Exhibit 10.9
EMPLOYMENT AGREEMENT
     THIS EMPLOYMENT AGREEMENT (“Agreement”), is made and entered into as of
January 31, 2005, by and between ATHENAHEALTH, INC. (the “Company”), and Derek
Hedges (“Employee”).
     The parties hereby agree as follows:
     1. Employment; Term.
          (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. 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 by assent of the parties hereto.
     2. Duties.
     During the Employment Period, Employee shall serve as Director of Channel
Development or in such other positions and with such other duties and
responsibilities as Company shall from time to time assign to employee. Employee
shall perform faithfully for the Company the duties of Employee’s position and
in accordance with the reasonable 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. 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.
     3. Compensation
Employee’s base salary will be at an annual gross rate of $100,000 (the “Base
Salary”), plus potential for $100,000 in incentive based pay if goals are met in
accordance with the Channel Development Compensation Plan, $50,000 of which will
be paid monthly in the form of a draw against commissions (the $50,000 draw
against commissions will be guaranteed in the first year of employment). In
addition, Employee will receive $20,000 as a signing bonus (payment schedule to
be determined by Robert Hueber), plus payment to cover moving expenses (payment

 

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amount and schedule to be determined by Robert Hueber). The Base Salary shall be
payable in accordance with the Company’s payroll practices, as in effect from
time to time, and shall be subject to required federal, state and local taxes
and withholdings. Employee may be entitled to annual consideration for a bonus
based on Employee’s and the Company’s performance. Such bonus, if any, shall be
determined by the Company in its sole discretion.
     4. Stock Option Grant,
     Following the execution of this Agreement and subject to the approval of
the Board of Directors, the Company shall grant Employee an option (the
“Option”) to purchase 6,500 shares of the Company’s Common Stock, subject to the
terms and conditions in the Company’s stock option plan and in the Company’s
stock option agreement.
     5. Expenses; Benefits.
          (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 17 days of vacation annually, which
vacation shall accrue at a rate of 1.4 business hours per month. The vacation
year begins on Employee’s anniversary date. Of the vacation days not taken at
the end of the vacation 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 that may
be instituted by the Company for the benefit of its mid-level management
Employees generally, upon such terms contained therein.
     6. Termination.
          (a) Since Employee’s employment is at-will employment, either Employee
or the Company may terminate Employee’s employment at any time for any reason or
for no reason.
          (b) Upon the termination of Employee’s employment for any reason, the
parties shall have no further obligations, except that those obligations of
Employee under Sections 7, 8, 9 and 10, and the provisions of Sections 12 and 13
shall remain in effect and binding upon the parties.

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     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 such portion (if any) of the Base Salary as may have
accrued but be unpaid on the date of termination, plus any accrued and unpaid
vacation pay or other benefits which may be owing through the date of
termination.
          (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 know which relates to any of its products, services or any
phase of its operations, business or financial affairs. Confidential Information
includes, but is not limited to, the following types of information and other
information of a similar nature (whether or not reduced to writing): trade
secrets, inventions, drawings, file data, documentation, diagrams,
specifications, know-how, processes, formulas, models, flow charts, software
completed or in various stages of development, source codes, object codes,
research and development procedures, test results, marketing techniques and
materials, marketing and development plans, price lists, pricing policies,
business plans, information relating to customers and/or suppliers’ identities,
characteristics and agreements, financial information and projections and
Employee files. Confidential Information also includes any information described
above which the Company obtains from another party and which the Company treats
and/or has an obligation to treat as confidential or designates as Confidential
Information, whether or not owned or developed by the Company. (The term
“Company,” as used in this Section 8, means not only athenahealth, Inc., but
also any company, partnership or entity which, directly or indirectly, controls,
is controlled by or is under common control with athenahealth, Inc..)

