Document:

EX-10.16

Exhibit 10.16

 

HEALTHCARE SERVICES, INC.

 

WARRANT AND LICENSE AGREEMENT

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page No.	 
	 
	 	 	 	 
	1. Business Development and Sales Support
	 	 	1	 
	 
	 	 	 	 
	2. Use and Development of Proprietary Rights
	 	 	1	 
	 
	 	 	 	 
	3. Authorization and Issuance of Securities
	 	 	2	 
	 
	 	 	 	 
	4. Delivery of Warrants
	 	 	2	 
	 
	 	 	 	 
	5. Stockholder Agreement
	 	 	2	 
	 
	 	 	 	 
	6. Representations and Warranties by Accretive
	 	 	2	 
	 
	 	 	 	 
	7. Representations and Warranties of Zimmerman
	 	 	3	 
	 
	 	 	 	 
	8. The Warrants
	 	 	6	 
	 
	 	 	 	 
	9. Restrictive Covenants
	 	 	7	 
	 
	 	 	 	 
	10. Indemnification
	 	 	8	 
	 
	 	 	 	 
	11. Definitions
	 	 	8	 
	 
	 	 	 	 
	12. Changes, Waivers, etc
	 	 	10	 
	 
	 	 	 	 
	13. Notices
	 	 	10	 
	 
	 	 	 	 
	14. Survival of Representations and Warranties, etc
	 	 	11	 
	 
	 	 	 	 
	15. Successors and Assigns
	 	 	11	 
	 
	 	 	 	 
	16. Headings
	 	 	11	 
	 
	 	 	 	 
	17. Choice of Law
	 	 	11	 
	 
	 	 	 	 
	18. Counterparts
	 	 	11	 
	 
	 	 	 	 
	19. Severability
	 	 	11	 
	 
	 	 	 	 
	20. Entire Agreement; Termination of Letter Agreement
	 	 	11	 
	 
	 	 	 	 
	21. Remedies
	 	 	11	 

Exhibits

Exhibit 1 — Form of Warrant

Exhibit 2 — Stockholder Agreement

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DEFINED TERMS

	 	 	 	 	 
	Accretive
	 	 	1	 
	Accretive Companies
	 	 	8	 
	Accretive Information
	 	 	6	 
	Act
	 	 	5	 
	Affiliate
	 	 	8	 
	Aggregate Exercise Price
	 	 	6	 
	Agreement
	 	 	1	 
	Change of Control
	 	 	8	 
	Commission
	 	 	5	 
	Common Stock
	 	 	9	 
	Exercise Price
	 	 	2	 
	Expiration Date
	 	 	2	 
	Incumbent Directors
	 	 	9	 
	Letter Agreement
	 	 	1	 
	License
	 	 	1	 
	License Warrant
	 	 	2	 
	License Warrant Exercise Price
	 	 	2	 
	License Warrant Shares
	 	 	2	 
	Person
	 	 	9	 
	Proprietary Rights
	 	 	9	 
	Restricted Period
	 	 	9	 
	Revenue Cycle Consultant
	 	 	7	 
	Service Provider
	 	 	7	 
	Service Warrant Exercise Price
	 	 	2	 
	Service Warrant Shares
	 	 	2	 
	Service Warrants
	 	 	2	 
	Services
	 	 	1	 
	Subsidiary
	 	 	9	 
	Third Party Purchaser
	 	 	9	 
	Warrant Shares
	 	 	2	 
	Warrants
	 	 	2	 
	Zimmerman
	 	 	1	 
	Zimmerman Proprietary Rights
	 	 	10	 
	Zimmerman Restricted Parties
	 	 	7	 

ii

 

WARRANT AND LICENSE AGREEMENT

     WARRANT AND LICENSE AGREEMENT, made as of January      , 2005 (the “Agreement”), by and between
HEALTHCARE SERVICES, INC., a Delaware corporation (“Accretive”), and MICHAEL ZIMMERMAN and
ZIMMERMAN AND ASSOCIATES, a Wisconsin limited liability corporation (“Zimmerman”, Zimmerman and
Michael Zimmerman shall be referred to hereafter, collectively, as the “Zimmerman Entities”).

Recitals

     A. Pursuant to the binding term sheet dated as of February 17, 2004 (the “Letter Agreement”), by and between the Zimmerman Entities and Accretive, the Zimmerman Entities have agreed to license
certain of their intellectual property and other proprietary rights to Accretive, to provide sales
support to Accretive, to enter into certain restrictive covenants for the benefit of Accretive and
to assist Accretive in the development of Accretive’s business by making referrals to certain
potential customers of Accretive.

     B. Pursuant to the Letter Agreement, Accretive has agreed, in consideration of the foregoing,
to issue to Michael Zimmerman one or more warrants to purchase shares of Accretive’s Series C
Common Stock pursuant to the terms of this Agreement. Michael Zimmerman is the sole owner of
Zimmerman and Associates.

     NOW, THEREFORE, in consideration of the foregoing and the other provisions of this Agreement,
and other good valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Accretive and Zimmerman agree as follows:

     1. Business Development and Sales Support. Accretive hereby acknowledges that the
Zimmerman Entities have provided support to Accretive’s sales efforts by providing independent,
objective assessments of the potential impact of a revenue cycle managed service solution to one or
more customers of Accretive. Zimmerman hereby agrees to continue to support Accretive’s sales
efforts by providing independent, objective assessments and by facilitating introductions of
potential customers to Accretive. In addition, Zimmerman hereby agrees to provide prominent
advertising space in its publications, at no cost to Accretive, and to provide presentation
opportunities for Accretive, at no cost to Accretive, at conferences and other events sponsored or
organized by Zimmerman, as may reasonably be requested by Accretive. Collectively, the services
heretofore provided and to be provided by Zimmerman pursuant to this Section 1 shall be referred to
herein as the “Services.”

     2. License and Use of Proprietary Rights. Subject to the terms and conditions of this
Agreement, the Zimmerman Entities hereby grant to Accretive and its Affiliates an exclusive,
worldwide, royalty-free, perpetual, irrevocable, transferable, sub-licensable right and license to
use the Zimmerman Licensed Materials, in any lawful manner, and in any media and any jurisdiction,
as Accretive may desire, including, but not limited to, the unrestricted right to use, modify,
combine with other information or materials, create derivative works based on, and commercially
exploit the Zimmerman Licensed Material (the “License”). The Zimmerman Entities have delivered
the Licensed Material to Accretive, or has otherwise made the Licensed Material available to
Accretive. The Zimmerman Entities shall have the obligation to continue to make the Licensed
Material available to Accretive and shall provide to Accretive the materials

 

and information necessary to permit Accretive to utilize the Zimmerman Licensed Material as may be
requested by Accretive. The Zimmerman Entities shall provide Accretive with all logins and
passwords necessary to access the Licensed Material electronically and shall update its delivery of
the Licensed Materials annually.

     3. Authorization and Issuance of Securities.

          3.1 Subject to the terms and conditions hereof, in consideration of the Services heretofore
provided and to be provided hereunder pursuant to Section 1, Accretive agrees to authorize and
issue to Michael Zimmerman a warrant (the “Service Warrant”), substantially in the form of Exhibit
1 hereto, in each case to purchase 416,667 shares of Common Stock (the “Service Warrant Shares”), at a price per share of $ 1.12 (the “Service Warrant Exercise Price”). The Service Warrants shall
expire on the earlier of (i) January 15, 2015 or (ii) the consummation of a Change of Control (the
“Expiration Date”).

          3.2 Subject to the terms and conditions hereof, in consideration of the License granted to
Accretive pursuant to Section 2, Accretive agrees to authorize and issue to Michael Zimmerman a
warrant (the “License Warrant”), substantially in the form of Exhibit 1 hereto, to purchase 416,667
shares of Common Stock (the “License Warrant Shares”), at a price per share of $1.12 (the “License
Warrant Exercise Price”). The License Warrant shall expire on the Expiration Date.

          3.3 The term “Warrants” as used herein shall mean the Service Warrant and the License Warrant
being delivered pursuant to this Agreement and all warrants issued in exchange or substitution
therefor; the term “Warrant Shares” as used herein shall mean the shares of Common Stock issuable
upon exercise of the Warrants and all shares of Common Stock issued in exchange or substitution
therefor; and the term “Exercise Price” shall mean the Service Warrant Exercise Price or the
License Warrant Exercise Price, as applicable.

     4. Delivery of Warrants. Promptly following the execution and delivery of this
Agreement by each of the parties hereto, Accretive shall deliver to Michael Zimmerman the Warrants,
registered in its name.

     5. Stockholder Agreement. The Zimmerman Entities hereby acknowledge and agree that the
Warrants are, and the Warrant Shares received upon exercise thereof will be, subject to a
Stockholder’s Agreement which carries restrictions in a form substantially similar to that which is
attached hereto as Exhibit 2. The Zimmerman Entities hereby agree to be, and to cause each
subsequent transferee of any Warrant or Warrant Shares to be, bound by the terms and conditions of
the Stockholders Agreement as an Investor (as defined therein), and to execute or cause to be
executed such documentation as may be reasonably requested by Accretive to give effect to the
foregoing.

