Contract analysis

From: "Jonathan M. Pryce" <jpryce@fieldingrowellp.com> To: Devon Archer <darcher@calderwoodharkness.com> Cc: "Catherine A. Fielding" <cfielding@fieldingrowellp.com> Date: Fri, 09 Sep 2022 04:47:00 -0000 Subject: RE: Elliston Non-Competition Agreement — Revised Scope and Duration

Thank you for your follow-up yesterday. I can confirm that we are transmitting our second markup of both the Employment Agreement and the Employee Non-Competition Agreement under separate cover today. You should receive the formal transmittal letter and marked documents from our office before end of day.

I wanted to use this email to provide a summary of where things stand from Dr. Elliston's perspective on the remaining restrictive covenant issues, so that your team can incorporate these positions into the third draft efficiently.

**Non-Compete Duration (12 Months):** Dr. Elliston is now comfortable with the 12-month post-termination non-competition period as reflected in the second draft dated August 30, 2022. This is acceptable provided the industry scope language remains as currently drafted — that is, limited to healthcare IT/SaaS companies with annual revenue exceeding $50 million operating in the United States. We view that scope limitat

**Employee Non-Solicitation (18 Months):** We can confirm agreement to the 18-month employee non-solicitation period, but only as narrowed in the second draft to employees at the manager level and above. I want to be clear that a broader scope covering all AHT employees remains unacceptable to the Executive. Dr. Elliston's role as COO will involve meaningful interaction with senior operational leaders, and the manage

**Customer/Partner Non-Solicitation (12 Months):** Dr. Elliston continues to maintain that the 12-month customer/partner non-solicitation must be limited to customers and partners with whom the Executive had "material contact" during the last 24 months of employment. We note that the second draft incorporates the "material contact" concept but does not yet include a definition of that term. We would request that the

**Garden-Leave Payment ($287,500):** One remaining point that is important to Dr. Elliston. We would like the garden-leave payment of $287,500 (representing 50% of the $575,000 base salary) to be payable in a lump sum within 30 days of the date of termination, rather than in installments over the 12-month restricted period. This is important to Dr. Elliston for liquidity and certainty purposes — he should not be plac

We believe we are close to alignment on the full restrictive covenant package. Catherine and I are hopeful that we can close the remaining gaps in the third draft and move toward finalization of the overall employment documentation. Please don't hesitate to call if it would be useful to discuss any of these points by phone before you begin the next revision.

Jonathan M. Pryce Partner Fielding & Rowe LLP One International Place, Suite 2600 Boston, MA 02110 Tel: (617) 555-4820 jpryce@fieldingrowellp.com

From: Devon Archer To: Jonathan M. Pryce Cc: Catherine A. Fielding ; Nadia Petrov ; Bernard Crawford Date: Thursday, September 8, 2022 2:15 PM EDT Subject: RE: Elliston Non-Competition Agreement — Revised Scope and Duration

I wanted to follow up on the status of your review of the second draft of the Employee Non-Competition Agreement, which we circulated on August 30, 2022. We are hoping to receive your second markup and any remaining comments on the restrictive covenant package so that we can move toward preparation of the third (and, ideally, near-final) draft.

As a reminder, the second draft already incorporates the following agreed revisions:

- Reduction of the non-competition period from 18 months to 12 months post-termination; - Narrowing of the industry scope to healthcare IT/SaaS companies with annual revenue exceeding $50 million operating in the United States; - Limitation of the customer/partner non-solicitation (12-month duration) to customers and partners with whom the Executive had material contact during the last 24 months of employment.

AHT's position remains firm on the 18-month employee non-solicitation at the manager-level-and-above threshold. As we discussed, this represents a meaningful compromise from the original draft, which covered all AHT employees, and the Company views this as appropriately tailored to protect its legitimate interest in retaining senior operational talent.

On the garden-leave payment of $287,500 (50% of base salary), the payment amount is confirmed and consistent with the requirements of the Massachusetts Noncompetition Agreement Act (M.G.L. c. 149, § 24L). The question of payment timing and structure — specifically, lump sum versus installment payments over the 12-month restricted period — is still subject to further discussion with the client and with our tax counsel

We would appreciate it if you could include any remaining comments on the restrictive covenant package — including the Non-Competition Agreement, the corresponding provisions in the Employment Agreement, and Schedule A (Prior Inventions Disclosure Form) — with your second markup so that we can address everything comprehensively in the next draft.

Please let me know if you have any questions or if a call would be helpful.

