Securities
Purchase Agreement
 
 By
and Among
 
 Cicero,
Inc.,
 
 And
 
 The
Purchasers Listed On Schedule I
 
 
 Dated
As Of FEBRUARY 26, 2007
 
 
  Exhibit
10.25
 
 
 SECURITIES
PURCHASE AGREEMENT
 
 
 THIS
SECURITIES PURCHASE AGREEMENT (this “Agreement”) is dated
as of February 26, 2007, by and among CICERO, INC., a Delaware corporation (the
“Company”), and
the various purchasers listed on Schedule I hereto (each referred to herein as a
“Purchaser”
and, collectively, the "Purchasers").
 
 WHEREAS,
the Company and the Purchasers are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Rule 506
under Regulation D as promulgated by the United States Securities and Exchange
Commission (the “Commission”) under
Section 4(2) of the Securities Act of 1933, as amended (the “Securities
Act”);
 
 WHEREAS,
subject to the terms and conditions set forth in this Agreement, the Company
desires to issue and sell to the Purchasers, and the Purchasers desire to
acquire from the Company,shares of common stock
of the Company, par value $.001 per share (the “Common Stock”);
and
 
 WHEREAS,
contemporaneously with the execution and delivery of this Agreement, the parties
hereto are executing and delivering a Registration Rights Agreement
substantially in the form of Exhibit B attached
hereto (the “Registration Rights
Agreement”) pursuant to which the Company has agreed to provide certain
registration rights under the Securities Act and the rules and regulations
promulgated thereunder, and applicable state securities laws.
 
 NOW,
THEREFORE, in consideration of the promises and mutual covenants and agreements
hereinafter, the Company and the Purchasers hereby agree as
follows:
  
  Exhibit
10.25
 
 
 ARTICLE
I.
 
 PURCHASE
AND SALE
 
 1.1           Purchase and Sale.
 
 On the
Closing Date (as defined below), subject to the terms and conditions set forth
herein, the Company shall issue and sell to each Purchaser and each Purchaser,
severally and not jointly, shall purchase from the Company theshares of Common Stock
as set forth on Schedule I (the
"Shares").  The
aggregate purchase price for the Shares  purchased by the Purchasers
shall be $500,000.
 
 1.2           Closing.
 
 a.           The
Closing.  The closing (the “Closing”) of the
purchase and sale of the Common Stock  shall take place at the offices
of the Company, 8000 Regency Parkway, Suite 542, Cary, North Carolina 27518,
immediately following the execution hereof or such later date or different
location as the parties shall agree, but in no event prior to the date that the
conditions set forth in Section 4.1 have been satisfied or waived by the
appropriate party (such date of the Closing, the “Closing
Date”).  At the Closing:
  (i)           Each
Purchaser shall deliver to the Company (1) this Agreement, duly executed by such
Purchaser, (2) the Registration Rights Agreement, duly executed by such
Purchaser and (3) its portion of the purchase price as set forth next to its
name on Schedule
I in United States dollars in immediately available funds to an account
or accounts designated in writing by the Company; and
 
 (ii)          The
Company shall deliver to each Purchaser (1) this Agreement, duly executed by the
Company, (2) the Registration Rights Agreement, duly executed by the Company,
and (3)  a certificate evidencing the number of shares of Common Stock
purchased by such Purchaser as set forth on Schedule I hereto,
registered in the name of such Purchaser.
 
 
 ARTICLE
II.
 
 REPRESENTATIONS
AND WARRANTIES
 
 2.1           Representations and
Warranties of the Company.  The Company represents and warrants
to each of the Purchasers that the statements contained in this Section 2.1 are
true, correct and complete as of the date hereof, and will be true correct and
complete as of the Closing Date (unless specifically made as of another date),
except as specified to the contrary in the corresponding paragraph of the
disclosure schedule prepared by the Company accompanying this Agreement (the
"Company Disclosure
Schedules"):
  
  Exhibit
10.25
 
 
 a.           Organization and
Qualification.  The Company duly incorporated, validly existing
and in good standing under the laws of Delaware, with the requisite corporate
power and authority to own and use its properties and assets and to carry on its
business as currently conducted. The Company is duly qualified as a foreign
corporation to do business and is in good standing as a foreign corporation in
each jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, except where the failure to be
so qualified or in good standing, as the case may be, would not, individually or
in the aggregate, (x) adversely affect the legality, validity or enforceability
of any of this Agreement or the Transaction Documents (as defined in Section
2.1(b)) or any of the transactions contemplated hereby or thereby, (y) have or
result in a material adverse effect on the results of operations, assets, or
financial condition of the Company, taken as a whole or (z) impair the Company’s
ability to perform fully on a timely basis its obligations under any Transaction
Document (any of (x), (y) or (z), being a “Material Adverse
Effect”).  The Company has made available to the Purchaser true
and correct copies of the Company's Certificate of Incorporation, as amended and
as in effect on the date hereof (the “Certificate of
Incorporation”), and the Company's Bylaws, as in effect on the date
hereof (the “Bylaws”).
 
 b.           Authorization;
Enforcement.  The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by this
Agreement and the Registration Rights Agreement (collectively, the “Transaction
Documents”), and otherwise to carry out its obligations hereunder and
thereunder.  The execution and delivery of each of this Agreement and
the Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action by the Company.  Each of this Agreement and
the Transaction Documents has been duly executed by the Company and when
delivered in accordance with the terms hereof will constitute the valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement of, creditors’ rights and
remedies or by other equitable principles of general application and except that
rights to indemnification and contribution may be limited by Federal or state
securities laws or public policy relating thereto.
 
 c.           Capitalization.  As
of the date hereof, the authorized capital stock of the Company is as set forth
in Schedule
2.1(c).  All of such outstanding shares of capital stock have
been, or upon issuance will be, validly authorized and issued, fully paid and
nonassessable. No securities of the Company are entitled to preemptive or
similar rights, and no Person (as hereinafter defined) has any right of first
refusal, preemptive right, right of participation, or any similar right to
participate in the transactions contemplated by the Transaction
Documents.  Except as a result of the purchase and sale of the Shares
and those outstanding warrants as identified in Schedule 2.1(c), there are no
outstanding options, warrants, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exchangeable for, or giving any Person any right
to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which the Company or any
subsidiary is or may become bound to issue additional shares of Common Stock, or
securities or rights convertible or exchangeable into shares of Common
Stock.  The issue and sale of the Shares  will not obligate
the Company to issue shares of Common Stock or other securities to any Person
(other than the Purchasers) and will not result in a right of any holder of
Company securities to adjust the exercise, conversion, exchange or reset price
under such securities.
  
  Exhibit
10.25
 
 
 d.           Authorization and Validity;
Issuance of Shares. The Shares are and will at all times hereafter
continue to be duly authorized and reserved for issuance and, when issued and
paid for in accordance with this Agreement and the Transaction Documents, will
be validly issued, fully paid and non-assessable, free and clear of all
liens.
 
 e.           No
Conflicts.  The execution, delivery and performance of this
Agreement and each of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
do not and will not (i) conflict with or violate any provision of the
Certificate of Incorporation, Bylaws or other organizational documents of the
Company, (ii)subject to obtaining the
consents referred to in Section 2.1(f), conflict with, or constitute a default
(or an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture, patent, patent license or instrument
(evidencing a Company debt or otherwise) to which the Company is a party or by
which any property or asset of the Company is bound or affected, except where
such conflict or violation has not resulted or would not reasonably be expected
to result, individually or in the aggregate, in a Material Adverse Effect, or
(iii) result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority
to which the Company is subject (including Federal and state securities laws and
regulations and the rules and regulations of the principal market or exchange on
which the Common Stock is traded or listed), or by which any material property
or asset of the Company is bound, except where such conflict has not resulted or
would not reasonably be expected to result, individually or in the aggregate, in
a Material Adverse Effect.
 
 f.           Consents and
Approvals. The Company is not required to obtain any consent, waiver,
authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority, regulatory or self regulatory agency, or other Person in
connection with the execution, delivery and performance by the Company of this
Agreement or the Transaction Documents, other than (i) the filing of a
registration statement with the Commission, which shall be filed in accordance
with and in the time periods set forth in the Registration Rights Agreement,
(ii) the application(s) or any letter(s) acceptable to the Nasdaq National
Market (“Nasdaq”) for the
listing of the Common Stock with Nasdaq (and with any other national securities
exchange or market on which the Common Stock is then listed), and (iii) any
filings, notices or registrations under applicable Federal or state securities
laws (together with the consents, waivers, authorizations, orders, notices and
filings referred to on Schedule 2.1(f), the
“Required
Approvals”), except where failure to do so has not resulted or would not
reasonably result, individually, or in the aggregate, in a Material Adverse
Effect. “Person” means an
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any
kind.
 
 g.           Litigation;
Proceedings. Except as specifically set forth on Schedule 2.1(g) or in
the SEC Documents (as hereinafter defined), there is no action, suit, notice of
violation, proceeding or investigation pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its subsidiaries
or any of their respective properties before or by any court, governmental or
administrative agency or regulatory authority (Federal, state, county, local or
foreign) (collectively, an “Action”) which (i)
adversely affects or challenges the legality, validity or enforceability of any
of this Agreement or the Transaction Documents or (ii) would reasonably be
expected to, individually or in the aggregate, have a Material Adverse
Effect.  Neither the Company nor any subsidiary, nor, to the knowledge
of the Company, any officer thereof, is or has been, nor, to the knowledge of
the Company, any director thereof is or has been for the last three years, the
subject of any Action involving a claim of violation of or liability under
federal or state securities laws or a claim of breach of fiduciary
duty.  There has not been, and, to the knowledge of the Company, there
is not pending or contemplated, any investigation by the Commission involving
the Company or any current or former director that was a director of the Company
at any time during the last three years or officer of the
Company.  The Commission has not issued any stop order or other order
suspending the effectiveness of any registration statement filed by the Company
or any subsidiary under the Exchange Act or the Securities Act.
  
