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                                                                    Exhibit 10.7
                                                                    ------------


                             EMPLOYMENT AGREEMENT
                             --------------------


     This Employment Agreement (the "Agreement") is made and entered into this
____day of March, 2001, by and between LEVEL 8 SYSTEMS, INC., a Delaware
corporation (the "Company"), and PAUL RAMPEL, a resident of the State of
California (the "Employee").

     In consideration of the mutual covenants, promises and conditions set forth
in this Agreement, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.   Employment. The Company hereby employs Employee and Employee hereby accepts
     ----------
     such employment upon the terms and conditions set forth in this Agreement.

2.   Duties of Employee. Employee's title will be President and Employee will
     ------------------
     report directly to the Chief Executive Officer of the Company. Employee
     will be based in California. Employee agrees to perform and discharge such
     other duties as may be assigned to Employee from time to time by the
     Company to the reasonable satisfaction of the Company, and such duties will
     be consistent with those duties regularly and customarily assigned by the
     Company to the position of President. Employee agrees to comply with all of
     the Company's policies and standards and regulations and to follow the
     instructions and directives as promulgated by the Chief Executive Officer
     of the Company. Employee will devote Employee's full professional and
     business-related time, skills and best efforts to such duties and will not,
     during the term of this Agreement, be engaged (whether or not during normal
     business hours) in any other business or professional activity, whether or
     not such activity is pursued for gain, profit or other pecuniary advantage,
     without the prior written consent of the Chief Executive Officer of the
     Company. This Section will not be construed to prevent Employee from (a)
     investing personal assets in businesses which do not compete with the
     Company in such form or manner that will not require any services on the
     part of Employee in the operation or the affairs of the companies in which
     such investments are made and in which Employee's participation is solely
     that of an investor; (b) purchasing securities in any corporation whose
     securities are listed on a national securities exchange or regularly traded
     in the over-the-counter market, provided that Employee at no time owns,
     directly or indirectly, in excess of one percent (1%) of the outstanding
     stock of any class of any such corporation engaged in a business
     competitive with that of the Company; or (c) participating in conferences,
     preparing and publishing papers or books, teaching or joining or
     participating in any professional associations or trade group, so long as
     the Chief Executive Officer of the Company approves such participation,
     preparation and publication or teaching prior to Employee's engaging
     therein.
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3.   Term. The term of this Agreement will be at-will, and can be terminated by
     ----
     either party at any time, with or without cause, subject to the provisions
     of Section 4 of this Agreement.

4.   Termination.
     -----------

     (a)     Termination by Company for Cause. The Company may terminate this
             --------------------------------
             Agreement and all of its obligations hereunder immediately,
             including the obligation to pay Employee severance, vacation pay or
             any further benefits or remuneration, if any of the following
             events occur:

             (i)   Employee materially breaches any of the terms or conditions
             set forth in this Agreement and fails to cure such breach within
             ten (10) days after Employee's receipt from the Company of written
             notice of such breach (notwithstanding the foregoing, no cure
             period shall be applicable to breaches by Employee of Sections 6, 7
             or 8 of this Agreement);

             (ii)  Employee commits any other act materially detrimental to the
             business or reputation of the Company;

             (iii) Employee engages in dishonest or illegal activities or
             commits or is convicted of any crime involving fraud, deceit or
             moral turpitude; or

             (iv)  Employee dies or becomes mentally or physically incapacitated
             or disabled so as to be unable to perform Employee's duties under
             this Agreement even with a reasonable accommodation. Without
             limiting the generality of the foregoing, Employee's inability
             adequately to perform services under this Agreement for a period of
             sixty (60) consecutive days will be conclusive evidence of such
             mental or physical incapacity or disability, unless such inability
             adequately to perform services under this Agreement is pursuant to
             a mental or physical incapacity or disability covered by the Family
             Medical Leave Act, in which case such sixty (60)-day period shall
             be extended to a one hundred and twenty (120)-day period.

