8-K

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): March 30, 2007

INTEGRAL SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

Maryland	0-18603	52-1267968
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

5000 Philadelphia Way, Lanham, Maryland	20706-4417
(Address of principal executive offices)	(ZIP Code)

Registrant’s telephone number, including area code: (301) 731-4233

(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))

Section 1 – Registrant’s Business and Operations

Item 1.01. Entry into a Material Definitive Agreement.

On March 30, 2007, Integral Systems, Inc. (the “Company”) amended its line of credit facility with Bank of America, N.A. to change the line of credit’s maturity date to April 30, 2007. Under the line of credit, the Company can borrow up to $10.0 million for general corporate purposes. Borrowings under the line of credit are due on demand with interest at the London Inter-Bank Offering Rate (LIBOR), plus a spread of 1.5 to 2.4% based on the ratio of funded debt to earnings before interest, taxes and depreciation (EBITDA). The line of credit is secured by the Company’s billed and unbilled accounts receivable and has certain financial covenants, including minimum net worth and liquidity ratios. The Company currently has no amounts outstanding under the line of credit.

Section 2 – Financial Information

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

Item 1.01 is incorporated herein by reference.

Section 9 – Financial Statements and Exhibits

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit	Description
10.1	Fourth Amendment to Revolving Note, dated as of March 30, 2007, by and between Integral Systems, Inc. and Bank of America, N.A.
10.2	Fifth Amendment to Loan Agreement, dated as of March 30, 2007, by and between Integral Systems, Inc. and Bank of America, N.A.

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.
	By:	/s/ Peter J. Gaffney
		Peter J. Gaffney
		Chief Executive Officer
Date: April 5, 2007

EXHIBIT INDEX

Exhibit Number	Description
10.1	Fourth Amendment to Revolving Note, dated as of March 30, 2007, by and between Integral Systems, Inc. and Bank of America, N.A.
10.2	Fifth Amendment to Loan Agreement, dated as of March 30, 2007, by and between Integral Systems, Inc. and Bank of America, N.A.

EX-10.1

Exhibit 10.1

FOURTH AMENDMENT

TO

REVOLVING NOTE

This Fourth Amendment to Revolving Note, dated as of March 30, 2007, is entered into by and between Integral Systems, Inc., a Maryland corporation (“Borrower”), and Bank of America, N.A. (the “Lender”) (said Amendment being referred to herein as “this Amendment”).

WITNESSETH:

WHEREAS, Borrower and Lender are parties to that certain Amended and Restated Revolving Line of Credit Loan Agreement and Security Agreement, dated as of August 31, 2001, as amended by that certain First Modification to Amended and Restated Revolving Line of Credit Loan Agreement and Security Agreement, dated as of February 3, 2003, as further amended by that certain Second Amendment to Amended and Restated Revolving Line of Credit Loan Agreement and Security Agreement, dated as of February 25, 2004, as further amended by that certain Third Amendment to Amended and Restated Revolving Line of Credit Loan Agreement and Security Agreement, dated as of January 19, 2004, as further amended by that certain letter, dated February 20, 2007, from Lender to Borrower, and as further amended by that certain Fifth Amendment to Amended and Restated Revolving Line of Credit Loan Agreement and Security Agreement, dated as of the date hereof (as so amended, the “Loan Agreement”);

WHEREAS, in connection with the transactions contemplated by the Loan Agreement, Borrower executed and delivered to Lender that certain Revolving Note, dated as of August 31, 2001, in the original principal amount of Ten Million and No/100 Dollars ($10,000,000.00) and payable to the order of Lender, as amended by that certain First Amendment to Revolving Note, dated as of February 25, 2004, as further amended by that certain Second Amendment to Revolving Note, dated as of January 19, 2004, and as further amended by that certain letter, dated February 20, 2007, from Lender to Borrower (as so amended, the “Note”); and

WHEREAS, Borrower and Lender have agreed to amend the Note as provided herein;

NOW THEREFORE, in consideration of the terms and conditions set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows (capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed thereto as set forth in the Loan Agreement):

SECTION 1. Amendment to Note. Effective as of the date hereof, the Note is hereby amended as follows:

1.1 Section 2.b of the Note is hereby deleted in its entirety and the following is substituted therefor:

b. unless sooner paid, the unpaid Principal Sum, together with all interest accrued and unpaid thereon, and all other amounts owing under this Note shall be due and payable in full on April 30, 2007 (the “Maturity Date”). If the Loan Agreement provides for the

Borrower to make additional payments on account of the Principal Sum from time to time, Borrower promises to make those payments at the time and in the manner specified in the Loan Agreement.