Devon Archer Partner Calderwood & Harkness LLP One Federal Street, 35th Floor Boston, MA 02110 Tel: (617) 555-7100 darcher@calderwoodharkness.com

Matter No. 1010-00004 / Client No. 81-30294

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From: Devon Archer To: Bernard Crawford ; Nadia Petrov Date: Wednesday, August 31, 2022 9:22 AM EDT Subject: FW: Elliston Non-Competition Agreement — Revised Scope and Duration [INTERNAL — DO NOT FORWARD]

ATTORNEY-CLIENT PRIVILEGED / WORK PRODUCT — DO NOT FORWARD OUTSIDE CALDERWOOD & HARKNESS

Forwarding the below exchange with Fielding & Rowe for your review and internal discussion. A few thoughts before we hear back from F&R on the second draft we sent yesterday:

**On the 12-month non-compete duration:** I think conceding on the reduction from 18 months to 12 months was the right call. Nadia's July 25 memo on Massachusetts Noncompetition Agreement Act compliance made it clear that the statute effectively creates a 12-month presumptive maximum, and attempting to enforce an 18-month covenant would have been an uphill battle under MA law. We're on much firmer ground at 12 months

**On industry scope:** F&R's push to narrow the industry scope to "healthcare IT/SaaS companies with >$50M annual revenue operating in the United States" is reasonable and, frankly, more defensible than the broader "healthcare services" language we had in the first draft. I've already discussed this with Aaron Whitfield and Lisa Murakami at AHT, and the client has signed off on this narrowing in principle. The $50 mi

**On employee non-solicitation:** This is where AHT wants to hold firm. The 18-month period, limited to manager level and above, is the compromise position. Thomas R. Glenwood and the Board compensation committee at Ridgeline Capital Partners view retention of senior operational talent as critical given AHT's growth trajectory and the ~620-person workforce. I don't think we should concede further on duration here. Na

**On garden-leave payment structure:** The $287,500 amount (50% of base) meets the statutory floor, so we're fine there. Nadia, can you check with Gregory Tan on whether a lump-sum garden-leave payment creates any Section 409A issues versus installment payments over the restricted period? F&R will almost certainly push for a lump sum, and I want to be prepared with a position on that before they come back to us.

**One other flag:** Sandra Okafor raised a good point in our last team call — we need to make sure the non-compete definition of "competing business" aligns with the change in control carve-out for Ridgeline Capital Partners affiliates in the Employment Agreement. Specifically, Ridgeline portfolio companies in adjacent healthcare spaces should not inadvertently restrict Dr. Elliston if he moves to another Ridgeline-a

Let's connect tomorrow to align before F&R sends their markup.

Matter No. 1010-00004 / Client No. 81-30294

ATTORNEY-CLIENT PRIVILEGED / WORK PRODUCT — CONFIDENTIAL

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From: Devon Archer To: Catherine A. Fielding ; Jonathan M. Pryce Cc: Nadia Petrov ; Bernard Crawford Date: Tuesday, August 30, 2022 5:30 PM EDT Subject: RE: Elliston Non-Competition Agreement — Revised Scope and Duration

Please find attached the second draft of the Employee Non-Competition Agreement (dated August 30, 2022), marked against the first draft (August 5, 2022). The second draft of the Executive Employment Agreement is being transmitted separately under formal cover letter today.

Below is a summary of the key changes incorporated into the second draft of the Non-Competition Agreement:

1. **Non-Competition Period (Section 2(a)):** Reduced from 18 months to 12 months post-termination, consistent with the Massachusetts Noncompetition Agreement Act (M.G.L. c. 149, § 24L) and as requested in your August 19 comments.

2. **Industry Scope (Section 2(a)(i)):** Narrowed from "healthcare services" to "healthcare IT/SaaS companies with annual revenue exceeding $50 million operating in the United States." The broader "healthcare services" language from the first draft has been removed.

3. **Employee Non-Solicitation (Section 2(b)):** Duration maintained at 18 months post-termination. However, the scope has been narrowed from all AHT employees to employees at the manager level and above. This represents a meaningful compromise from the first draft and reflects the Company's legitimate interest in protecting its senior operational talent while addressing your concern regarding the breadth of the orig

4. **Customer/Partner Non-Solicitation (Section 2(c)):** 12 months post-termination, now limited to customers and partners with whom the Executive had material contact during the last 24 months of employment. This incorporates your requested "material contact" limitation.

5. **Garden-Leave Payment (Section 3):** Confirmed at 50% of base salary ($575,000 × 50% = $287,500), payable during the restricted period as required by the statute. The payment structure (lump sum versus installments over the 12-month restricted period) remains an open item, and we expect to have a position on this shortly following consultation with our tax counsel.

