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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549



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FORM 10-K/A

Amendment No. 1



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ANNUAL REPORT

PURSUANT TO SECTIONS 13 OR 15(d)

OF
THE SECURITIES EXCHANGE ACT OF 1934

(mark one)

|x | Annual report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
|- | -------------------------------------------------------------------------------------

For the fiscal period ended September 30, 2006

or



| ̈ | Transition report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
|- | -----------------------------------------------------------------------------------------

For the transition period from  to

Commission file number 0-18603



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INTEGRAL SYSTEMS, INC.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Maryland                                                       |  | 52-1267968                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



|                                         |  |           
|---------------------------------------- |  | ----------
|5000 Philadelphia Way, Lanham, MD        |  | 20706     
|(Address of principal executive offices) |  | (Zip Code)

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



(Former name, address and fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:



|                                       |  |                                          
|-------------------------------------- |  | -----------------------------------------
|Title of Each Class                    |  | Name of Each Exchange on Which Registered
|Common Stock, par value $.01 per share |  | Nasdaq Global Select Market              

Securities registered pursuant to Section 12(g) of the Act: None



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Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes ̈No  x

Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.    Yes  x     No ̈

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of registrants knowledge, in the definitive proxy on information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ̈

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Large accelerated
filer ̈Accelerated filer  x    Non-accelerated filer ̈

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2of the Exchange Act).    Yes ̈No  x

As of the last business day of the Registrants most recently completed second fiscal quarter, the aggregate market value of the Common Stock of the Registrant (based on the average bid and ask prices of the
Common Stock as reported on the NASDAQ Global Select Market, formerly the NASDAQ National Market, on that date) held by non-affiliates of the Registrant was $272,955,896. As of November 6, 2006, 11,058,306 shares of the Common Stock of the
Registrant were outstanding.



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Explanatory Note

Integral Systems, Inc. (the Company) is filing this Amendment No. 1 to Annual Report on Form 10-K/A for the year ended September 30, 2006 (this Amendment) to (1) revise the
disclosure in the section entitled Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values to reflect that James G. Schuetzle exercised 3,500 Non-statutory Stock Options during the Companys fiscal year
2006, which information was inadvertently omitted, and (2) to revise an error in the number of option shares granted to each of Dominic A. Laiti, R. Doss McComas, Bonnie Wachtel and Mark D. Funston as set forth in the table of compensation
received by the Companys outside directors during the Companys fiscal year 2006 in the section entitled d. Compensation of Directors. In connection with the filing of this Amendment and pursuant to Rule 12b-15 under the
Securities Exchange Act of 1934, as amended, the Company is including certain currently dated certifications. This Amendment continues to speak as of the date of the original filing of the Form 10-K and the Company has not updated the disclosure in
this Amendment to speak to any later date.



i



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PART 1II



|ITEM 11. | EXECUTIVE COMPENSATION
|-------- | ----------------------



|a. | Summary Compensation Table
|-- | --------------------------

The following table sets forth
compensation received by the Companys CEO and four highest paid executive officers who were serving as executive officers of the Company at the end of fiscal year 2006 and who earned over $100,000 during the fiscal year ended
September 30, 2006:



