As filed with the Securities and Exchange Commission on August 31, 1999
Registration No. 33-_____________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
LEVEL 8 SYSTEMS, INC.
---------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 11-2920559
- -------------------- --------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8000 REGENCY PARKWAY, CARY, NORTH CAROLINA 27511
-------------------------------------------------
(Address of principal executive offices and zip code)
LEVEL 8 SYSTEMS, INC.
INTERNATIONAL STOCK PURCHASE PLAN
(Full Title of the Plan)
------------------------
DENNIS MCKINNIE, ESQ.
SENIOR VICE PRESIDENT, CHIEF LEGAL AND ADMINISTRATIVE OFFICER
LEVEL 8 SYSTEMS, INC.
8000 REGENCY PARKWAY
CARY, NORTH CAROLINA 27511
--------------------------
Name and address of agent for service)
(919) 380-5000
--------------
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered Per Share Price Fee
- ------------- ----------- ----------- -------------- -------------
Common
Stock, $0.001 65,000 $ 9.6875(2) $629,687.50(3) $ 176.00
par value shares(1)
- ------------- ----------- ----------- -------------- -------------
</TABLE>
(1) Representing shares to be issued and sold by the Registrant under the
Level 8 Systems, Inc. International Stock Purchase Plan (the "Plan"). This
Registration Statement also covers such indeterminable number of additional
shares as may become issuable to prevent dilution in the event of a stock split,
stock dividend, reclassification or other similar transaction pursuant to the
terms of the Plan.
(2) The average of the high and low prices of the Registrant's Common Stock
as reported by the Nasdaq National Market for August 4, 1999.
(3) The aggregate offering price is calculated solely for the purpose of
determining the registration fee pursuant to Rule 457(h)(1) under the Securities
Act of 1933, as amended.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents containing the information specified in Part I of the
Instructions to the Registration Statement on Form S-8 will be sent or given to
employees of the Registrant as required by Rule 428(b)(1) promulgated under the
Securities Act of 1933, as amended (the "Securities Act").
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed with the Securities and Exchange Commission
(the "Commission") are incorporated herein by reference:
<TABLE>
<CAPTION>
<S> <C>
(1) The Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1998 (File No. 0-26392);
(2) The Registrant's Current Report on Form 8-K/A, filed with the Commission on January 11, 1999 (File No. 0-26392);
(3) The Registrant's Current Report on Form 8-K/A, filed with the Commission on January 15, 1999 (File No. 0-26392);
(4) The Registrant's Current Report on Form 8-K, filed with the Commission on January 15, 1999 (File No. 0-26392);
(5) The Registrant's Current Report on Form 8-K, filed with the Commission on January 21, 1999 (File No. 0-26392);
(6) The Registrant's Current Report on Form 8-K/A, filed with the Commission on March 17, 1999 (File No. 0-26392);
(7) The Registrant's Quarterly Report on Form 10-Q/A for the quarter ended March 31, 1998 and filed with the Commission on Apri
(8) The Registrant's Quarterly Report on Form 10-Q/A for the quarter ended June 30, 1998 and filed with the Commission on April
(9) The Registrant's Quarterly Report on Form 10-Q/A for the quarter ended September 30, 1998 and filed with the Commission on
(10) The Registrant's Current Report on Form 8-K, filed with the Commission filed with the Commission on April 30, 1999 (File N
(11) The Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1999 (File No. 0-26392);
(12) The Registrant's Definitive Proxy Statement for its 1999 Annual Meeting of Stockholders held on May 26, 1999;
(13) The Registrant's Current Report on Form 8-K/A filed with the Commission on June 29, 1999 (File No. 0-26392);
(14) The Registrant's Current Report on Form 8-K/A filed with the Commission on July 12, 1999 (File No. 0-26392);
(15) The Registrant's Current Report on Form 8-K filed with the Commission on July 23, 1999 (File No. 0-26392); and
(16) The description of the Registrant's Common Stock contained in the Registrant's Registration Statement on Form 8-A filed on
</TABLE>
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing of a
post-effective amendment that indicates that all securities offered hereby have
been sold or that deregisters all such securities then remaining unsold, shall
be deemed to be incorporated by reference in this Registration Statement and to
be a part hereof from the date of filing of such documents.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's Certificate of Incorporation sets forth the extent to
which the Registrant's directors and officers may be indemnified by the
Registrant against the liabilities which they may incur in such capacities. Such
