Document:

<PAGE>

                                                                   Exhibit 10.17

                              EMPLOYMENT AGREEMENT

      THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
August 30, 2006, by and between ATHENAHEALTH, INC. (the "Company"), and James
MacDonald ("Employee").

      The parties hereby agree as follows:

      1. Employment; Term.

            (a) The Company employs Employee, and Employee accepts employment
with the Company, upon the terms and conditions contained in this Agreement.

            (b) Term of Employment. The Company and Employee acknowledge that
Employee's employment is at-will, and is for no definite period of time.
Employee acknowledges and agrees that this Agreement will govern the terms of
Employee's employment with Company, even though compensation levels may be
adjusted by Company from time to time by assent of the parties hereto.

      2. Duties.

      During the Employment Period, Employee shall serve as Chief Operating
Officer or in such other positions and with such other duties and
responsibilities as Company shall from time to time assign to employee. Employee
shall perform faithfully for the Company the duties of Employee's position in
accordance' with the reasonable directives of the Company. Employee shall comply
with procedures and policies as established by the Company from time to time.
Employee shall devote substantially all of Employee's business time and effort
to the performance of Employee's duties to the Company. Employee acknowledges
that execution of Employee's duties in a timely, consistent and prudent manner
is vital to the successful operations of the Company and that it is essential
that Employee conduct the duties of this position with constant and watchful
attention. Employee will participate in Company's compliance training and act in
accordance with the Company's Compliance Principles and its Code of Conduct, in
conformity with the Company's compliance and integrity plan.

      3. Compensation.

      Employee's base salary will be at an annual gross rate of $300,000 (the
"Base Salary"). The Base Salary shall be payable in accordance with the
Company's payroll practices, as in effect from time to time, and shall be
subject to required federal, state and local taxes and withholdings. Employee
will be entitled to participation in the Company's Executive Bonus Program for
the remainder of 2006 as set forth in Schedule B, attached hereto. In subsequent
years, Employee will be entitled to participation in the Company's Executive
Bonus Program as it is defined and determined from time to time by the Board of
Directors.

<PAGE>

      4. Stock Option Grant.

      Following the execution of this Agreement, and subject to the approval of
the Board of Directors, the Company shall grant Employee an option to purchase
330,000 shares of the Company's Common Stock. The option grant shall be
contingent upon approval of the Board of Directors, subject to determination by
the Board of Directors with respect to strike price and vesting schedule and
subject to the terms and conditions in the Company's stock option plan and in
the Company's stock option agreement forms.

      5. Expenses: Benefits.

            (a) The Company agrees to reimburse Employee, in accordance with the
Company's policies, for reasonable expenses paid or incurred by Employee in
connection with the performance of Employee's duties for the Company hereunder.

            (b) Employee shall be entitled to 17 days of vacation annually,
which vacation shall accrue at a rate of 1.4 days per month. The vacation year
begins on Employee's anniversary date. Of the vacation days not taken at the end
of the vacation year, only ten days may be carried forward to the following
year. Employee may not receive cash in lieu of the days not taken, except with
written consent of the HR Committee.

            (c) Employee shall be entitled to participate in health, life, or
disability insurance, and retirement, pension, or profit-sharing plans that may
be instituted by the Company for the benefit of its mid-level management
Employees generally, upon such terms contained therein.

      6. Termination.

            (a) Since Employee's employment is at-will employment, either
Employee or the Company may terminate Employee's employment at any time for any
reason or for no reason.

            (b) Upon the termination of Employee's employment for any reason,
the parties shall have no further obligations, except that those obligations of
Employee under Sections 7, 8, 9 and 10, and the provisions of Sections 12 and 13
shall remain in effect and binding upon the parties.

      7. Effect of Termination.

            (a) The Company shall have no liability or obligation to Employee
upon Employee's termination other than as specifically set forth in this Section
7, or as provided by law.

            (b) Upon the termination of Employee's employment, Employee shall be
entitled to receive only such portion (if any) of the Base Salary as may have
accrued but be unpaid on the date of termination, any accrued and unpaid
vacation pay, outstanding expenses reimbursable under the Company's then
applicable policies and other benefits which may be owing through the date of
termination.

                                       -2
<PAGE>

            (c) Upon the termination of Employee's employment for any reason,
Employee shall immediately surrender to the Company all Company property in the
possession, custody or control of Employee, including but not limited to any
computer hardware, software, computer disks and/or data storage devices, notes,
data, sketches, drawings, manuals, documents, records, data bases, programs,
blueprints, memoranda, specifications, customer lists, financial reports,
equipment and all other physical forms of expression incorporating or containing
any Confidential Information (as defined in Section 8 hereof), it being
distinctly understood that all such writings, physical forms of expression and
other things are exclusive property of the Company.

      8. Confidential Information and Company Inventions.

            (a) Employee recognizes and acknowledges that during the course of
Employee's employment with the Company, Employee shall have access to
Confidential Information. "Confidential Information" means all information or
material not publicly know which relates to any of its products, services or any
phase of its operations, business or financial affairs. Confidential Information
includes, but is not limited to, the following types of information and other
information of a similar nature (whether or not reduced to writing): Company
Inventions (as defined below), trade secrets, inventions, drawings, file data,
documentation, diagrams, specifications, know-how, processes, formulas, models,
flow charts, software completed or in various stages of development, source
codes, object codes, research and development procedures, test results,
marketing techniques and materials, marketing and development plans, price
lists, pricing policies, business plans, information relating to customers
and/or suppliers' identities, characteristics and agreements, financial
information and projections and Employee files. Confidential Information also
includes any information described above which the Company obtains from another
party and which the Company treats and/or has an obligation to treat as
confidential or designates as Confidential Information, whether or not owned or
developed by the Company. (The term "Company," as used in this Section 8, means
not only athenahealth, Inc., but also any company, partnership or entity which,
directly or indirectly, controls, is controlled by or is under common control
with athenahealth, Inc.)