|                                                      |  |                     |  |        |                        |       |   |        |                             |  |                         |  |   |         |  
|----------------------------------------------------- |  | ------------------- |  | ------ | ---------------------- | ----- | - | ------ | --------------------------- |  | ----------------------- |  | - | ------- | -
|                                                      |  | Annual Compensation |  |        | Long-Term Compensation |      
|Name and Principal Position                           |  | Year                |  | Salary |                        | Bonus |   |        | SecuritiesUnderlyingOptions |  | All OtherCompensation 1 | 
|Chief Executive Officer (former)                      |  |                     |  |        |                        |       |   |        |                             |  |                         |  |   |         |  
|Steven R. Chamberlain                                 |  | 2006                |  | $      | 488,546                |       | $ | 0      |                             |  | 0                       |  | $ | 139,980 | 2
|                                                      |  | 2005                |  | $      | 299,960                |       | $ | 60,000 |                             |  | 0                       |  | $ | 23,100  |  
|                                                      |  | 2004                |  | $      | 288,532                |       | $ | 60,000 |                             |  | 10,000                  |  | $ | 23,332  |  
|Chief Executive Officer (current)                     |  |                     |  |        |                        |       |   |        |                             |  |                         |  |   |         |  
|Peter J. Gaffney                                      |  | 2006                |  | $      | 234,794                |       | $ | 35,000 | 3                           |  | 30,000                  |  | $ | 25,744  |  
|                                                      |  | 2005                |  | $      | 208,150                |       | $ | 65,000 |                             |  | 0                       |  | $ | 22,859  |  
|                                                      |  | 2004                |  | $      | 197,808                |       | $ | 45,000 |                             |  | 18,000                  |  | $ | 21,595  |  
|President                                             |  |                     |  |        |                        |       |   |        |                             |  |                         |  |   |         |  
|Thomas L. Gough                                       |  | 2006                |  | $      | 242,393                |       | $ | 25,000 | 4                           |  | 6,000                   |  | $ | 23,783  |  
|                                                      |  | 2005                |  | $      | 235,345                |       | $ | 50,000 |                             |  | 0                       |  | $ | 23,505  |  
|                                                      |  | 2004                |  | $      | 223,682                |       | $ | 35,000 |                             |  | 6,000                   |  | $ | 24,264  |  
|Exec. Vice President, Managing Director of Operations |  |                     |  |        |                        |       |   |        |                             |  |                         |  |   |         |  
|Gary A. Prince                                        |  | 2006                |  | $      | 241,707                |       | $ | 0      | 5                           |  | 6,000                   |  | $ | 23,849  |  
|                                                      |  | 2005                |  | $      | 223,621                |       | $ | 55,000 |                             |  | 0                       |  | $ | 23,223  |  
|                                                      |  | 2004                |  | $      | 213,428                |       | $ | 45,000 |                             |  | 6,000                   |  | $ | 23,016  |  
|Chief Financial Officer, Exec. Vice President         |  |                     |  |        |                        |       |   |        |                             |  |                         |  |   |         |  
|Elaine M. Brown                                       |  | 2006                |  | $      | 217,256                |       | $ | 30,000 | 6                           |  | 6,000                   |  | $ | 58,203  |  
|                                                      |  | 2005                |  | $      | 195,180                |       | $ | 60,000 |                             |  | 0                       |  | $ | 21,432  |  
|                                                      |  | 2004                |  | $      | 197,808                |       | $ | 45,000 |                             |  | 6,000                   |  | $ | 21,501  |  
|Exec. Vice Pres., Commercial Division                 |  |                     |  |        |                        |       |   |        |                             |  |                         |  |   |         |  
|Stuart C. Daughtridge                                 |  | 2006                |  | $      | 206,102                |       | $ | 62,000 |                             |  | 6,000                   |  | $ | 22,722  |  
|                                                      |  | 2005                |  | $      | 197,988                |       | $ | 55,000 |                             |  | 0                       |  | $ | 21,746  |  
|                                                      |  | 2004                |  | $      | 185,856                |       | $ | 35,000 |                             |  | 6,000                   |  | $ | 20,087  |  
|Exec. Vice President, Government Division             |  |                     |  |        |                        |       |   |        |                             |  |                         |  |   |         |  
|James G. Schuetzle                                    |  | 2006                |  | $      | 196,333                |       | $ | 61,000 |                             |  | 3,500                   |  | $ | 21,587  |  
|                                                      |  | 2005                |  | $      | 180,499                |       | $ | 25,000 |                             |  | 0                       |  | $ | 19,799  |  
|                                                      |  | 2004                |  | $      | 170,518                |       | $ | 12,500 |                             |  | 3,500                   |  | $ | 18,661  |  

