1010-00004 · Arbor Health Technologies Inc · Transaction Documents/Employment Agreement

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EXECUTIVE EMPLOYMENT AGREEMENT

Third Draft — Near-Final — September 16, 2022

CONFIDENTIAL — DRAFT — Subject to Further Review and Negotiation

Drafted by Calderwood & Harkness LLP, One International Place, Suite 3400, Boston, MA 02110

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This Executive Employment Agreement (this "Agreement") is entered into as of [●], 2022 (the "Effective Date"), by and between:

ARBOR HEALTH TECHNOLOGIES INC., a Delaware corporation with its principal offices at 400 Brattle Commerce Park, Suite 1200, Cambridge, MA 02138 (the "Company"),

and

DR. MARCUS J. ELLISTON, an individual residing at 87 Laurel Hill Road, Wellesley, MA 02481 (the "Executive").

The Company and the Executive are each referred to herein individually as a "Party" and collectively as the "Parties."

RECITALS

WHEREAS, the Company is a healthcare services and software company that develops and provides cloud-based clinical workflow optimization and revenue cycle management solutions delivered on a software-as-a-service ("SaaS") basis to healthcare systems, physician groups, and related organizations throughout the United States;

WHEREAS, the Company desires to employ the Executive as its Chief Operating Officer, and the Executive desires to accept such employment, on the terms and conditions set forth herein;

WHEREAS, the Company's Board of Directors (the "Board"), upon the recommendation of the Compensation Committee of the Board (the "Compensation Committee"), has reviewed and approved the terms and conditions of this Agreement;

WHEREAS, Ridgeline Capital Partners, LP ("Ridgeline"), through its affiliate Ridgeline Capital Partners Fund IV, LP, is the majority equity holder of the Company, owning approximately sixty-eight percent (68%) of the Company's outstanding equity on a fully diluted basis; and

WHEREAS, this Agreement supersedes all prior negotiations, representations, discussions, term sheets, letters of intent, and agreements, whether written or oral, relating to the Executive's employment by the Company.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

ARTICLE I — EMPLOYMENT AND TERM

Section 1.1 — Employment.

The Company hereby agrees to employ the Executive, and the Executive hereby agrees to be employed by the Company, upon the terms and conditions set forth in this Agreement. The Executive's employment with the Company shall commence on November 1, 2022 (the "Start Date"). For the avoidance of doubt, the Executive shall not be deemed to be an employee of the Company, and no obligations under this Agreement shall arise with respect to either Party, until the Start Date.

Section 1.2 — Title and Position.

(a) Title. The Executive shall serve as Chief Operating Officer ("COO") of the Company. The Executive shall have such duties, responsibilities, and authority as are customarily associated with the position of Chief Operating Officer of a company of comparable size and scope, and as may be further described in Exhibit A attached hereto, which is incorporated herein by reference.

(b) Reporting. The Executive shall report directly to the Company's Chief Executive Officer (currently Priya Chandrasekaran) (the "CEO"). The Executive shall be a member of the Company's Executive Leadership Team and shall attend meetings of the Board upon invitation of the Board or the CEO, as appropriate.

(c) Duties and Responsibilities. The Executive's specific duties and responsibilities, including oversight of business functions, operational strategy, and direct reports, are set forth in Exhibit A attached hereto. The Board and the CEO reserve the right to modify the Executive's duties from time to time, consistent with the Executive's position as Chief Operating Officer; provided, that any material diminution in the Executive's duties, title, authority, or responsibilities shall constitute "Good Reason" as defined in Section 4.3 of this Agreement.

(d) Devotion of Time. The Executive shall devote substantially all of the Executive's business time, attention, skill, and energy to the affairs of the Company, and shall use the Executive's best efforts to faithfully and diligently perform the duties assigned hereunder. Notwithstanding the foregoing, the Executive may, to the extent that such activities do not materially interfere with the performance of the Executive's duties hereunder:

(i) serve on the board of directors of up to two (2) for-profit entities that are not Competitive Businesses (as defined in the Restrictive Covenant Agreement), provided that such service is approved in advance by the Board, which approval shall not be unreasonably withheld;

(ii) serve on boards of, or participate in activities of, charitable, civic, educational, religious, or not-for-profit organizations; and

(iii) manage the Executive's personal investments and affairs.

Section 1.3 — Initial Term and Renewal.

(a) Initial Term. The initial term of the Executive's employment under this Agreement shall be three (3) years, commencing on the Start Date and expiring on the third anniversary thereof, unless earlier terminated in accordance with Article IV (the "Initial Term").

(b) Renewal Terms. Following the expiration of the Initial Term, this Agreement shall automatically renew for successive periods of one (1) year each (each, a "Renewal Term"), unless either Party provides the other Party with written notice of non-renewal at least ninety (90) days prior to the expiration of the then-current Initial Term or Renewal Term, as applicable. If such notice of non-renewal is given, employment shall terminate at the end of the then-current term, subject to the provisions of Section 4.6 hereof.

(c) Employment Period. The Initial Term and any Renewal Terms are collectively referred to herein as the "Employment Period." Notwithstanding the foregoing, the Executive's employment hereunder is subject to earlier termination in accordance with the provisions of Article IV.

Section 1.4 — Principal Place of Employment.

The Executive's principal place of employment shall be the Company's offices located at 400 Brattle Commerce Park, Suite 1200, Cambridge, MA 02138, or such other location within thirty-five (35) miles thereof as the Company may designate from time to time. The Executive acknowledges that the performance of the Executive's duties may require reasonable business travel, both domestically and internationally, as determined by the CEO or the Board consistent with the needs of the Company's business.

ARTICLE II — COMPENSATION

Section 2.1 — Base Salary.

(a) Amount. During the Employment Period, the Company shall pay the Executive an annual base salary of Five Hundred Seventy-Five Thousand Dollars ($575,000) (the "Base Salary"), payable in accordance with the Company's regular payroll practices and subject to all applicable withholdings and deductions required by law.

(b) Annual Review. The Base Salary shall be reviewed at least annually by the Board or the Compensation Committee, commencing with the first full fiscal year following the Start Date. The Base Salary may be increased from time to time in the sole discretion of the Board (or the Compensation Committee), but shall not be decreased without the Executive's prior written consent; provided, however, that the Base Salary may be reduced without the Executive's consent if such reduction is part of a company-wide reduction in base salaries of less than ten percent (10%) that applies equally and proportionally to all similarly situated senior executives of the Company. Any increase in Base Salary shall not serve to limit or reduce any other obligation of the Company under this Agreement.

Section 2.2 — Annual Bonus.

(a) Target Bonus. For each full fiscal year during the Employment Period, the Executive shall be eligible to earn an annual performance bonus (the "Annual Bonus") with a target amount equal to seventy-five percent (75%) of the Executive's then-current Base Salary (the "Target Bonus"). Based on the initial Base Salary, the Target Bonus equals Four Hundred Thirty-One Thousand Two Hundred Fifty Dollars ($431,250).

(b) Maximum Bonus. The maximum Annual Bonus payable to the Executive for any fiscal year shall not exceed one hundred fifty percent (150%) of the Target Bonus for such fiscal year. Based on the initial Base Salary, the maximum Annual Bonus equals Six Hundred Forty-Six Thousand Eight Hundred Seventy-Five Dollars ($646,875).

(c) Performance Metrics. The Annual Bonus shall be determined based on the achievement of individual performance objectives and Company-wide performance metrics (including, without limitation, revenue growth, EBITDA, customer retention, and operational milestones) established by the Board or the Compensation Committee in consultation with the CEO and communicated to the Executive within sixty (60) days after the start of each fiscal year. The Board (or the Compensation Committee) shall have sole discretion in determining the level of achievement of such performance metrics and the corresponding bonus amount, subject to the terms of this Section 2.2.

(d) Pro-Ration for Partial Year. The Annual Bonus for the fiscal year in which the Start Date falls shall be pro-rated based on the number of days of the Executive's active employment during such fiscal year divided by the total number of days in such fiscal year.

(e) Payment Timing. Annual Bonus payments, if any, shall be paid no later than March 15 of the calendar year following the close of the fiscal year to which the Annual Bonus relates, in compliance with the short-term deferral exception under Section 409A of the Internal Revenue Code of 1986, as amended (the "Code").

(f) Employment Requirement. Except as otherwise expressly provided in Article V (Severance and Change in Control Protections) or Section 4.5 (Death or Disability), the Executive must be actively employed by the Company on the date the Annual Bonus is paid in order to earn and receive such Annual Bonus. No partial or pro-rated bonus shall be payable upon termination of employment, except as set forth in Article V or Section 4.5.

Section 2.3 — Signing Bonus.

(a) Amount and Payment. In consideration of the Executive's acceptance of employment hereunder, the Company shall pay the Executive a one-time signing bonus in the amount of Two Hundred Fifty Thousand Dollars ($250,000) (the "Signing Bonus"), payable within thirty (30) days following the Start Date, less all applicable federal, state, and local tax withholdings and deductions.

(b) Clawback. In the event that the Executive voluntarily resigns without Good Reason (as defined in Section 4.3) or is terminated by the Company for Cause (as defined in Section 4.1), in either case within twenty-four (24) months following the Start Date, the Executive shall repay to the Company the Signing Bonus on a pro-rated basis. The amount to be repaid shall equal the Signing Bonus amount multiplied by a fraction, the numerator of which is twenty-four (24) minus the number of full calendar months of completed employment following the Start Date, and the denominator of which is twenty-four (24). The Executive hereby authorizes the Company to offset any repayment obligation under this Section 2.3(b) against any amounts otherwise payable to the Executive by the Company, to the fullest extent permitted by applicable law, including any Accrued Obligations or other final pay. Any remaining balance shall be payable by the Executive to the Company within thirty (30) days following the date of termination.

Section 2.4 — Equity Awards.

(a) Stock Options.

(i) Grant. As soon as practicable following the Start Date (and in no event later than thirty (30) days after the Start Date), the Company shall grant to the Executive nonqualified stock options (the "Options") to purchase shares of the Company's common stock representing one and one-quarter percent (1.25%) of the Company's fully diluted equity capitalization as of the date of grant, calculated in accordance with the Company's standard methodology for determining fully diluted share counts.

(ii) Exercise Price. The exercise price per share of the Options shall be equal to the fair market value of a share of the Company's common stock as of the date of grant, as determined by the Board in good faith, based on the most recent independent valuation of the Company's common stock (a "409A valuation").

(iii) Vesting. The Options shall vest and become exercisable as follows: twenty-five percent (25%) of the shares of common stock subject to the Options shall vest on the first anniversary of the Start Date (the "Cliff Date"), and the remaining seventy-five percent (75%) of the shares of common stock subject to the Options shall vest in equal monthly installments over the thirty-six (36)-month period following the Cliff Date, such that the Options shall be fully vested on the fourth anniversary of the Start Date, in each case subject to the Executive's continued employment with the Company through each applicable vesting date.

(iv) Award Agreement. The Options shall be governed by the terms and conditions of the AHT 2020 Equity Incentive Plan (as amended May 2021) (the "Plan") and a separate Stock Option Award Agreement to be entered into between the Company and the Executive on or promptly following the date of grant.

(b) Restricted Stock Units.

(i) Grant. As soon as practicable following the Start Date (and in no event later than thirty (30) days after the Start Date), the Company shall grant to the Executive restricted stock units (the "RSUs") representing one-half of one percent (0.50%) of the Company's fully diluted equity capitalization as of the date of grant.

