Devon,
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 limitation and the 12-month duration as a package, and any broadening of the industry definition would require us to revisit duration.
**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 manager-level-and-above threshold appropriately reflects the scope of relationships that warrant protection. Any attempt to broaden this back to the full ~620-person workforce would be a non-starter.
**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 third draft include a clear and workable definition of "material contact" — we would suggest something along the lines of interaction in person, by telephone, videoconference, or in writing for the purpose of maintaining, furthering, or establishing a business relationship on behalf of the Company. We are happy to discuss specific language.
**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 placed in a position where garden-leave payments are subject to ongoing administrative processes or potential disputes during the restricted period. We understand there may be tax-timing considerations and are happy to discuss the mechanics, but the lump-sum structure is a strong preference.
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.
Best regards,
Jonathan M. Pryce Partner Fielding & Rowe LLP One International Place, Suite 2600 Boston, MA 02110 Tel: (617) 555-4820 jpryce@fieldingrowellp.com
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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
Jonathan, Catherine,
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. Gregory Tan on our side has been reviewing whether a lump-sum garden-leave payment creates any issues under Section 409A of the Internal Revenue Code, and we expect to have guidance on that shortly.
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.
Best regards,
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
Bernard, Nadia —
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 million revenue threshold effectively captures AHT's actual competitive set without overreaching.
**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. Nadia — your August 8 memo on non-solicitation enforceability under MA common law supports the position that 18 months for a targeted group of senior employees is defensible, correct? Let's make sure we're buttoned up on that.
**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-affiliated entity post-termination. Let's review the current drafting on that and tighten it up if needed.
Let's connect tomorrow to align before F&R sends their markup.
— Devon
Matter No. 1010-00004 / Client No. 81-30294
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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
Catherine, Jonathan,
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 original restriction.
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.
Best regards,
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: 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
Devon,
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 this as now resolved.
**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, Suite 600, Rockville, MD 20850) is specifically in healthcare IT and operations — his experience in that sector should not be leveraged to impose a restriction that extends into unrelated segments of the healthcare industry. We will review the specific definitional language in the second draft carefully on this point.
**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 unenforceable under Massachusetts common law. Dr. Elliston's role as COO would involve direct interaction primarily with senior operational leaders, and the restriction should be calibrated to reflect that reality. We consider this agreed in principle, subject to review of the drafting.
**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 judicial scrutiny. We would request that the second draft include a clear definition of "material contact" so that both parties understand the boundaries of this restriction.
**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 restricted period. We understand there may be tax-related considerations and are prepared to discuss those, but this is an important point for the Executive.
We look forward to reviewing the second draft of the Non-Competition Agreement and will provide our markup promptly.
Regards,
Catherine A. Fielding Senior Partner Fielding & Rowe LLP One International Place, Suite 2600 Boston, MA 02110 Tel: (617) 555-4800 cfielding@fieldingrowellp.com
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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
Catherine,
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-level executives in the healthcare IT sector. We are comfortable making this concession.
**Industry Scope:** AHT is prepared to narrow the industry scope from the broader "healthcare services" language in the first draft to "healthcare IT/SaaS companies with annual revenue exceeding $50 million operating in the United States." We believe this appropriately captures AHT's competitive landscape while addressing your concern that the original language was overbroad.
**Employee Non-Solicitation:** AHT is not prepared to reduce the employee non-solicitation period below 18 months. However, the Company is willing to limit the scope to employees at the manager level and above. This is a meaningful concession from the first draft, which covered all approximately 620 AHT employees, and we believe it strikes the right balance between protecting the Company's interest in retaining key operational talent and accommodating Dr. Elliston's concerns about the breadth of the restriction.
**Customer/Partner Non-Solicitation:** AHT insists on a 12-month customer and partner non-solicitation but accepts the limitation to customers and partners with whom the Executive had material contact during the last 24 months of employment. We will include appropriate definitional language in the second draft.
**Garden-Leave Payment:** Confirmed at 50% of base salary ($575,000 × 50% = $287,500), consistent with the requirements of the Massachusetts Noncompetition Agreement Act. The payment timing and structure (lump sum vs. installments) will be addressed in the second draft.
We plan to incorporate these changes into the second draft of the Employee Non-Competition Agreement, which we expect to circulate by August 30, 2022, alongside the second draft of the Executive Employment Agreement.
Please let me know if you have any questions in the interim.