     6. Representations and Warranties by Accretive. Accretive represents and warrants to
the Zimmerman Entities that:

          6.1 Organization, Standing, etc. Accretive is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has the requisite
corporate power and authority to own its properties and to carry on its business in all

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material respects as it is now being conducted. Accretive has the requisite corporate power and
authority to issue the Warrants and the Warrant Shares, and to otherwise perform its obligations
under this Agreement and the Warrants.

          6.2 Qualification. Accretive is duly qualified or licensed as a foreign
corporation in good standing in each jurisdiction wherein the nature of its activities or of its
properties owned or leased makes such qualification or licensing necessary and failure to be so
qualified or licensed would have a material adverse impact on its business.

          6.3 Warrants and Warrant Shares. The Warrants, when issued pursuant to the terms of
this Agreement, will be duly authorized, validly issued and outstanding, fully paid, nonassessable
and free and clear of all pledges, liens, encumbrances and restrictions, except as set forth in
Section 5 hereof.

          6.4 Corporate Acts and Proceedings. This Agreement has been duly authorized by all
necessary corporate action on behalf of Accretive, and has been duly executed and delivered by
authorized officers of Accretive. All corporate action necessary to the authorization, creation,
issuance and delivery of the Warrants and the Warrant Shares has been taken on the part of
Accretive. This Agreement is, and each of the Warrants when issued pursuant to the terms of this
Agreement will be, a valid and binding agreement of Accretive enforceable in accordance with its
terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting the enforcement of creditors’ rights generally, and
except for judicial limitations on the enforcement of the remedy of specific enforcement and other
equitable remedies.

     7. Representations and Warranties of the Zimmerman Entities. The Zimmerman
Entities represent and warrant that:

          7.1 Organization, Standing, etc. Zimmerman is a limited liability corporation, duly
organized, validly existing and in good standing under the laws of the State of Wisconsin, and has
the requisite power and authority to own its properties and to carry on its business in all
material respects as it is now being conducted. Zimmerman has the requisite power and authority
to perform the Services, to grant to Accretive the License, to agree to and perform the restrictive
covenants set forth in Section 9, and to otherwise perform its obligations under this Agreement and
the Warrants. Michael Zimmerman is the sole owner of Zimmerman.

          7.2 Qualification. Zimmerman is duly qualified or licensed as a foreign entity in good
standing in each jurisdiction wherein the nature of its activities or of its properties owned or
leased makes such qualification or licensing necessary and failure to be so qualified or licensed
would have a material adverse impact on its business.

          7.3 Acts and Proceedings. This Agreement has been duly authorized by all necessary
action on behalf of Zimmerman, and has been duly executed and delivered by authorized
representatives of Zimmerman. This Agreement is a valid and binding agreement of Zimmerman
enforceable in accordance with its terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting the enforcement
of creditors’ rights generally, and except for judicial limitations on the enforcement of the
remedy of specific enforcement and other equitable remedies.

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          7.4 Information Provided. The information provided to Accretive by the Zimmerman
Entities and any of their officers, directors, employees, consultants or other agents or
representatives in connection with this Agreement, the Services or the License with respect to the
Zimmerman Entities is true, complete and correct in all respects.

          7.5 Information Received. The Zimmerman Entities:

     (a) have received such documents, materials and information as they deem necessary or
appropriate for evaluating an investment in Accretive;

     (b) have carefully read and understand these materials; and

     (c) have made such further investigation as was deemed appropriate to obtain additional
information to verify the accuracy of such materials and to evaluate the merits and risks of
its investment in the Warrants and the Warrant Shares.

          7.6 Due Diligence. The Zimmerman Entities have had an opportunity to ask questions of
and receive answers from the officers of Accretive, concerning the terms and conditions of this
investment, and all such questions have been answered to the full satisfaction of the undersigned.

          7.7 No Solicitation. The Zimmerman Entities confirm that the Warrants and the
Warrant Shares were not offered to them by any means of general solicitation or general
advertising.

          7.8 Investor Status. The Zimmerman Entities:

     (a) were not formed for the specific purpose of investing in the Warrants or the
Warrant Shares;

     (b) have total assets in excess of US$5,000,000;

     (c) have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of an investment in Accretive;

     (d) are able to bear the economic risks of an investment in the Warrants and the
Warrant Shares, and at the present time could afford a complete loss of such investment; and

     (e) are acquiring the Warrants and the Warrant Shares for their own account, for
investment purposes only, and not with a view towards the sale or other distribution
thereof, in whole or in part.

          7.9 No Registration. The Zimmerman Entities understand that the Warrants have not
been, and that the Warrant Shares will not be, registered under the securities laws of any state,
under the Securities Act of 1933, as amended (the “Act”) or under the securities laws of any other
country and are offered in reliance on exemptions therefrom (which depend upon, among other things,
the bona fide nature of the investment intent and the truth and accuracy of the representations of
the Zimmerman Entities as expressed herein), and that the Warrants and

4

 

the Warrant Shares have not been approved or disapproved by the Securities and Exchange Commission
(the “Commission”), by any other federal or state agency or by any other equivalent foreign agency.

          7.10 Nature of Investment. The Zimmerman Entities recognize that Accretive is a
highly speculative venture involving a high degree of financial risk and the Zimmerman Entities are
familiar with the nature of, and risks attendant to, investments in securities of the type being
subscribed for and has determined that the purchase of such securities is consistent with their
investment objectives.

          7.11 Transferability. The Zimmerman Entities understand that: (a) there will be no
public market for the Warrants or the Warrant Shares; and (b) it may not be possible to liquidate
their investment in Accretive and accordingly, they may have to hold the Warrants and the Warrant
Shares, and bear the economic risk of this investment, indefinitely.

          7.12 Restrictions on Disposition. Except as expressly provided in Section 7.13 hereof,
and notwithstanding the provisions of any other agreement to which the Company and the Zimmerman
Entities are a party, or are bound under, until such time as there is a Public Market for the
Common Stock of the Company, may not, directly or indirectly, voluntarily or involuntarily, sell,
transfer, negotiate, pledge, hypothecate, assign or any other way dispose of (collectively,
“Dispose” or a “Disposition”) the Warrants, or the Restricted Stock acquired as a result of the
exercise of the Warrants, now owned or hereafter acquired by him or any part thereof either during
the Recipient’s lifetime or upon his death.

          7.13 Exceptions to Restrictions on Disposition. The restrictions set forth in
Section 7.12 hereof shall not apply to any of the following Dispositions: (i) any repurchase or
redemption by the Company from the Recipient of the Restricted Stock, provided that such repurchase
or redemption is effectuated in accordance with applicable law and as set forth in the Amended and
Restated Certificate of Incorporation of the Company; or (ii) to the Recipient’s spouse, children,
sisters or brothers (collectively, “Family Members” and, individually a “Family Member”) or any
trust, limited partnership or limited liability company primarily for the benefit of a Family
Member or Family Members; provided, however, with respect to any of the foregoing that any such
transferee shall agree in writing to be bound by, and the shares so transferred shall remain
subject to, the terms and conditions of this Agreement.

          7.14 Separate Representation. The Zimmerman Entities acknowledge that they have been
advised to consult with its own attorney regarding legal matters concerning Accretive and to
consult with its tax advisor regarding the tax consequences of participating in Accretive.

          7.15 Accretive Representations. Except as set forth herein, the Zimmerman Entities
are not relying on any representations, warranties, projections, covenants or other statements or
commitments, written or oral, by Accretive, its officers, directors, representatives or agents in
connection with its investment in the Warrants and the Warrant Shares.

          7.16 No Brokers or Finders. No person, firm or corporation has or will have, as a
result of any act or omission by the Zimmerman Entities, any right, interest or valid claim against
Accretive for any commission, fee or other compensation as a finder or broker, or in any similar
capacity, in connection with the transactions contemplated by this Agreement. The

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Zimmerman Entities will indemnify and hold Accretive harmless against any and all liability with
respect to any such commission, fee or other compensation which may be payable or determined to be
payable as a result of the actions of the Zimmerman Entities in connection with the transactions
contemplated by this Agreement.

          7.17 Zimmerman Licensed Material. Zimmerman (a) owns all rights, title and interest
in and to the Zimmerman Licensed Material, and has not previously granted, pledged or made any
other disposition to any other entity or any individual of any right, title or interest in or to
the Zimmerman Licensed Material, and shall not make any such disposition to any individual or to
any entity other than Accretive; and (b) none of the Zimmerman Licensed Material in any manner
infringe or otherwise violate the intellectual property or other proprietary rights of any
individual or entity.