            (b) Employee recognizes and acknowledges that Company is regulated
as a Covered Entity under the Health Insurance Portability and Accountability
Act of 1996 ("HIPAA"). Employee recognizes and acknowledges that Employee will
have access to Protected Health Information ("PHI") as defined under HIPAA in
the course of employment and that such PHI is Confidential Information, subject
to strict confidentially and security restrictions under HIPAA and other
applicable law. .

            (c) Both during the Employment Period and at all times thereafter,
all Confidential Information which Employee may now possess or access, may
obtain during or after the Employment Period, or may create prior to the end of
the Employment Period will be held confidential by Employee, and Employee will
not (nor will Employee assist any other person to do so), directly or
indirectly, (i) reveal, report, publish or disclose such Confidential
Information to any person, firm, corporation, association or other entity for
any reason or purpose whatsoever (other than in the course of carrying out
Employee's duties hereunder or as expressly authorized by the Company), (ii)
render any services to any person, firm, corporation, association or other
entity to whom any such Confidential Information, in whole or in part, has

                                       -3
<PAGE>

been disclosed or is threatened to be disclosed by or at the instance of
Employee, or (iii) use such Confidential Information except for the benefit of
the Company and in the course of Employee's employment with the Company. The
foregoing will not apply to the extent Employee is required to disclose any
Confidential Information by applicable law or legal process so long as Employee
promptly notifies the Company of such pending disclosure and consults with the
Company prior to such disclosure concerning the advisability of seeking a
protective order or other means of preserving the confidentiality of the
Confidential Information.

            (d) During the Employment Period and thereafter, Employee agrees to
disclose promptly to the Company any and all Company Inventions (as defined
below). Employee hereby assigns, and agrees during the Employment Period and
thereafter to assign, to the Company all of Employee's right, title and interest
in any Company Inventions and in any and all applications and registrations for
any form of intellectual property applicable to any Company Inventions. Employee
acknowledges that all Company Inventions consisting of Works are intended to be
"works made for hire", as that term is defined in Section 101 of the United
States Copyright Act of 1976 (the "Act"), and shall be automatically the sole
property of the Company within the meaning of the Act. If the copyright to any
such Works shall not be the property of the Company by operation of law,
Employee will, without further consideration, assign to the Company all of my
right, title and interest in such the copyright to such Works. Employee hereby
waives, to the extent permitted by law, all claims to moral rights in any
Company Inventions.

                  (i) "Company Inventions" shall mean any and all Inventions and
Works in whole or in part conceived, made or reduced to practice by Employee
(either solely or in conjunction with others) during or after the Employment
Period that (A) are made through the use of any of the Company's Confidential
Information, Company Inventions, equipment, facilities, supplies, funds or
proprietary rights or other property of the Company or (B) relate to the
Company's business or the Company's actual or demonstrably anticipated research
and development or business, or (C) result from any work performed by Employee
for the Company.

                  (ii) "Inventions" shall mean any ideas, designs, concepts,
techniques, inventions and discoveries, whether or not patentable or protectable
by copyright and whether or not reduced to practice, including, but not limited
to, devices, processes, methods, techniques, algorithms, trade secrets, and
know-how.

                  (iii) "Works" shall mean any and all original works of
authorship in any written, electronic, video, or audio records (or any other
tangible medium, existing now or in the future, on which information is fixed),
including without limitation all mask works, software, computer files, computer
programs (in both object and source code), computer interfaces, documentation,
and databases together with any improvements thereon or thereto, derivative
works therefrom.

                  (iv) "Prior Inventions" shall mean any and all Inventions
made, conceived or first reduced to practice by Employee, under Employee's
direction or jointly with others prior to Employee's employment with the
Company, which Employee owns or controls, either solely or jointly with others.

                                       -4
<PAGE>

                  (v) Employee represents that the attached Schedule A contains
a complete list of all Prior Inventions which Employee desires to exclude from
assignment to the Company hereunder. If there is no such Schedule A attached
hereto, or if it is left blank, Employee represents that there are no such Prior
Inventions. Employee agrees that, if in the course of my employment with the
Company, Employee incorporates into a Company product, process or machine a
Prior Invention or Work owned by Employee or in which Employee has an interest
(regardless whether such Prior Invention is listed on Schedule A), or if the
manufacture, use, sale, or import of any Company product or machine or the
practice of any Company process would infringe any such Prior Invention or Work,
the Company shall automatically be granted and shall have a non-exclusive,
royalty-free, fully-paid, irrevocable, transferable, perpetual world-wide
license under such Prior Invention or Work to make, have made, modify, use,
import, and/or sell such Company product or machine or to practice such process
or Prior Invention or Work.

                  (vi) Employee will keep and maintain adequate and current
written records (in the form of notes, sketches, drawings or such other form(s)
as may be specified by the Company) of all Company Inventions made by Employee
during the Employment Period or thereafter (including but not limited to
information relating to all Company Inventions which belong exclusively to the
Company pursuant to the provisions of this Section 8(c)), which records will be
available at all times to the Company and will remain the sole property of the
Company. In the event that (A) any Company Invention is made, conceived of or
reduced to practice by Employee, either solely or in conjunction with others,
during the Employment Period, or (B) any Company Invention is made, conceived of
or reduced to practice by Employee after the Employment Period which belongs
exclusively to the Company pursuant to the provisions of this Section 8(c),
Employee will promptly give notice and fully disclose in writing such Company
Invention to the Chairman of the Board and the Board of Directors of the
Company.

                  (vii) Employee will assist the Company (at the Company's
expense), either during or subsequent to the Employment Period, to obtain and
enforce for the Company's benefit, patents, copyrights, and mask work protection
in any country for any and all Company Inventions made by Employee, in whole or
in part, the rights to which belong to or have been assigned to the Company
pursuant to the provisions of Section 8(c) hereof. Employee agrees to execute
all applications, assignments, instruments and papers and perform all acts as
the Company or its counsel may deem necessary or desirable to obtain any
patents, copyrights or mask work protection in such Company Inventions and
otherwise to protect the interests of the Company therein. In the event the
Company is unable to secure Employee's signature on any document necessary to
apply for, prosecute, obtain, or enforce any patent, copyright, or other right
or protection relating to any Company Invention, whether due to mental or
physical incapacity or any other cause, Employed hereby irrevocably designates
and appoints the Company and each of its duly authorized officers and agents as
Employee's agents and attorney-in-fact, to act for and in Employee's behalf and
stead to execute and Me any such document and to do all other lawfully permitted
acts to further the prosecution, issuance, and enforcement of patents,
copyrights, or other right or protections with the same force and effect as if
executed and delivered by Employee.