6. **Confidentiality and Non-Disclosure (Section 4):** Retained in perpetuity with standard carve-outs for legally compelled disclosure, consistent with the first draft. No changes.

7. **Invention Assignment (Section 5):** Retained without substantive changes. Schedule A (Prior Inventions Disclosure Form) is to be completed by Dr. Elliston prior to execution.

These revisions reflect a collaborative effort to find middle ground on the restrictive covenant package, and we believe the second draft represents a commercially reasonable framework. We would ask that you confirm agreement on the revised terms or identify any remaining issues so that we can incorporate everything into a third (near-final) draft.

We look forward to receiving your markup and comments. As always, happy to discuss by phone at your convenience.

Devon Archer Partner Calderwood & Harkness LLP One Federal Street, 35th Floor Boston, MA 02110 Tel: (617) 555-7100 darcher@calderwoodharkness.com

Matter No. 1010-00004 / Client No. 81-30294

CONFIDENTIALITY NOTICE: This email message and any attachments are intended solely for the use of the addressee(s) named above and may contain information that is privileged, confidential, and/or exempt from disclosure under applicable law. If you are not the intended recipient, you are hereby notified that any dissemination, distribution, or copying of this communication is strictly prohibited. If you have received

From: Catherine A. Fielding To: Devon Archer Cc: Jonathan M. Pryce ; Nadia Petrov Date: Thursday, August 25, 2022 11:03 AM EDT Subject: RE: Elliston Non-Competition Agreement — Revised Scope and Duration

Thank you for your response on August 23. We appreciate the constructive approach, and I want to acknowledge the meaningful movement on several key points.

**Non-Compete Duration (12 Months):** We are pleased to confirm that the reduction to 12 months is acceptable and, frankly, essential from Dr. Elliston's perspective. As you know, the Massachusetts Noncompetition Agreement Act effectively caps enforceable non-compete duration at 12 months, and anything longer would have presented a significant obstacle to reaching agreement on the overall employment package. We view

**Industry Scope:** We accept the narrowing to "healthcare IT/SaaS companies with annual revenue exceeding $50 million operating in the United States." However, we want to ensure the definition of "competing business" in the agreement clearly excludes general healthcare consulting firms, hospital systems, and pharmaceutical companies. Dr. Elliston's background at Pinnacle Care Systems, Inc. (1500 Research Boulevard,

**Employee Non-Solicitation (18 Months, Manager Level and Above):** We are willing to accept the 18-month duration for employee non-solicitation, but only if the scope is limited to employees at the manager level and above, as you have proposed. A blanket restriction covering all AHT employees — including junior staff, administrative personnel, and entry-level positions — is overbroad and, in our view, likely unenfor

**Customer/Partner Non-Solicitation:** The 12-month duration is acceptable. However, we continue to insist that the restriction be limited to customers and partners with whom the Executive had "material contact" during the final 24 months of employment. A blanket prohibition on soliciting any AHT customer or partner — regardless of whether Dr. Elliston ever interacted with them — is unreasonable and would not survive

**Garden-Leave Payment:** We confirm that the $287,500 figure (50% of $575,000 base salary) is acceptable as to amount. On the question of payment timing, Dr. Elliston has a strong preference for a lump-sum payment at or near the time of termination rather than installment payments spread over the 12-month restricted period. A lump-sum structure provides certainty and avoids the risk of payment disputes during the re

We look forward to reviewing the second draft of the Non-Competition Agreement and will provide our markup promptly.

Catherine A. Fielding Senior Partner Fielding & Rowe LLP One International Place, Suite 2600 Boston, MA 02110 Tel: (617) 555-4800 cfielding@fieldingrowellp.com

From: Devon Archer To: Catherine A. Fielding Cc: Jonathan M. Pryce ; Nadia Petrov ; Bernard Crawford Date: Tuesday, August 23, 2022 3:45 PM EDT Subject: RE: Elliston Non-Competition Agreement — Revised Scope and Duration

Thank you for your detailed comments of August 19 on the non-compete and restrictive covenant provisions. We have reviewed your positions carefully, and I have consulted with our client, including Aaron Whitfield (CEO) and Lisa Murakami (General Counsel) at Arbor Health Technologies.

After those discussions, I can confirm that Calderwood & Harkness, on behalf of AHT, is prepared to move on the following points:

**Non-Competition Duration:** AHT is prepared to reduce the non-competition period from 18 months to 12 months post-termination. We recognize this aligns with the Massachusetts Noncompetition Agreement Act's 12-month standard (M.G.L. c. 149, § 24L), and it is also consistent with the Broadleaf Compensation Advisors LLC peer benchmarking data, which indicated that 12-month non-competes are market-standard for COO-leve