indemnification is authorized by Section 145 of the General Corporation Law of
Delaware, as amended from time to time ("Section 145"). The Registrant shall, to
the extent permitted by Section 145, indemnify each person who was or is a party
or threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he is or was or has agreed to become, a director or
officer of the Registrant, or is or was serving, or has agreed to serve, at the
request of the Registrant, as a director, officer or trustee of, or any similar
capacity with, another corporation, partnership, joint venture, trust or other
enterprise (including any employee benefit plans), or by reason of any action
alleged to have been taken or omitted in such capacity, against all expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or on his behalf in connection with such
action, suit or proceeding and any appeal therefrom. Indemnification may include
payment by the Registrant of expenses in defending any action or proceeding in
advance of the final disposition of such action or proceeding upon receipt of an
undertaking by the person indemnified to repay such payment if it is ultimately
determined that such person is not entitled to the indemnification under the
Registrant's Certificate of Incorporation, which undertaking may be accepted
without reference to the financial ability of such person to make such
repayment. The Registrant shall not indemnify any person seeking indemnification
in connection with a proceeding (or part thereof) initiated by such person
unless the initiation thereof was approved by the Board of Directors of the
Registrant. The indemnification rights provided in the Registrant's Certificate
of Incorporation shall not be deemed exclusive of any other rights to which
those indemnified may be entitled under any law, agreement or vote of
stockholder or disinterested directors or otherwise, and shall inure to the
benefit of the heirs, executors and administrators of such persons. The
Registrant may, to the extent authorized from time to time by its Board of
Directors, grant indemnification rights to other persons or agents of the
Registrant or other persons serving the Registrant and such rights may be
equivalent to or greater or less than those set forth in the Registrant's
Certificate of Incorporation.
The Registrant maintains directors and officers liability policies covering
claims made against its directors and officers for certain wrongful acts done in
such capacities and providing reimbursement to the Registrant for its
indemnification of its directors and officers in respect of such claims.
<PAGE>
ITEM 8. EXHIBITS.
The following exhibits are filed with or incorporated by reference into
this Registration Statement pursuant to Item 601 of Regulation S-K:
<TABLE>
<CAPTION>
Exhibit
<S> <C>
No. Description
- ------------------- ---------------------------------------------------------------------------------------
5 Opinion of counsel with respect to the securities being registered.*
10 Level 8 Systems, Inc. International Stock Purchase Plan*
23(a) Consent of counsel (included in Exhibit 5).*
23(b) Consent of PricewaterhouseCoopers, LLP.*
23(c) Consent of Grant Thornton LLP.*
23(d) Consent of Lurie, Besikof, Lapidus & Co., LLP.*
23 (e) Consent of PricewaterhouseCoopers, LLP, to incorporation by reference Form 10-K of Seer
Technologies, Inc. for the year ended September 30, 1998.*
24 Power of Attorney (see signature pages to this Registration Statement).*
* Filed herewith.
</TABLE>
<PAGE>
II-5
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total value of securities offered would not exceed
that which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective Registration Statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 and the information required to
be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d)
of the Exchange Act that are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
<PAGE>
SIGNATURES
- ---------------
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Cary, State of North Carolina, on this the 31st day
of August, 1999.
LEVEL 8 SYSTEMS, INC.
By: /s/ Dennis McKinnie
---------------------
Dennis McKinnie
Senior Vice President, Chief Legal
and
Administrative Officer
POWER OF ATTORNEY
-------------------
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of Steven Dmiszewicki and Dennis McKinnie,
or either of them, as his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto each of said attorneys-in-fact
and agents, full power and authority to do and perform each and every act and
thing required or necessary to be done in and about the premises, as fully to
all intents and purposes as he might or could do in person, hereby ratifying and
confirming all that each of said attorneys-in-fact and agents, or their
substitutes, could lawfully do or cause to be done by virtue hereof.
