MODSYS INTERNATIONAL LTD. (NASDAQ:MDSY) Files An 8-K Entry into a Material Definitive Agreement

Item 1.01. Entry into a Material Definitive Agreement.

SEVENTH AMENDMENT TO LOAN AND SECURITY
AGREEMENT

On February 15, 2017, Modern Systems Corporation and MS
Modernization Services Inc, a wholly owned subsidiary and
majority owned subsidiary, respectively, of ModSys International
Ltd. (the Company), entered into a Seventh Amendment (the
Amendment) to the existing loan and security agreement (the
Existing Agreement) with Comerica Bank dated October 2, 2013, as
previously amended, to: (i) increase the amount of credit
available on the non-formula line to $3,000,000; (ii) extend the
maturity date of the non-formula revolving line and revolving
line to February 15, 2019; (iii) amend the EBITDA covenant
requirements; (iv) decrease the revolving line amount of credit
available to $1,000,000 from $1,500,000; and (iv) amend the
definition of a new equity event, described below.

A copy of the Seventh Amendment to Loan and Security Agreement is
attached as Exhibit 10.1 and is incorporated herein by reference.
The foregoing description of the Seventh Amendment is qualified
in its entirety by reference to the full text of the Seventh
Amendment to Loan and Security Agreement attached.

SHARE PURCHASE AGREEMENTS

On February 14, 2017, the Company entered into two Share Purchase
Agreements with Columbia Pacific Opportunity Fund, LP, providing
for the issuance of ordinary shares in a private placement.

The first Share Purchase Agreement (First Agreement) is for the
issuance of 757,575 ordinary shares of the Company, par value NIS
0.04 per share, at a price equal to $0.66 per share amounting to
an aggregate purchase price of US $500,000. The closing of the
First Agreement will take place on April 1, 2017, subject to
approval of the Companys shareholders and other customary closing
conditions.

In addition, the Company entered in to a second Share Purchase
Agreement (Second Agreement) for the issuance of 757,575 ordinary
shares of the Company, par value NIS 0.04 per share, at a price
equal to $0.66 per share amounting to an aggregate purchase price
of US $500,000. In the event that the volume weighted average
price of the ordinary shares for the thirty days prior to July 1,
2017, as reported by Bloomberg Financial L.P. (VWAP) is lower
than the $0.66, then the price per share shall be equal to the
higher of (i) the VWAP and (ii) $0.50, and the number of shares
shall be adjusted to equal the purchase price divided by the
adjusted price per share. The closing of the Second Agreement
will take place on July 1, 2017, subject to approval of the
Companys shareholders and other customary closing conditions.

Both agreements described above fulfill the requirement in the
Amendment for the new equity event. Copies of both Share Purchase
Agreements are attached as Exhibits 10.2 and 10.3 and are
incorporated herein by reference. The foregoing description of
the First Agreement and Second Agreement are qualified in their
entirety by reference to the full text of the First Agreement and
Second Agreement attached.

Item3.02. Unregistered Sale of Equity
Securities.

The disclosures in Items 1.01 and 8.01 of this Current Report on
Form 8-K are incorporated herein by reference.

The sale of the ordinary shares, warrants and, if applicable,
ordinary shares issuable upon exercise of the warrants, by the
Company 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 by the
Securities and Exchange Commission (the Commission) under the
Securities Act. The offer and sale of such securities do not
involve a public offering as defined in Section 4(a)(2) of the
Securities Act, and each of the purchasers has represented to the
Company that it is an accredited investor as such term is defined
in Rule 501(a) of Regulation D. Such securities may not be
offered or sold in the United States absent registration or an
applicable exemption from registration requirements.

Item 8.01. Other Events.

In connection with the increased line of credit from $2.0 million
to $3.0 million described above as part of the Amendment, the
Company agreed to issue warrants to purchase 378,788 ordinary
shares to Prescott Group Aggressive Small Cap Master Fund in
exchange for extending a guaranty for 2017. In addition, the
Company agreed to issue warrants to purchase 735,294 ordinary
shares to Columbia Pacific Opportunity Fund, LP and 441,176
ordinary shares to Prescott Group Aggressive Small Cap Master
Fund in exchange for the guaranty of the Existing Agreement for
2016 and 2017. Each of the warrants has an exercise price of
$0.01 per share and has a three-year term from the date of grant.

The issuance of the warrants is contingent upon approval of the
Companys shareholders and other customary closing conditions.

Additional Information and Where to Find It

In connection with certain of the transactions described above,
the Company plans to file a definitive proxy statement with the
Commission. INVESTORS AND SHAREHOLDERS OF THE COMPANY ARE
ADVISED TO READ THE PROXY STATEMENT AND ANY OTHER RELEVANT
DOCUMENTS FILED WITH THE COMMISSION WHEN THEY BECOME AVAILABLE
BECAUSE THOSE DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION ABOUT
THE PROPOSED TRANSACTIONS. The final proxy statement
will be mailed or otherwise made available to shareholders of the
Company. Investors and shareholders may obtain a free copy of the
proxy statement, when it becomes available, and other documents
filed by the Company with the Commission at the Commission’s
website at http://www.sec.gov or at the Companys website at
www.modernsystems.com. Free copies of the proxy statement, when
it becomes available, and the Company’s other filings with the
Commission may also be obtained from the Company by directing a
written request to Chief Financial Officer, Modsys International
Ltd., 6600 LBJ Freeway, Ste 210,Dallas, Texas.

Participants in the Solicitation

The Company and its directors, executive officers and certain
other members of its management and employees may be deemed to be
soliciting proxies from the Companys shareholders in favor of the
transactions contemplated by the purchase agreements and
warrants. Information regarding the Company’s directors and
executive officers will be available in the Companys definitive
proxy statement for its 2017 annual general meeting of
shareholders. Additional information regarding the interests of
such potential participants will be included in the proxy
statement to be filed in connection with these transactions and
the other relevant documents filed with the Commission when they
become available.

Item 9.01. Financial Statements and Exhibits.

About MODSYS INTERNATIONAL LTD. (NASDAQ:MDSY)

ModSys International Ltd., formerly BluePhoenix Solutions Ltd., develops and markets enterprise legacy migration solutions, and provides tools and professional services to international markets. The Company operates through information technology (IT) modernization solutions segment. The Company’s technologies and services allow businesses to migrate from their legacy mainframe and distributed IT infrastructures to modern environments and programming languages. In addition to the technology tools, the Company provides professional services for project management of migrations, understanding and mapping of the applications, testing, remediation, and ongoing monitoring and management of the environments. The Company performs conversions of legacy databases, such as Integrated Database Management System (IDMS), Adaptable Data Base System (ADABAS), Virtual Storage Access Method (VSAM), Oracle and database 2 (DB2) environments.

MODSYS INTERNATIONAL LTD. (NASDAQ:MDSY) Recent Trading Information

MODSYS INTERNATIONAL LTD. (NASDAQ:MDSY) closed its last trading session 00.00 at 1.02 with 4,350 shares trading hands.