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): September 1, 2005
1MAGE SOFTWARE, INC.
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(Exact name of registrant as specified in its charter)
COLORADO 0-12535 84-0866294
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification Number)
6025 S. Quebec Street, Suite 300 Englewood, Colorado 80111
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 694-9180
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 Instruction 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))
Item 1.02 Termination of a Material Definitive Agreement
On August 26, 2005, US Bank, NA (the "Bank") assigned the outstanding
balance of $149,136.43 owed to the Bank by 1mage Software, Inc. (the "Company")
under its line of credit with the Bank to David R. DeYoung, the Company's
President and CEO, and his spouse, Mary Anne DeYoung, the Company's Vice
President-Finance and CFO (together, the "DeYoungs"), in exchange for the
DeYoungs' payment in full of that unpaid balance. Both David and Mary Anne
DeYoung serve on the Company's Board of Directors. In connection with the
assignment of the line of credit, the DeYoungs and the Bank executed an Allonge
and Agreement for Promissory Note, UCC Financing Statement and Related
Collateral Documents and Interests (the "Assignment"). By the Assignment, the
DeYoungs became the Company's new principal lender with a first priority
security interest in substantially all of the Company's assets, subject to the
same terms and conditions as those previously governing the Bank's line of
credit (the "Senior Line"). Because the Senior Line had matured on August 15,
2005 and the Bank had not extended the time for payment of the entire principal
before the Assignment, the DeYoungs also obtained an immediate right to payment
of the $149,136.43 balance on the Senior Line. The DeYoungs informed the
Company's Board of Directors of the Assignment and made a proposal to the
Company for installment payments of the Senior Line subject to certain terms.
On August 26, 2005, the Company's Board of Directors, with the DeYoungs
abstaining, resolved to request DEMALE, LLC, a private entity controlled by
members of the Company's Board of Directors which had previously entered into a
line of credit agreement with the Company (the "DEMALE Line"), to increase the
DEMALE Line, which was second in priority to the Senior Line, from $500,000 to
$800,000, and for an immediate draw down of $150,000 to repay the Senior Line.
On August 29, 2005, the Company's Board of Directors accepted an offer
from DEMALE, LLC to immediately increase the DEMALE Line to $650,000. While
David DeYoung is one of the members of DEMALE, LLC and participated in the
funding of DEMALE's prior extensions of credit to the Company, he did not
participate in the funding of this additional $150,000. None of the other terms
of the DEMALE Line were changed. On September 1, 2005, the Company drew down
$149,136.43 from the DEMALE Line and utilized the proceeds to repay the Senior
Line in full. As a result, DEMALE, LLC is now the Company's senior lender with a
first priority security interest in substantially all of the Company's assets.
The DEMALE Line matures on June 30, 2007, at which time all unpaid principal and
interest is due and payable. Copies of the Allonge and Agreement are attached
hereto as Exhibit 10.1 and incorporated by reference herein.
Item 9.01 Financial Statements and Exhibits
(c) Exhibits
Exhibit No.
10.1 Allonge and Agreement for Promissory Note, UCC Financing
Statement and Related Collateral Documents and Interests dated
August 26, 2005.
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SIGNATURE
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.
Date: September 2, 2005 1MAGE SOFTWARE, INC.
By: /s/ David R. DeYoung
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David R. DeYoung,
Chief Executive Officer
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