<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 14, 1998
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
INTEGRAL SYSTEMS, INC.
(Exact Name of Registrant as Specified in Its Charter)
MARYLAND 52-1267968
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
5000 PHILADELPHIA WAY, SUITE A
Lanham, Maryland 20706-4417
(Address of Principal Executive Offices) (Zip Code)
INTEGRAL SYSTEMS, INC., 1988 STOCK OPTION PLAN
AS AMENDED AND RESTATED EFFECTIVE MAY 8, 1998
(Full Title of the Plan)
STEVEN R. CHAMBERLAIN
CHIEF EXECUTIVE OFFICER
INTEGRAL SYSTEMS, INC.
5000 PHILADELPHIA WAY, SUITE A
LANHAM, MARYLAND 20706-4417
(Name and Address of Agent for Service)
(301) 731-4233
(Telephone Number, Including Area Code, of Agent For Service)
Copy to:
JOHN L. SULLIVAN, III, ESQ.
VENABLE, BAETJER AND HOWARD, LLP
2010 CORPORATE RIDGE, SUITE 400
MCLEAN, VIRGINIA 22102
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Proposed Maximum Offering Proposed Maximum
Title Of Securities To Amount Price Aggregate Amount Of
Be Registered To Be Registered(1) Per Share(2) Offering Price (2) Registration Fee(2)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par
value per share 600,000 shares $11.875 $7,125,000 $2,102
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
________
(1) Pursuant to Rule 416 under the Securities Act of 1933, this Registration
Statement also covers such additional shares of Common Stock as may become
issuable pursuant to the anti-dilution provisions of the Integral Systems,
Inc., 1988 Stock Option Plan as Amended and Restated Effective May 8, 1998.
(2) Estimated solely for the purpose of determining the Registration Fee and
calculated pursuant to Rules 457(c) and 457(h) based upon the average of
the high and low prices of the Common Stock on the Nasdaq SmallCap Market
on August 11, 1998.
<PAGE>
PART I
Documents containing the information specified in Part I of Form S-8 have
been and/or will be sent or given to employees as specified by Rule 428(b)(1) of
the Securities Act of 1933, as amended (the "Securities Act"). In accordance
with the instructions to Part I of Form S-8, such documents will not be filed
with the Securities and Exchange Commission (the "Commission") either as part of
this Registration Statement or as prospectuses or prospectus supplements
pursuant to Rule 424 under the Securities Act. These documents and the
documents incorporated by reference pursuant to Item 3 of Part II of this
Registration Statement, taken together, constitute the prospectus as required by
Section 10(a) of the Securities Act.
PART II
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
---------------------------------------
The following documents which have been filed by Integral Systems,
Inc. (the "Company") with the Securities and Exchange Commission (the
"Commission") are incorporated into this Registration Statement by reference:
(a) The Company's Annual Report on Form 10-KSB for the year ended
September 30, 1997, filed with the Commission on December 31,
1997;
(b) The Company's Quarterly Reports on Form 10-QSB for the quarters
ended December 31, 1997 and March 31, 1998, filed with the
Commission on February 19, 1998 and May 15, 1998, respectively;
and
(c) The description of the Common Stock set forth in Company's
Registration Statement on Form 8-A filed with the Commission on
May 17, 1990 by the Registrant under Section 12(g) of the
Securities Exchange Act of 1934, as amended, (the "Exchange Act")
together with any amendment or report filed with the Commission
for the purpose of updating such description.
All documents subsequently filed by the Registrant with the Commission
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the filing of a post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference into this Registration
Statement and to be a part of this Registration Statement from the date of
filing of such documents. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Registration Statement to the
extent that a statement contained herein or in any other subsequently filed
document that also is or is deemed to be incorporated herein by reference
modifies or supersedes such earlier statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
-------------------------
Not Applicable.
<PAGE>
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
--------------------------------------
Not Applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
-----------------------------------------
Section 2-418 of the Maryland General Corporation Law ("MGCL") permits a
corporation to indemnify each of its present and former directors and officers,
among others, against judgments, penalties, fines, settlements and reasonable
expenses actually incurred by him or her in connection with any proceeding to
which he or she may be made a party by reason of his or her service in that
capacity or certain other capacities, unless it is established that (a) the act
or omission of the director or officer was material to the matter giving rise to
such proceeding and (i) was committed in bad faith or (ii) was the result of
active and deliberate dishonesty; or (b) the director or officer actually
received an improper personal benefit in money, property or services; or (c) in
the case of any criminal proceeding, the director or officer had reasonable
cause to believe that the act or omission was unlawful. However, if the
proceeding was one by or in the right of the corporation, indemnification may
not be made in respect of any proceeding in which the director or officer shall
have been adjudged to be liable to the corporation. In addition, Section 2-
418(f) of the MGCL permits a corporation to pay or reimburse, in advance of the
final disposition of a proceeding, reasonable expenses (including attorney's
fees) incurred by a present or former director or officer made a party to the
proceeding by reason of his or her service in that capacity or certain other
capacities, provided that the corporation shall have received (a) a written
affirmation by the director or officer of his or her good faith belief that he
or she has met the standard of conduct necessary for indemnification by the
corporation and (b) a written undertaking by or on behalf of the director or
officer to repay the amount paid or reimbursed by the corporation if it shall
ultimately be determined that the standard of conduct was not met. The MGCL
also provides that, unless limited by the corporation's articles of
incorporation, a director or officer of the corporation who has been successful,
on the merits or otherwise, shall be indemnified against reasonable expenses
incurred by the director or officer in connection with any proceeding to which
he or she is made a party by reason of his or her service in that capacity or
certain other capacities. Maryland law permits a corporation to indemnify and
advance expenses to a present and former employee or agent of the corporation to
the same extent as a director or officer, and to provide additional
indemnification to an employee or agent who is not also a director or officer.
The Company has provided for indemnification of directors, officers,
employees and agents in Article Ninth of the Articles of Restatement of the
Articles of Incorporation ("Restated Articles of Incorporation") and in Section
1 of Article VI of the By-Laws of the Company (the "By-Laws"). These provisions
read as follows:
The Corporation shall indemnify as determined by the Board of Directors any
person who is serving or has served as a director or officer or employee or
agent of this Corporation to the extent permitted by Maryland Law, who has
been made, or is threatened to be made, a party to an action, suit, or
proceeding, whether civil, criminal, administrative, investigative, or
otherwise (including an action, suit or proceeding by or in the right of
the corporation), by reason of the fact that the person is or was a
director or officer or employee or agent of the corporation, or a fiduciary
within the meaning of the Employee Retirement Income Security Act of 1974
with respect to an employee benefit plan of the corporation, or serves or
served at the request of the corporation as a director, or as an officer,
or as a fiduciary of an employee benefit plan, of another corporation,
partnership, joint venture, trust or other enterprise, or as an employee,
or as an agent, except in relation to matters as to which such person is
adjudged in such action,
2
<PAGE>
suit or proceedings or otherwise determined to be liable for negligence
or misconduct in the performance of duty.
In addition, the Corporation as determined by the Board of Directors shall
pay for or reimburse any expenses incurred by such persons who are parties
to such proceedings, in advance of the final disposition of such
proceedings, to the extent permitted by the Maryland Law.
Note that the Restated Articles of Incorporation do not limit the requirement of
the MGCL that a corporation indemnify a director or officer who has been
successful, on the merits or otherwise, against reasonable expenses incurred by
the director or officer in any proceeding to which he or she is made a party by
reason of his or her service in that capacity or certain other capacities.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act of 1933 and will be governed by
the final adjudication of such issue.
Under Maryland law, a corporation is permitted to limit by provision in its
articles of incorporation the liability of its directors and officers to the
corporation or to its stockholder for money damages except to the extent that
(i) it is proved that the director or officer actually received an improper
benefit or profit in money, property or services, for the amount of the benefit
or profit in money, property or services actually received, or (ii) a judgment
or other final adjudication adverse to the director or officer is entered in a
proceeding based on a finding in the proceeding that the director's or officer's
action, or failure to act, was the result or active and deliberate dishonesty
and was material to the cause of action adjudicated in the proceeding.
The Company has not limited the liability of its directors and officers for
money damages in its Restated Articles of Incorporation.
Under Maryland law, a corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation against any liability asserted against and incurred by such person
in any such capacity or certain other capacities or arising out of such person's
position, whether or not the corporation would have the power to indemnify
against liability under the MGCL.
The Company has provided for the purchase of insurance for directors,
officers, employees or agents of the Company in Section 2 of Article VI of the
By-Laws. This provision reads as follows:
Upon resolution passed by the Board of Directors, the Corporation may
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or
3
<PAGE>
agent of the Corporation or who, while a director, officer, employee or
agent of the Corporation is or was serving at the request of the
Corporation as a director, officer, partner, trustee, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
or employee benefit plan against any liability asserted against and
incurred by such person in any such capacity, or arising out of such
person's position as such, whether or not the Corporation would have the
power to indemnify him against such liability under the By-Laws.
4
<PAGE>
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
-----------------------------------
Not applicable.
ITEM 8. EXHIBITS.
--------
4.1* Restated Articles of Incorporation of the Registrant.
4.2* By-Laws of the Registrant as restated in August 1998.
4.3 Form of Common Stock Certificate (incorporated herein by reference to
Exhibit 4.1 of the Registrant's Registration Statement on Form S-1
filed July 2, 1998).
4.4* Integral Systems, Inc. 1988 Stock Option Plan As Amended and Restated
Effective as of May 8, 1998.
5.1* Opinion of Counsel.
23.1* Consent of Venable, Baetjer, Howard & Civiletti, LLP (included in
Exhibit 5.1).
23.2* Consent of Independent Public Accountants.