     8. The Warrants.

          8.1 Exercise of Warrants. The rights represented by any Warrant issued pursuant
hereto may be exercised by Michael Zimmerman, in whole or in part, by delivering to Accretive (i)
the Warrant, together with a properly completed Election to Purchase in the form attached thereto;
and (ii) at Michael Zimmerman’s option, either (A) a certified check or bank draft in an amount
equal to the product of the Exercise Price multiplied by the number of Warrant Shares being
purchased upon such exercise (the “Aggregate Exercise Price”) or (B) via wire transfer in an amount
equal to the Aggregate Exercise Price. Upon such exercise Michael Zimmerman shall be deemed to have
become the owner of record of such Warrant Shares as of the date of delivery to Accretive of the
Warrant and the Exercise Price therefor as provided in clauses (i) and (ii) above.

          8.2 Partial Exercise. If a Warrant is exercised in part at any time, a new Warrant
or Warrants shall be issued for the unexercised portion of such Warrant. All Warrants surrendered
upon exercise shall be canceled.

          8.3 Taxes. Michael Zimmerman will pay all taxes attributable to the issuance of
Warrant Shares upon the exercise of the Warrants, including without limitation any tax which may be
payable in respect of any transfer involved in the issue of any Warrant or any Warrant Shares in a
name other than that of Michael Zimmerman.

          8.4 Stock Fully Paid; Reservation of Shares. Accretive covenants and agrees that all
Warrant Shares that may be issued upon the exercise of the Warrants will, upon issuance in
accordance with the terms of the Warrants, be fully paid and nonassessable. Accretive further
covenants and agrees that, until expiration of the Warrants, Accretive will at all times have
authorized and reserved a sufficient number of shares of its Common Stock for the purpose of issue
upon the exercise of the Warrants.

          8.5 Replacement of Warrants or Certificates Representing Warrant Shares. Upon
receipt of evidence reasonably satisfactory to Accretive of the loss, theft, destruction or
mutilation of any Warrants or certificates representing Warrant Shares, and, in the case of any
such loss, theft or destruction, upon delivery of an indemnity satisfactory to Accretive, or, in
the case of any such mutilation, upon surrender and cancellation of the Warrants or certificates
representing Warrant Shares, as the case may be, Accretive will issue new Warrants or certificates
representing

6

 

Warrant Shares, as the case may be, of like tenor, in lieu of such lost, stolen, destroyed or
mutilated Warrants or certificates representing Warrant Shares, as the case may be.

     9. Restrictive Covenants. This Section 9 shall apply in addition to, and be severable
from, any other obligations that the parties hereto may have pursuant to any agreement between the
Zimmerman Entities and Accretive and/or its Affiliates.

          9.1 Accretive Information. The Zimmerman Entities hereby acknowledge that (a) any
confidential information and customer names and accounts of Accretive, its Subsidiaries and its
predecessors (“Accretive Information”) are and will at all times be the sole and separate property
of Accretive, in which the Zimmerman Entities have no rights whatsoever, and (b) all activities of
or work performed for the benefit of Accretive and the goodwill resulting from the efforts of the
Zimmerman Entities are and at all times will be the sole and separate property of Accretive, which
goodwill is intended to be protected, in part, by this Section 9. Except to the extent
specifically permitted under this Agreement, neither the Zimmerman Entities nor any of their
current or future owners, officers or directors (collectively with Zimmerman, the
“Zimmerman Restricted Parties”) shall use or disclose any Accretive Information without the prior
written consent of Accretive.

          9.2 Non-Interference with Accretive. The Zimmerman Entities agree that, at any time
during the Restricted Period, the Zimmerman Restricted Parties will not, directly or indirectly,
whether on their own behalf, or for any other person or entity, solicit any customer or vendor of
Accretive or its Subsidiaries during the Restricted Period, nor shall the Zimmerman Restricted
Parties otherwise interfere with the relationship between Accretive (including its Subsidiaries)
and any of its customers or vendors.

          9.3 Non-Interference with Zimmerman. Accretive agrees that, at any time during the
Restricted Period, Accretive will not, directly or indirectly, whether on its own behalf or for any
other person or entity, solicit any customer or vendor of the Zimmerman Entities during the
Restricted Period, nor shall Accretive otherwise interfere with the relationship between the
Zimmerman Entities and any of its customers or vendors.

          9.4 Non-Disparagement. During the Restricted Period, each of Accretive and the
Zimmerman Restricted Parties shall refrain from making any oral or written statements that
disparage or place the other party, or any of their respective Affiliates, in a false or negative
light.

          9.5 Zimmerman Non-Competition. The Zimmerman Entities agree that, during the
Restricted Period, no Zimmerman Restricted Party nor any person or enterprise controlled by a
Zimmerman Restricted Party will (i) become a stockholder, member, partner, director, officer,
agent, contractor, employee or representative of any entity, (ii) engage as a sole proprietor in
any business, (iii) act as a consultant to any of the foregoing or (iv) otherwise engage directly
or indirectly in any enterprise, in each case, that competes with the Business of Accretive (a
“Service Provider”) in any geographic territory in which Accretive or any of its Subsidiaries
operates as of the date the Restricted Period ends; provided, however, that the foregoing
shall not prohibit the ownership of less than one percent (1%) of the outstanding shares of the
stock of any company engaged as a Service Provider, which shares are regularly traded on a national
securities exchange or in any over-the-counter market. Notwithstanding the

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foregoing, the Zimmerman Entities shall not be deemed to have violated this covenant by engaging in
the Business of Zimmerman.

          9.6 Acknowledgement. The parties hereto hereby acknowledge and agree that the
covenants and agreements set forth in this Section 9 are essential to protect and Accretive and its
Subsidiaries and their respective goodwill and are being entered into in consideration for, among
other things, the Services, the License and Accretive’s agreement to issue the Warrants and upon
exercise thereof the Warrant Shares, and that the scope and duration of such covenants and
agreements are reasonably designed to protect a protectible interest of the parties and are not
excessive in light of the circumstances.

          9.7 Notice of Breach of Breach of Zimmerman Covenants. In the event that Accretive becomes
aware of a breach of the covenants of the Zimmerman Entities set forth in Sections 1, 2 or 9 of
this Agreement (the “Zimmerman Covenants”), Accretive shall provide the Zimmerman Entities with
written notice of the conduct giving rise to the claim that the Zimmerman Covenants have been
breached. The Zimmerman Entities shall have a commercially reasonable period of
time, based on the nature of the conduct, to cure the alleged breach or, alternatively, to
demonstrate to Accretive’s reasonable satisfaction that the conduct giving rise to the claim did
not constitute a breach of the Zimmerman Covenants. The commercially reasonable period shall not
exceed 30 days. In the event that the Zimmerman Entities fail to cure a material breach of the
Zimmerman Covenants, as provided for in this Section 9.7, the Warrants granted to the Zimmerman
Entities under Section 3 of this Agreement and by virtue of the Form of Warrant which is attached
to this Agreement as Exhibit 1 shall be deemed cancelled and shall be non-exercisable.

          9.8 Blue Pencil. If any arbitrator or court of competent jurisdiction shall at any time deem
the term of any particular covenant set forth in this Section 9 too lengthy or the territory
thereof too extensive, the other provisions of this Section 9 shall nevertheless stand, and the
term of these covenants shall be deemed to be the longest period permissible by law under the
circumstances and the territory thereof shall be deemed to comprise the largest territory
permissible by law under the circumstances. The arbitrator or court in each case shall reduce the
term of these covenants and/or the territory thereof to a permissible duration or size.

     10. Indemnification. The Zimmerman Entities shall reimburse, defend, indemnify, and
hold Accretive harmless against any and all actions, damages, losses, expenses, claims, demands,
costs and liabilities of any nature whatsoever (including attorneys fees and court costs) incurred
by Accretive in connection with or arising out of a breach of any of the representations,
warranties or obligations set forth herein, including but not limited to any claim that any of
Zimmerman’s Proprietary Rights infringes or otherwise violates the intellectual property or other
Proprietary Rights of any third party.

     11. Definitions. Unless the context otherwise requires, the terms defined in this
Section 11 shall have the meanings herein specified for all purposes of this Agreement, applicable
to both the singular and plural forms of any of the terms herein defined.

          “Accretive Companies” shall mean Accretive and its Subsidiaries, as they exist from time to
time.

8

 

          “Affiliate” means (a) any director or officer of Accretive or any Subsidiary, (b) any Person
who, individually or with his immediate family, directly or indirectly beneficially owns or holds
5% or more of the voting interest of Accretive or any Subsidiary, or (c) any corporation,
partnership or other Person in which any Person or group of Persons described above directly or
indirectly owns a 5% or greater equity interest.

          “Business of Accretive” means the business of providing services or solutions target at
improving revenue cycle performance of healthcare providers.

          “Business of Zimmerman” means (a) the business of providing consulting services to healthcare
providers in the area of assessments, b) the delivery of discrete revenue cycle improvement
projects involving consulting services and technology implementation and integration, and (c) the
business of providing publications, surveys and educational programs for the healthcare industry.
The Business of Zimmerman shall not be construed to include revenue cycle outsourcing or managed
services.

