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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 8, 2010

INTEGRAL SYSTEMS, INC. (Exact name of registrant as specified in its charter)

Maryland 0-18603 52-1267968


(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)

6721 Columbia Gateway Drive


Columbia, Maryland 21046
(Address of principal executive offices)

(443) 539-5008
(Registrant’s telephone number, including area code)

N/A
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 1.01 Entry into a Material Definitive Agreement.

On October 8, 2010, Integral Systems, Inc. (the “Company”) entered into an agreement (the “Agreement”) with Vintage Partners,
L.P., Vintage Partners GP, LLC, Vintage Capital Management, LLC and Brian R. Kahn (together with their affiliates, the “Vintage
Group”) providing for, among other things, (i) a temporary increase in the size of the Board of Directors (the “Board”) to eleven
(11) directors, (ii) the reassignment of one current Class I director as a Class II director and (iii) the appointment of Mr. Brian R.
Kahn and Mr. Melvin L. Keating (the “New Directors”) to the Board as Class I directors, each having an initial term continuing until
the Company’s 2011 annual meeting of stockholders (the “2011 Annual Meeting”), each effective October 8, 2010. As contemplated
by the Agreement, Ms. Bonnie K. Wachtel has resigned as a Class I director and has been reappointed as a Class II director, effective
October 8, 2010, having a term continuing until the Company’s 2012 annual meeting of stockholders (the “2012 Annual Meeting”).
Ms. Wachtel will continue to serve on the Company’s audit committee.

The Agreement provides that, from the date of the Agreement until immediately prior to the 2012 Annual Meeting (the “Term”), if
either of the New Directors remains in office, one of the New Directors will have the right, subject to compliance with applicable
Securities and Exchange Commission (“SEC”) and NASDAQ corporate governance rules, to serve on each of the committees of the
Board. Mr. Keating has been appointed to the Company’s audit and compensation committees, and Mr. Kahn has been appointed to
the Company’s nominating, strategic growth and special litigation committees. The Agreement also provides that, so long as the
Vintage Group beneficially owns more than 5% of the Company’s then outstanding common stock, (i) through the 2012 Annual
Meeting, if a New Director resigns, is unable to serve as a director or is removed for cause, the Vintage Group has the right to submit
the name of a replacement director for consideration by the Company, and (ii) the Company will not take any action to remove a New
Director (including recommending to its stockholders the removal of either of the New Directors), other than for cause (as used in the
Maryland General Corporation Law) until the Company’s 2014 annual meeting of stockholders.

The Company will compensate the New Directors for their services as described in the discussion of director compensation in the
Company’s definitive proxy statement for its 2010 annual meeting of stockholders, filed with the SEC on January 11, 2010.

In addition, the Company agreed to: (i) nominate the New Directors for election and include the New Directors in the Board’s slate of
nominees for election as directors at the 2011 Annual Meeting; (ii) obtain the resignation of two directors, other than the New
Directors, effective no later than immediately prior to the 2011 Annual Meeting; (iii) reduce the size of the Board to nine (9) directors
effective immediately prior to the 2011 Annual Meeting; (iv) seek to obtain proxies in favor of the election as director for the New
Directors at the 2011 Annual Meeting; (v) call and convene the 2011 Annual Meeting no later than February 28, 2011; (vi) call and
convene the 2012 Annual Meeting no later than February 29, 2012; (vii) refrain from calling or convening an annual or special
meeting of stockholders for the purpose of electing directors (other than the 2011 Annual Meeting and the 2012 Annual Meeting)
prior to February 29, 2012; (viii) keep the size of the Board at no more than eleven (11) directors until the 2011 Annual
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Meeting; and (ix) keep the size of the Board at no more than nine (9) directors (including the New Directors) from the 2011 Annual
Meeting until the 2012 Annual Meeting.

The Company also agreed that during the Term, it will not adopt a stockholder rights plan or other defensive device that is
inconsistent with, or more restrictive with respect to Vintage Group than the provisions of the Agreement.

The Vintage Group has agreed to support the Company’s nominees for election as director at the 2011 Annual Meeting (including the
New Directors) and to vote at the 2011 Annual Meeting all securities beneficially owned or owned of record by the members of the
Vintage Group in accordance with the Board’s recommendation with respect to the election of directors (provided that the New
Directors are two of the Board’s nominees for election as director and the third nominee is an existing member of the Board),
ratification of the Company’s current auditors, and say-on-pay proposals (provided that the compensation of the Company’s
executives is consistent with compensation practices at the time of the Agreement).