24* Powers of Attorney (included in signature page).
___________
* Filed herewith.
ITEM 9. UNDERTAKINGS.
------------
(1) The undersigned Registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which as registered)
and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no
more than 20 percent change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table
in the effective registration statement; and
5
<PAGE>
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (1)(a)(i) and (1)(a)(ii) do not
apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in this registration statement.
(b) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(2) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Exchange Act that is incorporated by reference in the Registration
Statement shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(3) Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized, in the City of Lanham, in the State of Maryland, on this 7th day of
August, 1998.
INTEGRAL SYSTEMS, INC.
BY: /S/ Steven R. Chamberlain
-------------------------
Steven R. Chamberlain
Chairman and Chief Executive Officer
(Principal Executive Officer)
Each person whose signature appears below constitutes and appoints Steven
R. Chamberlain his or her true and lawful attorney-in-fact, with full power of
substitution and resubstitution, severally, for him and in his or her name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments or supplements) to this Registration
Statement, and to file the same, with all exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his or her substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Steven R. Chamberlain Chairman and Chief Executive Officer
- ---------------------------------- (Principal Executive Officer) August 7, 1998
Steven R. Chamberlain
Vice President and Chief Financial
/s/ Elaine M. Parfitt Officer August 7, 1998
- ---------------------------------- (Principal Financial Officer and
Elaine M. Parfitt Principal Accounting Officer)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Robert P. Sadler Vice President, Quality Control,
- ---------------------------------- Secretary, Treasurer and Director August 7, 1998
Robert P. Sadler
/s/ Bonnie K. Wachtel Director August 7, 1998
- ----------------------------------
Bonnie K. Wachtel
/s/ Dominic A. Laiti
- ---------------------------------- Director August 7, 1998
Dominic A. Laiti
/s/ R. Doss McComas Director August 7, 1998
- ----------------------------------
R. Doss McComas
</TABLE>
<PAGE>
EXHIBIT INDEX
-------------
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
4.1 Restated Articles of Incorporation of the Registrant.
4.2 Restated By-Laws of the Registrant.
4.3 Form of Common Stock Certificate (incorporated herein by
reference to Exhibit 4.1 of the Registrant's Registration
Statement on Form S-1 filed July 2, 1998).
4.4 Integral Systems, Inc. 1988 Stock Option Plan as amended and
Restated Effective May 8, 1998.
5.1 Opinion of Counsel
23.1 Consent of Venable, Baetjer and Howard, LLP (included in
opinion filed as Exhibit 5.1).
23.2 Consent of Independent Public Accountants.
24 Powers of Attorney (included in signature page).
<PAGE>
EXHIBIT 4.1
ARTICLES OF RESTATEMENT
OF INTEGRAL SYSTEMS, INC.
Integral Systems, Inc., a Maryland corporation (hereinafter called the
"Corporation") hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
1. The Corporation desires to restate its Charter as currently in effect.
The Charter of the Corporation is hereby restated as follows:
FIRST: The name of the corporation is INTEGRAL SYSTEMS, INC.
(hereinafter the "Corporation").
SECOND: The purposes for which the Corporation is formed are:
To carry on an engineering services and consulting business and to
engage in any transaction deemed necessary, convenient or incidental to the
foregoing purpose.
In aid of, or in connection with, the foregoing, or in the use,
management, improvement, or disposition of its property, the Corporation shall
have the power:
(a) To do all things lawful, necessary or incidental to the
accomplishment of the purposes set forth above; to exercise all lawful powers
possessed by Maryland corporations of similar character; to enter into
partnerships or joint ventures; and to engage in any business in which a
corporation organized under the laws of Maryland may engage, except any business
that is required to be specifically set forth in the Articles of Incorporation.
(b) The objects, powers and purposes specified in any clause or
paragraph hereinbefore contained shall be construed as objects and powers in
furtherance and not in limitation of the general powers conferred upon
corporations by the laws of the State of Maryland; and it is hereby expressly
provided that the foregoing enumeration of specific powers shall in no way limit
or restrict any other power, object or purpose of the Corporation or in any
manner affect any general powers or authority of the Corporation.
THIRD: The post office address of the principal office of the
Corporation in Maryland is 5000 Philadelphia Way, Suite A, Lanham, Prince
George's County, Maryland 20706. The name and post office address of the
resident agent of the Corporation in Maryland is Thomas L. Gough at the same
address.
<PAGE>
FOURTH: The total number of shares of stock which the Corporation is
authorized to issue is one class of Ten Million (10,000,000) shares of common
stock with par value of $0.01 per share. The aggregate par value of all shares
of the Corporation's stock is $100,000.
FIFTH: The number of directors shall be set at six (6) members. The
number of directors may be increased or decreased by the Board of Directors
pursuant to the bylaws of the Corporation.
SIXTH: Provisions for regulation of the internal affairs of the
Corporation are: None.
SEVENTH: The Corporation shall exist perpetually.
EIGHTH: No holder of any shares of stock of the Corporation, and no
holder of any other security issued by the Corporation, whether now or hereafter
authorized, shall have any pre-emptive rights.
NINTH: The Corporation shall indemnify as determined by the Board of
Directors any person who is serving or has served as a director or officer or
employee or agent of this Corporation to the extent permitted by Maryland Law,
who has been made, or is threatened to be made, a party to an action, suit, or
proceeding, whether civil, criminal, administrative, investigative, or otherwise
(including an action, suit or proceeding by or in the right of the Corporation),
by reason of the fact that the person is or was a director or officer or
employee or agent of the Corporation, or a fiduciary within the meaning of the
Employee Retirement Income Security Act of 1974 with respect to an employee
benefit plan of the Corporation, or serves or served at the request of the
Corporation as a director, or as an officer, or as a fiduciary of an employee
benefit plan, of another corporation, partnership, joint venture, trust or other
enterprise, or as an employee, or as an agent, except in relation to matters as
to which such person is adjudged in such action, suit or proceedings or
otherwise determined to be liable for negligence or misconduct in the
performance of duty.
In addition, the Corporation as determined by the Board of Directors
shall pay for or reimburse any expenses incurred by such persons who are parties
to such proceedings, in advance of the final disposition of such proceedings, to
the extent permitted by the Maryland Law.
2: The restatement of the Charter of the Corporation herein made was
approved by a majority of the entire Board of Directors of the Corporation.
-2-
<PAGE>
3: The provisions set forth in the above articles of restatement (the
"Articles of Restatement") are all of the provisions of the Corporation's
Charter currently in effect.
4. The Charter of the Corporation is not amended by the Articles of
Restatement.
5: The current address of the principal office of the Corporation is
5000 Philadelphia Way, Suite A, Lanham, Prince George's County, Maryland 20706
and the Corporation's current resident agent is Thomas L. Gough, whose address
is 5000 Philadelphia Way, Suite A, Lanham, Prince George's County, Maryland
20706.
6: The Corporation currently has six (6) directors; the directors
currently in office are Steven R. Chamberlain, Robert P. Sadler, Thomas L.
Gough, Bonnie K. Wachtel, Dominic A. Laiti and R. Doss McComas.
-3-
<PAGE>
IN WITNESS WHEREOF, Integral Systems, Inc. has caused these Articles of
Restatement to be signed in its name and on its behalf by its President, Thomas
L. Gough, and attested by its Secretary, Robert P. Sadler, on the 31st day of
July, 1998.
THE UNDERSIGNED President acknowledges these Articles of Restatement to be
the corporate act of the Corporation and states that, to the best of his
knowledge, information and belief, the matters and facts set forth herein with
respect to the authorization and approval hereof are true in all material
respects and that this statement is made under the penalties of perjury.
ATTEST: INTEGRAL SYSTEMS, INC.
/s/ Robert P. Sadler By: /s/ Thomas L. Gough (SEAL)
- ------------------------------ -----------------------
Robert P. Sadler, Secretary Thomas L. Gough, President
-4-
<PAGE>
EXHIBIT 4.2
BY-LAWS OF
INTEGRAL SYSTEMS, INC.
(AS RESTATED 8-98)
ARTICLE I
OFFICES
Section 1. REGISTERED OFFICE. The registered office of the
---------- ------------------
Corporation shall be in the City of Lanham, County of Prince George's, State of
Maryland.
SECTION 2. OTHER OFFICES. The Corporation may also have offices at
---------- --------------
such other place or places, both within and without the State of Maryland, as
the Board of Directors may from time to time determine, or the business of the
Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. PLACE OF MEETINGS. All meetings of the stockholders for
---------- ------------------
the election of directors shall be held in Lanham, Maryland, at such place
within such city as may be fixed from time to time by the Board of Directors, or
at such other place either within or without the State of Maryland as shall be
designated from time to time by the Board of Directors and stated in the notice
of the meeting. Meetings of stockholders for any other purpose may be held at
such time and place, within or without of the State of Maryland, as shall be
stated in the notice of the meeting or in a duly executed waiver of notice
thereof.
SECTION 2. ANNUAL MEETINGS. Annual meetings of stockholders shall be
---------- ----------------
held during the month of July following the end of the Corporation's fiscal year
on such a date and time as shall be designated by the Board of Directors and
stated in the notice of the meeting, at which the stockholders entitled to vote
shall elect by a plurality vote a Board of Directors and transact such other
business as may properly be brought before the meeting.
SECTION 3. NOTICE OF ANNUAL MEETINGS. Written notice of the annual
---------- --------------------------
meeting, stating the date, time and place of the meeting, shall be delivered in
person or by mail to each stockholder of record entitled to vote at such meeting
not less than ten or more than ninety (90) days before the date of the meeting.