          “Change of Control” shall mean (A) the consummation of any consolidation or merger of
Accretive where the stockholders of Accretive, immediately prior to the consolidation or merger,
would not, immediately after the consolidation or merger, beneficially own (as such term is
defined in Rule 13d-3 under the Act), directly or indirectly, shares representing in the aggregate
more than fifty percent (50%) of the voting shares of Accretive issuing cash or securities in the
consolidation or merger (or of its ultimate parent corporation, if any), (B) any sale, lease,
exchange or other transfer (in one transaction or a series of transactions contemplated or
arranged by any party as a single plan) of all or substantially all of the assets of Accretive to
a Third Party Purchaser, (C) any sale of a majority of the voting shares of Accretive to a Third
Party Purchaser or (D) any liquidation or dissolution of Accretive.

          Notwithstanding the foregoing, a “Change of Control” shall not be deemed to have occurred if
in the event of a recapitalization, consolidation or merger (including a reverse merger) of
Accretive, (i) persons who, as of the date immediately prior to such recapitalization,
consolidation or merger, constitute Accretive’s Board of Directors (the “Incumbent Directors”)
constitute at least a majority of the Board of Directors following such recapitalization,
consolidation or merger and (ii) the Chief Executive Officer of Accretive as of the date hereof
remains as the Chief Executive Officer of Accretive and a member of the Board of Directors
following such recapitalization, consolidation or merger.

          “Common Stock” shall mean Accretive’s Series C Common Stock, par value $0.01 per share.

          “Licensed Material” means (a) all inventions (whether patentable or unpatentable and whether
or not reduced to practice), all improvements thereto, and all patents, patent applications, and
patent disclosures, together with all reissuances, continuations, continuations-in-part,
revisions, extensions, and reexaminations thereof, (b) all trademarks, service marks, trade dress,
logos, trade names, internet domain names and corporate names, together with all translations,
adaptations, derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications, registrations, and renewals in
connection therewith, (d) all mask works and all applications, registrations, and

9

 

renewals in connection therewith, (e) all trade secrets and confidential business information,
including, but not limited to, all ideas, research and development, bench-marking information,
know-how, formulas, compositions, tools, methodologies, processes and techniques, technical data,
design, drawings, specifications, customer and supplier lists, pricing and cost information, and
business and marketing plans and proposals, (f) all computer software and databases (including
data and related documentation), (g) all other proprietary rights, and (h) all copies and tangible
embodiments thereof (in whatever form or medium).

          “Person” shall mean any individual, entity or group, within the meaning of Section 13(d) or
14(d) of the Exchange Act, but excluding (a) the Accretive Companies, (b) any employee stock
ownership or other employee benefit plan maintained by Accretive and (c) an underwriter or
underwriting syndicate that has acquired Accretive’s securities solely in connection with a public
offering thereof.

          “Restricted Period” means the period beginning on the date hereof and ending on the third
(3rd) anniversary of the Expiration Date.

          “Subsidiary” shall mean any corporation in an unbroken chain of corporations beginning with
Accretive if each of the corporations other than the last corporation in the unbroken chain then
owns stock possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.

          “Third Party Purchaser” shall mean any Person or group of Persons, none of whom is, immediately prior to the subject transaction, a stockholder of Accretive or an Affiliate
of a stockholder of Accretive.

          “Zimmerman Licensed Material” means any Licensed Material owned or licensed by a Zimmerman
Entity, including without limitation any revenue cycle methodologies, tools, technology,
benchmarking information and other intellectual property related to healthcare provider revenue
cycles.

     12. Changes, Waivers, etc. Neither this Agreement nor any provision hereof may be
changed, waived, discharged or terminated orally, but only by a statement in writing signed by the
party against which enforcement of the change, waiver, discharge or termination is sought.

     13. Notices. All notices, requests, consents and other communications required or
permitted hereunder shall be in writing and shall be delivered, or mailed first-class postage
prepaid, registered or certified mail,

     (a) if to any holder of any Warrants or Warrant Shares, addressed to such holder at its
address as shown on the books of Accretive, or at such other address as such holder may
specify by written notice to Accretive, or

     (b) if to Accretive, addressed to Accretive Health, 401 North Michigan Avenue, Suite
2700, Chicago, Illinois, 60611, Attention: Gregory Kazarian or to such other address as
Accretive may specify by written notice to Zimmerman,

10

 

and such notices and other communications shall for all purposes of this Agreement be treated as
being effective or having been given if delivered personally, or, if sent by mail, when received.

     14. Survival of Representations and Warranties, etc. All representations and
warranties contained herein shall survive the execution and delivery of this Agreement, any
investigation at any time made by either party or on its behalf, and the issuance of the Warrants
to Michael Zimmerman. All statements contained in any certificate, instrument or other writing
delivered by or on behalf of either party pursuant hereto or in connection with or contemplation of
the transactions herein contemplated (other than legal opinions) shall
constitute representations and warranties by either party hereunder.

     15. Successors and Assigns. Neither this Agreement nor any of the obligations of any
Zimmerman Entity arising hereunder may be assigned thereby without the prior written consent of
Accretive. Accretive may assign any or all of its rights and/or obligations hereunder without the
prior written consent of any party hereto. All the terms and provisions of this Agreement shall
be binding upon and inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto, whether so expressed or not, and, in particular, shall inure to the
benefit of and be enforceable by the holder or holders at the time of any of the Warrants or
Warrant Shares.

     16. Headings. The headings of the Sections and paragraphs of this Agreement have been
inserted for convenience of reference only and do not constitute a part of this Agreement.

     17. Choice of Law. It is the intention of the parties that the laws of Illinois
shall govern the validity of this Agreement, the construction of its terms and the interpretation
of the rights and duties of the parties.

     18. Counterparts. This Agreement may be executed concurrently in two or more
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

     19. Severability. The unenforceability or invalidity of any provision of
this Agreement shall not affect the enforceability or validity of any other provision.

     20. Entire Agreement; Termination of Letter Agreement. This Agreement sets forth the
entire understanding of the parties hereto with respect to the subject matter hereof, and this
Agreement supersedes and preempts all prior oral or written understandings and agreements with
respect to the subject matter hereof, including without limitation the Letter Agreement, and shall
not be modified or affected by any offer, proposal, statement or representation, oral or written,
made by or for any party in connection with the negotiation of the terms hereof except in
accordance with Section 12. The parties hereto agree that, upon the execution and delivery of
this Agreement, the Letter Agreement shall terminate and be of no further force or effect
whatsoever.

     21. Remedies. The parties recognize that irreparable injury will result from a breach
of any provision of this Agreement and that money damages will be inadequate to fully remedy the
injury. Accordingly, in the event of a breach or threatened breach of one or more of the provisions
of this Agreement, any party who may be injured (in addition to any other remedies which may be

11

 

available to that party) shall be entitled, without posting a bond or other security and without
the necessity of showing actual monetary damages, to one or more preliminary or permanent orders
(i) restraining and enjoining any act which would constitute a breach or (ii) compelling the
performance of any obligation which, if not performed, would constitute a breach.

12

 

     IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date
first above written.

	 	 	 	 	 
	 	HEALTHCARE SERVICES, INC. 

 	 
	 	By:  	/s/ Greg Kazarian
 	 
	 	 	Its: Senior Vice President/General Counsel 	 
	 	 	 	 
	 	ZIMMERMAN AND ASSOCIATES

 	 
	 	By:  	/s/ Michael Zimmerman
 	 
	 	 	Its: Chief Executive Officer 	 
	 	 	 	 
	 
	 	Michael Zimmerman 

 	 
	 	By:  	/s/ Michael ZimmermanEX-10.18

Exhibit 10.18

EMPLOYMENT AGREEMENT

     This EMPLOYMENT AGREEMENT is dated as of January ___, 2004 by and between HealthCare Services,
Inc., a Delaware corporation (the “Company”), and Mary Tolan (the “Executive”).

WITNESSETH:

     WHEREAS, the Company desires to employ the Executive and the Executive desires to be employed
by the Company on the terms and conditions contained herein.

     NOW, THEREFORE, for and in consideration of the premises hereof and the mutual covenants
contained herein, the parties hereto hereby covenant and agree as follows:

     1. Employment. The Company hereby employs the Executive, and the Executive hereby
accepts such employment with the Company commencing on November 3, 2003, subject to the terms and
conditions provided for herein (the “Commencement Date”). The period beginning November 3, 2003
until the date upon which the Executive is no longer employed by the Company, in accordance with
the terms of this Agreement, shall be referred to herein as the “Term”.

     2. At-Will Employment. Unless otherwise expressly agreed to by the Executive and the
Company in writing, the Executive’s employment by the Company shall, notwithstanding anything to
the contrary expressed or implied herein, be terminable by either party “at will”, for any reason
or for no reason, but shall in all other respects be subject to the terms and conditions of this
Agreement.

