Contract analysis

I. Executive Summary This memorandum analyzes the enforceability under Massachusetts common law of the proposed restrictive covenants set forth in the draft Executive Employment Agreement and the standalone Employee Non-Competition Agreement for Dr. Marcus J. Elliston, who is being recruited to serve as Chief Operating Officer of Arbor Health Technologies Inc. ("AHT" or the "Company"). Both agreements are dated Augus

1. Employee Non-Solicitation Covenant (18 months). This covenant prohibits Dr. Elliston, for a period of eighteen (18) months following the termination of his employment (regardless of the reason for termination), from directly or indirectly soliciting, recruiting, inducing, or encouraging any employee of AHT at the manager level and above to leave AHT's employment.

2. Customer/Partner Non-Solicitation Covenant (12 months). This covenant prohibits Dr. Elliston, for a period of twelve (12) months following the termination of his employment, from soliciting, diverting, or servicing any customer or business partner of AHT with whom the Executive had material contact during the last twenty-four (24) months of his employment with the Company.

3. Perpetual Confidentiality/Non-Disclosure Provision. This covenant imposes an indefinite obligation on Dr. Elliston not to use or disclose any Confidential Information (as defined in the agreement) of AHT, subject to standard carve-outs for legally compelled disclosure, information that becomes publicly available through no fault of the Executive, and information independently developed without use of Confidential

II. Background and Factual Context A. The Parties and the Transaction Arbor Health Technologies Inc. AHT is a Delaware corporation headquartered at 400 Brattle Commerce Park, Suite 1200, Cambridge, Massachusetts 02138. The Company operates in the healthcare services and software-as-a-service ("SaaS") sector, providing a cloud-based clinical workflow and revenue cycle management platform to hospital systems, physician

III. Legal Framework: Massachusetts Common Law Enforceability of Non-Solicitation and Non-Disclosure Covenants A. Distinction from Non-Competition Agreements Under the MNAA As a threshold matter, it is critical to distinguish the covenants analyzed in this memorandum from non-competition agreements governed by the MNAA. The Massachusetts Noncompetition Agreement Act, codified at M.G.L. c. 149, § 24L, took effect on O

IV. Analysis of the 18-Month Employee Non-Solicitation Covenant A. Duration — 18 Months The proposed employee non-solicitation covenant restricts Dr. Elliston from soliciting AHT employees at the manager level and above for a period of eighteen (18) months following the termination of his employment. The question of duration is among the most significant enforceability variables, and it warrants careful analysis. Mas

1. Duration. Consider reducing the duration from eighteen (18) months to twelve (12) months to align with the most commonly upheld period under Massachusetts common law and to minimize litigation risk. If the client, after consultation with Ridgeline Capital Partners and CEO Chandrasekaran, determines that the eighteen-month duration is a business priority, the covenant is defensible at that duration but carries a mo

2. Definition of "Manager Level." Define "manager level" with specificity in the agreement, using either AHT's internal grade classification system, a title-based definition, or a functional definition (e.g., employees with direct reports and authority over a business operation or functional area). The definition should be developed in consultation with CHRO Lisa Murakami to ensure accuracy and administrability.

3. General Solicitation Carve-Out. Add a carve-out clarifying that the covenant does not prohibit general, non-targeted solicitations of employment (e.g., publicly posted job advertisements, participation in career fairs, or general social media postings) and does not prohibit the hiring of AHT employees who apply independently without solicitation or encouragement from Dr. Elliston. This carve-out improves enforceab

4. Termination Trigger. Confirm that the covenant applies regardless of the reason for termination (termination for Cause, termination without Cause, voluntary resignation, death, disability, or otherwise) and that the triggering event — the "termination of employment" — is clearly and consistently defined across the Employment Agreement and the NCA to avoid ambiguity.

V. Analysis of the 12-Month Customer/Partner Non-Solicitation Covenant A. Duration — 12 Months The proposed customer/partner non-solicitation covenant restricts Dr. Elliston from soliciting, diverting, or servicing covered customers and business partners for a period of twelve (12) months following the termination of his employment. This duration is the most commonly upheld period for customer non-solicitation covena

1. Duration. The twelve-month duration is appropriate and well within the range of enforceability. No change is recommended.

2. Definition of "Material Contact." Define "material contact" with precision in the agreement, using language such as: "direct business dealings, negotiations, contract discussions, account management activities, strategic planning sessions, or substantive communications concerning AHT products, services, or business relationships." This definition will reduce ambiguity, provide the Executive with clear notice of wh

3. Servicing Language. Consider narrowing the "servicing" prohibition to situations involving affirmative solicitation or diversion by the Executive, or alternatively add a customer-initiated contact carve-out that permits the Executive to service covered customers or partners who independently and without solicitation contact the Executive at a new employer. This refinement reduces the risk that the covenant will be

4. Termination Trigger. As with the employee non-solicitation covenant, confirm that the customer/partner non-solicitation covenant applies regardless of the reason for termination and that the triggering event is clearly and consistently defined.

VI. Analysis of the Perpetual Confidentiality/NDA Provision A. Enforceability of Perpetual Duration The proposed confidentiality/non-disclosure provision imposes an indefinite obligation on Dr. Elliston not to use or disclose Confidential Information of AHT. The perpetual duration of this obligation is a common feature of executive confidentiality agreements, and Massachusetts courts have generally upheld perpetual c

Section 1833(b)(3)(A) of the DTSA requires that an employer provide notice of this immunity provision in any contract or agreement with an employee that governs the use of a trade secret or other confidential information. If the employer fails to include this notice, the employer may not be awarded exemplary damages or attorneys' fees against the employee in an action brought under the DTSA. This limitation on remedi

1. Bifurcate Duration. Consider bifurcating the confidentiality obligation: perpetual protection for trade secrets (as defined under M.G.L. c. 93, § 42 and 18 U.S.C. § 1836); time-limited protection (three to five years post-termination) for other confidential business information that does not rise to the level of a trade secret. Alternatively, tie the obligation for non-trade-secret information to the period during

2. Refine Definition of "Confidential Information." Add specificity to the definition by including additional illustrative categories. Qualify the catch-all provision to exclude information that is generally known or readily ascertainable. Add an explicit exclusion for general skills, knowledge, and experience.