Document:

Employment Agreement between Jeffrey A. Rosolio

 Exhibit 10.01 
 EMPLOYMENT AGREEMENT 
 THIS
EMPLOYMENT AGREEMENT (“Agreement”) is entered into on the 23rd of October, 2007, to be effective on and as of the 19th of November,
2007 (the “Effective Date”), by and between Integral Systems, Inc., a Maryland corporation (the “Company”), and Jeffrey A. Rosolio (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 the Executive as the Vice
President, Human Resources. The Executive shall have such powers, perform such duties and fulfill such responsibilities as may be determined by the Chief Executive Officer of the Company from time to time. The Executive accepts such employment and
shall perform his duties faithfully and to the best of his abilities. 
 (b) The Executive shall devote 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 the Executive of his duties hereunder: (i) the Executive shall be permitted a reasonable amount of time to supervise his personal, passive investments; and (ii) the Executive shall be
permitted a reasonable amount of time to participate (as board member, officer or volunteer) in civic, political and charitable activities. 
 1.2 Place of Employment. The Executive’s principal place of employment shall be in Lanham, 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 date first written above (the “Effective Date”) and will continue until the first anniversary
of 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 with or without Cause. 

 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
non-renewal to the other party at least one hundred twenty (120) days prior to the last day of the 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 the Executive during the Term a salary of $200,000 per annum (the “Base Salary”), which shall be pro-rated
for calendar year 2007, less such deductions as shall be required to be withheld by applicable laws and regulations or as otherwise authorized by the 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.
The Executive’s Base Salary shall be reviewed at least annually and may be increased (but not decreased) based upon the evaluation of the 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. 
 3.3 Participation in Executive Officer Benefit Plans;
Vacation. The 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, 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. The Executive shall receive vacation in accordance with the vacation policy of the Company. 
 3.4 Expenses. The Company shall pay or reimburse the 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 the Executive during the Term in the performance of the
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. 
 3.5 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 the Executive, all sums authorized by the Executive or required to be withheld by law, court decree, 

  

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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 the 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 the Executive may, by mutual written agreement, terminate this Agreement
and/or the employment of the Executive at any time. 
 4.3 Death or Disability of Executive. 

 (a) The employment of the Executive hereunder shall terminate upon (i) the death of the Executive, and (ii) at the option of the
Company upon not less than thirty (30) days’ prior written notice to the Executive or his personal representative or guardian, if the 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 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 by the Company 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. 
 (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 the 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. The Company may, upon written notice to the Executive specifying in
reasonable detail the reason therefore, terminate the employment of the Executive at any time for “Cause” (as defined below). For purposes of this Agreement, “Cause” means (i) the material failure of the Executive to perform
his 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
the Executive in connection with the performance of his duties under this 

  

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Agreement; (iii) the 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 the Executive to obey in any material respects any proper written direction of the Chief Executive Officer of the Company that is not
inconsistent with this Agreement; (vi) or the material violation by the Executive of any of the provisions of Section 5 of this Agreement. 
 4.5 Payments Upon Termination. 
 (a) The Company may at any time during the Term
terminate the Executive without Cause. In the event the Executive’s employment is terminated by the Company without Cause during the Term, then the Company shall pay (on the same schedule used to pay Base Salary to the Executive during the
Term) the Executive: 
 (1) the Base Salary to which the Executive would have been entitled pursuant to Section 3.1 of this
Agreement had the 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”); provided, however,
that in the event that during the Termination Coverage Period such period Executive receives compensation from a third party employer (“Third Party Employer Compensation”), then Executive shall promptly provide written evidence of such
compensation and any payments under this Section 4.5(a) shall be net of such Third Party Employer Compensation, and 
 (2) The
Executive’s COBRA Premiums 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 the Executive’s employment is terminated (i) by the Company for Cause, or (ii) voluntarily by the Executive, then the
Company shall have no duty to make any payments or provide any benefits to the Executive pursuant to this Agreement other than payment of the amount of the Executive’s Base Salary accrued through the date of termination of his employment and
any other benefits the Executive is then due pursuant to the employment benefit plans of the Company. 
 (d) Upon termination of
Executive’s employment for death or due to Total Disability, the Company shall pay to the Executive, guardian, personal representative or estate, as the case may be, in addition to any insurance or disability benefits to which Executive may be
entitled hereunder, all amounts accrued or vested prior to such termination. 
 (e) Upon termination of Executive’s employment for
death, due to Total Disability or without Cause, the Executive, or the Executive’s guardian, personal representative or estate, as the case may be, shall be entitled to a bonus (consistent with the provisions of Section 3.2 of this
Agreement) for the fiscal year in which the date of termination of employment occurs, prorated for the period of employment in such fiscal year; provided, however, that such bonus will be withheld and not deemed earned only in the 

