Exhibit 10.11
FORM TIER 1
CHANGE IN CONTROL
AGREEMENT
This Change in Control Agreement
(this “ Agreement ” ) is hereby entered
into as of August , 2006, (the
“ Effective Date ” ) by and between
Integral Systems, Inc., a Maryland corporation (the “
Company ” ), and
(the “ Executive ” ), collectively
referred to as the “ Parties
.”
Background
WHEREAS , the Company considers it essential to the best
interests of its stockholders to foster the continuous employment
of key management personnel;
WHEREAS , the Board of Directors of the Company (the
“ Board ” ) recognizes that, as is the
case with many publicly-held corporations, the possibility of a
Change in Control (as defined below) exists and that such
possibility, and the uncertainty and questions that it may raise
among management, may result in the departure or distraction of
management personnel to the detriment of the Company and its
stockholders; and
WHEREAS , the Board has determined that appropriate
steps should be taken to reinforce and encourage the continued
attention and dedication of members of the Company’s
management, including the Executive, to their assigned duties
without distraction in the face of potentially disturbing
circumstances arising from the possibility of a Change in
Control.
NOW THEREFORE
, in consideration of the premises
and the mutual covenants herein contained, the Company and the
Executive hereby agree as follows:
1. Definitions
. The following capitalized words
and phrases as used in this Agreement shall have the following
meanings:
(a) “ Base
Salary ” shall mean, unless the context refers to a
specific time period, the higher of (i) the then current base
annual salary in effect for Executive (excluding any reduction
giving rise to Good Reason (as defined below)) and (ii) the
base annual salary of Executive in effect immediately prior to the
current base annual salary.
(b) “ Cause
” for termination by the Company of the Executive’s
employment shall mean (i) the continued and material failure
of the Executive to perform the duties of his or her position with
the Company which continued and material failure adversely affects
the Company or its business after notice and a reasonable
opportunity to cure; provided, however that the parties do not
intend that this Subsection 1(b)(i) address: (x) circumstances
that are outside of the Executive’s control such as changes
in general business or economic conditions or in the industry in
which the Company operates; and/or (y) war, acts of war,
terrorism, or acts of terrorism (whether or not the foregoing
are
declared or undeclared and whether
or not the foregoing takes place in the United States or outside
the United States); (ii) material and willful malfeasance by
the Executive in connection with the performance of the duties of
his or her position with the Company that could in the good faith
judgment of the Board (x) have a material adverse impact on
the Company’s business (provided that prior to termination
for such reason, the Company shall give Executive written notice of
the acts constituting such cause, and the Company shall give
Executive a period of twenty (20) days within which to cease
and correct such acts, and if Executive ceases and corrects such
acts this Agreement shall remain in effect), (y) subject the
Company to criminal penalties in excess of $50,000, or
(z) result in the incarceration of any officer, director or
employee of the Company; (iii) after the date hereof, the
Executive’s being convicted of, or pleading guilty or nolo
contendere to, a felony that adversely affects the Company or
involves moral turpitude (i.e. an act that is base, vile and
depraved); (iv) fraud or embezzlement against the Company;
(v) the willful failure (other than failure resulting from
Executive’s incapacity due to injury, physical or mental
illness or disability) of the Executive to obey in all material
respects any proper written direction of the Board to the
Executive, provided the written direction is consistent with the
job-related responsibilities set forth in this Agreement (i.e.
written direction clarifying the Executive’s job-related
responsibilities hereunder without expanding such responsibilities
beyond the scope hereof), and which has a material adverse effect
on the Company (provided that prior to termination for such reason,
the Company shall give Executive written notice of the acts
constituting such cause, and the Company shall give Executive a
period of twenty (20) days within which to cease and correct
such acts, and if Executive ceases and corrects such acts this
Agreement shall remain in effect); or (vi) the willful and
material violation by the Executive of any agreement with the
Company restricting competition against the Company, solicitation
of customers or employees of the Company and/or disclosure of
confidential or other information with respect to the Company. In
no event shall the Company be obligated to give Executive notice
and cure rights on more than two (2) occasions.