  Exhibit
10.25
 
 
 h.           No Default or
Violation. The Company (i) is not in default under or in violation of any
indenture, loan or other credit agreement or any other agreement or instrument
to which it is a party or by which it or any of its properties is bound and
which is required to be included as an exhibit to any SEC Document (as defined
in Section 2.1(j)) or will be required to be included as an exhibit to the
Company’s next filing under either the Securities Act or the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), (ii)
is not in violation of any order of any court, arbitrator or governmental body
applicable to it, (iii) is  not in violation of any statute, rule or
regulation of any governmental authority to which it is subject, (iv) is not in
default under or in violation of its Certificate of Incorporation, Bylaws or
other organizational documents, respectively in the case of (i), (ii) and (iii),
except where such violations have not resulted or would not reasonably result,
individually or in the aggregate, in a Material Adverse Effect.
 
 i.           Private
Offering.  The Company and all Persons acting on its behalf
have not made, directly or indirectly, and will not make, offers or sales of any
securities or solicited any offers to buy any security under circumstances that
would require registration of the Common Stock  or the issuance of
such securities under the Securities Act. Subject to the accuracy and
completeness of the representations and warranties of the Purchasers contained
in Section 2.2, the offer, sale and issuance by the Company to the
Purchasers  of the Common Stock and  is exempt from the
registration requirements of the Securities Act.
 
 j.           SEC Documents; Financial
Statements. The Common Stock of the Company is registered pursuant to
Section 12(g) of the Exchange Act.  Since December 31, 2000, the
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it, with the Commission, pursuant to Section 13, 14 or
15(d) of the Exchange Act (the foregoing materials and all exhibits included
therein and financial statements and schedules thereto and documents (other than
exhibits to such documents) incorporated by reference therein being collectively
referred to herein as the “SEC Documents”), on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Documents prior to the expiration of any such
extension.  As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the Securities Act and the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Documents, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.  The
financial statements of the Company included in the SEC Documents comply in all
material respects with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at the time of
filing.  Such financial statements have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
during the periods involved ("GAAP"), except as may
be otherwise specified in such financial statements or the notes thereto, and
fairly present in all material respects the financial position of the Company
and its consolidated subsidiaries as of and for the dates thereof and the
results of operations and cash flows for the periods then ended, subject, in the
case of unaudited statements, to normal, immaterial, year-end audit
adjustments.
  
  Exhibit
10.25
 
 
 k.           Material
Changes.  Since the date of the latest audited financial
statements included within the SEC Documents, except as specifically disclosed
in the SEC Documents, (i) there has been no event, occurrence or development
that has had or that could result in a Material Adverse Effect, (ii) the Company
has not incurred any liabilities (contingent or otherwise) other than (A) trade
payables and accrued expenses incurred in the ordinary course of business
consistent with past practice and (B) liabilities not required to be reflected
in the Company's financial statements pursuant to GAAP or required to be
disclosed in filings made with the Commission, (iii) the Company has not altered
its method of accounting or the identity of its auditors, (iv) the Company has
not declared or made any dividend or distribution of cash or other property to
its stockholders or purchased, redeemed or made any agreements to purchase or
redeem any shares of its capital stock, and (v) the Company has not issued any
equity securities to any officer, director or affiliate, except pursuant to
existing Company stock option plans. The Company does not have pending before
the Commission any request for confidential treatment of
information.
 
 l.           Patents and
Trademarks.  The Company and its subsidiaries have, or have
rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and other similar
rights that are necessary or material for use in connection with their
respective businesses as described in the SEC Documents and which the failure to
so have could have, or reasonably be expected to result in, a Material Adverse
Effect (collectively, the "Intellectual Property
Rights").  Neither the Company nor any subsidiary has received
a written notice that the Intellectual Property Rights used by the Company or
any subsidiary violates or infringes upon the rights of any Person which if
determined adversely to the Company would, individually or in the aggregate have
a Material Adverse Effect. To the knowledge of the Company, all such
Intellectual Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property
Rights.
 
 m.           Transactions With Affiliates
and Employees.  Except as set forth in SEC Documents, none of
the officers or directors of the Company and, to the knowledge of the Company,
none of the employees of the Company is presently a party to any transaction
with the Company or any subsidiary (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Company, any
entity in which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee or partner.
  
  Exhibit
10.25
 
 
 n.           Solvency.  Except
as set forth in the SEC Documents, based on the financial condition of the
Company as of the Closing Date, (i) the Company's fair saleable value of its
assets exceeds the amount that will be required to be paid on or in respect of
the Company's existing debts and other liabilities (including known contingent
liabilities) as they mature; (ii) the Company's assets do not constitute
unreasonably small capital to carry on its business for the current fiscal year
as now conducted and as proposed to be conducted including its capital needs
taking into account the particular capital requirements of the business
conducted by the Company, and projected capital requirements and capital
availability thereof; and (iii) the current cash flow of the Company, together
with the proceeds the Company would receive, were it to liquidate all of its
assets, after taking into account all anticipated uses of the cash, would be
sufficient to pay all amounts on or in respect of its debt when such amounts are
required to be paid.  The Company does not intend to incur debts
beyond its ability to pay such debts as they mature (taking into account the
timing and amounts of cash to be payable on or in respect of its
debt).
 
 o.           Listing and Maintenance
Requirements.  The Company has not, in the two years preceding
the date hereof, received notice (written or oral) from any  exchange
or market on which the Common Stock is or has been listed or quoted to the
effect that the Company is not in compliance with the listing or maintenance
requirements of such exchange or market. The Company is, and has no reason to
believe that it will not in the foreseeable future continue to be, in compliance
with all such listing and maintenance requirements.  The issuance and
sale of the Shares  hereunder does not contravene the rules and
regulations of the Nasdaq OTC Market and no approval of the shareholders of the
Company is required for the Company to issue and deliver to the Purchasers the
number of Shares contemplated by this Agreement.
 
 p.           Registration
Rights.  The Company has not granted or agreed to grant to any
Person any rights (including "piggy-back" registration rights) to have any
securities of the Company registered with the Commission or any other
governmental authority that have not been satisfied except as noted on the
Disclosure Schedules.
 
 q.           Broker’s
Fees.  No fees or commissions or similar payments with respect
to the transactions contemplated by this Agreement or the Transaction Documents
have been paid or will be payable by the Company to any third party broker,
financial advisor, finder, investment banker, or bank.  The Purchaser
shall have no obligation with respect to any fees or with respect to any claims
made by or on behalf of other Persons for fees of a type contemplated in this
Section 2.1(q) that may be due in connection with the transactions
contemplated by this Agreement and the Transaction Documents.
 