  

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event that: (i) the Company reasonably determines that Executive had not substantially met, to the extent reasonably obtainable, Executive’s bonus
related goals as of the date of termination of employment or (ii) no other similarly situated executive actually receives a bonus for such fiscal year. Any such bonus deemed earned, shall be payable at the time in which other similarly situated
Company executives receive their bonus payments. 
 (f) In the event that this Agreement is not renewed either after the initial Term or
after a renewal period, then the Company shall have no duty to make any payments or provide any benefits to the Executive pursuant to this Agreement other than payment of the amount of the Executive’s Base Salary accrued through the date of
termination of his employment and any other benefits the Executive is then due pursuant to the employment benefit plans of the Company. 
 4.6 No Disparaging Comments Upon Termination. 
 Upon termination of this Agreement, the
Company will refrain from making any disparaging remarks about the Executive. Similarly, the Executive shall refrain from making any disparaging remarks about the Company or the businesses, services, products, stockholders, officers, directors or
other personnel of the Company or any of its affiliates. 
  

	 	5.	Certain Covenants of the Executive. 

 5.1 Restrictive Covenants. 
 (a) The parties hereto agree that as used herein “Confidential
Information” means all information which becomes known to the Executive as a consequence of his employment by the Company and includes, but is not limited to, information about the Company’s customers, methods of operation, prospective and
executed contracts, trade secrets, business contacts, customer lists, and all technological, business, financial, accounting, statistical and personnel information regarding the Company. The parties hereto further agree and stipulate that this
Confidential Information was developed by the Company at considerable expense, that this information is a valuable asset and part of the Company’s goodwill, that this information is vital to the Company’s success and is the sole property
of the Company. 
 (b) The Executive recognizes and acknowledges that during his employment by the Company, the Executive has, or will,
become familiar with the Company’s Confidential Information. 
 (c) The Executive recognizes and acknowledges that the Company is
engaged in the business of, among other things, building satellite ground systems and equipment for command and control, integration and test, data processing and simulation (the “Business”). The Business is a highly competitive
enterprise, so that any unauthorized disclosure or unauthorized use by the Executive of the Confidential Information protected under this Agreement, whether during his employment with the Company or after its termination, would cause immediate,
substantial and irreparable injury to the Business and the goodwill of the Company. 
  