<PAGE>
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below on August 31, 1999 by the following persons in
the capacities indicated.
/s/ Arie Kilman Chairman of the Board of Directors and
- ----------------- Chief Executive Officer
Arie Kilman (Principal Executive Officer)
/s/ Steven Dmiszewicki President
- ------------------------
Steven Dmiszewicki
/s/ Renee Fulk Vice President - Finance
- ---------------- (Principal Financial and Accounting Officer)
Renee Fulk
/s/ Samuel Somech Director and Chairman Emeritus
- -------------------
Samuel Somech
/s/ Robert M. Brill Director
- ----------------------
Robert M. Brill
/s/ Michel Berty Director
- ------------------
Michel Berty
/s/ Theodore Fine Director
- -------------------
Theodore Fine
/s/ Lenny Recanati Director
- --------------------
Lenny Recanati
/s/ Frank J. Klein Director
- ---------------------
Frank J. Klein
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
<S> <C>
No. Description
- ------------------- ---------------------------------------------------------------------------------------
5 Opinion of counsel with respect to the securities being registered.*
10 Level 8 Systems, Inc. International Stock Purchase Plan*
23(a) Consent of counsel (included in Exhibit 5).*
23(b) Consent of PricewaterhouseCoopers, LLP.*
23(c) Consent of Grant Thornton LLP.*
23(d) Consent of Lurie, Besikof, Lapidus & Co., LLP.*
23 (e) Consent of PricewaterhouseCoopers, LLP, to incorporation by reference Form 10-K of Seer
Technologies, Inc. for the year ended September 30, 1998.*
24 Power of Attorney (see signature pages to this Registration Statement).*
* Filed herewith.
</TABLE>
August 31, 1999
Level 8 Systems, Inc.
8000 Regency Parkway
Cary, North Carolina 27511
Re: Registration Statement on Form S-8
Level 8 Systems, Inc.
1997 Stock Option Plan, as Amended and Restated
Ladies and Gentlemen:
We have served as counsel for Level 8 Systems, Inc., a Delaware corporation
(the "Company"), in connection with the registration under the Securities Act of
1933, as amended, pursuant to a Registration Statement on Form S-8 (the
"Registration Statement"), of an additional 1,200,000 shares (the "Shares") of
common stock, $.001 par value, of the Company, to be issued and sold by the
Company pursuant to the Level 8 Systems, Inc. Stock Option Plan, as Amended and
Restated (the "Plan").
We have examined and are familiar with originals or copies (certified,
photostatic or otherwise identified to our satisfaction) of such documents,
corporate records and other instruments relating to the incorporation of the
Company and the authorization of the grants of securities pursuant to the Plan
as we have deemed necessary and advisable. In such examinations, we have
assumed the genuineness of all signatures on all originals and copies of
documents we have examined, the authenticity of all documents submitted to us as
originals and the conformity to original documents of all certified, conformed
or photostatic copies. As to questions of fact material and relevant to our
opinion, we have relied upon certificates or representations of Company
officials and of appropriate governmental officials.
We express no opinion as to matters under or involving the laws of any
jurisdiction other than the corporate law of the State of Delaware.
Based upon and subject to the foregoing and having regard for such legal
considerations as we have deemed relevant, it is our opinion that:
1. The Shares have been duly authorized; and
<PAGE>
2. Upon the issuance and delivery of the Shares and the receipt of
payment therefor as provided in the Plan and as contemplated by the Registration
Statement, such Shares will be validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement.
Very truly yours,
/s/ POWELL, GOLDSTEIN, FRAZER & MURPHY LLP
EXHIBIT 23(B)
--------------
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 for the Level 8 Systems, Inc. 1997 Stock Option Plan, as
Amended and Restated, of our report dated March 31, 1999, relating to the
financial statements, which appears in the Annual Report on Form 10-K of Level 8
Systems, Inc. for the year ended December 31, 1998.
/s/ PricewaterhouseCoopers LLP
Washington, D.C.