The Vintage Group also agreed that during the Term, unless approved by a majority of the entire Board, the members of the Vintage
Group and their associates will refrain from engaging in certain activities, either directly or indirectly, including: (i) acquiring,
agreeing to acquire, publicly announcing an intention to acquire, publicly offering, publicly proposing to acquire, or agreeing to
acquire, by purchase, gift, tender or exchange offer or otherwise, beneficial or record ownership of any securities of the Company
(however, the Vintage Group may increase, or publicly propose to increase, its ownership interest in the Company (whether owned
beneficially or of record) to up to 25% of the then outstanding common stock of the Company in open market purchases, private
purchases, block trades, or any other manner other than a tender or exchange offer (any shares of common stock of the Company
owned beneficially or of record by the Vintage Group in excess of 20% of the then outstanding shares of common stock of the
Company during the Term and as of the end of the Term are referred to as the (“Neutral Shares”)); (ii) forming, joining, or
participating in a “group” (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) with respect to the Company’s securities or otherwise act in concert with any person with respect to the Company’s
securities; (iii) arranging, or in any way participating in, any financing for the purchase by any person of shares of the Company’s
common stock or other securities or assets or businesses of the Company and its affiliates; (iv) publicly proposing or seeking to
propose to the Company or a third party an extraordinary corporate transaction involving the Company or its affiliates, including a
merger, reorganization, recapitalization, extraordinary dividend, liquidation, sale or transfer of assets other than in the ordinary course
of business; (v) publicly proposing or trying to publicly propose to the Company or any third party the acquisition or purchase of all
or any portion of the assets of the Company by any member of the Vintage Group; (vi) soliciting proxies for any securities of the
Company or otherwise becoming a “participant,” directly or indirectly, in any “solicitation” of “proxies” to vote, or becoming a
“participant” in any “election contest” involving the Company or its securities (all terms used having the meanings assigned them in
Regulation 14A under the Exchange Act); (vii) calling or seeking to call, directly or indirectly, a special meeting of the Company’s
stockholders; (viii) seeking, requesting or taking any action to obtain or retain, directly or indirectly, any list of holders of any voting
or other securities of the Company; (ix) publicly making a recommendation with respect to the voting of Company’s securities or
recommending to any
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other stockholder that they vote contrary to the recommendations of the Board on any matter presented for a stockholder vote;
(x) publicly seeking any change in the composition of the Board, including a change to the number of directors, the term of directors
or to fill any vacancies on the Board; (xi) publicly proposing that the Company’s common stock become eligible for termination of
registration under Section 12(g)(4) of the Exchange Act; (xii) making a public request that the prohibitions in the Agreement be
waived or that the Company take action that would permit the Vintage Group or its associates to take action prohibited by the
Agreement, or otherwise making any public statement relating to the Vintage Group’s willingness to pursue any such prohibited
action conditioned upon waiver of the Agreement; (xiii) making, issuing or causing to be issued any public disclosure, public
announcement or public statement to a third party about the Board or the management of the Company which disparages, criticizes or
in any other way reflects adversely or detrimentally upon the Board or the management of the Company; (xiv) making, issuing or
causing to be issued any disclosure, announcement or statement to a third party concerning the Board or the management of the
Company, that is materially misleading, or omits to state a material fact necessary to make the statement, in light of the circumstances
in which the statement is made, not misleading, or with the intent or purpose of defaming or disparaging the Board or the
management of the Company; and (xv) initiating, soliciting, assisting, facilitating, financing, or encouraging or otherwise
participating in the taking of any of the actions listed above by, or entering into any discussions, negotiations, arrangements, or
understandings with, any third party with respect to any of the actions listed above. These standstill provisions will not: (i) prevent the
New Directors from discharging their duties as directors; (ii) keep the Vintage Group from taking actions necessary to comply with
the advance notice provisions of the bylaws of the Company with respect to the nomination of directors or submission of proposals
for the 2012 Annual Meeting; or (iii) prevent the Vintage Group from soliciting proxies for the 2012 Annual Meeting beginning on
the date that is sixty (60) days before the date that the 2012 Annual Meeting is scheduled.

The Agreement provides that the Vintage Group may increase (or publicly propose to increase) its ownership interest (whether owned
beneficially or of record) in the Company to up to 25% of the then outstanding common stock of the Company, and that subject to the
continuing satisfaction of certain conditions set forth in the Agreement (which are described in the following sentence) and assuming
that neither the Vintage Group nor any member thereof is an “interested stockholder” (as defined in the Maryland Business
Combination Act) of the Company on the date of the Agreement, the Maryland Business Combination Act (and, if it becomes
applicable to the Company, the Maryland Control Share Acquisition Act) shall not apply to the Vintage Group up to such amount, if
acquired during the Term. The Agreement further provides that for purposes of the Maryland Business Combination Act and the
Maryland Control Share Acquisition Act (should it be applicable to the Company), the Company’s approval of the increase by the
Vintage Group of its ownership interest in the Company to up to 25% of the outstanding common stock of the Company is
conditioned upon and subject to: (i) the Vintage Group or any member thereof, at no time during the Term, owning beneficially (as
defined in the Maryland Business Combination Act) or of record, more than 25% of the outstanding common stock of the Company;
(ii) the Vintage Group complying in all material respects with all terms and conditions of the Agreement; and (iii) no material breach,
default or violation by the Vintage Group of any of the terms or conditions of the Agreement having occurred.
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The Vintage Group has agreed that at the 2012 Annual Meeting and for so long as a New Director or designee of the Vintage Group
serves as a director of the Company, unless approved by a majority of the entire Board, the Neutral Shares will, at the Vintage
Group’s election, either not be voted or be voted in accordance with the recommendation of the Board with respect to the election of
directors, ratification of the Company’s auditors, and say-on-pay proposals (provided that the compensation of the Company’s
executives is consistent with compensation practices at the time of the Agreement).

