THIS EMPLOYMENT
AGREEMENT (“Agreement”), is made and entered into as of
September 16, 2002, by and between ATHENAHEALTH, INC. (the
“Company”), and Robert M. Hueber
(“Employee”).
The parties
hereby agree as follows:
(a) The
Company employs Employee, and Employee accepts employment with the
Company, upon the terms and conditions contained in this
Agreement.
(b)
Term of Employment . Employee’s employment with the
Company will commence on October 7, 2002 (the “Start
Date”). The Company and Employee acknowledge that
Employee’s employment is at-will, and is for no definite
period of time. Employee acknowledges and agrees that this
Agreement will govern the terms of Employee’s employment with
Company, even though compensation levels may be adjusted by Company
from time to time consistent with Section 3, below.
“Employment Period” means the period commencing on the
Start Date and ending on the effective date of any termination of
Employee’s employment with the Company.
During the
Employment Period, Employee shall serve as Vice President Sales or
in such other positions and with such other duties and
responsibilities as Company shall from time to time assign to
Employee provided that these shall be at the senior management
level within the Company. Employee shall perform faithfully for the
Company the duties of Employee’s position and in accordance
with the directives of the Company. Employee shall comply with
procedures and policies as established by the Company from time to
time. Employee shall devote substantially all of Employee’s
business time and effort to the performance of Employee’s
duties to the Company; provided that nothing in this Agreement
shall be construed as preventing the Employee from: (a) investing
the Employee’s assets in any company or other entity in a
manner not prohibited by Section 8 or 9 and in such form or
manner as shall not require any material activities on the
Employee’s part in connection with the operations or affairs
of the companies or other entities in which such investments are
made; or (b) engaging in religious, charitable or other
community or non-profit activities that do not impair the
Employee’s ability to fulfill his duties and responsibilities
under this Agreement. Employee acknowledges that execution of
Employee’s duties in a timely, consistent and prudent manner
is vital to the successful operations of the Company and that it is
essential that Employee conduct the duties of this position with
constant and watchful attention.
Employee’s initial base salary will be at
an annual gross rate of $188,802.80 (the “Base Salary”)
which shall, in the sole discretion of the Company, be subject to
increase during the Employment Period. The Base Salary and the cash
commissions and cash bonuses which Employee may be
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entitled to
receive under this Agreement and Exhibit A attached hereto may
not be reduced (i) unless cash compensation for substantially all
other senior management personnel at the same level and higher of
management seniority within the Company is reduced, as nearly as
may be determined, to the same degree, or (ii) except that
Employee’s incentive compensation (and not the Base Salary)
may be reduced as a result of the negotiation contemplated by the
following sentence. If, during the Employment Period, Employee is
proposed to be moved to a position other than a senior sales
position in which he is substantially responsible for sales on a
Company-wide basis such that Employee would no longer be entitled
to the commissions and/or bonuses payable under this Agreement and
Exhibit A attached hereto, then the Company and Employee will
negotiate in good faith a new incentive compensation package (which
may be an increase or decrease from Employee’s then-current
incentive compensation package) for Employee (which will be in
addition to the Base Salary) in such new position in place of such
commissions and bonuses. Unless otherwise explicitly stated herein
the Base Salary and all other amounts payable to Employee pursuant
to this Agreement shall be payable in accordance with the
Company’s payroll practices, as in effect from time to time,
shall be subject to required federal, state and local taxes and
withholdings, and the amount actually paid to Employee will be the
amount payable reduced by any deductions and withholdings as
required by law or as appropriate under the applicable Company
employees’ benefits plans. Each year, before the beginning of
the fiscal year, the Company will, after consultation with Employee
in his position of Vice President Sales, set a quota for sales for
the entire Company, for such fiscal year. During each fiscal year,
the Company will pay Employee a commission of .5% on all Company
sales made while Employee is acting as Vice President Sales (or
another senior sales position in which he is substantially
responsible for sales on a Company-wide basis) up to the amount of
the quota for such fiscal year and a commission of 1% on all
Company sales made while Employee is acting as Vice President Sales
(or another senior sales position in which he is substantially
responsible for sales on a Company-wide basis) in excess of the
quota for such fiscal year. This quota for the fiscal year
beginning January 1, 2003 will be determined by the Company in
good faith in consultation with Employee in his position as Vice
President Sales. For the fiscal year ending December 31, 2002,
the Company will pay Employee a commission of .5% on all Company
sales made while Employee is acting as Vice President Sales (or
another senior sales position in which he is substantially
responsible for sales on a Company-wide basis), commencing with
sales made on the Start Date. The Company will pay Employee a
nonrecoverable advance on commissions at the annual rate of
$50,000, payable in equal installments through out the year with
each payment of Base Salary. The calculation of sales and the
payment of commissions shall be made in accordance with the
Company’s sales and commissions plan then in effect. The
Company calculates sales for purposes of calculation of its sales
and commissions plan on a different basis from the classification
of sales on its books of accounting. The Company will also pay
Employee cash bonuses in accordance with Exhibit A attached
hereto to the extent that the conditions for such bonuses are
fulfilled.