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|(1) | All Other Compensation represents employer pension contributions and optional one-time payout of vacation leave balance in excess of 200 hours. It does not include the value of
insurance premiums paid by or on behalf of the Company with respect to term life insurance for the benefit of each identified individual in the amounts of $574, $598 and $689 for fiscal years 2006, 2005 and 2004, respectively.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Includes compensation pursuant to Consulting Agreement dated May 17, 2006 between Steven R. Chamberlain and the Company.
|--- | ------------------------------------------------------------------------------------------------------------------------

|(3) | Compensation Committee may elect to pay additional bonus amount of up to $35,000 at a future date yet to be determined.
|--- | -----------------------------------------------------------------------------------------------------------------------

|(4) | Compensation Committee may elect to pay additional bonus amount of up to $25,000 at a future date yet to be determined.
|--- | -----------------------------------------------------------------------------------------------------------------------

|(5) | Compensation Committee may elect to pay bonus amount of up to $60,000 at a future date yet to be determined.
|--- | ------------------------------------------------------------------------------------------------------------

|(6) | Compensation Committee may elect to pay additional bonus amount of up to $30,000 at a future date yet to be determined.
|--- | -----------------------------------------------------------------------------------------------------------------------



2



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OPTION/SAR GRANTS IN LAST FISCAL YEAR



|                                     |  |                                 |  |                                                                   |   |  |                        |       |                 |      |                             |   |        
|------------------------------------ |  | ------------------------------- |  | ----------------------------------------------------------------- | - |  | ---------------------- | ----- | --------------- | ---- | --------------------------- | - | -------
|Individual Grants                   
|Name                                 |  | Number of Options/ SARs Granted |  | Percent of Total Options/SARs Granted
to Employees in Fiscal Year |   |  | Exercise/Base Price($) |       | Expiration Date |      | Grant Date Present Value(1)
|CEO (former)                         |  |                                 |  |                                                                   |   |  |                        |       |                 |      |                             |   |        
|Steven R. Chamberlain                |  | 0                               |  | 0                                                                 | % |  |                        | N/A   |                 | N/A  |                             |   | N/A    
|                                     |  |                                 |  |                                                                   |  
|CEO (current)                        |  |                                 |  |                                                                   |   |  |                        |       |                 |      |                             |   |        
|Peter J. Gaffney                     |  | 30,000                          |  | 15.5                                                              | % |  | $                      | 27.64 |                 | 2012 |                             | $ | 286,620
|                                     |  |                                 |  |                                                                   |  
|PRESIDENT                            |  |                                 |  |                                                                   |   |  |                        |       |                 |      |                             |   |        
|Thomas L. Gough                      |  | 6,000                           |  | 3.1                                                               | % |  | $                      | 27.64 |                 | 2012 |                             | $ | 57,324 
|                                     |  |                                 |  |                                                                   |  
|EVP, MANAGING DIRECTOR OF OPERATIONS |  |                                 |  |                                                                   |   |  |                        |       |                 |      |                             |   |        
|Gary A. Prince                       |  | 6,000                           |  | 3.1                                                               | % |  | $                      | 27.64 |                 | 2012 |                             | $ | 57,324 
|                                     |  |                                 |  |                                                                   |  
|CHIEF FINANCIAL OFFICER/EVP          |  |                                 |  |                                                                   |   |  |                        |       |                 |      |                             |   |        
|Elaine M. Brown                      |  | 6,000                           |  | 3.1                                                               | % |  | $                      | 27.64 |                 | 2012 |                             | $ | 57,324 
|                                     |  |                                 |  |                                                                   |  
|EVP, COMMERCIAL DIVISION             |  |                                 |  |                                                                   |   |  |                        |       |                 |      |                             |   |        
|Stuart C. Daughtridge                |  | 6,000                           |  | 3.1                                                               | % |  | $                      | 27.64 |                 | 2012 |                             | $ | 57,324 
|                                     |  |                                 |  |                                                                   |  
|EVP, GOVERNMENT DIVISION             |  |                                 |  |                                                                   |   |  |                        |       |                 |      |                             |   |        
|James G. Schuetzle                   |  | 3,500                           |  | 1.8                                                               | % |  | $                      | 27.64 |                 | 2012 |                             | $ | 33,439 

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|(1) | Grant date present value is calculated on the date of the grant using the Black-Scholes options pricing model assuming the following: dividend yield of .66%, risk-free interest rate
of 4.82%, expected volatility of 34.79%, and an expected term of the option of 4.5 years. This value is then multiplied by the number of options granted.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | All of the options granted to individuals in the above table in the last fiscal year vest 20% per year for five years and expire 6 years from the grant date of the option.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|b. | Compensation Pursuant to Plans
|-- | ------------------------------

The Companys Board of
Directors awards annual bonuses to officers and employees on a discretionary basis. In fiscal year 2006, no formal plan existed for determining bonus amounts with respect to the officers and employees of Integral Systems, Inc.