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 (d) The Executive agrees that upon termination of his employment with the Company for any reason,
whether voluntary or involuntary or with or without Cause, he will surrender to the Company every item and every document which is the Company’s property or will completely remove from the Executive’s personal property such Confidential
Information in whatever form (e.g. cell phones, PDA’s, personal computers, etc.). All such documents and Confidential Information are the sole and absolute property of the Company. At the written request of the Company, the Executive shall
provide the designated representative of the Company a certificate containing the following statement: “The Executive hereby certifies that he has notified the Company’s designated representative of all Confidential Information residing on
any personal property of the Executive to which the Executive is aware of after due review and inspection and has removed and destroyed (unless otherwise directed in writing by the Company) all Confidential Information from all personal property of
the Executive.” Thereafter, in the event that the Executive becomes aware of any further Confidential Information on the Executive’s personal property, the Executive shall notify the Company in writing and again comply with the immediately
preceding sentence. 
 (e) The Executive agrees that during his employment and following the termination of that employment for any reason,
whether voluntary or involuntary or with or without Cause, he will not, on his own behalf or as a partner, officer, director, employee, agent, or consultant of any other person or entity, directly or indirectly, disclose the Company’s
Confidential Information to any person or entity other than agents of the Company, and he will not use or aid others in obtaining or using any such Confidential Information. The Executive’s obligations under this Section 5.1(e)
shall not be deemed violated in the event that (i) the Executive discloses any Confidential Information pursuant to order of a court of competent jurisdiction, provided the Executive has notified the Company of such potential legal order and
provided the Company with the opportunity to challenge or limit the scope of the disclosure, or (ii) the information becomes generally available from a source other than the Company, any of its affiliates, or any of their employees when such
source is not legally prohibited, to the best of the Executive’s knowledge, from making such information available. 
 (f) All
inventions, prototypes, discoveries, improvements, innovations and the like (“Inventions”) and all works of original authorship or images that are fixed in any tangible medium of expression and all copies thereof (“Works”) which
are designed, created or developed by the Executive, solely or in conjunction with others, in the course of performance of the Executive’s duties which relate to the Business, shall be made or conceived for the exclusive benefit of and shall be
the exclusive property of the Company. The Executive shall immediately notify the Company upon the design, creation or development of all Inventions and Works. At any time thereafter, the Executive, at the request and expense of the Company, shall
execute and deliver to the Company all documents or instruments which may be necessary to secure or perfect the Company’s title to or interest in the Inventions and Works, including but not limited to applications for letters of patent, and
extensions, continuations or reissues thereof, applications 

  

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for copyrights and documents or instruments of assignment or transfer. All Works are agreed and stipulated to be “works made for hire,” as that
term is used and understood within the Copyright Act of 1976, as amended or any successor statute. To the extent any Works are not deemed to be works made for hire as defined above, and to the extent that title to or ownership of any Invention or
Work and all other rights therein are not otherwise vested exclusively in the Company, the Executive shall, without further consideration but at the expense of the Company, assign and transfer to the Company the Executive’s entire right, title
and interest (including copyrights and patents) in or to those Inventions and Works. 
 (g) The Executive agrees that during his employment
with the Company and for a period commencing on the termination of such employment and ending (i) in the event the Executive’s employment is terminated in accordance with Section 2 by the Company without Cause, at the end of
the Termination Coverage Period, or (ii) in the event the Executive’s employment terminates for any other reason (whether voluntarily or involuntarily), on the date one (1) year following such date of termination, he will not, on his
own behalf or as a partner, officer, director, employee, agent, or consultant of any other person or entity, directly or indirectly, engage or attempt to engage in a business which competes against the Business of the Company in any geographic area
in which the Company engages in the Business. This subsection shall not be construed as precluding the Executive from working as an employee or consultant for a separate business unit of a competitor of the Company, if the separate business unit is
not in competition with the Business. 
 (h) The Executive agrees that during his employment and for a period of twenty four
(24) months after the termination of such employment, whether voluntary or involuntary or with or without Cause, he will not, on his own behalf or as a partner, officer, director, employee, agent, or consultant of any other person or entity,
directly or indirectly, solicit or induce (or attempt to solicit or induce) any employees of the Company to leave their employment with the Company and/or consider employment with any other person or entity. 
 5.2 Rights and Remedies Upon Breach. If the Executive breaches, or threatens, either in writing or as evidenced by a demonstrable
course of conduct, to commit a breach of, any of the provisions of Section 5.1 (the “Restrictive Covenants”), the Company shall, in addition to its right immediately to terminate this Agreement, have the right and remedy (which
right and remedy shall be independent of others and severally enforceable, and which shall be in addition to, and not in lieu of, any other rights and remedies available to the Company under law or in equity) to have the Restrictive Covenants
specifically enforced by any court having equity jurisdiction, it being acknowledged and agreed that any such breach or threatened breach could cause irreparable injury to the Company or its affiliates and that money damages may not provide adequate
remedy to the Company. 
 5.3 Covenants Currently Binding the Executive. The Executive warrants that his employment by
the Company, and his execution, delivery and performance of this Agreement, will not (a) violate any non-disclosure agreements, covenants against competition, or other restrictive covenants made by the Executive to or for the benefit of any
previous employer or partner, or (b) violate or constitute a breach or default under, any statute, law, judgment, order, decree, writ, injunction, deed, instrument, contract, lease, license or permit to which the Executive is a party or by
which the Executive is bound. 
  