The Vintage Group also agreed that for so long as any New Director or any designee of the Vintage Group serves as a director of the
Company, the Vintage Group will not, without the prior written approval of a majority of the Independent Directors (described
below) then serving on the Board, seek or offer to (i) acquire, beneficially or of record, securities of the Company representing 50%
or more of the voting power of the then outstanding securities of the Company whether by purchase, tender or exchange offer,
merger, consolidation or otherwise or (ii) acquire, directly or indirectly, all or substantially all of the assets of the Company.

For purposes of the Agreement, an “Independent Director” is a director who is not a New Director, a designee of the Vintage Group,
or otherwise affiliated with the Vintage Group, does not have a conflict of interest with respect to the proposed transaction, is not in
any way interested in the proposed transaction and meets the qualifications for independence under NASDAQ independence rules.

The full text of the Agreement is attached as Exhibit 10.1 and is incorporated herein by reference. The foregoing description does not
purport to be a complete summary of the terms of the Agreement and is qualified in its entirety by reference to Exhibit 10.1. A copy
of the joint press release issued by the Company and the Vintage Group with respect to the Agreement is attached as Exhibit 99.l.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain Officers.

(d) Election of New Directors.

The information provided under Item 1.01 hereof is incorporated herein by reference.
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Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

The following material is attached as an exhibit to this Current Report on Form 8-K.

Exhibit
Number Description
10.1 Agreement, dated October 8, 2010, by and among Integral Systems, Inc.,
Vintage Partners, L.P., Vintage Partners GP, LLC, Vintage Capital Management, LLC and Brian R. Kahn.
99.1 Joint Press Release, dated October 8, 2010.
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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.

INTEGRAL SYSTEMS, INC.

Dated: October 8, 2010 By: /s/ Christopher B. Roberts


Name: Christopher B. Roberts
Title: Chief Financial Officer
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EXHIBIT INDEX

Exhibit
Number Description
10.1 Agreement, dated October 8, 2010, by and among Integral Systems, Inc., Vintage Partners, L.P., Vintage Partners
GP, LLC, Vintage Capital Management, LLC and Brian R. Kahn.
99.1 Joint Press Release, dated October 8, 2010.
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Exhibit 10.1

AGREEMENT

THIS AGREEMENT (“Agreement”), dated as of October 8, 2010, is made by and among Integral Systems, Inc., a
Maryland corporation (the “Company”), and the entities and natural persons listed on Schedule A hereto and their affiliates
(collectively, the “Vintage Group”) (each of the Company and the Vintage Group, a “Party” to this Agreement, and collectively, the
“Parties”).

WHEREAS, the Vintage Group may be deemed to beneficially own shares of common stock of the Company (the
“Common Stock”) totaling, in the aggregate, 1,750,000 shares, or approximately 9.9%, of the Common Stock issued and outstanding
on the date hereof; and

WHEREAS, the Company and the Vintage Group have agreed that it is in their mutual interests to enter into this
Agreement.

NOW, THEREFORE, in consideration of and in reliance upon the covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereto agree as
follows:

1. Representations and Warranties of the Vintage Group. The Vintage Group represents and warrants to the Company that
(a) this Agreement has been duly authorized, executed and delivered by each member of the Vintage Group identified on Schedule A
hereto, and is a valid and binding obligation of the Vintage Group, enforceable against the Vintage Group in accordance with its
terms; (b) neither the execution of this Agreement nor the consummation of any of the transactions contemplated hereby nor the
fulfillment of the terms hereof, in each case in accordance with the terms hereof, will conflict with, result in a breach or violation of
any of the organizational documents of the Vintage Group as currently in effect, or the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other agreement, obligation, condition, covenant or instrument to which
any member of the Vintage Group is a party or bound or to which its property or assets is subject; and (c) as of the date of this
Agreement, the Vintage Group may be deemed to beneficially own in the aggregate 1,750,000 shares of Common Stock.

2. Representations and Warranties of the Company. The Company hereby represents and warrants to the Vintage Group that
(a) this Agreement has been duly authorized, executed and delivered by the Company, and is a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms; (b) neither the execution of this Agreement nor the
consummation of any of the transactions contemplated hereby nor the fulfillment of the terms hereof, in each case in accordance with
the terms hereof, will conflict with, result in a breach or violation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company or any of its subsidiaries pursuant to any law, any order of any court or other agency of government, the
Articles of Restatement of the Company dated May 7, 1999, as supplemented by Articles Supplementary of the Company dated
March 13, 2006, as supplemented by Articles Supplementary of the Company dated February 12, 2007, as amended by the Articles of
Amendment dated February 26, 2009 and effective April 29, 2009, and as
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supplemented by the Articles Supplementary of the Company, dated August 13, 2010 (collectively, the “Charter”), the Company’s
Amended and Restated Bylaws, as amended (the “Bylaws”), or the terms of any indenture, contract, lease, mortgage, deed of trust,
note agreement, loan agreement or other agreement, obligation, condition, covenant or instrument to which the Company is a party or
bound or to which its property or assets is subject (collectively, the “Company Contracts”); and (c) attached as Exhibit B is a true,
correct and complete copy of the resolutions adopted by the Board to effect the increase in the number of directors and the director
appointments contemplated by Section 3, and such resolutions have not been amended, annulled, rescinded or revoked and remain in
full force and effect.

