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                                                                   EXHIBIT 10.12

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

This Employment Agreement (the "Agreement") is made effective this 1st day of
January, 2002, 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, 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.

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.

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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; an amount equal to the
                  prorated bonus earned having received credit for bonus
                  earnings up to the date of termination and Employee shall be
                  entitled to an award of 100,000 shares of the Company's Common
                  Stock. In addition, all Employee's then outstanding but
                  unvested stock options shall vest one hundred percent (100%).
                  Employee will have twelve (12) months from the date of
                  termination to exercise his stock options. Other than the
                  severance payments and vesting of outstanding options set
                  forth in this Section 4(b), Employee will be entitled to
                  receive no further remuneration and will not be entitled to
                  participate in any Company benefit

                                       2

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                  programs following his termination by the Company, whether
                  such termination is with or 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 (as defined below) of the Company,
                  Employee shall have the right to resign his employment and
                  will be entitled to receive a severance payment equal to one
                  (1) year of Employee's then base salary payable within thirty
                  (30) days of the date of termination; an amount equal to the
                  prorated bonus earned having received credit for bonus
                  earnings up to the date of termination , except if there is a
                  failure to provide compensation or vested benefits in the
                  event of insolvency by the Company, in which case no severance
                  payment shall be made, but in any case, Employee shall receive
                  an award of 100,000 shares of the Company's common stock. For
                  avoidance of doubt, this award shall be in lieu of the 100,000
                  common stock shares awarded Employee under Section 4(b) above.
                  In addition, all Employee's then outstanding but unvested
                  stock options shall vest one hundred percent (100%). Except in
                  the case of a Change in Control (as defined below), Employee
                  will have twelve (12) months from the date of termination to
                  exercise his stock options. Employee shall have thirty (30)
                  days from the date written notice is given to Employee about
                  either (a) a 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.

                  For purposes of this Section 4, a Change in Control shall be
                  deemed to have occurred if any of the following occur:

                  (i)      the merger of 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 percent (50%) of the total
                           voting power of all securities generally entitled to
                           vote in the election of directors, managers or
                           trustees of the entity surviving such merger or
                           consolidation;

                  (ii)     the sale or transfer of more than fifty-one percent
                           (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

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                  (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 Two Hundred
                  Thousand Dollars ($200,000.00) per annum in equal bi-monthly
                  installments. Such annual salary will be subject to
                  adjustments by any increases given in the normal course of
                  business.

         (b)      Incentive Compensation. Employee shall be eligible to receive
                  ----------------------
                  incentive compensation in the form of a cash bonus equal to
                  One Hundred Fifty Thousand Dollars ($150,000.00) upon the
                  Company reaching anticipated operating income results as set
                  forth in the operating plan for the Company subject to
                  approval by the Board of Directors.

         (c)      Repayment of Outstanding Note.  Upon execution of the
                  -----------------------------
                  Agreement, Employee shall surrender to Company fifteen
                  thousand (15,000) shares of the Company's common stock as
                  partial repayment for the outstanding loan with the Company
                  evidenced by a Promissory Note and Stock Pledge Agreement. In
                  addition, Employee shall pay to the Company an amount equal to
                  Fifty Thousand Dollars ($50,000.00) payable in equal monthly
                  installments of Five Thousand Dollars ($5,000.00), which
                  amount shall be taken from employees paychecks through
                  December 31, 2002. Upon receipt of the common stock and
                  payment in full of the amount referenced in this paragraph,
                  Level 8 will cancel the Promissory Note and Stock Pledge
                  Agreement. If, prior to December 31, 2002 there occurs a
                  Change in Control of the Company or in the event of
                  insolvency, Employee shall be forgiven of the remaining
                  payments from the date of closing of such transaction under
                  this Section 5(c).

6.       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.

7.       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.

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8.       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.

9.       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.

10.      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 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

                                       5

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         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.

11.      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 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.

12.      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.

13.      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

                                       6

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         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.

14.      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 14 will be construed in accordance 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

                                       7

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

15.      Remedies. Employee agrees and acknowledges that the violation of any of
         --------
         the covenants or agreements contained in Sections 10, 11 and 14 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.

16.      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.

17.      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, except for any earned but unpaid bonuses that remain from
         calendar year 2001 for which the parties agree as being due and
         payable. Specifically, both parties agree that Employee has earned and
         is due a minimum of $60,000 for calendar year 2001. No amendment or
         modification of this Agreement will be valid or binding upon the
         parties unless made in writing and signed by the parties.

18.      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.

19.      Surviving Terms.  Sections 4, 10, 11, 14, 15 and 18 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.

                                       8

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COMPANY:                                        EMPLOYEE:

LEVEL 8 SYSTEMS, INC.



By:
    -----------------------------------        ---------------------------------
Name:                                          Paul Rampel
     ----------------------------------
Title:
       --------------------------------


                                       9

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                                    EXHIBIT A

                                   INVENTIONS
                                   -----------

         Employee represents that there are no Inventions.


                                                  ------------------------------
                                                  Employee Initials

                                       10

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                                    EXHIBIT B

                         EXISTING RESTRICTIVE COVENANTS
                         ------------------------------

                                       11