NYSE ORIGINAL LISTING APPLICATION — SUPPLEMENTAL MATERIALS

NYSE ORIGINAL LISTING APPLICATION — SUPPLEMENTAL MATERIALS
Arbor Health Technologies Inc.
Proposed Ticker Symbol: ARHT
Prepared by:
Calderwood & Harkness LLP 125 Broad Street New York, NY 10004
Prepared for:
New York Stock Exchange Listing Qualifications Department 11 Wall Street New York, NY 10005
Date of Application: January 2024 (Initial Submission); Supplemented Through February 2024
Issuer's Counsel Contact: Theodore Langston, Responsible Partner, Capital Markets Eric Johannsen, Lead Associate, Capital Markets Telephone: (212) 558-4000
Email: tlangston@calderwoodharkness.com / ejohannsen@calderwoodharkness.com
SEC File Number: 333-276841 SEC CIK Number: 0001987432 SIC Code: 7372 (Prepackaged Software)
PART I — APPLICANT INFORMATION
Section 1.1 — Issuer Identification
The Applicant hereby provides the following identifying information in connection with this Original Listing Application — Supplemental Materials filed with the New York Stock Exchange, Inc. (the "NYSE" or the "Exchange"):
Full Legal Name: Arbor Health Technologies Inc. (the "Company," "AHT," "Arbor Health," or the "Issuer")
State of Incorporation: Delaware
Date of Incorporation: Arbor Health Technologies Inc. was incorporated under the laws of the State of Delaware on June 17, 2014, pursuant to the General Corporation Law of the State of Delaware (the "DGCL").
Federal Employer Identification Number (EIN): 47-3891205
Principal Executive Offices: 275 Kendall Avenue, Suite 1400 Cambridge, Massachusetts 02142 Telephone: (617) 492-7800 Facsimile: (617) 492-7801 Website: www.arborhealthtech.com
Registered Agent in Delaware: National Registered Agents of Delaware, Inc. 160 Greentree Drive, Suite 101 Dover, Delaware 19904 Telephone: (302) 674-4000
General Counsel and Corporate Secretary: Rachel Moynihan, Esq.
General Contact Information: Investor Relations: ir@arborhealthtech.com Media Relations: press@arborhealthtech.com Telephone (General): (617) 492-7800
Industry Description: Arbor Health Technologies Inc. is a healthcare services and software-as-a-service ("SaaS") company. The Company develops and commercializes a proprietary cloud-based platform encompassing clinical decision support, population health management, revenue cycle management outsourcing, and real-time analytics solutions for healthcare providers and health systems across the United States. The Company's products and services are designed to improve patient outcomes, optimize clinical workflows, reduce administrative costs, and support value-based care initiatives across the continuum of care.
Number of Employees: Approximately 3,400 full-time employees as of December 31, 2023. This figure includes approximately 1,800 employees engaged in technology, product development, and engineering functions; approximately 900 employees in sales, marketing, and customer success roles; approximately 400 employees in revenue cycle management operations; and approximately 300 employees in general and administrative functions.
Fiscal Year End: December 31
Independent Registered Public Accounting Firm: Kellerman & Associates LLP 345 Park Avenue New York, New York 10154 Lead Engagement Partner: Richard Olander, CPA Telephone: (212) 909-6000 PCAOB Registration No.: 1127
Kellerman & Associates LLP has served as the Company's independent registered public accounting firm since 2018 and has audited the Company's consolidated financial statements for the fiscal years ended December 31, 2021, December 31, 2022, and December 31, 2023, as included in the Registration Statement on Form S-1 (File No. 333-276841). Kellerman & Associates LLP is registered with the Public Company Accounting Oversight Board ("PCAOB") and is subject to PCAOB inspections.
Transfer Agent and Registrar: Continental Share Services, Inc. 1 Ashbury Asset Advisors Plaza, 30th Floor New York, New York 10004 Telephone: (212) 509-4000 Contact: Transfer Agent Services Group
Continental Share Services, Inc. has been appointed to serve as the Company's transfer agent and registrar for the Common Stock, effective upon the closing of the initial public offering.
Financial Printer / EDGAR Filing Agent: Toppan Quillon Health IT 35 West Wacker Drive Chicago, Illinois 60601 Telephone: (312) 326-8000
Toppan Quillon Health IT has served as the Company's EDGAR filing agent in connection with the preparation and filing of the Registration Statement on Form S-1 and all amendments thereto, as well as ongoing periodic reporting obligations under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Section 1.2 — Description of Business
Arbor Health Technologies Inc. operates a comprehensive, cloud-based clinical decision support and population health management platform that is used by healthcare providers and health systems to improve clinical outcomes, manage patient populations, streamline revenue cycle operations, and generate actionable insights through real-time data analytics. The Company's platform integrates seamlessly with leading electronic health record ("EHR") systems and is deployed across a diverse base of healthcare organizations.
As of December 31, 2023, the Company's platform is utilized by over 1,200 hospital systems and physician groups across 42 states, representing approximately 85,000 licensed physician end-users. Arbor Health's customer base includes academic medical centers, integrated delivery networks, community hospitals, and large multi-specialty physician groups. The Company's products and services span four primary areas: (i) clinical decision support tools that assist clinicians in evidence-based care delivery; (ii) population health management solutions that aggregate and analyze patient data across care settings to support risk stratification, care coordination, and quality improvement; (iii) revenue cycle management outsourcing services that enable healthcare organizations to optimize charge capture, claims adjudication, denial management, and collections; and (iv) real-time analytics and reporting dashboards that provide operational and financial intelligence to healthcare executives and clinicians.
The Company generates revenue primarily through subscription-based SaaS arrangements, which accounted for approximately 72% of total revenue in fiscal year 2023, with the balance derived from professional services, implementation fees, and revenue cycle management outsourcing services.