 2.2           Representations and
Warranties of the Purchasers.  Each of the Purchasers,
severally and not jointly, hereby represents and warrants to the Company as
follows:
  
  Exhibit
10.25
 
 
 a.           Organization;
Authority.  Such Purchaser, as applicable, is a corporation or
a limited liability company or limited partnership duly formed, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or
formation with the requisite power and authority, corporate or otherwise, to
enter into and to consummate the transactions contemplated hereby and by this
Agreement and the Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder.  The purchase by such Purchaser,
as applicable, of the shares of Common Stock  hereunder has been duly
authorized by all necessary action on the part of such
Purchaser.  Each of this Agreement and the Transaction Documents has
been duly executed and delivered by each Purchaser and constitutes the valid and
legally binding obligation of each Purchaser, enforceable against such Purchaser
in accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors’ rights generally and to general principles
of equity and except that rights to indemnification and contribution may be
limited by Federal or state securities laws or public policy relating
thereto.
 
 b.           Investment
Intent.  Such Purchaser is acquiring the shares of Common
Stock  for its own account and not with a present view to or for
distributing or reselling the shares of Common Stock or any part thereof or
interest therein in violation of the Securities Act. Nothing contained herein
shall be deemed a representation or warranty by such Purchaser to hold the
Shares  for any period of time.  Such Purchaser is acquiring
the Shares  hereunder in the ordinary course of its business. Such
Purchaser does not have any agreement or understanding, directly or indirectly,
with any Person to distribute any of the Shares.
 
 c.           Purchaser
Status.  At the time such Purchaser was offered the Common
Stock, and at the Closing Date, (i) it was and will be an “accredited investor”
as defined in Rule 501 under the Securities Act and (ii) such Purchaser, either
alone or together with its representatives, had and will have such knowledge,
sophistication and experience in business and financial matters so as to be
capable of evaluating the merits and risks of the prospective investment in the
Common Stock. Such Purchaser is not a registered broker-dealer under Section 15
of the Exchange Act.
 
 d.           Reliance.  Such
Purchaser understands and acknowledges that (i) the shares of Common Stock are
being offered and sold to the Purchaser without registration under the
Securities Act in a private placement that is exempt from the registration
provisions of the Securities Act under Section 4(2) of the Securities Act or
Regulation D promulgated thereunder and (ii) the availability of such exemption
depends in part on, and the Company will rely upon the accuracy and truthfulness
of, the representations set forth in this Section 2.2 and such Purchaser hereby
consents to such reliance.
 
 e.           Information.  Such
Purchaser and its advisors, if any, have been furnished with all materials
relating to the business, finances and operations of the Company and materials
relating to the offer and sale of the Common Stock  which have been
requested by such Purchaser or its advisors.  Such Purchaser and its
advisors, if any, have been afforded the opportunity to ask questions of the
Company. The Purchaser understands that its investment in the Common
Stock  involves a significant degree of risk. Neither such inquiries
nor any other investigation conducted by or on behalf of such Purchaser or its
representatives or counsel shall modify, amend or affect such Purchaser's right
to rely on the truth, accuracy and completeness of the Company's representations
and warranties contained in this Agreement or the Transaction
Documents.
  
  Exhibit
10.25
 
 
 f.           Governmental
Review.  Such Purchaser understands that no United States
Federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Common
Stock.
 
 g.           Residency.  Such
Purchaser is a resident of the jurisdiction set forth immediately beside such
Purchaser’s name on Schedule I
hereto.
 
 The
Company acknowledges and agrees that the Purchasers make no representations or
warranties with respect to the transactions contemplated hereby other than those
specifically set forth in this Section 2.2.
   ARTICLE
III.
 
 OTHER
AGREEMENTS
 
 3.1           Transfer Restrictions.
 
 a.           If
any Purchaser should decide to dispose of the Common Stock held by it, such
Purchaser understands and agrees that it may do so (1) only pursuant to an
effective registration statement under the Securities Act, (2) pursuant to an
available exemption from the registration requirements of the Securities Act,
(3) to an affiliate of the Purchaser, or (4) pursuant to Rule 144 promulgated
under the Securities Act (“Rule 144”).  In connection with any
transfer of any Common Stock other than pursuant to an effective registration
statement, Rule 144, to the Company or to an affiliate of the Purchasers, the
Company may require the transferor thereof to provide to the Company a written
opinion of counsel experienced in the area of United States securities laws
selected by the transferor, the form and substance of which opinion shall be
customary for opinions of counsel in comparable transactions and reasonably
acceptable to the Company, to the effect that such transfer does not require
registration of such transferred securities under the Securities Act; provided,
however, that if the Common Stock may be sold pursuant to Rule 144(k), no
written opinion of counsel shall be required from any Purchaser if such
Purchaser provides reasonable assurances that such security can be sold pursuant
to Rule 144(k).  Notwithstanding the foregoing, the Company hereby
consents to and agrees to register any transfer by any Purchaser to an affiliate
of such Purchaser, provided that the transferee certifies to the Company that it
is an “accredited investor” as defined in Rule 501(a) under the Securities
Act.  Any such transferee shall agree in writing to be bound by the
terms of this Agreement and the Transaction Documentsand shall have the
rights of a Purchaser under this Agreement and the Transaction
Documents.  The Company shall not require an opinion of counsel in
connection with the transfer of the shares of Common Stock to an affiliate of a
Purchaser.
 
 b.           The
Purchasers agree to the imprinting, so long as is required by this Section
3.1(b), of the following legend on the Common Stock:
  
  Exhibit
10.25
   THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY.  THESE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH
SHARES.
 
 The
Company acknowledges and agrees that a Purchaser may from time to time pledge
pursuant to a bona fide margin agreement or grant a security interest in some or
all of the shares of Common Stock and if required under the terms of such
arrangement, such Purchaser may transfer pledged or secured shares of Common
Stock to the pledgees or secured parties.  Such a pledge or transfer
would not be subject to approval of the Company and no legal opinion of the
pledgee, secured party or pledgor shall be required in connection
therewith.  Further, no notice shall be required of such
pledge.  At the appropriate Purchaser's expense, the Company will
execute and deliver such reasonable documentation as a pledgee or secured party
reasonably request in connection with a pledge or transfer of the shares of
Common Stock, including the preparation and filing of any required prospectus
supplement under Rule 424(b)(3) of the Securities Act or other applicable
provision of the Securities Act to appropriately amend the list of selling
stockholders thereunder.
 
 Neither
the Common Stock shall contain the legend set forth above (or any other legend)
(i) while a registration statement covering the resale of such security is
effective under the Securities Act, (ii) if in the written opinion of counsel to
the Company experienced in the area of United States securities laws such legend
is not required under applicable requirements of the Securities Act (including
judicial interpretations and pronouncements issued by the staff of the
Commission) or (iii) if such Common Stock may be sold pursuant to Rule
144(k).  The Company agrees that it will provide any Purchaser, upon
request, with a certificate or certificates representing shares of Common Stock
free from such legend at such time as such legend is no longer required
hereunder.  If such certificate or certificates had previously been
issued with such a legend or any other legend, the Company shall, upon request
and upon the delivery of the legended certificate(s), reissue such certificate
or certificates free of any legend. The Company agrees that following the
effective date of the registration statement meeting the requirements set forth
in the Registration Rights Agreement and covering the resale of the Shares by
the Purchasers or at such time as such legend is no longer required under this
Section 3.1, it will, no later than three Trading Days (as such term is defined
in the Registration Rights Agreement) following the delivery by a Purchaser to
the Company or the Company's transfer agent of a certificate representing Shares
an issued with a restrictive legend, deliver or cause to be delivered to such
Purchaser a certificate representing such Shares that is free from all
restrictive and other legends.
  
  Exhibit
10.25
 
 
 When the
Company is required to cause unlegended certificates to replace previously
issued legended certificates, if unlegended certificates are not delivered to a
Holder within three (3) Business Days of submission by that Holder of legended
certificate(s) to the Company’s transfer agent together with a representation
letter in customary form, the Company shall be liable to the Holder for
liquidated damages in an amount equal to 1.5% of the aggregate purchase price of
the securities evidenced by such certificate(s) for each thirty (30) day period
(or portion thereof) beyond such three (3) Business Days that the unlegended
certificates have not been so delivered
 
 3.2           Stop Transfer
Instruction.  The Company may not make any notation on its
records or give instructions to any transfer agent of the Company which enlarge
the restrictions on transfer set forth in Section 3.1.
 
 3.3           
Not used.
 
 3.4           Furnishing of
Information.  As long as any Purchaser owns shares of Common
Stock, the Company covenants to timely file (or obtain extensions in respect
thereof and file within the applicable grace period) all reports required to be
filed by the Company after the date hereof pursuant to the Exchange
Act.  Upon the request of any such Person, the Company shall deliver
to such Person a written certification of a duly authorized officer as to
whether it has complied with the preceding sentence. As long as any Purchaser
owns shares of Common Stock if the Company is not required to file reports
pursuant to such laws, it will prepare and furnish to the Purchasers and make
publicly available in accordance with Rule 144(c) such information as is
required for the Purchasers to sell the Shares under Rule 144.
 
 3.5           Integration.  The
Company shall not, and shall use its best efforts to ensure that no affiliate of
the Company shall, sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that would be integrated with the offer or sale of the shares of Common
Stock hereunder in a manner that would require the registration under the
Securities Act of the sale of the shares Common Stock to the Purchasers, or that
would be integrated with the offer or sale of the Shares for purposes of the
rules and regulations of the Nasdaq National Market, if such integration would
result in a violation of any such rule or regulation.
 