(ii) Vesting. The RSUs shall vest in three (3) equal annual installments, with one-third (33.33%) of the RSUs vesting on each of the first, second, and third anniversaries of the Start Date, in each case subject to the Executive's continued employment with the Company through each applicable vesting date. Vested RSUs shall be settled in shares of the Company's common stock (or, at the Company's election, in cash) within thirty (30) days following each applicable vesting date.

(iii) Award Agreement. The RSUs shall be governed by the terms and conditions of the Plan and a separate Restricted Stock Unit Award Agreement to be entered into between the Company and the Executive on or promptly following the date of grant.

(i) All equity awards granted to the Executive pursuant to this Section 2.4 shall be subject in all respects to the terms and conditions of the Plan and the applicable award agreements. In the event of any conflict between this Agreement and the Plan or any award agreement, the terms of such Plan or award agreement shall control with respect to the equity award, except with respect to any acceleration provisions set forth in Sections 5.2 and 5.3 of this Agreement, which shall supersede any contrary provision in the Plan or award agreement.

(ii) The Executive acknowledges that all equity awards granted hereunder are subject to any applicable consent, approval, or co-investment requirements under the Amended and Restated Stockholders' Agreement of the Company, dated as of March 14, 2020, as amended from time to time (the "Stockholders' Agreement"), including any consent rights held by Helix Ventures Fund III, LP with respect to equity issuances under the Plan.

(iii) Accelerated vesting of unvested equity awards shall be provided as set forth in Sections 5.2 and 5.3 of this Agreement, as applicable, and as further set forth in Section 4.5 hereof in the event of the Executive's death or Disability.

ARTICLE III — BENEFITS AND PERQUISITES

Section 3.1 — Health and Welfare Benefits.

During the Employment Period, the Executive and the Executive's eligible dependents shall be eligible to participate in the Company's executive health benefit plans, including medical, dental, and vision insurance coverage, on terms no less favorable than those provided to other senior executives of the Company. The Company's estimated contribution toward the cost of such coverage for the Executive and the Executive's eligible dependents is approximately Two Thousand One Hundred Fifty Dollars ($2,150) per month, based on current plan year rates. The Executive's participation in such plans shall be subject to the terms, conditions, and eligibility requirements of the applicable plan documents, which may be amended or modified by the Company from time to time.

Section 3.2 — Life Insurance.

The Company shall provide, at its expense, life insurance coverage for the benefit of the Executive in an amount equal to two times (2×) the Executive's then-current Base Salary (i.e., One Million One Hundred Fifty Thousand Dollars ($1,150,000) based on the initial Base Salary). The Executive shall have the right to designate the beneficiary or beneficiaries of such life insurance coverage. Such coverage shall be provided under the Company's group life insurance program or, if necessary, through an individual policy obtained by the Company, and shall be subject to the terms and conditions of the applicable insurance policy.

Section 3.3 — Disability Insurance.

During the Employment Period, the Executive shall be eligible to participate in the Company's long-term disability insurance program, which shall provide coverage at a level equal to sixty percent (60%) of the Executive's then-current Base Salary, subject to any applicable caps imposed by the insurance carrier. Participation in the disability insurance program shall be subject to the terms and conditions of the applicable insurance policy and plan documents, as may be amended from time to time.

Section 3.4 — Retirement Benefits.

The Executive shall be eligible to participate in the Company's 401(k) retirement savings plan on the same terms and conditions as are available to other employees of the Company. The Company shall make matching contributions to the Executive's 401(k) account in an amount equal to one hundred percent (100%) of the Executive's elective deferrals up to four percent (4%) of the Executive's eligible compensation, subject to the applicable contribution limits imposed by the Internal Revenue Service under Sections 401(a)(17), 402(g), and 415 of the Code. The Executive's participation in the 401(k) plan shall be subject to the terms and conditions of the applicable plan document.

Section 3.5 — Paid Time Off.

The Executive shall be entitled to twenty-five (25) days of paid time off ("PTO") per calendar year, in addition to all Company-recognized holidays. PTO for partial calendar years of employment shall be pro-rated based on the number of days of employment during such calendar year. The use and accrual of PTO shall be subject to the Company's PTO policies as in effect from time to time, including any applicable accrual caps and carryover provisions.

Section 3.6 — Executive Perquisites.

(a) Professional Development Allowance. During the Employment Period, the Company shall provide the Executive with an annual professional development allowance of Fifteen Thousand Dollars ($15,000) per calendar year. Such allowance may be used for attendance at professional conferences, industry events, continuing education programs, executive coaching, professional association memberships, and related expenses. The allowance shall be subject to the Company's standard expense reimbursement procedures and documentation requirements.

(b) Executive Physical Exam. The Executive shall be eligible to participate in the Company's executive physical exam program, which provides an annual comprehensive health assessment at a facility designated or approved by the Company, at the Company's expense.

Section 3.7 — Relocation.

In the event that the Executive incurs expenses in connection with relocating to a residence within reasonable commuting distance of the Company's principal offices, the Company shall reimburse the Executive for reasonable and documented relocation expenses in an aggregate amount not to exceed Seventy-Five Thousand Dollars ($75,000). Eligible expenses shall include moving costs, temporary housing (for a period not to exceed sixty (60) days), and customary closing costs associated with the sale and/or purchase of a residence. The Parties acknowledge that, as of the date hereof, the Executive currently resides in Wellesley, Massachusetts, and relocation is not expected to be necessary.

Section 3.8 — Business Expenses.

The Company shall reimburse the Executive for all reasonable and documented business expenses incurred by the Executive in the performance of the Executive's duties hereunder, in accordance with the Company's expense reimbursement policies as in effect from time to time. The Executive shall submit expense reports and supporting documentation in accordance with such policies. Subject to Section 409A of the Code, all reimbursements of expenses incurred during a given calendar year shall be paid no later than December 31 of the calendar year following the calendar year in which such expense was incurred. The amount of expenses eligible for reimbursement in any calendar year shall not affect the expenses eligible for reimbursement in any other calendar year, and the right to reimbursement shall not be subject to liquidation or exchange for another benefit.

ARTICLE IV — TERMINATION OF EMPLOYMENT

Section 4.1 — Termination for Cause.

(a) Right to Terminate. The Company may terminate the Executive's employment for Cause at any time, effective upon delivery of written notice to the Executive specifying in reasonable detail the grounds for such termination.

(b) Definition of "Cause." For purposes of this Agreement, "Cause" shall mean the occurrence of any of the following:

(i) the Executive's conviction of, or plea of guilty or nolo contendere to, a felony or any crime involving fraud, dishonesty, or moral turpitude under the laws of the United States or any state thereof;

(ii) the Executive's willful and material breach of this Agreement or any material written policy of the Company, which breach, if capable of cure, remains uncured for a period of thirty (30) days after written notice from the Company to the Executive specifying in reasonable detail the nature of such breach;

(iii) the Executive's willful misconduct or gross negligence in the performance of the Executive's duties hereunder that is materially injurious to the Company, monetarily or otherwise;

(iv) any material act of fraud, embezzlement, or misappropriation by the Executive against the Company or any of its subsidiaries or affiliates; or

(v) the Executive's willful and continued refusal to perform the lawful duties reasonably consistent with the Executive's position as Chief Operating Officer after a written demand for performance has been delivered to the Executive by the Board, which refusal is not cured within fifteen (15) days after such written demand.

For purposes of this Section 4.1(b), no act or failure to act by the Executive shall be deemed "willful" if done, or omitted to be done, by the Executive in good faith and with the reasonable belief that such action or omission was in the best interests of the Company.

(c) Board Approval. Any termination of the Executive's employment for Cause shall be subject to prior review and approval by a majority of the members of the Board (excluding the Executive, if the Executive is then serving as a member of the Board), at a meeting duly called and held for such purpose, at which the Executive shall have been given reasonable notice and an opportunity (together with the Executive's counsel) to be heard.

(d) Consequences. Upon a termination of the Executive's employment for Cause, the Executive shall be entitled only to the Accrued Obligations (as defined in Section 4.7). The Executive shall not be entitled to any severance payments or benefits, any Annual Bonus for the fiscal year in which such termination occurs, or any accelerated vesting of equity awards. The Signing Bonus clawback provisions of Section 2.3(b) shall apply if such termination for Cause occurs within twenty-four (24) months following the Start Date.

Section 4.2 — Termination Without Cause.

The Company may terminate the Executive's employment without Cause at any time, for any reason or no reason, upon not less than thirty (30) days' prior written notice to the Executive (or, at the Company's election, payment of thirty (30) days of Base Salary in lieu of notice). Upon a termination of the Executive's employment by the Company without Cause, the Executive shall be entitled to the Accrued Obligations and the severance benefits set forth in Section 5.2 of this Agreement (or, if such termination occurs during the CIC Protection Period, the enhanced severance benefits set forth in Section 5.3 of this Agreement), in each case subject to the Executive's satisfaction of the Release requirement set forth in Section 5.1.

Section 4.3 — Resignation for Good Reason.

(a) Right to Resign. The Executive may resign from employment with the Company for Good Reason, subject to the notice and cure procedures set forth in Section 4.3(c) below.

(b) Definition of "Good Reason." For purposes of this Agreement, "Good Reason" shall mean the occurrence, without the Executive's prior written consent, of any of the following events:

(i) a material diminution in the Executive's Base Salary, other than as part of a company-wide reduction of less than ten percent (10%) that applies equally and proportionally to all similarly situated senior executives of the Company;

(ii) a material diminution in the Executive's title, authority, duties, or responsibilities, including, without limitation, a change in the Executive's reporting line such that the Executive no longer reports directly to the CEO of the Company;

(iii) the relocation of the Executive's principal place of employment by more than thirty-five (35) miles from Cambridge, Massachusetts, without the Executive's prior written consent;

(iv) a material breach by the Company of any material provision of this Agreement; or

(v) the failure by the Company to nominate or appoint the Executive to any position, committee membership, or similar role expressly specified in this Agreement or in Exhibit A.

(i) the Executive must provide written notice to the Company within sixty (60) days after the initial occurrence of the event or condition constituting Good Reason, specifying in reasonable detail the facts and circumstances giving rise to the claim of Good Reason;

(ii) the Company shall have a period of thirty (30) days following its receipt of such notice (the "Cure Period") within which to cure or remedy the Good Reason condition; and

(iii) if the Company fails to cure or remedy the Good Reason condition within the Cure Period, the Executive must submit a written notice of resignation within thirty (30) days following the expiration of the Cure Period, with such resignation to be effective on the date specified in such notice (which date shall not be later than thirty (30) days after delivery of the resignation notice).

If the Executive fails to comply with the foregoing procedures, the Executive shall be deemed to have waived the right to resign for Good Reason with respect to the particular event or condition at issue, but shall not be deemed to have waived the right to resign for Good Reason with respect to any future occurrence of a Good Reason event.

(d) Consequences. A resignation by the Executive for Good Reason shall be treated as a termination by the Company without Cause for all purposes of this Agreement, including for purposes of the severance provisions set forth in Article V.

Section 4.4 — Voluntary Resignation Without Good Reason.

The Executive may resign from employment with the Company at any time without Good Reason upon not less than sixty (60) days' prior written notice to the Company. The Company may, in its sole discretion, elect to accelerate the effective date of such resignation and pay the Executive the Base Salary that would have been earned during the remainder of the notice period. Upon a voluntary resignation without Good Reason, the Executive shall be entitled only to the Accrued Obligations. The Executive shall not be entitled to any severance payments or benefits, any Annual Bonus for the fiscal year in which such resignation occurs, or any accelerated vesting of equity awards. The Signing Bonus clawback provisions of Section 2.3(b) shall apply if such resignation occurs within twenty-four (24) months following the Start Date.

Section 4.5 — Death or Disability.

