MODSYS INTERNATIONAL LTD. (NASDAQ:MDSY) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

MODSYS INTERNATIONAL LTD. (NASDAQ:MDSY) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

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Item5.02. Departure of Directors or Certain Officers;
Election of Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain Officers.

Appointment of President and CEO

On January 3, 2017, ModSys International Ltd. (Modern Systems or
the Company) announced the appointment of Brandon Edenfield to
the position of President and Chief Executive Officer, effective
January 2, 2017.

Mr. Edenfield, age 55, most recently served as executive director
in the Application Modernization division of Dell Services from
2012 to 2015. In this role, he was responsible for developing and
delivering services and solutions to help customers reduce the
cost of transitioning business-critical applications and data
from legacy computing systems onto modern architectures,
including the cloud. Prior to joining Dell, Mr. Edenfield was the
president and founder of Clerity Solutions, a provider of
applications migration, modernization and optimization solutions,
from 1999 to 2012, when Clerity was acquired by Dell. Mr.
Edenfield holds a B.S. in Computer/Information Technology
Administration and Management from Eastern Illinois University.

There are no arrangements or understandings between Mr. Edenfield
and any other persons to which he was selected as President and
Chief Executive Officer. There are also no family relationships
between Mr. Edenfield and any director or executive officer of
the Company and he has no direct or indirect material interest in
any transaction required to be disclosed to Item 404(a) of
Regulation S-K.

Matt Bell ceased to serve as the Companys President and Chief
Executive Officer, effective January 2, 2017.

Employment Agreement

Modern Systems and Mr. Edenfield entered into an employment
agreement, establishing the terms of his employment as President
and Chief Executive Officer, as summarized below:

Term. Three years, unless terminated
earlier in accordance with the terms of the agreement.

Base Annual Salary. $300,000.

Stock Options. Within six months of
January 2, 2017, and subject to the sole discretion and
determination of the Board of Directors of the Company (the
Board) and, to the extent required, shareholder approval, the
Company will grant Mr. Edenfield an option to purchase 1,750,000
ordinary shares (the Stock Options) to the terms of the Companys
2007 Award Plan. The strike price of the Stock Options shall be
equal to the fair market value on the date of grant (the Strike
Price). The Stock Options shall vest under the criteria as
follows.

Vesting

Twenty percent (20%) of the Stock Options will vest annually for
the next five years upon achieving the minimum EBITDA in such
year according to the following schedule:

$ 500,000
$ 1,000,000
$ 1,500,000
$ 2,500,000
$ 4,500,000

If the EBITDA target is missed in any year(s), the options will
still vest upon reaching the cumulative EBITDA target in a future
year. For example, if the 2017 EBITDA target is not achieved, but
the cumulative actual EBITDA for 2018 and 2017 exceeds the
cumulative EBITDA target for 2018 and 2017, the Stock Options for
both the 2017 and 2018 targets would vest.

EBITDA will be calculated by the Board or the Compensation
Committee of the Board (in consultation with the Companys
auditors) no later than March 31 of the following year. Upon such
final calculation, the Stock Options shall vest if the EBITDA
target has been reached.

The Board may accelerate the vesting of the Stock Options in its
sole discretion.

If the Company acquires another entity or technology, the Board
and Mr. Edenfield will mutually agree on an adjustment of the
EBITDA targets to reflect the acquired EBITDA.

Accelerated Vesting for Sales Transaction

Subject to terms and conditions provided in the Agreement and
consistent with the Companys Compensation Policy, and provided
that Mr. Edenfield remains employed immediately prior to the
consummation of a Sales Transaction (as defined below), the
remaining unvested options will vest upon the consummation of a
Sales Transaction under the following accelerated vesting
schedule:

Per Share Sales Proceeds Accelerated vesting
Over $1.40 up to $1.70 50% of unvested options
Over $1.70 up to $2.20 75% of unvested options
Over $2.20 100% of unvested options

Per Share Sale Proceeds means the consideration per ordinary
share received by the shareholders in a Sales Transaction
(adjusted for any stock splits, reverse splits, recapitalization
and the like). For any consideration received other than cash,
the fair market value of such consideration shall be determined
in good faith by the Board.

Sales Transaction means: (i) an acquisition of the Company by
another entity by means of any transaction or series of related
transactions (including, without limitation, any reorganization,
merger or consolidation but excluding any merger effected
exclusively for the purpose of changing the domicile of the
Company), or (ii) a sale of all or substantially all of the
assets of the Company (collectively, a Merger), so long as in
either case the Companys stockholders of record immediately prior
to such Merger will, immediately after such Merger, hold less
than fifty percent (50%) of the voting power of the surviving or
acquiring entity.

Cash Bonus. If the Company enters into
a Sales Transaction and provided Mr. Edenfield remains employed
immediately prior to the consummation of a Sales Transaction, Mr.
Edenfield will be granted a cash bonus upon the consummation of
the Sales Transaction. If the Per Share Sale Proceeds is greater
than the Strike Price, the cash bonus will be an amount equal to
(i) the number of vested options times (ii) the Strike
Prices. If the Per Share Sales Proceeds is greater than one-half
the Strike Price but less than or equal to the Strike Price, the
cash bonus will be an amount equal to (i) the number of vested
options times the Per Share Sales Proceeds. If the Per
Share Sales Proceeds is less than one-half of the Strike Price
there will be no cash bonus paid.

Benefits. Mr. Edenfield will be
eligible for all standard company benefits, including health,
dental, vision, life and disability insurance.

The foregoing description is qualified in its entirety by
reference to the full text of Mr. Edenfields employment
agreement, a copy of which is attached as Exhibit 10.1 to this
Current Report in Form 8-K and is incorporated herein by
reference.

Item8.01 Other Events

On December 29, 2016, the Company entered into a Share Purchase
Agreement with Prescott Group Aggressive Small Cap Master Fund
(Prescott), providing for the issuance to Prescott in a private
placement of 378,788 ordinary shares at a purchase price of $0.66
per ordinary share, for total proceeds to the Company of
$250,000. The issuance and sale of the shares occurred on
December 29, 2016.

The sale of the ordinary shares by the Company to Prescott are
being made in reliance upon the exemption from securities
registration afforded by Section 4(a)(2) of the Securities Act of
1933, as amended (the Securities Act), and Rule 506 of Regulation
D (or Regulation D) as promulgated under the Securities Act. The
offer and sale of such ordinary shares do not involve a public
offering as defined in Section 4(a)(2) of the Securities Act, and
Prescott represented to the Company in the Purchase Agreement
that it is an accredited investor as such term is defined in Rule
501(a) of Regulation D.

For a full description, please see the Share Purchase Agreement,
which is attached hereto as Exhibit 10.2 and is incorporated
herein by reference.

Section9 – Financial Statements and Exhibits

Item 9.01. FinancialStatements and Exhibits.

(d) Exhibits.

10.1 Employment Agreement dated January 2, 2017
10.2 Share Purchase Agreement dated as of December 29, 2016 by and
between Modsys International Ltd. and Prescott Group
Aggressive Small Cap Master Fund
99.1 Press Release dated January 4, 2017 ModSys International Ltd.
Modern Systems Announces the Appointment of Brandon Edenfield
as CEO

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