 3.6           Non-Public
Information. Except for information regarding the transaction
contemplated by this Agreement and the Transaction Documents and the terms and
conditions hereof and thereof, the Company covenants and agrees that neither it
nor any other Person acting on its behalf will provide any Purchaser or its
agents or counsel with any information that the Company believes constitutes
material non-public information, unless prior thereto such Purchaser shall have
executed a written agreement regarding the confidentiality and use of such
information.  The Company understands and confirms that each Purchaser
shall be relying on the foregoing representations in effecting transactions in
securities of the Company.  Notwithstanding anything to the contrary
herein, no Purchaser shall engage in any trading activity in the Company's
securities in violation of Regulation M of the Exchange Act.
  
  Exhibit
10.25
 
 
 3.7           Use of
Proceeds.  The Company shall use the net proceeds from the sale
of the shares of Common Stock hereunder for working capital purposes. The
Company shall not use the net proceeds from the sale of the shares of Common
Stock hereunder to repay any of its short-term or long-term debt
instruments
 
 3.8           Best
Efforts.  Each of the parties hereto shall use its best efforts
to satisfy each of the conditions to be satisfied by it as provided in Article
IV of this Agreement.
 
 3.9           Subsequent Placements.
 
 a.           From
the date hereof until the Effective Date, the Company will not directly or
indirectly, offer, sell or grant any option to purchase (or announce any offer,
sale, grant or any option to purchase) any of its Common Stock or other
securities which entitle the holder thereof to receive Common Stock, including
without limitation any debt, preferred stock or other instrument or security
that is, at any time during its life and under any circumstances, convertible
into or exchangeable for Common Stock.
 
 b.       
  The restrictions contained in paragraph (a) of this Section shall
not apply to: (i) the granting of options, restricted stock, stock appreciation
rights or similar instruments to employees, officers, directors and consultants
of the Company pursuant to any stock option or similar plan duly adopted by the
Company or to the issuance of shares of Common Stock upon exercise of such
options or other rights, (ii) issuances of shares of Common Stock pursuant to
any acquisition by the Company of the assets or capital stock of a business
pursuant to a merger, asset sale or other business combination; (iii) issuances
of shares of Common Stock upon conversion of the Company’s Series A1 Convertible
Redeemable Preferred Stock (the “Series A1 Preferred
Stock”) (as described on Schedule 2.1(c));
 
 ARTICLE
IV.
 
 CONDITIONS
 
 4.1           Closing.
 
 a.           Conditions Precedent to the
Obligation of the Company to Sell the Shares of Common
Stock.  The obligation of the Company to sell the shares of
Common Stock  is subject to the satisfaction or waiver by the Company,
at or before the Closing Date, of each of the following conditions:
  (i)           Accuracy of the Purchasers’
Representations and Warranties.  The representations and
warranties of each Purchaser in this Agreement shall be true and correct in all
material respects as of the date when made and as of the Closing
Date;
 
 (ii)          Performance by the
Purchasers.  Each Purchaser shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by such
Purchaser at or before the Closing Date; and
  
  Exhibit
10.25
 
 
 (iii)         No
Injunction.  No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement or the Transaction Documents.
 
 b.           Conditions Precedent to the
Obligation of the Purchasers to Purchase the Shares of Common
Stock  at the Closing.  The obligation of each
Purchaser hereunder to acquire and pay for the shares of Common
Stock  at the Closing is subject to the satisfaction or waiver by
Purchaser, at or before the Closing Date, of each of the following
conditions:
 
 (i)           Accuracy of the Company’s
Representations and Warranties.  The representations and
warranties of the Company set forth in this Agreement shall be true and correct
in all respects as of the date when made and as of the Closing
Date;
 
 (ii)           Performance by the
Company.  The Company shall have performed, satisfied and
complied in all respects with all covenants, agreements and conditions required
by this Agreement to be performed, satisfied or complied with by the Company at
or before the Closing Date;
 
 (iii)           No
Injunction.  No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement and the Transaction Documents;
 
 (iv)           Required
Approvals.  All Required Approvals shall have been obtained;
and
 
 (v)           Shares of Common
Stock.  The Company shall have duly reserved the number of
shares of Common Stock  acquired by the Purchasers on the Closing
Date.
 
 
 ARTICLE
V.
 
 INDEMNIFICATION
 
 5.1           Indemnification. The
Company will indemnify and hold the Purchasers and their directors, officers,
shareholders, partners, employees and agents (each, a "Purchaser Party")
harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments, amounts
paid in settlements, court costs and reasonable attorneys' fees and costs of
investigation that any such Purchaser Party may suffer or incur as a result of
or relating to (a) any misrepresentation, breach or inaccuracy, or any
allegation by a third party that, if true, would constitute a breach or
inaccuracy, of any of the representations, warranties, covenants or agreements
made by the Company in this Agreement or in the other Transaction Documents; or
(b) any cause of action, suit or claim brought or made against such Purchaser
Party and solely arising out of or solely resulting from the execution,
delivery, performance or enforcement of this Agreement or any of the other
Transaction Documents.  The Company will reimburse such Purchaser for
its reasonable legal and other expenses (including the cost of any
investigation, preparation and travel in connection therewith) incurred in
connection therewith, as such expenses are incurred. Notwithstanding the
foregoing, the Company shall not be required to indemnify any the Purchaser
under the terms of this Article V with respect to any claim or violation for
which indemnification is expressly excluded under the Registration Rights
Agreement.
  
  Exhibit
10.25
 
 
 ARTICLE
VI.
 
 MISCELLANEOUS
 
 6.1           Entire
Agreement.  This Agreement, together with the Exhibits and
Schedules hereto and the Transaction Documents contain the entire understanding
of the parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral or written, with respect to such
matters.
 
 6.2           Notices.  Whenever
it is provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon any
of the parties by another, or whenever any of the parties desires to give or
serve upon another any such communication with respect to this Agreement, each
such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and either shall be delivered in person with
receipt acknowledged or by registered or certified mail, return receipt
requested, postage prepaid, or by telecopy and confirmed by telecopy answerback
addressed as follows:
 
 If to the
Company:
 
 Cicero,
Inc.
 8000
Regency Parkway
 Cary,
North Carolina 27518
 Attn:                      John
P. Broderick
 
 With
a Copy to:
 
 Golenbock
Eiseman, Assor Bell and Peskoe LLP
 437
Madison Ave
 New York,
NY 10022
 Attn:                      Lawrence
Bell, Esq.
  
  Exhibit
10.25
 
 
 If to the Purchasers: To the
address set forth on the counterpart signature page of such Purchaser or at such
other address as may be substituted by notice given as herein
provided.  The giving of any notice required hereunder may be waived
in writing by the party entitled to receive such notice.  Every
notice, demand, request, consent, approval, declaration or other communication
hereunder shall be deemed to have been duly given and effective on the earliest
of (a) the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile number specified in this Section prior to 6:30
p.m. (New York City time) on a business day, (b) the next business day after the
date of transmission, if such notice or communication is delivered via facsimile
at the facsimile number specified in this Section on a day that is not a
business day or later than 6:30 p.m. (New York City time) on any business day,
(c) the business day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (d) upon actual receipt by the party to
whom such notice is required to be given. As used herein, a “business day” means
any day except Saturday, Sunday and any day which shall be a federal legal
holiday or a day on which banking institutions in the State of New York are
authorized or required by law or other governmental action to
close.
 
 6.3           Amendments;
Waivers.  No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
both the Company and each of the Purchasers or, in the case of a waiver, by the
party against whom enforcement of any such waiver is sought.  No
waiver of any default with respect to any provision, condition or requirement of
this Agreement shall be deemed to be a continuing waiver in the future or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder in any manner
impair the exercise of any such right accruing to it thereafter.
 
 6.4           Headings.  The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
 
 6.5           References.  References
herein to Sections are to Sections of this Agreement, unless otherwise expressly
provided.
 
 6.6           Successors and Assigns;
Assignability.  Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by either the Company or the Purchasers without the prior written
consent of the other party.  In the event that such prior written
consent is obtained and this Agreement is assigned by either party, all
covenants contained herein shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns.
 
 6.7           No Third-Party
Beneficiaries.  This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person.
 
 6.8           Governing Law; Waiver of
Jury Trial. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Delaware, without regard to the principles of conflicts of law
thereof.  Each party agrees that all proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) (each a "Proceeding") shall be
commenced exclusively in the state and federal courts sitting in the City of New
York, Borough of Manhattan.  Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
the City of New York, Borough of Manhattan for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of the any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any Proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such Proceeding is
improper.  Each party hereto hereby irrevocably waives personal
service of process and consents to process being served in any such Proceeding
by mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof.  Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. Each party hereto hereby irrevocably waives, to
the fullest extent permitted by applicable law, any and all right to trial by
jury in any legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If either party shall commence a Proceeding to
enforce any provisions of a Transaction Document, then the prevailing party in
such Proceeding shall be reimbursed by the other party for its attorneys fees
and other costs and expenses incurred with the investigation, preparation and
prosecution of such Proceeding.
  