(a) Death. The Executive's employment shall terminate automatically upon the Executive's death.

(b) Disability. The Company may terminate the Executive's employment upon the Executive's Disability. For purposes of this Agreement, "Disability" shall mean the Executive's inability, due to physical or mental incapacity, to perform the essential functions of the Executive's position, with or without reasonable accommodation, for a period of one hundred eighty (180) consecutive days or for an aggregate of two hundred seventy (270) days in any twelve (12)-month period, as determined by a physician mutually agreed upon by the Company and the Executive (or, in the event of the Executive's incapacity to participate in such selection, the Executive's legal representative).

(c) Consequences. Upon a termination of the Executive's employment due to death or Disability, the Executive (or the Executive's estate, beneficiaries, or legal representative, as applicable) shall be entitled to:

(i) the Accrued Obligations;

(ii) a pro-rata Annual Bonus for the fiscal year in which the termination occurs, calculated as the Target Bonus multiplied by a fraction, the numerator of which is the number of days of the Executive's active employment during such fiscal year and the denominator of which is the total number of days in such fiscal year, payable at the same time Annual Bonuses are paid to other senior executives of the Company (but in no event later than March 15 of the calendar year following the fiscal year in which the termination occurs); and

(iii) accelerated vesting of twenty-five percent (25%) of the then-unvested shares of common stock subject to the Executive's outstanding equity awards (including Options and RSUs), with such acceleration to be effective as of the date of termination.

Section 4.6 — Expiration / Non-Renewal.

(a) Non-Renewal. If either Party provides timely written notice of non-renewal in accordance with Section 1.3(b), the Executive's employment shall terminate at the end of the then-current Initial Term or Renewal Term, as applicable.

(b) Company Non-Renewal. If the Company elects not to renew this Agreement, such non-renewal shall be treated as a termination of the Executive's employment by the Company without Cause for purposes of Article V (Severance and Change in Control Protections), and the Executive shall be entitled to the severance benefits set forth in Section 5.2 (or Section 5.3, if applicable), subject to the Executive's satisfaction of the Release requirement set forth in Section 5.1.

(c) Executive Non-Renewal. If the Executive elects not to renew this Agreement, such non-renewal shall be treated as a voluntary resignation without Good Reason for purposes of this Agreement, and the Executive shall be entitled only to the Accrued Obligations.

Section 4.7 — Accrued Obligations.

For purposes of this Agreement, "Accrued Obligations" shall mean: (i) earned but unpaid Base Salary through and including the Executive's date of termination; (ii) accrued but unused PTO, payable in accordance with the Company's PTO policies and applicable law; (iii) vested benefits, if any, to which the Executive is entitled under any employee benefit plan of the Company, payable in accordance with the terms of such plans; and (iv) any unreimbursed business expenses properly incurred by the Executive prior to the date of termination, payable in accordance with Section 3.8 of this Agreement. The Accrued Obligations shall be payable in all termination scenarios described in this Article IV, regardless of the reason for or circumstances of the Executive's termination of employment.

ARTICLE V — SEVERANCE AND CHANGE IN CONTROL PROTECTIONS

Section 5.1 — Release Requirement.

Notwithstanding any other provision of this Agreement, the Executive's right to receive any severance payments or benefits under Section 5.2 or Section 5.3 of this Agreement (other than the Accrued Obligations) is expressly conditioned upon the Executive's timely execution and non-revocation of a general release of claims against the Company, its affiliates, and their respective officers, directors, employees, agents, and representatives, substantially in the form attached hereto as Schedule B (the "Release"). The Release must become effective and irrevocable no later than sixty (60) days following the Executive's date of termination (such sixtieth (60th) day, the "Release Deadline"). In the event the Executive fails to execute the Release within the applicable period or timely revokes the Release, the Executive shall forfeit all rights to severance payments and benefits under this Article V. To the extent that any severance payments would otherwise commence prior to the Release Deadline, such payments shall be accumulated and paid in a lump sum on the first regularly scheduled payroll date following the Release Deadline (subject to any Section 409A delay provisions set forth in Article VII), with subsequent installments, if any, paid on regularly scheduled payroll dates thereafter.

Section 5.2 — Severance Upon Qualifying Termination (No Change in Control).

In the event of a Qualifying Termination (as defined below) that occurs other than during the CIC Protection Period (as defined in Section 5.3), the Executive shall be entitled to the following severance payments and benefits, in addition to the Accrued Obligations:

For purposes of this Agreement, a "Qualifying Termination" shall mean a termination of the Executive's employment (i) by the Company without Cause (including a Company non-renewal under Section 4.6(b)) or (ii) by the Executive for Good Reason.

(a) Cash Severance. Continued payment of the Executive's Base Salary for a period of twelve (12) months following the date of termination (for an aggregate amount of Five Hundred Seventy-Five Thousand Dollars ($575,000)), payable in substantially equal installments in accordance with the Company's regular payroll schedule, commencing on the first regularly scheduled payroll date following the Release Deadline.

(b) Pro-Rata Annual Bonus. A pro-rata Annual Bonus for the fiscal year in which the termination occurs, based on actual Company performance for such fiscal year (as determined by the Board or the Compensation Committee in its sole discretion), calculated by multiplying the Annual Bonus that would otherwise have been payable for such fiscal year by a fraction, the numerator of which is the number of days of the Executive's active employment during such fiscal year and the denominator of which is the total number of days in such fiscal year. Such pro-rata Annual Bonus shall be payable at the same time Annual Bonuses are paid to other senior executives of the Company, but in no event later than March 15 of the calendar year following the fiscal year in which the termination occurs.

(c) COBRA Continuation. Provided the Executive timely elects continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), the Company shall pay the full cost of the Executive's COBRA premiums (for the same level of coverage that was in effect immediately prior to the date of termination) for a period of twelve (12) months following the date of termination, at an estimated cost to the Company of approximately Two Thousand One Hundred Fifty Dollars ($2,150) per month (or an aggregate estimated cost of Twenty-Five Thousand Eight Hundred Dollars ($25,800)). In the event that COBRA continuation coverage is not available, is exhausted prior to the end of such twelve-month period, or would result in adverse tax consequences to the Company under Section 105(h) of the Code or the Patient Protection and Affordable Care Act, the Company shall instead pay the Executive a taxable lump sum cash payment equal to the remaining COBRA premium subsidy that would otherwise have been payable.

(d) Accelerated Equity Vesting. Accelerated vesting of twenty-five percent (25%) of the then-unvested shares of common stock subject to the Executive's outstanding equity awards (including Options and RSUs), with such acceleration to be effective as of the date of termination. The post-termination exercise period for any vested Options shall be as set forth in the applicable Stock Option Award Agreement.

(e) Estimated Total Value. For illustrative purposes only, and based on the initial Base Salary and Target Bonus, the estimated total value of the cash severance components under this Section 5.2 (excluding the value of any equity acceleration) is as follows:

Section 5.3 — Enhanced Severance Upon Qualifying Termination Following Change in Control (Double-Trigger).

In the event of a Qualifying Termination that occurs within twenty-four (24) months following a Change in Control (as defined in Section 5.4) (such twenty-four (24)-month period, the "CIC Protection Period"), the Executive shall be entitled to the following enhanced severance payments and benefits, in addition to the Accrued Obligations, in lieu of (and not in addition to) the severance payments and benefits set forth in Section 5.2:

(a) Enhanced Cash Severance. A lump sum cash payment equal to twenty-four (24) months of the Executive's Base Salary, in an aggregate amount of One Million One Hundred Fifty Thousand Dollars ($1,150,000) (calculated as $575,000 × 2), payable within sixty (60) days following the Release Deadline, subject to any Section 409A delay provisions set forth in Article VII.

(b) Enhanced Bonus Payment. A lump sum cash payment equal to two times (2×) the Executive's Target Bonus, in an aggregate amount of Eight Hundred Sixty-Two Thousand Five Hundred Dollars ($862,500) (calculated as $431,250 × 2), payable at the same time as the enhanced cash severance payment under Section 5.3(a).

(c) Extended COBRA Continuation. Provided the Executive timely elects COBRA continuation coverage, the Company (or its successor) shall pay the full cost of the Executive's COBRA premiums for a period of eighteen (18) months following the date of termination, at an estimated cost to the Company of approximately Two Thousand One Hundred Fifty Dollars ($2,150) per month (or an aggregate estimated cost of Thirty-Eight Thousand Seven Hundred Dollars ($38,700)). In the event that COBRA continuation coverage is not available, is exhausted prior to the end of such eighteen-month period, or would result in adverse tax consequences to the Company (or its successor) under applicable law, the Company shall instead pay the Executive a taxable lump sum cash payment equal to the remaining COBRA premium subsidy that would otherwise have been payable.

(d) Full Acceleration of Equity. Accelerated vesting of one hundred percent (100%) of the then-unvested shares of common stock subject to the Executive's outstanding equity awards (including all Options and RSUs), effective as of the date of termination. All vested Options shall remain exercisable for the period specified in the applicable Stock Option Award Agreement.

(e) Estimated Total CIC Severance Value. For illustrative purposes only, and based on the initial Base Salary and Target Bonus, the estimated total value of the cash severance components under this Section 5.3 (excluding the value of any equity acceleration) is as follows:

Section 5.4 — Definition of "Change in Control."

For purposes of this Agreement, a "Change in Control" shall mean the occurrence of any of the following events:

(a) The acquisition by any "person" or "group" (as such terms are used in Section 13(d) and Section 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of more than fifty percent (50%) of the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors; provided, however, that an acquisition of beneficial ownership by Ridgeline Capital Partners, LP, or any of its affiliates (including, without limitation, Ridgeline Capital Partners Fund IV, LP, and any successor fund or related entity) (collectively, "Ridgeline Entities"), or any acquisition resulting from a transaction in which a Ridgeline Entity remains the beneficial owner of more than fifty percent (50%) of such combined voting power immediately following such transaction, shall not constitute a Change in Control.

(b) The consummation of a merger, consolidation, reorganization, recapitalization, or similar corporate transaction involving the Company, or the sale or other disposition of all or substantially all of the assets of the Company (a "Business Combination"), unless, immediately following such Business Combination, the holders of the Company's voting securities immediately prior to such Business Combination continue to beneficially own, directly or indirectly, more than fifty percent (50%) of the combined voting power of the then-outstanding voting securities of the surviving corporation or entity (or its ultimate parent entity) resulting from such Business Combination, in substantially the same proportions as their ownership immediately prior to such Business Combination.

(c) The complete liquidation or dissolution of the Company, other than in connection with a transaction described in Section 5.4(b) that does not constitute a Change in Control.

(d) A change in the composition of the Board such that the individuals who, as of the Effective Date, constitute the Board (the "Incumbent Board"), together with any new director whose election by the Board or whose nomination for election by the Company's stockholders was approved by a vote of at least a majority of the directors then still in office who either were directors as of the Effective Date or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the Board. For purposes of this clause (d), any director whose initial assumption of office occurs as a result of an actual or threatened proxy contest relating to the election or removal of directors shall not be considered a member of the Incumbent Board.

Notwithstanding Section 5.4(a), the Parties acknowledge and agree that a sale of equity by Ridgeline Capital Partners, LP or any of its affiliates to a third party (or group of third parties) that results in such third party (or group) acquiring beneficial ownership of more than fifty percent (50%) of the combined voting power of the Company's then-outstanding voting securities shall constitute a Change in Control for purposes of this Agreement.

Section 5.5 — Section 280G Best-Net Cutback.