Upon the Start
Date, the Company shall grant Employee options to purchase 300,000
shares of the Company’s Common Stock (at the current strike
price of $0.62 per share, which is equal to the fair market value
of the shares at the time of grant as determined by the
Company’s Board of Directors) vesting at the rate of 25% of
the grant one year from the grant date and an additional
1/36 th
of the remainder (rounded down to
the nearest share) vesting at the end of each following month until
all shares are vested, in accordance with the Company’s
current four-year vesting schedule for new senior-level
hires.
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This grant will
be subject to the terms and conditions in the Company’s stock
option plan and in the Company’s current stock option
agreement for vesting of non-qualified options. Employee hereby
represents and warrants to Company on a continuing basis that
Employee does not believe or expect that any unvested portion of
any option granted is compensation for past employment or for any
work done prior to the relevant vesting date. Employee acknowledges
and agrees that under no circumstances will Employee’s right
to any unvested options become vested unless and until any and all
conditions stated for vesting in the relevant stock option
agreement have been fulfilled. The Company will also grant to
Employee options to purchase shares of the Company’s common
stock in accordance with Exhibit A attached hereto to the
extent that the conditions for such options grants are
fulfilled.
(a) The
Company agrees to reimburse Employee, in accordance with the
Company’s policies, for reasonable expenses paid or incurred
by Employee in connection with the performance of Employee’s
duties for the Company hereunder.
(b) Employee
shall be entitled to 20 business days of vacation annually, which
vacation shall accrue at a rate of 13.36 business hours per month;
provided that the maximum vacation accrual Employee may have at any
time shall be 30 days. The vacation year begins on
Employee’s anniversary date. Of the vacation days not taken
at the end of the calendar year, only ten days may be carried
forward to the following year. Employee may not receive cash in
lieu of the days not taken, except with written consent of the HR
Committee.
(c) Employee
shall be entitled to participate in health, life, or disability
insurance, and retirement, pension, or profit-sharing plans and any
other employee benefits plans that may be instituted by the Company
for the benefit of its senior-level management employees generally,
upon such terms contained therein.
Employee’s employment under this Agreement
shall terminate under the following circumstances set forth in this
Section 6.
(a) Termination
by the Company for Cause. Employee’s employment under this
Agreement may be terminated for Cause without further liability on
the part of the Company, except as provided in
Section 7(b)(i).