                                       -5
<PAGE>

            (e) All Works, memoranda, notes, lists, records and other documents
(and all copies thereof) containing Confidential Information (including
information relating to all Company Inventions which belong exclusively to the
Company pursuant to the provisions of Section 8(c) above) made or compiled by
Employee or made available to Employee during or after the Employment Period
shall be the Company's property, shall be kept confidential in accordance with
the provisions of this Section 8 and shall be delivered to the Company at any
time upon request and upon the termination of Employee's employment.

            (f) To the extent, if any, that Employee possesses or has knowledge
of information that is proprietary to a third party or that is subject to
confidentiality restrictions properly placed upon it by a third party that would
prevent Company from having access to such information (collectively "Third
Party Information"), Employee shall not disclose such information to Company or
to any Company personnel nor shall Employee use such information in the conduct
of Employee's employment hereunder. Employee's duties hereunder expressly
exclude use or disclosure of such information. Company expressly disclaims any
request or requirement that Employee disclose or use Third Party Information
with in connection with employment hereunder; and, if Employee encounters such
request or requirement, Employee will not make such disclosure or use but shall
instead promptly report such request or requirement to the Company's acting
compliance officer.

            (g) To the extent that Employee has been employed or retained by any
third party in the past whereby Employee has come into possession of Third Party
Information, Employee warrants and represents that Employee's duties for Company
as they have been described by Company in negotiation of this Agreement are not
substantially similar to those duties that Employee undertook for any such third
party such that any Third Party Information would naturally, necessarily or
inevitably be used or disclosed by Employee in performing her duties for the
Company.

      9. Covenant Against Competition. Employee covenants and agrees that:

            (a) During the Non-Compete Period (as hereinafter defined), Employee
shall not, in any Geographic Area (as hereinafter defined): (i) engage in any
business competitive with the Company Business (as hereinafter defined); (ii)
render any services in any capacity to any person or entity engaged in any
business competitive with the Company Business; or (iii) acquire an interest in
any person or entity engaged in any business competitive with the Company
Business as a partner, shareholder, director, officer, Employee, principal,
manager, member, agent, trustee, consultant or in any other relationship or
capacity, provided, however, Employee may own, directly or indirectly, solely as
a passive investment, securities of any such entity which are traded on any
national securities exchange if Employee (A) is not a controlling person of, or
a member of a group which controls, such entity, and (B) does not, directly or
indirectly, own 1% or more of any class of securities of such entity.

            (b) During the Non-Compete Period and for an additional 12 months,
Employee shall not, without the prior written consent of the Company, directly
or indirectly, on behalf of himself or any other person or entity, solicit or
encourage any Employee of the Company or any of its Affiliates to leave the
employment of the Company or any of its Affiliates, or hire any Employee who has
left the employment of the Company or any of its

                                       -6
<PAGE>

Affiliates within one year of the termination of such Employee's employment with
the Company or any of its Affiliates.

            (c) During the Non-Compete Period and for an additional 12 months,
Employee shall not, in any Geographic Area, directly or indirectly (i) solicit
or encourage any customer or client of the Company to engage the services
competitive with the Company Business of Employee or any person or entity (other
than the Company) in which Employee is a partner, shareholder, director officer,
employee, principal, member, manager, agent, trustee, consultant or engaged in
any other relationship or capacity, or (ii) accept orders or business that is
competitive with the Company Business from, or agree to provide services
competitive with the Company Business to, any customer or client of the Company,
on behalf of Employee or any person or entity (other than the Company) in which
Employee is a partner, shareholder, director, officer, employee, principal,
member, manager, agent, trustee, consultant or engaged in any other relationship
or capacity.

            (d) If any provision of Sections 8 or 9 is held to be unenforceable,
it is the intention of the parties that the court making such determination
shall modify such provision, so that the provision shall be enforceable to the
greatest extent permitted under the law, and that such provision shall then be
applicable in such modified form.

            (e) As used herein:

                  (i) "Affiliate" shall mean any entity directly or indirectly
controlling, controlled by, or under common control with the Company and any
entity in which the Company is a general partner, member, manager or holder of
greater than a 10% common equity, partnership or membership interest.

                  (ii) "Company Business" shall mean the business of providing,
selling, contracting for or arranging for provision of revenue cycle or clinical
electronic record management, software or software functionality and shall also
mean the business of providing, selling, contracting for or arranging for
provision of services that involve, in whole or in any part, outsourcing or
subcontracting of all or any portion of the office or facility or enterprise
workflow, business process, billing or revenue cycle tasks of clinics,
physicians or other providers or practitioners of health care. An entity will be
deemed affiliated with another if: (a) it directly or indirectly is a parent,
subsidiary, joint venturer, or partner of the other; (b) if it directly or
indirectly owns any interest in, is owned in any part by or shares common
ownership in any part with the other; or, (c) if it hold itself out as providing
a joint, coordinated or integrated service, item or combination of service and
item with the other.

                  (iii) "Geographic Area" shall mean in the United States.

                  (iv) "Non-Compete Period" shall mean the period during which
Employee is employed by the Company and an additional period equal to one month
following the termination of Employee's employment with the Company for each one
month that Employee has been employed by the Company, to a maximum period of one
year following termination of Employee's employment.