(1)
<PAGE>
SECTION 4. SPECIAL MEETINGS. Special meetings of the stockholders
---------- -----------------
for any purpose or purposes, unless otherwise prescribed by statute or by the
articles of incorporation, may be called at any time by order of the Board of
Directors and shall be called by the Chairman of the Board, the President or the
Secretary at the request in writing of a majority of the Board of Directors or
(1) if the common stock of the Company is either quoted on the NASDAQ National
Market or listed a national stock exchange, then by stockholders entitled to
cast at least twenty-five percent (25%) of all votes entitled to be cast at such
meeting or (2) if the common stock of the Company is not either quoted on the
NASDAQ National Market or listed on a national stock exchange, then by
stockholders entitled to cast at least ten percent (10%) of all votes entitled
to be cast at such meeting. Such request shall state the purpose or purposes of
the proposed special meeting. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.
SECTION 5. NOTICE OF SPECIAL MEETINGS. Written notice of a special
---------- ---------------------------
meeting, stating the place, date, and hour of the meeting and the purpose or
purposes for which the meeting is called, shall be delivered in person or by
mail, to each stockholder of record entitled to vote at such meeting not less
than ten (10) nor more than ninety (90) days before the date of the meeting,
except that notice of a stockholders' meeting to act on an amendment of the
articles of incorporation, a plan of merger, share exchange, or proposed sale of
assets other than in the ordinary course of business, or the dissolution of the
corporation shall be given to all stockholders of record whether or not entitled
to vote thereon.
SECTION 6. QUORUM. Except as otherwise provided by statute or the
---------- -------
articles of incorporation, the holders of stock having a majority of the voting
power of the stock entitled to be voted thereat, present in person or
represented by proxy, shall constitute a quorum for the transaction of business
at all meetings of the stockholders. If, however, such quorum shall not be
present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time without notice (other than
announcement at the meeting at which the adjournment is taken of the time and
place of the adjourned meeting) until a quorum shall be present or represented.
At such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. If the adjournment is for more than one hundred twenty
(120) days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
SECTION 7. ORGANIZATION. At each meeting of the stockholders, the
---------- -------------
Chairman of the Board or the President, determined as provided in Article V of
these bylaws, or if those officers shall be absent therefrom, another officer of
the Corporation
(2)
<PAGE>
chosen as chairman, or if all the officers of the Corporation shall be absent
therefrom, a stockholder holding of record shares of stock of the Corporation,
so chosen, shall act as chairman of the meeting and preside thereat. The
Secretary, or if he shall be absent from such meeting or shall be required
pursuant to the provisions of this Section 7 to act as chairman of such meeting,
the person (who shall be an Assistant Secretary, if an Assistant Secretary shall
be present thereat) whom the chairman of such meeting shall appoint, shall act
as Secretary of such meeting and keep the minutes thereof.
SECTION 8. ORDER OF BUSINESS. The order of business at annual
---------- ------------------
meetings of stockholders and, so far as practicable, at other meetings of
stockholders shall be as follows unless changed by the vote of a majority in
voting interest of those present in person or by proxy at such meeting and
entitled to vote thereat:
(a) Call to order.
(b) Proof of due notice of meeting.
(c) Determination of quorum and examination of proxies.
(d) Reading and disposing of minutes of last meeting of stockholders.
(e) Announcement of purposes for which the meeting was called.
(f) Nomination and election of directors.
(g) Entertainment of motions with respect to other business.
(h) Reports of officers and committees.
(i) Other business.
(j) Adjournment.
SECTION 9. VOTING. Except as otherwise provided in the articles of
---------- -------
incorporation, each stockholder shall, at each meeting of the stockholders, be
entitled to one vote in person or by proxy for each share of stock of the
Corporation held by him and registered in his name on the books of the
Corporation on the date fixed pursuant to the provisions of Section 5 of Article
VII of these bylaws as the record date for the determination of stockholders who
shall be entitled to notice of and to vote at such meeting. Shares of its own
stock owned, directly or indirectly, by the Corporation, shall not be entitled
to vote and shall not be counted in determining the total number of outstanding
shares entitled to be voted at any given time. Shares of its own stock are
considered owned indirectly by the Corporation if owned by another corporation
in which the Corporation owns shares entitled to cast a majority of all the
votes entitled to be cast by all shares outstanding and entitled to vote. The
Corporation shall be entitled to vote shares of its own stock held by it in a
fiduciary capacity and such shares shall be counted in determining such total
number of outstanding shares entitled to be voted. Any vote by stock of the
Corporation may be given at any meeting of the stockholders by the stockholder
entitled thereto, in person or by his proxy appointed by an instrument in
writing subscribed by such stockholder or by his attorney thereunto duly
authorized and delivered to the Secretary of the Corporation or to the Secretary
of the meeting; provided, however, that no proxy shall be voted or acted upon
after eleven (11) months from its
(3)
<PAGE>
date, unless said proxy shall provide for a longer period. Each proxy shall be
revocable unless expressly provided therein to be irrevocable and unless
otherwise made irrevocable by law. At all meetings of the stockholders all
matters, except where other provision is made by the law, the articles of
incorporation or these bylaws, shall be decided by the vote of a majority of the
votes cast by the stockholders present in person or by proxy and entitled to
vote thereat, a quorum being present. Unless demanded by a stockholder of the
Corporation present in person or by proxy at any meeting of the stockholders and
entitled to vote thereat, or so directed by the chairman of the meeting, the
vote thereat on any question other than the election or removal of directors
need not be by written ballot. Upon a demand of any such stockholder for a vote
by written ballot on any question or at the direction of such chairman that a
vote by written ballot be taken on any question, such vote shall be taken by
written ballot, each ballot shall be signed by the stockholder voting or by his
proxy, if there be such proxy, and shall state the number of shares voted.
SECTION 10. STOCK LEDGER. It shall be the duty of the Secretary or
----------- -------------
other officer of the Corporation who shall have charge of its share transfer
books, either directly or through another officer of the Corporation designated
by him or through a transfer agent appointed by the Board of Directors, to
prepare and maintain, a complete list of the stockholders arranged in
alphabetical order, and showing the address of each stockholder and the number
of each class of shares registered in the name of each stockholder. The
original or a duplicate of the Stock Ledger shall be kept at the principal
office of the Corporation. Such list shall be available for inspection by any
holder of the Corporation's stock during normal business hours. In addition,
such list shall be open to the examination of any stockholder, for any purpose
germane to any stockholder meeting, during ordinary business hours, for a period
of at least ten (10) days prior to said meeting, either at the registered office
of the Corporation or at its principal office, or at the office at its transfer
agent or registrar. The list shall also be produced and kept at the time and
place of said meeting during the whole time thereof, and may be inspected by any
stockholder of record who shall be present thereat. The original share transfer
books shall be prima facie evidence as to which stockholders are entitled to
examine the share transfer books, stockholder list, or the books of the
Corporation, or to vote in person or by proxy at any meeting of stockholders.
SECTION 11. ACTION WITHOUT A MEETING. Any action required to be
----------- -------------------------
taken at any annual or special meeting of stockholders of the Corporation, or
any action which may be taken at any annual or special meeting of stockholders,
may be taken without a meeting, and without action by the Board of Directors, if
a consent in writing, setting forth the action so taken, shall be signed by all
the stockholders entitled to vote on the action and delivered to the Secretary
of the Corporation for inclusion in the minutes or filing with the corporate
records.
(4)
<PAGE>
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. POWERS. The business and affairs of the Corporation shall
---------- -------
be managed by its Board of Directors, which shall exercise all such powers of
the Corporation and do all such lawful acts and things not expressly forbidden
by statute, the articles of incorporation or these bylaws directed or required
to be exercised or done by the stockholders.
SECTION 2. NUMBER, QUALIFICATION, AND TERM OF OFFICE. The number of
---------- ------------------------------------------
directors which shall constitute the whole Board of Directors shall not be less
than three nor more than seven. Within the limits above specified, the number
of directors which shall constitute the whole Board of Directors shall be
determined by resolution of the Board of Directors or by the stockholders at any
annual or special meeting or otherwise pursuant to action of the stockholders.
Directors need not be stockholders. The directors shall be elected at the
annual meeting of the stockholders, except as provided in Section 4 and 5 of
this Article III, and each director elected shall hold office until the annual
meeting next after his election and until his successor is elected and
qualified, or until his death or retirement or until he shall resign or shall be
removed in the manner hereinafter provided. Such election shall be by written
ballot.
SECTION 3. RESIGNATIONS. Any director may resign at any time by
---------- -------------
giving written notice of his resignation to the Board of Directors, its
Chairman, the President or the Secretary of the Corporation. Any such
resignation shall take effect at the time specified therein, or, if the time
when it shall become effective shall not be specified therein, then it shall
take effect immediately upon its receipt by the Secretary. Unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
SECTION 4. REMOVAL OF DIRECTORS. Any director may be removed, either
---------- ---------------------
with or without cause, at any time, by the affirmative vote by written ballot of
a majority in voting interest of the stockholders of record of the Corporation
entitled to vote, given only at an annual or special meeting of the stockholders
called for that purpose. A vacancy in the Board of Directors caused by any such
removal shall be filled by the stockholders at such meeting or, if not so
filled, by the Board of Directors as provided in Section 5 of this Article III.
SECTION 5. VACANCIES. Newly created directorships resulting from any
---------- ----------
increase in the authorized number of directors may be filled by a majority of
the directors then in office. Vacancies resulting from any other cause may be
filled by a majority of the directors then in office, whether or not sufficient
to constitute a quorum and the directors so chosen shall hold office until the
annual meeting next after their election and until their successors are elected
and qualified, unless sooner displaced. If there are no
(5)
<PAGE>
directors in office, then an election of directors may be held in the manner
provided by statute.