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          (b) Both during the Employment Period and at all times thereafter, all
Confidential Information which Employee may now possess or access, may obtain
during or after the Employment Period, or may create prior to the end of the
Employment Period will be held confidential by Employee, and Employee will not
(nor will Employee assist any other person to do so), directly or indirectly,
(i) reveal, report, publish or disclose such Confidential Information to any
person, firm, corporation, association or other entity for any reason or purpose
whatsoever (other than in the course of carrying out Employee’s duties hereunder
or as expressly authorized by the Company), (ii) render any services to any
person, firm, corporation, association or other entity to whom any such
Confidential Information, in whole or in part, has been disclosed or is
threatened to be disclosed by or at the instance of Employee, or (iii) use such
Confidential Information except for the benefit of the Company and in the course
of Employee’s employment with the Company. The foregoing will not apply to the
extent Employee is required to disclose any Confidential Information by
applicable law or legal process so long as Employee promptly notifies the
Company of such pending disclosure and consults with the Company prior to such
disclosure concerning the advisability of seeking a protective order or other
means of preserving the confidentiality of the Confidential Information.
          (c) Any Inventions (as defined below) in whole or in part conceived,
made or reduced to practice by Employee (either solely or in conjunction with
others) during or after the Employment Period that are made through the use of
any of the Confidential Information or any of the Company’s equipment,
facilities, supplies, trade secrets or time, or that relate to the Company’s
business or the Company’s actual or demonstrably anticipated research and
development, or that result from any work performed by Employee for the Company
will belong exclusively to the Company and will be deemed part of the
Confidential Information for purposes of this Agreement, whether or not fixed in
a tangible medium of expression. The term “Inventions,” as used herein, means
any ideas, designs, concepts, techniques, inventions and discoveries, whether or
not patentable or protectable by copyright and whether or not reduced to
practice, including, but not limited to, devices, processes, drawings, works of
authorship, computer programs, software, source codes, object codes, interfaces
and networks (and all components of the foregoing), methods and formulas
together with any improvements thereon or thereto, derivative works therefrom
and know-how related thereto. The provisions of this section are not meant to
apply to those inventions (1) that Employee creates without the use of any
Confidential Information of the Company and/or without the use of any of the
Company’s resources, equipment, facilities, supplies, trades secrets or time,
(2) that do not relate to the Company’s business and/or the Company’s actual or
demonstrably anticipated business, research or development, (3) that do not
result from any Company work assigned to or performed by Employee or any other
employee of the Company, and (4) that do not result from any work performed by
Employee during the hours Employee is scheduled to work for the Company or
during the hours Employee is working for the Company.

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          (i) Without limiting the foregoing, any such Inventions will be deemed
to be “works made for hire” and the Company will be deemed to be the owner
thereof, provided that in the event and to the extent such works are determined
not to constitute “works made for hire” as a matter of law, Employee hereby
irrevocably assigns and transfers to the Company all right, title and interest
in and to any such Inventions, including but not limited to all related patents,
copyrights and mask works and all applications therefor and filings and
notification with respect thereto.
          (ii) Employee will keep and maintain adequate and current written
records (in the form of notes, sketches, drawings or such other form(s) as may
be specified by the Company) of all Inventions made by Employee during the
Employment Period or thereafter (including but not limited to information
relating to all Inventions which belong exclusively to the Company pursuant to
the provisions of this Section 8(c)), which records will be available at all
times to the Company and will remain the sole property of the Company. In the
event that (A) any Invention is made, conceived of or reduced to practice by
Employee, either solely or in conjunction with others, during the Employment
Period, or (B) any Invention is made, conceived of or reduced to practice by
Employee after the Employment Period which belongs exclusively to the Company
pursuant to the provisions of this Section 8(c), Employee will promptly give
notice and fully disclose in writing such Invention to the Chairman of the Board
and the Board of Directors of the Company.
          (iii) Employee will assist the Company (at the Company’s expense),
either during or subsequent to the Employment Period, to obtain and enforce for
the Company’s benefit, patents, copyrights, and mask work protection in any
country for any and all Inventions made by Employee, in whole or in part, the
rights to which belong to or have been assigned to the Company pursuant to the
provisions of Section 8(c) hereof. Employee agrees to execute all applications,
assignments, instruments and papers and perform all acts as the Company or its
counsel may deem necessary or desirable to obtain any patents, copyrights or
mask work protection in such Inventions and otherwise to protect the interests
of the Company therein. In the event the Company is unable to secure Employee’s
signature on any document necessary to apply for, prosecute, obtain, or enforce
any patent, copyright, or other right or protection relating to any Invention,
whether due to mental or physical incapacity or any other cause, Employee hereby
irrevocably designates and appoints the Company and each of its duly authorized
officers and agents as Employee’s agents and attorney-in-fact, to act for and in
Employee’s behalf and stead to execute and file any such document and to do all
other lawfully permitted acts to further the prosecution, issuance, and
enforcement of patents, copyrights, or other right or protections with the same
force and effect as if executed and delivered by Employee.

