<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Amendment No. 1
and initial filing with respect to
Advanced Systems Europe B.V.
under the Securities Exchange Act of 1934
LEVEL 8 SYSTEMS, INC.
________________________________________________________________________________
(Name of Issuer)
Common Stock, par value $.001 per share
________________________________________________________________________________
(Title of Class of Securities)
52729M 10 2
_______________________________________________________________
(CUSIP Number)
Mr. Yossi Shemesh
Liraz Systems, Ltd.
5 Hatzoref Street
Holon 58856, Israel
Telephone: 011-972-3-557-3409
with a copy to:
Scott D. Smith, Esq. and Eliot W. Robinson, Esq.
Powell, Goldstein, Frazer & Murphy LLP
191 Peachtree Street, 16/th/ Floor
Atlanta, Georgia 30303-1740
Telephone: (404) 572-6600
________________________________________________________________________________
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
August 23, 2000
_______________________________________________________________
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), (f) or (g), check the following box [_].
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
CUSIP No. 52729 M 10 2 Page 2 of 13
------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Liraz Systems, Ltd.
------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
2 (a) [X]
(b) [_]
------------------------------------------------------------------------------
SEC USE ONLY
3
------------------------------------------------------------------------------
SOURCE OF FUNDS
4
WC
------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [X]
5
------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Israel
------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
7,685,925
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
7,685,925
------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
7,685,925
------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
12 [_]
------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
46.37%
------------------------------------------------------------------------------
TYPE OF REPORTING PERSON
14
OO
------------------------------------------------------------------------------
<PAGE>
CUSIP No. 52729 M 10 2 Page 3 of 13
------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Liraz Systems Export (1990) Ltd.
------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
2 (a) [X]
(b) [_]
------------------------------------------------------------------------------
SEC USE ONLY
3
------------------------------------------------------------------------------
SOURCE OF FUNDS
4
WC
------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [X]
5
------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Israel
------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
7,685,925
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
7,685,925
------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
7,685,925
------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
12 [_]
------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
46.37%
------------------------------------------------------------------------------
TYPE OF REPORTING PERSON
14
OO
------------------------------------------------------------------------------
<PAGE>
CUSIP No. 52729 M 10 2 Page 4 of 13
------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Advanced Systems Europe B.V.
------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
2 (a) [X]
(b) [_]
------------------------------------------------------------------------------
SEC USE ONLY
3
------------------------------------------------------------------------------
SOURCE OF FUNDS
4
AF
------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(c) [X]
5
------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Netherlands
------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
7,685,925
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
7,685,925
------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
7,685,925
------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
12 [_]
------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
46.37%
------------------------------------------------------------------------------
TYPE OF REPORTING PERSON
14
OO
------------------------------------------------------------------------------
<PAGE>
CUSIP No. 52729 M 10 2 Page 5 of 13
------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Arie Kilman
------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
2 (a) [_]
(b) [X]
------------------------------------------------------------------------------
SEC USE ONLY
3
------------------------------------------------------------------------------
SOURCE OF FUNDS
4
PF
------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Israel
------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 76,667
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
821,257
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 76,667
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
821,257
------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
897,924
------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
12 [_]
------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
6.01%
------------------------------------------------------------------------------
TYPE OF REPORTING PERSON
14
IN
------------------------------------------------------------------------------
<PAGE>
CUSIP No.52729 M 10 2 Page 6 of 13
Item 1. Security and Issuer
This Schedule 13D relates to the common stock, par value $0.001 per
share (the "Common Stock"), of Level 8 Systems, Inc., a Delaware corporation
("Level 8" or "Issuer"). Level 8's principal executive offices are located at
8000 Regency Parkway, Cary, North Carolina 27511.
Item 2. Identity and Background
(a) - (c), (f): This Schedule 13D is being filed on behalf of each of
the following, who are collectively referred to herein as the
"Reporting Persons":
(1) Liraz Systems, Ltd. ("Liraz"), an Israeli corporation, with its
principal business office at 5 Hatzoref Street, Holon 58856,
Israel. Liraz is in the business of systems integration.
(2) Liraz Systems Export (1990) Ltd. ("Export"), an Israeli
corporation, with its principal business office at 5 Hatzoref
Street, Holon 58856, Israel. Export is a wholly-owned subsidiary of
Liraz and is also in the business of systems integration.