(a) Notwithstanding any other provision of this Agreement or any other plan, arrangement, or agreement to the contrary, if any payments or benefits to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the "Total Payments"), would constitute "parachute payments" within the meaning of Section 280G of the Code and would be subject to the excise tax imposed by Section 4999 of the Code (the "Excise Tax"), then such Total Payments shall be reduced (but not below zero) to the largest amount that would result in no portion of the Total Payments being subject to the Excise Tax (the "Reduced Amount"), but only if and to the extent that such reduction would result in the Executive retaining a greater amount on an after-tax basis (taking into account all applicable federal, state, and local income, employment, and excise taxes) than the Executive would retain on an after-tax basis if the Executive received the full Total Payments.

(b) The determination of whether the Total Payments must be reduced pursuant to this Section 5.5, and the amount of any such reduction, shall be made by the Company's independent registered public accounting firm or such other nationally recognized accounting or consulting firm as may be designated by the Company and reasonably acceptable to the Executive (currently Hargrove & Sinclair CPAs) (the "Accounting Firm"), at the Company's sole expense. The Accounting Firm shall provide its determination and detailed supporting calculations to both the Company and the Executive within fifteen (15) business days of the date of termination (or such earlier date as is requested by the Company or the Executive). The determination of the Accounting Firm shall be final and binding upon the Parties absent manifest error.

(c) No gross-up payment shall be made by the Company with respect to the Excise Tax or any other tax imposed on the Executive.

(d) If a reduction of the Total Payments is required under this Section 5.5, the reduction shall be applied in the following order: (1) first, cash severance payments payable under Section 5.2(a) or Section 5.3(a), as applicable, shall be reduced, with amounts payable latest in time being reduced first; (2) second, other cash amounts payable under this Agreement (including the bonus payment under Section 5.2(b) or Section 5.3(b)) shall be reduced, with amounts payable latest in time being reduced first; and (3) third, acceleration of vesting of equity awards under Section 5.2(d) or Section 5.3(d) shall be reduced, in reverse chronological order based on the scheduled vesting dates of such awards. Within each category, amounts that are not subject to Section 409A of the Code shall be reduced before amounts that are subject to Section 409A of the Code.

Section 5.6 — No Duplication.

The severance payments and benefits described in Section 5.2 and Section 5.3 of this Agreement are mutually exclusive. In no event shall the Executive be entitled to severance payments or benefits under both Section 5.2 and Section 5.3. If a Qualifying Termination occurs during the CIC Protection Period, the Executive shall receive the enhanced severance payments and benefits under Section 5.3 only, and shall not be entitled to any severance payments or benefits under Section 5.2. Any severance payments or benefits payable to the Executive under this Article V shall be offset and reduced by any amounts payable to the Executive under any other severance plan, program, policy, or arrangement maintained by the Company or any of its affiliates (other than the Accrued Obligations), and the Executive shall not be entitled to duplicative payments. For the avoidance of doubt, this Section 5.6 shall not reduce or offset the Executive's entitlement to the Accrued Obligations or to garden-leave payments under Section 6.2.

ARTICLE VI — RESTRICTIVE COVENANTS

Section 6.1 — Reference to Separate Agreement.

Concurrently with the execution of this Agreement, and as a condition of the Executive's employment hereunder, the Executive shall execute the Employee Non-Competition Agreement, substantially in the form approved by the Company, which sets forth the Executive's obligations regarding non-competition, non-solicitation, confidentiality, and invention assignment (the "Restrictive Covenant Agreement"). The Restrictive Covenant Agreement is incorporated herein by reference and shall survive the termination of the Executive's employment and the expiration of this Agreement in accordance with its terms. The following Sections 6.2 through 6.6 provide a summary of the key terms of the Restrictive Covenant Agreement for reference purposes; provided, that in the event of any conflict between the summary set forth herein and the terms of the Restrictive Covenant Agreement, the terms of the Restrictive Covenant Agreement shall control.

Section 6.2 — Non-Competition.

(a) Restricted Period. During the Executive's employment with the Company and for a period of twelve (12) months following the termination of the Executive's employment for any reason (the "Non-Competition Period"), the Executive shall not, directly or indirectly, engage in, be employed by, consult with, render services to, or have any ownership interest in (other than ownership of less than two percent (2%) of the outstanding securities of a publicly traded company) any Competitive Business.

(b) Scope. For purposes of this Agreement and the Restrictive Covenant Agreement, "Competitive Business" means any healthcare information technology or software-as-a-service company with annual revenues in excess of Fifty Million Dollars ($50,000,000) that operates in the United States and provides clinical workflow optimization, revenue cycle management, or substantially similar products or services to those offered by the Company as of the date of termination.

(c) Garden-Leave Payment. In accordance with the Massachusetts Noncompetition Agreement Act (M.G.L. c. 149, § 24L), during the Non-Competition Period, the Company shall pay the Executive garden-leave compensation equal to fifty percent (50%) of the Executive's highest annual Base Salary within the two (2)-year period preceding the date of termination (i.e., Two Hundred Eighty-Seven Thousand Five Hundred Dollars ($287,500) based on the initial Base Salary), or such other mutually agreed consideration, payable in accordance with the Company's regular payroll schedule during the Non-Competition Period. Such garden-leave payment shall be in addition to, and not in lieu of, any severance payments to which the Executive may be entitled under Article V.

(d) Exception. Notwithstanding the foregoing, the non-competition restriction set forth in this Section 6.2 shall not apply if the Executive's employment is terminated by the Company without Cause or if the Executive resigns for Good Reason; provided, however, that the garden-leave payment described in Section 6.2(c) shall remain payable during the Non-Competition Period regardless of the reason for the Executive's termination.

Section 6.3 — Non-Solicitation of Employees.

During the Executive's employment with the Company and for a period of eighteen (18) months following the termination of the Executive's employment for any reason, the Executive shall not, directly or indirectly, recruit, solicit, induce, or encourage any employee of the Company or any of its subsidiaries or affiliates who holds a position at or above the manager level to leave the employ of the Company, or hire or engage any such individual for employment or consulting services with any other person or entity.

Section 6.4 — Non-Solicitation of Customers and Partners.

During the Executive's employment with the Company and for a period of twelve (12) months following the termination of the Executive's employment for any reason, the Executive shall not, directly or indirectly, solicit, divert, or seek to induce any customer, client, strategic partner, vendor, or other business relation of the Company or any of its subsidiaries or affiliates to terminate or materially reduce its business relationship with the Company, or to conduct with any other person or entity any business activity of the type conducted with the Company, in each case limited to those customers, clients, strategic partners, vendors, or business relations with whom the Executive had material contact or about whom the Executive possessed material confidential information during the twenty-four (24)-month period immediately preceding the Executive's date of termination.

Section 6.5 — Confidentiality.

(a) Obligation. The Executive acknowledges that, during the course of employment, the Executive will have access to and become familiar with confidential and proprietary information of the Company, including, without limitation, trade secrets, business plans, financial data, customer and prospect lists, pricing strategies, product roadmaps, source code, algorithms, and other information not generally known to the public (collectively, "Confidential Information"). The Executive shall not, at any time during or after the Executive's employment with the Company, directly or indirectly, disclose, publish, or use any Confidential Information for any purpose other than in furtherance of the Executive's duties to the Company. This obligation of confidentiality is perpetual and shall survive the termination of the Executive's employment and the expiration of this Agreement.

(b) Exceptions. The foregoing restrictions shall not apply to: (i) information that is or becomes generally available to the public other than as a result of a breach of this Agreement or the Restrictive Covenant Agreement by the Executive; (ii) information that the Executive can demonstrate was known to the Executive prior to the commencement of employment with the Company, other than through a breach of any obligation of confidentiality owed to the Company; or (iii) disclosures compelled by applicable law, regulation, or legal process, provided that the Executive provides the Company with prompt written notice of any such compelled disclosure (to the extent legally permissible) to enable the Company to seek a protective order or other appropriate remedy.

(c) Defend Trade Secrets Act Notice. Pursuant to the Defend Trade Secrets Act of 2016 (18 U.S.C. § 1833(b)), the Executive is hereby notified that an individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (A) is made (1) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and (2) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual (1) files any document containing the trade secret under seal; and (2) does not disclose the trade secret, except pursuant to court order.

Section 6.6 — Invention Assignment.

(a) Assignment. The Executive hereby assigns, and agrees to assign, to the Company all right, title, and interest in and to any and all inventions, discoveries, innovations, improvements, works of authorship, designs, trade secrets, know-how, techniques, processes, software, data, and other intellectual property (whether or not patentable or copyrightable) that are conceived, created, developed, reduced to practice, or learned by the Executive, either alone or jointly with others, during the period of the Executive's employment with the Company and that relate to the Company's business, actual or anticipated research or development, or products or services, or that result from any work performed by the Executive for the Company (collectively, "Company Inventions").

(b) Prior Inventions. Any inventions, patents, patent applications, or other intellectual property owned by the Executive prior to the Start Date and that the Executive wishes to exclude from the scope of this Section 6.6 are listed on Schedule A attached hereto (collectively, "Prior Inventions"). If no Prior Inventions are listed on Schedule A, the Executive represents that there are no Prior Inventions.

(c) Cooperation. The Executive shall cooperate fully with the Company, both during and after the Executive's employment, in the preparation, filing, prosecution, maintenance, and enforcement of any and all applications for patents, copyrights, trademarks, and other intellectual property rights relating to Company Inventions, and shall execute and deliver all documents and take all actions reasonably requested by the Company in connection therewith, at the Company's sole expense.

Section 6.7 — Remedies.

(a) The Executive acknowledges and agrees that the restrictive covenants set forth in this Article VI and in the Restrictive Covenant Agreement are reasonable and necessary to protect the Company's legitimate business interests, including its Confidential Information, goodwill, and customer and employee relationships, and that a breach of any such restrictive covenant would result in irreparable harm to the Company for which monetary damages alone would be an inadequate remedy.

(b) In the event of a breach or threatened breach of any restrictive covenant set forth in this Article VI or in the Restrictive Covenant Agreement, the Company shall be entitled to seek temporary, preliminary, and permanent injunctive relief, specific performance, and any other equitable remedies available at law or in equity, without the necessity of posting a bond or proving actual damages, in addition to any and all other remedies available at law or in equity, including monetary damages.

(c) The covenants contained in this Article VI are independent of one another and of the other provisions of this Agreement. The existence of any claim or cause of action by the Executive against the Company, whether based on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of any restrictive covenant. If any provision of this Article VI is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, such invalidity, illegality, or unenforceability shall not affect the validity, legality, or enforceability of any other provision, each of which shall be given full effect. If any provision is held to be unenforceable because of its scope, duration, or area of restriction, the court making such determination shall have the power to reduce the scope, duration, or area of restriction, as applicable, and to enforce such provision as so modified to the fullest extent permitted by applicable law.

ARTICLE VII — SECTION 409A COMPLIANCE

Section 7.1 — General 409A Compliance.

(a) This Agreement is intended to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended ("Section 409A"), or to be exempt from the application of Section 409A, and shall be interpreted, construed, and administered in a manner consistent with such intent. Each payment made under this Agreement shall be treated as a separate payment for purposes of Section 409A, and the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments. All payments intended to qualify as short-term deferrals under Section 409A shall be made in accordance with Treasury Regulation Section 1.409A-1(b)(4). In no event shall the Company be required to "gross up" or otherwise compensate the Executive for any tax, interest, or penalty imposed under Section 409A.