                                       -7
<PAGE>

      10. Enforcement by Injunction.

      Employee acknowledges and agrees that the Company will be irreparably
damaged if Employee fails to comply with the provisions of Sections 8 or 9.
Accordingly, the Company shall be entitled to (i) an injunction or any other
appropriate decree of specific performance (without the necessity of posting any
bond or other security in connection therewith) in case of any breach or
threatened breach of Employee's covenants under Sections 8 or 9, (ii) damages in
an amount equal to all compensation, profits, monies, accruals, increments or
other benefits derived or received by Employee (or any associated party deriving
such benefits, including but not limited to any future employer of Employee) as
a result of any such breach of Employee's covenants under Sections 8 or 9, and
(iii) indemnification against any other losses, damages, costs and expenses,
including actual attorneys' fees and court costs, incurred by the Company in
obtaining any damages and/or injunctive relief. Such remedies shall not be
exclusive and shall be in addition to any other remedy, at law or in equity,
which the Company may have for any breach or threatened breach of Sections 8 or
9 by Employee.

      11. Notices.

      Any and all notices or other communications required or permitted to be
given under any of the provisions of this Agreement shall be in writing and
shall be deemed to have been duly given (a) when personally delivered, (b) on
the third business day after deposit in the U.S. mail (certified or registered
mail, return receipt requested, postage prepaid), (c) on the next day business
day after timely delivery to an overnight courier, or (d) upon confirmation of
receipt by facsimile or e-mail; in each case addressed to the parties at the
addresses set forth below their signatures hereto (or at such other address as
any party may specify by notice to all other parties given as aforesaid).

      12. Arbitration.

      Except for the right of either party to apply to a court of competent
jurisdiction for a temporary restraining order, a preliminary injunction or
other equitable relief to preserve the status quo or prevent irreparable harm,
any dispute or controversy arising under this Agreement or concerning Employee's
employment with the Company (including, without limitation, any controversy as
to the arbitrability of any dispute), including but not limited to any claims
arising out of Title VII of the Civil Rights Act of 1964, the Age Discrimination
in Employment Act, the Americans with Disabilities Act, and/or Massachusetts
General Laws Chapter 151B, shall be settled exclusively by arbitration to be
held in Boston, Massachusetts, before a single arbitrator in accordance with the
rules of the American Arbitration Association then in effect relating to the
arbitration of employment disputes. Judgment may be entered on the arbitrator's
award in any court having jurisdiction, and the parties consent to the
jurisdiction of the Massachusetts courts for that purpose.

      13. Miscellaneous.

            (a) This writing constitutes the entire agreement of the parties
with respect to the subject matter hereof and may not be modified, amended or
terminated except by a written agreement signed by all parties hereto, provided
however that compensation levels may be

                                       -8
<PAGE>

adjusted by assent of the parties, which assent of Company shall be in writing
and signed on behalf of Company stating the adjusted level and which assent of
Employee will be established by acceptance by Employee of compensation at such
adjusted level.

            (b) This Agreement shall be binding upon and inure to the benefit of
both parties and their respective successors and assigns, including any
corporation with which, or into which, the Company may be merged or which may
succeed to the Company's assets or business, provided, however, that the
obligations of the Employee are personal and shall not be assigned by him or
her.

            (c) No waiver of any breach or default hereunder shall be considered
valid unless in writing signed by all parties hereto, and no such waiver shall
be deemed a waiver of any subsequent breach or default of a similar nature.

            (d) If any provisions of this Agreement shall be held unenforceable,
such unenforceability shall attach only to such provisions and shall not render
unenforceable any other severable provisions of this Agreement, and this
Agreement shall be carried out as if any such unenforceable provisions were not
contained herein, unless the unenforceability of such provisions substantially
impairs the benefits of the remaining portions of this Agreement.

            (e) This Agreement may be executed in two or more counterparts, each
of which shall be deemed one original.

            (f) This Agreement shall be deemed to be a contract under the laws
of the Commonwealth of Massachusetts and for all purposes shall be construed and
enforced in accordance with the internal laws of said Commonwealth.

      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.

James MacDonald                         ATHENAHEALTH, INC.

/s/ James MacDonald
--------------------------
Employee signature

Address                                 By: /s/ Jonathan Bush
                                            ---------------------------
56 BARSTOW AVENUE                       Name: Jonathan Bush
NORWELL MASS.                           Title: CEO
02061                                   Address: 311 Arsenal Street
                                                 Watertown, MA 02472

                                       -9
<PAGE>

                                   SCHEDULE A

                                PRIOR INVENTIONS

The following is a complete list of all Prior Inventions

  X           No Prior Inventions
----
              See below for description of Prior Inventions
----
              Additional Sheets Attached
----

                                      -10
<PAGE>

                                   SCHEDULE B

RESOLVED: That James MacDonald will be eligible to receive bonuses under the
following plan with respect to 2006 based on performance of the Company in 2006
against the Balanced Scorecard goals as they have been presented to and accepted
by the Board:

1) The intent of the plan is that the employee will be eligible to receive a
bonus in an amount listed below for him in Appendix A, provided that the bonus
percentage for him will be adjusted so that (a) for each 1% by which Company
performance against the listed Index Scorecard result exceeds 100% on an
aggregated basis, the bonus base percentage will be increased by 3% of the
relevant salary and (b) for each 1% by which Company performance against the
Index Scorecard result is less than 100% on an aggregated basis, the bonus base
percentage will be reduced by 3% of the relevant salary.

2) Specifically, the bonus amount will be calculated on a quarterly basis for
the first three calendar quarters and also on an annual basis under the
following component formulas:

Quarterly Component: ({[(year-to-date percent attainment of Index Scorecard
results on an aggregated basis as presented to and accepted by the Board minus
100%) times 3 if the result is negative and times 1.5 if the result is positive]
plus the bonus base percentage listed for the relevant employee in Appendix A}
times base salary paid to the employee year-to-date through the quarter) minus
bonus paid year-to-date through the quarter on account of this plan.

Annual Component: ({[(year-to-date percent attainment of Index Scorecard results
on an aggregated basis as presented to and accepted by the Board minus 100%)
times 3 plus the bonus base percentage listed for the relevant employee in
Appendix A} times base salary paid to the employee year-to-date through the
quarter) minus bonus paid year-to-date through the year on account the quarterly
component of this plan.

