exv10w5






Exhibit 10.5




ATHENAHEALTH, INC. 




2007 EMPLOYEE STOCK PURCHASE PLAN




     The purpose of the 2007 Employee Stock Purchase Plan (“the Plan”) is to provide eligible
employees of athenahealth, Inc. (the “Company”) and each Designated Subsidiary (as defined in
Section 11) with opportunities to purchase shares of the Company’s common stock, par value $0.01
per share (the “Common Stock”). 500,000 shares of Common Stock in the aggregate have been approved
and reserved for this purpose, subject to adjustment as set forth in Section 17 below. The Plan is
intended to constitute an “employee stock purchase plan” within the meaning of Section 423(b) of
the Internal Revenue Code of 1986, as amended (the “Code”), and shall be interpreted in accordance
with that intent.



     1. Administration. The Plan will be administered by the person or persons (the
“Administrator”) appointed by the Company’s Board of Directors (the “Board”) for such purpose. The
Administrator has authority at any time to: (i) adopt, alter and repeal such rules, guidelines and
practices for the administration of the Plan and for its own acts and proceedings as it shall deem
advisable; (ii) interpret the terms and provisions of the Plan; (iii) make all determinations it
deems advisable for the administration of the Plan; (iv) decide all disputes arising in connection
with the Plan; and (v) otherwise supervise the administration of the Plan. All interpretations and
decisions of the Administrator shall be binding on all persons, including the Company and the
Participants. No member of the Board or individual exercising administrative authority with
respect to the Plan shall be liable for any action or determination made in good faith with respect
to the Plan or any option granted hereunder.



     2. Offerings. The Company will make one or more offerings to eligible employees to
purchase Common Stock under the Plan (“Offerings”). Unless otherwise determined by the
Administrator, the initial Offering will begin on January 1, 2008 and will end on the following



 









 







June 30, 2008 (the “Initial Offering”). Thereafter, unless otherwise determined by the
Administrator, an Offering will begin on the first business day occurring on or after each January
1 and July 1 and will end on the last business day occurring on or before the following June 30 and
December 31, respectively. The Administrator may, in its discretion, designate a different period
for any Offering, provided that no Offering shall exceed six months in duration or overlap any
other Offering.



     3. Eligibility. All individuals classified as employees on the payroll records of the
Company and each Designated Subsidiary are eligible to participate in any one or more of the
Offerings under the Plan, provided that as of the first day of the applicable Offering (the
“Offering Date”) they are customarily employed by the Company or a Designated Subsidiary for more
than 20 hours a week. Notwithstanding any other provision herein, individuals who are not
contemporaneously classified as employees of the Company or a Designated Subsidiary for purposes of
the Company’s or applicable Designated Subsidiary’s payroll system are not considered to be
eligible employees of the Company or any Designated Subsidiary and shall not be eligible to
participate in the Plan. In the event any such individuals are reclassified as employees of the
Company or a Designated Subsidiary for any purpose, including, without limitation, common law or
statutory employees, by any action of any third party, including, without limitation, any
government agency, or as a result of any private lawsuit, action or administrative proceeding, such
individuals shall, notwithstanding such reclassification, remain ineligible for participation.
Notwithstanding the foregoing, the exclusive means for individuals who are not contemporaneously
classified as employees of the Company or a Designated Subsidiary on the Company’s or Designated
Subsidiary’s payroll system to become eligible to



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participate in this Plan is through an amendment to this Plan, duly executed by the Company,
which specifically renders such individuals eligible to participate herein.



     4. Participation.



          (a) An eligible employee who is not a Participant on any Offering Date may participate in such
Offering by submitting an enrollment form to his or her appropriate payroll location at least 15
business days before the Offering Date (or by such other deadline as shall be established by the
Administrator for the Offering).




          (b) The enrollment form will (a) state a whole percentage to be deducted from an eligible
employee’s Compensation (as defined in Section 11) per pay period, (b) authorize the purchase of
Common Stock in each Offering in accordance with the terms of the Plan and (c) specify the exact
name or names in which shares of Common Stock purchased for such individual are to be issued
pursuant to Section 10. An employee who does not enroll in accordance with these procedures will
be deemed to have waived the right to participate. Unless a Participant files a new enrollment
form or withdraws from the Plan, such Participant’s deductions and purchases will continue at the
same percentage of Compensation for future Offerings, provided he or she remains eligible.