(b) To the extent required by Section 409A, reimbursements of expenses and in-kind benefits provided under this Agreement shall be subject to the following rules: (i) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during one calendar year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year; (ii) reimbursement of an eligible expense shall be made no later than the last day of the calendar year following the calendar year in which the expense was incurred; and (

EXECUTIVE EMPLOYMENT AGREEMENT
Third Draft — Near-Final — September 16, 2022
CONFIDENTIAL — DRAFT — Subject to Further Review and Negotiation
Drafted by Calderwood & Harkness LLP, One International Place, Suite 3400, Boston, MA 02110 | Matter No. 1010-00004
Right-click to update Table of Contents
This Executive Employment Agreement (this "Agreement") is entered into as of [●], 2022 (the "Effective Date"), by and between:
ARBOR HEALTH TECHNOLOGIES INC., a Delaware corporation with its principal offices at 400 Brattle Commerce Park, Suite 1200, Cambridge, MA 02138 (the "Company"),
and
DR. MARCUS J. ELLISTON, an individual residing at 87 Laurel Hill Road, Wellesley, MA 02481 (the "Executive").
The Company and the Executive are each referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, the Company is a healthcare services and software company that develops and provides cloud-based clinical workflow optimization and revenue cycle management solutions delivered on a software-as-a-service ("SaaS") basis to healthcare systems, physician groups, and related organizations throughout the United States;
WHEREAS, the Company desires to employ the Executive as its Chief Operating Officer, and the Executive desires to accept such employment, on the terms and conditions set forth herein;
WHEREAS, the Company's Board of Directors (the "Board"), upon the recommendation of the Compensation Committee of the Board (the "Compensation Committee"), has reviewed and approved the terms and conditions of this Agreement;
WHEREAS, Ridgeline Capital Partners, LP ("Ridgeline"), through its affiliate Ridgeline Capital Partners Fund IV, LP, is the majority equity holder of the Company, owning approximately sixty-eight percent (68%) of the Company's outstanding equity on a fully diluted basis; and
WHEREAS, this Agreement supersedes all prior negotiations, representations, discussions, term sheets, letters of intent, and agreements, whether written or oral, relating to the Executive's employment by the Company.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE I — EMPLOYMENT AND TERM
Section 1.1 — Employment.
The Company hereby agrees to employ the Executive, and the Executive hereby agrees to be employed by the Company, upon the terms and conditions set forth in this Agreement. The Executive's employment with the Company shall commence on November 1, 2022 (the "Start Date"). For the avoidance of doubt, the Executive shall not be deemed to be an employee of the Company, and no obligations under this Agreement shall arise with respect to either Party, until the Start Date.
Section 1.2 — Title and Position.
(a) Title. The Executive shall serve as Chief Operating Officer ("COO") of the Company. The Executive shall have such duties, responsibilities, and authority as are customarily associated with the position of Chief Operating Officer of a company of comparable size and scope, and as may be further described in Exhibit A attached hereto, which is incorporated herein by reference.
(b) Reporting. The Executive shall report directly to the Company's Chief Executive Officer (currently Priya Chandrasekaran) (the "CEO"). The Executive shall be a member of the Company's Executive Leadership Team and shall attend meetings of the Board upon invitation of the Board or the CEO, as appropriate.
(c) Duties and Responsibilities. The Executive's specific duties and responsibilities, including oversight of business functions, operational strategy, and direct reports, are set forth in Exhibit A attached hereto. The Board and the CEO reserve the right to modify the Executive's duties from time to time, consistent with the Executive's position as Chief Operating Officer; provided, that any material diminution in the Executive's duties, title, authority, or responsibilities shall constitute "Good Reason" as defined in Section 4.3 of this Agreement.
(d) Devotion of Time. The Executive shall devote substantially all of the Executive's business time, attention, skill, and energy to the affairs of the Company, and shall use the Executive's best efforts to faithfully and diligently perform the duties assigned hereunder. Notwithstanding the foregoing, the Executive may, to the extent that such activities do not materially interfere with the performance of the Executive's duties hereunder:
(i) serve on the board of directors of up to two (2) for-profit entities that are not Competitive Businesses (as defined in the Restrictive Covenant Agreement), provided that such service is approved in advance by the Board, which approval shall not be unreasonably withheld;
(ii) serve on boards of, or participate in activities of, charitable, civic, educational, religious, or not-for-profit organizations; and
(iii) manage the Executive's personal investments and affairs.
Section 1.3 — Initial Term and Renewal.
(a) Initial Term. The initial term of the Executive's employment under this Agreement shall be three (3) years, commencing on the Start Date and expiring on the third anniversary thereof, unless earlier terminated in accordance with Article IV (the "Initial Term").
(b) Renewal Terms. Following the expiration of the Initial Term, this Agreement shall automatically renew for successive periods of one (1) year each (each, a "Renewal Term"), unless either Party provides the other Party with written notice of non-renewal at least ninety (90) days prior to the expiration of the then-current Initial Term or Renewal Term, as applicable. If such notice of non-renewal is given, employment shall terminate at the end of the then-current term, subject to the provisions of Section 4.6 hereof.
(c) Employment Period. The Initial Term and any Renewal Terms are collectively referred to herein as the "Employment Period." Notwithstanding the foregoing, the Executive's employment hereunder is subject to earlier termination in accordance with the provisions of Article IV.
Section 1.4 — Principal Place of Employment.
The Executive's principal place of employment shall be the Company's offices located at 400 Brattle Commerce Park, Suite 1200, Cambridge, MA 02138, or such other location within thirty-five (35) miles thereof as the Company may designate from time to time. The Executive acknowledges that the performance of the Executive's duties may require reasonable business travel, both domestically and internationally, as determined by the CEO or the Board consistent with the needs of the Company's business.
ARTICLE II — COMPENSATION
Section 2.1 — Base Salary.
(a) Amount. During the Employment Period, the Company shall pay the Executive an annual base salary of Five Hundred Seventy-Five Thousand Dollars ($575,000) (the "Base Salary"), payable in accordance with the Company's regular payroll practices and subject to all applicable withholdings and deductions required by law.
(b) Annual Review. The Base Salary shall be reviewed at least annually by the Board or the Compensation Committee, commencing with the first full fiscal year following the Start Date. The Base Salary may be increased from time to time in the sole discretion of the Board (or the Compensation Committee), but shall not be decreased without the Executive's prior written consent; provided, however, that the Base Salary may be reduced without the Executive's consent if such reduction is part of a company-wide reduction in base salaries of less than ten percent (10%) that applies equally and proportionally to all similarly situated senior executives of the Company. Any increase in Base Salary shall not serve to limit or reduce any other obligation of the Company under this Agreement.
Section 2.2 — Annual Bonus.
(a) Target Bonus. For each full fiscal year during the Employment Period, the Executive shall be eligible to earn an annual performance bonus (the "Annual Bonus") with a target amount equal to seventy-five percent (75%) of the Executive's then-current Base Salary (the "Target Bonus"). Based on the initial Base Salary, the Target Bonus equals Four Hundred Thirty-One Thousand Two Hundred Fifty Dollars ($431,250).
(b) Maximum Bonus. The maximum Annual Bonus payable to the Executive for any fiscal year shall not exceed one hundred fifty percent (150%) of the Target Bonus for such fiscal year. Based on the initial Base Salary, the maximum Annual Bonus equals Six Hundred Forty-Six Thousand Eight Hundred Seventy-Five Dollars ($646,875).
(c) Performance Metrics. The Annual Bonus shall be determined based on the achievement of individual performance objectives and Company-wide performance metrics (including, without limitation, revenue growth, EBITDA, customer retention, and operational milestones) established by the Board or the Compensation Committee in consultation with the CEO and communicated to the Executive within sixty (60) days after the start of each fiscal year. The Board (or the Compensation Committee) shall have sole discretion in determining the level of achievement of such performance metrics and the corresponding bonus amount, subject to the terms of this Section 2.2.
(d) Pro-Ration for Partial Year. The Annual Bonus for the fiscal year in which the Start Date falls shall be pro-rated based on the number of days of the Executive's active employment during such fiscal year divided by the total number of days in such fiscal year.
(e) Payment Timing. Annual Bonus payments, if any, shall be paid no later than March 15 of the calendar year following the close of the fiscal year to which the Annual Bonus relates, in compliance with the short-term deferral exception under Section 409A of the Internal Revenue Code of 1986, as amended (the "Code").
(f) Employment Requirement. Except as otherwise expressly provided in Article V (Severance and Change in Control Protections) or Section 4.5 (Death or Disability), the Executive must be actively employed by the Company on the date the Annual Bonus is paid in order to earn and receive such Annual Bonus. No partial or pro-rated bonus shall be payable upon termination of employment, except as set forth in Article V or Section 4.5.
Section 2.3 — Signing Bonus.
(a) Amount and Payment. In consideration of the Executive's acceptance of employment hereunder, the Company shall pay the Executive a one-time signing bonus in the amount of Two Hundred Fifty Thousand Dollars ($250,000) (the "Signing Bonus"), payable within thirty (30) days following the Start Date, less all applicable federal, state, and local tax withholdings and deductions.
(b) Clawback. In the event that the Executive voluntarily resigns without Good Reason (as defined in Section 4.3) or is terminated by the Company for Cause (as defined in Section 4.1), in either case within twenty-four (24) months following the Start Date, the Executive shall repay to the Company the Signing Bonus on a pro-rated basis. The amount to be repaid shall equal the Signing Bonus amount multiplied by a fraction, the numerator of which is twenty-four (24) minus the number of full calendar months of completed employment following the Start Date, and the denominator of which is twenty-four (24). The Executive hereby authorizes the Company to offset any repayment obligation under this Section 2.3(b) against any amounts otherwise payable to the Executive by the Company, to the fullest extent permitted by applicable law, including any Accrued Obligations or other final pay. Any remaining balance shall be payable by the Executive to the Company within thirty (30) days following the date of termination.
Section 2.4 — Equity Awards.
(a) Stock Options.
(i) Grant. As soon as practicable following the Start Date (and in no event later than thirty (30) days after the Start Date), the Company shall grant to the Executive nonqualified stock options (the "Options") to purchase shares of the Company's common stock representing one and one-quarter percent (1.25%) of the Company's fully diluted equity capitalization as of the date of grant, calculated in accordance with the Company's standard methodology for determining fully diluted share counts.
(ii) Exercise Price. The exercise price per share of the Options shall be equal to the fair market value of a share of the Company's common stock as of the date of grant, as determined by the Board in good faith, based on the most recent independent valuation of the Company's common stock (a "409A valuation").
(iii) Vesting. The Options shall vest and become exercisable as follows: twenty-five percent (25%) of the shares of common stock subject to the Options shall vest on the first anniversary of the Start Date (the "Cliff Date"), and the remaining seventy-five percent (75%) of the shares of common stock subject to the Options shall vest in equal monthly installments over the thirty-six (36)-month period following the Cliff Date, such that the Options shall be fully vested on the fourth anniversary of the Start Date, in each case subject to the Executive's continued employment with the Company through each applicable vesting date.
(iv) Award Agreement. The Options shall be governed by the terms and conditions of the AHT 2020 Equity Incentive Plan (as amended May 2021) (the "Plan") and a separate Stock Option Award Agreement to be entered into between the Company and the Executive on or promptly following the date of grant.
(b) Restricted Stock Units.
(i) Grant. As soon as practicable following the Start Date (and in no event later than thirty (30) days after the Start Date), the Company shall grant to the Executive restricted stock units (the "RSUs") representing one-half of one percent (0.50%) of the Company's fully diluted equity capitalization as of the date of grant.
(ii) Vesting. The RSUs shall vest in three (3) equal annual installments, with one-third (33.33%) of the RSUs vesting on each of the first, second, and third anniversaries of the Start Date, in each case subject to the Executive's continued employment with the Company through each applicable vesting date. Vested RSUs shall be settled in shares of the Company's common stock (or, at the Company's election, in cash) within thirty (30) days following each applicable vesting date.
(iii) Award Agreement. The RSUs shall be governed by the terms and conditions of the Plan and a separate Restricted Stock Unit Award Agreement to be entered into between the Company and the Executive on or promptly following the date of grant.