  Exhibit
10.25
 
 
 6.9            
Survival.  The
representations, warranties, agreements and covenants contained herein shall
survive following the Closing.
 
 6.10           Execution.  This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same
counterpart.  In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
 
 6.11           Not
used.
 
 6.12           Publicity. The
Purchasers shall not issue any press release or make any public disclosure
regarding the transactions contemplated hereby unless such press release or
public disclosure is approved by the Company in
advance.  Notwithstanding the foregoing, each of the parties hereto
may, in documents required to be filed by it with the SEC or other regulatory
bodies, make such statements with respect to the transactions contemplated
hereby as each may be advised by counsel is legally necessary or advisable, and
may make such disclosure as it is advised by its counsel is required by
law.
 
 6.13           Severability.  In
case any one or more of the provisions of this Agreement shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Agreement shall not in any way be affected or
impaired thereby and the parties will attempt to agree upon a valid and
enforceable provision which shall be a reasonable substitute therefore, and upon
so agreeing, shall incorporate such substitute provision in this
Agreement.
  
  Exhibit
10.25
 
 
 6.14           Further
Assurances.  Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
 
 6.15           Replacement of
Certificates. If any certificate or instrument evidencing any shares of
Common Stock is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation
thereof, or in lieu of and substitution therefore, a new certificate or
instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested.  The applicants for a new certificate or
instrument under such circumstances shall also pay any reasonable third-party
costs associated with the issuance of such replacement shares.
 
 6.16           Remedies. In addition
to being entitled to exercise all rights provided herein or granted by law,
including recovery of damages, each of the Purchasers and the Company will be
entitled to specific performance under this Agreement or the Transaction
Documents.  The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.
 
 6.17           Independent Nature of
Purchasers' Obligations and Rights.  The obligations of each
Purchaser under this Agreement or any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under this Agreement or any Transaction Document.  Nothing
contained herein or in any Transaction Document, and no action taken by any
Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by
this Agreement or any the Transaction Document.  Each Purchaser shall
be entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such
purpose.
 
 6.18           Fees and
Expenses.  Except as set forth in the Registration Rights
Agreement, and except as provided herein, each Party shall pay the fees and
expenses of its advisers, accountants and other experts.
  
  Exhibit
10.25
 
 
 IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized persons as of the
day and year first above written.
 
 CICERO,
      INC.By:John
      P. BroderickChief
      Executive OfficerPURCHASERS:[COUNTERPART
      SIGNATURE PAGES FOLLOW]
  
  IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized persons as of the
day and year first above written.
 
 
 PURCHASER(Name
      of Purchaser)By:(Signature
      of Purchaser(s))Name:(Name
      of Signatory if Purchaser is an Entity)Title:(if
      Purchaser is an Entity)Purchase
      Price:
              $____________Address
      for Notice:With
      a copy to:
 
 Exhibit
10.25
 
 
 SCHEDULE
I
 
 
 Name
      and
              
              Number
      of Shares of Common StockAddress of
      Purchaser
              Residence
              at ClosingDate
              Purchase
      Price$15,000.00C.
      Glen Dugdale
              DE
              111,690Box
      4550Greenville,
      DE 19807Queequeg
      Partners, LP
              NY
              169,898
              $22,813.27Jonathan
      Gallen299
      Park AvenueNew
      York, NY 10171Ahab
      Partners, LP
              NY
              880,000
              $118,184.00Jonathan
      Gallen299
      Park AvenueNew
      York, NY 10171Ahab
      International, Ltd.
              NY
              1,120,000
              $150,416.00Jonathan
      Gallen299
      Park AvenueNew
      York, NY 10171Maurice
      Wills
              CA
              100,000
              $13,430.0027102
      Woodbrook RoadRancho
      Palos Verdes, CA 90275Mark
      & Carolyn Landis
              NJ
              74,460
              $10,000.00503
      Lake DrivePrinceton,
      NJ 08540Scott
      Lustgarten
              PA
              44,676
              $6,000.00418
      Hillbrook RoadBryn
      Mawr, PA 19010Bruce
      D. Miller
              MA
              148,920
              $20,000.00P.O.
      Box 2306Nantucket,
      MA 02584Richard
      Nager
              PA
              29,784
              $4,000.0044
      Righters Mill RoadGladwyne,
      PA 19035Jonathan
      P. Robinson
              PA
              37,230
              $5,000.00205
      Exeter RoadDevon,
      PA 19333John
      L. Steffens
              NY
              1,006,379
              $135,156.7365
      East 55th
      Street, 33rd
      FloorNew
      York, NY 10022
 
  Exhibit
10.25
 
 
 EXHIBIT
A
 
 
 CICERO
DISCLOSURE SCHEDULES
 
 These
Disclosure Schedules are being furnished by Cicero, Inc. (the “Company”), dated as
of February 22, 2007.
 
 No
reference to or disclosure of any item or matter in these Disclosure Schedules
shall be construed as an admission or indication that such item or other matter
is material or that such item or other matter is required to be referred to or
disclosed.  The inclusion and discussion of any document, agreement,
conflict or situation in these Disclosure Schedules is not an admission of the
effectiveness, enforceability, or interpretation of the document, agreement,
conflict or situation.
 
 Items
identified on the following Schedules are deemed disclosed for purposes of all
Schedules to which they relate.
 
 These
Disclosure Schedules do not contain Material Non-Public
Information.
  
  Exhibit
10.25
 
 
 Schedule 2.1 (c)
Capitalization
 
 Authorized
and Outstanding Capital Stock
 
 The
Company's Certificate of Incorporation, as amended on December 29, 2006,
authorizes the Company to issue 215,000,000 shares of Common Stock, par value
$0.001 per share, of which 35,150,832 were outstanding as of close of business
on February 9, 2007 (confirmed with American Stock Transfer and Trust
Company).  An additional 1,763,476 shares of Common Stock are reserved
for issuance upon the conversion of the Series A1 Preferred Stock.  An
additional 324,067 shares of Common Stock are reserved for issuance upon the
exercise of the warrants described below.
 
 The
Company's Certificate of Incorporation authorizes it to issue 10,000,000 shares
of Preferred Stock, par value $0.001 per share.  Of the authorized
Preferred Stock, the following series have been issued:
 
 1,763
shares have been designated Series A1 Convertible Redeemable Preferred Stock,
all of which were issued January 2007, and all of which are currently
outstanding;
 
 
 Preemptive
Rights
 
 None.
 
 Stock
Options
 
 As of
January 10, 2007, 110,200 options to purchase Common Stock were outstanding
under the Company’s Employee and Outside Director Stock Option Plans. The
Company’s 1997 Plan has approximately 320,000 shares available to grant and the
Plan expires in 2007. The Company does plan to create a new Employee and Outside
Director Stock Option Plan.
 
 Warrants
 
 324,067
shares of Common Stock are reserved for issuance upon the exercise of warrants
(all are subject to Registration Rights Agreements) as follows:
  
  Exhibit
10.25
 
 
 Warrant
      Holders:
              
              Granted:
              
              
              Remaining:
              
              
              Exercise
      Price:Early
      Adopter Warrants as part of the Senior Reorganization
Notes
              
              
              201,115
              
              
              
              201,115
              
              
              $
              2.00Former
      Series D-1 Preferred Stock Purchasers
              
              
              41,581
              
              
              
              22,931
              
              
              $
              7.00Former
      Series D-2 Preferred Stock Purchasers
              
              
              24,157
              
              
              
              10,914
              
              
              $
              20.00Former
      Financing Warrants
              
              
              55,3671
              
              
              
              28,095
              
              
              $
              40.00Purchasers
      in January 2002 Private Placement
              
              
              4,764
              
              
              
              2,131
              
              
              $
              60.00Purchasers
      in October 2003 Private Placement
              
              
              474
              
              
              
              445
              
              
              $
              45.00Purchasers
      in January 2004 Private Placement
              
              
              33,692
              
              
              
              13,838
              
              
              $
              37.00Convertible
      notes
              
              
              18,750
              
              
              
              18,750
              
              
              $
              8.00Convertible
      notes
              
              
              20,000
              
              
              
              20,000
              
              
              $
              10.00Convertible
      notes
              
              
              901
              
              
              
              901
              
              
              $
              17.00Convertible
      notes
              
              
              7,893
              
              
              
              1,875
              
              
              $
              32.00Former
      Series C Preferred Stock Purchasers.
              