(3) Advanced Systems Europe B.V. ("Advanced Systems"), is a Dutch
corporation, with its principal business office at 15 Rechtzaad,
4703 RC Roosendaal, Netherlands. Advanced Systems is a wholly-owned
subsidiary of Liraz and is also in the business of systems
integration.
(4) Arie Kilman, an Israeli citizen, with his business address at c/o
Level 8 Systems, Inc., 8000 Regency Parkway, Cary, North Carolina
27511. Mr. Kilman currently serves as Chairman of the Board and
Chief Executive Officer of Level 8. Mr. Kilman owns 17.8% of the
outstanding ordinary shares of Liraz and until December 13, 1999
served as Chairman of the Board of Directors and President of
Liraz. Mr. Kilman is the sole director of Export.
Certain information concerning the directors and executive officers of the
Reporting Persons is set forth on Schedule A attached hereto and incorporated by
reference herein.
This Schedule 13D is being filed to amend the Schedule 13D filed with
regard to shares of Level 8 beneficially owned by Liraz, Export and Arie Kilman
filed March 9, 1999 (the "Previous Filing") and to add Advanced Systems as a
Reporting Person.
(d) & (e): Except as noted below, during the last five years, neither
the Reporting Persons nor, to the best of their knowledge, any of their
directors or executive officers, have been convicted in any criminal proceeding
(excluding traffic violations or similar misdemeanors) or have been parties to
any civil proceeding of a judicial or administrative body of competent
jurisdiction subjecting them to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
Mr. Amos Bankirer was the controller of Discount Investment Corporation
Ltd. ("DIC"), an Israeli corporation. DIC is a principal holder of ordinary
shares of Liraz. Mr. Bankirer was nominated by DIC and elected as a member of
the Liraz Board of Directors, serving from June 29, 1998 to April 3, 2000. On
August 5, 1999, an indictment was filed with the Tel-Aviv Magistrate's Court,
against DIC, and several then current and former officers of DIC, including Mr.
Bankrier, the CFO, a former CEO, another former senior executive, and DIC's
legal advisor. The indictment alleged offences under Section 53A(4) of the
Israeli Securities Act, 1968, regarding DIC's annual and quarterly financial
statements. The asserted offenses related to the non-attachment of the
financial statements of Iscar Ltd., Blades Technology Ltd. and Tefron Holdings
(1990) Ltd., to DIC's financial statements, which had been filed with the
Israeli Stock Exchange and the Israeli Registrar of Companies, for periods from
1990 until the first quarter of 1995 (inclusive). DIC denied the charges. In May
2000, Mr. Bankrier notified the Court that he had reached a plea bargain with
the Tel Aviv District Attorney's Office with regard to his indictment. In the
course of
<PAGE>
CUSIP No.52729 M 10 2 Page 7 of 13
the hearings involving the plea bargain, Mr. Bankrier pleaded guilty to the
charges against him. The Court imposed upon him a fine of NIS 230,000
(approximately $56,900 U.S.) and 12 months imprisonment, suspended for three
years, which suspension will be revoked if he commits another crime under
Section 53(A)(4). As noted above, Mr. Bankrier resigned his position with Liraz
prior to the plea bargain, and has no further connection with Liraz.
Item 3. Source and Amount of Funds or Other Consideration
Liraz and Export used available cash and cash equivalents to fund
acquisitions of the Common Stock of Level 8 except with regard to 170,000 shares
of Common Stock received in exchange for Liraz's guarantee of a loan to Level 8.
Advanced Systems funded its acquisitions of Common Stock and preferred shares of
Level 8 with loans of funds from Liraz to Advanced Systems. Mr. Kilman used
personal funds to purchase his shares.
Item 4. Purpose of Transaction
The Reporting Persons acquired their shares of Level 8 for investment
purposes. The Reporting Persons intend to consider various alternative courses
of action with respect to their interests in Level 8 in light of the
circumstances existing from time to time. Such actions may involve the purchase
of additional shares of the Common Stock of Level 8, or the sale of all or a
portion of the shares of Common Stock beneficially owned by them, in the open
market or in privately negotiated transactions.
