Level 8 Signs Agreement to Acquire StarQuest Software.

Business Editors

CARY, N.C.--(BUSINESS WIRE)

Oct. 2, 2000

Purchase Allows Level 8 to Offer Enhanced Enterprise Connectivity for

Cisco Platforms

Level 8 (Nasdaq: LVEL), a leading global provider of high performance eBusiness integration software, has reached a definitive agreement to acquire StarQuest Software, Inc., a provider of Internet infrastructure solutions for Cisco routers.

The acquisition will extend Level 8's industry leadership with an expanded product portfolio and enable it to provide enhanced integration connectivity for Cisco platforms.

In 1999, StarQuest announced its joint development with Cisco to create the Cisco Transaction Connection (CTRC) - a product which provides TCP/IP end-users and servers with fast, reliable, and secure access to IBM DB2 databases using the Systems Network Architecture (SNA) protocol. CTRC uses the Distributed Relational Database Architecture (DRDA) protocol to access remote databases using a standard messaging format over TCP/IP or SNA.

In addition, StarQuest and Merrill Lynch, Pierce Fenner & Smith, Inc. are parties to a license, development and royalty agreement in which Merrill Lynch provides technology and related patents to StarQuest for its development. StarQuest utilized Merrill Lynch's source code, named TGADP (Trusted Global Advisor Data Provider), to modify and enhance its product line.

Under terms of the acquisition, Level 8 will acquire the issued and outstanding stock of privately held StarQuest for 500,000 shares of Level 8 common stock and 250,000 warrants, plus the assumption of certain debt. The warrants will have an exercise price of $30 per share. The acquisition is subject to customary closing conditions and approvals.

"The companies are an excellent fit that will allow us to continue to dominate the EAI market," said Steven Dmiszewicki, president of Level 8. "Our union with StarQuest will result in a greater competitive advantage for our customers in search of connectivity options that work with Cisco routers. "

The Level 8 Geneva High Performance Integration Platform offers a comprehensive assortment of eBusiness integration software, ranging from application integration to enterprise messaging, business process automation, and application engineering. StarQuest develops connectivity solutions for MVS platforms, DB2, IMS, and CICS databases using Cisco routers. The StarQuest products will enhance the Geneva High Performance Integration Platform by providing even faster integration solutions.

"This acquisition provides us the opportunity to build upon our success," said Paul Rampel, president of StarQuest Software, Inc. "Our customers, employees and partners will benefit from extended software integration solutions."

About StarQuest

Headquartered in Berkeley, California, StarQuest Software, Inc. provides Internet infrastructure solutions linking IBM enterprise customers to the Web. StarQuest develops and markets software products for seamlessly connecting Windows and UNIX systems to DB2, data, CICS and IMS transactions on mainframe and midrange systems.

StarQuest has strategic relationships with Cisco Systems, Merrill Lynch and Microsoft. In addition, StarQuest is a founding member of The Open Group's Database Interoperability Workgroup, responsible for the adoption of Distributed Relational Database Architecture (DRDA) as an industry standard for data access interoperability.

About Level 8 Systems

Level 8 Systems ( Nasdaq: LVEL; http://www.level8.com ) is a leading global provider of high performance eBusiness integration software that enables organizations to integrate new and existing information and processes with the Internet to create new business value. The Level 8 product portfolio represents the broadest eBusiness integration offering from a single vendor in the market today. The Geneva High Performance Integration Platform provides enterprise messaging, application integration, business process automation and application engineering technologies. Level 8 Systems has more than 700 customers and over 475 employees worldwide with corporate headquarters in Cary, North Carolina, and offices in the US, UK, Germany, Denmark, Sweden, France and Italy.

Level 8, Level 8 Systems, Level 8 Technologies, Geneva, Geneva Integration Suite, Geneva Enterprise Integrator, Geneva Business Process Automator, Geneva Integration Broker, Geneva Message Queuing, Geneva XIPC and Geneva AppBuilder are trademarks of Level 8 Technologies, Inc., a wholly-owned subsidiary of Level 8 Systems, Inc. All other company and product names are for identification purposes only and are the property of, and may be trademarks of, their respective owners.

Except for any historical information contained herein, this news release contains forward looking statements on such matters as anticipated financial performance, business prospects, the development and capabilities of next generation EAI solutions, new products, and similar matters. Actual results may differ materially from the anticipated results or other expectations expressed in this release as a result of a variety of factors, including risks presented by market acceptance of the companys strategic direction; continued market acceptance of the companys existing technology; the potential failure to meet product delivery dates; matters relating to international operations; protection of intellectual property and proprietary rights; difficulties in attracting and retaining consultants, development professionals, and trained qualified sales professionals and the ability of those sales professionals to perform to quota; the sufficiency of the companys liquidity and capital resources; and the risks more fully described in Level 8s recent filings with the Securities and Exchange Commission.