MEETINGS OF THE BOARD OF DIRECTORS
SECTION 6. PLACE OF MEETINGS. The Board of Directors of the
---------- ------------------
Corporation may hold meetings, both regular and special, either within or
outside of the State of Maryland.
SECTION 7. ANNUAL MEETINGS. Annual meetings of the Board of
---------- ----------------
Directors shall be held within sixty (60) days after the annual meeting of the
stockholders on such date and time as shall be designated by the Board of
Directors in a notice given as hereinafter provided for special meetings of the
Board of Directors or as shall be specified in a written waiver signed by all of
the directors.
SECTION 8. REGULAR MEETINGS. Regular meetings of the Board of
---------- -----------------
Directors may be held without notice at such time and at such place as shall
from time to time be determined by the Board of Directors.
SECTION 9. SPECIAL MEETINGS; NOTICE. Special meetings of the Board
---------- -------------------------
of Directors may be called by the Chairman of the Board, President or Secretary
on 24 hours notice to each director, either personally or by telephone or by
mail, telegraph, telex, cable, wireless or other form of recorded communication.
Special meetings shall be called by the Chairman of the Board, President or
Secretary in like manner and on like notice on the written request of any
director. Notice of any such meeting need not be given to any director,
however, if waived by him in writing or by telegraph, telex, cable, wireless or
other form of recorded communication, or if he shall be present at such meeting.
SECTION 10. QUORUM AND MANNER OF ACTING. At all meetings of the
----------- ----------------------------
Board of Directors, 50% or more of the directors in office immediately before
the meeting begins shall constitute a quorum for the transaction of business,
unless it is determined that an item or items on the agenda will require the
disclosure of classified information. In such case, all Directors not holding a
valid security clearance on file at Integral Systems, Inc. or not possessing a
valid need-to-know for the business at hand, shall be excused for the duration
of the classified business. The remaining Directors shall constitute a quorum
for the transaction of the classified items only. The full Board will be
reconvened at the conclusion of the classified discussion. Under no
circumstances shall Directors not possessing a valid clearance and a certified
need-to-know be present during the discussion of classified material; these
Directors shall be absolved of all responsibility for all direct and indirect
consequences of decisions and actions undertaken with respect to classified
material. The Security Officer or his/her designated assistant
(6)
<PAGE>
shall be the sole authority as to when the agenda requires a discussion of
classified material, which Directors have a valid security clearance, and which
Directors have a need to know. If any meeting of this nature takes place, the
Security Officer shall note the date of said meeting and make available for
review the authorization for the cleared directors to attend to the DISCO
representative at the next security inspection.
The acts of a majority of the Directors present at a meeting in which
a quorum, as defined above, is present shall be the act of the Board of
Directors, except as may be otherwise specifically provided by statute or by the
articles of incorporation. If a quorum shall not be present at any meeting of
the Board of Directors, the directors present thereat may adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum shall be present/1/.
SECTION 11. REMUNERATION. Unless otherwise expressly provided by
----------- ------------
resolution adopted by the Board of Directors, none of the directors shall, as
such, receive any stated remuneration for his services; but the Board of
Directors may at any time and from time to time by resolution provide that a
specified sum shall be paid to any director of the Corporation, either as his
annual remuneration as such director or member of any committee of the Board of
Directors, or as remuneration for his attendance at each meeting of the Board of
Directors or any such committee. The Board of Directors may also likewise
provide that the Corporation shall reimburse each director for any expenses paid
by him on account of his attendance at any meeting. Nothing in this Section 11
shall be construed to preclude any director from serving the Corporation in any
other capacity and receiving remuneration thereof.
GENERAL
SECTION 12. ACTIONS WITHOUT A MEETING. Unless otherwise restricted
----------- --------------------------
by the articles of incorporation or these bylaws, any action required or
permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting, if all members of the Board of Directors consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board of Directors or the committee.
SECTION 13. PRESENCE AT MEETINGS BY MEANS OF COMMUNICATIONS
----------- -----------------------------------------------
EQUIPMENT. Members of the Board of Directors may participate in a meeting of
- ----------
the Board of Directors by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in the meeting pursuant to this
Section 14 shall constitute presence in person at such meeting.
- -----------------------------------
/1/ Reference S89-02, 12-7-88
(7)
<PAGE>
ARTICLE IV
NOTICES
SECTION 1. TYPE OF NOTICE. Whenever, under the provisions of the
---------- ---------------
statutes, the articles of incorporation or these bylaws, notice is required to
be given to any director or stockholder, it shall not be construed to mean
personal notice, but such notice may be given in writing, in person or by mail,
addressed to such director or stockholder, at his address as it appears in the
records of the Corporation, with postage thereon prepaid, and such notice shall
be deemed to be given at the time when the same shall be deposited in the United
States mail. Notice to directors may also be given in any manner permitted by
Article III hereof and shall be deemed to be given at the time when first
transmitted by the method of communication so permitted.
SECTION 2. WAIVER OF NOTICE. Whenever any notice is required to be
---------- -----------------
given under the provisions of the statutes, the articles of incorporation or
these bylaws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein and
filed with the minutes or corporate records, shall be deemed equivalent thereto,
and transmission of a waiver of notice by a director or stockholder by mail,
telegraph, telex, cable, wireless or other form of recorded communication may
constitute such a waiver.
ARTICLE V
OFFICERS
SECTION 1. ELECTED AND APPOINTED OFFICERS. The elected officers of
---------- -------------------------------
the Corporation shall be a Chief Executive Officer(CEO), a President, a
Secretary and a Treasurer, and a Chairman of the Board (who shall be a
director). The Board of Directors by resolution may also appoint one or more
agents as from time to time may appear to be necessary or advisable in the
conduct of the affairs of the Corporation.
Section 2. TIME OF ELECTION OR APPOINTMENT. The Board of Directors
---------- --------------------------------
at its annual meeting shall elect or appoint, as the case may be, the officers
to fill the positions designated in or pursuant to Section 1 of this Article V,
Officers of the Corporation may also be elected or appointed, as the case may
be, at any other time.
SECTION 3. SALARIES OF ELECTED OFFICERS. The salaries of all elected
---------- -----------------------------
officers of the Corporation shall be fixed by the Board of Directors. The
salaries of all elected officers of the Corporation shall be fixed by the Board
of Directors/2/.
- ---------------------------------
/2/ Reference S96-28; 5-29-96
(8)
<PAGE>
SECTION 4. TERM. Each officer of the Corporation shall hold his
---------- -----
office until his successor is elected or appointed and qualified or until his
earlier resignation or removal. Any officer may resign at any time upon written
notice to the Corporation. Any officer elected or appointed by the Board of
Directors may be removed at any time by the affirmative vote of a majority of
the whole Board of Directors. Any vacancy occurring in any office of the
Corporation by death, resignation, removal or otherwise may be filled by the
Board of Directors or the appropriate committee thereof /3/.
SECTION 5. DUTIES OF THE CHAIRMAN OF THE BOARD. The Chairman of the
---------- ------------------------------------
Board, if one be elected, shall preside when present at all meetings of the
Board of Directors and will preside at meetings of the stockholders or designate
an alternate to preside. He shall advise and counsel the Chief Executive
Officer of the Corporation, and shall exercise such powers and perform such
duties as shall be assigned to or required of him from time to time by the Board
of Directors/4/.
SECTION 6. DUTIES OF THE CHIEF EXECUTIVE OFFICER. The Chief
---------- --------------------------------------
Executive Officer of the Corporation, subject to the provisions of these bylaws,
shall have general supervision of the affairs of the Corporation and shall have
general and active control of all its business. He shall preside, when present,
at all meetings of stockholders or designate an individual to preside as may
otherwise be provided by statute. He shall see that all orders and resolutions
of the Board of Directors and the shareholders are carried into effect. He
shall have general authority to execute bonds, deeds, and contracts in the name
of the Corporation and to affix the corporate seal thereto; to sign stock
certificates; to cause the employment or appointment of such officers,
employees, and agents of the Corporation as the proper conduct of operation may
require, and to fix their compensation, subject to the provisions of these
bylaws; to remove or suspend any employee or agent who shall have been employed
or appointed under his authority or under authority of an officer subordinate to
him; to suspend for cause, pending final action by the authority which shall
have elected or appointed him, any officer subordinate to the Chief Executive
Officer, and, in general, to exercise all the powers and authority usually
appertaining to the chief executive officer of a corporation, except as
otherwise provided in these bylaws.
The Chief Executive Officer is allowed to delegate a number of his
powers to one or more persons. These shall include his general authority to
execute bonds, deeds, and contracts in the name of the Company and to affix the
corporate seal thereto, to sign stock certificates; to cause the employment or
appointment of such officers, employees, and agents of the Corporation as the
proper conduct of operation may require and to fix their compensation, subject
to the provisions of the bylaws; to remove or suspend any officer, employee, or
agent who shall have been employed or appointed under his authority or under
authority of an officer subordinate to him; to suspend for
- ---------------------------------
/3/ Reference S96-28, 5-29-96
/4/ Reference S96-29, 5-29-96
(9)
<PAGE>
cause, pending final action by the authority which shall have been elected or
appointed, any officer subordinate to the Chief Executive Officer, and, in
general, to exercise all the powers and authority usually appertaining to the
chief executive officer of a corporation, except as otherwise provided in these
bylaws. This delegation can be whole or in part of any of these powers subject
to any constraints levied at or after said delegation.
The Board of Directors can designate someone to replace the Chief
Executive Officer should he be unable to perform his duties due to absence or
other reasons/5/.