Although the foregoing represents the range of activities presently
contemplated by the Reporting Persons with respect to Issuer's Common Stock, the
intentions of the Reporting Persons are subject to change at any time. Except as
set forth above, none of the Reporting Persons has any present plans or
proposals that relate to or would result in:
a. The acquisition by any person of additional securities of the
Issuer, or the disposition of securities of the Issuer;
b. An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of its
subsidiaries;
c. A sale or transfer of a material amount of assets of the Issuer or
any of its subsidiaries;
d. Any change in the present board of directors or management of the
Issuer, including any plans or proposals to change the number or
term of directors or to fill any existing vacancies on the board,
except that Liraz, Export and Advanced Systems will vote to elect
the Merrill Lynch designee, currently Mr. Anthony C. Pizi, to
Issuer's Board of Directors (Mr. Pizi is now on the Board of
Directors by virtue of an appointment);
e. Any material change in the present capitalization or dividend
policy of the Issuer;
f. Any other material change in the Issuer's business or corporate
structure;
<PAGE>
CUSIP No.52729 M 10 2 Page 8 of 13
g. Changes in the Issuer's charter, bylaws or instruments
corresponding thereto or other actions which may impede the
acquisition of control of the Issuer by any person;
h. Causing a class of securities of the Issuer to be delisted from a
national securities exchange or to cease to be authorized to be
quoted in an inter-dealer quotation system of a registered national
securities association;
i. A class of equity securities of the Issuer becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the
Act; or
j. Any action similar to any of those enumerated above.
Each of the Reporting Persons, however, reserves the right to take
future actions that may have any of the consequences described above, to acquire
additional securities of the Issuer, to dispose of any such securities at any
time or to formulate other purposes, plans or proposals regarding the Issuer or
any of its securities, to the extent each Reporting Person individually deems
advisable in light of its overall investment strategy, market conditions, the
Issuer's business prospects and any other factors.
Item 5. Interest in Securities of the Issuer
(a): As of the date of this schedule, the Reporting Persons directly
own the following numbers and percentages of the Common Stock of Level 8:
(b):
Number of Shares Percentage of
Reporting Persons Directly Owned Outstanding Shares (1)
----------------- ---------------- ------------------
Liraz 3,086,863 19.31%
Export 821,257 5.14%
Advanced Systems 2,000,000(1) 12.51%
Arie Kilman 76,667(2) (3)
(1) Including 1,000,000 shares issuable upon conversion of Series A
Preferred Stock.
(2) Including shares issuable within 60 days of this filing upon
exercise of options.
(3) Less than 1%.
Since Export and Advanced Systems are subsidiaries of Liraz, the direct
holdings of each of Liraz, Export and Advanced Systems are aggregated in figures
reported in pages 2-5 of this Schedule 13D. The sum of their direct holdings is
5,908,120 shares of the Common Stock (37.22% of 15,875,609, which is the sum of
the 14,875,609 shares of Level 8 Common Stock outstanding as of September 30,
2000, and the 1,000,000 shares which may be issued to Advanced Systems upon
conversion of Preferred Stock). For the reasons described below, an additional
1,000,000 shares, and warrants to purchase 250,000 shares, all held by Welsh
Carson Anderson & Stowe VI, L.P. ("WCAS VI") are added to the direct holdings of
the Liraz affiliates. Also as described below, a Voting Coordination Agreement
between Liraz and Mr. Samuel Somech causes Mr. Somech and Liraz to share voting
power over their respective shares. Thus, Mr. Somech's holdings of 77,805 shares
of Common Stock and options to purchase an additional 450,000 shares are
reported herein as being subject to Liraz's shared voting power. Thus the total
number of outstanding shares and shares issuable within 60 days over which
Liraz, Export and Advanced Systems share control is 7,685,925. The percentage of
class, 46.37%, was computed by taking that number and dividing it into
16,575,609 (14,875,609 outstanding plus 1,000,000 issuable upon conversion of
preferred stock plus 250,000 issuable upon exercise of the WCAS VI warrants plus
450,000 issuable upon exercise of Mr. Somech's options).