Best regards,
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: Nadia Petrov To: Devon Archer ; Bernard Crawford Date: Monday, August 22, 2022 10:15 AM EDT Subject: FW: Elliston Non-Competition Agreement — Scope and Duration — Initial Comments [INTERNAL]
ATTORNEY-CLIENT PRIVILEGED / WORK PRODUCT — DO NOT FORWARD OUTSIDE CALDERWOOD & HARKNESS
Devon, Bernard —
Forwarding Catherine Fielding's August 19 initial comments below with my analysis and recommendations. I've organized my thoughts by issue:
**1. Non-Compete Duration (18 → 12 months):** I recommend we concede on this. As detailed in my July 25, 2022 memo on Massachusetts Noncompetition Agreement Act compliance, the statute (M.G.L. c. 149, § 24L) effectively creates a 12-month ceiling for enforceable non-competes. Massachusetts courts have been increasingly skeptical of anything longer, and an 18-month period would invite enforceability challenges that could jeopardize the entire covenant. Moving to 12 months puts us on solid statutory footing and eliminates a significant litigation risk for the Company.
**2. Industry Scope:** I agree that the "healthcare services" language in the first draft was too broad. Dr. Elliston's background is specifically in healthcare IT and operations — he served as SVP of Operations at Pinnacle Care Systems, Inc., which is a healthcare IT company. A restriction purporting to cover all of "healthcare services" — a $4 trillion industry encompassing hospitals, pharmaceuticals, insurance, medical devices, and everything in between — would almost certainly be deemed unreasonable in scope by a Massachusetts court applying the reasonableness standard. I recommend narrowing to "healthcare IT/SaaS companies with annual revenue exceeding $50 million operating in the United States." This captures AHT's actual competitive landscape (mid-to-large healthcare IT/SaaS platforms) without overreaching.
**3. Employee Non-Solicitation (18 months):** The 18-month duration is defensible under Massachusetts common law. Importantly, the Massachusetts Noncompetition Agreement Act applies only to non-competition agreements, not to non-solicitation covenants — so we are not constrained by the 12-month statutory framework on this point. That said, I recommend accepting the manager-level-and-above limitation as a reasonable narrowing. A covenant covering all ~620 AHT employees, including junior and administrative staff, would be difficult to justify as necessary to protect the Company's legitimate business interests. Limiting the scope to manager-level employees strengthens enforceability significantly. My August 8, 2022 memo on Massachusetts non-solicitation enforceability supports this approach — courts consistently look for a nexus between the executive's role and the employees covered by the restriction.
**4. Garden-Leave Payment:** The $287,500 figure (50% of $575,000 base salary) satisfies the statutory requirement for "garden leave or other mutually-agreed-upon consideration" under M.G.L. c. 149, § 24L. The statute permits alternatives to garden-leave (e.g., other mutually agreed consideration), but a straight 50%-of-base-salary garden-leave payment is the cleanest and most defensible approach. I recommend we stick with this structure.
**Flag for Devon:** We should coordinate with Gregory Tan in the Tax group on whether the payment timing (lump sum vs. installments over the restricted period) has any Section 409A implications under the Internal Revenue Code. If F&R pushes for a lump sum — which I expect they will — we need to be prepared with a view on whether that creates deferred compensation issues. I'll reach out to Gregory today to get his preliminary take.
**5. Recommendation:** I recommend Devon raise the proposed concessions (12-month non-compete, narrowed industry scope, manager-level employee non-solicitation) with Aaron Whitfield and Lisa Murakami at AHT and seek client authorization before responding to Fielding & Rowe. I believe these concessions are well-supported legally and improve our enforceability position across the board.
Happy to discuss.
— Nadia
Nadia Petrov Senior Associate Calderwood & Harkness LLP One Federal Street, 35th Floor Boston, MA 02110 Tel: (617) 555-7145 npetrov@calderwoodharkness.com
Matter No. 1010-00004 / Client No. 81-30294
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From: Catherine A. Fielding To: Devon Archer Cc: Jonathan M. Pryce ; Nadia Petrov ; Bernard Crawford Date: Friday, August 19, 2022 6:12 PM EDT Subject: Elliston Non-Competition Agreement — Scope and Duration — Initial Comments
Devon,
We have completed our review of the non-competition and restrictive covenant provisions in the first draft of the Employee Non-Competition Agreement (dated August 5, 2022) and the corresponding provisions in the first draft of the Executive Employment Agreement. As you know, we are transmitting our full markup of the Employment Agreement separately (you should have received the blackline earlier today), but given the importance of the restrictive covenant issues to Dr. Elliston, we wanted to address these provisions in this parallel exchange so that we can work toward resolution efficiently.