3. Directorships.

(a) Effective on October 8, 2010, (i) the number of members of the board of directors of the Company (the “Board”) shall
be increased by two (2) directors, (ii) one (1) current Class I Director will be re-assigned to Class II and thereupon, there shall be two
(2) vacancies on the Board for Class I Directors and (iii) the New Appointees (as defined below) shall be appointed to fill such two
(2) vacancies on the Board as Class I Directors. The Nominating Committee of the Board (the “Nominating Committee”) has, in good
faith, reviewed and approved the credentials of Brian Kahn and Mel Keating (the “New Appointees”) in the exercise of their duties as
directors of the Company, concluded that each of the New Appointees has business experience in such areas as would reasonably be
expected to enhance the Board, and determined, consistent with the Company’s guidelines relating to director qualifications and
Board composition, subject to the terms of this Agreement, to recommend the appointment of, and the Board has determined to
appoint, the New Appointees to the Board.

(b) The Company further agrees to:

(i) take all actions necessary and appropriate to reduce the size of the Board to nine (9), effective immediately prior
to the annual meeting of the Company’s stockholders in 2011 (the “2011 Meeting”), and obtain the resignation of two (2) directors of
the Company other than the New Appointees, effective no later than immediately prior to the 2011 Meeting;

(ii) take all actions necessary and appropriate to nominate the New Appointees (or any replacement therefore
nominated in accordance with Section 3(c)) for election as directors of the Company at the 2011 Meeting;

(iii) take all actions necessary and appropriate to recommend, and reflect such recommendation in the Company’s
definitive proxy statement in connection with the 2011 Meeting, that the stockholders of the Company vote to elect the New
Appointees (or any replacement nominated or appointed in accordance with Section 3(c)) as directors of the Company at the 2011
Meeting;

(iv) take all actions necessary and appropriate to call and convene the 2011 Meeting no later than February 28, 2011;

(v) use all efforts consistent with the efforts used by the Company to obtain proxies for the other candidates
nominated by the Board to obtain proxies in favor of the election of the New Appointees (or any replacement nominated or appointed
in accordance with Section 3(c)) at the 2011 Meeting;
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(vi) take all actions necessary and appropriate to call and convene the 2012 annual meeting of the Company’s
stockholders (the “2012 Meeting”) no later than February 29, 2012;

(vii) take all actions necessary and appropriate to not call and convene any other annual or special meeting of
stockholders for the election of directors, other than the 2011 Meeting and the 2012 Meeting, prior to February 29, 2012;

(viii) use all reasonable efforts to ensure that, at all times from the execution of this Agreement until immediately
prior to the 2012 Meeting (the “Term”) that either of the New Appointees (or any replacement nominated or appointed pursuant to
Section 3(c)), remains in office, at least one such nominee shall have the right, subject to compliance with applicable Securities and
Exchange Commission (the “SEC”) and NASDAQ corporate governance rules, to serve on each of the committees and sub-
committees of the Board (or any substitutes therefor), including any committees and sub-committees of the Board (or any substitutes
therefor) created after the date hereof;

(ix) use all reasonable efforts to ensure that, at all times during the Term prior to the 2011 Meeting, the Board shall
consist of no greater than eleven (11) members; and

(x) use all reasonable efforts to ensure that, at all times following the 2011 Meeting and through the 2012 Meeting,
the Board shall consist of no greater than nine (9) members (two (2) of whom shall be the New Appointees (or any replacement
nominated or appointed pursuant to Section 3(c)).

(c) The Company agrees that, through the 2012 Meeting, so long as the Vintage Group’s beneficial ownership of the
outstanding Common Stock is greater than 5% of the Common Stock outstanding at such time, if a New Appointee resigns or is
otherwise unable to serve as a director or is removed for cause as a director, the Vintage Group shall have the right to submit the
name of a replacement (the “Replacement”) to the Company for its reasonable approval to serve as director. If the proposed
Replacement is not approved by the Nominating Committee and recommended by the Board, the Vintage Group shall have the right
to submit another proposed Replacement to the Nominating Committee for its reasonable approval. The Vintage Group shall have the
right to continue submitting the name of a proposed Replacement to the Nominating Committee for its reasonable approval until the
Nominating Committee approves and the Board recommends that such Replacement may serve as director, whereupon such person
shall be appointed as the Replacement, as the case may be. In addition, so long as the Vintage Group’s beneficial ownership of the
outstanding Common Stock is greater than 5% of the Common Stock outstanding at such time, the Company agrees that it will take
no action to remove either of the New Appointees (including without limitation recommending to the Company’s stockholders
removal of either of the New Appointees), other than for cause (as such term is used in the Maryland General Corporation Law), until
the Company’s 2014 annual meeting of stockholders.

(d) Each of the New Appointees, upon election to the Board, will be governed by the same protections and obligations
regarding confidentiality, conflicts of interests, directors’ duties, trading and disclosure policies and other governance guidelines, and
shall have the same rights and benefits, including without limitation with respect to insurance, indemnification, compensation and
fees, as are generally applicable to any non-employee directors of the Company.
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(e) The Vintage Group agrees to support the nominees for director presented by the Board for election at the 2011 Meeting
(which shall include the New Appointees). At the 2011 Meeting, the Vintage Group shall cause all voting securities of the Company
beneficially owned or owned of record by each member of the Vintage Group to be present at such meeting for purposes of
establishing a quorum and to be voted (either in person or by directing that any proxy granted with respect to such meeting be voted)
in accordance with the recommendation of the Board with respect to (i) the election of directors (provided that the New Appointees
constitute two (2) of the three (3) directors nominated and the other nominee is an existing member of the Board), (ii) ratification of
the Company’s current auditors and (iii) say-on-pay proposals (provided that compensation for the Company’s executives included
therein is consistent with practices in effect as of the date hereof). No later than five (5) business days prior to such meeting of
stockholders, the Vintage Group shall vote in accordance with this Section 3(e) and shall not revoke or change any such vote.