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 5.4 Litigation. There is no litigation, proceeding or investigation of any nature
(either civil or criminal) which is pending or, to the best of the Executive’s knowledge, threatened against or affecting the Executive or which would adversely affect his ability to substantially perform the duties herein. 
 5.5 Review. The Executive has received or been given the opportunity to review the provisions of this Agreement, and the meaning and
effect of each provision, with independent legal counsel of the Executive’s choosing. 
 5.6 Severability of
Covenants. The Executive acknowledges and agrees that the Restrictive Covenants are reasonable and valid in geographical and temporal scope and in all respects. If any court determines that any of the Restrictive Covenants, or any part
thereof, is invalid or unenforceable, the remainder of the Restrictive Covenants shall not thereby be affected and shall be given full effect, without regard to the invalid portions. 
 5.7 Blue-Penciling. If any court determines that any of the Restrictive Covenants, or any part thereof, is unenforceable because of
the duration or geographic scope of such provision, such court shall have the power to reduce the duration or scope of such provision, as the case may be, and, in its reduced form, such provision shall then be enforceable and shall be enforced. If
any such court declines to so revise such covenant, the parties agree to negotiate in good faith a modification that will make such duration or scope enforceable. 
  

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	 	6.	Dispute Resolution. 

 6.1
Costs of Arbitration. If either party brings an arbitration proceeding to enforce its rights under this Agreement, the substantially prevailing party (as determined by the arbitrator) shall be entitled to recover from the other
party all expenses incurred by it in preparing for and in trying the case, including, but not limited to, investigative costs, court costs and reasonable attorneys’ fees. 
 6.2 No Jury Trial. NEITHER PARTY SHALL ELECT A TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN
ANY WAY CONNECTED WITH A BREACH OF THIS AGREEMENT. 
 6.3 Personal Jurisdiction. Both parties agree to submit to the
jurisdiction and venue of the state courts in the State of Maryland as to matters involving enforcement of this Agreement including any award under an arbitration proceeding. 
 6.4 Arbitration. SUBJECT TO THE COMPANY’S RIGHT TO SEEK INJUNCTIVE RELIEF AS SPECIFIED IN THIS AGREEMENT, ANY DISPUTE BETWEEN
THE PARTIES HERETO ARISING UNDER OR RELATING TO THIS AGREEMENT (INCLUDING, BUT NOT LIMITED TO, THE AMOUNT OF DAMAGES, THE NATURE OF THE EXECUTIVE’S TERMINATION OR THE CALCULATION OF ANY BONUS OR OTHER AMOUNT OR BENEFIT DUE) SHALL BE RESOLVED IN
ACCORDANCE WITH THE PROCEDURES OF THE AMERICAN ARBITRATION ASSOCIATION. ANY RESULTING HEARING SHALL BE HELD IN LANHAM, MARYLAND. THE RESOLUTION OF ANY DISPUTE ACHIEVED THROUGH SUCH ARBITRATION SHALL BE BINDING AND ENFORCEABLE BY A COURT OF COMPETENT
JURISDICTION. 
  

	 	7.	Other Provisions. 

 7.1
Notices. Any notice or other communication required or which may be given hereunder shall be in writing and shall be delivered personally, telegraphed, telexed, sent by facsimile transmission or sent by certified, registered or
express mail, postage paid, and shall be deemed given when so delivered personally, telegraphed, telexed or sent by facsimile transmission or, if mailed, four days after the date of mailing, as follows: 
  

	 	(i)	if to the Company, to: 

 Integral Systems, Inc.

