Exhibit 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT
AGREEMENT (“Agreement”) is entered into on the
25 th of February, 2009 (the
“Effective Date”), by and between Integral Systems,
Inc., a Maryland corporation (the “Company”), and R.
Miller Adams (the “Executive”).
NOW, THEREFORE, in consideration of
the mutual promises made below, the parties agree as
follows:
1. Employment, Duties and
Acceptance.
1.1 Employment.
(a) Effective upon the Effective
Date, the Company shall employ Executive as its General Counsel.
Executive shall have such powers, perform such duties and fulfill
such responsibilities associated with the legal function of the
Company and such additional management duties as may be determined
by the Company’s Chief Executive Officer (the
“CEO”) from time to time, including management of
corporate development matters as applicable. Executive shall report
to the CEO. Executive accepts such employment and shall perform his
duties faithfully and to the best of his abilities.
(b) Executive shall devote
substantially all of his full working time and creative energies to
the performance of his duties hereunder and will at all times
devote such additional time and efforts as are reasonably
sufficient for fulfilling the significant responsibilities
entrusted to him. So long as such activities, in the aggregate, do
not interfere with the performance by Executive of his duties
hereunder, Executive shall be permitted a reasonable amount of time
to:
(i) supervise his personal, passive
investments; (ii) participate (as board member, officer or
volunteer) in civic, political and charitable activities; and
(iii) subject to a conflict of interest review by the
Company’s Board of Directors (the “Board”) and
such time limitations as the Board may determine, continue two
advisory positions existing as of the Effective Date and one
commercial activity existing as of the Effective Date.
1.2 Place of Employment.
Executive’s principal place of employment shall be in Lanham,
Maryland (or, following the Company’s move in 2009, Columbia,
Maryland), subject to such travel as may be reasonably required by
his employment pursuant to the terms hereof.
2. Term of Employment.
2.1 Term of Employment. Executive
agrees that the initial term of this Agreement shall be for a
period of three (3) years commencing on the Effective Date (as
-may be extended, the “Term”). At the end of the
initial Term or at the end of any twelve (12) month renewal period
(as described in Section 2.2 below), the Term of this
Agreement may automatically extend as provided below in
Section 2.2. Notwithstanding anything to the contrary
contained herein, the Company may terminate Executive’s
employment at any time with or without Cause, subject to the
provisions of Section 4 below.
2.2 Renewal Periods. If this Agreement has not
been terminated earlier in accordance with the provisions of this
Agreement, at the end of the initial Term or any twelve
(12) month renewal period, the Term shall be extended
automatically for an additional twelve (12) month period
unless either party provides written notice of nonrenewal to the
other party at least one hundred eighty (180) days prior to
the last day of the initial Term or any renewal period, as
applicable.
3. Compensation.
3.1 Salary. As compensation for all
services to be rendered pursuant to this Agreement, the Company
shall pay to Executive during the Term a salary of $270,000 per
annum (the “Base Salary”), which shall be pro-rated for
calendar year 2009, less such deductions as shall be required to be
withheld by applicable laws and regulations or as otherwise
authorized by Executive. The Base Salary shall accrue from and
after the Effective Date, and shall be payable during the Term, in
arrears in equal periodic installments and in accordance with the
practices of the Company in effect from time to time for the
payment of salaries to employees of the Company, but in any event
not less frequently than monthly. Executive’s Base Salary
shall be reviewed at least annually, at the beginning of each
fiscal year, and may be increased (but not decreased) based upon
the evaluation of Executive’s performance and the
compensation policies of the Company in effect at the time of each
such review.
3.2 Additional Compensation. During
the Term, Executive shall be entitled to participate, in accordance
with the terms thereof and in a manner substantially similar to
other similarly situated executive officers, in any present or
future bonus, profit sharing, stock option (whether incentive or
non qualified) or other employee compensation or incentive plan
adopted by the Company. Executive’s annual target bonus
opportunity shall be 50% of Base Salary (the “Target
Bonus”), with the actual bonus (if any) determined and paid
to Executive pursuant to the Company’s applicable annual
incentive compensation plan as in effect from
time-to-time.
3.3 Sign-On Bonus. The Company shall
pay Executive a one-time sign-on bonus of $25,000, payable with
Executive’s first paycheck from the Company.
3.4 Grant of Stock
Options.
No later than 30 days after the
Effective Date, the Company shall grant Executive a nonqualified
stock option to acquire 50,000 shares of the Company’s common
stock (the “Options”), subject to such vesting
restrictions and other terms and conditions as set forth by the
Company’s 2008 Stock Incentive Plan and the Company’s
standard form of award agreement for options under the Plan (the
“Award Agreement”). Further, the Company shall in good
faith consider Executive for additional awards of stock options or
other equity awards annually under the Company’s equity
incentive plan.
Any unvested portion of the Options
or any equity award made to Executive shall immediately vest and
become exercisable in full: (i) if a change in control (as
defined in the Award Agreement) occurs while Executive is an
employee of the Company, to the extent the
Options and/or other awards are not assumed by
the acquirer or successor entity (as applicable) in connection with
such change in control, or (ii) if the Options and/or other
awards are assumed by the acquirer or successor entity (as
applicable) in connection with such change in control and
Executive’s employment or services with the Company is
terminated by the Company without Cause or by Executive for Good
Reason in connection with or within twelve (12) months
following the change in control.
3.4 Participation in Executive
Officer Benefit Plans. Executive shall be permitted during the
Term, if and to the extent eligible, to participate in any group
life, hospitalization or disability insurance plan, health program,
employee stock purchase plan, 401(k) pension or similar benefit
plan of the Company which may be available to other executive
officers of the Company generally on the same terms as such other
executive officers.
3.5 Expenses.
The Company shall payor reimburse
Executive for all ordinary, necessary and reasonable expenses
(including, without limitation, travel, meetings, dues,
subscriptions, fees, educational expenses, computer equipment,
mobile telephones, professional insurance, and the like) actually
incurred or paid by Executive during the Term in the performance of
Executive’s services under this Agreement, upon presentation
of expense statements or vouchers or such other supporting
information as may be required by the policies and procedures of
the Company in effect from time to time.
The Company shall provide Executive
with transition/housing assistance reimbursement as follows: as
extended residence stay of four (4) weeks following the
Effective Date and a rental car during such four (4) week
transition period. In addition, the Company shall reimburse
Executive the cost of two (2) round-trip, coach-class tickets
per month during the initial Term of this Employment Agreement or
any renewal period, as applicable commencing with the month in
which the Effective Date occurs, so that Executive can visit his
family.
The Company shall promptly pay
Orrick, Herrington & Sutcliffe LLP for reasonable fees and
expenses incurred in connection with the negotiation and drafting
of this Employment Agreement, up to a maximum amount of $10,000
within fourteen (14) days after Executive provides the Company
with a copy of any invoices he has received for such services and
in all cases within the “short-term deferral” period
set forth in Section 1.409A-1(b)(4) of the Treasury
Regulations.
3.6 Withholding. The Company is
authorized to withhold from the amount of any Base Salary and any
other things of value paid to or for the benefit of Executive, all
sums authorized by Executive or required to be withheld by law,
court decree, or executive order, including (but not limited to)
such things as income taxes, employment taxes, and employee
contributions to fringe benefit plans sponsored by the
Company.
4. Termination.
4.1 General. The employment of
Executive hereunder shall terminate as provided in Section 2,
unless earlier terminated in accordance with the provisions of this
Section 4.
4.2 Termination Upon Mutual
Agreement. The Company and Executive may, by mutual written
agreement, terminate this Agreement and/or the employment of
Executive at any time.
4.3 Death or Disability of
Executive.
(a) The employment of Executive
hereunder shall terminate upon (i) the death of Executive, and
(ii) at the option of the Company upon not less than thirty
(30) days’ prior written notice to Executive or his
personal representative or guardian, if Executive suffers a
“Total Disability” (as defined in Section 4.3(b)
below).
(b) For purposes of this Agreement,
“Total Disability” shall mean (i) if 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 by the
Company that, because of a medically determinable disease, injury
or other physical or mental disability, Executive is unable
substantially to perform each of the material duties of 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
Executive’s inability substantially to perform each material
duty hereunder in support of such determination by the
physician.
(c) Any leave on account of illness
or temporary disability which is short of “Total
Disability” shall not constitute a breach of this Agreement
by Executive and in no event shall any party be entitled to
terminate this Agreement for “Cause” (as defined in
Section 4.4 below) due to any such leave. All physicians
selected hereunder shall be board-certified in the specialty most
closely related to the nature of the disability alleged to
exist.
4.4 Termination For
Cause/Termination by Executive for Good Reason.
(a) The Company may, upon written
notice to Executive specifying in reasonable detail the reason
therefore (and subject to Executive’s ability to cure as
outlined below), terminate the employment of Executive at any time
for “Cause” (as defined below). For purposes of this
Agreement, “Cause” means (i) the repeated and
material failure of Executive to perform his material duties under
this Agreement, or to follow the Company’s policies and
procedures applicable to executive officers of the Company in
effect from time to time, after notice and a reasonable opportunity
to cure; (ii) willful malfeasance by Executive in connection
with the performance of his duties under this Agreement;
(iii) Executive being convicted of, or pleading guilty or
nolo contendere to, or being indicted for a felony or other
crime involving theft, fraud or moral turpitude; (iv) fraud or
embezzlement against the Company; (v) the failure of Executive
to comply with in any material respects any proper and lawful
written direction of
the CEO or the Board related to the provision of
services to the Company that is not inconsistent with this
Agreement, after notice to Executive of such failure and a 3D-day
opportunity to cure; (vi) or the material violation by Executive of
any of the provisions of Section 5 of this
Agreement.
(b) Executive may, upon written
notice to the Company specifying in reasonable detail the reason
therefore, terminate his employment at any time for “Good
Reason” as provided herein. For purposes of this Agreement,
“Good Reason” shall mean Executive’s voluntary
termination for one of the following reasons, provided that
Executive has provided written notice to the Company of the event
that he believes constitutes Good Reason within thirty
(30) days after its occurrence, and the Company has not cured
such event within thirty (30) days following the receipt of
such notice (and provided further that Executive voluntarily
terminates employment no later than sixty (60) days after the
Company’s time period for curing such violation has lapsed):
(i) a material diminution of the authority, responsibilities,
or position of Executive from those set forth in this Agreement;
(ii) a reduction in Executive’s Base Salary or Target
Bonus; (iii) a required relocation of Executive’s
principal place of business more than fifty (50) miles from
the applicable location specified in Section 1.2; or
(iv) a material breach by the Company of a material term of
this Agreement.
4.5 Payments Upon
Termination.
(a) In the event Executive’s
employment is terminated by the Company without Cause during the
Term, or if Executive terminates his employment for Good Reason
during the Term, then, in addition to the benefits provided under
Section 3.4, the Company shall pay to Executive any Base
Salary accrued through the date of termination of his employment
and any unpaid bonus from a prior fiscal year (and any other
benefits due under the Company’s employee benefit plans), and
shall also pay Executive:
(1) the Base Salary to which
Executive would have been entitled pursuant to Section 3.1 of
this Agreement had this Agreement remained in effect and had
Executive remained in the employ of the Company for a period
commencing upon the date of such termination and ending on the
first anniversary of the date of termination (“Termination
Coverage Period”), with such payments occurring on the same
schedule used to pay Base Salary to Executive during the Term;
and
(2) Executive’s COBRA premiums
for Executive and his eligible dependents for the Termination
Coverage Period, or the portion thereof, that Executive or
Executive’s dependents are eligible for such COBRA
coverage.
(b) In the event Executive’s
employment is terminated (i) by the Company for Cause, or
(ii) voluntarily by Executive other than for Good Reason, then
the Company shall have no duty to make any payments or provide any
benefits to Executive pursuant