(f) Nothing in this Section 3 shall prevent the members of the Board from discharging their duties as directors of the
Company.

4. Certain Activities During the Term. The Vintage Group agrees that, during the Term, unless approved by a majority of the
entire Board, neither any member of the Vintage Group nor any of its associates (as defined under the Securities Exchange Act of
1934, as amended (the “Exchange Act”)) will (and the Vintage Group and their associates will not assist, encourage or participate
with others to), directly or indirectly:

(a) acquire, agree to acquire, publicly announce an intention to acquire, publicly offer, publicly seek or publicly propose to
acquire, or agree to acquire, by purchase, gift, tender or exchange offer, or otherwise, beneficial or record ownership of any shares of
Common Stock or any other securities or Derivative Securities (as hereinafter defined) of the Company, including any rights,
warrants, options or other securities convertible into or exchangeable for shares of Common Stock or any other securities of the
Company from the Company or third parties, except as a result of a stock split, stock dividend or other pro rata distribution made by
the Company to its stockholders and in which any member of the Vintage Group participates solely in its capacity as a stockholder;
provided, however, that the Vintage Group may increase (or publicly propose to increase) its ownership interest (whether owned
beneficially or of record) in the Company to up to 25% of the then-outstanding Common Stock (including the amounts that may be
deemed to be owned, whether beneficially or of record, by the Vintage Group as of the date hereof) in open market purchases, private
purchases, block trades or any other manner other than a tender or exchange offer (and, subject to the continuing satisfaction of the
conditions set forth in the last paragraph of this Section 4 and assuming that neither the Vintage Group nor any member thereof is an
interested stockholder (as defined in the Maryland Business Combination Act) of the Company on the date hereof, the Maryland
Business Combination Act (and, if it becomes applicable to the Company, the Maryland Control Share Acquisition Act) shall not
apply to the Vintage Group up to such amount, if acquired during the Term); any shares of Common Stock owned beneficially or of
record by the Vintage Group in excess of 20% of the then-outstanding Common Stock of the Company during the Term and as of the
end of the Term are referred to in this Agreement as the “Neutral Shares”;
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(b) form, join or in any way participate in a “group” within the meaning of Section 13(d)(3) of the Exchange Act with
respect to the Common Stock or any other securities or Derivative Securities of the Company or otherwise act in concert with any
person in respect of any such securities;

(c) arrange, or in any way participate in, any financing for the purchase by any person of shares of Common Stock or any
other securities or assets or businesses of the Company or any of its affiliates;

(d) publicly propose or seek to propose to the Company or any third party any extraordinary corporate transaction
involving the Company or any of its affiliates, including a merger, reorganization, recapitalization, extraordinary dividend,
liquidation, sale or transfer of assets other than in the ordinary course of the Company’s business (it being understood that this clause
(d) shall not address acquisitions of securities that are the subject of clause (a) above);

(e) publicly propose or seek to publicly propose to the Company or any third party the acquisition or purchase by any
member of the Vintage Group of all or any portion of the assets of the Company (it being understood that this clause (e) shall not
address acquisitions of securities that are the subject of clause (a) above);

(f) (i) solicit proxies for the voting of any voting or other securities of the Company or otherwise become a “participant,”
directly or indirectly, in any “solicitation” of “proxies” to vote, or become a “participant” in any “election contest” involving the
Company or its securities (all terms used herein having the meanings assigned them in Regulation 14A under the Exchange Act),
(ii) call or seek to call, directly or indirectly, any special meeting of stockholders of the Company for any reason whatsoever,
(iii) seek, request, or take any action to obtain or retain, directly or indirectly, any list of holders of any voting or other securities of
the Company, (iv) publicly make any recommendation with respect to the voting of any securities of the Company or (v) make any
recommendation to any other stockholder of the Company to vote contrary to the recommendation of the Board on any matter
presented to the Company’s stockholders for their vote.

(g) publicly seek any change in the composition of the Board of the Company, including any plans or proposals to change
the number or term of directors or to fill any vacancies on the board of directors;

(h) publicly propose that the Common Stock become eligible for termination of registration pursuant to Section 12(g)(4) of
the Exchange Act;

(i) make a public request that the prohibitions set forth in this Agreement be waived or that the Company take any action
that would permit the Vintage Group or its associates to take any of the actions prohibited by this Agreement, or otherwise make any
public statement relating to the Vintage Group’s willingness to pursue any such prohibited action conditioned upon waiver of this
Agreement;

(j) make or issue or cause to be made or issued any public disclosure, public announcement or public statement to any third
party (including without limitation the filing of any document or report with the Securities and Exchange Commission or any public
filing with any other governmental agency or any disclosure to any journalist or member of the media) concerning the Board or the
management of the Company, which disparages, criticizes or in any other way reflects adversely or detrimentally upon the Board or
the management of the Company;
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(k) make or issue or cause to be made or issued any disclosure, announcement or statement, whether publicly or privately,
to any third party (including without limitation any securities analyst) concerning the Board or the management of the Company,
(i) that is materially misleading, or omits to states a material fact necessary in order to make the statement, in light of the
circumstances in which such statement is made, not misleading, or (ii) with the intent or purpose of defaming or disparaging the
Board or the management of the Company; or

(l) initiate, solicit, assist, facilitate, finance, or encourage or otherwise participate in the taking of any of the foregoing
actions by any third party or enter into any discussions, negotiations, arrangements or understandings with any third party with
respect to any of the foregoing actions.