 5000 Philadelphia Way 
 Lanham, Maryland 
 Fax: 301-731-3183 
 Attention: Chief Executive Officer 
  

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 with copies to: 
 Gibson, Dunn & Crutcher LLP 
 1050 Connecticut Ave, NW 
 Washington, DC 20036 
 Fax:
(202) 955-8589 
 Attention: Howard Adler 
  

	 	(ii)	if to the Executive, to: 

 Jeffrey A. Rosolio 

16009 Daven Pine Court 
 Darnestown, MD
20878 
 FAX: 
 Any party may by
notice given in accordance with this Section to the other party designate another address or person for receipt of notices hereunder. 
 7.2
Entire Agreement. This Agreement contains the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, written or oral, with respect thereto,
including without limitation any severance benefits as described in the Company’s employment manual as in effect from time to time and the Change in Control Agreement and the Transition Bonus Agreement, both of which agreements are hereby
terminated and shall be of no further force and effect. 
 7.3 Waivers and Amendments. This Agreement may be amended,
modified, superseded, canceled, renewed or extended, and the terms and conditions hereof may be waived, only by a written instrument signed by the Executive and a duly authorized officer of the Company (each, in such capacity, a party) or, in the
case of a waiver, by the party waiving compliance. No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any right, power or
privilege hereunder, nor any single or partial exercise of any right, power or privilege hereunder, preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder. 
 7.4 Governing Law. This Agreement has been negotiated and is to be performed in the State of Maryland, and shall be governed and
construed in accordance with the laws of the State of Maryland applicable to agreements made and to be performed entirely within such State. 
 7.5 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 
  

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 7.6 Confidentiality. Neither party shall disclose the contents of this Agreement or
of any other agreement they have simultaneously entered into to any person, firm or entity, except the agents or representatives of the parties, or except as required by law. 
 7.7 Word Forms. Whenever used herein, the singular shall include the plural and the plural shall include the singular. The use of
any gender or tense shall include all genders and tenses. 
 7.8 Headings. The Section headings have been included for
convenience only, are not part of this Agreement, and are not to be used to interpret any provision hereof. 
 7.9 Binding Effect
and Benefit. This Agreement shall be binding upon and inure to the benefit of the parties, their successors, heirs, personal representatives and other legal representatives. This Agreement may be assigned by the Company to any entity
which buys substantially all of the Company’s assets. However, the Executive may not assign this Agreement without the prior written consent of the Company. 
 7.10 Separability. The covenants contained in this Agreement are separable, and if any court of competent jurisdiction declares any of them to be invalid or unenforceable, that declaration of
invalidity or unenforceability shall not affect the validity or enforceability of any of the other covenants, each of which shall remain in full force and effect. 
  

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 IN WITNESS WHEREOF, the parties, intending to be legally bound, have executed this Agreement or caused it
to be executed and attested by their duly authorized officers as a document under seal on the day and year first above written. 
  

			
	 INTEGRAL SYSTEMS, INC.

		
	 By:
	 	 /s/ Alan Baldwin

	Name:	 	Alan Baldwin
	Title:	 	 Chief Executive Officer and President

	
	 EXECUTIVE:

	
	 /s/ Jeffrey Rosolio

		 	Jeffrey Rosolio

  

 -12-2008 Incentive Compensation Plan

 Exhibit 10.02 
 Integral Systems, Inc. Incentive Compensation Plan for FY 2008 
 AWARDS 
 Target Award levels will be determined at the Board’s discretion and will be based upon a percentage of each participant’s base salary. 
 Participant’s individual awards will be further determined by a system of goal weighting. 
 SECTION 1. PURPOSE OF INCENTIVE COMPENSATION PLAN (ICP) 
 The purpose of the Plan is to promote the success of the Company by
providing to participating executives bonus incentives that qualify as performance-based compensation by: 
  

	1.1	Encouraging individual effort and group teamwork toward the achievement of overall Company objectives which include Division, Business Unit and individual goals.

  

	1.2	Rewarding outstanding managerial performance. 

  

	1.3	Providing total direct compensation (base salary plus annual incentive), which is competitive in the Company’s relevant market sector and which is sufficient to ensure the
Company’s ability to attract, retain, and motivate outstanding executives. 

  

	1.4	Focusing the attention of participants on Corporate, Division, Business Unit and Individual goals. 

  

	1.5	Engaging managers in business success by sharing the gains realized from changed behaviors. 

  

	1.6	Communicating priorities to indicate the relative importance of certain objectives and goals of the Company. 

 SECTION 2. DEFINITIONS AND TERMS 
 2.1 Accounting Terms. Except as otherwise
expressly provided or the context otherwise requires, financial and accounting terms are used as defined for purposes of, and shall be determined in accordance with, generally accepted accounting principles as applied and reflected in the
consolidated financial statements of the Company, prepared in the ordinary course of business. 
 2.2 Specific Terms. The following words and phrases as used
herein shall have the following meanings unless a different meaning is plainly required by the context: 
 “Base Salary” in respect of any
Performance Period means the aggregate base annualized salary of a Participant from the Company and all affiliates of the Company at the time Participant is selected to participate for that Performance Period, exclusive of any commissions or other
Company-provided benefits or perquisites or for contributions to a plan qualifying under Section 401(k) of the Code or contributions to a cafeteria plan under Section 125 of the IRS Code. 

 “Bonus” means a cash payment or a payment opportunity as the context requires. 
 “Bookings” means awards or contracts. 
 “Business Unit”
means any entity reporting directly to the corporate level. 
 “Business Unit Performance” means the specific financial and/or operating targets
established for each Business U, which, if attained will trigger the granting of Business unit award component of ICP. 
 “Calculated Award” means
the Total Performance Score multiplied by the Target Award established at the beginning of the Plan Year. 
 “Committee” means the Compensation
Committee of the Board of Directors of Integral Systems, Inc. 
 “Company” means Integral Systems, Inc. and any successor, whether by merger,
ownership of all or substantially all of its assets, or otherwise. 
 “Corporate Performance” means Integral’s annual financial and
operational performance measures and specific objectives established by top management and approved by the Committee. The attainment of these performance objectives will be used in the determination of the ICP awards. 
 “Division Performance” means specific performance objectives established for participants with Division responsibility, with an appropriate weighting applied
based on the intended focus on top management. The financial performance of the appropriate Division as defined in the ICP worksheet will be used in calculating the participant’s ICP award. 
 “Earned Award” means the Calculated Award which may be adjusted based on a review of a participant’s contributions and other performance criteria
considered by top management with input from senior management. 
 “EPS” for any Year means earnings per share of the Company, as reported in the
Company’s Consolidated Statement of Income set forth in the audited annual financial statements of the Company for the Year. 
 “Executive”
means a key employee (including any officer) of the Company who is (or in the opinion of the Committee may during the applicable Performance Period become) an “executive officer” as defined in Rule 3b-7 under the Securities Exchange Act of
1934. 
 “ICP” means the Incentive Compensation Plan approved by the Committee on an annual basis, as amended from time to time. 
 “Individual Performance” means the performance objectives specifically attributable to each Participant reflective of his/her functional area and
responsibilities, taking into consideration top management’s evaluation of performance in that regard. 

 “Operating Income” means Revenue less the sum of all allowable expenses including labor, material, overhead,
SG&A and allowable Corporate allocation plus unallowable costs which include unallowable Corporate allocation plus amortization of good will and related intangibles. 
 “Participant” means an Executive, manager or key staff member selected to participate in the Plan by the Committee. Participants must have an ongoing opportunity to contribute significantly to the success
and profitability of the Company. 
 “Performance Period” means the Year or Years with respect to which the Performance Targets are set by the
Committee, typically the Plan Year. 
 “Performance Target(s)” means the specific objective goal or goals (which may be cumulative and/or
alternative) that are set in writing by the Committee for each Executive for the Performance Period in respect of any one or more of the performance criteria. 
 “Plan Year” means any one or more fiscal years of the Company commencing on or after October 1, that represent(s) the applicable Performance Period and end(s) no later than September 30. 
 “Revenue” means the actual sales revenue results achieved during the Plan Year as reported in the Company’s audited Profit & Loss Statement.