          (c) Notwithstanding the foregoing, participation in the Plan will neither be permitted nor be
denied contrary to the requirements of the Code.




     5. Employee Contributions. Each eligible employee may authorize payroll deductions at
a minimum of 1 percent up to a maximum of 10 percent of such employee’s Compensation for each pay
period. The Company will maintain book accounts showing the amount of payroll deductions made by
each Participant for each Offering. No interest will accrue or be paid on payroll deductions.



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     6. Deduction Changes. Except as may be determined by the Administrator in advance of
an Offering, a Participant may not increase or decrease his or her payroll deduction during any
Offering, but may increase or decrease his or her payroll deduction with respect to the next
Offering (subject to the limitations of Section 5) by filing a new enrollment form at least 15
business days before the next Offering Date (or by such other deadline as shall be established by
the Administrator for the Offering). The Administrator may, in advance of any Offering, establish
rules permitting a Participant to increase, decrease or terminate his or her payroll deduction
during an Offering.



     7. Withdrawal. A Participant may withdraw from participation in the Plan by
delivering a written notice of withdrawal to his or her appropriate payroll location. The
Participant’s withdrawal will be effective as of the next business day. Following a Participant’s
withdrawal, the Company will promptly refund such individual’s entire account balance under the
Plan to him or her (after payment for any Common Stock purchased before the effective date of
withdrawal). Partial withdrawals are not permitted. Such an employee may not begin participation
again during the remainder of the Offering, but may enroll in a subsequent Offering in accordance
with Section 4.



     8. Grant of Options. On each Offering Date, the Company will grant to each eligible
employee who is then a Participant in the Plan an option (“Option”) to purchase on the last day of
such Offering (the “Exercise Date”), at the Option Price hereinafter provided for, (a) a number of
shares of Common Stock determined by dividing such Participant’s accumulated payroll deductions on
such Exercise Date by the lesser of 85 percent of the Fair Market Value of the Common Stock on (i)
the first day of the Offering or (ii) the Exercise Date, or (b) such other lesser maximum number of
shares as shall have been established by the Administrator in



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advance of the Offering; provided, however, that such Option shall be subject to the
limitations set forth below. Each Participant’s Option shall be exercisable only to the extent of
such Participant’s accumulated payroll deductions on the Exercise Date. The purchase price for each
share purchased under each Option (the “Option Price”) will be the lesser of 85 percent of the Fair
Market Value of the Common Stock on the first day of the Offering or on the Exercise Date.



     Notwithstanding the foregoing, no Participant may be granted an option hereunder if such
Participant, immediately after the option was granted, would be treated as owning stock possessing
5 percent or more of the total combined voting power or value of all classes of stock of the
Company or any Parent or Subsidiary (as defined in Section 11). For purposes of the preceding
sentence, the attribution rules of Section 424(d) of the Code shall apply in determining the stock
ownership of a Participant, and all stock which the Participant has a contractual right to purchase
shall be treated as stock owned by the Participant. In addition, no Participant may be granted an
Option which permits his or her rights to purchase stock under the Plan, and any other employee
stock purchase plan of the Company and its Parents and Subsidiaries, to accrue at a rate which
exceeds $25,000 of the fair market value of such stock (determined on the option grant date or
dates) for each calendar year in which the Option is outstanding at any time. The purpose of the
limitation in the preceding sentence is to comply with Section 423(b)(8) of the Code and shall be
applied taking Options into account in the order in which they were granted.



     9. Exercise of Option and Purchase of Shares. Each employee who continues to be a
Participant in the Plan on the Exercise Date shall be deemed to have exercised his or her Option on
such date and shall acquire from the Company such number of whole shares of Common Stock reserved
for the purpose of the Plan as his or her accumulated payroll deductions on such date will purchase
at the Option Price, subject to any other limitations contained in the Plan.



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Any amount remaining in a Participant’s account at the end of an Offering solely by reason of
the inability to purchase a fractional share will be carried forward to the next Offering; any
other balance remaining in a Participant’s account at the end of an Offering will be refunded to
the Participant promptly.




     10. Issuance of Certificates; Limitation on Sale. Certificates representing shares of
Common Stock purchased under the Plan may be issued only in the name of the employee, in the name
of the employee and another person of legal age as joint tenants with rights of survivorship, or in
the name of a broker authorized by the employee to be his, her or their, nominee for such purpose.
Unless the Administrator provides otherwise, an employee may not sell, exchange, assign, encumber,
alienate, transfer, pledge or otherwise dispose of any shares of Common Stock acquired on the
Exercise Date at the end of an Offering until the one-year anniversary of such Exercise Date, and
the Certificates representing shares of Common Stock purchased under the Plan may bear a legend to
that effect.



     11. Definitions.



     The term “Compensation” means the amount of base pay, prior to salary reduction pursuant to
Sections 125, 132(f) or 401(k) of the Code, but excluding overtime, commissions, incentive or bonus
awards, allowances and reimbursements for expenses such as relocation allowances or travel
expenses, income or gains on the exercise of Company stock options, and similar items.



     The term “Designated Subsidiary” means any present or future Subsidiary (as defined below)
that has been designated by the Board to participate in the Plan. The Board may so designate any
Subsidiary, or revoke any such designation, at any time and from time to time, either before or
after the Plan is approved by the stockholders.



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     The term “Fair Market Value of the Common Stock” on any given date means the fair market value
of the Common Stock determined in good faith by the Administrator; provided,
however, that if the Common Stock is admitted to quotation on the National Association of
Securities Dealers Automated Quotation System (“NASDAQ”), NASDAQ Global Market or another national
securities exchange, the determination shall be made by reference to market quotations. If there
are no market quotations for such date, the determination shall be made by reference to the last
date preceding such date for which there are market quotations.



     The term “Parent” means a “parent corporation” with respect to the Company, as defined in
Section 424(e) of the Code.



     The term “Participant” means an individual who is eligible as determined in Section 3 and who
has complied with the provisions of Section 4.



     The term “Subsidiary” means a “subsidiary corporation” with respect to the Company, as defined
in Section 424(f) of the Code.



     12. Rights on Termination of Employment. If a Participant’s employment terminates for
any reason before the Exercise Date for any Offering, no payroll deduction will be taken from any
pay due and owing to the Participant and the balance in the Participant’s account will be paid to
such Participant or, in the case of such Participant’s death, to his or her designated beneficiary
as if such Participant had withdrawn from the Plan under Section 7. An employee will be deemed to
have terminated employment, for this purpose, if the corporation that employs him or her, having
been a Designated Subsidiary, ceases to be a Subsidiary, or if the employee is transferred to any
corporation other than the Company or a Designated Subsidiary. An employee will not be deemed to
have terminated employment for this purpose, if the employee is on an approved leave of absence for
military service or sickness or for any other purpose approved by



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the Company, if the employee’s right to reemployment is guaranteed either by a statute or by
contract or under the policy pursuant to which the leave of absence was granted or if the
Administrator otherwise provides in writing.



     13. Special Rules. Notwithstanding anything herein to the contrary, the Administrator
may adopt special rules applicable to the employees of a particular Designated Subsidiary, whenever
the Administrator determines that such rules are necessary or appropriate for the implementation of
the Plan in a jurisdiction where such Designated Subsidiary has employees; provided that such rules
are consistent with the requirements of Section 423(b) of the Code. Such special rules may include
(by way of example, but not by way of limitation) the establishment of a method for employees of a
given Designated Subsidiary to fund the purchase of shares other than by payroll deduction, if the
payroll deduction method is prohibited by local law or is otherwise impracticable. Any special
rules established pursuant to this Section 13 shall, to the extent possible, result in the
employees subject to such rules having substantially the same rights as other Participants in the
Plan.



     14. Optionees Not Stockholders. Neither the granting of an Option to a Participant
nor the deductions from his or her pay shall constitute such Participant a holder of the shares of
Common Stock covered by an Option under the Plan until such shares have been purchased by and
issued to him or her.



     15. Rights Not Transferable. Rights under the Plan are not transferable by a
Participant other than by will or the laws of descent and distribution, and are exercisable during
the Participant’s lifetime only by the Participant.



     16. Application of Funds. All funds received or held by the Company under the Plan
may be combined with other corporate funds and may be used for any corporate purpose.



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     17. Adjustment in Case of Changes Affecting Common Stock. In the event of a
subdivision of outstanding shares of Common Stock, the payment of a dividend in Common Stock or any
other change affecting the Common Stock, the number of shares approved for the Plan and the share
limitation set forth in Section 8 shall be equitably or proportionately adjusted to give proper
effect to such event.



     18. Amendment of the Plan. The Board may at any time and from time to time amend the
Plan in any respect, except that without the approval within 12 months of such Board action by the
stockholders, no amendment shall be made increasing the number of shares approved for the Plan or
making any other change that would require stockholder approval in order for the Plan, as amended,
to qualify as an “employee stock purchase plan” under Section 423(b) of the Code.



     19. Insufficient Shares. If the total number of shares of Common Stock that would
otherwise be purchased on any Exercise Date plus the number of shares purchased under previous
Offerings under the Plan exceeds the maximum number of shares issuable under the Plan, the shares
then available shall be apportioned among Participants in proportion to the amount of payroll
deductions accumulated on behalf of each Participant that would otherwise be used to purchase
Common Stock on such Exercise Date.



     20. Termination of the Plan. The Plan may be terminated at any time by the Board.
Upon termination of the Plan, all amounts in the accounts of Participants shall be promptly
refunded.



     21. Governmental Regulations. The Company’s obligation to sell and deliver Common
Stock under the Plan is subject to obtaining all governmental approvals required in connection with
the authorization, issuance, or sale of such stock.



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     22. Governing Law. This Plan and all Options and actions taken thereunder shall be
governed by, and construed in accordance with, the laws of the General Corporation Law of the State
of Delaware as to matters within the scope thereof, and as to all other matters shall be governed
by and construed in accordance with the internal laws of the Commonwealth of Massachusetts, without
regard to conflict of law principles that would result in the application of any law other than the
law of the State of the Commonwealth of Massachusetts.



     23. Issuance of Shares. Shares may be issued upon exercise of an Option from
authorized but unissued Common Stock, from shares held in the treasury of the Company, or from any
other proper source.



     24. Tax Withholding. Participation in the Plan is subject to any minimum required tax
withholding on income of the Participant in connection with the Plan. Each Participant agrees, by
entering the Plan, that the Company and its Subsidiaries shall have the right to deduct any such
taxes from any payment of any kind otherwise due to the Participant, including shares issuable
under the Plan.



     25. Notification Upon Sale of Shares. Each Participant agrees, by entering the Plan,
to give the Company prompt notice of any disposition of shares purchased under the Plan where such
disposition occurs within two years after the date of grant of the Option pursuant to which such
shares were purchased.



     26. Effective Date and Approval of Shareholders. The Plan shall take effect on the later
of the date it is adopted by the Board and the date it is approved by the holders of a majority of
the votes cast at a meeting of stockholders at which a quorum is present or by written consent of
the stockholders.



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First Amendment

to the

athenahealth, Inc.

2007 Employees Stock Purchase Plan



Pursuant to the powers reserved to it in Section 18 of the athenahealth, Inc. 2007 Employees Stock
Purchase Plan (the “Plan”), the Board of Directors of athenahealth, Inc. (the “Company”) hereby
amends the Plan, effective as of May 1, 2008, as follows:



1) The Plan is amended by adding the following “Addendum — Terms of purchase of shares by
employees of Athena Net India Private Limited” to the end thereof:




“ADDENDUM TO THE

athenahealth, Inc.

2007 EMPLOYEES STOCK PURCHASE PLAN

Terms of Purchase of shares by employees of Athena Net India Private Limited



Notwithstanding anything stated to the contrary in the athenahealth, Inc. 2007 Employees Stock
Purchase Plan, as amended to date (the “Plan”), this Addendum to the Plan (the “Addendum”) shall
apply for purposes of all incentives granted under the Plan to eligible employees of Athena Net
India Private Limited, which is a Designated Subsidiary of athenahealth, Inc. as defined in the
Plan. All capitalized terms, to the extent not defined herein, shall have the meanings set forth in
the Plan.




Exercise of Stock Purchase — Regulatory Requirements for purchasing shares of Common Stock:



(a) Under applicable law, including without limitation, the Foreign Exchange Management (Transfer
or Issue of any Foreign Security) Regulations, 2000 (“Regulations”) framed by Reserve Bank of India
(“RBI”) as amended by Notification No. FEMA 120/ RB-2004 dated July 7, 2004 (as may be amended
/substituted from time to time), Participants who are resident in India and are employees or
employee directors of Athena Net India Private Limited (the “Indian Subsidiary”) may, subject to
the provisions of the Plan, exercise the Options granted to them to purchase shares of Common Stock
without seeking any prior approval from the RBI by remitting money out of India for such exercise /
purchase. There is currently no limit on the amount of money that may be remitted by such
Participants for exercising such Options.



(b) In accordance with the Regulations, any Participant resident in India (whether an employee,
officer or director of the Company or of the Indian Subsidiary) may also acquire the shares of
Common Stock by way of permitting deductions from their payrolls.



(c) It is hereby clarified that clauses 1.1 — 1.2 above merely summarize the Indian law
requirements for exercise of the Options by Participants resident in India as in effect on the date
of introduction of the Plan for Participants resident in India. Any exercise of the Options at any
time shall always be subject to any restrictions / conditions that may be stipulated under Indian
laws from time to time and Participants shall be responsible for complying with the same.




 









 







27. Terms of the Plan / Options:



(a) Total Number of Shares: The total number of shares of Common Stock that may be issued
under the Plan to employees of the Indian Subsidiary is 500,000, subject to adjustment as set forth
in Section 17 of the Plan.



(b) Eligibility: The class of employees of the Indian Subsidiary who are entitled to
participate in the Plan includes all employees, officers and directors (to the extent that such
director is an employee of the Indian Subsidiary or the Company) of the Indian Subsidiary,
provided, however, that an employee who is a “promoter” or belongs to the “promoter group” or a
director who either by himself or through his relatives or through any body corporate, directly or
indirectly holds more than 10% of outstanding equity shares of the Indian Subsidiary shall not be
eligible to participate in the Plan, to the extent that any such employee or director is resident
in India.



(c) Pricing Formula: The purchase price at which such shares will be purchased under
Options is 85% of the fair market value of the Company’s Common Stock on the Exercise Date as
determined in accordance with clause 2.7 of this Addendum.



(d) Number of Shares Awarded: The maximum number of shares of Common Stock that may be
issued to any employee is 25,000 in any one fiscal year. Options may be granted to those eligible
employees, officers and directors who have enrolled themselves under the Plan in accordance with
Section 4 of the Plan.



(e) Shareholder Approval: The Plan was most recently approved by shareholders of the
Company on September 4, 2007. Shareholder approval will be obtained in the future to the extent it
is required under applicable law.



(f) Lock-in Period: The lock in period of shares of Common Stock acquired on the Exercise
Date shall be one year from the Exercise Date.



(g) Valuation: The fair market value of the shares will be arrived at by the Administrator
appointed by the Board of Directors. Since the Company’s Common Stock is publicly traded on the
National Association of Securities Dealers Automated Quotation System (NASDAQ), the determination
of the fair value of the Common Stock would be made by reference to market quotations. If there are
no market quotations for such date, the determination shall be made by reference to the last date
preceding such date for which there are market quotations.



(h) Non-Transferability: Except as the Board may otherwise determine or provide in the
share certificate(s), shares shall not be sold, exchanged, assigned, alienated, transferred,
pledged, encumbered or otherwise disposed off by the person to whom they are granted, either
voluntarily or by operation of law, until the one year anniversary of the Exercise Date and the
share certificate representing shares of common stock purchased under the plan may bear a legend to
that effect. Further, the rights under the Plan shall not be transferred by a Participant except by
will or the laws of descent and distribution, and, during the life of the Participant, shall be
exercisable only by the Participant. References to a Participant, to the extent relevant in the
context, shall include references to authorized transferees.




 









 







(i) No changes shall be effected to the conditions contained in this Addendum after the date that
this Addendum becomes effective, except as may be required in accordance with the laws of India or
the USA.”



28. Except as so amended, the Plan in all other respects is hereby confirmed.



IN WITNESS WHEREOF, the Board has caused this First Amendment to the Plan to be duly executed on
this 1st day of May, 2008.




	 	 	 	 	 
	 

	 	athenahealth, Inc.	 	 
	 
	 	 	 	 
	 

	 	/s/ Jonathan Bush
 

Name: Jonathan Bush
	 	 
	 

	 	Title: President & Chief Executive Officer