Notwithstanding the foregoing, nothing in this Section 4 shall prevent: (i) the New Appointees from discharging their
duties as directors of the Company; (ii) the Vintage Group from taking any actions necessary to comply with the advance notice
provisions of the bylaws of the Company with respect to nomination of directors or submission of proposals for the 2012 Meeting; or
(iii) the Vintage Group from soliciting proxies for the 2012 Meeting beginning on the date that is sixty (60) days before the date on
which the 2012 Meeting is scheduled to be held.

For the purposes of this Agreement, “Derivative Securities” means any rights, options or other securities convertible into or
exercisable or exchangeable for securities or indebtedness or any obligations measured by the price or value of any securities, bank
debt or other obligations of the Company, including without limitation any swaps or other derivative arrangements.

For purposes of the Maryland Business Combination Act and the Maryland Control Share Acquisition Act (should it be
applicable to the Company), the approval of the increase by the Vintage Group of its ownership interest in the Company of up to 25%
of the outstanding Common Stock of the Company (including the amounts that may be deemed to be beneficially owned by the
Vintage Group as of the date hereof) is conditioned upon and subject to: (i) the Vintage Group or any member thereof, at no time
during the Term, owning, beneficially (as defined in the Maryland Business Combination Act) or of record, more than 25% of the
outstanding Common Stock of the Company; (ii) the Vintage Group complying in all material respects with all terms and conditions
of this Agreement; and (iii) no material breach, default or violation by Vintage Group of any of the terms or conditions of this
Agreement having occurred. It is the intention of the Company that as permitted by Section 3-601(j)(4) of the Maryland General
Corporation Law, the approval by the Board of the increase by Vintage Group of its ownership interest in the Company to up to 25%
of the outstanding Common Stock shall be subject to compliance by the Vintage Group with the conditions set forth in the
immediately preceding sentence.

5. Certain Other Activities. The Vintage Group agrees that:

(a) at the 2012 Meeting, and thereafter for so long as any New Appointee or any other designee of the Vintage Group
serves as a director of the Company (unless otherwise
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approved by a majority of the entire Board), the Neutral Shares shall, at the Vintage Group’s election, solely with respect to the
election of directors, ratification of auditors and say-on-pay proposals (provided that compensation for the Company’s executives
included therein is consistent with practices in effect as of the date hereof), either (i) not be voted or (ii) be voted in accordance with
the recommendation of the Board; and

(b) for so long as any New Appointee or any designee of the Vintage Group serves as a director of the Company, the
Vintage Group shall not, without the prior written approval of a majority of the Independent Directors (as hereinafter defined) then
serving on the Board, seek or offer to (i) acquire, beneficially or of record, securities of the Company representing 50% or more of the
voting power of the then-outstanding securities of the Company, whether by purchase, tender or exchange offer, merger,
consolidation or otherwise or (ii) acquire, directly or indirectly, all or substantially all of the assets of the Company.

For purposes of this Agreement, an “Independent Director” shall be a director who (i) is not a New Appointee, a designee
of the Vintage Group or otherwise affiliated with the Vintage Group, (ii) does not have a conflict of interest with respect to the
proposed transaction and is not in any way interested in the proposed transaction and (iii) meets the qualifications for independence
under NASDAQ Rule 5605 or any successor rule.

6. Rights Plan. The Company agrees that, during the Term, it will not implement a shareholder rights plan (also know as a
“poison pill”) or other similar defensive device that is inconsistent with, or more restrictive with respect to the Vintage Group than,
the provisions of Section 4, including, without limitation, the ability of the Vintage Group to acquire up to 25% of the then-
outstanding Common Stock.

7. Expenses. Each Party shall bear all fees and expenses incurred by such Party in connection with this Agreement and the
circumstances giving rise hereto, and neither Party shall seek or be entitled to reimbursement of any such fees and expenses from the
other Party.

8. Public Announcement. The Company and the Vintage Group shall promptly disclose the existence of this Agreement after its
execution pursuant to a joint press release that is mutually acceptable to the parties, including a description of the material terms of
this Agreement. Subject to applicable law, none of the Parties shall disclose the existence of this Agreement until the joint press
release is issued.

9. Nonpublic Information.

In connection with discussions between the Vintage Group and their representatives and the Company and its
representatives, or otherwise during the Term, the Vintage Group or their representatives have obtained, and may in the future obtain,
information about the Company or its securities that is confidential. Each member of the Vintage Group agrees to treat confidentially
any such information pursuant to the terms of the Confidentiality Agreement, dated as of September 23, 2010, between the Company
and Vintage Capital Management, LLC.