Below are Dr. Elliston's principal concerns and positions:
**1. Non-Competition Period (Section 2(a)):** The proposed 18-month post-termination non-competition period is excessive and exceeds the 12-month standard established by the Massachusetts Noncompetition Agreement Act (M.G.L. c. 149, § 24L). Dr. Elliston will not agree to a non-competition period exceeding 12 months. This is a firm position, and I want to be transparent that it is a threshold issue for the Executive. The statute creates a clear 12-month framework, and we see no basis for departing from that standard here.
**2. Industry Scope (Section 2(a)(i)):** The current definition of "competing business" encompasses "healthcare services" broadly. This is unacceptably overbroad. Dr. Elliston's expertise — developed over a career that includes his most recent position as Senior Vice President of Operations at Pinnacle Care Systems, Inc. (1500 Research Boulevard, Suite 600, Rockville, MD 20850) — is specifically in healthcare IT and operations. Arbor Health Technologies is a healthcare IT/SaaS company, and the restriction should be tailored to that sector. A restriction covering all "healthcare services" would effectively prevent Dr. Elliston from working anywhere in a $4 trillion industry that includes hospitals, pharmaceutical companies, medical device manufacturers, health insurers, and countless other businesses that have nothing to do with AHT's competitive landscape.
We propose limiting the industry scope to healthcare IT and SaaS companies of meaningful size — specifically, those with annual revenue exceeding $50 million operating in the United States. This captures AHT's actual competitors while respecting the principle that a non-compete must be reasonably limited in scope.
**3. Employee Non-Solicitation (Section 2(b)):** The proposed 18-month employee non-solicitation covering all AHT employees (approximately 620 individuals) is unreasonable. As COO, Dr. Elliston would interact primarily with senior operational leaders — not with every employee in the organization. A non-solicitation covenant that prevents him from hiring any former AHT employee, including junior staff and administrative personnel with whom he may have had no meaningful working relationship, is overbroad and would likely be unenforceable under Massachusetts common law.
We propose that the employee non-solicitation be limited to employees at the manager level and above with whom Dr. Elliston would have a direct working relationship in his capacity as Chief Operating Officer.
**4. Customer/Partner Non-Solicitation (Section 2(c)):** The 12-month duration for customer and partner non-solicitation is acceptable. However, a blanket prohibition on soliciting any AHT customer or partner is unreasonable and unnecessary. The restriction should be limited to customers and partners with whom the Executive had "material contact" during the final 24 months of employment. Dr. Elliston should not be restricted from engaging with entities he never interacted with on behalf of the Company. We would request that the agreement include a clear definition of "material contact."
**5. Garden-Leave Payment (Section 3):** We confirm that the proposed garden-leave amount of $287,500 (representing 50% of the $575,000 base salary) is adequate under the Massachusetts Noncompetition Agreement Act. However, Dr. Elliston has a strong preference for receiving this payment as a lump sum at or near the time of termination rather than in installments spread over the restricted period. We would like to discuss the payment structure and timing in connection with the next draft.
**6. Confidentiality and Non-Disclosure (Section 4):** We have no objection to the perpetual duration of the confidentiality and non-disclosure provisions, provided the standard carve-outs for legally compelled disclosure remain as drafted. The current language on this point is acceptable.
**7. Invention Assignment (Section 5):** No substantive objections to the invention assignment provisions. Dr. Elliston will complete Schedule A (Prior Inventions Disclosure Form) prior to execution of the agreement.
Devon, I want to emphasize that the restrictive covenant provisions are a high priority for Dr. Elliston. Reaching agreement on reasonable and enforceable terms for these covenants is a prerequisite to moving forward with the overall employment package, including the compensation and equity terms under the AHT 2020 Equity Incentive Plan (as amended May 2021). We are confident that with good-faith negotiation, the parties can arrive at a framework that appropriately protects AHT's legitimate business interests while respecting Dr. Elliston's ability to pursue his career.
We look forward to your response and to receiving the second draft incorporating revisions to the restrictive covenant provisions.
Regards,
Catherine A. Fielding Senior Partner Fielding & Rowe LLP One International Place, Suite 2600 Boston, MA 02110 Tel: (617) 555-4800 cfielding@fieldingrowellp.com