<PAGE>
CUSIP No.52729 M 10 2 Page 9 of 13
The Previous Filing reported that Mr. Kilman shared voting power with
respect to the Common Stock of Level 8 held by Liraz and Export. Mr. Kilman then
owned 19.4%, and continues to hold 17.8% of the outstanding ordinary shares of
Liraz. At the time of the Previous Filing Mr. Kilman was also Chairman of the
Board of Directors and President of Liraz and the sole director of Export. In
addition, at the time of the Previous Filing a shareholders agreement related to
Liraz was in effect among Mr. Kilman, PEC Israel Economic Corporation ("PEC")
and Discount Investment Corporation Ltd. ("DIC"), pursuant to which Mr. Kilman,
PEC and DIC agreed to act together to elect directors of Liraz and for certain
other purposes. Mr. Kilman has resigned from his positions with Liraz, and the
voting agreement with PEC and DIC relating to Liraz has been terminated.
Accordingly, Mr. Kilman no longer shares voting and dispositive power over the
Level 8 Common Stock held by Liraz. However, Mr. Kilman remains as the sole
director of Export. Therefore Mr. Kilman is reported herein as sharing voting
power over the shares of Level 8 held by Export, but disclaims beneficial
ownership of those shares except as he may indirectly have such interest through
his equity ownership in Liraz.
Mr. Kilman currently directly owns 10,000 shares of Level 8's
outstanding Common Stock. On March 30, 1999, Mr. Kilman voluntarily terminated
all of his outstanding options exerciseable for 200,000 shares of Common Stock
at exercise prices ranging from $10.45 to $14.73. In December 1999, he was
granted new options to purchase 200,000 shares at an option price of $30.25 per
share, with such options vesting on a schedule of 1/3 in December 2000, 1/3 in
December 2001, and 1/3 in December 2002. On January 6, 2000, Mr. Kilman was
granted options to purchase an additional 50,000 shares of Common Stock, with
1/3 vesting on each anniversary of the grant. Consequently, Mr. Kilman currently
directly owns 10,000 shares, and has options which will be exercisable within
sixty days of this filing for an additional 66,667 shares. When the shares held
by Export over which Mr. Kilman shares voting power are included, Mr. Kilman has
direct or shared power over 897,924 shares of Level 8 Common Stock, which is
6.01% of 14,942,276 (14,875,609 outstanding plus 66,667 issuable upon exercise
of Mr. Kilman's options which are exerciseable within 60 days).
Level 8 entered into an agreement dated November 23, 1998 (the
"Acquisition Agreement") with Welsh Carson Anderson & Stowe VI, L.P. ("WCAS VI")
and certain parties affiliated or associated with WCAS VI (collectively, the
"WCAS Parties") related to the acquisition of Seer Technologies, Inc. The
Acquisition Agreement is attached hereto as Exhibit 99.2 and is incorporated
herein by reference. Pursuant to the Acquisition Agreement, on December 31,
1998, Level 8 issued to the WCAS Parties 1,000,000 shares of Common Stock and
warrants to purchase an additional 250,000 shares of Common Stock for $12.00 a
share, and the WCAS Parties transferred to Level 8 approximately 69% of the
outstanding voting stock of Seer Technologies, Inc. Under the Acquisition
Agreement, at any meeting of shareholders of Level 8 prior to January 1, 2001,
each WCAS Party is required to grant a proxy to one or more individuals named by
Level 8 to vote all the Level 8 Common Stock that each such WCAS Party
beneficially owns. As reported in the Previous Filing, until the voting
agreement expires on January 1, 2001, Liraz may be deemed to share voting power
with respect to the Level 8 Common Stock beneficially owned by the WCAS Parties
because of Liraz's influence with regard to the Board of Directors of Level 8.
Liraz and Mr. Samuel Somech entered into a Voting Coordination
Agreement dated July 31, 1997. That agreement is attached hereto as Exhibit
99.4. The agreement obligated Liraz to vote its shares to maintain Mr. Somech on
the Level 8 Board of Directors, and obligates Mr. Somech to vote his shares for
the Liraz candidates for the Level 8 Board of Directors. The agreement
originally also had provisions allowing Mr. Somech to put his shares to Liraz,
and allowing Liraz to call Mr. Somech's shares under certain circumstances.
Those put and call options were cancelled in June 2000. The term of the
agreement is ten years.
On August 23, 2000 Level 8 sold 1,000,000 shares of Common Stock to
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"). In
connection with that transaction, Liraz, Export, Advanced Systems and certain of
the WCAS Parties (each a "Company Stockholder" and collectively, the "Company
Stockholders") entered into a Stockholders Agreement (the "Stockholders
Agreement"), dated August 23, 2000 with Merrill Lynch. The Stockholders
Agreement is Exhibit 99.3 hereto and is incorporated herein by reference.
Pursuant to the Stockholders Agreement, each of the Company Stockholders agreed
to vote, in person or by proxy, all shares of Common Stock owned by such Company
Stockholder in favor of the election of a person designated by Merrill Lynch
(the "Merrill Designee") to the Level 8 Board of Directors for so long as
Merrill Lynch continues to own 200,000 shares of Common Stock. Additionally, for
so long as Merrill Lynch has the right to designate a director of the Company,
each of the Company stockholders further agreed to take all action, including
the voting, in person or by proxy, of shares of Common Stock owned or controlled
by such Company Stockholder, as may be necessary to cause the Company to have a
Board of at least 8 directors. In addition, each of the Company Stockholders
agreed
<PAGE>
CUSIP No.52729 M 10 2 Page 10 of 13
that the Common Stock of each Company Stockholder shall not be transferable
until such time as any transferee agrees in writing to be bound by the terms of
the Stockholders Agreement, subject to certain limited exceptions. Because the
Stockholders Agreement grants Merrill Lynch certain rights with regard to the
voting of Common Stock held by Liraz, Export and Advanced Systems, and because
the Stockholders Agreement restrains transfer of those shares in certain
circumstances, Merrill Lynch may be deemed to share voting and dispositive power
with respect to the Common Stock owned by Liraz, Export and Advanced Systems.
However, because the Agreement does not grant Liraz, Export or Advanced Systems
any rights with regard to voting of the shares held by Merrill Lynch or the WCAS
Parties, and the transfer restrictions are only in support of Merrill Lynch's
rights, Liraz, Export and Advanced Systems do not share voting or dispositive
power over the shares held by Merrill Lynch.
(c): Level 8 has designated 21,000 shares of the authorized preferred
stock as Series A 4% Convertible Redeemable Preferred Stock ("Series A Preferred
Stock"). On June 28, 1999 Advanced Systems purchased 10,000 shares of Level 8
Preferred Stock, convertible into an aggregate of 1,000,000 shares of Common
Stock for a purchase price of $10,000,000. Holders of Series A Preferred Stock
are entitled to receive 4% annual cash dividends payable quarterly and have one
vote per share of Series A Preferred Stock, voting together with the Common
Stock and not as a separate class except on matters adversely affecting the
rights of holders of the Series A Preferred Stock. The Series A Preferred Stock
may be redeemed at Level 8's option at a redemption price equal to the original
purchase price if the closing price of the Common Stock over 20 consecutive
trading days is greater than $20 per share. The conversion price of the Series A
Preferred Stock is subject to certain anti-dilution provisions, including
adjustments in the event of certain sales of Common Stock at a price of less
than $10 per share. In the event that Level 8 breaches its obligations to pay
dividends when due or to issue Common Stock upon conversion, or the Common Stock
is delisted, the dividend rate on the Series A Preferred Stock would increase to
18% per annum (partially payable in shares of Level 8 Common Stock at Level 8's
option during the first 60 days of such increased dividend rate). Pursuant to
Rule 13d-3(d)(1) of the Regulations under the Securities Exchange Act of 1934,
as amended, Advanced Systems is deemed to be the beneficial owner of all the
shares into which the Preferred Stock is convertible.
As part of the Series A Preferred Stock issuance, Advanced Systems
acquired warrants exerciseable at $10.00 per share for an additional 1,000,000
shares of Level 8 Common Stock. Advanced Systems exercised those warrants in
December 1999.
Level 8 issued Liraz 60,000 shares of Common Stock in exchange for
Liraz's guaranty of a $10,000,000 term loan to Level 8 used to finance the
Template acquisition in December 1999 and issued 110,000 additional shares of
Common Stock in October 2000 in exchange for Liraz's continuing the guaranty
through an extension of the term through November 31, 2001 and an increase in
the loan amount of $5,000,000 to a total of $15,000,000.
The table below sets forth additional purchases and sales of Level 8
Common Stock by the Reporting Persons since the Previous Filing. All such
purchases and sales were effected on the Nasdaq Stock Exchange.