10. Remedies.

(a) Each of the Parties acknowledges and agrees that a breach or threatened breach by any Party may give rise to
irreparable injury inadequately compensable in damages, and accordingly each Party shall be entitled to injunctive relief to prevent a
breach of the provisions hereof and to enforce specifically the terms and provisions hereof in any state or federal court having
jurisdiction, in addition to any other remedy to which such aggrieved Party may be entitled to at law or in equity.
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(b) In the event that a Party institutes any legal action to enforce such Party’s rights under, or recover damages for breach
of, this Agreement, the prevailing Party or Parties in such action shall be entitled to recover from the other Party or Parties all costs
and expenses, including but not limited to reasonable attorneys’ fees, court costs, witness’ fees, disbursements and any other expenses
of litigation or negotiation incurred by such prevailing Party or Parties.

(c) In the event that the Company (on the one hand) or any member of the Vintage Group (on the other hand) materially
breaches its obligations hereunder, and such breach, to the extent curable, is not cured within ten (10) days of receiving written notice
thereof from the non-breaching Party, then the obligations, and restrictions imposed, under this Agreement on the non-breaching
Party shall terminate.

11. Notices. Any notice or other communication required or permitted to be given under this Agreement will be sufficient if it is
in writing, sent to the applicable address set forth below (or as otherwise specified by a Party by notice to the other Parties in
accordance with this Section 11) and delivered personally, mailed by certified or registered first-class mail or sent by recognized
overnight courier, postage prepaid, and will be deemed given (a) when so delivered personally, (b) if mailed by certified or registered
first-class mail, three (3) business days after the date of mailing, or (c) if sent by recognized overnight courier, one (1) day after the
date of sending.

If to the Company:

Integral Systems, Inc.


6721 Columbia Gateway Drive
Columbia, Maryland 21046
Attention: R. Miller Adams
Telephone: (443) 539-5016
Facsimile: (410) 312-2980

with a copy (which shall not constitute notice) to:

Gibson, Dunn & Crutcher LLP


1050 Connecticut Ave., NW
Washington, DC 20036
Attention: Howard B. Adler
Telephone: (202) 955-8589
Facsimile: (202) 530-9526

If to the Vintage Group:

Vintage Partners, L.P.


5506 Worsham Court
Windermere, Florida 34786
Attention: Brian Kahn
Telephone: (407) 909-8015
Facsimile: (208) 728-8007
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with a copy (which shall not constitute notice) to each of:

Wilson Sonsini Goodrich & Rosati


Professional Corporation
650 Page Mill Road
Palo Alto, California 94304
Attention: Bradley L. Finkelstein
Telephone: (650) 493-9300
Facsimile: (650) 493-6811

DLA Piper LLP


6225 Smith Avenue
Baltimore, Maryland 21209
Attention: Robert “Jay” Smith, Jr.
Telephone: (410) 580-4266
Facsimile: (410) 580-3266

12. Entire Agreement. This Agreement constitutes the entire agreement between the Parties pertaining to the subject matter
hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations and discussions of the Parties in
connection with the subject matter hereof.

13. Counterparts; Facsimile. This Agreement may be executed in any number of counterparts and by the Parties in separate
counterparts, and signature pages may be delivered by facsimile, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.

14. Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

15. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State
of Maryland, without regard to choice of law principles that would compel the application of the laws of any other jurisdiction.

16. Severability. In the event one or more of the provisions of this Agreement should, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this
Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained
herein.

17. Successors and Assigns. This Agreement shall not be assignable by any of the Parties. This Agreement, however, shall be
binding on successors of the Parties.

18. Amendments. This Agreement may not be modified, amended, altered or supplemented except upon the execution and
delivery of a written agreement executed by all of the Parties.

19. Further Action. Each Party agrees to execute such additional reasonable documents, and to do and perform such reasonable
acts and things necessary or proper to effectuate or further evidence the terms and provisions of this Agreement.
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[Signatures are on the following page.]
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day and year first above written.

INTEGRAL SYSTEMS, INC.

By: /s/ Paul G. Casner, Jr.


Name: Paul G. Casner, Jr.
Title: Chief Executive Officer and President
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day and year first above written.

BRIAN R. KAHN

By: /s/ Brian R. Kahn

VINTAGE PARTNERS GP, LLC

By: /s/ Brian R. Kahn


Name: Brian R. Kahn
Title: Manager

VINTAGE PARTNERS, L.P.

By: Vintage Partners GP, LLC, its General Partner

By: /s/ Brian R. Kahn


Name: Brian R. Kahn
Title: Manager

VINTAGE CAPITAL MANAGEMENT, LLC

By: /s/ Brian R. Kahn


Name: Brian R. Kahn
Title: Managing Member
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Schedule A

The Vintage Group

Vintage Partners, L.P.


Vintage Partners GP, LLC
Vintage Capital Management, LLC
Brian R. Kahn
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Exhibit 99.1

6721 Columbia Gateway Drive • Columbia • Maryland • 21046 • U.S.A.


Telephone: 443.539.5008 • Fax: 410.312.2705 • Internet: sales@integ.com • Web: http://www.integ.com

Integral Systems Reaches Agreement with the Vintage Group

COLUMBIA, Md, October 8, 2010 – Integral Systems, Inc. (NASDAQ: ISYS) and Vintage Partners, L.P., Vintage Partners GP,
LLC, Vintage Capital Management, LLC and Brian R. Kahn (the “Vintage Group”) announced today that they have reached an
agreement resulting in the appointment of two new directors to the Integral Systems’ Board of Directors.