 “Target Award” means the established award that a participant is eligible to receive if all performance objectives are achieved at 100%. The
Target Award is shown as a percentage of the Participant’s Base Salary. 
 “Target Performance Level” means the fully satisfied performance
level at which awards will equal 100% of the Target Award established for that performance measure. 
 “Threshold Performance Level” means the
minimum level of acceptable performance for which incentive awards will be earned for any of the established performance objectives or measures. 
 “Total Performance Score” means the sum of all of a Participant’s scores. 
 SECTION 3. ADMINISTRATION OF THE PLAN 
 3.1 The Committee. The Plan shall be administered by a Committee consisting of at least three members of the Board of Directors of the Company, duly authorized by the
Board of Directors of the Company to administer the Plan, who (i) are not eligible to participate in the Plan and (ii) are “outside directors.” 
 3.2 Powers of the Committee. The Committee shall have the sole authority to establish and administer the Performance Target(s) and the responsibility of determining from among the executives and managers those persons who will participate
in and receive Bonuses under the Plan, the amount of such Bonuses, and the time or times at which and the form and manner in which Bonuses will be paid and shall otherwise be responsible for the administration of the Plan, in accordance with its
terms. The Committee shall have the 

 
authority to construe and interpret the Plan and any agreement or other document relating to any Bonus under the Plan. For each Performance Period, the
Committee shall determine, at the time the Performance Target(s) are set, those selected as Participants in the Plan. All powers accruing to the Committee that affect Named Officers of the Corporation shall be subject to final approval by the Board
of Directors. 
 3.3 Requisite Action. A majority (but not fewer than two) of the members of the Committee shall constitute a quorum. The vote of a majority
of those present at a meeting at which a quorum is present or the unanimous written consent of the Committee shall constitute action by the Committee. 
 3.4
Express Authority (and Limitations on Authority) to Change Terms and Conditions of Bonus. Without limiting the Committee’s authority under other provisions of the Plan, the Committee shall have the authority accelerate a Bonus (after the
attainment of the applicable Performance Target(s)) and to waive restrictive conditions for a Bonus (including any forfeiture conditions, but not Performance Target(s)), in such circumstances as the Committee deems appropriate. 
 SECTION 4. BONUS PROVISIONS. 
 4.1 Provision for Bonus. Each Participant may
receive a Bonus if and only if the Performance Threshold(s) established by the Committee are attained. The applicable Performance Period and Performance Target(s) shall be determined by the Committee consistent with the terms of the Plan.
Notwithstanding the fact that the Performance Target(s) have been attained, the Company may pay a Bonus of more than or less than the amount determined by the formula or standard established, or may pay no Bonus at all, unless the Committee
otherwise expressly provides by written contract or other written commitment. 
 4.2 Selection of Performance Target(s). The specific Performance Target(s)
must be established by the Committee in advance of the deadlines applicable. At the time the Performance Target(s) are selected, the Committee shall provide, in terms of an objective formula or standard for each Participant, and for any person who
may become a Participant after the Performance Target(s) are set, the method of computing the specific amount that will represent the maximum amount of Bonus payable to the Participant if the Performance Target(s) are attained. 
 4.3 Selection of Participants. For each Performance Period, the Committee shall determine, at the time the Performance Target(s) are set, those executives, managers and
key staff who will participate in the Plan. 
 4.4 Effect of Mid-Year Commencement of Service. If services as a Participant commence after the adoption of
the Plan and the Performance Target(s) are established for a Performance Period, the Committee may grant a Bonus that is proportionately adjusted based on the period of actual service during the Year; the amount of any Bonus paid to such person
shall not exceed that proportionate amount of the applicable maximum individual bonus. 
 4.5 Changes Resulting From Accounting Changes. If, after the
Performance Target(s) are established for a Performance Period, a change occurs in the applicable accounting principles or practices, the amount of the Bonuses paid under this Plan for such Performance Period shall be determined without regard to
such change. 