(c) General Equity Provisions.
(i) All equity awards granted to the Executive pursuant to this Section 2.4 shall be subject in all respects to the terms and conditions of the Plan and the applicable award agreements. In the event of any conflict between this Agreement and the Plan or any award agreement, the terms of such Plan or award agreement shall control with respect to the equity award, except with respect to any acceleration provisions set forth in Sections 5.2 and 5.3 of this Agreement, which shall supersede any contrary provision in the Plan or award agreement.
(ii) The Executive acknowledges that all equity awards granted hereunder are subject to any applicable consent, approval, or co-investment requirements under the Amended and Restated Stockholders' Agreement of the Company, dated as of March 14, 2020, as amended from time to time (the "Stockholders' Agreement"), including any consent rights held by Helix Ventures Fund III, LP with respect to equity issuances under the Plan.
(iii) Accelerated vesting of unvested equity awards shall be provided as set forth in Sections 5.2 and 5.3 of this Agreement, as applicable, and as further set forth in Section 4.5 hereof in the event of the Executive's death or Disability.
ARTICLE III — BENEFITS AND PERQUISITES
Section 3.1 — Health and Welfare Benefits.
During the Employment Period, the Executive and the Executive's eligible dependents shall be eligible to participate in the Company's executive health benefit plans, including medical, dental, and vision insurance coverage, on terms no less favorable than those provided to other senior executives of the Company. The Company's estimated contribution toward the cost of such coverage for the Executive and the Executive's eligible dependents is approximately Two Thousand One Hundred Fifty Dollars ($2,150) per month, based on current plan year rates. The Executive's participation in such plans shall be subject to the terms, conditions, and eligibility requirements of the applicable plan documents, which may be amended or modified by the Company from time to time.
Section 3.2 — Life Insurance.
The Company shall provide, at its expense, life insurance coverage for the benefit of the Executive in an amount equal to two times (2×) the Executive's then-current Base Salary (i.e., One Million One Hundred Fifty Thousand Dollars ($1,150,000) based on the initial Base Salary). The Executive shall have the right to designate the beneficiary or beneficiaries of such life insurance coverage. Such coverage shall be provided under the Company's group life insurance program or, if necessary, through an individual policy obtained by the Company, and shall be subject to the terms and conditions of the applicable insurance policy.
Section 3.3 — Disability Insurance.
During the Employment Period, the Executive shall be eligible to participate in the Company's long-term disability insurance program, which shall provide coverage at a level equal to sixty percent (60%) of the Executive's then-current Base Salary, subject to any applicable caps imposed by the insurance carrier. Participation in the disability insurance program shall be subject to the terms and conditions of the applicable insurance policy and plan documents, as may be amended from time to time.
Section 3.4 — Retirement Benefits.
The Executive shall be eligible to participate in the Company's 401(k) retirement savings plan on the same terms and conditions as are available to other employees of the Company. The Company shall make matching contributions to the Executive's 401(k) account in an amount equal to one hundred percent (100%) of the Executive's elective deferrals up to four percent (4%) of the Executive's eligible compensation, subject to the applicable contribution limits imposed by the Internal Revenue Service under Sections 401(a)(17), 402(g), and 415 of the Code. The Executive's participation in the 401(k) plan shall be subject to the terms and conditions of the applicable plan document.
Section 3.5 — Paid Time Off.
The Executive shall be entitled to twenty-five (25) days of paid time off ("PTO") per calendar year, in addition to all Company-recognized holidays. PTO for partial calendar years of employment shall be pro-rated based on the number of days of employment during such calendar year. The use and accrual of PTO shall be subject to the Company's PTO policies as in effect from time to time, including any applicable accrual caps and carryover provisions.
Section 3.6 — Executive Perquisites.
(a) Professional Development Allowance. During the Employment Period, the Company shall provide the Executive with an annual professional development allowance of Fifteen Thousand Dollars ($15,000) per calendar year. Such allowance may be used for attendance at professional conferences, industry events, continuing education programs, executive coaching, professional association memberships, and related expenses. The allowance shall be subject to the Company's standard expense reimbursement procedures and documentation requirements.
(b) Executive Physical Exam. The Executive shall be eligible to participate in the Company's executive physical exam program, which provides an annual comprehensive health assessment at a facility designated or approved by the Company, at the Company's expense.
Section 3.7 — Relocation.
In the event that the Executive incurs expenses in connection with relocating to a residence within reasonable commuting distance of the Company's principal offices, the Company shall reimburse the Executive for reasonable and documented relocation expenses in an aggregate amount not to exceed Seventy-Five Thousand Dollars ($75,000). Eligible expenses shall include moving costs, temporary housing (for a period not to exceed sixty (60) days), and customary closing costs associated with the sale and/or purchase of a residence. The Parties acknowledge that, as of the date hereof, the Executive currently resides in Wellesley, Massachusetts, and relocation is not expected to be necessary.
Section 3.8 — Business Expenses.
The Company shall reimburse the Executive for all reasonable and documented business expenses incurred by the Executive in the performance of the Executive's duties hereunder, in accordance with the Company's expense reimbursement policies as in effect from time to time. The Executive shall submit expense reports and supporting documentation in accordance with such policies. Subject to Section 409A of the Code, all reimbursements of expenses incurred during a given calendar year shall be paid no later than December 31 of the calendar year following the calendar year in which such expense was incurred. The amount of expenses eligible for reimbursement in any calendar year shall not affect the expenses eligible for reimbursement in any other calendar year, and the right to reimbursement shall not be subject to liquidation or exchange for another benefit.
ARTICLE IV — TERMINATION OF EMPLOYMENT
Section 4.1 — Termination for Cause.
(a) Right to Terminate. The Company may terminate the Executive's employment for Cause at any time, effective upon delivery of written notice to the Executive specifying in reasonable detail the grounds for such termination.
(b) Definition of "Cause." For purposes of this Agreement, "Cause" shall mean the occurrence of any of the following:
(i) the Executive's conviction of, or plea of guilty or nolo contendere to, a felony or any crime involving fraud, dishonesty, or moral turpitude under the laws of the United States or any state thereof;
(ii) the Executive's willful and material breach of this Agreement or any material written policy of the Company, which breach, if capable of cure, remains uncured for a period of thirty (30) days after written notice from the Company to the Executive specifying in reasonable detail the nature of such breach;
(iii) the Executive's willful misconduct or gross negligence in the performance of the Executive's duties hereunder that is materially injurious to the Company, monetarily or otherwise;
(iv) any material act of fraud, embezzlement, or misappropriation by the Executive against the Company or any of its subsidiaries or affiliates; or
(v) the Executive's willful and continued refusal to perform the lawful duties reasonably consistent with the Executive's position as Chief Operating Officer after a written demand for performance has been delivered to the Executive by the Board, which refusal is not cured within fifteen (15) days after such written demand.
For purposes of this Section 4.1(b), no act or failure to act by the Executive shall be deemed "willful" if done, or omitted to be done, by the Executive in good faith and with the reasonable belief that such action or omission was in the best interests of the Company.
(c) Board Approval. Any termination of the Executive's employment for Cause shall be subject to prior review and approval by a majority of the members of the Board (excluding the Executive, if the Executive is then serving as a member of the Board), at a meeting duly called and held for such purpose, at which the Executive shall have been given reasonable notice and an opportunity (together with the Executive's counsel) to be heard.
(d) Consequences. Upon a termination of the Executive's employment for Cause, the Executive shall be entitled only to the Accrued Obligations (as defined in Section 4.7). The Executive shall not be entitled to any severance payments or benefits, any Annual Bonus for the fiscal year in which such termination occurs, or any accelerated vesting of equity awards. The Signing Bonus clawback provisions of Section 2.3(b) shall apply if such termination for Cause occurs within twenty-four (24) months following the Start Date.
Section 4.2 — Termination Without Cause.
The Company may terminate the Executive's employment without Cause at any time, for any reason or no reason, upon not less than thirty (30) days' prior written notice to the Executive (or, at the Company's election, payment of thirty (30) days of Base Salary in lieu of notice). Upon a termination of the Executive's employment by the Company without Cause, the Executive shall be entitled to the Accrued Obligations and the severance benefits set forth in Section 5.2 of this Agreement (or, if such termination occurs during the CIC Protection Period, the enhanced severance benefits set forth in Section 5.3 of this Agreement), in each case subject to the Executive's satisfaction of the Release requirement set forth in Section 5.1.
Section 4.3 — Resignation for Good Reason.
(a) Right to Resign. The Executive may resign from employment with the Company for Good Reason, subject to the notice and cure procedures set forth in Section 4.3(c) below.
(b) Definition of "Good Reason." For purposes of this Agreement, "Good Reason" shall mean the occurrence, without the Executive's prior written consent, of any of the following events:
(i) a material diminution in the Executive's Base Salary, other than as part of a company-wide reduction of less than ten percent (10%) that applies equally and proportionally to all similarly situated senior executives of the Company;
(ii) a material diminution in the Executive's title, authority, duties, or responsibilities, including, without limitation, a change in the Executive's reporting line such that the Executive no longer reports directly to the CEO of the Company;
(iii) the relocation of the Executive's principal place of employment by more than thirty-five (35) miles from Cambridge, Massachusetts, without the Executive's prior written consent;
(iv) a material breach by the Company of any material provision of this Agreement; or
(v) the failure by the Company to nominate or appoint the Executive to any position, committee membership, or similar role expressly specified in this Agreement or in Exhibit A.
(c) Good Reason Procedure. The Executive's right to resign for Good Reason is subject to the following conditions:
(i) the Executive must provide written notice to the Company within sixty (60) days after the initial occurrence of the event or condition constituting Good Reason, specifying in reasonable detail the facts and circumstances giving rise to the claim of Good Reason;
(ii) the Company shall have a period of thirty (30) days following its receipt of such notice (the "Cure Period") within which to cure or remedy the Good Reason condition; and
(iii) if the Company fails to cure or remedy the Good Reason condition within the Cure Period, the Executive must submit a written notice of resignation within thirty (30) days following the expiration of the Cure Period, with such resignation to be effective on the date specified in such notice (which date shall not be later than thirty (30) days after delivery of the resignation notice).
If the Executive fails to comply with the foregoing procedures, the Executive shall be deemed to have waived the right to resign for Good Reason with respect to the particular event or condition at issue, but shall not be deemed to have waived the right to resign for Good Reason with respect to any future occurrence of a Good Reason event.
(d) Consequences. A resignation by the Executive for Good Reason shall be treated as a termination by the Company without Cause for all purposes of this Agreement, including for purposes of the severance provisions set forth in Article V.
Section 4.4 — Voluntary Resignation Without Good Reason.
The Executive may resign from employment with the Company at any time without Good Reason upon not less than sixty (60) days' prior written notice to the Company. The Company may, in its sole discretion, elect to accelerate the effective date of such resignation and pay the Executive the Base Salary that would have been earned during the remainder of the notice period. Upon a voluntary resignation without Good Reason, the Executive shall be entitled only to the Accrued Obligations. The Executive shall not be entitled to any severance payments or benefits, any Annual Bonus for the fiscal year in which such resignation occurs, or any accelerated vesting of equity awards. The Signing Bonus clawback provisions of Section 2.3(b) shall apply if such resignation occurs within twenty-four (24) months following the Start Date.
Section 4.5 — Death or Disability.
(a) Death. The Executive's employment shall terminate automatically upon the Executive's death.