     3. Duties. The Executive shall be employed as the Chief Executive Officer of the
Company subject to the supervision and direction of the Board of Directors of the Company.
Executive shall be responsible for the operation of the Company’s business and shall faithfully and
competently perform such duties and shall also perform and discharge such other executive
employment duties and responsibilities consistent with this position as Chief Executive Officer and
as the Board of Directors of the Company may from time to time reasonably prescribe. The Executive
shall perform her duties at such places and times as the Board of Directors of the Company may
reasonably from time to time prescribe, such duties to be initially performed from the Company’s
headquarters which shall be located in Chicago, Illinois, or elsewhere. Except as may otherwise be
approved in advance by the Board of Directors of the Company, and except during vacation periods
and reasonable periods of absence due to sickness, personal injury or other disability, the
Executive shall devote her full time during normal business hours throughout the Employment Period
to the services required of her hereunder. The Executive shall render her business services
exclusively to the Company during the Term and shall use her best efforts, judgment and energy to
improve and advance the business and interests of the Company in a manner consistent with the
duties of this position.

     4. Base Salary, Bonus, Withholding and Restricted Stock.

          (a) Base Salary. As compensation for the performance by the Executive of the services
to be performed by the Executive hereunder during the Term, the Company shall pay the
Executive a base salary at the annual rate of four hundred thousand dollars ($400,000) (said

 

 

annual amount, together with any increases thereto as may be determined from time to time by the
Board of Directors of the Company in its sole discretion, being hereinafter referred to as “Base
Salary”). Any Base Salary payable hereunder shall be paid in regular intervals (but in no event
less frequently than monthly) in accordance with the Company’s payroll practices from time to time
in effect.

          (b) Performance Bonus. In addition to the Restricted Stock to be granted to the
Executive as described below, the Executive shall be entitled to a one-time only cash performance
bonus in the amount of two hundred thousand dollars ($200,000) in the event, as determined in the
discretion of the Board of Directors, the Executive procures a quality customer consistent with the
Board of Directors’ approved business plan. The performance bonus shall be paid upon execution of
the contract by customer.

          (c) Withholding, Etc. The payment of any Base Salary, performance bonus or any other
cash bonus hereunder shall be subject to applicable withholding and payroll taxes, and such other
deductions as may be required under the Company’s Executive benefit plans.

          (d) Grant of Restricted Stock. Promptly following the date hereof, the Company shall
grant to the Executive 3,000,000 shares of the Company’s Class B Common Stock, $.01 par value per
share (the “Restricted Stock”), pursuant to the terms and conditions of the Restricted Stock Plan
of Healthcare Services, Inc. (the “Plan”) and a Healthcare Services, Inc. Restricted Stock Award
Agreement by and between the Executive and the Company attached hereto as Exhibit A (the
“Award Agreement”). The Restricted Stock shall vest in equal installments of 1/48 on a monthly
basis beginning as of the Commencement Date and ending on the fourth anniversary thereof. Until so
vested (or until the occurrence of an event of forfeiture as set forth in the Plan and Award
Agreement), the Executive shall nevertheless have the right to own for all purposes such Restricted
Stock in such manner as if such vesting had already occurred and to possess and enjoy all
beneficial ownership rights in same, including, without limitation, the right to vote the
Restricted Stock and the right to receive all dividends and other distributions paid or made with
respect to the Restricted Stock. The Restricted Stock shall be subject to dilution in the same
manner as all other shares of capital stock. Executive agrees and acknowledges that,
notwithstanding her right to vote the Restricted Stock, she may only vote those shares of
Restricted Stock which equal 18% of the then issued and outstanding shares of stock on record at
the time of the vote.

     Notwithstanding the foregoing agreement to grant the Executive the Restricted Stock, it is
expressly understood and agreed that the Company does not now, nor hereafter shall have, any
obligation to continue the Executive in its employ whether or not on a full-time basis, after the
end of the Term. In the event that the Executive is terminated “for Cause” as that term is defined
below, Executive agrees to i) execute a limited stock power transferring all rights to vote the
Restricted Stock to a person designated by Company in its sole discretion and ii) execute a consent
to the conversion of the Restricted Stock from Class B Common Stock to Class C Common Stock, if the
Company requests such a consent.

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     5. Benefits. During the Term, the Executive shall:

          (a) be eligible to participate in Executive fringe benefits and pension and/or profit sharing
plans that may be provided by the Company for its senior executive Executives in accordance with
the provisions of any such plan, as the same may be in effect from time to time;

          (b) be eligible to participate in any medical and health plans or other Executive welfare
benefit plans that may be provided by the Company for its senior executive Executives in accordance
with the provisions of any such plan, as the same may be in effect from time to time;

          (c) be entitled to four (4) weeks of paid vacations taken at such times in coordination with
the needs of the Company as determined by its Board of Directors during each twelve month period of
the Term;

          (d) be entitled to sick leave, sick pay and disability benefits in accordance with the Company
policy that may be applicable to senior executive Executives from time to time; and

          (e) be entitled to reimbursement for all reasonable and necessary out-of-pocket business
expenses incurred by the Executive in the performance of her duties hereunder in accordance with
the Company’s policies applicable thereto.

     6. Unauthorized Disclosure. The Executive hereby covenants, agrees and acknowledge as
follows:

          (a) The Executive has and will have access to and will participate in the development of or be
acquainted with confidential or proprietary information and trade secrets related to the business
of the Company and its subsidiaries (collectively, the “Companies”), including but not limited to
(i) business plans, operating plans, marketing plans, financial reports, operating data, budgets,
wage and salary rates, pricing strategies and information, terms of agreements with suppliers or
customers and others, customer lists, patents, devices, software programs, reports, correspondence,
tangible property and specifications owned by or used in the businesses of one or more of the
Companies, (ii) information pertaining to future developments such as, but not limited to, research
and development, future marketing, distribution, delivery or merchandising plans or ideas, and
potential new business locations, and (iii) other tangible and intangible property, which are used
in the business and operations of the Companies but not made publicly available. The information
and trade secrets relating to the business of the Companies described hereinabove in this paragraph
(a) are hereinafter referred to collectively as the “Confidential Information”; provided that the
term Confidential Information shall not include any information (x) that is or becomes generally
publicly available (other than as a result of violation of this Agreement by the Executive) or (y)
that the Executive receives on a nonconfidential basis from a source (other than the Company, its
affiliates or representatives) that is not known by her to be bound by an obligation of secrecy or
confidentiality to the Companies or any of them.

          (b) The Executive hereby assigns to the Company, in consideration of her employment, all
Confidential Information developed by or otherwise in the possession of the Executive at any time
during the Term, whether or not made or conceived during working hours, alone or with others, which
relates, directly or indirectly, to businesses or proposed businesses of any of the Companies, and
the Executive agrees that all such Confidential Information shall be the

3

 

exclusive property of the Companies. Upon request of the Board of Directors of the Company,
the Executive shall execute and deliver to the Companies any specific assignments or other
documents appropriate to vest title in such Confidential Information in the Companies or to obtain
for the Companies legal protection for such Confidential Information.

          (c) The Executive shall not disclose, use or make known for her or another’s benefit any
Confidential Information or use such Confidential Information in any way except in the best
interests of the Companies in the performance of the Executive’s duties under this Agreement. The
Executive may disclose Confidential Information when required by applicable law or judicial
process, but only after notice to the Company of the Executive’s intention to do so and opportunity
for the Company to challenge or limit the scope of the disclosure.

          (d) The Executive acknowledges and agrees that a remedy at law for any breach or threatened
breach of the provisions of this Section 6 would be inadequate and, therefore, agrees that the
Companies shall be entitled to injunctive relief in addition to any other available rights and
remedies in case of any such breach or threatened breach; provided, however, that
nothing contained herein shall be construed as prohibiting the Companies from pursuing any other
rights and remedies available for any such breach or threatened breach.

          (e) The Executive agrees that upon termination of her employment by the Company for any
reason, the Executive shall forthwith return to the Company all Confidential Information,
documents, correspondence, notebooks, reports, computer programs and all other materials and copies
thereof (including computer discs and other electronic media) relating in any way to the business
of the Companies in any way developed or obtained by the Executive during the period of her
employment with the Company.

          (f) Executive agrees, while Executive is employed by the Company, to offer or otherwise make
known or available to it, as directed by the Board of Directors of the Company and without
additional compensation or consideration, any business prospects, contracts or other business
opportunities that Executive may discover, find, develop or otherwise have available to her in any
field in which the Company is engaged or proposes to be engaged, and further agrees that any such
prospects, contacts or other business opportunities shall be the property of the Company.

          (g) The obligations of the Executive under this Section 6 shall survive the termination of the
Term and the termination of this Agreement and shall terminate two (2) years after the termination
of the Term.

          (h) Without limiting the generality of Section 11 hereof, the Executive hereby expressly
agrees that the foregoing provisions of this Section 6 shall be binding upon the Executive’s heirs,
successors and legal representatives.

     7. Termination. (a) The Executive’s employment hereunder may be terminated without
any breach of this Agreement under the following circumstances:

               (i) Death. The death of the Executive;

4

 

               (ii) Disability. The Disability (as defined below) of the Executive, as determined by
the Board of Directors;

     For purposes of this Agreement, the term “Disability” shall mean that if, as a result of the
Executive’s incapacity due to physical or mental illness, the Executive shall have been absent from
her duties with the Company on a full-time basis for three (3) consecutive months or an aggregate
of 120 days in any twenty-four month period, and within thirty (30) days after written notice of
termination is given, the Executive shall not have returned to the full-time performance of the
Executive’s duties.