Selected Financial Highlights:
Arbor Health was founded in 2014 by Dr. Nathaniel Rourke and Margaret Tsujimoto. Dr. Rourke, who holds an M.D. from Harvard Medical School and an M.B.A. from the Wharton School of Business at the University of Pennsylvania, serves as Chairman of the Board and Chief Executive Officer. Ms. Tsujimoto, who holds an M.S. in Computer Science from the Massachusetts Institute of Technology and a B.S. in Electrical Engineering from Stanford University, serves as Co-Founder and Chief Technology Officer. Under their leadership, Arbor Health has grown from a two-person startup to a company with approximately 3,400 employees and over $612 million in annual revenue. The Company has raised approximately $340 million in aggregate equity financing across five rounds of venture capital and growth equity investment prior to the initial public offering.
Section 1.3 — Issuer's Counsel
The Company is represented in connection with the initial public offering and this listing application by:
Calderwood & Harkness LLP 125 Broad Street New York, New York 10004 Telephone: (212) 558-4000 Facsimile: (212) 558-3588
Theodore Langston — Responsible Partner, Capital Markets Group
Email: tlangston@calderwoodharkness.com
Direct: (212) 558-4120
Eric Johannsen — Lead Associate, Capital Markets Group
Email: ejohannsen@calderwoodharkness.com
Direct: (212) 558-4355
Calderwood & Harkness LLP has served as counsel to Arbor Health Technologies Inc. since 2019 in connection with general corporate matters and has acted as lead issuer's counsel in connection with the Registration Statement on Form S-1, all amendments thereto, the underwriting agreement, and all ancillary transaction documents related to the initial public offering.
Section 1.4 — Underwriters and Underwriters' Counsel
The following firms are serving as underwriters in connection with the Company's initial public offering of Common Stock:
Lead Left Bookrunner:
Whitfield Barrow & Co., LLC 383 Madison Avenue New York, New York 10179 FINRA Central Registration Depository (CRD) Number: 7924 Contact: Jonathan Pritchett, Managing Director, Equity Capital Markets Contact: Sarah Langley-Kwan, Director, Healthcare Equity Capital Markets Telephone: (212) 761-4000
Whitfield Barrow & Co., LLC is serving as the representative of the several underwriters (the "Representative") and lead left bookrunner for the offering. Whitfield Barrow has been allocated 50% of the base offering shares.
Joint Bookrunner:
Calloway Pierce Securities LLC 200 Park Avenue, 40th Floor New York, New York 10166 Contact: Marcus Delgado, Managing Director Contact: Anita Pham, Vice President Telephone: (212) 272-2000
Calloway Pierce Securities LLC has been allocated 30% of the base offering shares.
Joint Bookrunner:
Velthorn Capital Partners Inc. 555 California Street, Suite 3000 San Francisco, California 94104 Contact: Robert Acheson, Managing Director Telephone: (415) 954-5000
Velthorn Capital Partners Inc. has been allocated 12% of the base offering shares.
Co-Manager:
Pemberton Wallis LLC 100 Federal Street, 28th Floor Boston, Massachusetts 02110 Contact: Elena Vasquez, Director Telephone: (617) 426-3300
Pemberton Wallis LLC has been allocated 8% of the base offering shares.
Underwriters' Counsel:
Meridian Hale & Quivorn LLP 51 West 52nd Street New York, New York 10019 Contact: Graham Neville, Lead Partner Contact: Kathryn Brennan, Senior Associate Telephone: (212) 999-2000
Meridian Hale & Quivorn LLP is serving as counsel to the underwriters in connection with the initial public offering.
PART II — SECURITIES TO BE LISTED
Section 2.1 — Description of Securities
The Company hereby applies to list the following securities on the New York Stock Exchange:
Security: Common Stock, par value $0.001 per share ("Common Stock")
CUSIP Number: 039217105
Proposed Ticker Symbol: ARHT
Each share of Common Stock entitles the holder thereof to one vote on all matters submitted to a vote of stockholders, including the election of directors. Holders of Common Stock are entitled to receive dividends when, as, and if declared by the Board of Directors out of funds legally available therefor. In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Company, holders of Common Stock are entitled to receive their pro rata share of the remaining assets of the Company available for distribution, after payment of all debts and other liabilities and subject to the prior rights of any outstanding shares of preferred stock. The Common Stock has no preemptive, subscription, redemption, or conversion rights. The rights, preferences, and privileges of the holders of Common Stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that the Company may designate and issue in the future.
Section 2.2 — Authorized Share Capital (Post-IPO)
The authorized capital stock of the Company, as set forth in the Amended and Restated Certificate of Incorporation filed with the Secretary of State of the State of Delaware on February 13, 2024, consists of the following:
Common Stock. Four hundred million (400,000,000) shares of Common Stock, par value $0.001 per share, are authorized. The rights, powers, preferences, and limitations of the Common Stock are as described in Section 2.1 above and as set forth in the Amended and Restated Certificate of Incorporation, which is attached hereto as Exhibit A.
Preferred Stock. Fifty million (50,000,000) shares of Preferred Stock, par value $0.001 per share, are authorized. The Board of Directors is authorized, without further stockholder approval, to issue shares of Preferred Stock from time to time in one or more series and to fix the rights, preferences, privileges, and restrictions thereof, including dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences, and the number of shares constituting any series or the designation of such series (commonly referred to as "blank check" preferred stock). As of the date of this application, no shares of Preferred Stock are issued or outstanding, and the Company has no current plans to issue any shares of Preferred Stock.
The foregoing authorized share capital reflects the Company's capitalization as set forth in the Amended and Restated Certificate of Incorporation, which was filed with the Delaware Secretary of State on February 13, 2024, concurrent with the closing of the initial public offering.
Section 2.3 — Shares Outstanding and to Be Listed
The following table sets forth the number of shares of Common Stock outstanding before and after the initial public offering, including upon full exercise of the overallotment option granted to the underwriters:
All 20,000,000 shares offered in the base offering are primary shares issued and sold by the Company. No shares were sold by selling stockholders. The overallotment option of 3,000,000 additional shares was granted to the underwriters and represents shares to be issued and sold by the Company upon exercise.
Total Shares Applied for Listing: The Company hereby applies to list a total of 103,000,000 shares of Common Stock on the New York Stock Exchange, representing all outstanding shares of Common Stock following the closing of the initial public offering, including shares issuable upon full exercise of the overallotment option.