3) If more than one bonus percentage is listed for an individual in Schedule A,
then it is intended that more than one bonus calculation will be made for that
individual for a given period and that the resulting bonus amounts will be
cumulative for that individual in that period.

4) The above calculation establishes eligibility of bonus only. To receive a
bonus payment, an employee must be an employee in good standing throughout the
year to the date of calculation of any quarterly or annual component and must be
directly reporting to the CEO at the time of calculation. In addition, in the
Board's sole judgment the Company finances must prudently permit such payment
and the Board must be satisfied that the employee has not acted in a manner that
is materially detrimental to the Company's interests.

5) Bonus amounts, if any, will be paid by the end of the next pay period after
performance results have been presented to and accepted by the Board at its next
meeting and the bonus amounts have been duly calculated. Any overpayment of
bonus remaining at the end of 2006 resulting from quarterly payments as outlined
above to any employee will be offset against any bonuses otherwise determined by
the Board to be paid to that employee going forward until such overpayment is
fully offset.

6) Any ambiguity in the operation of the plan will be resolved by the Board in
its absolute and sole discretion.

                                      -11
<PAGE>

                                   Appendix A

EXECUTIVE      TITLE       INDEX SCORECARD         BONUS BASE
------------   -----   ------------------------    ----------
James
MacDonald       COO    Corp Financial Scorecard         10.0%

James
MacDonald       COO    Corp Overall Scorecard           30.0%

                                      -12<PAGE>

                                                                   Exhibit 10.18

                              EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
November 1, 1999, by and between ATHENAHEALTH.COM (the "Company") and Carl Byers
("Employee").

     The parties hereby agree as follows:

     1. Employment; Term.

          (a) The Company employs Employee, and Employee accepts employment with
the Company, upon the terms and conditions contained in this Agreement.

          (b) Term of Employment. The Company and Employee acknowledge that
Employee's employment is at-will, and is for no definite period of time.

     2. Duties.

     During the Employment Period, Employee shall serve as Chief Financial
Officer. Employee shall perform faithfully for the Company the duties of
Employee's position and in accordance with the directives of the Company.
Employee shall comply with procedures and policies as established by the Company
from time to time. Employee shall devote substantially all of Employee's
business time and effort to the performance of Employee's duties to the Company.
The execution of Employee's duties in a timely, consistent and prudent manner is
vital to the successful operations of the Company. It is essential that Employee
conduct the duties of this position with constant and watchful attention.

     3. Compensation

     Employee's base salary will be at an annual gross rate of $115,000 (the
"Base Salary"). The Base Salary shall be payable in accordance with the
Company's payroll practices, as in effect from time to time, and shall be
subject to required federal, state and local taxes and withholdings. Employee
may be entitled to annual consideration for a bonus based on Employee's and the
Company's performance, such bonus, if any, shall be determined by the Company in
its sole discretion.

<PAGE>

     4. Stock Option Grant,

     Following the execution of this Agreement and subject to the approval of
the Board of Directors, the Company shall grant Employee an option (the
"Option") to purchase 80,000 shares of the Company's Common Stock, subject to
the terms and conditions in the Company's stock option plan and in the Company's
stock option agreement.

     5. Expenses; Benefits.

          (a) The Company agrees to reimburse Employee, in accordance with the
Company's policies, for reasonable expenses paid or incurred by Employee in
connection with the performance of Employee's duties for the Company hereunder.

          (b) Employee shall be entitled to 20 days of vacation annually, which
vacation shall accrue at a rate of 13.3 business hours per month, provided that
the maximum vacation accrual Employee may have at any time shall be 38.3 days.
The vacation year begins on Employee's anniversary date. No more than 10
vacation days may be carried forward from a given year to the next without the
prior written consent of the HR Committee, and Employee may not receive cash in
lieu of the days not taken.

          (c) Employee shall be entitled to participate in health, life, or
disability insurance, and retirement, pension, or profit-sharing plans that may
be instituted by the Company for the benefit of its mid-level management
Employees generally, upon such terms contained therein.

     6. Termination.

          (a) Since Employee's employment is at-will employment, either Employee
or the Company may terminate Employee's employment at any time for any reason or
for no reason.

          (b) Upon the termination of Employee's employment for any reason, the
parties shall have no further obligations, except that those obligations of
Employee under Sections 8, 9 and 10, and the provisions of Sections 12 and 13
shall remain in effect and binding upon the parties.

     7. Effect of Termination.

          (a) The Company shall have no liability or obligation to Employee upon
Employee's termination other than as specifically set forth in this Section 7.

                                       -2-

<PAGE>

          (b) Upon the termination of Employee's employment, Employee shall be
entitled to receive only such portion (if any) of the Base Salary as may have
accrued but be unpaid on the date of termination, plus any accrued and unpaid
vacation pay or other benefits which may be owing through the date of
termination.

          (c) Upon the termination of Employee's employment for any reason,
Employee shall immediately surrender to the Company all Company property in the
possession, custody or control of Employee, including but not limited to any
computer hardware, software, computer disks and/or data storage devices, notes,
data, sketches, drawings, manuals, documents, records, data bases, programs,
blueprints, memoranda, specifications, customer lists, financial reports,
equipment and all other physical forms of expression incorporating or containing
any Confidential Information (as defined in Section 8 hereof), it being
distinctly understood that all such writings, physical forms of expression and
other things are exclusive property of the Company.