SECTION 7. DUTIES OF THE PRESIDENT. The President shall be the chief
---------- ------------------------
executive officer of the Corporation and, subject to the provisions of these
bylaws, shall have general supervision of the affairs of the Corporation and
shall have general and active control of all its business. He shall preside,
when present, at all meeting of stockholders, except when the Chairman of the
Board presides with the approval of the President and as may otherwise be
provided by statute and, in the absence of any other person designated thereto
by these bylaws, at all meetings of the Board of Directors. He shall see that
all orders and resolutions of the Board of Directors and the shareholders are
carried into effect. He shall have general authority to execute bonds, deeds,
and contracts in the name of the Corporation and to affix the corporate seal
thereto; to sign stock certificates; to cause the employment or appointment of
such employees and agents of the Corporation as the proper conduct of operation
may require, and to fix their compensation, subject to the provisions of these
bylaws; to remove or suspend any employee or agent who shall have been employed
or appointed under his authority or under authority of an officer subordinate to
him; to suspend for cause, pending final action by the authority which shall
have elected or appointed him, any officer subordinate to the President, and, in
general, to exercise all the powers and authority usually appertaining to the
chief executive officer of a corporation, except as otherwise provided in these
bylaws/6/.
The President is allowed to delegate a number of his powers to one or
more persons. These shall include his general authority to execute bonds,
deeds, and contracts in the name of the Company and to affix the corporate seal
thereto, to sign stock certificates; to cause the employment or appointment of
such employees and agents of the Corporation as the proper conduct of operation
may require and to fix their compensation, subject to the provisions of the
bylaws; to remove or suspend any employee or agent who shall have been employed
or appointed under his authority or under authority of an officer subordinate to
him; to suspend for cause, pending final action by the authority which shall
have elected or appointed, any officer subordinate to the President, and, in
general, to exercise all the powers and authority usually appertaining to the
chief executive officer of a corporation, except as otherwise provided in these
bylaws. This
- ----------------------------------
/5/ Reference S96-29, 5-29-96
/6/ Reference S96-29, 5-29-96
(10)
<PAGE>
delegation can be whole or in part of any of these powers subject
to any constraints levied at or after said delegation./7/
SECTION 8. DUTIES OF THE SECRETARY. The Secretary shall attend all
---------- ------------------------
meetings of the Board of Directors and all meetings of the stockholders and
record all the proceedings of the meetings of the Corporation and of the Board
of Directors in a book to be kept for that purpose. He shall give, or cause to
be given, notice of all meetings of the stockholders and special meetings of the
Board of Directors, and shall perform such other duties as may be prescribed by
the Board of Directors or the President, under whose supervision he shall be.
He shall have custody of the corporate seal of the Corporation and he, or an
Assistant Secretary shall have authority to affix the same to any instrument
requiring it, and when so affixed, it may be attested by his signature or by the
signature of such Assistant Secretary. The Board of Directors may give general
authority to any other officer to affix the seal of the Corporation and to
attest the affixing by his signature. The Secretary shall keep and account for
all books, documents, papers, and records of the Corporation except those for
which some other officer or agent is properly accountable. He shall have
authority to sign stock certificates and shall generally perform all the duties
usually appertaining to the office of the secretary of a corporation.
SECTION 9. DUTIES OF ASSISTANT SECRETARIES. In the absence of the
---------- --------------------------------
Secretary or in the event of his inability or refusal to act, the Assistant
Secretary (or, if there shall be more than one, the Assistant Secretaries in the
order designated by the Board of Directors, or in the absence of any
designation, then in the order of their appointment) shall perform the duties
and exercise the powers of the Secretary and shall perform such other duties and
have such other powers as the Board of Directors, the President or the Secretary
may from time to time prescribe.
SECTION 10. DUTIES OF THE TREASURER. The Treasurer shall have the
----------- ------------------------
custody of the corporate funds and securities and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the Corporation and
shall deposit all moneys and other valuable effects in the name and to the
credit of the Corporation in such depositories as may be designated by the Board
of Directors. He shall disburse the funds of the Corporation as may be ordered
by the Board of Directors, taking proper vouchers for such disbursements, and
shall render to the President and the Board of Directors, at its regular
meetings, or when the Board of Directors so requires, an account of all his
transactions as Treasurer and of the financial condition of the Corporation. If
required by the Board of Directors, he shall give the Corporation a bond (which
shall be renewed every six years) in such sum and with such surety or sureties
as shall be satisfactory to the Board of Directors for the faithful performance
of the duties of his office and for the restoration to the Corporation, in case
of his death, resignation, retirement or removal from office, of all books,
papers, vouchers, money, and other property of whatever kind
- -----------------------------------
/7/ Reference S89-02, 12-7-88
(11)
<PAGE>
in his possession or under his control belonging to the Corporation. The
Treasurer shall be under the supervision of the Vice President in charge of
finance, if one is so designated, and he shall perform such other duties as may
be prescribed by the Board of Directors, the President or any such Vice
President in charge of finance.
SECTION 11. DUTIES OF ASSISTANT TREASURERS. The Assistant Treasurer
----------- -------------------------------
or Assistant Treasurers shall assist the Treasurer, and in the absence of the
Treasurer or in the event of his inability or refusal to act, the Assistant
Treasurer (or if there shall be more than one, the Assistant Treasurers in the
order designated by the Board of Directors, or in the absence of any
designation, then in the order of their appointment), shall perform the duties
and exercise the powers of the Treasurer and shall perform such other duties and
have such other powers as the Board of Directors, the President or the Treasurer
may from time to time prescribe.
ARTICLE VI
INDEMNIFICATION
SECTION 1. RIGHT OF INDEMNIFICATION. The Corporation shall indemnify
---------- -------------------------
as determined by the Board of Directors any person who is serving or has served
as a director or officer or employee or agent of the Corporation to the extent
permitted by Maryland law, who has made, or is threatened to be made, a party to
an action, suit, or proceeding, whether civil, criminal, administrative,
investigative, or otherwise (including an action, suit, or proceeding by or in
the right of the Corporation), by reason of the fact that the person is or was a
director or officer or employee or agent of the Corporation, or a fiduciary
within the meaning of the Employee Retirement Income Security Act of 1974 with
respect to an employee benefit plan of the Corporation, or serves or served at
the request of the Corporation as a director, or as an officer, or as a
fiduciary of an employee benefit plan, or another corporation, partnership,
joint venture, trust or other enterprise, or as an employee, or as an agent,
except in relation to matters as to which such person is adjudged in such
action, suit or proceedings or otherwise determined to be liable for negligence
or misconduct in the performance of duty.
In addition, the Corporation as determined by the Board of Directors
shall pay for or reimburse any expenses incurred by such persons who are parties
to such proceedings, in advance of the final disposition of such proceedings, to
the extent permitted by Maryland law/8/.
SECTION 2. INSURANCE. Upon resolution passed by the Board of
---------- ----------
Directors, the Corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the Corporation
or who, while a
- -----------------------------------
/8/ Reference S96-29, 5-29-96
(12)
<PAGE>
director, officer, employee, or agent of the Corporation is or was serving at
the request of the Corporation as a director, officer, partner, trustee,
employee or agent of another corporation, partnership, joint venture, trust, or
other enterprise or employee benefit plan against any liability asserted against
and incurred by such person in any such capacity, or arising out of such
person's position as such, whether or not the Corporation would have the power
to indemnify him against such liability under the provisions of this Article VI.
SECTION 3. MERGERS. For purposes of this Article VI, references to
---------- --------
"the Corporation" shall include, in addition to the resulting or surviving
corporation, constituent corporations (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, employees or agents, so that any person who is or was a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise shall stand in the same position under the
provisions of this Article VI with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence and continued.
ARTICLE VII
CERTIFICATES OF STOCK
SECTION 1. RIGHT TO CERTIFICATE. Every holder of stock in the
---------- ---------------------
Corporation shall be entitled to have a certificate, bearing the name of the
person to whom issued, and signed by the President, a Vice President or the
Chairman of the Board, and countersigned by the Secretary, an Assistant
Secretary, or the Treasurer of the Corporation certifying the number of shares
owned by him in the Corporation. The certificate shall bear on its face the
name of the Corporation and shall state that such Corporation is organized under
the Laws of the State of Maryland. If the Corporation shall be authorized to
issue more than one class of stock or more than one series of any class, the
powers, designations, preferences and relative, participating, optional or other
special rights of each or restrictions of such preferences and/or rights shall
be set forth in full or summarized on the face or back of the certificate which
the Corporation shall issue to represent such class or series of stock, provided
that, in lieu of the foregoing requirements, there may be set forth on the face
or back of the certificate which the Corporation shall issue to represent such
class or series of stock, a statement that the Corporation will furnish without
charge to each stockholder who so requests the powers, designations, preferences
and relative, participating, optional or other special rights of each class of
stock or series thereof and the qualifications, limitations or restrictions of
such preferences and/or rights.
SECTION 2. FACSIMILE SIGNATURES. Any of or all the signatures on the
---------- ---------------------
stock certificate may be facsimile.
(13)
<PAGE>
SECTION 3. NEW CERTIFICATES. The Board of Directors may direct a new
---------- -----------------
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation and alleged to have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or to give the Corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the Corporation
with respect to the certificate alleged to have been lost, stolen or destroyed
or the issuance of such new certificate.