(c) “ Change in
Control ” shall mean the first of the following
events to occur:
(i) Any person or group (within the
meaning of Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934, as amended (the “ Exchange Act ”
)), other than the Company or a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or a
corporation owned directly or indirectly by the stockholders of the
Company in substantially the same proportions as their ownership of
stock of the Company, becomes the beneficial owner (within the
meaning of Rule 13(d)(3) under the Exchange Act), directly or
indirectly, of securities representing 50% or more of the combined
voting power of the Company’s then-outstanding securities
entitled generally to vote for the election of
directors;
(ii) The Company’s
stockholders approve an agreement to merge or consolidate with
another corporation (other than a majority-controlled subsidiary of
the Company) unless the Company’s stockholders immediately
before the merger or
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consolidation are to own more than
50% of the combined voting power of the resulting entity’s
voting securities entitled generally to vote for the election of
directors;
(iii) The Company’s
stockholders approve an agreement (including, without limitation,
an agreement of liquidation) to sell or otherwise dispose of all or
substantially all of the business or assets of the Company;
or
(iv) Individuals who, as of the
Effective Date, constitute the Board (the “ Incumbent
Board ” ) cease for any reason to constitute at least
a majority of the Board, provided that any person becoming a
director subsequent to the Effective Date whose election or
nomination for election by the Company’s stockholders is
approved by a vote of at least a majority of directors then
constituting the Incumbent Board (either by a specific vote or by
approval of the proxy statement of the Company in which such person
is named as a nominee for direction, without objection to such
nomination) shall be, for purposes of this Agreement, considered as
though such person were a member of the Incumbent Board (excluding,
however, for this purpose any Board member whose initial assumption
as a member of the Board occurs as a result of either an actual or
threatened election contest or other actual or threatened
solicitation of proxies or consents by or on behalf of any person
or persons other than the Incumbent Board).
However, no Change in Control shall
be deemed to have occurred by a reason of (A) any event
involving a transaction in which the Executive or a group of
persons or entities with whom or with which the Executive acts in
concert, acquire(s), directly or indirectly, 50% or more of the
combined voting power of the Company’s then-outstanding
voting securities or the business or assets of the Company; or
(B) any event involving or arising out of a proceeding under
Title 11 of the United States Code or the provisions of any future
United States bankruptcy law, an assignment for the benefit of
creditors or an insolvency proceeding under state or local
law.
A Change in Control shall be deemed
to occur, (I) with respect to a Change in Control pursuant to
Section 1(c)(i) above, on the date any person or group first
becomes the beneficial owner, directly or indirectly, of securities
representing 50% or more of the combined voting power of the
Company’s then-outstanding securities entitled generally to
vote for the election of directors, (II) with respect to a Change
in Control pursuant to Sections 1(c)(ii) or (iii) above, on
the date of stockholder approval, or (III) with respect to a Change
in Control pursuant to Section 1(c)(iv) above, on the date
members of the Incumbent Board first cease to constitute at least a
majority of Board.
This Agreement, once triggered by a
Change in Control event, shall apply with respect to that Change in
Control event only and not with respect to any later Change in
Control event.
(d) “ Code
” shall mean the Internal Revenue Code of 1986, as
amended.
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(e) “ Date of
Termination ” with respect to any termination of the
Executive’s employment shall mean the date specified in the
Notice of Termination required under Section 3(a); provided,
however, that (i) in the case of termination by the Company,
other than termination for Cause, the Date of Termination shall not
be less than thirty (30) days from the date the Notice of
Termination is given, and (ii) in the case of termination by
the Executive, the Date of Termination shall not be less than
thirty (30) days from the date the Notice of Termination is
given.
(f) “ Good Reason
” for termination by the Executive of the
Executive’s employment with the Company shall mean the
occurrence (without the Executive’s express written consent)
of any one of the following acts by the Company, or failures by the
Company to act, unless such act or failure to act is corrected
prior to the Date of Termination specified in the Notice of
Termination given in respect thereof:
(i) The assignment to Executive,
without Executive’s express written consent, of any material
duties inconsistent with Executive’s background, training,
position, duties, responsibilities or status with the Company
immediately prior to such assignment, or a substantial diminution
in Executive’s title(s), position, duties, or
responsibilities with the Company or any removal of Executive from,
or any failure to reelect Executive to, any of such positions,
except in connection with the termination of Executive’s
employment for Cause, death, or Total Disability (provided that
prior to termination for such reason, Executive shall give the
Company written notice of the acts constituting such cause, and the
Executive shall give the Company a period of twenty (20) days
within which to cease and correct such acts, and if the Company
ceases and corrects such acts, this Agreement shall remain in
effect). Good Reason shall not be deemed to exist under this
Subsection 1(f)(i) solely as a result of the Company or any part of
the Company becoming a subsidiary or other business unit of another
entity in a Change in Control;
(ii) A reduction by the Company in
Executive’s Base Salary as in effect on the Effective Date or
as the same may be increased from time to time or in
Executive’s Target Bonus;
(iii) The failure by the Company to
continue in effect any compensation, welfare, fringe or other
benefit plan in which Executive is participating, without
substituting plans providing Executive with substantially
comparable benefits, or the taking of any action by the Company
which would materially and adversely affect Executive’s
participation in or benefits under any of such plans; except in
connection with a company wide change to benefit plans which are
the same as or comparable to those provided by an acquiring entity
or its parent to similarly situated employees or where there is no
material reduction to the employee benefit plans provided to
Executive except in response to an adverse change in economic
circumstances.
(iv) Any purported termination of
Executive’s employment for Cause or Total Disability without
justifiable grounds;
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(v) A material breach of this
Agreement by anyone other than Executive (provided that prior to
termination for such reason, Executive shall give the Company
written notice of the acts constituting such cause, and the
Executive shall give the Company a period of twenty (20) days
within which to cease and correct such acts, and if the Company
ceases and corrects such acts, this Agreement shall remain in
effect); and
(vi) The relocation of the principal
office of the Company where Executive is required to perform the
principal duties and responsibilities of his or her position to a
location which is more than fifty (50) miles outside of
Lanham, Maryland and more than forty (40) miles from the
Executive’s primary residence.
(g) “ Protected
Termination ” means a termination of
Executive’s employment (i) by the Company without Cause
or by the Executive for Good Reason, which in either case occurs
within twenty four (24) months after a Change in Control or
(ii) by the Board without Cause on or before the date of a
Change in Control in anticipation of such Change in Control or at
the request of a potential acquirer of the Company, or its
directors, officers, or agents, which has indicated an intent or
taken steps reasonably calculated to effect a Change in Control and
a Change in Control actually occurs. A termination of
Executive’s employment at any time by reason of death or
Total Disability, by the Company for Cause, or by the Executive
without Good Reason does not constitute a Protected
Termination.
(h) “ Target Bonus
” shall mean the target bonus percentage under the bonus
plan of the Company in effect immediately prior to the date of a
Change in Control; provided that if no bonus plan has been approved
by the Board at the relevant time, the Target Bonus shall be the
percentage of salary that the Executive received in the prior year
as a bonus. The term “Target Bonus” shall not include
any bonus structured as a transition or success bonus related to a
Change in Control.
(i) “ Total
Disability ” shall mean (i) if the Executive is
subject to a legal decree of incompetency (the date of such decree
being deemed the date on which such disability occurred), or
(ii) the written determination by a physician selected in good
faith by the Company and reasonably acceptable to Executive that,
because of a medically determinable disease, injury or other
physical or mental disability, the Executive is unable
substantially to perform each of the material duties of the
Executive required hereby, and that such disability has lasted for
the immediately preceding ninety (90) days and is, as of the
date of determination, reasonably expected to last an additional
ninety (90) days or longer after the date of determination, in
each case based upon medically available reliable information, and
the provision of clear and convincing evidence by the Company of
the Executive’s inability substantially to perform each
material duty hereunder in support of such determination by the
physician.
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2. Company Obligations Upon a
Protected Termination .
(a) Payments and Benefits .
If the Executive’s employment with the Company is terminated
by reason of a Protected Termination, then the Company shall
provide to the Executive the payments and benefits set forth in
this Section 2, subject to the terms and conditions herein, in
addition to (i) Executive’s Base Salary and all other
accrued benefits through the Date of Termination, (ii) expense
reimbursements for all unreimbursed business expenses incurred by
Executive through the Date of Termination consistent with Company
policies, and (iii) the Executive’s Target Bonus
multiplied by a fraction the numerator of which is the number of
days elapsed in such year through the Date of Termination and the
denominator of which is 365.
(b) Cash Severance . In the
event of a