(b) Disability. The Company may terminate the Executive's employment upon the Executive's Disability. For purposes of this Agreement, "Disability" shall mean the Executive's inability, due to physical or mental incapacity, to perform the essential functions of the Executive's position, with or without reasonable accommodation, for a period of one hundred eighty (180) consecutive days or for an aggregate of two hundred seventy (270) days in any twelve (12)-month period, as determined by a physician mutually agreed upon by the Company and the Executive (or, in the event of the Executive's incapacity to participate in such selection, the Executive's legal representative).
(c) Consequences. Upon a termination of the Executive's employment due to death or Disability, the Executive (or the Executive's estate, beneficiaries, or legal representative, as applicable) shall be entitled to:
(i) the Accrued Obligations;
(ii) a pro-rata Annual Bonus for the fiscal year in which the termination occurs, calculated as the Target Bonus multiplied by a fraction, the numerator of which is the number of days of the Executive's active employment during such fiscal year and the denominator of which is the total number of days in such fiscal year, payable at the same time Annual Bonuses are paid to other senior executives of the Company (but in no event later than March 15 of the calendar year following the fiscal year in which the termination occurs); and
(iii) accelerated vesting of twenty-five percent (25%) of the then-unvested shares of common stock subject to the Executive's outstanding equity awards (including Options and RSUs), with such acceleration to be effective as of the date of termination.
Section 4.6 — Expiration / Non-Renewal.
(a) Non-Renewal. If either Party provides timely written notice of non-renewal in accordance with Section 1.3(b), the Executive's employment shall terminate at the end of the then-current Initial Term or Renewal Term, as applicable.
(b) Company Non-Renewal. If the Company elects not to renew this Agreement, such non-renewal shall be treated as a termination of the Executive's employment by the Company without Cause for purposes of Article V (Severance and Change in Control Protections), and the Executive shall be entitled to the severance benefits set forth in Section 5.2 (or Section 5.3, if applicable), subject to the Executive's satisfaction of the Release requirement set forth in Section 5.1.
(c) Executive Non-Renewal. If the Executive elects not to renew this Agreement, such non-renewal shall be treated as a voluntary resignation without Good Reason for purposes of this Agreement, and the Executive shall be entitled only to the Accrued Obligations.
Section 4.7 — Accrued Obligations.
For purposes of this Agreement, "Accrued Obligations" shall mean: (i) earned but unpaid Base Salary through and including the Executive's date of termination; (ii) accrued but unused PTO, payable in accordance with the Company's PTO policies and applicable law; (iii) vested benefits, if any, to which the Executive is entitled under any employee benefit plan of the Company, payable in accordance with the terms of such plans; and (iv) any unreimbursed business expenses properly incurred by the Executive prior to the date of termination, payable in accordance with Section 3.8 of this Agreement. The Accrued Obligations shall be payable in all termination scenarios described in this Article IV, regardless of the reason for or circumstances of the Executive's termination of employment.
ARTICLE V — SEVERANCE AND CHANGE IN CONTROL PROTECTIONS
Section 5.1 — Release Requirement.
Notwithstanding any other provision of this Agreement, the Executive's right to receive any severance payments or benefits under Section 5.2 or Section 5.3 of this Agreement (other than the Accrued Obligations) is expressly conditioned upon the Executive's timely execution and non-revocation of a general release of claims against the Company, its affiliates, and their respective officers, directors, employees, agents, and representatives, substantially in the form attached hereto as Schedule B (the "Release"). The Release must become effective and irrevocable no later than sixty (60) days following the Executive's date of termination (such sixtieth (60th) day, the "Release Deadline"). In the event the Executive fails to execute the Release within the applicable period or timely revokes the Release, the Executive shall forfeit all rights to severance payments and benefits under this Article V. To the extent that any severance payments would otherwise commence prior to the Release Deadline, such payments shall be accumulated and paid in a lump sum on the first regularly scheduled payroll date following the Release Deadline (subject to any Section 409A delay provisions set forth in Article VII), with subsequent installments, if any, paid on regularly scheduled payroll dates thereafter.
Section 5.2 — Severance Upon Qualifying Termination (No Change in Control).
In the event of a Qualifying Termination (as defined below) that occurs other than during the CIC Protection Period (as defined in Section 5.3), the Executive shall be entitled to the following severance payments and benefits, in addition to the Accrued Obligations:
For purposes of this Agreement, a "Qualifying Termination" shall mean a termination of the Executive's employment (i) by the Company without Cause (including a Company non-renewal under Section 4.6(b)) or (ii) by the Executive for Good Reason.
(a) Cash Severance. Continued payment of the Executive's Base Salary for a period of twelve (12) months following the date of termination (for an aggregate amount of Five Hundred Seventy-Five Thousand Dollars ($575,000)), payable in substantially equal installments in accordance with the Company's regular payroll schedule, commencing on the first regularly scheduled payroll date following the Release Deadline.
(b) Pro-Rata Annual Bonus. A pro-rata Annual Bonus for the fiscal year in which the termination occurs, based on actual Company performance for such fiscal year (as determined by the Board or the Compensation Committee in its sole discretion), calculated by multiplying the Annual Bonus that would otherwise have been payable for such fiscal year by a fraction, the numerator of which is the number of days of the Executive's active employment during such fiscal year and the denominator of which is the total number of days in such fiscal year. Such pro-rata Annual Bonus shall be payable at the same time Annual Bonuses are paid to other senior executives of the Company, but in no event later than March 15 of the calendar year following the fiscal year in which the termination occurs.
(c) COBRA Continuation. Provided the Executive timely elects continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), the Company shall pay the full cost of the Executive's COBRA premiums (for the same level of coverage that was in effect immediately prior to the date of termination) for a period of twelve (12) months following the date of termination, at an estimated cost to the Company of approximately Two Thousand One Hundred Fifty Dollars ($2,150) per month (or an aggregate estimated cost of Twenty-Five Thousand Eight Hundred Dollars ($25,800)). In the event that COBRA continuation coverage is not available, is exhausted prior to the end of such twelve-month period, or would result in adverse tax consequences to the Company under Section 105(h) of the Code or the Patient Protection and Affordable Care Act, the Company shall instead pay the Executive a taxable lump sum cash payment equal to the remaining COBRA premium subsidy that would otherwise have been payable.
(d) Accelerated Equity Vesting. Accelerated vesting of twenty-five percent (25%) of the then-unvested shares of common stock subject to the Executive's outstanding equity awards (including Options and RSUs), with such acceleration to be effective as of the date of termination. The post-termination exercise period for any vested Options shall be as set forth in the applicable Stock Option Award Agreement.
(e) Estimated Total Value. For illustrative purposes only, and based on the initial Base Salary and Target Bonus, the estimated total value of the cash severance components under this Section 5.2 (excluding the value of any equity acceleration) is as follows:
Section 5.3 — Enhanced Severance Upon Qualifying Termination Following Change in Control (Double-Trigger).
In the event of a Qualifying Termination that occurs within twenty-four (24) months following a Change in Control (as defined in Section 5.4) (such twenty-four (24)-month period, the "CIC Protection Period"), the Executive shall be entitled to the following enhanced severance payments and benefits, in addition to the Accrued Obligations, in lieu of (and not in addition to) the severance payments and benefits set forth in Section 5.2:
(a) Enhanced Cash Severance. A lump sum cash payment equal to twenty-four (24) months of the Executive's Base Salary, in an aggregate amount of One Million One Hundred Fifty Thousand Dollars ($1,150,000) (calculated as $575,000 × 2), payable within sixty (60) days following the Release Deadline, subject to any Section 409A delay provisions set forth in Article VII.
(b) Enhanced Bonus Payment. A lump sum cash payment equal to two times (2×) the Executive's Target Bonus, in an aggregate amount of Eight Hundred Sixty-Two Thousand Five Hundred Dollars ($862,500) (calculated as $431,250 × 2), payable at the same time as the enhanced cash severance payment under Section 5.3(a).
(c) Extended COBRA Continuation. Provided the Executive timely elects COBRA continuation coverage, the Company (or its successor) shall pay the full cost of the Executive's COBRA premiums for a period of eighteen (18) months following the date of termination, at an estimated cost to the Company of approximately Two Thousand One Hundred Fifty Dollars ($2,150) per month (or an aggregate estimated cost of Thirty-Eight Thousand Seven Hundred Dollars ($38,700)). In the event that COBRA continuation coverage is not available, is exhausted prior to the end of such eighteen-month period, or would result in adverse tax consequences to the Company (or its successor) under applicable law, the Company shall instead pay the Executive a taxable lump sum cash payment equal to the remaining COBRA premium subsidy that would otherwise have been payable.
(d) Full Acceleration of Equity. Accelerated vesting of one hundred percent (100%) of the then-unvested shares of common stock subject to the Executive's outstanding equity awards (including all Options and RSUs), effective as of the date of termination. All vested Options shall remain exercisable for the period specified in the applicable Stock Option Award Agreement.
(e) Estimated Total CIC Severance Value. For illustrative purposes only, and based on the initial Base Salary and Target Bonus, the estimated total value of the cash severance components under this Section 5.3 (excluding the value of any equity acceleration) is as follows:
Section 5.4 — Definition of "Change in Control."
For purposes of this Agreement, a "Change in Control" shall mean the occurrence of any of the following events:
(a) The acquisition by any "person" or "group" (as such terms are used in Section 13(d) and Section 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of more than fifty percent (50%) of the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors; provided, however, that an acquisition of beneficial ownership by Ridgeline Capital Partners, LP, or any of its affiliates (including, without limitation, Ridgeline Capital Partners Fund IV, LP, and any successor fund or related entity) (collectively, "Ridgeline Entities"), or any acquisition resulting from a transaction in which a Ridgeline Entity remains the beneficial owner of more than fifty percent (50%) of such combined voting power immediately following such transaction, shall not constitute a Change in Control.
(b) The consummation of a merger, consolidation, reorganization, recapitalization, or similar corporate transaction involving the Company, or the sale or other disposition of all or substantially all of the assets of the Company (a "Business Combination"), unless, immediately following such Business Combination, the holders of the Company's voting securities immediately prior to such Business Combination continue to beneficially own, directly or indirectly, more than fifty percent (50%) of the combined voting power of the then-outstanding voting securities of the surviving corporation or entity (or its ultimate parent entity) resulting from such Business Combination, in substantially the same proportions as their ownership immediately prior to such Business Combination.
(c) The complete liquidation or dissolution of the Company, other than in connection with a transaction described in Section 5.4(b) that does not constitute a Change in Control.
(d) A change in the composition of the Board such that the individuals who, as of the Effective Date, constitute the Board (the "Incumbent Board"), together with any new director whose election by the Board or whose nomination for election by the Company's stockholders was approved by a vote of at least a majority of the directors then still in office who either were directors as of the Effective Date or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the Board. For purposes of this clause (d), any director whose initial assumption of office occurs as a result of an actual or threatened proxy contest relating to the election or removal of directors shall not be considered a member of the Incumbent Board.
Notwithstanding Section 5.4(a), the Parties acknowledge and agree that a sale of equity by Ridgeline Capital Partners, LP or any of its affiliates to a third party (or group of third parties) that results in such third party (or group) acquiring beneficial ownership of more than fifty percent (50%) of the combined voting power of the Company's then-outstanding voting securities shall constitute a Change in Control for purposes of this Agreement.
Section 5.5 — Section 280G Best-Net Cutback.
(a) Notwithstanding any other provision of this Agreement or any other plan, arrangement, or agreement to the contrary, if any payments or benefits to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the "Total Payments"), would constitute "parachute payments" within the meaning of Section 280G of the Code and would be subject to the excise tax imposed by Section 4999 of the Code (the "Excise Tax"), then such Total Payments shall be reduced (but not below zero) to the largest amount that would result in no portion of the Total Payments being subject to the Excise Tax (the "Reduced Amount"), but only if and to the extent that such reduction would result in the Executive retaining a greater amount on an after-tax basis (taking into account all applicable federal, state, and local income, employment, and excise taxes) than the Executive would retain on an after-tax basis if the Executive received the full Total Payments.