Effective October 1, 1987, the Company established a 401(K) pension and profit sharing plan (the Plan) under Section 401 of the Internal Revenue
Code (the Code). Under the Plan, the Company currently contributes a discretionary amount equal to 11% of eligible employees salary. The employee may contribute up to an additional 25% as salary deferral, subject to the annual
limits of the Internal Revenue Code.



|c. | Stock Option Plan
|-- | -----------------

Effective May 1, 2002, the Company
established the 2002 Stock Option Plan (the 2002 Stock Option Plan), which was amended and restated effective May 1, 2005, to create additional incentives for the Companys employees, consultants and directors to promote the
financial success of the Company. Stockholders approved the 2002 Stock Option Plan at the Annual Meeting which was held April 17, 2002. The maximum number of shares of Common Stock, which may be issued pursuant to the Amended and Restated 2002
Stock Option Plan, is 1,150,000 shares. The Stock Option Committee has the authority to select full-time employees, directors or consultants to receive



3



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awards of options for the purchase of stock of the Company under this plan. Options to purchase a total of 193,025 shares of Common Stock were issued under
the 2002 Stock Option Plan in fiscal year 2006. Options to purchase 276,574 shares of Common Stock were exercised during the 2006 fiscal year under this plan. The Company has reserved for issuance an aggregate of 827,696 shares of Common Stock under
the 2002 Stock Option Plan, of which options to purchase 584,421 shares are outstanding. Pursuant to the 2002 Stock Option Plan, options may be incentive stock options within the meaning of Section 422 of the Code or non-statutory stock
options, although incentive stock options may be granted only to employees.

Effective May 25, 1988, the Company established a stock option plan, as
amended and restated in 1994 and 1998 (the 1988 Stock Option Plan), to create additional incentives for the Companys employees, consultants and directors to promote the financial success of the Company. The Stock Option Committee
had the authority to select full-time employees, directors or consultants to receive awards of options for the purchase of stock of the Company under this plan. The maximum number of shares of Common Stock which may be issued pursuant to the 1988
Stock Option Plan was increased from 300,000 to 1,200,000 during fiscal year 1994. At the Annual Meeting of stockholders of the Company held on July 22, 1998, the stockholders approved an amendment and restatement of the 1988 Stock Option Plan,
which, among other changes, increased the number of shares subject to options under the 1988 Stock Option Plan from 1,200,000 to 1,800,000 shares. No shares of Common Stock were granted during the 2006 fiscal year under the 1988 Stock Option Plan.
Options to purchase 187,713 shares of Common Stock granted under the 1988 Stock Option Plan were exercised during fiscal year 2006. The Company has reserved for issuance an aggregate of 168,957 shares of Common Stock under the 1988 Stock Option
Plan, all of which are outstanding at September 30, 2006. Pursuant to the approval by stockholders at the April 17, 2002 Annual Meeting of Shareholders, no further options will be granted under the 1988 Stock Option Plan.

Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values

Seven of the executives named below exercised options during the fiscal year ended September 30, 2006. Steven R. Chamberlain exercised a total of 12,000 stock options, including 7,522 Incentive Stock Options and
4,478 Non-statutory Stock Options. Peter J. Gaffney exercised 7,000 stock options, including 4,262 Incentive Stock Options and 2,738 Non-statutory Stock Options. Elaine M. Brown exercised 26,138 stock options, including 6,000 Incentive Stock Options
and 20,138 Non-statutory Stock Options. Thomas L. Gough exercised 36,537 stock options, including 14,000 Incentive Stock Options and 22,537 Non-statutory Stock Options. Gary A. Prince exercised 11,707 stock options, including 5,000 Incentive Stock
Options, and 6,707 Non-statutory Stock Options. Stuart C. Daughtridge exercised 2,000 Incentive Stock Options. James G. Schuetzle exercised 3,500 Non-statutory Stock Options.