Only the
following shall constitute “Cause” for such
termination:
(i) willful and material dishonest statements or reports of
the Employee to the Company or any affiliate of the Company or
willful and material dishonest acts of the Employee with respect to
the Company or any affiliate of the Company; (ii) the
commission by or indictment of the Employee for (A) a felony
or (B) any misdemeanor involving moral turpitude, deceit,
dishonesty or fraud (“indictment,” for these purposes,
meaning an indictment, probable cause hearing or any other
procedure pursuant to which an initial determination of probable or
reasonable cause with
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respect to such
offense is made); (iii) failure to perform to the reasonable
satisfaction of the Company’s Board of Directors (the
“Board”) a substantial portion of the Employee’s
duties and responsibilities assigned or delegated under this
Agreement or material breach by the Employee of any of the
Employee’s obligations under this Agreement, ;
(iv) disloyalty, willful misconduct, willful insubordination,
fraud or breach of fiduciary duty to the Company (v) willful
violation of the rules or policies of the Company or willful breach
of Employee’s obligations or representations under this
Agreement; (vi) the unauthorized disclosure of any Company
trade secret or other confidential information of the Company; or
(vii) death or mental or physical disability or infirmity
(provided that any insurance or other similar benefits due to
Employee as a result of death or any such disability or infirmity
will not be affected by virtue of such events being deemed to
constitute “Cause”);. Cause shall be deemed to exist
under clauses (iii), (v) and (vi) of this paragraph only if
the events or behavior alleged to constitute “Cause”
continue, in the reasonable judgment of the President or Chief
Executive Officer of the Company, for a period of not less than
30 days after the Company has given written notice to the
Employee of such events or behavior, or Employee has not, within
such 30-day period, substantially cured the effects of such events
or behavior, provided that if material and irreparable injury is
likely to result to the Company by reason of the passage of all or
any portion of such 30- day period, then the period shall be deemed
waived. The Company will cooperate in good faith with the
Employee’s efforts to correct any Cause event or behavior
during the 30-day period following the written notice. If Employee
cures the Cause event or behavior during the 30-day period, Cause
shall be deemed not to have occurred.
(b) Termination
by the Employee For Good Reason. The Employee’s employment
under this Agreement may be terminated for Good Reason by the
Employee by written notice to the Board at least 30 days prior
to such termination.
Only the
following shall constitute “Good Reason”: (i) any
removal of Employee from the position of Vice President Sales not
for Cause as set forth above unless Employee is offered another
senior management position in the Company no less senior than the
position from which he is being removed, (ii) any significant
diminution, without Employee’s prior written consent, in the
nature or scope of Employee’s responsibilities, authorities,
powers, functions or duties not for Cause as set forth above unless
Employee is offered another senior management position in the
Company no less senior than his position as it existed prior to any
such diminution or (iii) a material breach by the Company of
any of the Company’s obligations under the Agreement,
provided that in the event of termination for Good Reason, Employee
shall first comply with the “Good Reason Process” and
provided further that if material and irreparable injury is likely
to result to the Employee by reason of the passage of all or any
portion of the period necessary for the Good Reason Process then
the requirement of Good Reason Process shall be deemed waived For
purposes of this Agreement, “Good Reason Process” shall
mean that (i) the Employee reasonably determines in good faith
that a “Good Reason” event has occurred;
(ii) Employee notifies the Company in writing of the
occurrence of the Good Reason event; (iii) Employee cooperates
in good faith with the Company’s efforts, for a period not
less than 30 days following such notice, to modify
Employee’s employment situation in a manner so as to cure any
Good Reason; and (iv) notwithstanding such efforts, the Good
Reason continues to exist. If the Company cures the Good Reason
event during the 30-day period referenced in this
Section 6(b), Good Reason shall be deemed not to have
occurred. If during the pendency of the Good Reason process the
Company terminates the Employee’s employment without Cause,
the Employee shall nevertheless be entitled to receive the
termination benefits set forth in Section 7(b)(ii)
below.
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(c) Other
Termination. Since Employee’s employment is at-will
employment, either the Employee or the Company may terminate
Employee’s employment at any time for any reason or for no
reason, subject to the payment of severance to Employee in certain
circumstances as provided in Section 7. The Company may
terminate Employee’s employment without Cause and any
termination by the Company other than pursuant to Section 6(a)
above shall be considered a Termination without Cause. Any
termination of the Employee’s employment by the Employee
other than pursuant to Section 6(b) above shall be considered a
Termination without Good Reason.