     8. Confidential Information and Inventions.

          (a) Employee recognizes and acknowledges that during the course of
Employee's employment with the Company, Employee shall have access to
Confidential Information. "Confidential Information" means all information or
material not publicly know which relates to any of its products, services or any
phase of its operations, business or financial affairs. Confidential Information
includes, but is not limited to, the following types of information and other
information of a similar nature (whether or not reduced to writing): trade
secrets, inventions, drawings, file data, documentation, diagrams,
specifications, know-how, processes, formulas, models, flow charts, software
completed or in various stages of development, source codes, object codes,
research and development procedures, test results, marketing techniques and
materials, marketing and development plans, price lists, pricing policies,
business plans, information relating to customers and/or suppliers' identities,
characteristics and agreements, financial information and projections and
Employee files. Confidential Information also includes any information described
above which the Company obtains from another party and which the Company treats
and/or has an obligation to treat as confidential or designates as Confidential
Information, whether or not owned or developed by the Company. (The term
"Company," as used in this Section 8, means not only Athenahealth.com, but also
any company, partnership or entity which, directly or indirectly, controls, is
controlled by or is under common control with Athenahealth.com.)

          (b) Both during the Employment Period and at all times thereafter, all
Confidential Information which Employee may now possess or

                                       -3-

<PAGE>

access, may obtain during or after the Employment Period, or may create prior to
the end of the Employment Period will be held confidential by Employee, and
Employee will not (nor will Employee assist any other person to do so), directly
or indirectly, (i) reveal, report, publish or disclose such Confidential
Information to any person, firm, corporation, association or other entity for
any reason or purpose whatsoever (other than in the course of carrying out
Employee's duties hereunder or as expressly authorized by the Company), (ii)
render any services to any person, firm, corporation, association or other
entity to whom any such Confidential Information, in whole or in part, has been
disclosed or is threatened to be disclosed by or at the instance of Employee, or
(iii) use such Confidential Information except for the benefit of the Company
and in the course of Employee's employment with the Company. The foregoing will
not apply to the extent Employee is required to disclose any Confidential
Information by applicable law or legal process so long as Employee promptly
notifies the Company of such pending disclosure and consults with the Company
prior to such disclosure concerning the advisability of seeking a protective
order or other means of preserving the confidentiality of the Confidential
Information.

          (c) Any Inventions (as defined below) in whole or in part conceived,
made or reduced to practice by Employee (either solely or in conjunction with
others) during or after the Employment Period that are made through the use of
any of the Confidential Information or any of the Company's equipment,
facilities, supplies, trade secrets or time, or that relate to the Company's
business or the Company's actual or demonstrably anticipated research and
development, or that result from any work performed by Employee for the Company
will belong exclusively to the Company and will be deemed part of the
Confidential Information for purposes of this Agreement, whether or not fixed in
a tangible medium of expression. The term "Inventions," as used herein, means
any ideas, designs, concepts, techniques, inventions and discoveries, whether or
not patentable or protectable by copyright and whether or not reduced to
practice, including, but not limited to, devices, processes, drawings, works of
authorship, computer programs, software, source codes, object codes, interfaces
and networks (and all components of the foregoing), methods and formulas
together with any improvements thereon or thereto, derivative works therefrom
and know-how related thereto. The provisions of this section are not meant to
apply to those inventions (1)that Employee creates without the use of any
Confidential Information of the Company and/or without the use of any of the
Company's resources, equipment, facilities, supplies, trades secrets or time,
(2) that do not relate to the Company's business and/or the Company's actual or
demonstrably anticipated business, research or development, (3)that do not
result from any Company work assigned to or performed by Employee or any other
employee of the Company, and (4) that do not result from any work

                                       -4-

<PAGE>

performed by Employee during the hours Employee is scheduled to work for the
Company or during the hours Employee is working for the Company.

               (i) Without limiting the foregoing, any such Inventions will be
deemed to be "works made for hire" and the Company will be deemed to be the
owner thereof, provided that in the event and to the extent such works are
determined not to constitute "works made for hire" as a matter of law, Employee
hereby irrevocably assigns and transfers to the Company all right, title and
interest in and to any such Inventions, including but not limited to all related
patents, copyrights and mask works and all applications therefor and filings and
notification with respect thereto.

               (ii) Employee will keep and maintain adequate and current written
records (in the form of notes, sketches, drawings or such other form(s) as may
be specified by the Company) of all Inventions made by Employee during the
Employment Period or thereafter (including but not limited to information
relating to all Inventions which belong exclusively to the Company pursuant to
the provisions of this Section 8(c)), which records will be available at all
times to the Company and will remain the sole property of the Company. In the
event that (A) any Invention is made, conceived of or reduced to practice by
Employee, either solely or in conjunction with others, during the Employment
Period, or (B) any Invention is made, conceived of or reduced to practice by
Employee after the Employment Period which belongs exclusively to the Company
pursuant to the provisions of this Section 8(c), Employee will promptly give
notice and fully disclose in writing such Invention to the Chairman of the Board
and the Board of Directors of the Company.

               (iii) Employee will assist the Company (at the Company's
expense), either during or subsequent to the Employment Period, to obtain and
enforce for the Company's benefit, patents, copyrights, and mask work protection
in any country for any and all Inventions made by Employee, in whole or in part,
the rights to which belong to or have been assigned to the Company pursuant to
the provisions of Section 8(c) hereof. Employee agrees to execute all
applications, assignments, instruments and papers and perform all acts as the
Company or its counsel may deem necessary or desirable to obtain any patents,
copyrights or mask work protection in such Inventions and otherwise to protect
the interests of the Company therein. In the event the Company is unable to
secure Employee's signature on any document necessary to apply for, prosecute,
obtain, or enforce any patent, copyright, or other right or protection relating
to any Invention, whether due to mental or physical incapacity or any other
cause, Employee hereby irrevocably designates and appoints the Company and each
of its duly authorized officers and agents as Employee's agents and
attorney-in-fact, to act for and in Employee's behalf and stead to execute and
file any such document and to do all other lawfully

                                       -5-

<PAGE>

permitted acts to further the prosecution, issuance, and enforcement of patents,
copyrights, or other right or protections with the same force and effect as if
executed and delivered by Employee.

               (d) All memoranda, notes, lists, records and other documents (and
all copies thereof) constituting Confidential Information (including information
relating to all Inventions which belong exclusively to the Company pursuant to
the provisions of Section 8(c) above) made or compiled by Employee or made
available to Employee during or after the Employment Period shall be the
Company's property, shall be kept confidential in accordance with the provisions
of this Section 8 and shall be delivered to the Company at any time upon request
and upon the termination of Employee's employment.