August 31, 1999
EXHIBIT 23(C)
-------------
CONSENT OF INDEPENDENT ACCOUNTANTS
We have issued our report dated February 23, 1998 (except for Note 2, as to
which the date is February 27, 1998 and Note 3, as to which the date is April 6,
1998) accompanying the consolidated financial statements of Level 8 Systems,
Inc. and subsidiaries included in the Annual Report on Form 10-K for the year
ended December 31, 1998 which is incorporated by reference in this Registration
Statement. We consent to the incorporation by reference in the Registration
Statement of aforementioned report.
/s/ Grant Thornton LLP
New York, New York
August 31, 1999
EXHIBIT 23(D)
-------------
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement
of Level 8 Systems, Inc. on Form S-8 of our report dated January 31, 1997,
except for Note 3, as to which the date is April 6, 1998, relating to the
financial statements included in the Annual Report on Form 10-K of Level 8
Systems, Inc. for the year ended December 31, 1998.
/s/ Lurie, Besikof, Lapidus & Co., LLP
Minneapolis, Minnesota
August 31, 1999
EXHIBIT 23(E)
-------------
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 for the Level 8 Systems, Inc. 1997 Stock Option Plan, as
Amended and Restated, of our report dated December 31, 1998, relating to the
financial statements, which appears in the Annual Report on Form 10-K of Seer
Technologies, Inc. for the year ended September 30, 1998.
/s/ PricewaterhouseCoopers LLP
Washington, D.C.
August 31, 1999
EXHIBIT 10
----------
LEVEL 8 SYSTEMS, INC.
INTERNATIONAL EMPLOYEE STOCK PURCHASE PLAN
<PAGE>
TABLE OF CONTENTS
LEVEL 8 SYSTEMS, INC.
INTERNATIONAL EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE 1
2. DEFINITIONS 1
3. ELIGIBILITY AND PARTICIPATION 2
4. PAYROLL DEDUCTIONS. 2
5. CASH WITHDRAWALS AND DISTRIBUTIONS UPON TERMINATION OF PARTICIPATION 3
6. GRANT OF OPTION AND OPTION EXERCISE PRICE 3
7. EXERCISE OF OPTION 4
8. STOCK SUBJECT TO ESPP 4
9. ADMINISTRATION 4
10. ADMINISTRATIVE FEES 4
11. TRANSFERABILITY 5
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION 5
13. AMENDMENT OR TERMINATION 5
14. NOTICES 6
15. NO CONTRACT 5
16. HEADINGS AND CONSTRUCTION 5
17. GOVERNMENTAL REGULATION. 5
18. WITHHOLDING. 6
<PAGE>
7
LEVEL 8 SYSTEMS, INC.
INTERNATIONAL EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE. The purpose of the Level 8 Systems, Inc.
International Employee Stock Purchase Plan (the "ESPP") is to provide employees
of the international subsidiaries of Level 8 Systems, Inc., a New York
corporation (the "Company"), with an opportunity to be compensated through the
benefits of stock ownership and to acquire an interest in the Company through
the purchase of Common Stock of the Company ("Common Stock"). This ESPP shall
be effective as of May 15, 1999.
2. DEFINITIONS.
(a) "Base Salary" means the regular base salary and wages paid to
------------
an Eligible Employee by the Designated International Subsidiary, excluding
commissions, income attributable to the exercise of stock options, bonuses, and
awards.
(b) "Board of Directors" means the board of directors of the
--------------------
Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
----
(d) "Designated International Subsidiary" means an International
-------------------------------------
Subsidiary which the Board of Directors, or its designee, has designated as
eligible to participate in the ESPP.
(e) "Eligible Employee" means any Employee of a Designated
------------------
International Subsidiary as recognized for employment purposes in the applicable
jurisdiction in which the Employee has a regular place of employment other than:
(1) any Employee who customarily is employed for twenty (20)
hours per week or less;
(2) any Employee who would own (immediately after the grant
of an option under the ESPP and applying the rules of Code Section 424(d) in
determining stock ownership) shares, and/or hold outstanding options to purchase
shares, possessing five percent (5%) or more of the total combined voting power
or value of all classes of shares of the Company or of any Parent or Subsidiary;
and
(3) any Employee who customarily is employed for five (5)
months or less.