 4.6 Committee Discretion to Determine Bonuses. The Committee has the sole discretion to determine the standard or formula
pursuant to which each Participant’s Bonus shall be calculated (in accordance with Section 4.2), whether all or any portion of the amount so calculated will be paid, and the specific amount (if any) to be paid to each Participant, subject
in all cases to the terms, conditions and limits of the Plan and of any other written commitment authorized by the Committee. To this same extent, the Committee may at any time establish additional conditions and terms of payment of Bonuses
(including but not limited to the achievement of other financial, strategic or individual goals, which may be objective or subjective) as it may deem desirable in carrying out the purposes of the Plan and may take into account such other factors as
it deems appropriate in administering any aspect of the Plan. 
 4.7 Committee Certification. No Participant shall receive any payment under the Plan unless
the Committee has certified, by resolution or other appropriate action in writing, that the amount thereof has been accurately determined in accordance with the terms, conditions and limits of the Plan and that the Performance Target(s) and any
other material terms previously established by the Committee or set forth in the Plan were in fact satisfied. 
 SECTION 5. GENERAL PROVISIONS 
 5.1 No Right to Bonus or Continued Employment. Neither the establishment of the Plan nor the provision for or payment of any amounts hereunder nor any action of the
Company (including, for purposes of this Section 5.1, any predecessor or subsidiary), the Board of Directors of the Company or the Committee in respect of the Plan, shall be held or construed to confer upon any person any legal right to
receive, or any interest in, a Bonus or any other benefit under the Plan, or any legal right to be continued in the employ of the Company. The Company expressly reserves any and all rights to discharge an Participant in its sole discretion, without
liability of any person, entity or governing body under the Plan. The Company shall have no obligation to pay any Bonus hereunder nor to pay the maximum amount so calculated or any prorated amount based on service during the period, unless the
Committee otherwise expressly provides by written contract or other written commitment. 
 5.2 Discretion of Company, Board of Directors and Committee. Any
decision made or action taken by the Company or by the Board of Directors of the Company or by the Committee arising out of or in connection with the creation, amendment, construction, administration, interpretation and effect of the Plan shall be
within the absolute discretion of such entity and shall be conclusive and binding upon all persons. No member of the Committee shall have any liability for actions taken or omitted under the Plan by the member or any other person. 
 5.3 Absence of Liability. A member of the Board of Directors of the Company or a member of the Committee of the Company or any officer of the Company shall not be liable
for any act or inaction hereunder, whether of commission or omission. 
 5.4 No Funding of Plan. The Company shall not be required to fund or otherwise
segregate any cash or any other assets which may at any time be paid to Participants under the Plan. The Plan shall constitute an “unfunded” plan of the Company. The Company shall 

 
not, by any provisions of the Plan, be deemed to be a trustee of any property, and any obligations of the Company to any Participant under the Plan shall be
those of a debtor and any rights of any Participant or former Participant shall be no greater than those of a general unsecured creditor. 
 5.5
Non-Transferability of Benefits and Interests. Except as expressly provided by the Committee, no benefit payable under the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge,
and any such attempted action be void and no such benefit shall be in any manner liable for or subject to debts, contracts, liabilities, engagements or torts of any Participant or former Participant. This Section 5.5 shall not apply to an
assignment of a contingency or payment due after the death of the Participant to the deceased Participant’s legal representative or beneficiary. 
 5.6
Law to Govern. All questions pertaining to the construction, regulation, validity and effect of the provisions of the Plan shall be determined in accordance with the laws of the State of Maryland. 
 SECTION 6. AMENDMENTS, SUSPENSION OR TERMINATION OF PLAN 
 The Board of
Directors or the Committee may from time to time amend, suspend or terminate in whole or in part, and if suspended or terminated, may reinstate, any or all of the provisions of the Plan.

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