(d) Upon
the termination of Employee’s employment for any reason, the
parties shall have no further obligations under this Agreement,
except that those obligations of Employee and the Company under
Sections 7, 8, 9 and 10 of this Agreement and
Section A.4. of Exhibit A attached hereto, and the
provisions of Sections 6, 10, 11, 12 and 13 shall remain in
effect and binding upon the parties.
7. Effect of
Termination.
(a) The
Company shall have no liability or obligation to Employee upon
Employee’s termination other than as specifically set forth
in this Section 7.
(b) Upon
the termination of Employee’s employment, Employee shall be
entitled to receive only the following:
(i) Payments
Upon Any Termination. Upon any termination of the Employee’s
employment for any reason, the Company shall promptly (i) pay
to the Employee all accrued Base Salary, sales commissions, any
benefits under any plans of the Company in which the Employee is a
participant to the full extent of the Employee’s rights under
such plans, accrued vacation pay and any business expense incurred
by the Employee in connection with his duties and properly
reimbursable hereunder and (ii) grant to Employee any stock
options that are required to be granted in accordance with
Exhibit A attached hereto but are not granted at the time of
termination, all to the date of termination.
(ii) Payments
Upon Termination For Good Reason or Termination Without Cause. In
the event the Employee’s employment with the Company is
terminated by Employee for Good Reason pursuant to Section 6(b)
above or by the Company without Cause pursuant to Section 6(c) at
any time from the date of this Agreement to the first anniversary
of the Start Date, the Company shall, in addition to any sum
payable under Section 7(b)(i) above, promptly (and in no event
more than ten business days following the effective date of
termination) pay to Employee a lump-sum cash payment in an amount
equal to the sum of (A) Employee’s annual Base Salary
then in effect (but in no event less than $188,802.80), plus
(B) a sum of money equal to (i) the aggregate amount of
any commissions paid or payable to Employee under Section 3
with respect to the Employment Period (not including the advance on
commissions set forth in Section 3, but only to the extent
that any amount of that advance does not represent commissions paid
or
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payable under
the formula set forth in Section 3 to the date of termination)
divided by the number of days in the Employment Period times
(ii) the number of days between the date of termination and
the date that is one year after the Start Date, plus (C) a sum
of money that is equal to (i) the aggregated amounts of cash
bonus available under Section B of Exhibit A for quarters
in the first year following the Start Date that are not ended as of
the date of termination times (ii) a fraction the denominator
of which is the number of quarters that have ended between the
Start Date and the date of termination and numerator of which is
the number of quarters during the Employment Period in which
Employee has qualified for a bonus under such Section B,
exclusive of this Section 7(b)(ii). In the event the
Employee’s employment with the Company is terminated by
Employee for Good Reason or by the Company without Cause at any
time after the first anniversary of the Start Date, the Company
shall, in addition to any sum payable under Section 7(b)(i)
above, promptly (and in no event more than ten business days after
the effective date of termination) pay to Employee severance in
such amount as is at least equal to the amount of severance paid by
the Company to senior management level employees who terminated
employment during the year prior to Employee’s termination
not as a result of settlement of legal claims or in situations
where “cause” (as applicable to the particular employee
and not as defined in this Agreement) existed or was alleged to
exist, or, if there was no such termination in such year, then the
most recent termination of a senior management level employee in
such circumstances.
(c) Upon
the termination of Employee’s employment for any reason,
Employee shall immediately surrender to the Company all Company
property in the possession, custody or control of Employee,
including but not limited to any computer hardware, software,
computer disks and/or data storage devices, notes, data, sketches,
drawings, manuals, documents, records, data bases, programs,
blueprints, memoranda, specifications, customer lists, financial
reports, equipment and all other physical forms of expression
incorporating or containing any Confidential Information (as
defined in Section 8 hereof), it being distinctly understood
that all such writings, physical forms of expression and other
things are exclusive property of the Company.
8. Confidential
Information and Inventions.
(a) Employee
recognizes and acknowledges that during the course of
Employee’s employment with the Company, Employee shall have
access to Confidential Information. “Confidential
Information” means all information or material not publicly
known which relates to any of its products, services or any phase
of its operations, business or financial affairs. Confidential
Information includes,
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