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          (d) All memoranda, notes, lists, records and other documents (and all
copies thereof) constituting Confidential Information (including information
relating to all Inventions which belong exclusively to the Company pursuant to
the provisions of Section 8(c) above) made or compiled by Employee or made
available to Employee during or after the Employment Period shall be the
Company’s property, shall be kept confidential in accordance with the provisions
of this Section 8 and shall be delivered to the Company at any time upon request
and upon the termination of Employee’s employment.
          (e) To the extent, if any, that Employee possesses or has knowledge of
information that is proprietary to a third party or that is subject to
confidentiality restrictions properly placed upon it by a third party that would
prevent Company from having access to such information (collectively “Third
Party Information”), Employee shall not disclose such information to Company or
to any Company personnel nor shall Employee use such information in the conduct
of Employee’s employment hereunder. Employee’s duties hereunder expressly
exclude use or disclosure of such information. Company expressly disclaims any
request or requirement that Employee disclose or use Third Party Information
with in connection with employment hereunder; and, if Employee encounters such
request or requirement, Employee will not make such disclosure or use but shall
instead promptly report such request or requirement to the Company’s acting
compliance officer.
          (f) To the extent that Employee has been employed or retained by any
third party in the past whereby Employee has come into possession of Third Party
Information, Employee warrants and represents that Employee’s duties for Company
as they have been described by Company in negotiation of this Agreement are not
substantially similar to those duties that Employee undertook for any such third
party such that any Third Party Information would naturally, necessarily or
inevitably be used or disclosed by Employee in performing her duties for the
Company.
     9. Covenant Against Competition.
     Employee covenants and agrees that:
          (a) During the Non-Compete Period (as hereinafter defined), Employee
shall not, in any Geographic Area (as hereinafter defined): (i) engage in any
business competitive with the Company Business (as hereinafter defined); (ii)
render any services in any capacity to any person or entity engaged in any
business competitive with the Company Business; or (iii) acquire an interest in
any person or entity engaged in any business competitive with the Company
Business as a partner, shareholder, director, officer, Employee, principal,
manager, member, agent, trustee, consultant or in any other relationship or
capacity, provided, however, Employee may own, directly or indirectly, solely as
a passive investment,

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securities of any such entity which are traded on any national securities
exchange if Employee (A) is not a controlling person of, or a member of a group
which controls, such entity, and (B) does not, directly or indirectly, own 1% or
more of any class of securities of such entity.
          (b) During the Non-Compete Period, Employee shall not, without the
prior written consent of the Company, directly or indirectly, on behalf of
himself or any other person or entity, solicit or encourage any Employee of the
Company or any of its Affiliates to leave the employment of the Company or any
of its Affiliates, or hire any Employee who has left the employment of the
Company or any of its Affiliates within one year of the termination of such
Employee’s employment with the Company or any of its Affiliates.
          (c) During the Non-Compete Period, Employee shall not, in any
Geographic Area, directly or indirectly (i) solicit or encourage any customer or
client of the Company to engage the services competitive with the Company
Business of Employee or any person or entity (other than the Company) in which
Employee is a partner, shareholder, director, officer, employee, principal,
member, manager, agent, trustee, consultant or engaged in any other relationship
or capacity, or (ii) accept orders or business that is competitive with the
Company Business from, or agree to provide services competitive with the Company
Business to, any customer or client of the Company, on behalf of Employee or any
person or entity (other than the Company) in which Employee is a partner,
shareholder, director, officer, employee, principal, member, manager, agent,
trustee, consultant or engaged in any other relationship or capacity.
          (d) If any provision of Sections 8 or 9 is held to be unenforceable,
it is the intention of the parties that the court making such determination
shall modify such provision, so that the provision shall be enforceable to the
greatest extent permitted under the law, and that such provision shall then be
applicable in such modified form.
          (e) As used herein:
               (i) “Affiliate” shall mean any entity directly or indirectly
controlling, controlled by, or under common control with the Company and any
entity in which the Company is a general partner, member, manager or holder of
greater than a 10% common equity, partnership or membership interest.
               (ii) “Company Business” shall mean the business of the Company at
the time a violation of this Section 9 is alleged to occur or, if such alleged
occurrence is after Employee’s employment is terminated, the business of the
Company at the time such employment terminates.
               (iii) “Geographic Area” shall mean the United States and Canada.