(b) The determination of whether the Total Payments must be reduced pursuant to this Section 5.5, and the amount of any such reduction, shall be made by the Company's independent registered public accounting firm or such other nationally recognized accounting or consulting firm as may be designated by the Company and reasonably acceptable to the Executive (currently Hargrove & Sinclair CPAs) (the "Accounting Firm"), at the Company's sole expense. The Accounting Firm shall provide its determination and detailed supporting calculations to both the Company and the Executive within fifteen (15) business days of the date of termination (or such earlier date as is requested by the Company or the Executive). The determination of the Accounting Firm shall be final and binding upon the Parties absent manifest error.
(c) No gross-up payment shall be made by the Company with respect to the Excise Tax or any other tax imposed on the Executive.
(d) If a reduction of the Total Payments is required under this Section 5.5, the reduction shall be applied in the following order: (1) first, cash severance payments payable under Section 5.2(a) or Section 5.3(a), as applicable, shall be reduced, with amounts payable latest in time being reduced first; (2) second, other cash amounts payable under this Agreement (including the bonus payment under Section 5.2(b) or Section 5.3(b)) shall be reduced, with amounts payable latest in time being reduced first; and (3) third, acceleration of vesting of equity awards under Section 5.2(d) or Section 5.3(d) shall be reduced, in reverse chronological order based on the scheduled vesting dates of such awards. Within each category, amounts that are not subject to Section 409A of the Code shall be reduced before amounts that are subject to Section 409A of the Code.
Section 5.6 — No Duplication.
The severance payments and benefits described in Section 5.2 and Section 5.3 of this Agreement are mutually exclusive. In no event shall the Executive be entitled to severance payments or benefits under both Section 5.2 and Section 5.3. If a Qualifying Termination occurs during the CIC Protection Period, the Executive shall receive the enhanced severance payments and benefits under Section 5.3 only, and shall not be entitled to any severance payments or benefits under Section 5.2. Any severance payments or benefits payable to the Executive under this Article V shall be offset and reduced by any amounts payable to the Executive under any other severance plan, program, policy, or arrangement maintained by the Company or any of its affiliates (other than the Accrued Obligations), and the Executive shall not be entitled to duplicative payments. For the avoidance of doubt, this Section 5.6 shall not reduce or offset the Executive's entitlement to the Accrued Obligations or to garden-leave payments under Section 6.2.
ARTICLE VI — RESTRICTIVE COVENANTS
Section 6.1 — Reference to Separate Agreement.
Concurrently with the execution of this Agreement, and as a condition of the Executive's employment hereunder, the Executive shall execute the Employee Non-Competition Agreement, substantially in the form approved by the Company, which sets forth the Executive's obligations regarding non-competition, non-solicitation, confidentiality, and invention assignment (the "Restrictive Covenant Agreement"). The Restrictive Covenant Agreement is incorporated herein by reference and shall survive the termination of the Executive's employment and the expiration of this Agreement in accordance with its terms. The following Sections 6.2 through 6.6 provide a summary of the key terms of the Restrictive Covenant Agreement for reference purposes; provided, that in the event of any conflict between the summary set forth herein and the terms of the Restrictive Covenant Agreement, the terms of the Restrictive Covenant Agreement shall control.
Section 6.2 — Non-Competition.
(a) Restricted Period. During the Executive's employment with the Company and for a period of twelve (12) months following the termination of the Executive's employment for any reason (the "Non-Competition Period"), the Executive shall not, directly or indirectly, engage in, be employed by, consult with, render services to, or have any ownership interest in (other than ownership of less than two percent (2%) of the outstanding securities of a publicly traded company) any Competitive Business.
(b) Scope. For purposes of this Agreement and the Restrictive Covenant Agreement, "Competitive Business" means any healthcare information technology or software-as-a-service company with annual revenues in excess of Fifty Million Dollars ($50,000,000) that operates in the United States and provides clinical workflow optimization, revenue cycle management, or substantially similar products or services to those offered by the Company as of the date of termination.
(c) Garden-Leave Payment. In accordance with the Massachusetts Noncompetition Agreement Act (M.G.L. c. 149, § 24L), during the Non-Competition Period, the Company shall pay the Executive garden-leave compensation equal to fifty percent (50%) of the Executive's highest annual Base Salary within the two (2)-year period preceding the date of termination (i.e., Two Hundred Eighty-Seven Thousand Five Hundred Dollars ($287,500) based on the initial Base Salary), or such other mutually agreed consideration, payable in accordance with the Company's regular payroll schedule during the Non-Competition Period. Such garden-leave payment shall be in addition to, and not in lieu of, any severance payments to which the Executive may be entitled under Article V.
(d) Exception. Notwithstanding the foregoing, the non-competition restriction set forth in this Section 6.2 shall not apply if the Executive's employment is terminated by the Company without Cause or if the Executive resigns for Good Reason; provided, however, that the garden-leave payment described in Section 6.2(c) shall remain payable during the Non-Competition Period regardless of the reason for the Executive's termination.
Section 6.3 — Non-Solicitation of Employees.
During the Executive's employment with the Company and for a period of eighteen (18) months following the termination of the Executive's employment for any reason, the Executive shall not, directly or indirectly, recruit, solicit, induce, or encourage any employee of the Company or any of its subsidiaries or affiliates who holds a position at or above the manager level to leave the employ of the Company, or hire or engage any such individual for employment or consulting services with any other person or entity.
Section 6.4 — Non-Solicitation of Customers and Partners.
During the Executive's employment with the Company and for a period of twelve (12) months following the termination of the Executive's employment for any reason, the Executive shall not, directly or indirectly, solicit, divert, or seek to induce any customer, client, strategic partner, vendor, or other business relation of the Company or any of its subsidiaries or affiliates to terminate or materially reduce its business relationship with the Company, or to conduct with any other person or entity any business activity of the type conducted with the Company, in each case limited to those customers, clients, strategic partners, vendors, or business relations with whom the Executive had material contact or about whom the Executive possessed material confidential information during the twenty-four (24)-month period immediately preceding the Executive's date of termination.
Section 6.5 — Confidentiality.
(a) Obligation. The Executive acknowledges that, during the course of employment, the Executive will have access to and become familiar with confidential and proprietary information of the Company, including, without limitation, trade secrets, business plans, financial data, customer and prospect lists, pricing strategies, product roadmaps, source code, algorithms, and other information not generally known to the public (collectively, "Confidential Information"). The Executive shall not, at any time during or after the Executive's employment with the Company, directly or indirectly, disclose, publish, or use any Confidential Information for any purpose other than in furtherance of the Executive's duties to the Company. This obligation of confidentiality is perpetual and shall survive the termination of the Executive's employment and the expiration of this Agreement.
(b) Exceptions. The foregoing restrictions shall not apply to: (i) information that is or becomes generally available to the public other than as a result of a breach of this Agreement or the Restrictive Covenant Agreement by the Executive; (ii) information that the Executive can demonstrate was known to the Executive prior to the commencement of employment with the Company, other than through a breach of any obligation of confidentiality owed to the Company; or (iii) disclosures compelled by applicable law, regulation, or legal process, provided that the Executive provides the Company with prompt written notice of any such compelled disclosure (to the extent legally permissible) to enable the Company to seek a protective order or other appropriate remedy.
(c) Defend Trade Secrets Act Notice. Pursuant to the Defend Trade Secrets Act of 2016 (18 U.S.C. § 1833(b)), the Executive is hereby notified that an individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (A) is made (1) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and (2) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual (1) files any document containing the trade secret under seal; and (2) does not disclose the trade secret, except pursuant to court order.
Section 6.6 — Invention Assignment.
(a) Assignment. The Executive hereby assigns, and agrees to assign, to the Company all right, title, and interest in and to any and all inventions, discoveries, innovations, improvements, works of authorship, designs, trade secrets, know-how, techniques, processes, software, data, and other intellectual property (whether or not patentable or copyrightable) that are conceived, created, developed, reduced to practice, or learned by the Executive, either alone or jointly with others, during the period of the Executive's employment with the Company and that relate to the Company's business, actual or anticipated research or development, or products or services, or that result from any work performed by the Executive for the Company (collectively, "Company Inventions").
(b) Prior Inventions. Any inventions, patents, patent applications, or other intellectual property owned by the Executive prior to the Start Date and that the Executive wishes to exclude from the scope of this Section 6.6 are listed on Schedule A attached hereto (collectively, "Prior Inventions"). If no Prior Inventions are listed on Schedule A, the Executive represents that there are no Prior Inventions.
(c) Cooperation. The Executive shall cooperate fully with the Company, both during and after the Executive's employment, in the preparation, filing, prosecution, maintenance, and enforcement of any and all applications for patents, copyrights, trademarks, and other intellectual property rights relating to Company Inventions, and shall execute and deliver all documents and take all actions reasonably requested by the Company in connection therewith, at the Company's sole expense.
Section 6.7 — Remedies.
(a) The Executive acknowledges and agrees that the restrictive covenants set forth in this Article VI and in the Restrictive Covenant Agreement are reasonable and necessary to protect the Company's legitimate business interests, including its Confidential Information, goodwill, and customer and employee relationships, and that a breach of any such restrictive covenant would result in irreparable harm to the Company for which monetary damages alone would be an inadequate remedy.
(b) In the event of a breach or threatened breach of any restrictive covenant set forth in this Article VI or in the Restrictive Covenant Agreement, the Company shall be entitled to seek temporary, preliminary, and permanent injunctive relief, specific performance, and any other equitable remedies available at law or in equity, without the necessity of posting a bond or proving actual damages, in addition to any and all other remedies available at law or in equity, including monetary damages.
(c) The covenants contained in this Article VI are independent of one another and of the other provisions of this Agreement. The existence of any claim or cause of action by the Executive against the Company, whether based on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of any restrictive covenant. If any provision of this Article VI is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, such invalidity, illegality, or unenforceability shall not affect the validity, legality, or enforceability of any other provision, each of which shall be given full effect. If any provision is held to be unenforceable because of its scope, duration, or area of restriction, the court making such determination shall have the power to reduce the scope, duration, or area of restriction, as applicable, and to enforce such provision as so modified to the fullest extent permitted by applicable law.
ARTICLE VII — SECTION 409A COMPLIANCE
Section 7.1 — General 409A Compliance.
(a) This Agreement is intended to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended ("Section 409A"), or to be exempt from the application of Section 409A, and shall be interpreted, construed, and administered in a manner consistent with such intent. Each payment made under this Agreement shall be treated as a separate payment for purposes of Section 409A, and the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments. All payments intended to qualify as short-term deferrals under Section 409A shall be made in accordance with Treasury Regulation Section 1.409A-1(b)(4). In no event shall the Company be required to "gross up" or otherwise compensate the Executive for any tax, interest, or penalty imposed under Section 409A.
(b) To the extent required by Section 409A, reimbursements of expenses and in-kind benefits provided under this Agreement shall be subject to the following rules: (i) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during one calendar year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year; (ii) reimbursement of an eligible expense shall be made no later than the last day of the calendar year following the calendar year in which the expense was incurred; and (

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