     9. Covenant Against Competition.

     Employee covenants and agrees that:

               (a) During the Non-Compete Period (as hereinafter defined),
Employee shall not, in any Geographic Area (as hereinafter defined): (i) engage
in any business competitive with the Company Business (as hereinafter defined);
(ii) render any services in any capacity to any person or entity engaged in any
business competitive with the Company Business; or (iii) acquire an interest in
any person or entity engaged in any business competitive with the Company
Business as a partner, shareholder, director, officer, Employee, principal,
manager, member, agent, trustee, consultant or in any other relationship or
capacity, provided, however, Employee may own, directly or indirectly, solely as
a passive investment, securities of any such entity which are traded on any
national securities exchange if Employee (A) is not a controlling person of, or
a member of a group which controls, such entity, and (B) does not, directly or
indirectly, own 1% or more of any class of securities of such entity.

               (b) During the Non-Compete Period, Employee shall not, without
the prior written consent of the Company, directly or indirectly, on behalf of
himself or any other person or entity, solicit or encourage any Employee of the
Company or any of its Affiliates to leave the employment of the Company or any
of its Affiliates, or hire any Employee who has left the employment of the
Company or any of its Affiliates within one year of the termination of such
Employee's employment with the Company or any of its Affiliates.

               (c) During any portion of the Non-Compete Period during which
Employee is not employed by the Company, Employee shall not, in any Geographic
Area, directly or indirectly (i) solicit or encourage any customer or client of
the Company to engage the services of Employee or any person or

                                       -6-

<PAGE>

entity (other than the Company) in which Employee is a partner, shareholder,
director, officer, Employee, principal, member, manager, agent, trustee,
consultant or engaged in any other relationship or capacity, or (ii) accept
orders or business from, or agree to provide services to, any customer or client
of the Company, on behalf of Employee or any person or entity (other than the
Company) in which Employee is a partner, shareholder, director, officer,
Employee, principal, member, manager, agent, trustee, consultant or engaged in
any other relationship or capacity.

          (d) If any provision of Sections 8 or 9 is held to be unenforceable,
it is the intention of the parties that the court making such determination
shall modify such provision, so that the provision shall be enforceable to the
greatest extent permitted under the law, and that such provision shall then be
applicable in such modified form.

          (e) As used herein:

               (i) "Affiliate" shall mean any entity directly or indirectly
controlling, controlled by, or under common control with the Company and any
entity in which the Company is a general partner, member, manager or holder of
greater than a 10% common equity, partnership or membership interest.

               (ii) "Company Business" shall mean the business of the Company at
the time a violation of this Section 9 is alleged to occur or, if such alleged
occurrence is after Employee's employment is terminated, the business of the
Company at the time such employment terminates.

               (iii) "Geographic Area" shall mean the United States and Canada.

               (iv) "Non-Compete Period" shall mean the period during which
Employee is employed by the Company and an additional period of one year
following the termination of Employee's employment with the Company for any
reason.

     10. Enforcement by Injunction.

     Employee acknowledges and agrees that the Company will be irreparably
damaged if Employee fails to comply with the provisions of Sections 8 or 9.
Accordingly, the Company shall be entitled to (i) an injunction or any other
appropriate decree of specific performance (without the necessity of posting any
bond or other security in connection therewith) in case of any breach or
threatened breach of Employee's covenants under Sections 8 or 9, (ii) damages in
an amount equal to all compensation, profits, monies, accruals, increments or
other benefits derived or received by Employee (or any associated party

                                       -7-

<PAGE>

deriving such benefits, including but not limited to any future employer of
Employee) as a result of any such breach of Employee's covenants under Sections
8 or 9, and (iii) indemnification against any other losses, damages, costs and
expenses, including actual attorneys' fees and court costs, incurred by the
Company in obtaining any damages and/or injunctive relief. Such remedies shall
not be exclusive and shall be in addition to any other remedy, at law or in
equity, which the Company may have for any breach or threatened breach of
Sections 8 or 9 by Employee.

     11. Notices.

     Any and all notices or other communications required or permitted to be
given under any of the provisions of this Agreement shall be in writing and
shall be deemed to have been duly given when personally delivered or mailed by
first class registered mail, return receipt requested, or by commercial courier
or delivery service, by facsimile or by receipted e-mail, addressed to the
parties at the addresses set forth below their signatures hereto (or at such
other address as any party may specify by notice to all other parties given as
aforesaid).

     12. Arbitration.

     Any dispute or controversy arising under this Agreement or concerning
Employee's employment with the Company (including, without limitation, any
controversy as to the arbitrability of any dispute), including but not limited
to any claims arising out of Title VII of the Civil Rights Act of 1964, the Age
Discrimination in Employment Act, the Americans with Disabilities Act, and/or
Massachusetts General Laws Chapter 151B, shall be settled exclusively by
arbitration to be held in Boston, Massachusetts, before a single arbitrator in
accordance with the rules of the American Arbitration Association then in effect
relating to the arbitration of employment disputes, provided, however, that any
claims arising out of Sections 8, 9 and/or 10 of this Agreement may be resolved
either through arbitration or through the court system. Judgment may be entered
on the arbitrator's award in any court having jurisdiction, and the parties
consent to the jurisdiction of the Massachusetts courts for that purpose.

     13. Miscellaneous.

          (a) This writing constitutes the entire agreement of the parties with
respect to the subject matter hereof and may not be modified, amended or
terminated except by a written agreement signed by all parties hereto.

          (b) No waiver of any breach or default hereunder shall be considered
valid unless in writing signed by all parties hereto, and no such

                                       -8-

<PAGE>

waiver shall be deemed a waiver of any subsequent breach or default of a similar
nature.