Offering Price and Proceeds:
The net proceeds figures above are before deduction of estimated offering expenses payable by the Company, which are estimated at approximately $4,200,000, consisting principally of SEC registration fees, FINRA filing fees, NYSE listing fees, accounting fees, legal fees, printing costs, and miscellaneous expenses.
Section 2.4 — Shares Reserved for Issuance
The Company has reserved shares of Common Stock for issuance under the following equity compensation plans:
2014 Stock Incentive Plan. The Company's 2014 Stock Incentive Plan (the "2014 Plan") was adopted by the Board of Directors and approved by the stockholders in June 2014. A total of 12,000,000 shares of Common Stock are authorized for issuance under the 2014 Plan. As of the date of this application, options to purchase a total of 11,200,000 shares of Common Stock have been granted under the 2014 Plan, of which options to purchase 8,400,000 shares have vested and are exercisable. The weighted average exercise price of all outstanding options under the 2014 Plan is $3.25 per share. No new awards will be granted under the 2014 Plan following the effective date of the initial public offering; however, outstanding awards under the 2014 Plan will remain outstanding in accordance with their terms.
2024 Equity Incentive Plan. The Company's 2024 Equity Incentive Plan (the "2024 Plan") was adopted by the Board of Directors on January 15, 2024, and approved by the stockholders on January 15, 2024, with such plan to become effective upon the closing of the initial public offering. A total of 10,300,000 shares of Common Stock are initially reserved for issuance under the 2024 Plan, representing approximately 10% of the total shares of Common Stock outstanding following the initial public offering (calculated on a post-overallotment basis). The 2024 Plan includes an annual "evergreen" provision pursuant to which the number of shares available for issuance under the 2024 Plan will automatically increase on the first day of each fiscal year, commencing with fiscal year 2025 and continuing through and including fiscal year 2034, by a number of shares 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 Board of Directors or the Compensation Committee. The 2024 Plan authorizes the grant of incentive stock options ("ISOs"), non-qualified stock options ("NQSOs"), restricted stock units ("RSUs"), stock appreciation rights ("SARs"), performance share awards, and other stock-based awards. Administration of the 2024 Plan is delegated to the Compensation Committee of the Board of Directors.
2024 Employee Stock Purchase Plan. The Company's 2024 Employee Stock Purchase Plan (the "ESPP") was adopted by the Board of Directors on January 15, 2024, and approved by the stockholders on January 15, 2024, with such plan to become effective upon the closing of the initial public offering. A total of 2,060,000 shares of Common Stock are reserved for issuance under the ESPP, representing approximately 2% of the total shares of Common Stock outstanding following the initial public offering. The ESPP provides eligible employees the opportunity to purchase shares of Common Stock at a 15% discount from the lesser of the fair market value of the Common Stock on the first day of the applicable offering period or the fair market value on the last day of the applicable purchase period. The ESPP is structured with semi-annual offering periods and is intended to qualify as an "employee stock purchase plan" within the meaning of Section 423 of the Internal Revenue Code of 1986, as amended (the "Code").
Summary of Shares Reserved for Equity Compensation:
The shares reserved under the foregoing equity compensation plans represent approximately 23.7% of the total shares of Common Stock outstanding following the initial public offering on a post-overallotment basis. This figure does not include any shares that may become available for issuance under the 2024 Plan pursuant to the annual evergreen provision described above.
Section 2.5 — Dual-Class Structure
The Company hereby confirms that it does not have a dual-class or multi-class stock structure. The Company has only a single class of Common Stock outstanding, and each share of Common Stock is entitled to one (1) vote per share on all matters submitted to a vote of stockholders. The Company's Amended and Restated Certificate of Incorporation does not provide for any class of stock with disparate voting rights, high-vote or low-vote shares, or any other arrangement that would result in certain stockholders holding a disproportionate number of votes relative to their economic ownership in the Company.
PART III — QUANTITATIVE LISTING STANDARDS COMPLIANCE
Arbor Health Technologies Inc. hereby demonstrates its compliance with the quantitative initial listing standards of the New York Stock Exchange as set forth in Section 102.01 of the NYSE Listed Company Manual. The Company satisfies the applicable requirements under both the domestic company standards and the market capitalization/revenue test, as described in detail below.
Section 3.1 — Market Capitalization
The post-IPO aggregate market capitalization of the Company, calculated based on the total number of shares of Common Stock outstanding following the initial public offering (including full exercise of the overallotment option) multiplied by the initial public offering price of $20.00 per share, is as follows:
The NYSE's initial listing standard for domestic companies under the market capitalization test requires a minimum aggregate market capitalization of $200,000,000 at the time of listing. The Company's post-IPO market capitalization of $2,060,000,000 significantly exceeds the $200,000,000 minimum threshold, representing approximately 10.3 times the required minimum. Accordingly, the Company confirms full compliance with the NYSE's market capitalization listing standard.
Section 3.2 — Total Stockholders' Equity
Following the initial public offering and the receipt of the net proceeds therefrom, the Company's total stockholders' equity will substantially exceed all applicable NYSE thresholds for initial listing. As set forth in the audited consolidated financial statements included in the Registration Statement on Form S-1 (File No. 333-276841), the Company's total stockholders' equity as of December 31, 2023, was approximately $210,000,000 on a historical basis. After giving effect to the receipt of estimated net proceeds from the initial public offering of approximately $372,000,000 (base offering, after deducting underwriting discounts and estimated offering expenses) and the intended use of approximately $65,000,000 of such net proceeds to repay amounts outstanding under the Company's revolving credit facility, the Company's pro forma total stockholders' equity will be approximately $517,000,000. This amount substantially exceeds the NYSE's minimum requirement of $60,000,000 in total stockholders' equity under the applicable initial listing standard.
The foregoing financial information is based on the audited consolidated financial statements of the Company as of and for the fiscal year ended December 31, 2023, audited by Kellerman & Associates LLP, the Company's independent registered public accounting firm, and as set forth in the Registration Statement.
Section 3.3 — Distribution Standards — Public Float
The following table sets forth the distribution of the Company's Common Stock for purposes of compliance with the NYSE's public float requirements:
Lock-Up Arrangements. All directors, executive officers, and holders of 1% or more of the Company's pre-IPO Common Stock have entered into lock-up agreements with Whitfield Barrow & Co., LLC, as Representative of the underwriters, pursuant to which such persons and entities have agreed not to offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale, or otherwise dispose of any shares of Common Stock or any securities convertible into or exchangeable for Common Stock for a period of 180 days from February 8, 2024, the pricing date of the initial public offering (the "Lock-Up Period"). The Lock-Up Period expires on August 6, 2024. Approximately 45 individuals and entities have executed lock-up agreements covering a total of approximately 80,000,000 shares of Common Stock.
Public Float. At the time of listing, the public float will consist of the 23,000,000 shares of Common Stock sold in the initial public offering (including shares sold upon exercise of the overallotment option). Upon expiration of the Lock-Up Period on August 6, 2024, all 103,000,000 shares of Common Stock outstanding will potentially be available for trading, subject to applicable securities laws, including volume limitations under Rule 144 of the Securities Act of 1933, as amended (the "Securities Act").
NYSE Requirement. The NYSE requires a minimum of 1,100,000 publicly held shares for initial listing. The Company's public float of 23,000,000 shares substantially exceeds this requirement, representing approximately 20.9 times the minimum threshold. Compliance is confirmed.
Section 3.4 — Round Lot Holders
The NYSE requires that a company have a minimum of 400 round lot holders (i.e., holders of 100 or more shares of Common Stock) at the time of initial listing. Based on the Company's discussions with the underwriting syndicate and customary distribution patterns for offerings of comparable size and structure, the Company anticipates that the number of round lot holders following the closing of the initial public offering will significantly exceed the NYSE's minimum requirement of 400. The underwriting syndicate consists of four firms — Whitfield Barrow & Co., LLC, Calloway Pierce Securities LLC, Velthorn Capital Partners Inc., and Pemberton Wallis LLC — and the broad institutional and retail distribution channels of these firms are expected to result in a substantial number of beneficial holders of the Common Stock following the initial public offering. The Company will verify the number of round lot holders following the closing of the offering and will provide supplemental confirmation to the NYSE as necessary.
Section 3.5 — Financial Standards — Earnings Test / Market Capitalization / Revenue Test
The Company satisfies the NYSE's initial listing financial standards under the market capitalization/revenue test, as set forth in Section 102.01C of the NYSE Listed Company Manual. The applicable requirements and the Company's compliance are summarized as follows:
In addition, although the Company is relying on the market capitalization/revenue test for purposes of demonstrating compliance with the NYSE's financial listing standards, the Company notes that it also satisfies the NYSE's earnings test. The Company reported net income of $41,300,000 for the fiscal year ended December 31, 2023, and aggregate pre-tax income in excess of $50,000,000 over the three fiscal years ended December 31, 2023, satisfying the threshold of $10,000,000 in aggregate pre-tax earnings over the most recent three fiscal years with a minimum of $2,000,000 in each of the two most recent fiscal years.
The foregoing financial data is derived from the Company's audited consolidated financial statements as of and for the fiscal years ended December 31, 2021, 2022, and 2023, which have been audited by Kellerman & Associates LLP and are included in the Registration Statement on Form S-1.
Section 3.6 — Share Price
The initial public offering price of the Company's Common Stock is $20.00 per share, as set forth in the final prospectus filed with the Securities and Exchange Commission (the "SEC") pursuant to Rule 424(b)(4) under the Securities Act on February 9, 2024.
The NYSE requires that the share price of a security be at least $4.00 per share at the time of initial listing, as set forth in Section 102.01A of the NYSE Listed Company Manual. The Company's initial public offering price of $20.00 per share exceeds the NYSE's minimum share price requirement by $16.00 per share, representing 5.0 times the minimum threshold. Compliance is confirmed.
PART IV — QUALITATIVE LISTING STANDARDS — CORPORATE GOVERNANCE COMPLIANCE
Section 4.1 — Certification of Compliance with NYSE Listed Company Manual Section 303A
Arbor Health Technologies Inc. hereby certifies that, upon listing of its Common Stock on the New York Stock Exchange, it will be in compliance with, or in the process of achieving compliance pursuant to applicable phase-in provisions with, all corporate governance standards set forth in Section 303A of the NYSE Listed Company Manual (the "Corporate Governance Listing Standards"). The Company's Board of Directors (the "Board") has taken all actions necessary to adopt and implement the governance structures, committees, charters, policies, and procedures required by the Corporate Governance Listing Standards, as described in detail in this Part IV.
The specific sections of the NYSE Listed Company Manual addressed in this Part IV include the following:
•  Section 303A.00 — Controlled Company Exemption
•  Section 303A.01 — Independent Directors
•  Section 303A.02 — Independence Tests
•  Section 303A.03 — Executive Sessions
•  Section 303A.04 — Nominating/Corporate Governance Committee
•  Section 303A.05 — Compensation Committee
•  Section 303A.06 — Audit Committee (Additional Requirements)
•  Section 303A.07 — Audit Committee (Charter and Responsibilities)
•  Section 303A.09 — Corporate Governance Guidelines
•  Section 303A.10 — Code of Business Conduct and Ethics
•  Section 303A.12 — CEO Certification
Additionally, the Company addresses its compliance with the audit committee requirements of Rule 10A-3 under the Exchange Act.
Section 4.2 — Board of Directors Composition (Section 303A.01)
Effective upon the closing of the initial public offering, the Board of Directors of Arbor Health Technologies Inc. will consist of seven (7) members, as follows:
As described in Section 4.3 below, the Company does not qualify as a "controlled company" under NYSE rules and accordingly is subject to the requirement that a majority of its Board be composed of independent directors. At the time of listing, two (2) of the Company's seven (7) directors (Carolyn Whittemore and Dr. Samuel Obadina) have been determined to be independent under the NYSE's independence standards. The Company acknowledges that this does not satisfy the majority independence requirement and will comply with such requirement within the phase-in periods permitted by NYSE rules for newly listed companies, as described more fully in Section 4.3 below.