4



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|                                                                    |  |                               |             |               |               |                                                                      |             |                                                               |               |  |   |         |  |   |        
|------------------------------------------------------------------- |  | ----------------------------- | ----------- | ------------- | ------------- | -------------------------------------------------------------------- | ----------- | ------------------------------------------------------------- | ------------- |  | - | ------- |  | - | -------
|Name                                                                |  | SharesAcquired onExercise (#) |             | ValueRealized |               | Number of Securities UnderlyingUnexercised Options/SARS atFY end (#) |             | Value of Unexercised In-the- Money Options/SARS at FYend ($)1
|                                                                    |  |                               | Exercisable |               | Unexercisable |                                                                      | Exercisable |                                                               | Unexercisable
|Chief Executive Officer (former) Steven R. Chamberlain              |  | 12,000                        |             | $             | 348,460       |                                                                      | 49,000      |                                                               | 0             |  | $ | 563,200 |  | $ | 0      
|Chief Executive Officer (present) Peter J. Gaffney                  |  | 7,000                         |             | $             | 186,580       |                                                                      | 43,000      |                                                               | 30,000        |  | $ | 515,080 |  | $ | 108,600
|President Thomas L. Gough                                           |  | 36,537                        |             | $             | 990,922       |                                                                      | 8,463       |                                                               | 6,000         |  | $ | 86,190  |  | $ | 21,720 
|Executive Vice President, Managing Director of Ops Gary A. Prince   |  | 11,707                        |             | $             | 326,078       |                                                                      | 23,293      |                                                               | 6,000         |  | $ | 270,938 |  | $ | 21,720 
|Executive Vice President, Chief Financial Officer Elaine M. Brown   |  | 26,138                        |             | $             | 789,000       |                                                                      | 10,862      |                                                               | 6,000         |  | $ | 112,561 |  | $ | 21,720 
|Executive Vice President, Commercial Division Stuart C. Daughtridge |  | 2,000                         |             | $             | 55,550        |                                                                      | 18,000      |                                                               | 6,000         |  | $ | 210,620 |  | $ | 21,720 
|Executive Vice President, Government Division James G. Schuetzle    |  | 3,500                         |             | $             | 102,585       |                                                                      | 19,000      |                                                               | 3,500         |  | $ | 192,180 |  | $ | 12,670 

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|(1) | Value for In the Money options represents the difference between the exercise prices of outstanding options and the fair market value of the Companys common stock
of $31.26 per share at September 30, 2006.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|d. | Compensation of Directors
|-- | -------------------------

Directors who are employees of the
Company do not receive any compensation for their service as directors. Effective October 1, 2006, the Company pays each director who is not an employee and who is not the Chairman of the Board of the Company an aggregate of $24,000 per year
for their services. In addition, directors receive an additional $6,000 for each committee they serve, up to a maximum of two committees. The amounts are paid in equal quarterly installments. From December 1, 2005 until September 30, 2006,
the Company paid each director who is not an employee and who is not the Chairman of the Board of the Company an aggregate of $20,000 per year for their services, which was increased from $18,500 effective December 1, 2005. The amount was paid
in equal quarterly installments. Directors who are not employees of the Company are also granted options to purchase a discretionary number of shares of the Companys common stock pursuant to the Stock Option Plan as determined by the
Compensation Committee. Prior to August 2005, outside directors were annually granted options to purchase 5,000 shares of the Companys common stock pursuant to the Stock Option Plan.

Effective April 21, 2006, R. Doss McComas was appointed Chairman of the Board and is being compensated at $12,000 monthly for his services in that capacity starting
May 1, 2006.

The following table sets forth compensation received by the Companys outside directors during fiscal year 2006:



|                   |  |                     |        |                       |       
|------------------ |  | ------------------- | ------ | --------------------- | ------
|Name               |  | Annual Compensation |        | Option Shares Granted
|Dominic A. Laiti   |  | $                   | 22,625 |                       | 25,000
|R. Doss McComas    |  | $                   | 74,292 |                       | 25,000
|Bonnie Wachtel     |  | $                   | 10,228 |                       | 5,000 
|Mark D. Funston    |  | $                   | 10,678 |                       | 20,625
|William Leimkuhler |  | $                   | 8,233  |                       | 20,000