Notwithstanding the foregoing, any Employee of a Designated
International Subsidiary who is not considered an Eligible Employee by operation
of subsections (1), (2) or (3) of this Section 2(e) will be considered an
Eligible Employee if the applicable provisions of the local laws governing such
Employee's employment with the applicable Designated International Subsidiary
prohibits the exclusion of the Employee from participation under the Plan on the
basis by which the Employee is so excluded.
(f) "Employee" means any person who is employed by a Subsidiary.
--------
(g) "Entry Date" means each the first day of each Offering Period.
----------
(h) "International Subsidiary" means a Subsidiary whose principal
-------------------------
place of business is outside the United States.
(i) "Offering Period" means each three-month period beginning May
----------------
15, August 15, November 15 and February 15.
(j) "Parent" means a corporation (other than the Company) in an
------
unbroken chain of corporations ending with the Company if, at the time of the
granting of the option hereunder, each of the corporations other than the
Company owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.
(k) "Participant" means an Employee who participates in the ESPP
-----------
pursuant to Paragraph 3.
(l) "Subsidiary" means a corporation (other than the Company) in
----------
an unbroken chain of corporations beginning with the Company if, at the time of
the granting of the option hereunder, each of the corporations other than the
last corporation in the unbroken chain owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
3. ELIGIBILITY AND PARTICIPATION
(a) Any person who is an Eligible Employee on an Entry Date shall
be eligible to become a Participant in the ESPP beginning on that Entry Date and
shall become a Participant as of that Entry Date by completing an authorization
form provided by the Company, in the form and containing the terms and
conditions as the Company from time to time may determine, and filing it with
the Company by the date required by the Company.
(b) Any person who first becomes an Eligible Employee during an
Offering Period shall be eligible to become a Participant in the ESPP as of the
first day of the Offering Period beginning after the date upon which that person
became an Eligible Employee and shall become a Participant as of such date by
completing an authorization form provided by the Company, in the form and
containing the terms and conditions as the Company from time to time may
determine, and filing it with the Company by the date required by the Company;
(c) A person shall cease to be a Participant upon the earliest to
occur of:
(1) the date of a termination of employment from the Company
and all Subsidiaries, for any reason, before the last day of the Offering
Period;
(2) the first day after the Offering Period following a
cessation of payroll deductions for the Participant under the ESPP or
(3) the date of a withdrawal by the Participant under
Paragraph 5.
4. PAYROLL DEDUCTIONS. A Participant may
contribute to the ESPP through payroll deductions
as follows:
(a) A Participant shall on his authorization form elect to have
payroll deductions made from his Base Salary at a rate which, expressed as a
percentage, shall be at least one percent (1%) and not exceed ten percent (10%)
of his Base Salary.
(b) Payroll deductions for a Participant shall commence for Base
Salary paid during the Offering Period for which the authorization form is
effective and shall continue until the effective date of an Employee's
authorization to change the rate of his payroll deductions or stop payroll
deductions.
(c) A Participant may change the rate of his payroll deductions
effective on the first day of any Offering Period, provided the Employee files
with the Company his authorization form by the date required by the Company.
However, a Participant may elect to stop payroll deductions effective as of the
first day of the payroll period coinciding with or immediately following the
Company's processing the Participant's request.
(d) All payroll deductions made for a Participant shall be
credited to his account under the ESPP. All payroll deductions made from
Participants' Base Salary under the ESPP shall be commingled with the general
assets of the Company and no separate fund shall be established. Participants'
accounts are solely for bookkeeping purposes and the Company shall not be
obligated to pay Participants interest on account balances.
5. CASH WITHDRAWALS AND DISTRIBUTIONS UPON TERMINATION OF
PARTICIPATION5. CASH WITHDRAWALS AND DISTRIBUTIONS UPON TERMINATION OF
PARTICIPATION.
(a) A Participant may elect to withdraw the balance of the cash
credited to his account under the ESPP by giving written notice to the Company
prior to the date specified by the Company before the end of the current
Offering Period.
(b) The Company shall pay the cash balance of a Participant's
account to the Participant as soon as administratively feasible following the
date of processing of the withdrawal request or the date a person ceases to be a
Participant pursuant to Paragraph 3(c), as applicable.