SECTION 2. Representations and Warranties.

2.1 Borrower hereby represents and warrants that the outstanding principal amount of the Note as of the date hereof is Zero and No/100 Dollars ($0.00).

2.2 Borrower hereby represents and warrants that (i) it has full power and authority to execute and deliver this Amendment and to perform its obligations hereunder, (ii) it has taken all corporate action necessary for the execution and delivery by it of this Amendment and the performance by it of its obligations hereunder, and (iii) this Amendment constitutes its valid and binding obligation enforceable against it in accordance with its terms except to the extent enforceability may be subject to bankruptcy, insolvency, moratorium and other similar laws affecting the rights of creditors generally or the application of principles of equity, whether in an action at law or proceeding in equity.

SECTION 3. Reference to and Effect Upon the Note.

3.1 Except as specifically amended or waived above, the Note shall remain in full force and effect and is hereby ratified and confirmed.

3.2 Except as specifically provided above, the execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of Lender under the Note, nor constitute an amendment of any provision of the Note, except as specifically set forth herein. Upon the effectiveness of this Amendment, each reference in the Note to “this Note”, “hereunder”, “hereof”, “herein” or words of similar import shall mean and be a reference to the Note as amended hereby. Upon the effectiveness of this Amendment, each reference in any Loan Document to the Note shall mean the Note as amended hereby.

SECTION 4. Fees and Expenses. Borrower shall pay all reasonable fees, costs and expenses (including, without limitation, reasonable attorneys’ fees, costs and expenses) incurred by Lender in connection with the preparation, negotiation, execution and delivery of this Amendment.

SECTION 5. Release. Borrower, on behalf of itself and its agents, representatives, attorneys, successors and assigns, hereby releases and forever discharges Lender and its agents, representatives, partners, directors, officers, attorneys, employees, affiliates, parents, subsidiaries, stockholders, predecessors, successors and assigns of and from any and all claims, setoffs, counterclaims, demands, liabilities, suits, actions and causes of action of any kind, nature or description whatsoever, whether or not now known, that Borrower has, ever had or claimed to have had against Lender from the beginning of time to and including the date hereof.

Except with respect to the Note (as modified hereby), Loan Agreement, any other Loan Document, and the agreements, documents and instruments executed in connection therewith, Lender, on behalf of itself and its agents, representatives, attorneys, successors and assigns, hereby releases and forever discharges

Borrower and its agents, representatives, partners, directors, officers, attorneys, employees, affiliates, parents, subsidiaries, stockholders, predecessors, successors and assigns of and from any and all claims, setoffs, counterclaims, demands, liabilities, suits, actions and causes of action of any kind, nature or description whatsoever, whether or not now known, that Lender has, ever had or claimed to have had against Borrower from the beginning of time to and including the date hereof.

SECTION 6. Governing Law; Arbitration. This Amendment shall be governed by, construed under and enforced in accordance with the laws of the Commonwealth of Virginia without giving effect to its conflict of laws principles. Provisions of the Loan Agreement specifying that certain disputes between the Borrower and the Lender shall be resolved by binding arbitration are incorporated into this Amendment by reference and shall have the same force and effect as if fully set forth in this Amendment.

SECTION 7. Section Titles. The section titles contained in this Amendment are and shall be without substance, meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto.

SECTION 8. Counterparts. This Amendment may be executed in any number of counterparts, each of which when so executed shall be deemed an original but all such counterparts shall constitute one and the same instrument.

[signature page follows]

IN WITNESS WHEREOF, this Amendment has been duly executed and delivered under seal by the parties hereto as of the day and year first above written.

INTEGRAL SYSTEMS, INC., a Maryland corporation
By:	/s/ Peter J. Gaffney	(SEAL)
Name:	Peter J. Gaffney
Title:	Chief Executive Officer
BANK OF AMERICA, N.A.
By:	/s/ Michael D. Brannan	(SEAL)
Name:	Michael D. Brannan
Title:	Senior Vice President

STATE OF	Maryland	)
CITY/COUNTY OF	Charles	)	To wit:

I, the undersigned, a Notary Public in and for the City/County and State aforesaid, do hereby certify that Peter J. Gaffney, Chief Executive Officer of Integral Systems, Inc., a Maryland corporation (“Integral”), whose name is signed to the foregoing Fourth Amendment to Revolving Note, appeared before me this 29^th day of March 2007, and acknowledged that the foregoing is his true act and deed in such capacity and the true act and deed of Integral.