               (iii) Termination For Cause. Termination of the Executive’s employment hereunder by
the Company at any time “for cause” (as defined below), such termination to take effect immediately
upon written notice from the Company to the Executive;

     The following actions, failures and events by or affecting the Executive shall, in the
reasonable opinion of the Board of Directors, constitute “cause” for termination within the meaning
of clause (iii) above: (1) material breach by Executive of any material provision of this Agreement
which has not been cured by Executive within thirty (30) days after receipt by Executive of written
notice from the Company of such breach; (2) gross negligence or willful misconduct of Executive in
connection with the performance of her duties under this Agreement, or Executive’s willful refusal
to perform any of her material duties or responsibilities required pursuant to this Employment
Agreement which has not been cured by Executive within thirty (30) days after receipt by Executive
of written notice from the Company of such conduct and/or refusal; (3) Executive’s misappropriation
for personal use of assets or business opportunities of the Company; (4) Executive’s embezzlement
of the Company’s funds or property, or fraud on the part of Executive’s; (5) Executive’s conviction
of, or plea of no contest to, a felony or any other crime which in the Board of Directors’ sole
opinion renders the Executive unfit to serve the Company as contemplated herein; or (6) a knowing
misrepresentation of a material fact made by the Executive to the Company’s Board of Directors,
with the intention of misleading the Board.

               (iv) Termination Without Cause. Termination of the Executive’s employment hereunder
by the Company at any time, other than (x) termination by reason of Disability as contemplated by
clause (ii) above or (y) termination by the Company “for cause” as contemplated by clause (iii)
above; and

               (v) Termination by Executive. At any time during the Term, Executive may terminate
her employment hereunder for Good Reason (as defined below). For purposes of this Agreement, “Good
Reason” shall mean that Executive has complied with the “Good Reason Process” (hereinafter defined)
following the occurrence of any of the following events: (A) a substantial diminution or other
substantive adverse change, not consented to by Executive, in the nature or scope of Executive’s
responsibilities, authorities, powers, functions or duties; (B) any removal, during the Term, from
Executive of her title of Chief Executive Officer; (C) an involuntary reduction in Executive’s Base
Salary except for across-the-board reductions similarly affecting all or substantially all of the
Company’s employees; (D) a breach by the Company of any of its other material obligations under
this Agreement and the failure of the Company to cure such breach within thirty (30) days after
written notice thereof by Executive; or (E) the involuntary relocation of the Company’s offices at
which Executive is principally employed or the

5

 

involuntary relocation of the offices of Executive’s primary workgroup to a location more than
fifty (50) miles from such offices, or the requirement by the Company that Executive be based
anywhere other than the Company’s offices at such location on an extended basis, except for
required travel on the Company’s business to an extent substantially consistent with Executive’s
business travel obligations. “Good Reason Process” shall mean that (i) Executive reasonably
determines in good faith that a “Good Reason” event has occurred; (ii) Executive notifies the
Company in writing of the occurrence of the Good Reason event; (iii) Executive cooperates in good
faith with the Company’s efforts, for a period not less than ninety (90) days following such
notice, to modify Executive’s employment situation in a manner acceptable to Executive and Company;
and (iv) notwithstanding such efforts, one or more of the Good Reason events continues to exist and
has not been modified in a manner reasonably acceptable to Executive. If the Company cures the
Good Reason event in a manner reasonably acceptable to Executive during the ninety (90) day period,
Good Reason shall be deemed not to have occurred.

          (b) In the event that the Executive’s employment is terminated pursuant to clause (i), (ii),
(iv) or (v) of Section 7(a) above, the Company shall pay to the Executive (or her personal
representative, as the case may be), as severance pay or liquidated damages or both, the amount of
Base Salary that the Executive would have otherwise been entitled to receive had the Executive’s
employment not been so terminated, for a period of twelve months immediately following such
termination (the “Severance”). The Company shall pay the Severance in accordance with its payroll
practices from time to time in effect. In addition, in the event that the Executive’s employment is
terminated pursuant to clause (i), (ii), (iv) or (v) of Section 7(a) above, each stock-based grant
and award, including the Restricted Stock, held by Executive shall continue to vest, as if
Executive’s employment had not ceased, until the earlier of (x) twelve (12) months following the
end of the Term or (y) the end of the vesting period. Notwithstanding anything to the contrary
herein, any payments required to be made pursuant to this Section 7(b) shall be subject to signing
by the Executive of a general mutual release of claims in a form and manner satisfactory to the
Company. Notwithstanding the foregoing, if, following the end of the Term, the Executive breaches
any of the provisions contained in this Agreement, including Sections 6 and 9, all payments of
Severance and any vesting of stock-based grants shall immediately cease.

          (c) Notwithstanding anything to the contrary expressed or implied herein, except as required
by applicable law and except as set forth in Section 7(b) above, the Company (and its affiliates)
shall not be obligated to make any payments to the Executive or on her behalf of whatever kind or
nature by reason of the Executive’s cessation of employment (including, without limitation, by
reason of termination of the Executive’s employment by the Company for “cause” pursuant to Section
7(a)(iii)), other than (i) such amounts, if any, of her Base Salary and bonus as shall have accrued
and remained unpaid as of the date of said cessation and (ii) such other amounts, if any, which may
be then otherwise payable to the Executive from the Company’s benefits plans or reimbursement
policies.

          (d) No interest shall accrue on or be paid with respect to any portion of any payments
hereunder.

          (e) In the event the Executive’s employment is terminated pursuant to clause (ii), (iv) or (v)
of Section 7(a) above, the Executive shall be obligated to pursue new employment

6

 

and, upon reemployment, to offset amounts earned against any amounts due under this Agreement
as provided in this Section 7(e). The Executive shall, immediately upon securing any new full-time
or part-time employment, provide notice to the Company of the employer, the starting date, and the
base salary and any other guaranteed compensation to which the Executive is entitled pursuant
thereto. The Company shall be permitted, at any time after the Executive’s notice (or at any time
after the Company first becomes aware by any other means of such new employment of the Executive),
to reduce the Severance not yet paid to the Executive by the aggregate amount of compensation
(salary, bonus payments of any kind, and all other benefits (such as car allowance) which can be
reduced to a monetary value) to be earned by the Executive during the same intervals pursuant to
any other employment.

          (f) Upon the termination of the Executive’s employment hereunder for any reason whatsoever,
the Executive shall be entitled to the continuation of group health plan benefits to the extent
authorized by and consistent with 29 U.S.C. §1161 et seq. (commonly known as COBRA) at her sole
cost and expense.

     8. Non-Assignability. (a) Neither this Agreement nor any right or interest hereunder
shall be assignable by the Executive or her beneficiaries or legal representatives without the
Company’s prior written consent; provided, however, that nothing in this Section
8(a) shall preclude the Executive from designating a beneficiary to receive any benefit payable
hereunder upon her death or incapacity.

          (b) Except as required by law, no right to receive payments under this Agreement shall be
subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or
hypothecation or to exclusion, attachment, levy or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void and
of no effect.

     9. Restrictive Covenants. (a) Competition. During the Term and for a period
of twelve (12) months thereafter, regardless of the reason for termination of employment, the
Executive will not directly or indirectly (as a director, officer, executive employee, manager,
consultant, independent contractor, advisor or otherwise) engage in competition with, or own any
interest in, perform any services for, participate in or be connected with any business or
organization which is competitive to the Business of the Company (as defined below) anywhere in the
United States of America; provided, however, that the provisions of this Section
9(a) shall not be deemed to prohibit the Executive’s ownership of not more than one percent (1%) of
the total shares of all classes of stock outstanding of any publicly held company, or ownership,
whether through direct or indirect stock holdings or otherwise, of not more than five percent (5%)
of any other business. The term “Business of the Company” shall mean any business with an activity
that is competitive with that engaged in by the Company at the time at issue. The Executive shall
not at any time, directly or indirectly, use or purport to authorize any person to use any name,
mark, logo or other identifying words or images which are the same as or similar to those used at
any time by the Company in connection with any product or service, whether or not such use would be
in a business competitive with that of the Company.

          (b) Non-Solicitation. During the Term and for a period of twelve (12) months
thereafter, regardless of the reason for termination of employment, the Executive will not directly

7

 

or indirectly recruit, solicit, induce or otherwise cause any other employee, employees,
consultant and/or consultants of the Company to leave their employment with the Company or any
person that was an employee or consultant of the Company at any time during the two years preceding
the date at issue in order to accept employment of any kind with any other person, firm,
partnership, corporation or other entity, including the Executive or any entity with which she is
affiliated.