(c) On the date of the Company's receipt and processing of a
Participant's withdrawal request or the date a person ceases to be a Participant
pursuant to Paragraph 3(c), the Participant's outstanding options under the ESPP
shall immediately terminate. A Participant who receives a withdrawal of the
cash balance of his or her account under the ESPP shall not be entitled to
participate in the ESPP until the next Entry Date.
(d) If a Participant withdraws the cash balance of his account, no
further payroll deductions will be made from the Participant's Compensation.
6. GRANT OF OPTION AND OPTION EXERCISE PRICE
(a) As of the beginning of each Offering Period, a Participant is
granted an option to purchase a whole number of shares at eighty-five percent
(85%) of the lesser of the fair market value as of the first day of each
Offering Period or the last day of each Offering Period up to an amount which
does not exceed the Participant's payroll deduction for that Offering Period.
The option price of each share of Common Stock to be purchased with a
Participant's account during a Offering Period shall be eighty-five percent
(85%) of the fair market value of one share of Common Stock on the first day of
the Offering Period or the fair market value on the last day of the Offering
Period.
(b) Notwithstanding the preceding subparagraph or any other
provisions of the ESPP, no Participant shall be granted an option which permits
his rights to purchase shares under all employee stock purchase plans of the
Company and its Parent and Subsidiaries to accrue at a rate which exceeds
$25,000 of the fair market value of the shares (determined at the time the
option is granted) for each calendar year in which such stock option is
outstanding at any time.
(c) For purposes of the preceding subparagraphs, the fair market
value of a share of Common Stock on the last day of each Offering Period shall
be determined as of each such date, or the most immediately preceding business
day with respect to which the information required in the following clauses is
available, as follows:
(1) if the Common Stock is traded on a national securities
exchange, the closing sale price on that date;
(2) if the Common Stock is not traded on any such exchange,
the closing sale price as reported by the NASDAQ Stock Market;
(3) if no such closing sale price information is available,
the average of the closing bid and asked prices as reported by the NASDAQ Stock
Market; or
(4) if there are no such closing bid and asked prices, the
average of the closing bid and asked prices as reported by any other commercial
service.
(d) All options granted during an Offering Period shall expire on
the last day of that Offering Period.
7. EXERCISE OF OPTION. A Participant's option
for the purchase of shares during an Offering Period will be automatically
exercised for him on the last day of each Offering Period for the purchase of
the maximum number of whole shares which the Participant's account on that day
can purchase at the option exercise price; provided, however, the number of
shares purchased for a Participant shall not be less than 10 shares. Any funds
remaining after the exercise of a Participant's option shall be held and will be
available for purchases of shares at the last day of the next succeeding
Offering Period.
8. STOCK SUBJECT TO ESPP.
(a) The shares of Common Stock to be sold to Participants under
the ESPP may, at the election of the Company, be either treasury shares, shares
originally issued for such purpose or shares acquired on the open market. The
maximum number of shares made available for sale under the ESPP shall be
sixty-five thousand (65,000) shares, subject to adjustment upon changes in
capitalization of the Company as provided in Paragraph 12. If the total number
of shares for which options are to be exercised in accordance with Paragraph 7
exceeds the number of shares then available under the ESPP, the Company shall
make a pro rata allocation of the shares available in as nearly a uniform manner
as shall be practicable and as it shall determine to be equitable.
(b) A Participant will have no interest in shares covered by his
option until such option has been exercised.
(c) Shares to be delivered to a Participant under the ESPP will be
registered in the name of the Participant, or if so directed by the Participant
and if permissible under applicable law, in the names of the Participant and one
other person designated by the Participant, as joint tenants with rights of
survivorship.
9. ADMINISTRATION. The ESPP shall be administered
by the Committee, which shall be comprised of at least two members of the Board
of Directors who are "non-employee directors" as defined in Rule 16b-3 as
promulgated under the Securities Exchange Act of 1934. Subject to the
provisions of the ESPP the Committee shall have full and conclusive authority to
interpret the ESPP; to prescribe, amend and rescind rules and regulations
relating to the ESPP; and to make all other determinations necessary or
advisable for the proper administration of the ESPP. The Committee's decisions
shall be final and binding. The Committee may delegate the duty to perform
administrative functions.