[SEAL]	/s/ Tory Walker
	Notary Public

My Commission Expires: STATE OF 4/1/2010) CITY/COUNTY OF Montgomery) to wit:

I, the undersigned, a Notary Public in and for the City/County and State aforesaid, do hereby certify that Michael D. Brannan, a Senior Vice President of Bank of America, N.A., whose name is signed to the foregoing Fourth Amendment to Revolving Note, appeared before me this 30^th day of March 2007, and acknowledged that the foregoing is his/her true act and deed and the true act and deed of Bank of America, N.A.

[SEAL]	/s/ Cynthia Ann Newsome
	Notary Public

My Commission Expires: May 1, 2007

EX-10.2

Exhibit 10.2

FIFTH AMENDMENT

TO

LOAN AGREEMENT

This Fifth Amendment to Amended and Restated Revolving Line of Credit Loan Agreement and Security Agreement, dated as of March 30, 2007, is entered into by and between Integral Systems, Inc., a Maryland corporation (“Borrower”), and Bank of America, N.A. (the “Lender”) (said Amendment being referred to herein as “this Amendment”).

WITNESSETH:

WHEREAS, Borrower and Lender are parties to that certain Amended and Restated Revolving Line of Credit Loan Agreement and Security Agreement, dated as of August 31, 2001, as amended by that certain First Modification to Amended and Restated Revolving Line of Credit Loan Agreement and Security Agreement, dated as of February 3, 2003, as further amended by that certain Second Amendment to Amended and Restated Revolving Line of Credit Loan Agreement and Security Agreement, dated as of February 25, 2004, as further amended by that certain Third Amendment to Amended and Restated Revolving Line of Credit Loan Agreement and Security Agreement, dated as of January 19, 2005, and as further amended by that certain letter, dated February 20, 2007, from Lender to Borrower (as so amended, the “Loan Agreement”); and

WHEREAS, Borrower and Lender have agreed to amend the Loan Agreement as provided herein;

NOW THEREFORE, in consideration of the terms and conditions set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows (capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed thereto as set forth in the Loan Agreement):

SECTION 1. Amendment to Loan Agreement. Effective as of the date hereof, the Loan Agreement is hereby amended as follows:

1.1 The definition of “Ending Date” in Section 1.1 of the Loan Agreement is hereby deleted in its entirety and the following is substituted therefor:

“Ending Date” means April 30, 2007.

1.3 The definition of “Loan Documents” in Section 1.1 of the Loan Agreement is hereby deleted in its entirety and the following is substituted therefor:

SECTION 2. Representations and Warranties.

2.1 To induce the Lender to enter into this Amendment, the Borrower warrants and represents to the Lender that:

a. The Borrower’s books and records properly reflect the Borrower’s financial condition, and no material adverse change in the Borrower’s financial condition has occurred since the last date that the Borrower provided financial reports to the Lender.

b. No litigation is pending or threatened against the Borrower of which the Borrower has not informed the Lender in writing.

c. The Borrower is in compliance with all provisions of the Loan Agreement and with all applicable laws and regulations.

d. The Borrower hereby represents and warrants that the Borrower’s representations and warranties set forth in the Loan Documents are true, accurate and correct as of the date hereof.

e. Borrower has the power and authority to enter into this Amendment, to perform its obligations hereunder, to execute all documents being executed and delivered in connection herewith, and to incur the obligations provided for herein, all of which have been duly authorized and approved in accordance with the Borrower’s organizational documents.

f. This Amendment, together with all documents executed in connection herewith or pursuant hereto, constitute the valid and legally binding obligations of the Borrower enforceable against the Borrower in accordance with their respective terms.

g. The Borrower’s obligations under the Loan Documents remain valid and enforceable obligations, and the execution and delivery of this Amendment and the other documents executed in connection herewith shall not be construed as a novation of the Loan Agreement or the other Loan Documents.

SECTION 3. Collateral.

3.1 Borrower hereby reaffirms its grant to Lender of a lien on and security interest in the Collateral and hereby grants and regrants to Lender a lien on and security interest in the Collateral.