          (c) If any provisions of this Agreement shall be held unenforceable,
such unenforceability shall attach only to such provisions and shall not render
unenforceable any other severable provisions of this Agreement, and this
Agreement shall be carried out as if any such unenforceable provisions were not
contained herein, unless the unenforceability of such provisions substantially
impairs the benefits of the remaining portions of this Agreement.

          (d) This Agreement may be executed in two or more counterparts, each
of which shall be deemed one original.

          (e) This Agreement shall be deemed to be a contract under the laws of
the Commonwealth of Massachusetts and for all purposes shall be construed and
enforced in accordance with the internal laws of said Commonwealth.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.

CARL BYERS                              ATHENAHEALTH.COM

/s/ Carl Byers                          By: /s/ Jonathan Bush
-------------------------------------       ------------------------------------
Employee signature                      Name: Jonathan Bush
                                        Title: CEO
Address: 56 Reed Street
         Lexington, MA
         02421

                                       -9-
<PAGE>

                 Agreement of Amendment to Employment Agreement

          This agreement of amendment is entered into as of February 26, 2002
and amends the terms of the "EMPLOYMENT AGREEMENT" entered between the Company
and the undersigned Employee (the "Agreement"). Except as explicitly amended
herein, the Agreement is confirmed; and, it shall remain in full force and
effect under its terms as amended.

Whereas the Parties desire to amend the Agreement in certain respects as set
forth below; now, therefore, in consideration of the obligations set forth below
and for other good and valuable consideration, the receipt and sufficiency of
which each Party hereby acknowledges, the Parties hereby agree to amend the
Agreement as follows:

1.   The salary rate of the Employee will be increased effective July 1, 2002 to
     an annual rate of $145,000.

2.   The Company will pay contingent bonuses to Employee in the form of cash
     bonuses and additional grants of options to purchase Company common stock,
     subject to the following conditions and upon the achievement by the Company
     of the following triggering events (each an "Event").

          a.   All options under this Amendment will be granted under the terms
               of the Stock Option and Incentive Plan of the Company in effect
               at the time that the Company makes the grant and will be subject
               to the terms of the stock option agreement generally applied by
               the Company to non-qualified grant of bonus stock options to
               employees in effect at the time that the company makes the grant
               (except to the extent of the vesting schedule described below).

          b.   The option exercise price under the grant will be the fair market
               value of the Company's common stock as of the time that the
               Company makes the grant as determined by the Board of Directors
               of the Company.

          c.   All financial results that relate to an Event will be measured as
               shown on the books of the Company that are made and kept
               according to generally accepted accounting practices consistently
               applied and in the ordinary course of the Company's business. All
               sales results that relate to an Event will be measured for Fiscal
               Year 2002 as reported to the Board by the Company's Chief
               Financial Officer consistently with the Company's written
               policies for recognizing sales and employing criteria for
               recognition at least a rigorous as used to report sales figures
               to the Board before the date of this amendment.

          d.   Event One occurs if and when the Company achieves positive net
               income for three consecutive months and simultaneously retains at
               least $10 million in cash or cash equivalents. Event Two occurs
               if and when in 2002 Company sales for 2002 exceed $16 million.
               Event Three occurs if and when in 2002 Company sales for 2002
               exceed $21 million. Event Four occurs if and when in 2002 Company
               sales for 2002 exceed $25.2 million.

          e.   Subject to the conditions above, Employee will receive the
               bonuses and bonus grants of stock options as follows, provided
               that the occurrence of the Events may occur in any order and are
               not cumulative except to the extent that Events Two, Three and
               Four are logically successive:

                    Upon occurrence of Event One: option for 30,000 shares and
                    $12,500.

                    Upon occurrence of Event Two: option for 10,000 shares and
                    $5,000.

                    Upon occurrence of Event Three: option for 10,000 shares and
                    $12,500.

                    Upon occurrence of Event Four: option for 10,000 shares and
                    $12,500.

3.   If at the time of an option grant under this Amendment the Company provides
     a reverse vesting method for any options otherwise granted to its
     employees, then such grant will vest by such reverse vesting method. The
     right to purchase shares under each option, once granted, will vest in
     monthly amounts following the

<PAGE>

     vesting start date at a rate in the first three years of 1.66% per month of
     the total shares (rounded down to the nearest whole share) originally
     subject to the option and thereafter at a rate of the lesser of 3.33% per
     month of the total shares (rounded down to the nearest whole share)
     originally subject to the option or the remaining unvested shares subject
     to the option until no further unvested shares remain subject to the
     option. For purposes of calculating vesting only, and for no other purpose,
     the vesting start date for each option will be deemed to be January 1, 2001
     such that upon the date of the grant (but not before), Employee will be
     deemed vested in the number of total shares originally subject to the
     option times the relevant percentage times the number of months elapsed
     between January 1, 2001 and the grant date, rounded down to the nearest
     whole month. Notwithstanding the foregoing, the use of a vesting start date
     that precedes the grant date is for purposes of calculating shares that are
     vested as of the grant date only and shall not create any right or
     interest, whether vested, unvested or otherwise, in any option or any share
     subject to any option that precedes that grant date of that option.

4.   The Employee will qualify for salary increases and bonuses under this
     amendment only if the Employee is employed in good standing by the Company
     and has otherwise performed his obligations to date under the Agreement at
     the date that the salary increase is to be effective or the Company
     achieves the relevant Event, respectively. Both the Company and the
     Employee agree that the Employee shall have no right or interest in all or
     any portion of any increase or bonus before the relevant salary increase
     date or Event. Notwithstanding any communication, representation or
     understanding of the parties to the contrary and notwithstanding the use of
     vesting start dates preceding a grant date for purposes of calculating
     shares vested as of that grant date, any and all salary increase or bonuses
     made under this Amendment are made only as an incentive to the performance
     of the Employee following the relevant salary increase date or Event and
     not as consideration for services preceding such date or Event.

Signed: athenahealth, Inc. (the "Company")

By: /s/ Jonathan Bush
    --------------------------------------
Position:
          --------------------------------

Signed: /s/ Carl Byers                     (the "Employee")
        ----------------------------------

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00126-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00126-of-00352.parquet"}]]