5



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In addition, at a meeting of the Board of Directors of the Company held on December 6, 2006, the Board elected to
make a one-time payment in the amount of $15,000 to each of Messrs. Leimkuhler and Laiti for additional services rendered as Board members.



|e. | Employment Contracts, Termination of Employment and Change of Control Termination
|-- | ---------------------------------------------------------------------------------

Since August 2, 2006, the Company has entered into Change of Control Agreements (each an Executive Change of Control Agreement) with the following executive officers: Peter Gaffney, Chief Executive
Officer; Thomas Gough, President; Patrick Woods, Executive Vice President, Business Development; Stuart Daughtridge, Executive Vice President, Commercial Division; Elaine M. Brown, Executive Vice President and Chief Financial Officer; Gary A.
Prince, Executive Vice President and Managing Director of Operations; and James Schuetzle, Executive Vice President, Government Division. Each of the Executive Change in Control Agreements has identical terms and provides for severance payments and
certain other benefits that will be paid to an executive officer whose employment with the Company is terminated under specified conditions within two years after or in anticipation of a change of control of the Company. A form of the Executive
Change in Control Agreements is attached to this Form 10-K as Exhibit 10.11. Eight other officers and key managers of the Company have also signed change of control agreements, a form of which change of control agreements is attached to this Form
10-K as Exhibit 10.12, that are generally identical to the Executive Change of Control Agreements, except that the severance and non-compete terms are half of those of those covered under the Executive Change of Control Agreements.

Also since August 2, 2006, the Company has entered into Transition Bonus Agreements (each, a Transition Bonus Agreement and collectively
Transition Bonus Agreements) with Peter Gaffney, Thomas Gough, Patrick Woods, Stuart Daughtridge, Elaine M. Brown, Gary A. Prince, and James Schuetzle, whereby the Company will pay a lump sum amount equal to $75,000, $30,000, $30,000,
$50,000, $66,000, $70,000, and $40,000, respectively, to such executive officers in each case if such executive officer remains employed by the Company through the period that ends 120 days following a change of control of the Company. A form of the
Transition Bonus Agreement is attached to this Form 10-K as Exhibit 10.13. Certain other key officers of the Company have also signed Transition Bonus Agreements described above but reflecting lesser amounts, forms of which Transition Bonus
Agreements are attached to this Form 10-K as Exhibits 10.14 and 10.15.

Indemnification Agreements exist between the Company and certain of its officers
and all of its directors.



|f. | Compensation Committee Interlocks and Insider Participation.
|-- | ------------------------------------------------------------

The
Compensation Committee is, and was during fiscal year 2006, made up of Dominic A. Laiti, R. Doss McComas and William Leimkuhler, each of whom is an outside non-employee director. Mark Funston served on the Compensation Committee from May 2006 until
his resignation on November 10, 2006.



6



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PART IV



|ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
|-------- | ---------------------------------------------------------------



|3. | Index to Exhibits
|-- | -----------------



|     |  |                                                                                                                       
|---- |  | ----------------------------------------------------------------------------------------------------------------------
|31.1 |  | Certification Pursuant to Rule 13a-14(a) Under the Securities Exchange Act of 1934, as amended.                       
|     | 
|31.2 |  | Certification Pursuant to Rule 13a-14(a) Under the Securities Exchange Act of 1934, as amended.                       
|     | 
|32.1 |  | Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|     | 
|32.2 |  | Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



7



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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                        |  |                        |  |                                  
|----------------------- |  | ---------------------- |  | ---------------------------------
|                        |  | INTEGRAL SYSTEMS, INC.
|                        |  |                       
|DATE:    March 16, 2007 |  | BY:                    |  | /s/ PETER J. GAFFNEY             
|                        |  |                        |  | Peter J. Gaffney                 
|                        |  |                        |  | Chief Executive Officer, Director



---

EXHIBIT INDEX



|              |  |                                                                                                                       
|------------- |  | ----------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                           
|31.1          |  | Certification Pursuant to Rule 13a-14(a) Under the Securities Exchange Act of 1934, as amended.                       
|              | 
|31.2          |  | Certification Pursuant to Rule 13a-14(a) Under the Securities Exchange Act of 1934, as amended.                       
|              | 
|32.1          |  | Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|              | 
|32.2          |  | Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.