Pursuant to the terms of the agreement, Integral Systems has temporarily increased the size of the Board of Directors to 11 directors
and appointed Mr. Brian R. Kahn and Mr. Melvin L. Keating as new Class I directors to the Board of Directors, each having an initial
term continuing until the Company’s 2011 annual meeting of stockholders. The agreement provides that the Company will call and
convene the 2011 annual meeting of stockholders no later than February 28, 2011. In addition, immediately prior to the 2011 annual
meeting of stockholders, the number of directors will be reduced to nine. Mr. Kahn and Mr. Keating will also be included in the
Company’s proxy statement as candidates for election at the Company’s 2011 annual meeting of stockholders. In connection with the
agreement, Ms. Bonnie K. Wachtel has moved from a Class I director to a Class II director, having a term continuing until the
Company’s 2012 annual meeting of stockholders. Mr. Keating will join the Company’s audit and compensation committees, and
Mr. Kahn will join the Company’s nominating, strategic growth and special litigation committees.

As part of the agreement, the Company and the Vintage Group have agreed to certain standstill provisions that will remain in effect
until immediately prior to the Company’s 2012 annual meeting of stockholders. The standstill provisions generally permit the Vintage
Group to increase its ownership to 25% of the Company’s then outstanding common stock (subject to certain limitations with respect
to voting shares in excess of 20%) and do not restrict the Vintage Group from making nominations of directors and soliciting proxies
for the 2012 annual meeting of stockholders.
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“On behalf of the Board, we are pleased to welcome Brian Kahn and Mel Keating to the Integral Systems Board,” said Dr. John
(Jack) M. Albertine, Chairman of Integral Systems’ Board of Directors. “Brian and Mel have a proven track record of delivering
shareholder value and we look forward to their constructive participation in strengthening Integral Systems.”

“The Board is committed to serving the best interests of all Integral Systems shareholders. The agreement announced today, and the
addition of Brian and Mel to the Board, will continue to support our unwavering focus on efficient operations, business growth and
delivering shareholder value.”

“Brian and Mel bring a broad set of industry experience and business expertise to the Board,” commented Paul G. Casner, Chief
Executive Officer of Integral Systems. “Their expertise and engagement will be valuable as we continue to focus on establishing an
efficient operating structure to support dynamic business growth. We look forward to the contributions and value they will provide.”

Brian Kahn, Managing Partner and founder of Vintage Capital Management commented, “We are looking forward to working closely
with Integral Systems’ Board to drive improved profitability by reducing its cost structure while continuing to grow Integral Systems’
business by delivering superior products, systems, and services to its customers. Integral Systems has a history of delivering
innovative technology for the infrastructure of our most critical communications systems. We believe this agreement demonstrates
Integral Systems’ commitment to enhancing shareholder value and we look forward to working together toward that goal.”

For additional information about the agreement, please see the Current Report on Form 8-K, filed by Integral Systems with the
Securities and Exchange Commission on October 8, 2010.

ABOUT INTEGRAL SYSTEMS


Integral Systems, Inc., of Columbia, Md, applies more than 25 years experience to provide integrated technology solutions for
satellite communications-interfaced systems. Customers have relied on the Integral Systems family of companies (Integral Systems,
Inc., Integral Systems Europe, Lumistar, Inc., Newpoint Technologies, Inc., RT Logic and SAT Corporation) to deliver on time and
on budget for more than 250 satellite missions. Our dedication to customer service has solidified long-term relationships with the U.S.
Air Force, NASA, NOAA, and nearly every satellite operator in the world. For more information, visit www.integ.com.
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ABOUT VINTAGE
Vintage Capital Management is a value-oriented private equity investment firm specializing in the defense, manufacturing and
consumer sectors. Vintage partners with proven management teams to target situations where there is a verifiable opportunity to
significantly enhance a company’s value through the Vintage operational and strategic approach. Since its establishment as Kahn
Capital Management in 1998, VCM and its principals have had a successful history of identifying, analyzing, and investing in high
quality, lower-middle market companies in its target sectors. For more information, please see www.vintcap.com.

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act. Such forward-looking statements include, but are not necessarily limited to, the
Company’s operations, growth and shareholder value and similar statements concerning future events and expectations that are not
historical facts. These forward-looking statements are based on current information and expectations. Integral Systems cautions you
that these statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including the
Company’s reliance on contracts and subcontracts funded by the U.S. government, intense competition in the ground systems
industry, the competitive bidding process to which the Company’s government and commercial contracts are subject, the Company’s
dependence on the satellite industry for most of its revenues, rapid technological changes in the satellite industry, the Company’s
acquisition strategy and other risks and uncertainties noted in the Company’s Securities and Exchange Commission filings, including
the Annual Report on Form 10-K for the year ended September 25, 2009, and subsequent filings. Integral Systems undertakes no
obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or
otherwise.

###

Company Contact:
Andrew Miller
Vice President, External Communications
Integral Systems, Inc.
Phone: 443.539.5124
amiller@integ.com

Vintage Group Contact:


Brian Randall Kahn
Phone: 407.907.8015

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