SECTION 4. TRANSFERS. Upon surrender to the Corporation or the
---------- ----------
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the Corporation, subject to any proper
restrictions on transfer, to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
SECTION 5. RECORD DATE. In order that the Corporation may determine
---------- ------------
the stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be less than ten (10) nor more than forty-five (45) days before
the date of such meeting or other action/9/. The Board of Directors may also
direct that the stock transfer books be closed for a stated period, not to
exceed twenty (20) days for the purpose of making a proper determination of the
stockholders with respect to any such action. If the Board of Directors does
not so fix a record date in advance, the date of such meeting or action shall be
fixed as the record date. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any adjournment
of the meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
SECTION 6. REGISTERED STOCKHOLDERS. The Corporation shall be
---------- ------------------------
entitled to recognize the exclusive right of a person registered on its books as
the owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares, and shall not be
- --------------------------------
/9/ Reference S89-02, 12-7-88
(14)
<PAGE>
bound to recognize any equitable or other claim to or interest in such share or
shares on the part of any other person, whether or not provided by the laws of
the State of Maryland.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 1. DIVIDENDS. Dividends upon the capital stock of the
---------- ----------
Corporation, subject to the provisions of the articles of incorporation, if any,
may be declared by the Board of Directors at any regular meeting, pursuant to
law. Dividends may be paid in cash, in property or in shares of the capital
stock, subject to the provisions of the articles of incorporation.
SECTION 2. RESERVES. Before payment of any dividend, there may be
---------- ---------
set aside out of any funds of the Corporation available for dividends such sum
or sums as the Board of Directors from time to time, in its absolute discretion,
thinks proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation or
for such other purpose as the Board of Directors shall think conducive to the
interest of the Corporation, and the Board of Directors may modify or abolish
any such reserve in the manner in which it was created.
SECTION 3. ANNUAL STATEMENT. The Board of Directors shall present at
---------- -----------------
each annual meeting of the stockholders a full and correct statement of the
affairs of the Corporation which shall include a balance sheet and a financial
statement of operations for the preceding fiscal year. Within twenty (20) days
after the meeting such statement of affairs shall be placed on file at the
Corporation's principal office.
SECTION 4. CHECKS. All checks or demands for money and notes of the
---------- -------
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time prescribe.
SECTION 5. FISCAL YEAR. The fiscal year of the Corporation shall
---------- ------------
begin on the first day of October of each year./10/
SECTION 6. CORPORATE SEAL. The corporate seal shall have inscribed
---------- ---------------
thereon the name of the Corporation, the year of its organization and the word
"Maryland." The seal may be used by causing it or a facsimile thereof to be
impressed, affixed, reproduced or otherwise.
- ---------------------------------------
/10/ Reference S89-02, 12-7-88
(15)
<PAGE>
ARTICLE IX
AMENDMENTS
These bylaws may be altered, amended or repealed or new bylaws may be
adopted by an action of the whole Board of Directors or by affirmative vote of
the stockholders representing a majority of the voting stock, at an annual or
special meeting of the stockholders or the Board of Directors, provided that
notice of such alteration, amendment, repeal or adoption of new bylaws be
contained in the notice of such annual or special meeting.
(16)
<PAGE>
EXHIBIT 4.4
INTEGRAL SYSTEMS, INC.
----------------------
1988 STOCK OPTION PLAN
----------------------
As Amended and Restated
Effective as of May 8, 1998
ARTICLE I
---------
PURPOSE OF PLAN
---------------
1.1 PURPOSE OF PLAN. The purpose of the Stock Option Plan is to serve as a
performance incentive and to encourage the ownership of Common Stock by
officers, directors, other employees and non-employee consultants of the Company
so that the person to whom the option is granted may acquire a proprietary
interest in the success of the Company, and to encourage such person to remain
in the employ of the Company. This Plan shall consist of grants of incentive
stock options, which are intended to qualify under section 422 of the Internal
Revenue Code of 1986, as amended, and of options which are intended not to so
qualify.
ARTICLE II
----------
DEFINITIONS
-----------
2.1 AWARD means Options granted hereunder.
2.2 BOARD means the Board of Directors of Integral Systems, Inc.
2.3 CODE means the Internal Revenue Code of 1986, as amended. Reference in
this Plan to any section of the Code shall be deemed to include any amendments
or successor provisions to such section and any regulations promulgated
thereunder.
2.4 COMMITTEE means, as designated by the Board, either the full Board of
Directors or a committee of the Board which shall consist solely of two or more
members of the Board who are "Non-Employee Directors" within the meaning of Rule
16b-3 under the Securities Exchange Act of 1934, as amended, and "Outside
Directors" within the meaning of Code Section 162(m).
2.5 COMPANY means Integral Systems, Inc. or any successors as described in
Article XI and any subsidiary of the Company of which the Company owns, directly
or indirectly, greater than fifty percent (50%) of its voting capital stock.
2.6 DATE OF DISABILITY means the date on which a Participant is classified
Disabled.
<PAGE>
2.7 DISABILITY or DISABLED means the classification of a Participant as
"Disabled" pursuant to a long-term disability plan of the Company, if any, or
successor to such plan (or, if there is no such plan, as determined by the
Committee), provided that Participant meets the requirements of section 22(e)(3)
of the Code.
2.8 EFFECTIVE DATE means May 8, 1998.
2.9 ELIGIBLE EMPLOYEE means any person employed by the Company who satisfies
all of the requirements of Article VI.
2.10 ELIGIBLE NON-EMPLOYEE means any person performing bona fide services for
the Company in a capacity other than as an employee, such as a non-employee
director or consultant.
2.11 FAIR MARKET VALUE means the fair market value of the Stock, as determined
by the Committee; provided; however, that (i) if the Stock is admitted to
trading on a national securities exchange on the date the Option is granted,
Fair Market Value shall not be less than the last sale price reported for the
Stock on such exchange on such date or, if no sales are reported on the date the
Option is granted, on the date next preceding such date on which a sale was
reported, or (ii) if the Stock is not admitted to trading on a national
securities exchange on the date the Option is granted but the Stock is admitted
to quotation on the National Association of Securities Dealers Automated
Quotation system on the date the Option is granted, Fair Market Value shall not
be less than the average of the highest bid and lowest asked prices of the stock
on such system on such date.
2.12 INCENTIVE STOCK OPTION means an Option which is an "incentive stock
option" within the meaning of section 422 of the Code and which is granted under
Article VII.
2.13 INSIDER means an "officer" or "director" of the Company within the meaning
of Section 16 of the Securities Exchange Act of 1934, as amended.
2.14 NON-QUALIFIED STOCK OPTION means an Option which is not an Incentive Stock
Option and which is granted under Article VII.
2.15 OPTION means either a Non-Qualified Stock Option or an Incentive Stock
Option granted under Article VII.
2.16 PARTICIPANT means an Eligible Employee or Eligible Non-Employee who has
been granted an Award under this Plan.
2.17 PLAN means the Integral Systems, Inc. 1988 Stock Option Plan, as amended
and restated as set forth herein.
2
<PAGE>
2.18 RETIREMENT means the normal retirement by an employee from the Company
under a pension or retirement plan maintained by the Company.
2.19 RETIREMENT DATE is the employee's date of Retirement from the Company.
2.20 STOCK means Common Stock of Integral Systems, Inc., par value $.01 per
share.
2.21 STOCK OPTION AGREEMENT means an agreement with respect to Options, as
described in Article VIII.
2.22 TERMINATION means resignation or discharge from employment with the
Company, except in the event of death, Disability or Retirement.
2.23 VESTED OPTION means, at any date, an Option which a Participant is then
entitled to exercise pursuant to the terms of the Plan and an applicable Stock
Option Agreement.
ARTICLE III
-----------
EFFECTIVE DATE AND DURATION
---------------------------
3.1 EFFECTIVE DATE. Subject to the approval by a majority of the holders of
Stock voted, in person or by proxy, at the 1998 Annual Meeting of Stockholders
of the Company, this Plan shall be effective as of the Effective Date.
3.2 PERIOD FOR GRANTS OF AWARDS. Awards may be made as provided herein for a
period of ten (10) years after the Effective Date.
3.3 TERMINATION. This Plan may be terminated as provided in Article XII, but
shall continue in effect until all matters relating to the payment of the Awards
and the administration of the Plan have been settled.
ARTICLE IV
----------
ADMINISTRATION
--------------
4.1 ADMINISTRATION. Except where this Plan expressly reserves administrative
or other powers to the Company or the Board, this Plan shall be administered by
the Committee. All questions or interpretation and application of this Plan, or
of the terms and conditions pursuant to which Awards are granted, exercised or
forfeited under the provisions hereof, shall be subject to the determination of
the Committee. Such determination shall be final and binding upon all parties
affected thereby.
3
<PAGE>
It is contemplated that Awards granted hereunder will be recommended by the
management of the Company or the Board to the Committee, and that the Committee
will determined whether to accept such recommendations.
ARTICLE V
---------
GRANT OF AWARDS AND LIMITATION OF
---------------------------------
NUMBER OF SHARES OF STOCK AWARDED
---------------------------------
5.1 GRANTS OF AWARDS; NUMBER OF SHARES. The Committee may, from time to time,
grant Awards of Options to one or more Eligible Employees or Eligible
Non-Employees in its discretion; provided, however, that:
(i) subject to any adjustment pursuant to Article X or Article XI, the
aggregate number of shares of Stock subject to Awards under this Plan may not
exceed One Million Eight Hundred Thousand (1,800,000) shares of Stock (which
number reflects the Company's two-for-one stock split effective as of June 25,
1998);
(ii) to the extent that an Award lapses or the rights of the Participant
to whom it was granted terminate, or to the extent that the Award is canceled by
mutual agreement of the Committee and the Participant (which cancellation
opportunities may be offered by the Committee to Participants from time to
time), any shares of Stock subject to such Award shall again be available for
the grant of an Award hereunder;
(iii) shares of Stock ceasing to be subject to an Award because of the
exercise of an Option shall no longer be available for the grant of an Award
hereunder; and
(iv) Eligible Non-Employees shall not be entitled to receive Awards of
Incentive Stock Options.
In determining the size of Awards, the Committee may take into
account recommendations by the Board or the Company's management, a
Participant's responsibility level, performance, potential, and cash
compensation level, the Fair Market value of the Stock at the time of Awards and
such other considerations as it deems appropriate.
The maximum number of shares of Stock subject to Options that may be
granted during any one calendar year to any one individual shall be limited to
50,000. To the extent required by Code Section 162(m), and so long as Section
162(m) of the Code is applicable to persons eligible to participate in the Plan,
shares of Stock subject to the foregoing limit with respect to which the related
Option is terminated, surrendered or canceled shall not again be available for
grant to the respective grantee under this limit.
4
<PAGE>
ARTICLE VI
----------
ELIGIBILITY
-----------
6.1 ELIGIBLE INDIVIDUALS. All Eligible Employees and Eligible Non-Employees
shall be eligible to receive Awards hereunder. Subject to the provisions of this
Plan, the Committee shall from time to time select from such Eligible Employees
and Eligible Non-Employees those to whom Awards shall be granted and determined
the size of the Awards. A Participant may hold more than one Option at any one
time. No person shall have any right to be granted an Award under this Plan, as
all Awards granted hereunder are granted in the sole and absolute discretion of
the committee, as provided herein.
ARTICLE VII
-----------
OPTIONS
-------
7.1 GRANTS OF OPTIONS. Awards shall be granted to Participants in the form of
Options to purchase Stock.
7.2 TYPE OF OPTIONS. The Committee may choose to grant a Participant who is an
Eligible Employee either Incentive Stock Options or Non-Qualified Stock Options
or both, subject to the limitations contained herein. The Committee shall grant
to a Participant who is an Eligible Non-Employee only Non-Qualified Stock
Options, subject to the limitations contained herein.
7.3 INCENTIVE STOCK OPTION DOLLAR LIMITATIONS. If the Committee grants
Incentive Stock Options, the aggregate Fair Market Value (determined as of the
date the Option is granted) of any such Options plus any incentive stock options
granted under any other plans of the Company which shall be first exercisable by
any one Participant during any one calendar year shall not exceed $100,000, or
such other dollar limitation as may be provided in the Code.
ARTICLE VIII
------------
TERMS AND CONDITIONS OF STOCK OPTION AGREEMENTS
-----------------------------------------------
8.1 STOCK OPTION AGREEMENTS. Awards shall be evidenced by Stock Option
Agreements in such form as the Committee shall, from time to time, approve. Such
Stock Option Agreements, which need not be identical, shall comply with and be
subject to the following terms and conditions:
(a) Medium of Payment. Upon exercise of the Option, the Option price shall
be payable either (i) in United States dollars, in cash, or by certified check,
bank draft or money order payable to the order of the Company, or (ii) in the
discretion of the Committee, through the delivery of shares of Stock (including
for Options granted after
5
<PAGE>
the date of this amendment and restatement, Stock that would otherwise be issued
upon exercise of the Option), with the Fair Market Value equal to the total
Option price, or (iii) by a combination of the methods described in (i) and
(ii).
In addition to the above, with respect to Options granted after the
date of this amendment and restatement, the Committee, subject to such
limitations as it may determine, may authorize payment of the exercise price, in
whole or in part, by delivery of a properly executed exercise notice, together
with irrevocable instructions to: (i) a brokerage firm designated by the Company
to deliver promptly to the Company the aggregate amount of sale or loan proceeds
to pay the exercise price and any withholding tax obligations that may arise in
connection with the exercise, and (ii) the Company to deliver the certificates
for such purchased shares directly to such brokerage firm.
(b) Number of Shares. The Stock Option Agreement shall state the total
number of shares to which it pertains.
(c) Option Price. With respect to Non-Qualified Stock Options, the
option price shall be an amount determined by the Committee, which amount may be
less than, equal to or greater than the Fair Market Value of such Shares on the
date of the granting of the Option. With respect to Incentive Stock Options, the
option price shall be not less than the Fair Market Value of such shares on the
dare of the granting of the Option (or one hundred ten percent (110%) of such
amount if the Option is granted to an individual owning stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of Integral Systems, Inc. or any subsidiary, within the meaning of Code
Section 424(f), taking into account the attribution rules of Code Section
424(d)).
(d) Term of Options. Each Non-Qualified Option and Incentive Stock
Option granted under this Plan shall expire not more than ten (10) years from
the date the Option is granted, except that each Incentive Stock Option granted
under the Plan to an individual owning stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of Integral
Systems, Inc. or any subsidiary, within the meaning of Code Section 424(f),
taking into account the attribution rules of Code Section 424(d), shall expire
not more than five (5) years from the date the Option is granted.
(e) Date of Exercise. Subject to subsection (d) of this Section, an
Option which becomes a Vested Option may be exercised in whole or in part at any
time thereafter. Options which are awarded hereunder shall become exercisable as
Vested Options, as follows:
(i) The aggregate number of shares of Stock subject to any Award
shall be divided into three installments (equally or unequally at the discretion
of the Committee), as specified in the Agreement. The first installment shall
become Vested Options one year from the date of such Award, the second
installment shall become Vested Options two years from the date of such Award
and the third installment shall become Vested Options
6
<PAGE>
three years from the date of such Award. Any other vesting schedule may be
substituted for the above, as specified in the Agreement, at the Committee's
discretion.
(ii) Except as otherwise provided hereunder, the Committee may in
its discretion accelerate the time at which an Option granted hereunder may be
exercised.
(f) Forfeiture or Exercise of Option. If a Participant ceases employment
with the Company, all Options held by him or her which are not Vested Options
shall terminate. If a Participant terminates his or her employment or other
service relationship with the Company prior to the exercise of the Participant's
Non-Qualified Stock Options, such Options shall be forfeited (or exercisable
after termination only as provided in the applicable Stock Option Agreement). If
a Participant terminates employment with the Company prior to exercise of the
Participant's Vested Options which are Incentive Stock Options, such Vested
Options shall be forfeited, or be exercised, as follows:
(i) Termination and Retirement. In the event of a Participant's
Termination or Retirement, the Participant's Vested Options shall be forfeited
within three (3) months of the Participant's Termination or Retirement,
(ii) Disability. Upon the Disability of a Participant, the
Participant's Vested Options shall be exercisable within twelve (12) months (or
such shorter period as the Code or the terms of the particular Stock Option
Agreement may require) of the Participant's Date of Disability.
(iii) Death. If the Participant dies while in the employment of the
Company or within the period of time after Termination or Retirement during
which the Participant would have been entitled to exercise his or her Vested
Option rights, the Participant's estate, personal representative or beneficiary
(as applicable) shall have the right to exercise such Vested Options, within one
(1) year from the date of the Participant's death (or such shorter period as the
Code or the terms of the particular Stock Option Agreement may require).
(iv) Other Restrictions/Forfeiture Events. The Committee shall have
complete discretion to prescribe any other events of forfeiture and/or
conditions of exercisability of Options, as specified in the applicable
Agreement.
(g) Agreement as to Sale of Securities. If, at the time of the exercise
of any Option, in the opinion of counsel for the Company, it is necessary or
desirable, in order to comply with any applicable laws or regulations relating
to the sale of securities, that the Participant exercising the Option shall
agree to purchase the shares that are subject to the Option for investment only
and not with any present intention to resell the same and that the Participant
will dispose of such shares only in compliance with such laws and regulations,
the Participant will, upon the request of the Company, execute and deliver to
the Company an agreement to such effect.
7
<PAGE>
(h) Required Amendments. Each Award shall be subject to any provision
necessary to assure compliance with federal and state securities laws.
(i) Limitation of Participant Rights. A Participant shall not be deemed
to be the holder of, or to have any of the rights of a holder with respect to,
any shares of Stock subject to an Option unless and until the Option shall have
been exercised pursuant to the terms thereof, the Company shall have issued and
delivered the shares to the Participant, and the Participant's name shall have
been entered as a stockholder of record on the books of Integral Systems, Inc.
Thereafter, the Participant shall have full voting, dividend and other ownership
rights with respect to such shares of stock.
ARTICLE IX
----------
GRANTS IN SUBSTITUTION FOR OPTIONS
----------------------------------
GRANTED BY OTHER CORPORATION
----------------------------
9.1 SUBSTITUTE AWARDS. Awards may be granted under this Plan from time to time
in substitution for similar awards held by employees of corporations who become
or are about to become employees of the Company as the result of a merger or
consolidation of the employing corporation with the Company, or the acquisition
by the Company of the assets of the employing corporation, or the acquisition by
the Company of fifty percent (50%) or more of the stock of the employing
corporation causing it to become a subsidiary of the Company. Subject to the
procurement of the approval of the stockholders of the Company as may be
required for the Plan to satisfy the requirements of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended, the terms and conditions of the
substitute Awards so granted may vary from the terms and conditions set forth in
this Plan to such extent as the Committee at the time of the grant may deem
appropriate to confirm, in whole or in part, to the provisions of the options in
substitution for which they are granted.
ARTICLE X
---------
CHANGES IN CAPITAL STRUCTURE
----------------------------
10.1 CAPITAL STRUCTURE CHANGES:
(a) In the event of any change in the number of issued shares of Stock
resulting from a subdivision or consolidation of shares or other capital
adjustment, or the payment of a stock dividend or other increase or decrease of
such shares, then appropriate adjustments shall be made by the Committee with
respect to outstanding Awards and the aggregate number of shares of Stock which
may be awarded pursuant to this Plan. Additions to Awards issued as a result of
any such change shall bear the same restrictions and carry the same terms as
the Awards to which they relate.
8
<PAGE>
(b) In the event of a change in the Stock which is limited to a change in
the designation thereof to "capital stock" or other similar designation, or in
par value to no par value, without increase or decrease in the number of issued
shares, the shares resulting from any such change shall be deemed to be Stock
within the meaning of this Plan.
