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EXHIBIT 99.4
VOTING COORDINATION AGREEMENT
This Agreement is made and entered into July 31, 1997 by and between Samuel
Somech, an individual residing at 9 Cloudy Lane, New Hyde Park, New York 11040
("Somech"), and Liraz Systems Ltd., an Israeli corporation, having its principal
place of business at 5 Hatzoref Street, Holon 58856 Israel ("Liraz").
WHEREAS, both parties hereto are significant shareholders in Level 8
Systems, Inc., a publicly traded New York corporation; and
WHEREAS the parties hereto desire to make provision for the harmonious
operation of Level 8 with the aim of making said corporation prosper and grow
and with the intention of protecting the investments of the respective parties
hereto in the corporation; and
WHEREAS, the parties believe that it is in their best as shareholders of
Level 8 as well as in the best interests of Level 8 to pool and coordinate the
vote to which their respective shares of common stock and Level 8 are entitled
for the time and on the terms hereinafter mentioned; and
WHEREAS, the parties desire to provide for such coordination and for
certain other procedures, all on the basis set forth more fully herein;
NOW, THEREFORE, in consideration of the promises, mutual covenants and
agreements set forth herein, the parties hereto agree as follows:
1. Voting Arrangements
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(a) Agreement on Board of Directors Appointments. Each of the parties
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hereto agrees, as a shareholder of Level 8, to take, or cause its
designees to take, all action necessary including, with out
limitation, the voting of all its shares of Level 8, the voting of
all shares of stock for which such party holds a proxy to vote such
shares, the execution of written consents, the calling of special
meetings, the removal of directors, the filling of vacancies on the
Board of Directors, the waiving of notice, the attending of meetings
and the amending of the bylaws of Level 8, so as to cause the Board
of Directors of Level 8 to at all times include Somech and so long
as Somech is a member of the Board of Directors of Level 8, the
candidates designated by Liraz.
(b) Agreement Not to Amend Charter. The parties covenant and agree with
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each other that each of them will not vote any of the shares of
Level 8 held of record by them to amend in any respect the
Certificate of Incorporation of
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Level 8, as amended, in effect on the date hereof, unless each party
receives a notice in writing from the other party that it consents
to vote all of the shares of Common Stock held of record by it in
favor of such amendment.
(c) Voting of Stock in Reorganization, Recapitalization, Consolidation,
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Merger or Sale of Assets. In the event of proposed (i)
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reorganization of Level 8, (ii) recapitalization of Level 8, (iii)
consolidation or merger of Level 8 with or into another corporation,
or the sale of all or substantially all the assets of Level 8 to
another person or entity (including another corporation), where such
consolidation or merger or sale of assets is to or with (A) a person
or entity other than an Affiliate (as defined below), or (B) an
Affiliate in a bona fide arm's-length transaction or (iv) any other
business reorganization or combination (similar in effect to any of
the foregoing) (each, individually, a "Corporate Event"), then each
party shall vote his or its, as the case may be, shares entitled to
vote on such Corporate Event in the same manner as the other party.
For purposes of this Section ___, the term "Affiliate" shall refer
to any corporation which controls, is controlled by or is under
common control with, Level 8. For purposes of Section ___, the
concept of "control" shall mean the right to vote a majority of the
issued and outstanding shares of voting stock of the relevant
corporation, either through ownership of such stock or by agreement
or proxy.
(d) This Agreement shall be operative forthwith and the several
provisions thereof requiring corporate action and sanction shall be
effected by appropriate procedure as soon as practicable.
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2. Acquisition Options
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(a) Liraz hereby grants Somech the right (the "Put Option") to require
Liraz, upon the occurrence of any sale, exchange or other
disposition of the Level 8 stock held by Liraz, including a sale
which is part of a public offering (an "Exercise Event"), to
purchase from Somech and Level 8 shares ("Somech Shares") acquirable
by Somech pursuant to the exercise of an option or warrant issued by
Somech by Level 8 (a "Level 8 Option") upon the terms described in
Section 2(d).
(b) Somech hereby grants Liraz the right (the "Call Option") to require
Somech, upon the occurrence of an Exercise Event, to sell to Liraz
the Somech Shares in consideration of $27 per Somech Share.
(c) Liraz shall notify Somech (the "Liraz Notice") of the occurrence of
an Exercise Event and if applicable, of its intention to exercise
the Call Option, with 5 days of the earlier to occur of Liraz's
entering into a binding agreement to effectuate such Exercise Event
or the closing of such Exercise Event. Somech shall notify Liraz
(the "Somech Notice") within 5 days of his receipt of the Liraz
Notice of that, if applicable (i) he intends to exercise the Put
Option, (ii) he notified Level 8 he intends to exercise the
appropriate number of Level 8 Options and (iii) he requests Liraz to
extend the Loan (as defined below).
(d) Upon the occurrence of an Exercise Event and the receipt of the
Somech Notice, Liraz shall extend to Somech an interest free loan
(the "Loan") in an amount equal to the aggregate exercise price of
the Level 8 Options for Somech Shares subject to the Put Option or
Call Option, as the case may be, in the form of the transfer to
Level 8, for the account of Somech, of such aggregate exercise
price. Immediately upon the issuance by Level 8 of the Somech
Shares, Somech shall transfer title to such shares to Liraz and the
Loan shall be considered repaid. In addition, Liraz shall pay Somech
an amount per Somech Share equal to (i) in the case of a Put Option
exercise, $10, or (ii) in the case of a Call Option exercise, the
excess of (x) $27, over (y) the Level 8 Option exercise price for
such Somech Share. Any amount payable to Somech by Liraz pursuant to
this Agreement shall be paid within 15 days of the delivery to Liraz
of the Somech Shares.
(e) In no event shall the amount payable to Liraz to Somech upon a Put
Option exercise exceed 13% of the aggregate amount realized by Liraz
upon the disposition of its Level 8 shares in an Exercise Event.
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3. Term
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The duration of this agreement shall for 10 years from the date hereof,
unless sooner terminated or amended by mutual agreement of the parties or their
respective heirs, legal representatives and assigns.
Liraz Systems Ltd.
By: /s/ A. Kilman /s/ Samuel Somech
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Name: A. Kilman Samuel Somech
Title: CEO
