SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
April 10, 1998 0-26392
Date of Report (Date of Earliest Commission File Number
Event Reported)
LEVEL 8 SYSTEMS, INC.
(Exact Name of Registrant as Specified in its Charter)
New York 11-2920559
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification Number)
One Penn Plaza
Suite 3401
New York, New York 10119-0002
(Address of Principal Executive Offices) (Zip Code)
(212) 244-1234
(Registrant's telephone number, including area code)
Item 2. Acquisition or Disposition of Assets
On March 26, 1998, Level 8 Systems, Inc.("Level 8") acquired
Momentum Software Corporation (the "Momentum"), a Delaware
corporation. Under the acquisition agreement, Momentum
shareholders will receive 575,000 common shares of Level 8 and
warrants to purchase 200,000 common shares of Level 8 for $13.108
per share, subject to adjustment ("Contingent Consideration") to
take into account certain fluctuations in the value of the Level
8 common shares. If the average price per common share during
the 30 days prior to the Calculation Date (as defined) (the
"Average Price") is $21.00 or more, there is no Contingent
Consideration; if the Average Price is between $15.00 and $21.00,
the Contingent Consideration is a number of additional common
shares equal to the product of (a) 416.666 and (b) the number of
cents by which $21.00 exceeds the Average Price; and if the
Average Price is below $15.00, the Contingent Consideration is
250,000 common shares or an installment promissory note payable
in four annual installments and bearing interest at the rate of
10% a year, as determined by the Momentum Liquidating Trust (the
"Trust").
Momentum is a provider of enterprise middleware used by
companies to build multi-platform, multi-tiered distributed
applications using message queuing technology.
The 575,000 common shares and 200,000 warrants are being
held by the Trust, the trustees of which are Dr. Robert Brill,
Hubert Vandervoort and Bruns Grayson. The Trust will distribute
the shares and warrants to the Momentum shareholders on December
1, 1998 (or earlier, in certain circumstance).
As a result of the acquisition of Momentum, Level 8 will
incur a one time charge to earnings of approximately $6,500,000
related to the purchase of in-process research and development
costs.
In connection with this transaction, the Trust has agreed,
among its trustees, to vote its common shares in Level 8 in
accordance with the instructions of Liraz Sytems Ltd.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(a)-(b) Financial Statements, Pro Forma Financial
Information
The financial statements and pro forma financial information
required by this item are not included herewith; they are
expected to be filed by amendment on or before June 8, 1998.
(c) Exhibits
1. Agreement and Plan of Reorganization by and among Level
8 Systems, Inc., Middleware Acquisition Corporation,
Momentum Software Corporation, and Robert Brill, Bruns
Grayson and Hubert Vandervoot, as Trustees of the
Momentum Liquidating Trust, on behalf of the
Securityholders of Momentum Software Corporation
(incorporated by reference to Exhibit 10.42 to Level
8's Annual Report on Form 10-K for fiscal year ended
December 31, 1997).
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.
LEVEL 8 SYSTEMS, INC.
(Registrant)
Dated: April 10, 1998 By: /s/ Joseph J. Di Zazzo
Name: Joseph J. Di Zazzo
Title: Chief Financial Officer