ARTICLE XI
----------
COMPANY SUCCESSORS
------------------
11.1 IN GENERAL
(a) If the Company shall be the surviving or resulting corporation in any
merger, sale of assets or sale of stock, consolidation or corporate
reorganization (including a reorganization in which the holders of Stock receive
securities of another corporation), any Award granted hereunder shall pertain to
and apply to the securities to which a holder of Stock would have been entitled.
The Committee shall make such appropriate determinations and adjustments as it
deems necessary so as to substantially preserve the rights and benefits, both as
to number of shares and otherwise, of Participants under this Plan.
(b) If the Company shall not be the surviving corporation in any merger,
sale of assets or sale of stock consolidation or corporate reorganization
(including a reorganization in which the holders of Stock receive securities of
another corporation) involving the Company, the successor corporation shall
issue substitute options so as to preserve substantially the rights and benefits
of the Participants under this Plan.
ARTICLE XII
-----------
AMENDMENT OR TERMINATION OF PLAN
--------------------------------
12.1 AMENDMENTS AND TERMINATION. The Plan shall terminate on the tenth (10)
anniversary of the Effective Date of the Plan. The Board may at any time and
from time to time otherwise alter, amend, suspend or terminate this Plan in
whole or in part; provided, however, that (i) no such action may be taken
without stockholder approval which materially increases the benefits accruing to
Participants hereunder, materially increases the number of securities which may
be issued pursuant to this Plan (except as provided in Sections 10.1 and 11.1),
materially extends the period for granting Awards hereunder, or materially
modifies the requirements as to eligibility for participation hereunder; and
(ii) no such action may be taken, without the consent of the Participant to whom
any Award shall have been granted, which adversely affects the rights of such
Participant concerning such Award, except as such termination or amendment of
this Plan is required by statute, or rules and regulations promulgated
thereunder, or as otherwise permitted hereunder.
9
<PAGE>
ARTICLE XIII
------------
MISCELLANEOUS PROVISIONS
------------------------
13.1 NON-TRANSFERABILITY. Except by the laws of descent and distribution, no
benefit provided hereunder shall be subject to alienation, assignment or
transfer by a Participant (or by any person entitled to such benefit pursuant to
the terms of this Plan), nor shall it be subject to attachment or other legal
process of whatever nature, and any attempted alienation, assignment, attachment
or transfer shall be void and of no effect whatsoever and, upon any such
attempt, the benefit shall terminate and be of no force or effect. During a
Participant's lifetime, Options granted to the Participant shall be exercisable
only by the Participant. Shares of Stock shall be delivered only into the hands
of the Participant entitled to receive the same or into the hands of the
Participants authorized legal representative.
13.2 NO EMPLOYMENT RIGHT. Neither this Plan nor any action taken hereunder
shall be construed as giving any right to any individual to be retained as an
officer, employee, director or independent contractor of the Company.
13.3 TAX WITHHOLDING. The Company shall have the right to deduct from all
Awards paid any federal, state, local or employment taxes which it deems are
required by law to be withheld with respect to such payments. The Participant
receiving Stock pursuant to the exercise of an Option may be required to pay to
the Company an amount required to be withheld with respect to such Stock. At the
request of a Participant, or as required by law, such sums as may be required
for the payment of any estimated or accrued income tax liability may be withheld
and paid over the governmental entity entitled to receive the same.
13.4 FRACTIONAL SHARES. Any fractional shares concerning Awards shall be
eliminated at the time of payment or payout by rounding down for fractions of
less than one-half (1/2) and rounding up for fractions of equal to or greater
than one-half (1/2). No cash settlements shall be made with respect to
fractional shares eliminated by rounding.
13.5 GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company to make
payment of Awards in Stock or otherwise shall be subject to all applicable laws,
rules and regulations, and to such approvals by any government agencies as may
be deemed necessary or appropriate by the Committee. If Stock awarded hereunder
may in certain circumstances be exempt from registration under the Securities
Act of 1933, the Company may restrict its transfer in such manner as it deems
advisable to ensure such exempt status. The Plan is intended to comply with
Rule 16b-3 under the Securities Exchange Act of 1934, as amended. Any provision
inconsistent with such Rule shall be inoperative and shall not affect the
validity of the Plan. The Plan shall be subject to any provision necessary to
assure compliance with federal and state securities laws.
10
<PAGE>
13.6 INDEMNIFICATION. Each person who is or at any time serves as a member of
the Board or the Committee shall be indemnified and held harmless by Integral
Systems, Inc. against and from (i) any loss, cost, liability or expense that may
be imposed upon or reasonably incurred by such person in connection with or
resulting from any claim, action, suit or proceeding to which such person may be
a party or in which such person may be involved by reason of any action or
failure to act under this Plan; and (ii) any and all amounts paid by such person
in satisfaction of judgment in any such action, suit or proceeding relating to
this Plan. Each person covered by this indemnification shall give Integral
Systems, Inc. an opportunity, at its own expense, to handle and defend the same
before such person undertakes to handle and defend the same on such person's own
behalf. The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such persons may be entitled under the
charter or by-laws of Integral Systems, Inc. as a matter of law, or otherwise,
or any power that Integral Systems, Inc. may have to indemnify such person or
hold such person harmless.
13.7 RELIANCE ON REPORTS. Each member of the Board or the Committee shall be
fully justified in relying or acting in good faith upon any report made by the
independent public accountants of the Company, and upon any other information
furnished in connection with this Plan. In no event shall any person who is or
shall have been a member of the Board or the Committee be liable for any
determination made or other action taken or any omission to act in reliance upon
any such report or information, or for any action taken, including the
furnishing of information, or failure to act, if in good faith.
13.8 GOVERNING LAW. All matters relating to this Plan or to Awards granted
hereunder shall be governed by the laws of the State of Maryland, without regard
to the principles of conflict of laws thereof, except to the extent preempted by
the laws of the United States.
13.9 RELATIONSHIP TO OTHER BENEFITS. No payment under this Plan shall be taken
into account in determining any benefits under any pension, retirement, profit
sharing or group insurance plan of the Company.
13.10 EXPENSES. The expenses of implementing and administering this Plan shall
be borne by the Company.
13.11 TITLES AND HEADINGS. The titles and headings of the Articles and Sections
in this Plan are for convenience of reference only, and in the event of any
conflict, the text of this Plan, rather than such titles or headings, shall
control.
13.12 USE OF PROCEEDS. Proceeds from the sale of Stock pursuant to Options
granted under the plan shall constitute general funds of the Company.
13.13 NON-EXCLUSIVITY OF PLAN. Neither the adoption of the Plan by the Board
nor the submission of the Plan to the stockholders of the Company for approval
shall be construed as creating any limitations on the power of the Board to
adopt such other
11
<PAGE>
incentive arrangements as it may deem desirable, including, without limitation,
the granting of stock options otherwise than under the Plan, and such
arrangements may be either applicable generally or only in specific cases.
12
<PAGE>
EXHIBIT 5.1
August 14, 1998
Integral Systems, Inc.
5000 Philadelphia Way, Suite A
Lanham, MD 20706
Ladies and Gentlemen:
We have acted as counsel for Integral Systems, Inc., a Maryland corporation
(the "Registrant"), in connection with a registration statement on Form S-8 of
the Registrant (the "Registration Statement"), filed with the Securities and
Exchange Commission (the "Commission") pursuant to the Securities Act of 1933,
as amended (the "Securities Act"), pertaining to the registration of 600,000
shares of common stock, par value $0.01 per share, of the Registrant (the
"Shares" ) for issuance and sale pursuant to the Integral Systems, Inc. 1988
Stock Option Plan As Amended and Restated Effective May 8, 1998 (the "Plan").
In connection with this opinion, we have considered such questions of law
as we have deemed necessary as a basis for the opinions set forth below, and we
have examined or otherwise are familiar with originals or copies, certified or
otherwise identified to our satisfaction, of the following: (i) the Registration
Statement; (ii) the Articles of Incorporation and Bylaws, as amended, of the
Registrant, as currently in effect; (iii) certain resolutions of the Board of
Directors of the Registrant relating to the adoption of the Plan and the
issuance of the Shares and the other transactions contemplated by the
Registration Statement; (iv) the Plan; and (v) such other documents as we have
deemed necessary or appropriate as a basis for the opinion set forth below. In
our examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as certified or photostatic
copies and the authenticity of the originals of such copies. As to any facts
material to this opinion that we did not independently establish or verify, we
have relied upon statements and representations of officers and other
representatives of the Registrant and others.
Based upon the foregoing, we are of the opinion that the Shares have been
duly authorized for issuance and that when sold, issued, paid for and delivered
as contemplated by the Plan, the Shares will be validly issued, fully paid and
nonassessable.
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The law covered by the opinion is limited to the corporate laws of the
State of Maryland pertaining to matters such as the issuance of stock, but not
including the "securities" or "blue sky" law of the State and without regard to
the principles of conflicts of laws thereof, and based upon and limited to the
laws and regulations in effect as of the date hereof. We assume no obligation
to update the opinion set forth herein.
We hereby consent to the filing of this opinion with the Commission as
Exhibit 5.1 to the Registration Statement. In giving this consent, we do not
thereby admit that we are within the category of persons whose consent is
required under Section 7 of the Securities Act, or the Rules and Regulations of
the Commission thereunder.
Very truly yours,
/s/ Venable, Baetjer and Howard, LLP
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EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement on Form S-8 of our report dated
November 21, 1997 included in Integral Systems, Inc.'s Form 10-KSB for the years
ended September 30, 1996 and 1997 and to all references to our Firm included in
this Registration Statement.
/s/ Rubino & McGeehin, Chartered
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Rubino & McGeehin, Chartered
Certified Public Accountants
Bethesda, MD
August 12, 1998
