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Green Hills Software Seeks $30 Million from Integrated Systems for Breach of VAR License Agreement

For More Information, Contact:
Green Hills Software, Inc.
Tamara Kleidermacher
Tel: 805.965.6044
tamara@ghs.com
Davis-Marrin Communications
Will Curtis
Tel: 858.573.0736
willc@davismarrin.com
 

SANTA BARBARA, Calif., Nov. 3, 1997 - Green Hills Software, Inc., an industry-leading supplier of software development tools for embedded applications, announced today that it has demanded binding arbitration of a long-standing legal dispute with Integrated Systems, Inc. (ISI)(NASDAQ: INTS), a value added reseller (VAR) of Green Hills products.

Green Hills alleges that Integrated Systems, Inc. is violating the companies' current VAR Agreement by their marketing of pRISM+, ISI's recently released software development tools product line. Green Hills is seeking an injunction against ISI's marketing of pRISM+, in addition to $30 million plus punitive damages.

Green Hills claims that ISI has damaged Green Hills' reputation for quality, reliability, and support by refusing to ship updates and new releases (Version 1.8.8) of Green Hills products that provide enhanced performance, new features, better documentation, and bug fixes. "ISI has denied many of its customers the updates and bug fixes that they have paid for under their maintenance contracts," said Dan O'Dowd, President of Green Hills. "I believe it is irresponsible for ISI to continue to ship old releases that contain known bugs that have long since been fixed. I am deeply concerned about ISI customers who develop life support systems."

Green Hills also claims that ISI is contractually obligated to promote Green Hills products ahead of competing products. Green Hills asserts that ISI violated this obligation by secretly acquiring several competitors of Green Hills and integrating their products to create a new product, pRISM+, in order to compete with Green Hills. Green Hills is seeking an injunction mandating divestiture of these subsidiaries.

Green Hills maintains that since ISI resells Green Hills products under the name "pRISM," ISI's use of the name "pRISM+" to identify ISI's new product, which contains no Green Hills products, is misleading and confusing. "By use of the name pRISM+, ISI is leveraging the market awareness and appeal of the pRISM name, even though ISI has refused to incorporate any Green Hills products into pRISM+," said John Carbone, Green Hills Vice President of Marketing. "Customers buying pRISM+ may think that they are getting a Green Hills upgrade, only to discover that pRISM+ contains no Green Hills products at all." Green Hills is seeking an injunction against ISI's use of the name pRISM+ for products that contain no Green Hills products.

Green Hills contends that ISI is in breach of its contractual obligation to spend more money marketing Green Hills products than it spends marketing competing products. Instead, ISI spends far more money promoting pRISM+ than it spends promoting Green Hills products, and has rarely even mentioned Green Hills products in recent ISI press releases, trade show booths, mailers, and literature kits. "Many customers have informed us that ISI sales people are now actively discouraging sales of Green Hills products in favor of pRISM+," said David Chandler, Green Hills Vice President of Sales. Green Hills is seeking an injunction to prevent ISI from promoting its competing products ahead of Green Hills products.

"In my view, ISI's failure to live up to its contractual commitments has already cost Green Hills millions of dollars in lost business," said O'Dowd. "Our mutual customers are also suffering from ISI's failure to live up to the terms of our Agreement. Our objective is to continue our relationship with ISI by keeping the VAR Agreement in effect and having ISI focus on supporting our mutual customers. If ISI continues on its present course, the future damages to Green Hills and our mutual customers may well be incalculable."

For sales information on Green Hills Software's products, please call 1-805-965-6044 or email inquiries to sales@ghs.com.

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