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               (iv) “Non-Compete Period” shall mean the period during which
Employee is employed by the Company and an additional period of one year
following the termination of Employee’s employment with the Company for any
reason.
     10. Enforcement by Injunction.
     Employee acknowledges and agrees that the Company will be irreparably
damaged if Employee fails to comply with the provisions of Sections 8 or 9.
Accordingly, the Company shall be entitled to (i) an injunction or any other
appropriate decree of specific performance (without the necessity of posting any
bond or other security in connection therewith) in case of any breach or
threatened breach of Employee’s covenants under Sections 8 or 9, (ii) damages in
an amount equal to all compensation, profits, monies, accruals, increments or
other benefits derived or received by Employee (or any associated party deriving
such benefits, including but not limited to any future employer of Employee) as
a result of any such breach of Employee’s covenants under Sections 8 or 9, and
(iii) indemnification against any other losses, damages, costs and expenses,
including actual attorneys’ fees and court costs, incurred by the Company in
obtaining any damages and/or injunctive relief. Such remedies shall not be
exclusive and shall be in addition to any other remedy, at law or in equity,
which the Company may have for any breach or threatened breach of Sections 8 or
9 by Employee.
     11. Notices.
     Any and all notices or other communications required or permitted to be
given under any of the provisions of this Agreement shall be in writing and
shall be deemed to have been duly given when personally delivered or mailed by
first class registered mail, return receipt requested, or by commercial courier
or delivery service, by facsimile or by receipted e-mail, addressed to the
parties at the addresses set forth below their signatures hereto (or at such
other address as any party may specify by notice to all other parties given as
aforesaid).
     12. Arbitration.
     Any dispute or controversy arising under this Agreement or concerning
Employee’s employment with the Company (including, without limitation, any
controversy as to the arbitrability of any dispute), including but not limited
to any claims arising out of Title VII of the Civil Rights Act of 1964, the Age
Discrimination in Employment Act, the Americans with Disabilities Act, and/or
Massachusetts General Laws Chapter 151B, shall be settled exclusively by
arbitration to be held in Boston, Massachusetts, before a single arbitrator in
accordance with the rules of the American Arbitration Association then in effect
relating to the arbitration of employment disputes, provided, however, that any
claims arising out of Sections 8, 9 and/or 10 of this Agreement may be resolved
either through arbitration or through the court system. Judgment may be entered

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on the arbitrator’s award in any court having jurisdiction, and the parties
consent to the jurisdiction of the Massachusetts courts for that purpose.
     13. Miscellaneous.
          (a) This writing constitutes the entire agreement of the parties with
respect to the subject matter hereof and may not be modified, amended or
terminated except by a written agreement signed by all parties hereto, provided
however that compensation levels may be adjusted by assent of the parties, which
assent of Company shall be in writing and signed on behalf of Company stating
the adjusted level and which assent of Employee will be established by
acceptance by Employee of compensation at such adjusted level.
          (b) No waiver of any breach or default hereunder shall be considered
valid unless in writing signed by all parties hereto, and no such waiver shall
be deemed a waiver of any subsequent breach or default of a similar nature.
          (c) If any provisions of this Agreement shall be held unenforceable,
such unenforceability shall attach only to such provisions and shall not render
unenforceable any other severable provisions of this Agreement, and this
Agreement shall be carried out as if any such unenforceable provisions were not
contained herein, unless the unenforceability of such provisions substantially
impairs the benefits of the remaining portions of this Agreement.
          (d) This Agreement may be executed in two or more counterparts, each
of which shall be deemed one original.
          (e) This Agreement shall be deemed to be a contract under the laws of
the Commonwealth of Massachusetts and for all purposes shall be construed and
enforced in accordance with the internal laws of said Commonwealth.
     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.

       
Derek Hedges
  athenahealth, Inc.
 
   
/s/ Derek Hedges
   
 
   
Employee signature
   
 
   
Address:
  By:      

11214 Highcrest Drive
 
Name: Jonathan Bush
 
   
Huntersville, NC 28078
 
Title: CEO
 
   
 
 
Address: One Moody Street,
 
   
 
 
               Waltham, MA 02453

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