              
              11,461
              
              
              
              3,072
              
              
              $
              38.00
  Rights
to Subscribe
 
 None
 
  Exhibit
10.25
  Registration
Rights Agreements
 
 Registration
Rights Agreement with Existing Preferred Stockholders.
 
 The
Company has entered into an amended registration rights agreements to provide
for the registration of the shares underlying the Series A1 Preferred Stock.
Such agreement will also provide for the registration of the shares underlying
warrants or shares of common stock issued in the future pursuant to the terms of
the respective certificates of designation.
 
 
 Registration
Rights Agreement with Participants in the January 2002 Private Placement of
Common Stock and Warrants.
 
 The
shares of common stock and the shares issuable upon exercise of the related
warrants are subject to a Registration Rights Agreement and are currently
registered.  Such shares were issued in the Company’s January 2002
private placement of common stock and warrants.
 
 Registration
Rights Agreement with Participants in the October 2003 Private Placement of
Common Stock and Warrants.
 
 The
shares of common stock and the shares issuable upon exercise of the related
warrants are subject to a Registration Rights Agreement and are currently
registered.  Such shares were issued in the Company’s October 2003
private placement of common stock and warrants.
 
 Registration
Rights Agreement with Participants in the January 2004 Private Placement of
Common Stock and Warrants.
 
 The
shares of common stock and the shares issuable upon exercise of the related
warrants are subject to a Registration Rights Agreement and are currently
registered.  Such shares were issued in the Company’s January 2004
private placement of common stock and warrants.
 
 Registration
Rights Agreement with MLBC.
 
 On
January 3, 2002, the Company entered into a registration rights agreement with
MLBC, Inc. (“MLBC”), an affiliate
of Merrill Lynch, Pierce, Fenner & Smith Incorporated (“Merrill
Lynch”).  This agreement grants registration rights to MLBC
with respect to 1,250 shares of Common Stock of the Company ( as adjusted for
the reverse stock split) and replaces the previous registration rights agreement
with Merrill Lynch for 1,000 shares of Common Stock of the
Company.  The Company complied with Merrill Lynch's demand to register
the original 1,000 shares upon effectiveness of its Form S-3 registration
statement, Reg. No. 333-61494 , effective as of June 14, 2001 and as amended by
Post-Effective Amendment No. 1, filed October 18, 2001 (subsequently
withdrawn).  MLBC subsequently requested that it not be included on an
updated registration statement and withdrew its request to be
included.  Accordingly, MLBC still retains “piggy-back” and demand
rights with respect to a total of 1,229 shares of Common Stock.  The
additional 21 shares of Common Stock were distributed by MLBC and have been
registered for resale in the names of the transferees.
  
  Exhibit
10.25
 
 
 Registration
Rights Agreement as Part of the Note and Warrant Offering.
 
 In August
2004, the Company entered into a registration rights agreement with the holders
of the Senior Reorganization Note and Warrant Offering. The conversion of the
Notes into Senior Debt and Warrants was contingent and dependent upon the
Company’s shareholders approving the merger and reorganization
(“Recapitalization”) of the Company which was completed on November 16,
2006.
 
 Registration Rights Agreement as Part
of the Convertible Bridge Notes.
 
 As part
of the Term Sheet for Convertible Bridge Note financing, the Company entered
into a registration rights agreement with the holders of Convertible Bridge
Notes within 90 days after consummation of the recapitalization.
 
 Registration
Rights Agreement with Liraz Systems, Ltd.
 
 On
November 30, 2006, the Company entered into a registration rights agreement
with Liraz Systems, Ltd. (“Liraz”) pursuant to a guaranty agreement between
Liraz and Bank Hapoalim B.M.  This agreement grants registration
rights to Liraz with respect to certain shares of Common Stock of the Company
and a warrant to purchase 3,600,000 shares of the Company’s Common Stock issued
as part of the guaranty extension agreement of the Company’s bank note to Bank
Hapoalim NY.
 
 Schedule
2.1 (f) Consents
  None
 
 Schedule
2.1 (g) Litigation
 
 Various
lawsuits and claims have been brought against us in the normal course of our
business. In January 2003, an action was brought against us in the Circuit Court
of Loudon County, Virginia, for a breach of a real estate lease. The case was
settled in August 2003. Under the terms of the settlement agreement, we agreed
to assign a note receivable with recourse equal to the unpaid portion of the
note should the note obligor default on future payments. The unpaid balance of
the note was $545,000, of which the current unpaid principal portion is
approximately $216,000 and it matures in December 2007.  We assessed
the probability of liability under the recourse provisions using a weighted
probability cash flow analysis and have recognized a long-term liability in the
amount of $131,000.
 
 In
October 2003, we were served with a summons and complaint in Superior Court of
North Carolina regarding unpaid invoices for services rendered by one of our
subcontractors.  The amount in dispute was approximately $200,000 and
is included in accounts payable. Subsequent to March 31, 2004, we settled this
litigation.  Under the terms of the settlement agreement, we agreed to
pay a total of $189,000 plus interest over a 19-month period ending November 15,
2005. The Company is in the process of negotiating a series of payments for the
remaining liability of approximately $80,000.
 
 In March
2004, we were served with a summons and complaint in Superior Court of North
Carolina regarding a security deposit for a sublease in Virginia. The amount in
dispute is approximately $247,000.  In October 2004, we reached a
settlement agreement wherein we agreed to pay $160,000 over a 36-month period
ending October 2007.
  
  Exhibit
10.25
 
 
 In
August  2004, we were notified that we were in default under an
existing lease agreement for office facilities in Princeton, New Jersey. The
amount of the default is approximately $65,000. Under the terms of the lease
agreement, we may be liable for future rents should the space remain vacant. We
have reached a settlement agreement with the landlord which calls for a total
payment of $200,000 and is included in accounts payable, over a 31-month period
ending October 2007.
 
 In April
2005, we were notified that Critical Mass Mail, Inc. had filed a claim against
us for failure to pay certain liabilities under an Asset Purchase Agreement
dated January 9, 2004. We in turn filed that Critical Mass Mail, Inc. failed to
deliver certain assets and other documents under the same Asset purchase
agreement. We had already reserved the potential liability under the Agreement
as part of the asset purchase accounting. On March 1, 2006, Critical Mass Mail
amended their complaint and is seeking damages of approximately $600,000 for our
failure to timely register the underlying securities issued in the Asset
Purchase. In December 2006 we settled this litigation. Under the terms of the
settlement agreement, the Company agreed to pay the sum of $45,000 in monthly
installments over nine consecutive months beginning on December 1, 2006 and to
issue Critical Mass Mail, Inc. $50,000 value of common shares of Cicero, Inc,
based on the trailing three day average price for Cicero common stock after such
stock initially trades on the OTC Bulletin Board.
 
 Under the
indemnification clause of the Company’s standard reseller agreements and
software license agreements, the Company agrees to defend the reseller/licensee
against third party claims asserting infringement by the Company’s products of
certain intellectual property rights, which may include patents, copyrights,
trademarks or trade secrets, and to pay any judgments entered on such claims
against the reseller/licensee.
  
  Exhibit
10.25
 
 
 EXHIBIT
B
 
 REGISTRATION RIGHTS
AGREEMENT
 
 This
REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as
of February 26, 2007, is entered into by and between CICERO, INC., a Delaware
corporation (the “Company”),
and  _____________________________  (the “Purchaser”).
 
 W I T N E S S E T
H:
 
 This
Agreement is made pursuant to that certain Purchase Agreement, dated as of the
date hereof, by and between the Company and the Purchaser (the “Purchase Agreement”),
and pursuant to that certain Commitment Agreement, dated as of the date hereof,
by and between the Company and the Purchaser (the “Commitment
Agreement”)
 .
 The
Company and the Purchaser hereby agree as follows:
 
 1.           Definitions.  Unless
otherwise defined herein, terms defined in the Purchase Agreement and the
Commitment Agreement are used herein as therein defined, and the following shall
have (unless otherwise provided elsewhere in this Agreement) the following
respective meanings (such meanings being equally applicable to both the singular
and plural form of the terms defined):
 
 “Affiliate” means,
with respect to any Person, any other Person that directly or indirectly
controls or is controlled by or under common control with such
Person.  For the purposes of this definition, “control,” when used
with respect to any Person, means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise, and the terms “affiliated,” “controlling” and
“controlled”
have meanings correlative to the foregoing.
 
 “Agreement” shall mean
this Registration Rights Agreement, including all amendments, modifications and
supplements and any exhibits or schedules to any of the foregoing, and shall
refer to the Agreement as the same may be in effect at the time such reference
becomes operative.
 
 “Business Day” shall
mean any day that is not a Saturday, a Sunday or a day on which banks are
required or permitted to be closed in the State of New York.
 
 “Commission” shall
mean the Securities and Exchange Commission or any other federal agency then
administering the Securities Act and other federal securities laws.
 