Section 4.3 — Controlled Company Exemption (Section 303A.00)
Under Section 303A.00 of the NYSE Listed Company Manual, a "controlled company" is defined as a company of which more than 50% of the voting power for the election of directors is held by an individual, a group, or another company. A company that qualifies as a controlled company is exempt from the requirements of Section 303A.01 (majority independent board), Section 303A.04 (fully independent nominating/corporate governance committee), and Section 303A.05 (fully independent compensation committee).
The Company has analyzed its post-IPO ownership structure to determine whether it qualifies as a "controlled company" under the foregoing definition. The following table sets forth the beneficial ownership of the Company's voting securities by each holder of 5% or more of the outstanding shares of Common Stock:
No single holder or group of holders holds more than 50% of the voting power for the election of directors. Brindoval Trelvon Partners Fund IV, L.P. is the largest single stockholder with 27.18% of the voting power, and no voting agreement, stockholders' agreement, or other arrangement exists among any combination of holders that would result in the aggregation of more than 50% of the voting power in the hands of a single individual, group, or other entity. The Amended and Restated Voting Agreement, which was in effect prior to the initial public offering, terminates upon the closing of a Qualified IPO, and the initial public offering constitutes such a Qualified IPO.
Accordingly, Arbor Health Technologies Inc. does not qualify as a "controlled company" under Section 303A.00 of the NYSE Listed Company Manual, and the Company does not claim the controlled company exemption.
Phase-In Provisions for Newly Listed Companies. Because the Company does not qualify for the controlled company exemption, it is subject to all of the NYSE's corporate governance requirements, including the requirement that a majority of the Board consist of independent directors and that each of the Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee be composed entirely of independent directors. However, as a newly listed company, the Company is entitled to the following phase-in provisions:
(i) At the time of listing, at least one independent director must serve on each of the Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee.
(ii) Within 90 days of listing, a majority of the members of each committee must be independent.
(iii) Within one year of listing, each committee must be composed entirely of independent directors.
(iv) Within one year of listing, a majority of the full Board must consist of independent directors.
As described in Sections 4.6, 4.7, and 4.8 below, the Company satisfies the requirement set forth in clause (i) above at the time of listing. The Company intends to identify, recruit, and appoint additional independent directors to the Board in order to satisfy the requirements set forth in clauses (ii), (iii), and (iv) above within the applicable phase-in periods. The Company has engaged Adriatic Management Consulting, a leading executive search and board advisory firm, to assist in the identification and recruitment of qualified independent director candidates.
Section 4.4 — Director Independence Determinations (Section 303A.02)
The Board of Directors has undertaken a review of the independence of each member of the Board in accordance with the standards set forth in Section 303A.02 of the NYSE Listed Company Manual. In making its independence determinations, the Board considered all relevant facts and circumstances, including the categorical standards for independence set forth in Section 303A.02(b) of the NYSE Listed Company Manual, and any relationships between each director (and his or her immediate family members) and the Company, its subsidiaries, and its affiliates, as well as any other facts or circumstances that might impair a director's independence.
The results of the Board's independence determinations are set forth below.
4.4.1 — Carolyn Whittemore
Determination: Independent
The Board of Directors has determined that Carolyn Whittemore is an independent director within the meaning of Section 303A.02 of the NYSE Listed Company Manual. In reaching this determination, the Board considered the following:
Ms. Whittemore has not been employed by the Company or any of its affiliates at any time during the past three years. No immediate family member of Ms. Whittemore is, or has been within the past three years, an executive officer of the Company. Ms. Whittemore does not receive, and has not received during any twelve-month period within the last three years, any direct compensation from the Company other than director and committee fees and equity-based compensation for service as a non-employee director. Ms. Whittemore is not affiliated with or employed by a present or former internal or external auditor of the Company, and no immediate family member of Ms. Whittemore is affiliated with or employed in a professional capacity by such auditor. Ms. Whittemore is not employed as an executive officer of another company where any of the Company's present executive officers serve or served on the compensation committee of such other company at any time during the past three years. Ms. Whittemore is not an executive officer or employee, and no immediate family member of Ms. Whittemore is an executive officer, of a company that has made payments to, or received payments from, the Company for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1,000,000 or 2% of such other company's consolidated gross revenues.
Ms. Whittemore currently serves as the retired Chief Financial Officer of NorthStar Health Systems, Inc., a publicly traded healthcare company, a position she held from 2010 through 2021. She also serves on the board of directors of two other publicly traded companies and one private company, none of which has a material business relationship with the Company. Ms. Whittemore holds a B.S. in Accounting from Boston College and an M.B.A. from Columbia Business School. She is a Certified Public Accountant (inactive) and a member of the National Association of Corporate Directors.
The Board has concluded that Ms. Whittemore meets all categorical standards for independence under Section 303A.02 of the NYSE Listed Company Manual and has no material relationship with the Company that would impair her independence.
4.4.2 — Dr. Samuel Obadina
Determination: Independent
The Board of Directors has determined that Dr. Samuel Obadina is an independent director within the meaning of Section 303A.02 of the NYSE Listed Company Manual. In reaching this determination, the Board considered the following:
Dr. Obadina has not been employed by the Company or any of its affiliates at any time during the past three years. No immediate family member of Dr. Obadina is, or has been within the past three years, an executive officer of the Company. Dr. Obadina does not receive, and has not received during any twelve-month period within the last three years, any direct compensation from the Company other than director and committee fees and equity-based compensation for service as a non-employee director. Dr. Obadina is not affiliated with or employed by a present or former internal or external auditor of the Company, and no immediate family member of Dr. Obadina is affiliated with or employed in a professional capacity by such auditor. Dr. Obadina is not employed as an executive officer of another company where any of the Company's present executive officers serve or served on the compensation committee of such other company at any time during the past three years. Dr. Obadina is not an executive officer or employee, and no immediate family member of Dr. Obadina is an executive officer, of a company that has made payments to, or received payments from, the Company for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1,000,000 or 2% of such other company's consolidated gross revenues.
Dr. Obadina currently serves as the Dean of the School of Public Health at the University of Pennsylvania and is a nationally recognized expert in health informatics and clinical data systems. He also serves as an independent director on the board of directors of one other publicly traded company, which does not have a material business relationship with the Company. Dr. Obadina holds an M.D. from Johns Hopkins University School of Medicine and a Ph.D. in Biomedical Informatics from Stanford University.
The Board has concluded that Dr. Obadina meets all categorical standards for independence under Section 303A.02 of the NYSE Listed Company Manual and has no material relationship with the Company that would impair his independence.
4.4.3 — Dr. Nathaniel Rourke
Determination: Not Independent
The Board of Directors has determined that Dr. Nathaniel Rourke is not an independent director within the meaning of Section 303A.02 of the NYSE Listed Company Manual. Dr. Rourke currently serves as the Co-Founder, Chairman of the Board, and Chief Executive Officer of the Company. As a current employee and executive officer of the Company, Dr. Rourke does not satisfy the independence standards set forth in Section 303A.02(b)(i) of the NYSE Listed Company Manual.
4.4.4 — Margaret Tsujimoto
Determination: Not Independent
The Board of Directors has determined that Margaret Tsujimoto is not an independent director within the meaning of Section 303A.02 of the NYSE Listed Company Manual. Ms. Tsujimoto currently serves as the Co-Founder and Chief Technology Officer of the Company. As a current employee and executive officer of the Company, Ms. Tsujimoto does not satisfy the independence standards set forth in Section 303A.02(b)(i) of the NYSE Listed Company Manual.
4.4.5 — Leonard Corbett
Determination: Not Independent
The Board of Directors has determined that Leonard Corbett is not an independent director within the meaning of Section 303A.02 of the NYSE Listed Company Manual. Mr. Corbett currently serves as Managing Partner of Brindoval Trelvon Partners, L.P., which is the general partner of Brindoval Trelvon Partners Fund IV, L.P. ("CSP Fund IV"). CSP Fund IV beneficially owns 28,000,000 shares of the Company's Common Stock, representing approximately 27.18% of the total shares outstanding following the initial public offering. Mr. Corbett was designated to the Board by CSP Fund IV pursuant to the terms of the Company's Amended and Restated Investors' Rights Agreement. The Board has determined that Mr. Corbett's affiliation with CSP Fund IV, a significant stockholder of the Company, constitutes a material relationship with the Company that precludes a determination of independence under Section 303A.02.
4.4.6 — Diana Coltrane
Determination: Not Independent
The Board of Directors has determined that Diana Coltrane is not an independent director within the meaning of Section 303A.02 of the NYSE Listed Company Manual. Ms. Coltrane currently serves as a Partner at Brindoval Trelvon Partners, L.P., which is the general partner of CSP Fund IV. Ms. Coltrane was designated to the Board by CSP Fund IV pursuant to the terms of the Company's Amended and Restated Investors' Rights Agreement. The Board has determined that Ms. Coltrane's affiliation with CSP Fund IV, a significant stockholder of the Company, constitutes a material relationship with the Company that precludes a determination of independence under Section 303A.02.
4.4.7 — Howard Feng
Determination: Not Independent
The Board of Directors has determined that Howard Feng is not an independent director within the meaning of Section 303A.02 of the NYSE Listed Company Manual. Mr. Feng currently serves as a Managing Director of Ridgeline Growth Equity, LLC, which is the managing member of Ridgeline Growth Equity Fund III, LLC ("RGE Fund III"). RGE Fund III beneficially owns 16,000,000 shares of the Company's Common Stock, representing approximately 15.53% of the total shares outstanding following the initial public offering. Mr. Feng was designated to the Board by RGE Fund III pursuant to the terms of the Company's Amended and Restated Investors' Rights Agreement. The Board has determined that Mr. Feng's affiliation with RGE Fund III, a significant stockholder of the Company, constitutes a material relationship with the Company that precludes a determination of independence under Section 303A.02.
Section 4.5 — Executive Sessions of Non-Management Directors (Section 303A.03)
In accordance with Section 303A.03 of the NYSE Listed Company Manual, the Company confirms that, upon listing, the Board of Directors will hold regular executive sessions at which only non-management directors are present, without any member of management being in attendance. The Corporate Governance Guidelines adopted by the Board, effective upon the initial public offering, provide that the non-management directors will meet in executive session at least four times per year, and more frequently as circumstances warrant, in connection with regularly scheduled meetings of the full Board.
The Board will designate a presiding director to chair the executive sessions of non-management directors. The presiding director will be selected from among the independent members of the Board. Until such time as the Board designates a permanent presiding director, Carolyn Whittemore will serve as the presiding director for executive sessions of non-management directors. The identity of the presiding director will be disclosed in the Company's annual proxy statement and on the Company's investor relations website.
If the group of non-management directors includes any directors who are not independent under the NYSE's independence standards, the independent directors will also hold at least one executive session per year at which only independent directors are present.
Section 4.6 — Nominating / Corporate Governance Committee (Section 303A.04)
The Board of Directors has established a Nominating and Corporate Governance Committee (the "N&CG Committee"), effective upon the closing of the initial public offering. The N&CG Committee will operate pursuant to a written charter adopted by the Board, which is compliant with the requirements of Section 303A.04 of the NYSE Listed Company Manual. The N&CG Committee Charter is attached hereto as Exhibit E.
Committee Composition:
At the time of listing, one of the three members of the N&CG Committee (Dr. Samuel Obadina) is independent, satisfying the NYSE's phase-in requirement that at least one independent director serve on the committee at the time of listing. The Company will achieve majority independence on the N&CG Committee within 90 days of listing and full independence within one year of listing, in accordance with the phase-in provisions described in Section 4.3 above.
Committee Responsibilities. The N&CG Committee is responsible for, among other things: (i) identifying, evaluating, and recommending to the Board qualified candidates for election as directors; (ii) developing and recommending to the Board criteria for selecting new directors, including desired skills, experience, and qualifications; (iii) evaluating the composition and size of the Board and its committees and making recommendations to the Board regarding appropriate changes; (iv) overseeing the Company's corporate governance practices and developing and recommending to the Board the Corporate Governance Guidelines; (v) overseeing the annual self-evaluation of the Board and its committees; (vi) reviewing and making recommendations to the Board regarding director compensation; and (vii) considering any stockholder nominees for director in accordance with the Company's Amended and Restated Bylaws and the N&CG Committee Charter.
Section 4.7 — Compensation Committee (Section 303A.05)
The Board of Directors has established a Compensation Committee (the "Compensation Committee"), effective upon the closing of the initial public offering. The Compensation Committee will operate pursuant to a written charter adopted by the Board, which is compliant with the requirements of Section 303A.05 of the NYSE Listed Company Manual. The Compensation Committee Charter is attached hereto as Exhibit D.
Committee Composition:
At the time of listing, two of the three members of the Compensation Committee (Dr. Samuel Obadina and Carolyn Whittemore) are independent under the NYSE's independence standards and satisfy the heightened independence requirements applicable to compensation committee members under Section 303A.05 and Rule 10C-1 under the Exchange Act. This satisfies both the phase-in requirement that at least one independent director serve on the committee at the time of listing and the requirement that a majority of members be independent within 90 days of listing. The Company will achieve full independence on the Compensation Committee within one year of listing, in accordance with the phase-in provisions described in Section 4.3 above.
Compensation Consultant. The Compensation Committee has retained Hargrove Prindaux Advisory Group LLC ("Hargrove Ellis"), located at 1600 Market Street, Suite 3400, Philadelphia, Pennsylvania 19103, as its independent compensation consultant to advise on IPO-readiness compensation matters, including the design and structure of the Company's post-IPO executive compensation program, equity compensation plan parameters, peer group selection, and compensation benchmarking. The Compensation Committee has assessed the independence of Hargrove Ellis in accordance with the factors set forth in Section 303A.05(c)(iv) of the NYSE Listed Company Manual and Exchange Act Rule 10C-1(b)(4) and has determined that Hargrove Ellis's engagement does not raise any conflict of interest.
Committee Responsibilities. The Compensation Committee is responsible for, among other things: (i) reviewing and approving, or recommending to the Board for approval, the compensation of the Company's Chief Executive Officer and other executive officers; (ii) administering the Company's equity compensation plans, including the 2024 Equity Incentive Plan and the 2024 Employee Stock Purchase Plan; (iii) reviewing and approving, or recommending to the Board for approval, employment agreements, severance arrangements, change-in-control protections, and other compensatory arrangements with executive officers; (iv) overseeing the preparation of the compensation discussion and analysis ("CD&A") for inclusion in the Company's annual proxy statement; (v) overseeing the Company's compliance with the compensation-related provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, including the pay-versus-performance and clawback policy requirements; and (vi) engaging and overseeing any compensation consultant retained by the Committee.
Section 4.8 — Audit Committee (Section 303A.06 and 303A.07; Rule 10A-3)
4.8.1 — Composition
The Board of Directors has established an Audit Committee (the "Audit Committee"), effective upon the closing of the initial public offering. The Audit Committee will operate pursuant to a written charter adopted by the Board, which is compliant with the requirements of Sections 303A.06 and 303A.07 of the NYSE Listed Company Manual and Rule 10A-3 under the Exchange Act. The Audit Committee Charter is attached hereto as Exhibit C.
The Audit Committee consists of three (3) members, satisfying the NYSE's minimum requirement of three members:
4.8.2 — Independence
The independence status of each member of the Audit Committee is as follows:
Carolyn Whittemore has been determined to be independent under Section 303A.02 of the NYSE Listed Company Manual and under Rule 10A-3 of the Exchange Act. Ms. Whittemore does not accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the Company or any of its subsidiaries, other than fees for service as a director and member of Board committees and equity-based compensation for such service. Ms. Whittemore is not an affiliated person of the Company.
Dr. Samuel Obadina has been determined to be independent under Section 303A.02 of the NYSE Listed Company Manual and under Rule 10A-3 of the Exchange Act. Dr. Obadina does not accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the Company or any of its subsidiaries, other than fees for service as a director and member of Board committees and equity-based compensation for such service. Dr. Obadina is not an affiliated person of the Company.
Howard Feng has been determined not to be independent under Section 303A.02 of the NYSE Listed Company Manual due to his affiliation with Ridgeline Growth Equity Fund III, LLC, a significant stockholder of the Company, as described in Section 4.4.7 above. Mr. Feng's service on the Audit Committee is permitted under the NYSE's phase-in provisions for newly listed companies. At the time of listing, at least one member of the Audit Committee is required to be independent under Section 303A.02 and Rule 10A-3, and this requirement is satisfied by the service of both Ms. Whittemore and Dr. Obadina. A majority of the Audit Committee members must be independent within 90 days of listing, and the Audit Committee must be fully independent within one year of listing. The Company will replace Mr. Feng with an additional independent director on the Audit Committee within the required phase-in period, or will appoint additional independent directors to the Audit Committee to achieve full independence.
4.8.3 — Financial Literacy and Audit Committee Financial Expert
All three members of the Audit Committee are financially literate, as such term is interpreted by the Board in its business judgment, in accordance with the requirements of Section 303A.07(a) of the NYSE Listed Company Manual. Each member of the Audit Committee has the ability to read and understand fundamental financial statements, including a balance sheet, income statement, and cash flow statement.
The Board has designated Carolyn Whittemore as the "audit committee financial expert" within the meaning of Item 407(d)(5) of Regulation S-K under the Securities Act and the Exchange Act. Ms. Whittemore qualifies as an audit committee financial expert based on her education (B.S. in Accounting from Boston College; M.B.A. from Columbia Business School), her professional certifications (Certified Public Accountant, inactive), and her extensive professional experience, including her service as Chief Financial Officer of NorthStar Health Systems, Inc. from 2010 through 2021, during which time she was responsible for the oversight of financial reporting, internal controls over financial reporting, interaction with internal and external auditors, and compliance with SEC and NYSE reporting and disclosure requirements. Ms. Whittemore has an understanding of generally accepted accounting principles ("GAAP") and financial statements, the ability to assess the general application of GAAP in connection with the accounting for estimates, accruals, and reserves, experience preparing, auditing, analyzing, or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the Company's financial statements, and an understanding of internal control over financial reporting and audit committee functions.
4.8.4 — Charter
The Audit Committee Charter was adopted by the Board of Directors effective upon the closing of the initial public offering. The Charter is compliant with the requirements of Section 303A.07 of the NYSE Listed Company Manual and Rule 10A-3 under the Exchange Act. A copy of the Audit Committee Charter is attached hereto as Exhibit C and will be made publicly available on the Company's investor relations website upon listing.
The Audit Committee Charter sets forth the following responsibilities and authority of the Audit Committee, among others:
(a) Oversight of the integrity of the Company's financial statements and financial reporting process, including reviews of the Company's annual and quarterly financial statements and earnings releases prior to filing or dissemination.
(b) Sole authority and responsibility for the appointment, compensation, retention, and oversight of the work of the Company's independent registered public accounting firm, currently Kellerman & Associates LLP. The Audit Committee is directly responsible for the engagement of the independent auditors, including the approval of all audit engagement fees and terms, the evaluation of the qualifications, independence, and performance of the auditors, and the determination of whether to retain or terminate the auditors.
(c) Pre-approval of all audit and permissible non-audit services provided by the independent registered public accounting firm, in accordance with applicable SEC rules.
(d) Review and oversight of the Company's internal controls over financial reporting, including receiving and reviewing reports from management and the independent auditors regarding the effectiveness of such controls and any significant deficiencies or material weaknesses identified.
(e) Oversight of the Company's enterprise risk management framework, including periodic reviews of the Company's major risk exposures and the steps management has taken to monitor and control such risks.
(f) Review and approval of related party transactions, in accordance with the Company's Related Party Transaction Policy and applicable SEC rules and NYSE listing standards.
(g) Establishment and maintenance of procedures for the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, auditing matters, or potential violations of law, including confidential and anonymous submission of concerns by employees (whistleblower procedures), in accordance with Rule 10A-3 under the Exchange Act.
(h) Review and oversight of the Company's compliance with legal and regulatory requirements, including the Company's compliance programs and policies.
Section 4.9 — Corporate Governance Guidelines (Section 303A.09)
In accordance with Section 303A.09 of the NYSE Listed Company Manual, the Board of Directors has adopted Corporate Governance Guidelines, effective upon the closing of the initial public offering. The Corporate Governance Guidelines address the following subjects, among others:
•  Board Composition and Size. The Corporate Governance Guidelines provide that the Board shall consist of such number of directors as determined from time to time by the Board, taking into account the needs of the Company, the desire for a diversity of backgrounds, skills, and experiences, and the requirements of NYSE listing standards regarding director independence.
•  Director Qualifications. The Guidelines set forth the criteria that the N&CG Committee and the Board will consider in evaluating director candidates, including integrity, business judgment, relevant expertise and experience, independence, potential conflicts of interest, diversity considerations, and the ability to devote adequate time and attention to Board responsibilities.
•  Director Independence. The Guidelines affirm the Board's commitment to maintaining compliance with the NYSE's requirements regarding board and committee independence, including the achievement of a majority independent board within the applicable phase-in period.
•  Lead Independent Director. The Guidelines provide for the designation of a lead independent director when the Chairman of the Board is not independent, as is the case with the Company (Dr. Rourke serving as both Chairman and CEO). The lead independent director will serve as the presiding director for executive sessions of non-management and independent directors.
•  Board Meeting Frequency and Procedures. The Board will hold regular meetings at least four times per year, and such additional meetings as may be necessary or appropriate. Directors are expected to attend all Board and applicable committee meetings and to be prepared for such meetings by reviewing materials distributed in advance.
•  CEO Performance Evaluation. The N&CG Committee and the independent directors will conduct an annual evaluation of the Chief Executive Officer's performance, taking into account the Company's financial and operational performance, strategic direction, and other relevant factors.
•  Management Succession Planning. The Board will periodically review the Company's management succession plan, including succession planning for the position of Chief Executive Officer and other key executive officer positions.
•  Director Stock Ownership Guidelines. The Guidelines establish stock ownership requirements for non-employee directors, requiring each non-employee director to acquire and hold shares of Common Stock (or share equivalents) having a value equal to at least five times the annual cash retainer for Board service, to be achieved within five years of joining the Board.
•  Continuing Education. The Guidelines encourage directors to participate in director education programs to enhance their understanding of governance best practices, regulatory developments, and industry trends.
A copy of the Corporate Governance Guidelines is attached hereto as Exhibit F. The Corporate Governance Guidelines will be made publicly available on the Company's investor relations website upon listing.
Section 4.10 — Code of Business Conduct and Ethics (Section 303A.10)
In accordance with Section 303A.10 of the NYSE Listed Company Manual, the Board of Directors has adopted a Code of Business Conduct and Ethics (the "Code of Conduct"), effective upon the closing of the initial public offering. The Code of Conduct is applicable to all employees, officers, and directors of Arbor Health Technologies Inc. and its subsidiaries. The Code of Conduct addresses the following subjects, among others:
•  Conflicts of Interest. The Code of Conduct requires all covered persons to avoid situations in which their personal interests conflict, or appear to conflict, with the interests of the Company, and sets forth procedures for the identification, disclosure, and resolution of actual or potential conflicts of interest.
•  Confidentiality and Proprietary Information. The Code of Conduct requires all covered persons to protect the confidentiality of the Company's proprietary information, trade secrets, and non-public information, and to refrain from disclosing such information except as authorized by the Company or required by law.
•  Insider Trading Policy. The Code of Conduct incorporates by reference the Company's Insider Trading Policy, which prohibits trading in the Company's securities on the basis of material, non-public information and establishes pre-clearance requirements and trading window restrictions for directors, executive officers, and certain other designated insiders.
•  Anti-Corruption and FCPA Compliance. The Code of Conduct prohibits bribery, corruption, and improper payments to government officials or other persons, and