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)  December 24, 2012

Image Sensing Systems, Inc.

(Exact name of registrant as specified in its charter)

Minnesota	000-26056	41-1519168
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)
500 Spruce Tree Centre, 1600 University Avenue West, St. Paul, Minnesota		55104
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code  (651) 603-7700

__________________________________________________________________________________

(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 (see General Instructions A.2. below):

☐	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.

(a)  On December 24, 2012, Image Sensing Systems, Inc. (the “Company”) entered into a modification agreement (the “Fifth Modification Agreement”) with Associated Bank, National Association (“Associated Bank”), under which the Company and Associated Bank amended the Loan Agreement (the “Original Loan Agreement”) dated May 1, 2008 by and between the Company and Associated Bank.  The Original Loan Agreement was amended on December 28, 2009, May 3, 2010, December 22, 2011, and again on December 24, 2012 (such amendments being referred to as the “Modification Agreements”).   Under the Original Loan Agreement, together with Modification Agreements, Associated Bank agreed to provide to the Company with a line of credit of up to $5,000,000 (the “Line of Credit”) and a term loan of up to $4,000,000 (the “Term Loan”). The Company currently has no borrowings outstanding under the Line of Credit or the Term Loan.

Under the Fifth Modification Agreement, the Line of Credit to the Company has been amended to mature May 31, 2014.  Prior to entering into the Fifth Modification Agreement, the Line of Credit was to mature May 1, 2013.  The remaining provisions of the Line of Credit and the Term Loan remain unchanged. In particular, any outstanding principal amounts under the Line of Credit continue to bear interest at an annual rate equal to the greater of (a) 3.5% or (b) LIBOR plus 2.75%, as reset from time to time as provided in the Modification Agreements.

A copy of the Fifth Modification Agreement is filed as an exhibit to this Current Report on Form 8-K.

Section 9 – Financial Statements and Exhibits

Item 9.01.  Financial Statements and Exhibits.

(b)	Exhibits. The following document is hereby filed as an exhibit to this Current Report on Form 8-K:
	Exhibit No.
	10.1    Fifth Modification Agreement.

SIGNATURES

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

	Image Sensing Systems, Inc.
Date:  December 27, 2012
	By	/s/ Gregrory R. L. Smith
		Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)

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Exhibit Index

Exhibit No.

10.1    Fifth Modification Agreement.

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EX-10.1

Exibit 10.1

FIFTH MODIFICATION AGREEMENT

THIS AGREEMENT is made as of the 24th day of December, 2012, by and between ASSOCIATED BANK, NATIONAL ASSOCIATION, a national banking association (“Bank”), and IMAGE SENSING SYSTEMS, INC., a Minnesota corporation (“Borrower”).

RECITALS:

i.Borrower and Bank have heretofore entered into a certain Loan Agreement dated as of the 1st day of May, 2008, as amended by a Modification Agreement dated as of the 28th day of December, 2009, a Second Modification Agreement dated as of the 3rd day of May, 2010, and a Third Modification Agreement dated as of the 14th day of December, 2010, and a Fourth Modification Agreement dated as of the 16th day of November, 2011 (the “Loan Agreement”), pursuant to which the Bank agreed to provide to Borrower a Line of Credit of up to $5,000,000.00 and a Loan in the amount of $4,000,000.00. All capitalized terms not otherwise defined herein shall have the meanings given them in the Loan Agreement.

ii.The Line of Credit matures on May 1, 2013, and the Borrower has requested that the Bank agree to extend the Line Maturity Date to May 31, 2014.

iii.Bank is willing to agree to the foregoing request of Borrower but only upon the terms and conditions hereinafter set forth and in reliance on the warranties and representations of Borrower contained herein.

AGREEMENTS:

In consideration of the matters stated in the foregoing Recitals and the covenants hereinafter set forth, the parties hereto agree as follows:

1.To induce Bank to enter into this Agreement, Borrower warrants and represents to Bank as follows:

A.The Recitals set forth above are each true and correct.

B.The Loan Agreement is, and as modified herein shall be, valid, binding and enforceable.

C.Borrower has no defenses, set-offs, claims or rights of recoupment against its obligations to pay to Bank the outstanding balance of the Line of Credit.

D.All of the representations and warranties set forth in Section 3 of the Loan Agreement are true and correct as though made on the date of this Agreement and as though applicable to this Agreement in the same manner as they were applicable to the Loan Agreement.

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2.Section 1.C of the Loan Agreement is hereby amended by changing the Line Maturity Date set forth therein from “May 1, 2013” to “May 31, 2014.”

3.All references to the Loan Agreement in the Master Note, Loan Note and the Security Agreement executed by the Borrower shall be deemed to mean the Loan Agreement as amended by this Agreement.

4.Borrower shall pay to Bank, upon demand, an extension fee in the amount of $250.00, which fee shall be fully earned and non-refundable upon execution of this Agreement by the Bank.

5.Except as expressly modified and amended herein, all terms and provisions of the Loan Agreement shall be and remain in full force and effect.

6.Borrower shall, upon demand by Bank, reimburse Bank for all costs and expenses incurred by Bank in connection with this Agreement, including, but not limited to, the fees of Bank’s attorneys.

7.This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.

8.WAIVER OF JURY TRIAL:  BORROWER AND BANK HEREBY JOINTLY AND SEVERALLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND TO ANY OF THE DOCUMENTS RELATING HERETO, THE OBLIGATIONS HEREUNDER OR THEREUNDER, ANY COLLATERAL SECURING THE OBLIGATIONS, OR ANY TRANSACTION ARISING THEREFROM OR CONNECTED THERETO. BORROWER AND BANK EACH REPRESENTS TO THE OTHER THAT THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY GIVEN.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

IMAGE SENSING SYSTEMS, INC.
A Minnesota corporation
By:
	Gregory R. L. Smith, Treasurer and Chief Financial Officer
ASSOCIATED BANK, NATIONAL ASSOCIATION
By:
	Peter Bridston, Vice President

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