Exhibit 10.1
AGREEMENT AND
RELEASE
IT IS HEREBY AGREED by and between
John B. Higginbotham (“Employee”) and Integral Systems,
Inc. (“ISI”), for the good and sufficient consideration
set forth below, as follows:
1. Employee resigned his employment
and all positions with ISI and its affiliates (including, for the
avoidance of doubt, as Chief Executive Officer and President of ISI
and his officer positions with any ISI affiliates, as well as
membership on ISI’s board of directors and the boards of
directors of any affiliates) effective August 5, 2009 (the
“date of separation”). Subject to Employee’s
compliance with these conditions and the remaining provisions of
this Agreement and Release, ISI for itself and its affiliates
agrees:
(a) promptly following execution of
this Agreement and Release, but in any event no longer than seven
(7) days after the Effective Date (as defined below), to pay
Employee the amount of $100,000, minus applicable withholdings and
deductions; and
(b) (i) to provide Employee
with continuation of his base salary in effect as of the date of
separation (which the parties agree is an annual rate of $390,000),
minus applicable withholdings and deductions, for a period of
twelve (12) months, with such payments occurring in
installments on ISI’s regular payroll schedule, beginning
with the first payroll date after the Effective Date and continuing
on each payroll date thereafter until full payment of $390,000
(less withholding), (ii) to pay any Consolidated Omnibus
Budget Reconciliation Act (“COBRA”) premiums for a
period of twelve (12) months (or, if earlier, until COBRA
coverage ends) for coverage of Employee and Employee’s
dependents if Employee (or, as applicable, Employee’s
dependents) elects COBRA coverage, and (iii) promptly
following execution of this Agreement (but in no event after the
date required by applicable law), to cash out Employee’s
accrued vacation, and to cash out any other accrued sick leave or
personal time off in accordance with ISI’s policies;
and
(c) (i) to fully vest the ISI
stock option covering 100,000 shares granted to Employee on
May 9, 2009 (the “Option”) and, notwithstanding
Section 4 of the “Standard Terms and Conditions”
applicable to such Option or any other contrary provision, to
permit Employee to continue to exercise such Option until
August 5, 2014 (provided that the Option may be treated in the
same manner as other ISI stock options in the event of a change in
control transaction or similar event to the extent lawful), and the
Option shall terminate and be cancelled as of the close of business
on August 5, 2014 if not exercised prior to such time (and
Employee shall have no further rights with respect thereto in such
event); (ii) to use its best efforts to register the shares
underlying the Option in accordance with Section 3.4(b) of the
Employment Agreement to the extent such shares have not previously
been registered; and
(d) to pay to Employee the change in
control bonus described in Section 3.5 of Employee’s
Employment Agreement dated July 9, 2008, as amended (the
“Employment Agreement”) (the “Change in Control
Bonus”), minus applicable withholdings and deductions, in the
event that the conditions for paying such bonus set forth in such
Section 3.5 are satisfied (and, for purposes of clarity, the
parties confirm that the time period during which such a change in
control must occur shall end on January 9, 2011); provided,
however, that (i) in the event the Change in Control Bonus
becomes payable, Employee shall elect immediately prior to the
applicable change in control whether to receive such Change in
Control Bonus or to receive any payment with respect to the Option
(and, for the avoidance of doubt, if Employee elects to receive the
Change in Control Bonus, the Option shall be cancelled and
terminate with no additional consideration, and
if Employee elects to receive any
payment with respect to the Option (including, for the avoidance of
doubt, continuation of the Option or substitution of new awards for
the Option), no Change in Control Bonus shall be payable and
Employee’s right to receive any Change in Control Bonus shall
terminate), and (ii) notwithstanding subparagraph
(i) above, if Employee exercises any portion of the Option
prior to the change in control, the Change in Control Bonus shall
be reduced dollar for dollar by the positive spread on such
exercised portion of the Option, if any (and for this purpose,
“positive spread” shall mean the difference between the
exercise price for the exercised portion of the Option and the
market value of the stock underlying the exercised portion of the
Option on the date such stock was sold or transferred by Employee
(or if such stock has not been sold or transferred on or before the
effective date of the change in control, the market value of the
stock at the time of such change in control)); and
(e) to pay to Employee an annual
bonus for ISI’s 2009 fiscal year, minus applicable
withholdings and deductions, that the Employee would have earned
for the 2009 fiscal year had he remained an employee of ISI, with
such bonus determined in the same manner as the annual bonus for
the 2009 fiscal year is determined for other named executive
officers of ISI, with such bonus payable at the same time such
bonuses are payable to other named executive officers of ISI. Upon
Employee’s request, ISI shall provide information to Employee
on a reasonable basis concerning whether or not such bonuses have
been approved and any other relevant information concerning the
terms and conditions of the 2009 fiscal year bonuses for
executives.
Employee’s other benefits will
be governed by applicable plan terms. All stock options granted to
the Employee other than the Option shall terminate and be cancelled
as of the date of separation, and Employee shall have no further
rights with respect thereto. For the avoidance of doubt, with the
exception of COBRA continuation coverage and other benefits
provided for herein, Employee shall not be eligible for benefits,
except as otherwise provided by the terms of ISI’s applicable
benefit plans and policies. (Employee may elect to continue health
insurance coverage following the date of separation at
Employee’s own expense, in accordance with the provisions of
COBRA, regardless of whether Employee enters into this Agreement
and Release.)
2. Employee acknowledges that, as of
the date of Employee’s signing of this Agreement and Release,
Employee has sustained no injury or illness related in any way to
Employee’s employment with ISI for which a workers
compensation claim has not already been filed.
3. In return for ISI’s
agreement to provide Employee with the consideration referred to in
Paragraph 1, Employee, for Employee and Employee’s heirs,
beneficiaries, devisees, privies, executors, administrators,
attorneys, representatives, and agents, and Employee’s and
their assigns, successors and predecessors, hereby releases and
forever discharges ISI and its parents, subsidiaries and
affiliates, its and their officers, directors, employees, members,
agents, attorneys and representatives, and the predecessors,
successors and assigns of each of the foregoing (collectively, the
“ISI Released Parties”) from any and all actions,
causes of action, suits, debts, claims, complaints, charges,
contracts, controversies, agreements, promises, damages,
counterclaims, cross-claims, claims for contribution and/or
indemnity, claims for costs and/or attorneys’ fees, judgments
and demands whatsoever, in law or equity, known or unknown,
Employee ever had, now has, or may have against the ISI Released
Parties as of the date of Employee’s signing of this
Agreement and Release. This release includes, but is not limited
to, any claims alleging breach of express or implied contract,
wrongful discharge, constructive discharge, brea