SECTION 4. Waiver; Reference to and Effect Upon the Loan Agreement.

4.1 Except as specifically amended or waived above, the Loan Agreement shall remain in full force and effect and is hereby ratified and confirmed.

4.2 Except as specifically provided above, the execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of Lender under the Loan Agreement, nor constitute an amendment of any provision of the Loan Agreement, except as specifically set forth herein. Upon the effectiveness of this Amendment, each reference in the Loan Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of similar import shall mean and be a reference to the Loan Agreement as amended hereby. Upon the effectiveness of this Amendment, each reference in any “Loan Document” (as defined in the Loan Agreement as amended hereby) to the Loan Agreement shall mean the Loan Agreement as amended hereby.

SECTION 5. Fees and Expenses. Borrower shall pay all reasonable fees, costs and expenses (including, without limitation, reasonable attorneys’ fees, costs and expenses) incurred by Lender in connection with the preparation, negotiation, execution and delivery of this Amendment.

SECTION 6. Release. Borrower, on behalf of itself and its agents, representatives, attorneys, successors and assigns, hereby releases and forever discharges Lender and its agents, representatives, partners, directors, officers, attorneys, employees, affiliates, parents, subsidiaries, stockholders, predecessors, successors and assigns of and from any and all claims, setoffs, counterclaims, demands, liabilities, suits, actions and causes of action of any kind, nature or description whatsoever, whether or not now known, that Borrower has, ever had or claimed to have had against Lender from the beginning of time to and including the date hereof.

Except with respect to the Loan Agreement (as amended hereby), the Revolving Note, any other Loan Document, and the agreements, documents and instruments executed in connection therewith, Lender, on behalf of itself and its agents, representatives, attorneys, successors and assigns, hereby releases and forever discharges Borrower and its agents, representatives, partners, directors, officers, attorneys, employees, affiliates, parents, subsidiaries, stockholders, predecessors, successors and assigns of and from any and all claims, setoffs, counterclaims, demands, liabilities, suits, actions and causes of action of any kind, nature or description whatsoever, whether or not now known, that Lender has, ever had or claimed to have had against Borrower from the beginning of time to and including the date hereof.

SECTION 7. Governing Law; Arbitration. This Amendment shall be governed by, construed under and enforced in accordance with the laws of the Commonwealth of Virginia without giving effect to its conflict of laws principles. Provisions of the Loan Agreement (as amended hereby) specifying that certain disputes between the Borrower and the Lender shall be resolved by binding arbitration are incorporated into this Amendment by reference and shall have the same force and effect as if fully set forth in this Amendment.

SECTION 8. Section Titles. The section titles contained in this Amendment are and shall be without substance, meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto.

SECTION 9. Counterparts. This Amendment may be executed in any number of counterparts, each of which when so executed shall be deemed an original but all such counterparts shall constitute one and the same instrument.

IN WITNESS WHEREOF, this Amendment has been duly executed and delivered under seal by the parties hereto as of the day and year first above written.

INTEGRAL SYSTEMS, INC., a Maryland corporation
By:	/s/ Peter J. Gaffney	(SEAL)
Name:	Peter J. Gaffney
Title:	Chief Executive Officer
BANK OF AMERICA, N.A.
By:	/s/ Michael D. Brannan	(SEAL)
Name:	Michael D. Brannan
Title:	Sr. Vice President

STATE OF	MARYLAND	)
CITY/COUNTY OF	CHARLES	)	To wit:

I, the undersigned, a Notary Public in and for the City/County and State aforesaid, do hereby certify that Peter J. Gaffney, Chief Executive Officer of Integral Systems, Inc., a Maryland corporation (“Integral”), whose name is signed to the foregoing Fifth Amendment to Loan Agreement, appeared before me this 29^th day of March 2007, and acknowledged that the foregoing is his true act and deed in such capacity and the true act and deed of Integral.

[SEAL]	/s/ Tory Walker
	Notary Public

My Commission Expires: STATE OF                     ) CITY/COUNTY OF                     ) To wit:

I, the undersigned, a Notary Public in and for the City/County and State aforesaid, do hereby certify that                     , a                      of Bank of America, N.A., whose name is signed to the foregoing Fifth Amendment to Loan Agreement, appeared before me this      day of              2007, and acknowledged that the foregoing is his/her true act and deed and the true act and deed of Bank of America, N.A.

[SEAL]
	Notary Public

My Commission Expires: