AGREEMENT





Dated October 30,
2007








The
parties to this agreement are Cicero Inc. (the “Company”) and BluePhoenix
Solutions Ltd. (“BluePhoenix”).





Pursuant
to a guaranty agreement between BluePhoenix  and Bank Hapoalim B.M.
(the “Bank”), BluePhoenix  has guaranteed certain obligations of the
Company under the Company’s promissory note (the “Bank Note”) dated September
28, 2001, in favor of the Bank, which is due and payable on or about October 30,
2007 (the “Guaranty”).   The outstanding principal amount of the
Bank Note is $1,971,000.





The
parties wish to enter into an agreement with respect to, among other things, (a)
the repayment in full of the Bank Note, and (b) the issuance by the Company to
BluePhoenix of (i) a  senior note in the principal amount of
$1,021,000 in the form of exhibit A (the “New Note”) and (ii) 2,546,149
fully-paid and nonassessable shares of the Company’s common stock, free and
clear of any adverse claim (the “Shares”).





Accordingly,
the parties agree as follows:





1.           Repayment of the Bank
Note.   Simultaneously with the execution and delivery of
this agreement, (a) the Company is repaying $300,000 principal amount of the
Bank Note and all accrued interest on the Bank Note to the date of this
agreement, (b) BluePhoenix is repaying $1,671,000 principal amount of the Bank
Note, (c) the Bank is discharging the Company and BluePhoenix from all
liabilities and obligations in respect of the Bank Note and the Guaranty, and
(d)  the Company is issuing to BluePhoenix the Note and the
Shares.  Accordingly, the Company has no further liabilities or
obligations  arising from (y) the agreement pursuant to exhibit 6.1.1
of the asset purchase agreement dated August 8, 2001 between the Company and
BluePhoenix, which required that the Company repay the indebtedness under the
Bank Note immediately upon the consummation of a financing by the Company or any
of its direct or indirect subsidiaries to the extent of 10% of any net proceeds
of any such financing, or (z) any Irrevocable Instruction Letters issued by the
Company to any bank pursuant to any Guaranty Extension Agreement between the
Company and BluePhoenix requiring the Company to repay certain amounts under the
Bank Note.





2.           Negative
Covenant.     As long as any portion of the New
Note remains outstanding, the Company shall not, and shall not permit any of its
subsidiaries to, incur or otherwise create any indebtedness for borrowed money,
except for Permitted Indebtedness (as defined below).  As used in this
agreement, the term “Permitted Indebtedness” means  (a) indebtedness
for borrowed money of the Company that is not due and payable as to principal
prior to the repayment in full of the indebtedness under the New Note and that
is not secured, directly or indirectly, by the grant of a security interest in
any assets or shares of the Company or any of its subsidiaries or an agreement
not to grant any such security interest, unless the indebtedness under the New
Note is equally and ratably secured, or (b) indebtedness set forth in exhibit
A.







Exhibit
10.23





3.           Option to Acquire Additional
Shares.  If the Company fails to pay when due
any  principal of or interest on the New Note,
BluePhoenix  may, at its option, exercisable from time to time by
notice given to the Company, elect to require the Company to issue to
BluePhoenix  a number of  fully paid and nonassessable
shares of the Company’s common stock, free and clear of any adverse claim,
determined by dividing the amount of that payment by 75% of the average closing
sale price of a share of such stock on the ten trading days immediately
preceding the exercise of such option (or, if there is no closing sale price on
a particular trading day, the average of the closing bid and asked price on that
trading day shall be used).  If, from time to time, BluePhoenix makes
that election, the Company shall, not later than five business days after such
election, issue to BluePhoenix a certificate evidencing such
shares.





4.
              Registration




(a)           The
Company agrees that all shares issued pursuant to section 1 shall be registered
for sale by BluePhoenix pursuant to a registration statement on Form S-1 to be
filed with the Securities and Exchange Commission (the “SEC”) before February 1,
2008. The Company shall use its reasonable best efforts to cause such
registration statement to be declared effective not later than April 1, 2008
(the “Effective Date”), and to remain effective and current thereafter, until
(a) all the certificates evidencing the unsold shares covered by the
registration statement cease to bear any restrictive legends, (b) no such shares
are subject to any stop transfer orders, and (c) all the unsold shares covered
by the registration statement may be sold publicly without registration under
the Securities Act of 1933 (without limitation as to volume in any
period).  If the registration statement referred to above shall not
have been declared effective on  or before April 1, 2008 or
shall  not be current on April 1, 2008, the Company shall immediately
issue to BluePhoenix 50,000 additional shares of its common stock.  If
the registration statement is required to be effective and current but is not
effective and current on any August 1, December 1, or April 1 thereafter, the
Company shall, at each such time, issue to BluePhoenix an additional 50,000
shares of its common stock.





(b)           Notwithstanding
anything to the contrary in this section 4, if the Company is or becomes a party
to any agreement with any other person or entity respecting registration of
shares under Securities Act of 1933, which agreement contains provisions
entitling such other person or entity to rights  not otherwise
provided to BluePhoenix  under this section 4, this section 4 shall be
deemed amended to the extent necessary to provide BluePhoenix  such
additional rights (but without adversely affecting the rights otherwise provided
under this section 4).





5.           Partnership. Both
parties have expressed a mutual interest in forming a partnership to explore
additional capabilities to market and sell Cicero. Specifically, BluePhoenix has
indicated a willingness to establish a partnership with the Company for the
purpose of including the Company’s Cicero product in its desktop modernization
solutions. Each party shall use all reasonable efforts to negotiate the terms of
such a partnership within 30 days after the date of this
agreement.  The parties agree that, notwithstanding the foregoing,
neither party shall have any liability or obligation if for any reason or for no
reason the parties fail so to agree on the terms of such
partnership.







Exhibit
10.23


6.           Releases





(a)           The
Company, on its own behalf and on behalf of each of its subsidiaries and
controlled affiliates, hereby releases, acquits, and forever discharges
BluePhoenix and its affiliates, agents, representatives, officers, directors,
and employees, whether in their individual or representative capacities, and
their successors and assigns from, and acknowledge the full accord and
satisfaction of, any and all claims, accounts, debts, obligations, demands,
damages, actions, or suits of whatever nature, whether in contract, tort, or
otherwise, now accrued known or unknown, arising out of any and all transactions
and occurrences up to and including the execution and delivery of this
agreement.





(b)           BluePhoenix
on its own behalf and on behalf of each of its subsidiaries and controlled
affiliates, hereby releases, acquits and forever discharges the Company and its
affiliates, agents, representatives, officers and directors and employees
whether in their individual or representative capacities, and their successors
and assigns from, and acknowledge the full accord and satisfaction of, any and
all claims, accounts, debts, obligations, demands, damages, actions, or suits of
whatever nature, whether in contract, tort, or otherwise, now accrued known or
unknown, arising out of any and all transactions and occurrences up to and
including the execution and delivery of this agreement.





(c)           Notwithstanding
anything to the contrary in this section 6, nothing in this section 6 is
intended to, or shall, release either party from any liabilities or obligations
under this agreement or the New Note.





7.           Miscellaneous





(a)          Governing
Law.   This agreement shall be governed by and construed
in accordance with the law of the state of New York, without giving effect to
its conflict of law principles.





(b)          Headings.   The
section headings of this agreement are for reference purposes only, and are to
be given no effect in the construction or interpretation of this
agreement.





(c)          Notices.   All
notices and other communications under this agreement shall be in writing and
may be given by any of the following methods: (i) personal delivery; (ii)
facsimile transmission; (iii) registered or certified mail, postage prepaid,
return receipt requested; or (iv) overnight delivery service.  Notices
shall be sent to the appropriate party at its address or facsimile number given
below (or at such other address or facsimile number for that party as shall be
specified by notice given under this section 7(c)):







Exhibit
10.23





(y)
            if
      to the Company, to it at:8000
      Regency Parkway, Suite 542Cary,
      North Carolina 27518Attention:  Mr.
      John BroderickWith
      a copy to:Golenbock,
      Eiseman, Assor, Bell and Peskoe, LLP437
      Madison AvenueNew
      York, NY 10022Attention:
      Lawrence Bell, Esq.(z)
            if
      to BluePhoenix, to it at:8
      Maskit StreetP.O.
      Box 2062Herzlia
      46120IsraelAttention:  Chief
      Financial Officerwith
      a copy to:Law
      Office of Edward W. Kerson80
      University Place, Third FloorNew
      York, New York 10003-4564





All such
notices and communications shall be deemed received upon (v) actual receipt by
the addressee, (vi) actual delivery to the appropriate address, or (vii) in the
case of a facsimile transmission, upon transmission by the sender and issuance
by the transmitting machine of a confirmation slip confirming that the number of
pages constituting the notice have been transmitted without error.  In
the case of notices sent by facsimile transmission, the sender shall
contemporaneously mail a copy of the notice to the addressee at the address
provided for above.  However, such mailing shall in no way alter the
time at which the facsimile notice is deemed received.





(d)           Separability.   The
invalidity of unenforceability of any provision of this agreement shall not
affect the validity or enforceability of any other provision of this agreement,
which shall remain in full force and effect.







Exhibit
10.23


(e)          
Waiver.   Either
party may waive compliance by the other with any provision of this
agreement.  No waiver of any provision shall be construed as a waiver
of any other provision.  Any waiver must be in writing and signed by
the waiving party.





(f)             Counterparts.   This
agreement may be executed in counterparts, each of which shall be deemed an
original, but both of which together shall constitute one and the same
instrument.





(g)           Submission to
Jurisdiction.  Each party hereby irrevocably submits to the
jurisdiction of the Supreme Court of the State of New York, New York County, in
connection with any claim or controversy under this Agreement, and agrees to
waive any claim of forum inconvenience (or other similar claim) in connection
therewith.





(h)           Entire
Agreement.  This agreement is a complete statement of all the
terms of the arrangements between the parties with respect to the matters
provided for, supersedes all previous agreements and understandings between the
parties with respect to those matters, and cannot be changed or terminated
orally.





CICERO,
      INC.By:John
      BroderickChief
      Executive and Chief Financial OfficerBLUEPHOENIX
      SOLUTIONS  LTD.By:







Exhibit
10.23





SENIOR PROMISSORY
NOTE








$1,021,000.00


New York, New York
            October 30,
2007








FOR VALUE
RECEIVED, the undersigned, Cicero Inc., a Delaware corporation (the "Maker"),
hereby promises to pay, in lawful money of the United States of America, to the
order of BluePhoenix Solutions (the "Payee"), the principal sum of
$1,021,000.00, at such address  as the holder of this promissory note
and security agreement (this “Note”) may specify from time to time by notice
given to the Maker at 8000 Regency Parkway, Suite 542, Cary, North Carolina
27518, Attention:  Mr. John Broderick (the “Maker’s
Address”).  The Maker agrees to pay interest (computed on the basis of
a 360-day year of twelve 30-day months) on the outstanding principal amount of
this Note at a rate of LIBOR +1% per annum until the principal shall have become
due and payable.  The Maker agrees to pay $350,000 of principal on
January 30, 2009, and $671,000 of principal on December 31, 2011. Accrued and
unpaid interest on the unpaid principal amount hereof shall be payable on each
Required Payment Date.





Notwithstanding
any provision to the contrary in this Note, the entire principal sum of this
Note, and all accrued and unpaid interest thereon, shall immediately become due
and payable (without demand for payment, notice of non-payment, presentment,
notice of dishonor, protest, notice of protest, or any other notice, all of
which are hereby expressly waived by the Maker) upon the occurrence of any of
the following (any such occurrence, a “Default”):





(a) the
default by the Maker of any payment or other obligation under this Note;
or





(b)           the
entry of an order, judgment, or decree by a court of competent jurisdiction for
relief in respect of the Maker under any applicable federal or state bankruptcy
or reorganization law or other similar law, and the continuance of any such
order, judgment, or decree unstayed, unbonded, and in effect for a period of 30
consecutive days, or (i) the Maker shall file a petition or an answer or consent
seeking relief under any applicable federal or state bankruptcy or
reorganization law or other similar law, or (ii) the consent by the Maker to the
filing of any such petition or to the appointment of or taking possession by a
trustee, custodian, or other similar official of the Maker or any substantial
part of its assets, or (iii) the failure of  the Maker generally to
pay its debts as such debts become due, or the taking of action by the Maker in
furtherance of any such action.





If the
Maker fails to make any payment of principal of, or interest on this Note in
accordance with the preceding provisions of this Note, the Company shall issue
to the Payee, as promptly as practicable, a number of shares of the Company’s
fully paid and nonassessable shares of common stock equal to the product of 100
and the then unpaid balance under this Note. Nothing in this paragraph is
intended to, or shall, affect the Maker’s obligations, or the Payee’s rights,
under this Note, including, without limitation, the obligation of the Maker to
pay principal of, and interest on, this Note in accordance with the preceding
provisions of this Note.





1


Exhibit
10.23


Failure
or delay of the Payee to assert any right or remedy herein shall not be deemed a
waiver of such right or remedy or of any other right hereunder.  A
waiver on one occasion shall not operate as a bar to or waiver of any such right
or remedy on any future occasion.  No single, partial, or other
exercise of any right or remedy by the Payee shall preclude any other or future
exercise thereof.  No waiver by the Payee will be effective, unless it
is in writing and signed by the Payee.





This Note
may not be changed or terminated orally, nor may any of its provisions be
waived, except by an agreement in writing signed by the party against whom
enforcement of such change or termination is sought.





If at any
time this transaction would be usurious under applicable law, then, regardless
of any provision in this Note to the contrary, it is agreed that the total of
all consideration that constitutes interest under applicable law that is
contracted for, charged, or received upon this Note shall under no circumstances
exceed the maximum rate of interest allowed by applicable law now or hereafter
in effect, and any excess theretofore paid shall be credited on this Note by the
holder hereof or refunded to the Maker, if this Note has been paid.





The
remedies provided for herein shall be in addition to all other remedies
existing, in the Payee's favor, under the applicable law (including equity) of
any jurisdiction.





This Note
and the legality, validity, and performance of the terms hereof shall be
governed by and enforced, determined, and construed in accordance with the
internal laws of the State of New York applicable to commercial contracts,
transactions, and obligations entered into, and to be performed in, New York,
and without giving effect to the conflict of laws principles
thereof.





The Maker
hereby irrevocably submits to the jurisdiction of the Supreme Court of the State
of New York, New York County, in connection with any claim or controversy under
this Note.





The Maker
hereby agrees to be bound by any expedited process or procedure in effect from
time to time under New York law for the enforcement by the Payee of his rights
under this Note.





This Note
shall be binding upon the Maker and the Maker's successors, and
assigns.





The Maker
shall pay all costs of collection (including reasonable counsel fees and
disbursements), if default is made in payment of this Note, and, in addition,
shall reimburse the


Payee for
all costs and expenses in connection with the preparation and negotiation of
this Note.





2


Exhibit
10.23


Any
notice under this Note shall be in writing and shall be considered given when
mailed by registered mail, return receipt requested, as follows:





If to the
Maker, to it at the Maker’s address (or at such other address as the Maker may
specify by notice given to the Payee from time to time)





If to the
Payee, to it at the Payee’s address of  8 Maskit Street, P.O. Box
2062, Herzlia 46120, Israel, Attention:  Chief Financial
Officer..





The Maker
acknowledges that, except as set forth in this Note, neither the Maker nor the
Payee has entered into any agreement with the other with respect to the subject
matter of this Note.








CICERO
      INC.By:John
      BroderickChief
      Executive and Chief Financial
Officer


3