          (c) Non-Interference. During the Term and for a period of twelve (12) months
thereafter, regardless of the reason for termination of employment, the Executive will not directly
or indirectly call upon, accept business from or solicit the trade, business or patronage of any of
the customers or known prospective customers of the Company or of anyone who has heretofore traded
and dealt with the Company, regardless of the location of such customers or prospective customers
of the Company, with respect to the Confidential Information or Business of the Company, or
otherwise divert or attempt to divert any business from the Company.

          (d) Certain Definitions. For purposes of this Section 9, a person or entity
(including, without limitation, the Executive) shall be deemed to be a direct competitor of the
Company or any of its affiliates, or a person or entity (including, without limitation, the
Executive) shall be deemed to be engaging in competition with the Company or any of its affiliates,
if such person or entity in any way conducts, operates, carries out or engages in (i) the business
of providing services targeted at improving back-office services for health care providers, or (ii)
such other business or businesses as the Company conducts or reasonably anticipates conducting, as
of the date hereof or during the Term, in each case in any state in which such business or
businesses are conducted or are reasonably contemplated, whether or not overt steps have been taken
to so implement such contemplated business.

          (e) Certain Representations of the Executive. In connection with the foregoing
provisions of this Section 9, the Executive represents that her experience, capabilities and
circumstances are such that such provisions will not prevent her from earning a livelihood. The
Executive further agrees that the limitations set forth in this Section 9 (including, without
limitation, time and territorial limitations) are reasonable and properly required for the adequate
protection of the businesses of the Company and its affiliates. It is understood and agreed that
the covenants made by the Executive in this Section 9 (and in Section 6 hereof) shall survive the
termination of this Agreement. Should any court of competent jurisdiction deem the restrictions
set forth herein unenforceable by reason of time or territorial limitation the parties consent to
be bound by the maximum limitation determined by such tribunal.

          (f) Injunctive Relief. The Executive acknowledges and agrees that a remedy at law for
any breach or threatened breach of the provisions of Section 9 hereof would be inadequate and,
therefore, agrees that the Company and any of its affiliates shall be entitled to injunctive relief
in addition to any other available rights and remedies in cases of any such breach or threatened
breach; provided, however, that nothing contained herein shall be construed as
prohibiting the Company or any of its affiliates from pursuing any other rights and remedies
available for any such breach or threatened breach.

     10. Change in Control. The provisions of this Section 10 set forth certain terms of
an agreement reached between Executive and the Company regarding Executive’s rights and obligations
upon the occurrence of a Change in Control of the Company. These provisions are

8

 

intended to assure and encourage in advance Executive’s continued attention and dedication to
her assigned duties and her objectivity during the pendency and after the occurrence of any such
event. These provisions shall terminate and be of no further force or effect beginning twelve (12)
months after the occurrence of a Change of Control.

          (a) Change in Control.

               (i) Notwithstanding anything to the contrary in any applicable stock-based award agreement,
upon a Change in Control, 50% of all unvested stock-based awards, including the Restricted Stock,
granted to Executive by the Company shall immediately accelerate and vest and become exercisable or
non-forfeitable as of the effective date of such Change in Control. Executive shall also be
entitled to any other rights and benefits with respect to stock-related awards, to the extent and
upon the terms provided in the Executive stock incentive plan or any agreement or other instrument
attendant thereto pursuant to which such awards were granted; and

               (ii) If a termination of employment pursuant to Section 7(a)(iv) and 7(a)(v) occurs within
twelve (12) months after the occurrence of the first event constituting a Change of Control,
provided that such first event occurs during the Term, the remaining 50% of all unvested
stock-based awards referred to in clause (i) above, as of the effective date of such Change in
Control, granted to Executive by the Company shall immediately accelerate and vest and become
exercisable or non-forfeitable.

          (b) Definitions. For purposes of this Section 10, the following terms shall have the
following meanings:

“Change in Control” shall mean any of the following:

               (i) any “person,” as such term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the “Act”) (other than the Company, any of its subsidiaries, or any
trustee, fiduciary or other person or entity holding securities under any employee benefit plan or
trust of the Company or any of its subsidiaries), together with all “affiliates” and “associates”
(as such terms are defined in Rule 12b-2 under the Act) of such person, shall become the
“beneficial owner” (as such term is defined in Rule 13d-3 under the Act), directly or indirectly,
of securities of the Company representing more than fifty percent (50%) of either (A) the combined
voting power of the Company’s then outstanding securities having the right to vote in an election
of the Company’s Board or (B) the then outstanding shares of the Company’s common stock, par value
$0.01 per share (other than as a result of an acquisition of securities directly from the Company);
or

               (ii) the stockholders of the Company shall approve (A) any consolidation or merger of the
Company where the stockholders of the Company, immediately prior to the consolidation or merger,
would not, immediately after the consolidation or merger, beneficially own (as such term is defined
in Rule 13d-3 under the Act), directly or indirectly, shares representing in the aggregate more
than fifty percent (50%) of the voting shares of the Company issuing cash or securities in the
consolidation or merger (or of its ultimate parent corporation, if any), (B) any sale, lease,
exchange or other transfer (in one transaction or a series of transactions

9

 

contemplated or arranged by any party as a single plan) of all or substantially all of the
assets of the Company or (C) any plan or proposal for the liquidation or dissolution of the
Company.

     Notwithstanding the foregoing, a “Change of Control” shall not be deemed to have occurred for
purposes of the foregoing clause (b) if in the event of a recapitalization, consolidation or merger
(including reverse mergers) of the Company, (i) persons who, as of the Commencement Date,
constitute the Company’s Board of Directors (the “Incumbent Directors”) constitute at least a
majority of the Board of Directors following such recapitalization, consolidation or merger,
provided that any person becoming a director of the Company subsequent to the Commencement Date
shall be considered an Incumbent Director if such person’s election was approved by or such person
was nominated for election by a vote of at least a majority of the Incumbent Directors and (ii) the
Executive remains as the Chief Executive Officer of the Company and a member of its Board of
Directors following such recapitalization, consolidation or merger.

     11. Binding Effect. Without limiting or diminishing the effect of Section 8 hereof,
this Agreement shall inure to the benefit of and be binding upon the parties hereto and their
respective heirs, successors, legal representatives and assigns.

     12. Notices. Any notice required or permitted to be given under this Agreement shall
be sufficient if in writing and either delivered in person or sent by first class certified or
registered mail, postage prepaid, if to the Company, at the Company’s principal place of business,
and if to the Executive, at her home address most recently filed with the Company, or to such other
address or addresses as either party shall have designated in writing to the other party hereto.

     13. Law Governing. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware.

     14. Severability. The Executive agrees that in the event that any court of competent
jurisdiction shall finally hold that any provision of Section 6 or 9 hereof is void or constitutes
an unreasonable restriction against the Executive, the provisions of such Section shall not be
rendered void but shall apply with respect to such extent as such court may judicially determine
constitutes a reasonable restriction under the circumstances. If any part of this Agreement other
than Section 6 or 9 hereof is held by a court of competent jurisdiction to be invalid, illegible or
incapable of being enforced in whole or in part by reason of any rule or law or public policy, such
part shall be deemed to be severed from the remainder of this Agreement for the purpose only of the
particular legal proceedings in question and all other covenants and provisions of this Agreement
shall in every other respect continue in full force and effect and no covenant or provision shall
be deemed dependent upon any other covenant or provision.

     15. Waiver. Failure to insist upon strict compliance with any of the terms, covenants
or conditions hereof shall not be deemed a waiver of such term, covenant or condition, nor shall
any waiver or relinquishment of any right or power hereunder at any one or more times be deemed a
waiver or relinquishment of such right or power at any other time or times.

     16. Entire Agreement; Modifications. This Agreement constitute the entire and final
expression of the agreement of the parties with respect to the subject matter hereof and supersedes
all prior agreements, oral and written, between the parties hereto with respect to the subject
matter

10

 

hereof. This agreement may be modified or amended only by an instrument in writing signed by
both parties hereto.

     17. Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same
instrument.

     18. Non-Disparagement and Cooperation. During and throughout the Term and for a
period of one year after termination of Executive’s employment, Executive and Company, and its
officers and directors, agree not to make or cause to be made, directly or indirectly, any
statement to any person criticizing or disparaging the Company or any of its stockholders,
directors, officers or Executives or commenting unfavorably or falsely on the character, business
judgment, business practices or business reputation of the Company or any of its stockholders,
directors, officers or Executives. During and after the Term, Executive agrees that Executive will
cooperate fully with the Company in arranging for an orderly and professional transition of her
responsibilities. During and after the Term, Executive and Company, and its officers and
directors, further agree that they will present the circumstances relating to Executive’s
separation from Company in a light that will not reflect unfavorably on the either the Company or
the Executive.

     19. Third-Party Agreements and Rights. Executive represents to the Company that
Executive’s execution of this Agreement, Executive’s employment with the Company and the
performance of Executive’s proposed duties for the Company will not violate any obligations
Executive may have to any employer or other party, and Executive will not bring to the premises of
the Company any copies or other tangible embodiments of non-public information belonging to or
obtained from any such previous employment or other party.

     20. Litigation and Regulatory Cooperation. During and after the Term, Executive shall
reasonably cooperate with the Company in the defense or prosecution of any claims or actions now in
existence or which may be brought in the future against or on behalf of the Company which relate to
events or occurrences that transpired while Executive was employed by the Company;
provided, however, that such cooperation shall not materially and adversely affect
Executive or expose Executive to an increased probability of civil or criminal litigation.
Executive’s cooperation in connection with such claims or actions shall include, but not be limited
to, being available to meet with counsel to prepare for discovery or trial and to act as a witness
on behalf of the Company at mutually convenient times. During and after the Term, Executive also
shall cooperate fully with the Company in connection with any investigation or review of any
federal, state or local regulatory authority as any such investigation or review relates to events
or occurrences that transpired while Executive was employed by the Company. The Company shall also
provide Executive with compensation on an hourly basis (to be derived from her Base Salary) for
requested litigation and regulatory cooperation that occurs after her termination of employment,
and reimburse Executive for all costs and expenses incurred in connection with her performance
under this Paragraph 20, including, but not limited to, reasonable attorneys’ fees and costs.

[The remainder of this page has been left blank intentionally]

11

 

     IN WITNESS WHEREOF, the Company and the Executive have duly executed and delivered this
Agreement as of the day and year first above written.

	 	 	 	 	 
	 	HEALTHCARE SERVICES, INC.

 	 
	 	By:  	/s/ J. Michael Cline
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	 	 
	 	     /s/ Mary Tolan
 	 
	 	Mary Tolan 	 
	 	 	 

 

 

	 	 	 	 	 

Exhibit A

RESTRICTED STOCK AWARD AGREEMENT

 

 

September 24, 2009

Mary Tolan

Accretive Health, Inc.

401 North Michigan Avenue, Suite 2700

Chicago, IL 60611

Dear Mary:

     You and Accretive Health, Inc. (formerly known as HealthCare Services, Inc.) (the “Company”),
are parties to an employment agreement dated January      , 2004 that sets forth certain terms of your
employment with the Company (the “Employment Agreement”). We have agreed to the amendments to the
Employment Agreement set forth below:

1. The following sentence shall be added to the end of Section 5(a) of the Employment Agreement:

     Any such reimbursements shall be subject to the terms and conditions set forth on Exhibit
B, Section 3.

2. Section 7(b) of the Employment Agreement shall be replaced in its entirety with the following
(with the new language in bold):

     (b) In the event that the Executive’s employment is terminated pursuant to clause (i), (ii),
(iv), or (v) of Section 7(a) above, the Company shall pay to the Executive (or her personal
representative, as the case may be), as severance pay or liquidated damages or both, the amount of
Base Salary that the Executive would have otherwise been entitled to receive had the Executive’s
employment not been so terminated, for a period of twelve months immediately following such
termination (the “Severance”). The Company shall pay the Severance in accordance with its payroll
practices from time to time in effect and such payments shall commence on the 30th day
following the Executive’s termination of employment (the “Payment Commencement Date”). In
addition, in the event that the Executive’s employment is terminated pursuant to clause (i), (ii),
(iv) or (v) of Section 7(a) above, each stock-based grant and award, including the Restricted
Stock, held by Executive shall continue to vest, as if Executive’s employment had not ceased, until
the earlier of (x) twelve (12) months following the end of the Term or (y) the end of the vesting
period. Notwithstanding anything to the contrary herein, any payments required to be made
pursuant to this Section 7(b) shall be subject to signing by the Executive of a general mutual
release of claims in a form and manner satisfactory to the Company (the “Release”) on or before the
Payment Commencement Date and any applicable revocation period with respect to such Release
expiring on or before the Payment Commencement Date. Notwithstanding the foregoing, if, following
the end of the Term, the Executive breaches any of the provisions contained in this Agreement,
including Sections 6 and 9, all payments of Severance and any vesting of stock-based grants shall
immediately cease. The Severance shall be subject to the terms and conditions set forth on
Exhibit B.

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3. A new Exhibit B, as attached hereto, shall be added to the Employment Agreement.

     Except as specifically provided herein, all other terms of the Employment Agreement, shall
remain in full force and effect. If the terms of this amendment are acceptable to you, please sign
and return the copy of this amendment enclosed for that purpose no later than September 25, 2009.

	 	 	 	 	 
	Sincerely,	 	 
	 

	 	 	 	 
	Accretive Health, Inc.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Gregory Kazarian	 	 
	 

	 	 	 	 

	 	 	 	 	 
	Title:

	 	Senior Vice President and General Counsel
	 	 
	 

	 	 	 	 

     The foregoing correctly sets forth the terms of my continued employment with the Company. I
am not relying on any representations other than as set out in the Employment Agreement and the
amendment thereto set forth above. I have been given a reasonable amount of time to consider this
amendment and to consult an attorney and/or advisor of my choosing. I have carefully read this
amendment, understand the contents herein, freely and voluntarily assent to all of the terms and
conditions hereof, and sign my name of my own free act.

	 	 	 	 	 
	/s/ Mary Tolan
 

	 	  
	 	Date: September      , 2009
	Mary Tolan
	 	 	 	 

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Exhibit B

Payments Subject to Section 409A

1. Subject to this Exhibit B, payments or benefits under Section 7(b) of the Employment Agreement
shall begin only upon the date of Executive’s “separation from service” (determined as set forth
below) which occurs on or after the termination of Executive’s employment. The following rules
shall apply with respect to distribution of the payments and benefits, if any, to be provided to
Executive under Section 7(b) of the Employment Agreement, as applicable:

(a) It is intended that each installment of the payments and benefits provided under Section
7(b) of the Employment Agreement shall be treated as a separate “payment” for purposes of
Section 409A of the Code and the guidance issued thereunder (“Section 409A”). Neither the
Company nor Executive shall have the right to accelerate or defer the delivery of any such
payments or benefits except to the extent specifically permitted or required by Section
409A.

(b) If, as of the date of Executive’s “separation from service” from the Company, Executive
is not a “specified employee” (within the meaning of Section 409A), then each installment of
the payments and benefits shall be made on the dates and terms set forth in Section 7(b) of
the Employment Agreement.

(c) If, as of the date of Executive’s “separation from service” from the Company, Executive
is a “specified employee” (within the meaning of Section 409A), then:

(i) Each installment of the payments and benefits due under Section 7(b) of the
Employment Agreement that, in accordance with the dates and terms set forth herein,
will in all circumstances, regardless of when Executive’s separation from service
occurs, be paid within the short-term deferral period (as defined under Section 409A)
shall be treated as a short-term deferral within the meaning of Treasury Regulation
Section 1.409A-1(b)(4) to the maximum extent permissible under Section 409A; and

(ii) Each installment of the payments and benefits due under Section 7(b) of the
Employment Agreement that is not described in this Exhibit B, Section 1(c)(i) and
that would, absent this subsection, be paid within the six-month period following
Executive’s “separation from service” from the Company shall not be paid until the
date that is six months and one day after such separation from service (or, if
earlier, Executive’s death), with any such installments that are required to be
delayed being accumulated during the six-month period and paid in a lump sum on the
date that is six months and one day following Executive’s separation from service and
any subsequent installments, if any, being paid in accordance with the dates and
terms set forth herein; provided, however, that the preceding provisions of this
sentence shall not apply to any installment of payments and benefits if and to the
maximum extent that that such installment is deemed to be paid under a separation pay
plan that does not provide for a deferral

-3-

 

of compensation by reason of the application of Treasury Regulation
1.409A-1(b)(9)(iii) (relating to separation pay upon an involuntary separation from
service). Any installments that qualify for the exception under Treasury Regulation
Section 1.409A-1(b)(9)(iii) must be paid no later than the last day of Executive’s
second taxable year following the taxable year in which the separation from service
occurs.

2. The determination of whether and when Executive’s separation from service from the Company has
occurred shall be made and in a manner consistent with, and based on the presumptions set forth in,
Treasury Regulation Section 1.409A-1(h). Solely for purposes of this Exhibit B, Section 2,
“Company” shall include all persons with whom the Company would be considered a single employer
under Section 414(b) and 414(c) of the Code.

3. All reimbursements and in-kind benefits provided under this Agreement shall be made or provided
in accordance with the requirements of Section 409A to the extent that such reimbursements or
in-kind benefits are subject to Section 409A, including, where applicable, the requirements that
(i) any reimbursement is for expenses incurred during the Executive’s lifetime (or during a shorter
period of time specified in this Agreement), (ii) the amount of expenses eligible for reimbursement
during a calendar year may not affect the expenses eligible for reimbursement in any other calendar
year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the
calendar year following the year in which the expense is incurred and (iv) the right to
reimbursement is not subject to set off or liquidation or exchange for any other benefit.

4. The Company makes no representation or warranty and shall have no liability to Executive or to
any other person if any of the provisions of the Employment Agreement (including this Exhibit) are
determined to constitute deferred compensation subject to Section 409A but that do not satisfy an
exemption from, or the conditions of, that section.

-4-

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