<TABLE>
<CAPTION>
Purchase or Sale and
Date Reporting Person Number of Shares Approximate Price per Share(1)
<S> <C> <C> <C>
08/23/00 Liraz Purchase, 6,000 Shares $19.66 per share
09/06/00 Liraz Purchase, 3,900 Shares $19.93 per share
09/07/00 Liraz Purchase, 10,000 Shares $19.75 per share
09/08/00 Liraz Purchase, 5,000 Shares $19.88 per share
</TABLE>
<PAGE>
CUSIP No.52729 M 10 2 Page 11 of 13
<TABLE>
<S> <C> <C> <C>
09/11/00 Liraz Purchase, 7,500 Shares $19.83 per share
11/02/00 Liraz Purchase, 12,500 Shares $ 9.38 per share
11/02/00 Liraz Purchase, 5,000 Shares $ 8.81 per share
11/03/00 Liraz Purchase, 5,000 Shares $ 8.88 per share
11/03/00 Liraz Purchase, 1,000 Shares $ 9.25 per share
11/03/00 Liraz Purchase, 1,100 Shares $ 9.38 per share
</TABLE>
(1) Exclusive of commissions.
(d): Not applicable.
(e): Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
See item 5(b) and item 5(c).
The summary descriptions contained in this Schedule 13D of certain
agreements and documents are qualified in their entirety by reference to the
complete texts of such agreements and documents, filed as exhibits hereto and
incorporated herein by reference.
Except as described herein, the Reporting Persons do not have any
contracts, arrangements, understandings or relationships (legal or otherwise)
with respect to any securities of the Issuer, including, but not limited to any
agreements concerning (i) transfer or voting of any securities of the Company,
(ii) finder's fees, (iii) joint ventures, (iv) loan or option arrangements, (v)
puts or calls, (vi) guarantees of profits, (vii) division of profits or loss or
(viii) the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits
99.1 Joint filing agreement regarding the filing of this Schedule,
attached hereto.
99.2 Agreement, dated November 23, 1998, between Level 8, on one hand,
and Welsh Carson Anderson & Stowe VI, L.P. ("WCAS VI") and
certain parties affiliated or associated with WCAS VI is
incorporated by reference to Exhibit 2.1 of Level 8's Report on
Form 8-K filed with the SEC on January 15, 1999.
99.3 Stockholders Agreement among Level 8 Systems, Inc., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Liraz Systems, Ltd.
And certain of its affiliates and Welsh, Carson Anderson & Stowe
VI, L.P. and certain of its affiliates, incorporated by reference
to Exhibit 10.3 of Level 8's Report on Form 8-K filed with the
SEC on September 11, 2000.
99.4 Voting Coordination Agreement between Liraz and Mr. Samuel
Somech, dated as of July 31, 1997 and attached hereto.
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: November 7, 2000.
LIRAZ SYSTEMS LTD.
LIRAZ SYSTEMS EXPORT (1990) LTD.
ADVANCED SYSTEMS EUROPE B.V.
ARIE KILMAN
By: LIRAZ SYSTEMS LTD.
<PAGE>
CUSIP No.52729 M 10 2 Page 12 of 13
/s/ Mordecai Gutman
---------------------------
Mordecai Gutman
Chief Executive Officer
/s/ Yossi Shemesh
----------------------------
Yossi Shemesh
Chief Financial Officer
For itself and on behalf of Liraz
Systems Ltd., Liraz Systems Export
(1990) Ltd., Advanced Systems Europe
B.V. and Arie Kilman pursuant to the
agreement annexed hereto as Exhibit
99.1.
<PAGE>
CUSIP No.52729 M 10 2 Page 13 of 13
Exhibit Index
99.1 Joint filing agreement regarding the filing of this Schedule,
attached hereto.
99.2 Agreement, dated November 23, 1998, between Level 8, on one
hand, and Welsh Carson Anderson & Stowe VI, L.P. ("WCAS VI")
and certain parties affiliated or associated with WCAS VI is
incorporated by reference to Exhibit 2.1 of Level 8's Report
on Form 8-K filed with the SEC on January 15, 1999.
99.3 Stockholders Agreement among Level 8 Systems, Inc., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Liraz Systems,
Ltd. And certain of its affiliates and Welsh, Carson Anderson
& Stowe VI, L.P. and certain of its affiliates, incorporated
by reference to Exhibit 10.3 of Level 8's Report on Form 8-K
filed with the SEC on September 11, 2000.
99.4 Voting Coordination Agreement between Liraz and Mr. Samuel
Somech, dated as of July 31, 1997 and attached hereto.
