EXHIBIT 10.27
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 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) reorganization
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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.
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.
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