LEVEL 8 SYSTEMS INC
AMEND 5 TO 1997 STOCK OPTION PLAN
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<TYPE>EX-10.14A
<SEQUENCE>8
<FILENAME>dex1014a.txt
<DESCRIPTION>AMEND 5 TO 1997 STOCK OPTION PLAN
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                                                                  EXHIBIT 10.14A

                             FIFTH AMENDMENT TO THE
                             LEVEL 8 SYSTEMS, INC.
                               STOCK OPTION PLAN

         THIS FIFTH AMENDMENT is made as of the 22nd day of June 2001, by Level
8 Systems, Inc., a corporation organized and existing under the laws of the
State of New York (hereinafter called the "Company").

                              W I T N E S S E T H:

         WHEREAS, the Company maintains the Level 8 Systems, Inc. 1997 Stock
Option Plan (the "Plan").

         WHEREAS, the Company wishes to amend the Plan to increase the number of
shares reserved for issuance under the Plan.

         WHEREAS, the Company wishes to amend the Plan to increase the number of
shares that each participant of the Plan may receive during the course of a
fiscal year.

         WHEREAS, the Company now authorizes the Committee to issue at its
discretion an award comprised of Company stock.

         NOW, THEREFORE, the Company does hereby amend the Plan, effective as of
the 22nd day of June, 2001, as follows:

1.       By deleting the third full sentence in Section 2.5 in its entirety and
by substituting therefor the following:

         "Notwithstanding the foregoing, with respect to grants of Options or
Awards to non-employee directors and any action hereunder relating to Options or
Awards held by non-employee directors, the Committee shall mean the Board."

2.       By deleting Section 2.7 in its entirety and by substituting therefor
the following:

         "2.7 `Consultant' means any advisor or consultant to the Company or its
Subsidiaries who is eligible pursuant to Article V to be granted Options or
Awards under this Plan. The term `Consultant' shall also include any former
advisor or consultant to the Company."

3.       By deleting Section 2.10 in its entirety and by substituting therefor
the following:

         "2.10 `Eligible Employee' shall mean the employees of the Company and
its Subsidiaries who are eligible pursuant to Article V to be granted Options or
Awards under this Plan."

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4.       By deleting Section 2.16 in its entirety and by substituting therefor
the following:

         "2.16 `Participant' shall mean the following persons to whom an Option
or Award has been granted pursuant to this Plan: Eligible Employees and
Consultants of the Company or its Subsidiaries and non-employee directors of the
Company."

5.       By adding the following new Section 2.19A:

         "2.19A `Stock Award' or `Award' shall mean a stock award described in
Article VIA."

6.       By adding the following new Section 2.19B:

         "2.19B `Stock Award Agreement' shall mean an agreement between the
Company and a Participant or other documentation evidencing a Stock Award."

7.       By adding the following new Section 2.19C:

         "2.19C `Stock Award Program' shall mean a written program established
by the Committee, pursuant to which Stock Awards are awarded under the Plan
under uniform terms, conditions, and restrictions set forth in such written
program."

8.       By deleting Section 3.2 in its entirety and by substituting therefor
the following:

         "3.2 Grants. The Committee shall have full authority to grant Stock
Options or Stock Awards, pursuant to the terms of this Plan. In particular, the
Committee shall have the authority:

                  (a) to select the Eligible Employees, Consultants, and
         non-employee directors to whom Stock Options or Stock Awards may from
         time to time be granted hereunder;

                  (b) to determine whether and to what extent Stock Options or
         Stock Awards are to be granted hereunder to one or more Eligible
         Employees, Consultants or non-employee directors;

                  (c) to determine, in accordance with the terms of this Plan,
         the number of shares of Common Stock to be covered by each Stock Option
         or Stock Award granted to an Eligible Employee, Consultant or
         non-employee director;

                  (d) to determine the terms and conditions, not inconsistent
         with the terms of this Plan, of any Stock Option or Stock Award granted
         hereunder to an Eligible Employee, Consultant or non-employee director
         (including, but not limited to, the share price, any restriction or
         limitation, any vesting schedule or acceleration thereof, or any
         forfeiture restrictions or waiver thereof, and the shares of Common
         Stock relating thereto, based on such factors, if any, as the Committee
         shall determine, in its sole discretion);

                  (e) to determine whether and under what circumstances a Stock
         Option may be settled in cash and/or Common Stock under Subsection
         6.3(d);


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<PAGE>

                  (f) to determine whether, to what extent and under what
         circumstances to provide loans (which shall be on a recourse basis and
         shall bear a reasonable rate of interest) to Eligible Employees,
         Consultants or non-employee directors in order to exercise Options
         under the Plan; and

                  (g) to determine whether to require Eligible Employees,
         Consultants or non-employee directors, as a condition of the granting
         of any Option or Award, to not sell or otherwise dispose of shares
         acquired pursuant to the exercise of an Option or Award for a period of
         time as determined by the Committee, in its sole discretion, following
         the date of the acquisition of such Option or Award."

9.       By deleting Section 3.3 of the Plan in its entirety and by substituting
therefor the following:

         "3.3 Guidelines. Subject to Article IX hereof, the Committee shall have
the authority to adopt, alter and repeal such administrative rules, guidelines
and practices governing this Plan and perform all acts, include the delegation
of its administrative responsibilities, as it shall, from time to time, deem
advisable; to construe and interpret the terms and provisions of this Plan and
any Option or Award granted under this Plan (and any agreements relating
thereto); and to otherwise supervise the administration of this Plan. The
Committee may correct any defect, supply any omission or reconcile any
inconsistency in this Plan or in any agreement relating thereto in the manner
and to the extent it shall deem necessary to carry this Plan into effect, but
only to the extent any such action would be permitted under the applicable
provisions of Rule 16b-3b (if any) and the applicable provisions of Section
162(m) of the Code (if any). The Committee may adopt special guidelines and
provisions for persons who are residing in, or subject to, the taxes of,
countries other than the United States to comply with applicable tax and
securities laws. If and solely to the extent applicable, this Plan is intended
to comply with Rule 16b-3 and, only for purposes of any Option granted
hereunder, Section 162m of the Code and shall be limited, construed and
interpreted in a manner so as to comply therewith."

10. By amending Section 3.7(b) of the Plan by replacing the phrase "Stock
Option" with the phrase "Stock Option or Stock Award" and by replacing the
phrase "Stock Options" with the phrase "Stock Options or Stock Awards."

11.      By deleting the first full sentence in Section 4.1(a) of the Plan and
by substituting therefor the following:

         "The aggregate number of shares of Common Stock which may be issued
under this Plan with respect to which Stock Options and Stock Awards may be
granted shall not exceed 6,500,000 shares (subject to any increase or decrease
pursuant to Section 4.2) which may be either authorized or unissued Common Stock
or Common Stock held in or acquired for the treasury of the Company."

12.      By deleting the first full sentence in Section 4.1(b) of the Plan and
by substituting therefor the following:

         "The maximum number of shares of Common Stock subject to any Option
which may be granted under this Plan to each Participant shall not exceed
500,000 shares (subject to any increase or decrease pursuant to Section 4.2)
during each fiscal year of the Company."


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13.      By amending Section 4.2(a) by replacing the phrase "Options" with the
phrase "Options or Awards."

14.      By amending Article V of the Plan by replacing the phrase "Stock
Options" with the phrase "Stock Options or Stock Awards."

15.      By adding the following new Article VIA:

                                  "ARTICLE VIA

                                  STOCK AWARDS

         6A.1   Terms and Conditions.

                  (a) The number of shares of Common Stock as to which a Stock
         Award may be granted will be determined by the Committee in its sole
         discretion, subject to the provisions of Section 4.1 as to the total
         number of shares available for grants under the Plan. The Committee may
         require a payment from the Participant in an amount less than, equal to
         or greater than the aggregate Fair Market Value of the shares of Common
         Stock awarded determined at the date of grant in exchange for the grant
         of a Stock Award or may grant a Stock Award without the requirement of
         payment.

                  (b) Each Stock Award will be evidenced by a Stock Award
         Agreement or Stock Award Program in such form and containing such
         terms, conditions and restrictions as the Committee may determine to be
         appropriate, including, without limitation, performance goals that must
         be achieved as a condition to vesting and other restrictions as the
         Committee may determine to be appropriate. Each Stock Award Agreement
         or Stock Award Program is subject to the terms of the Plan and any
         provisions contained in the Stock Award Agreement or Stock Award
         Program that are inconsistent with the Plan are null and void. The
         certificate representing shares of Common Stock subject to a Stock
         Award will bear evidence of any restrictions or conditions established
         by the Committee.

                  (c) The date a Stock Award is granted will be the date on
         which the Committee has approved the terms and conditions of the Stock
         Award and has determined the recipient of the Stock Award and the
         number of shares covered by the Stock Award, and has taken all such
         other actions necessary to complete the grant of the Stock Award.

                  (d) The terms of any Stock Award Agreement or Stock Award
         Program awarded to a Participant under the Plan may be modified with
         the consent of the Committee and the Participant.

                  (e) Subsequent to the date of the grant of the Stock Award,
         the Committee has the power to permit, in its discretion, an
         acceleration of the expiration of an applicable restriction period with
         respect to any part of all of the shares awarded to a Participant.



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<PAGE>

         6A.2 Termination of Employment. Any Award under this Plan to a
Participant who has experienced a Termination of Relationship or Termination of
Directorship may be cancelled, accelerated, paid or continued, as provided in
the applicable Stock Award Agreement or the Stock Award Program, in the absence
of such provision, as determined by the Committee."

16.      By adding the following new Article VIB:

                                  "ARTICLE VIB

                              RESTRICTIONS ON STOCK

         6B.1 Escrow of Shares. Any certificates representing the shares of
Common Stock issued under the Plan will be issued in the Participant's name,
but, if the applicable Stock Award Agreement or Stock Award Program so provides,
the shares of Common Stock will be held by a custodian designated by the
Committee (the "Custodian"). Each applicable Stock Award Agreement or Stock
Award Program so providing for transfer of shares of Common Stock to the
Custodian must appoint the Custodian as the attorney-in-fact for the Participant
for the term specified in the applicable Stock Award Agreement or Stock Award
Program, with full power and authority in the Participant's name, place and
stead to transfer, assign and convey to the Company any shares of Common Stock
held by the Custodian for such Participant, if the Participant forfeits the
shares under the terms of the applicable Stock Award Agreement or Stock Award
Program. During the period that the Custodian holds the shares subject to this
Section 6B.1, the Participant is entitled to all rights, except as provided in
the applicable Stock Award Agreement or Stock Award Program, applicable to
shares of Stock not so held. Any dividends declares on shares of Common Stock
held by the Custodian must provide in the applicable Stock Award Agreement or
Stock Award Program, to be paid directly to the Participant or, in the
alternative, be retained by the Custodian or by the Company until the expiration
of the term specified in the applicable Stock Award Agreement or Stock Award
Program and shall then be delivered, together with any proceeds, with the shares
of Common Stock to the Participant or to the Company, as applicable.

         6B.2 Restrictions on Transfer. The Participant does not have the right
to make or permit to exist any disposition of the shares of Common Stock issued
pursuant to the Plan except as provided in the Plan or the applicable Stock
Award Agreement or Stock Award Program. Any disposition of the shares of Common
Stock issued under the Plan by the Participant not made in accordance with the
Plan or the applicable Stock Award Agreement or Stock Award Program will be
void. The Company will not recognize, or have the duty to recognize, any
disposition not made in accordance with the Plan and the applicable Stock Award
Agreement or Stock Award Program, and the shares so transferred will continue to
be bound by the Plan and the applicable Stock Award Agreement or Stock Award
Program."

17.      By deleting Article VII in its entirety and by substituting therefore
the following:

         "No Stock Option or Stock Award, to the extent such Stock Award is not
     vested, shall be Transferable by the Participant otherwise than by will or
     by the laws of descent and distribution. All Stock Options shall be
     exercisable, during the Participant's lifetime, only by the Participant. No
     Stock Option or Stock Award, to the extent such Stock Award is not vested,
     shall, except as otherwise specifically provided by law or herein, be
     Transferable in any manner, and any attempt to Transfer any such Option or
     such Award shall be void, and



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     no such Option or such Award shall in any manner be liable for or subject
     to the debts, contracts, liabilities, engagements or torts of any person
     who shall be entitled to such Option or such Award, nor shall it be subject
     to attachment or legal process for or against such person."

18.      By adding the following new Section 8.1(c):

         "(c) In the event of a Change in Control of the Company (as defined
below), except as otherwise provided by the Committee upon the grant of an
Award, all Awards shall be and become fully vested."

19. By amending Section 9.1, Article XI, Article XII, and Article XIII by
replacing the phrase "Option" with the phrase "Option or Award", by replacing
the phrase "Options" with the phrase "Options or Awards, by replacing the phrase
"Stock Options" with the phrase "Stock Options or Stock Awards", and by
replacing the phrase "Alternative Option" with the phrase "Alternative Option or
Alternative Award."

         IN WITNESS WHEREOF, the Company has caused this Fifth Amendment to be
executed as of the day and year first above written.

                                                LEVEL 8 SYSTEMS, INC.


                                                By: /s/ John P. Broderick
                                                   ----------------------------


                                                Title: Corporate Secretary
                                                      -------------------------





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