     (b) Termination by Company Without Cause. The Company may terminate
     ----------------------------------------
         Employee's employment pursuant to this Agreement for reasons other than
         those stated in Section 4(a) upon at least thirty (30) days' prior
         written notice to Employee. In the event Employee's employment with the
         Company is terminated by the Company without cause, the Company shall
         be obligated to pay Employee a lump sum severance payment equal to one
         (1) year of Employee's then base salary payable within thirty (30) days
         of the date of termination. Other than the severance payment set forth
         in this Section 4(b), Employee will be entitled to receive no further
         cash remuneration and will not be entitled to participate in any
         Company benefit programs following his termination by the Company,
         whether such termination is with or without cause. Furthermore, should
         Employee's employment with the Company be terminated without cause,
         Employee shall be entitled to an award of 100,000 shares of the
         Company's Common Stock and all Employee's

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         outstanding but unvested stock options shall vest 100%. Employee shall
         not be entitled to any further remuneration of any kind whatsoever for
         his termination without cause.

     (c) Termination by Employee for Cause. In the event there occurs a
     -------------------------------------
         substantial change in the Employee's job duties, there is a decrease in
         or a failure to provide the compensation or vested benefits under this
         Agreement or there is a change in control of the Company, Employee
         shall have the right to resign his employment and will be entitled to
         receive a severance payment equal to an award of 100,000 shares of the
         Company's common stock and all Employee's outstanding but unvested
         stock options shall vest 100%. For avoidance of doubt, this award shall
         be in lieu of the 100,000 shares awarded Employee under section 4(b)
         above. Employee shall have thirty (30) days from the date written
         notice is given to Employee about either (a) the change in his duties
         or (b) the announcement and closing of a transaction resulting in a
         change in control of the Company to resign or this Section 4(c) shall
         not apply. In the event Employee resigns from the Company for any other
         reason, Employee will not be entitled to receive or accrue any further
         Company benefits or other remuneration under this Agreement, and
         Employee specifically agrees that he will not be entitled to receive
         any severance pay or any further stock awards.

                 For purposes of this section, a change in control shall be
                 deemed to have occurred if any of the following occur:

            i)     the merger or consolidation of the Company with or into
                   another unaffiliated entity, or the merger of another
                   unaffiliated entity into the Company or another subsidiary
                   thereof with the effect that immediately after such
                   transaction the stockholders of the Company immediately prior
                   to such transaction hold less than fifty (50%) of the total
                   voting power of all securities generally entitled to vote in
                   the lection of directors, managers or trustees of the entity
                   surviving such merger or consolidation;

           ii)     the sale or transfer of more than 51% of the Company's then
                   outstanding voting stock (other than a restructuring event
                   which results in the continuation of the Company's business
                   by an affiliated entity) to unaffiliated person or group (as
                   such term is used in Section 13(d)(3) of the Securities
                   Exchange Act of 1934, as amended); or

          iii)     the adoption by the stockholders of the Company of a plan
                   relating to the liquidation or dissolution of the Company.

5.   Compensation and Benefits.
     -------------------------

     (a)  Annual Salary. During the term of this Agreement and for all services
          -------------
     rendered by Employee under this Agreement, the Company will pay Employee a
     base salary of Three Hundred Thousand Dollars ($300,000.00) per annum in
     equal bi-weekly installments. Such annual salary will be subject to
     adjustments by any increases given in the normal course of business.

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<PAGE>

     (b)  Incentive Compensation. Employee shall be eligible to receive
          ----------------------
     incentive compensation in the form of an annual bonus. Except as set forth
     in this Section, such bonus payment shall not exceed 40% of Employee's then
     base salary, and will be payable at the sole discretion of the Chief
     Executive Officer subject to Employee meeting the established goals set by
     the Company. Employee's bonus for the calendar year 2000 will be prorated
     based upon the amount of time Employee was an active employee of the
     Company. For the year 2001 only, Employee is guaranteed a minimum bonus
     payment of twenty percent of his base salary.

     (d)  Vacation. Employee shall be eligible for four (4) weeks of paid
          --------
     vacation annually, provided that such vacation is scheduled at such times
     that do not interfere with the Company's legitimate business needs.