 “Holder or Holders” means the
holder or holders, as the case may be, from time to time of the Registrable
Securities.
  
  Exhibit
10.25
 
 
 “NASD” shall mean the
National Association of Securities Dealers, Inc., or any successor corporation
thereto.
 
 “Registrable
Securities” shall mean the shares of Common Stock issuable upon
conversion of the Convertible Bridge Notes and the purchase of common
stock.
 
 2.           Registration.  As
soon as practicable following the Closing Date and within ninety (90) days of
the such date, the Company shall prepare and file with the Commission a
Registration Statement (the “Registration
Statement”) which shall cover all of the Registrable
Securities.  The Registration Statement shall be on Form S-1 or any
successor form.  The Company shall use its best efforts to cause the
Registration Statement to be declared effective under the Securities Act within
one hundred eighty (180) days of the Closing Date.
 
 3.           Registration
Procedures.  Subject to the provisions of Section 2, the
Company will:
 
 (a)           prepare
and file with the Commission a Registration Statement with respect to such
securities and use its best efforts to cause such Registration Statement to
become and remain effective for a period of time required for the disposition of
such securities by the Holder thereof, but not to exceed two (2)
years;
 
 (b)           prepare
and file with the Commission such amendments and supplements to such
Registration Statement and the prospectus used in connection therewith as may be
necessary to keep such Registration Statement effective and to comply with the
provisions of the Securities Act with respect to the sale or other disposition
of all securities covered by such Registration Statement until the earlier of
such time as all of such securities have been disposed of in a public offering
or the expiration of two (2) years;
 
 (c)           furnish
to each Holder such number of copies of a summary prospectus or other
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents, as such Holder may
reasonably request;
 
 (d)           use
its best efforts to register or qualify the securities covered by such
Registration Statement under such other securities or blue sky laws of such
jurisdictions within the United States as each Holder shall reasonably request
to the extent such registration or qualification is required in such
jurisdictions (provided, however, that the
Company shall not be obligated to qualify as a foreign corporation to do
business under the laws of any jurisdiction in which it is not then qualified or
to file any general consent to service of process), and do such other reasonable
acts and things as may be required of it to enable such Holder to consummate the
disposition in such jurisdiction of the securities covered by such Registration
Statement;
  
  Exhibit
10.25
 
 
  (e)           furnish,
at the request of any Holder during registration of Registrable Securities
pursuant to Section 2, on the date that such shares of Registrable Securities
are delivered to the underwriters for sale pursuant to such registration or, if
such Registrable Securities are not being sold through underwriters, on the date
that the Registration Statement with respect to such shares of Registrable
Securities becomes effective, (1) an opinion, dated as of such date, of the
independent counsel representing the Company for the purposes of such
registration, addressed to the underwriters, if any, and if such Registrable
Securities are not being sold through underwriters, then to the Holder making
such request, in customary form and covering matters of the type customarily
covered in such legal opinions; and (2) a comfort letter dated such date,
from the independent certified public accountants of the Company, addressed to
the underwriters, if any, and if such Registrable Securities are not being sold
through underwriters, then to the Holder making such request and, if such
accountants refuse to deliver such letter to such Holder, then to the Company,
in a customary form and covering matters of the type customarily covered by such
comfort letters and as the underwriters or such Holder shall reasonably
request;
 
 (f)           enter
into customary agreements (including an underwriting agreement in customary
form) and take such other actions as are reasonably required in order to
expedite or facilitate the disposition of such Registrable
Securities;
 
 (g)           notify
each Holder as promptly as practicable upon the occurrence of any event as a
result of which the prospectus included in a Registration Statement, as then in
effect, contains an untrue statement of material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing, and as
promptly as possible, prepare, file and furnish to such Holder a reasonable
number of copies of a supplement or an amendment to such prospectus as may be
necessary so that such prospectus does not contain an untrue statement of
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing;
 
 (h)           provide
each Holder and its representatives the opportunity to conduct reasonable
inquiry of the Company’s financial and other records during normal business
hours and make available its officers, directors and employees for questions
regarding information which such Holder may reasonably request in order to
conduct any due diligence; and
 
 (i)           otherwise
use its best efforts to comply with all applicable rules and regulations of the
Commission, and make available to the Holders, as soon as reasonably
practicable, but not later than eighteen (18) months after the effective date of
the Registration Statement, an earnings statement covering the period of at
least twelve (12) months beginning with the first full month after the effective
date of such Registration Statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act.
 
 4.           Expenses.  All
expenses incident to the Company’s compliance with the terms of this Agreement,
including, without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel for the Company, expenses of any
special audits incident to or required by any such registration and expenses of
complying with the securities or blue sky laws of any jurisdiction pursuant to
Section 3(d), shall be paid by the Company, except that:
 
 (a)           all
such expenses in connection with any amendment or supplement to the Registration
Statement or prospectus filed more than two (2) years after the effective date
of such Registration Statement because any Holder has not effected the
disposition of the securities requested to be registered shall be paid by such
Holder;
  
  Exhibit
10.25
 
 
  (b)           the
Company shall not be liable for any fees, discounts or commissions to any
underwriter or any fees or disbursements of counsel for any underwriter in
respect of the securities sold by such Holder; and
 
 (c)           any
incremental expenses incurred by the Company as a result of the inclusion of a
Holder’s Registrable Securities in an underwritten offering where the Holder or
any of its Affiliates is an underwriter of the Registrable Securities which
inclusion of such Holder’s Registrable Securities requires a “qualified
independent underwriter” under the applicable rules of the NASD shall be paid by
such Holder.
 
 5.           Indemnification and
Contribution.  (a)  In the event of any registration
of any Registrable Securities under the Securities Act pursuant to this
Agreement, the Company shall indemnify and hold harmless the Holder of such
Registrable Securities, such Holder’s directors and officers, and each other
person (including each underwriter) who participated in the offering of such
Registrable Securities and each other person, if any, who controls such Holder
or such participating person within the meaning of the Securities Act, against
any losses, claims, damages or liabilities, joint or several, to which such
Holder or any such director or officer or participating person or controlling
person may become subject under the Securities Act or any other statute or at
common law, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon (i) any alleged untrue
statement of any material fact contained, on the effective date thereof, in any
Registration Statement under which such securities were registered under the
Securities Act, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereto, or (ii) any alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and shall reimburse
such Holder or such director, officer or participating person or controlling
person for any legal or any other expenses reasonably incurred by such Holder or
such director, officer or participating person or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action.  Notwithstanding anything to the contrary set
forth in this Section 5(a), the Company shall not be liable to indemnify any
person in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon (1) any actual or alleged untrue
statement or actual or alleged omission either (x) made in such Registration
Statement, preliminary prospectus, prospectus or amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by such Holder specifically for use therein or so furnished for such
purposes by any underwriter or (y) that had been corrected in a preliminary
prospectus, prospectus supplement or amendment which had been furnished to such
Holder prior to any distribution of the document alleged to contain the untrue
statement or omission to offerees or purchasers, (2) any offer or sale of
Registrable Securities after receipt by such Holder of a Standstill Notice under
Section 3(g) and prior to the delivery of the prospectus supplement or amendment
contemplated by Section 3(g), or (3) the Holder’s failure to comply with the
prospectus delivery requirements under the Securities Act or failure to
distribute its Registrable Securities in a manner consistent with its intended
plan of distribution as provided to the Company and disclosed in the
Registration Statement.  Notwithstanding the foregoing, the Company
shall not be required to indemnify any person for amounts paid in settlement of
any claim without the prior written consent of the Company, which consent shall
not be unreasonably withheld.  Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
Holder or such director, officer or participating person or controlling person,
and shall survive the transfer of such securities by such
Holder.
  
  Exhibit
10.25
 
 
  (b)           Each
Holder, by acceptance hereof, agrees to indemnify and hold harmless the Company,
its directors and officers and each person who participated in such offering and
each other person, if any, who controls the Company within the meaning of the
Securities Act against any losses, claims, damages or liabilities, joint or
several, to which the Company or any such director or officer or any such person
may become subject under the Securities Act or any other statute or at common
law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) information in writing
provided to the Company by the Holder specifically for use in the following
documents and contained, on the effective date thereof, in any Registration
Statement under which securities were registered under the Securities Act at the
request of the Holder, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereto, (ii) Holder’s offer or sale of
Registrable Securities after receipt by such Holder of a Standstill Notice under
Section 3(g) and prior to the delivery of the prospectus supplement or amendment
contemplated by Section 3(g), (iii) Holder’s failure to comply with the
prospectus delivery requirements under the Securities Act or failure to
distribute its Registrable Securities in a manner consistent with its intended
plan of distribution as provided to the Company and disclosed in the
Registration Statement, (iv) Holder’s failure to comply with Regulation M under
the Exchange Act, or (v) Holder’s failure to comply with any rules and
regulations applicable because the Holder is, or is an Affiliate of, a
registered broker-dealer.  Notwithstanding the provisions of this
paragraph (b) or paragraph (c) below, no Holder shall be required to indemnify
any person pursuant to this Section 5 or to contribute pursuant to paragraph (c)
below in an amount in excess of the amount of the aggregate net proceeds
received by such Holder in connection with any such registration under the
Securities Act.
 