10. ADMINISTRATIVE FEES. The Committee may
charge Participants' accounts for reasonable administrative fees to defray the
administrative costs of the Plan, which shall in no event exceed the actual
administrative costs of the Plan.
11. TRANSFERABILITY. Neither payroll deductions
credited to a Participant's account nor any rights with regard to the exercise
of an option or to receive shares under the ESPP may be assigned, transferred,
pledged, or otherwise disposed of in any way by the Participant. Any attempted
assignment, transfer, pledge, or other disposition shall be without effect.
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
(a) In the event that the outstanding shares of Common Stock of
the Company are hereafter increased or decreased or changed into or exchanged
for a different number or kind of shares or other securities of the Company by
reason of a recapitalization, reclassification, stock split, combination of
shares, or dividend payable in shares of Common Stock, an appropriate adjustment
shall be made by the Committee to the number and kind of shares available for
the granting of options, or as to which outstanding options shall be
exercisable, and to the option price. No fractional shares shall be issued or
optioned in making any such adjustments. All adjustments made by the Committee
under this paragraph shall be conclusive.
(b) In the event of or in anticipation of a merger, consolidation
or other reorganization of the Company or tender offer for shares of Common
Stock, the Committee may make such adjustments with respect to options and take
such other action as it deems necessary or appropriate to reflect such merger,
consolidation, reorganization or tender offer, including, without limitation,
the substitution of new options, the termination of outstanding options for
cash, the adjustment of outstanding options, or the acceleration of options.
(c) The grant of an option pursuant to the ESPP shall not affect
in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge or to consolidate or to dissolve, liquidate or sell, or
transfer all or any part of its business or assets.
13. AMENDMENT OR TERMINATION. The
Board of Directors may at any time amend or terminate the ESPP without
shareholder approval; provided, however, that the Board of Directors may
condition any amendment on the approval of the shareholders of the Company if
such approval is necessary or advisable with respect to tax, securities or other
applicable laws to which the Company, the Plan or Employees are subject. No
termination shall adversely affect the right of an Employee without his consent
with respect to Common Stock previously acquired under the Plan.
14. NOTICES All notices or other communications by a
Participant to the Company under or in connection with the ESPP shall be deemed
to have been duly given when received in the form specified by the Company at
the location, or by the person, designated by the Company.
15. NO CONTRACT. The ESPP shall not be deemed to
constitute a contract between the Company or any Subsidiary and any Employee or
to be a consideration or an inducement for the employment of any Employee.
Nothing contained in the ESPP shall be deemed to give any Employee the right to
be retained in the service of the Company or any Subsidiary or to interfere with
the right of the Company or any Subsidiary to discharge any Employee at any
time, regardless of the effect which such discharge shall have upon him or her
or as a Participant.
16. HEADINGS AND CONSTRUCTION. The
headings to Paragraphs in the ESPP have been included for convenience of
reference only. The ESPP shall be interpreted and construed in accordance with
the laws of the State of Delaware.
17. GOVERNMENTAL REGULATION.. The
Company's obligation to sell and deliver shares of the Company's Common Stock
under the ESPP is subject to the approval of any governmental authority required
in connection with the authorization, issuance or sale of such stock.
18. WITHHOLDING. The Company or, if applicable,
the Designated International Subsidiary, will withhold from wages of
Participants any amounts attributable to participation in the ESPP which are
required to be withheld from wages by the applicable governmental authorities.
[SIGNATURES ON FOLLOWING PAGE]
<PAGE>
IN WITNESS WHEREOF, the Company has caused this ESPP to be executed as of
this 26th day of May, 1999.
LEVEL 8 SYSTEMS, INC.
By: /s/ Steven Dmiszewicki
-----------------------------
Steven Dmiszewicki
Title: President
ATTEST:
By: /s/ Dennis McKinnie_____
- --------------------------
Dennis McKinnie
Title: Senior Vice President, Chief Legal
and Administrative Officer
[CORPORATE SEAL]