     (e)  Other Benefits. Employee will be entitled to such fringe benefits as
          --------------
     may be provided from time-to-time by the Company to its employees,
     including, but not limited to, group health insurance, life and disability
     insurance, and any other fringe benefits now or hereafter provided by the
     Company to its employees, if and when Employee meets the eligibility
     requirements for any such benefit. The Company reserves the right to change
     or discontinue any employee benefit plans or programs now being offered to
     its employees; provided, however, that all benefits provided for employees
     of the same position and status as Employee will be provided to Employee on
     an equal basis.

     (f)  Business Expenses. Employee will be reimbursed for all reasonable
          -----------------
     expenses incurred in the discharge of Employee's duties under this
     Agreement pursuant to the Company's standard reimbursement policies.

     (g)  Withholding. The Company will deduct and withhold from the payments
          -----------
     made to Employee under this Agreement, state and federal income taxes, FICA
     and other amounts normally withheld from compensation due employees.

     (h)  Relocation Expenses. In the event that the Company requests that
          -------------------
     Employee relocate and Employee agrees to the request for relocation to any
     office of the Company, Employee will be eligible to receive relocation
     assistance in an amount not to exceed the amount recommended by a mutually
     agreeable relocation company. The payment of such relocation expenses will
     be subject to Employee submitting documentation that is consistent with the
     Company's standard reimbursement policies. Nothing in this subsection 5(h)
     shall obligate Company to purchase Employee's home or assist Employee in
     financing a new home if Employee is relocated.

6.   Non-Disclosure of Proprietary Information. Employee recognizes and
     -----------------------------------------
acknowledges that the Trade Secrets (as defined below) and Confidential
Information (as defined below) of the Company and its affiliates and all
physical embodiments thereof (as they may exist from time-to-time, collectively,
the "Proprietary Information") are valuable, special and unique assets of the
Company's and its affiliates' businesses. Employee further acknowledges that
access to such

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Proprietary Information is essential to the performance of Employee's duties
under this Agreement. Therefore, in order to obtain access to such Proprietary
Information, Employee agrees that, except with respect to those duties assigned
to him by the Company, Employee shall hold in confidence all Proprietary
Information and will not reproduce, use, distribute, disclose, publish or
otherwise disseminate any Proprietary Information, in whole or in part, and will
take no action causing, or fail to take any action necessary to prevent causing,
any Proprietary Information to lose its character as Proprietary Information,
nor will Employee make use of any such information for Employee's own purposes
or for the benefit of any person, firm, corporation, association or other entity
(except the Company) under any circumstances.

For purposes of this Agreement, the term "Trade Secrets" means information,
including, but not limited to, any technical or nontechnical data, formula,
pattern, compilation, program, device, method, technique, drawing, process,
financial data, financial plan, product plan, list of actual or potential
customers or suppliers, or other information similar to any of the foregoing,
which derives economic value, actual or potential, from not being generally
known to, and not being readily ascertainable by proper means by, other persons
who can derive economic value from its disclosure or use. For purposes of this
Agreement, the term "Trade Secrets" does not include information that Employee
can show by competent proof (i) was known to Employee and reduced to writing
prior to disclosure by the Company (but only if Employee promptly notifies the
Company of Employee's prior knowledge); (ii) was generally known to the public
at the time the Company disclosed the information to Employee; (iii) became
generally known to the public after disclosure by the Company through no act or
omission of Employee; or (iv) was disclosed to Employee by a third party having
a bona fide right both to possess the information and to disclose the
information to Employee. The term "Confidential Information" means any data or
information of the Company, other than trade secrets, which is valuable to the
Company and not generally known to competitors of the Company. The provisions of
this Section 6 will apply to Trade Secrets for so long as such information
remains a trade secret and to Confidential Information during Employee's
employment with the Company and for a period of two (2) years following any
termination of Employee's employment with the Company for whatever reason.

7.   Non-Solicitation Covenants. Employee agrees that during Employee's
     --------------------------
employment by the Company and for a period of one (1) year following the
termination of Employee's employment for whatever reason, Employee will not,
directly or indirectly, on Employee's own behalf or in the service of or on
behalf of any other individual or entity, divert, solicit or attempt to divert
or solicit any individual or entity (i) who is a client of the Company at any
time during the six (6)-month period prior to Employee's termination of
employment with the Company ("Client"), or was actively sought by the Company as
a prospective client, and (ii) with whom Employee had material contact while
employed by the Company to provide similar services or products as such provided
by Employee for the Company to such Clients or prospects. Employee further

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agrees and represents that during Employee's employment by the Company and for a
period of one (1) year following any termination of Employee's employment for
whatever reason, Employee will not, directly or indirectly, on Employee's own
behalf or in the service of, or on behalf of any other individual or entity,
divert, solicit or hire away, or attempt to divert, solicit or hire away, to or
for any individual or entity which is engaged in providing similar services or
products to that provided by the Company, any person employed by the Company for
whom Employee had supervisory responsibility or with whom Employee had material
contact while employed by the Company, whether or not such employee is a full-
time employee or temporary employee of the Company, whether or not such employee
is employed pursuant to written agreement and whether or not such employee is
employed for a determined period or at-will. For purposes of this Agreement,
"material contact" exists between Employee and a Client or potential Client when
(1) Employee established and/or nurtured the Client or potential Client; (2) the
Client or potential Client and Employee interacted to further a business
relationship or contract with the Company; (3) Employee had access to
confidential information and/or marketing strategies or programs regarding the
Client or potential Client; and/or (4) Employee learned of the Client or
potential Client through the efforts of the Company providing Employee with
confidential Client information, including but not limited to the Client's
identify, for purposes of furthering a business relationship.

8.   Existing Restrictive Covenants. Except as provided in Exhibit B, Employee
     ------------------------------
has not entered into any agreement with any employer or former employer (a) to
keep in confidence any confidential information or (b) to not compete with any
former employer. Employee represents and warrants that Employee's employment
with the Company does not and will not breach any agreement which Employee has
with any former employer to keep in confidence confidential information or not
to compete with any such former employer. Employee will not disclose to the
Company or use on its behalf any confidential information of any other party
required to be kept confidential by Employee. After the date of purchase by the
Company of StarQuest Software, Inc. ("StarQuest"), this Section 8 shall not
apply to any agreement between Employee and StarQuest.

9.   Return of Proprietary Information. Employee acknowledges that as a result
     ---------------------------------
of Employee's employment with the Company, Employee may come into the possession
and control of Proprietary Information, such as proprietary documents, drawings,
specifications, manuals, notes, computer programs, or other proprietary
material. Employee acknowledges, warrants and agrees that Employee will return
to the Company all such items and any copies or excerpts thereof, and any other
properties, files or documents obtained as a result of Employee's employment
with the Company, immediately upon the termination of Employee's employment with
the Company.

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10.  Proprietary Rights. During the course of Employee's employment with the
     ------------------
Company, Employee may make, develop or conceive of useful processes, machines,
compositions of matter, computer software, algorithms, works of authorship
expressing such algorithm, or any other discovery, idea, concept, document or
improvement which relates to or is useful to the Company's Business (the
"Inventions"), whether or not subject to copyright or patent protection, and
which may or may not be considered Proprietary Information. Employee
acknowledges that all such Inventions will be "works made for hire" under United
States copyright law and will remain the sole and exclusive property of the
Company. Employee also hereby assigns and agrees to assign to the Company, in
perpetuity, all right, title and interest Employee may have in and to such
Inventions, including without limitation, all copyrights, and the right to apply
for any form of patent, utility model, industrial design or similar proprietary
right recognized by any state, country or jurisdiction. Employee further agrees,
at the Company's request and expense, to do all things and sign all documents or
instruments necessary, in the opinion of the Company, to eliminate any ambiguity
as to the ownership of, and rights of the Company to, such Inventions, including
filing copyright and patent registrations and defending and enforcing in
litigation or otherwise all such rights.

Employee will not be obligated to assign to the Company any Invention made by
Employee while in the Company's employ which does not relate to any business or
activity in which the Company is or may reasonably be expected to become
engaged, except that Employee is so obligated if the same relates to or is based
on Proprietary Information to which Employee will have had access during and by
virtue of Employee's employment or which arises out of work assigned to Employee
by the Company. Employee will not be obligated to assign any Invention which may
be wholly conceived by Employee after Employee leaves the employ of the Company,
except that Employee is so obligated if such Invention involves the utilization
of Proprietary Information obtained while in the employ of the Company. Employee
is not obligated to assign any Invention that relates to or would be useful in
any business or activities in which the Company is engaged if such Invention was
conceived and reduced to practice by Employee prior to Employee's employment
with the Company. Employee agrees that any such Invention is set forth on
Exhibit "A" to this Agreement.

The provisions of this Section 10 will be construed in accordance with the
provisions of Section 2870 of the California Labor Code. Section 2870(a) of the
California Labor Code provides that: (a) any provision in an employment
agreement which provides that an employee shall assign, or offer to assign, any
of his or her rights in an invention to his or her employer shall not apply to
an invention that the employee developed entirely on his or her own time without
using the employer's equipment, supplies, facilities, or trade secret
information except for those inventions that either (1) relate at the time of
the conception and reduction to practice of the invention to the employer's
business, or actual or demonstrably anticipated research or

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development of the employer; or (2) result from any work performed by the
employee for the employer.

11.  Remedies. Employee agrees and acknowledges that the violation of any of the
     --------
covenants or agreements contained in Sections 6, 7, and 10 of this Agreement
would cause irreparable injury to the Company, that the remedy at law for any
such violation or threatened violation thereof would be inadequate, and that the
Company will be entitled, in addition to any other remedy, to temporary and
permanent injunctive or other equitable relief without the necessity of proving
actual damages or posting a bond.

12.  Severability. In case one or more of the provisions contained in this
     ------------
Agreement is for any reason held to be invalid, illegal or unenforceable in any
respect, the parties agree that it is their intent that the same will not affect
any other provision in this Agreement, and this Agreement will be construed as
if such invalid or illegal or unenforceable provision had never been contained
herein. It is the intent of the parties that this Agreement be enforced to the
maximum extent permitted by law.

13.  Entire Agreement. This Agreement embodies the entire agreement of the
     ----------------
parties relating to the subject matter of this Agreement and supersedes all
prior agreements, oral or written, regarding the subject matter hereof. No
amendment or modification of this Agreement will be valid or binding upon the
parties unless made in writing and signed by the parties.

14.  Governing Law. This Agreement is entered into and will be interpreted and
     -------------
enforced pursuant to the laws of the State of California. The parties hereto
hereby agree that the appropriate forum and venue for any disputes between any
of the parties hereto arising out of this Agreement shall be any federal court
in the state where the Employee has his principal place of residence and each of
the parties hereto hereby submits to the personal jurisdiction of any such
court. The foregoing shall not limit the rights of any party to obtain execution
of judgment in any other jurisdiction. The parties further agree, to the extent
permitted by law, that a final and unappealable judgment against either of them
in any action or proceeding contemplated above shall be conclusive and may be
enforced in any other jurisdiction within or outside the United States by suit
on the judgment, a certified exemplified copy of which shall be conclusive
evidence of the fact and amount of such judgment.

15.  Surviving Terms. Sections 4, 6, 7, 10, 11 and 14 of this Agreement shall
     ---------------
survive termination of this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.

COMPANY:                                        EMPLOYEE:

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LEVEL 8 SYSTEMS, INC.



By: ____________________________                _______________________________
                                                Paul Rampel

Title: _________________________

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                                   EXHIBIT A

                                  INVENTIONS


Employee represents that there are no Inventions.



                                              _________________
                                              Employee Initials

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                                   EXHIBIT B

                        EXISTING RESTRICTIVE COVENANTS

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