 (c)           If
the indemnification provided for in this Section 5 from the indemnifying party
is unavailable to an indemnified party hereunder in respect of any losses,
claims, damages, liabilities or expenses referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or expenses in such proportion as
is appropriate to reflect the relative fault of the indemnifying party and
indemnified parties in connection with the actions which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations.  The relative fault of such indemnifying
party and indemnified parties shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact, has been made by, or relates to information supplied by, such indemnifying
party or indemnified parties, and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such
action.  The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include any legal or other fees or expenses reasonably incurred by
such party in connection with any investigation or proceeding.
  
  Exhibit
10.25
 
 
 The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(c) were determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph.  No
Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
 
 6.      
     Certain Limitations on
Registration Rights.  Notwithstanding the other provisions of
this Agreement:
 
 (a)           the
Company shall not be obligated to register the Registrable Securities of Holders
if, in the opinion of counsel to the Company reasonably satisfactory to the
Holder and its counsel (or, if the Holder has engaged an investment banking
firm, to such investment banking firm and its counsel), the sale or other
disposition of such Holder’s Registrable Securities, in the manner proposed by
such Holder (or by such investment banking firm), may be effected without
registering such Registrable Securities under the Securities Act;
 
 (b)           the
Company shall not be obligated to register the Registrable Securities of any
Holder pursuant to Section 2 if the Company has had a registration statement,
under which the Holder had a right to have its Registrable Securities included
pursuant to Section 2, declared effective within one hundred and twenty (120)
days prior to the date of the request pursuant to Section 2; and
 
 (c)           the
Company shall have the right to delay the filing or effectiveness of the
registration statement required pursuant to Section 2 hereof during one or more
periods aggregating not more than forty five (45) days in any twelve-month
period in the event that (i) the Company would, in accordance with the advice of
its counsel, be required to disclose in the prospectus information not otherwise
then required by law to be publicly disclosed and (ii) in the judgment of the
Company’s Board of Directors, there is a reasonable likelihood that such
disclosure would materially and adversely affect any existing or prospective
material business situation, transaction or negotiation or otherwise materially
and adversely affect the Company.
 
 7.           Selection of Managing
Underwriters.  The managing underwriter or underwriters for any
offering of Registrable Securities to be registered pursuant to Section 2 shall
be selected by the Holders of a majority of the shares being so registered and
shall be reasonably acceptable to the Company.
 
 8.           Holder
Agreements.  (a)  No Holder may participate in an
underwritten offering provided for hereunder unless such Holder (i) agrees to
sell the Holder’s Registrable Securities on the basis provided in the
underwriting arrangements contemplated for such offering as reasonably requested
by the managing underwriter, (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements as
reasonably requested by the managing underwriter, and (iii) agrees to bear the
Holder’s pro rata portion of all underwriting discounts and
commissions.
  
  Exhibit
10.25
 
 
  (b)           Each
Holder agrees to comply with Regulation M under the Exchange Act in connection
with its offer and sale of Registrable Securities.
 
 (c)           Each
Holder agrees that it will not sell any Registrable Securities registered under
the Securities Act pursuant to the terms of this Agreement until a Registration
Statement (and any associated post-effective amendment) relating thereto has
been declared effective and the Holder has been provided copies of the related
prospectus, as amended or supplemented to date.
 
 (d)           Each
Holder agrees to comply with the prospectus delivery requirements of the
Securities Act as applicable in connection with the sale of Registrable
Securities registered under the Securities Act pursuant to a Registration
Statement.
 
 (e)           Each
Holder agrees that upon receipt of a Standstill Notice pursuant to Section 3(g),
the Holder shall immediately discontinue offers and sales of Registrable
Securities registered under the Securities Act pursuant to any Registration
Statements covering such Registrable Securities until such Holder receives
copies of the supplemented or amended prospectus contemplated by Section 3(g) or
notice from the Company that no such supplement or amendment is
required.
 
 9.           Miscellaneous.
 
 (a)           No Inconsistent
Agreements.  The Company will not hereafter enter into any
agreement with respect to its securities which conflicts with the rights granted
to the Holders in this Agreement.
 
 (b)           Remedies.  Each
Holder, in addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance of its
rights under this Agreement.  The Company agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of the provisions of this Agreement and hereby agrees to waive the defense
in any action for specific performance that a remedy at law would be
adequate.  In any action or proceeding brought to enforce any
provision of this Agreement or where any provision hereof is validly asserted as
a defense, the successful party shall be entitled to recover reasonable
attorneys’ fees in addition to any other available remedy.
 
 (c)           Amendments and
Waivers.  Except as otherwise provided herein, the provisions
of this Agreement may not be amended, modified or supplemented, and waivers or
consents to departure from the provisions hereof may not be given unless the
Company has obtained the written consent of the Holder.
 
 (d)           Notice
Generally.  Any notice, demand, request, consent, approval,
declaration, delivery or other communication hereunder to be made pursuant to
the provisions of this Agreement shall be sufficiently given or made if in
writing and either delivered in person with receipt acknowledged or sent by
registered or certified mail, return receipt requested, postage prepaid, or by
telecopy and confirmed by telecopy answerback, addressed as
follows:
  
  Exhibit
10.25
 
 
 If to the
Company:               Cicero,
Inc.
 8000
Regency Parkway, Suite 542
 Cary,
North Carolina 27518
 Attn:   John
P. Broderick
 
 With a Copy
to:                    Golenbock
Eiseman Assor Bell & Peskoe LLP
 437
Madison Avenue
 New York,
New York 10022
 Attn:   Lawrence
Bell, Esq.
 
 If to the
Holders:                 To
the address set forth on the counterpart signature page of such Purchaser or at
such other address as may be substituted by notice given as herein
provided.  The giving of any notice required hereunder may be waived
in writing by the party entitled to receive such notice.  Every
notice, demand, request, consent, approval, declaration, delivery or other
communication hereunder shall be deemed to have been duly given or served on the
date on which personally delivered, with receipt acknowledged, telecopied and
confirmed by telecopy answerback or three (3) Business Days after the same shall
have been deposited in the United States mail.
 
 (e)           Rule
144.  With a view to making available to the Holders the
benefits of Rule 144 under the Securities Act (“Rule 144”) and any
other rule or regulation of the Commission that may at any time permit the
Holder to sell securities of the Company to the public without registration, the
Company agrees that it will:
 
 (i)          make
and keep public information available, as those terms are understood and defined
in Rule 144;
 
 (ii)         file
with the Commission in a timely manner all reports and other documents required
of the Company under the Exchange Act; and
 
 (iii)          furnish
to a Holder, so long as such Holder owns any Registrable Securities, forthwith
upon request (A) a written statement by the Company, if true, that it has
complied with the reporting requirements of Rule 144, the Securities Act and the
Exchange Act, (B) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company, and (C)
such other information as may be reasonably requested in availing such Holder of
any rule or regulation of the Commission which permits the selling of any such
securities without registration.
 
 (f)           Successors and
Assigns.  This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties hereto including
any person to whom Registrable Securities are transferred.
 
 (g)           Headings.  The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.
  
  Exhibit
10.25
 
 
  (h)           Governing Law;
Jurisdiction.  This Agreement shall be governed by, construed
and enforced in accordance with the laws of the State of Delaware without giving
effect to the conflict of laws provisions thereof.  Service of process
on the parties in any action arising out of or relating to this Agreement shall
be effective if mailed to the parties in accordance with Section 9(d)
hereof.  The parties
hereto waive all right to trial by jury in any action or proceeding to enforce
or defend any rights hereunder.
 
 (i)           Severability.  Wherever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
 
 (j)           Entire
Agreement.  This Agreement, together with the License Agreement
and the Subscription Agreement, represents the complete agreement and
understanding of the parties hereto in respect of the subject matter contained
herein and therein.  This Agreement supersedes all prior agreements
and understandings between the parties with respect to the subject matter
hereof.
 
 (k)           Counterparts. This
Agreement may be executed in any number of counterparts, all of which taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same
counterpart.  In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
 
 
 [SIGNATURE
PAGES ATTACHED HERETO]
  
  Exhibit
10.25
 
 
 IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first above written.
 
 CICERO,
      INC.By:John
      P. Broderick,Chief
      Executive and Financial OfficerPURCHASER:By:Name:Title: