**PRIVATE      CONSORTIUM OF QUALIFIED INVESTORS**

**A      M E N D E D C O N F I D E N T I A L T E R M S H E E T**

**December      15, 2005**

**This      Term Sheet is an expression of intention only and, except as expressly set      forth      below, is not to be construed as a binding agreement.**

| **Promissory                Note with Conversion Feature** |
|------------------------------------------------------------|
|                                                       |   |
| **Issuer:**                                                | Level                8 Systems, Inc., a Delaware corporation (the “Company”) |
| **Investors:**                                             | Private                Consortium of Qualified Investors |
| **Investment                Amount:**                      | Up                to $2,000,000 |
| **Securities                Offered:**                     | $450,000                minimum principal amount of Senior Notes (the “Notes”) to be issued in                integral amounts of $1,000.  Each                holder of these Senior Promissory Notes upon the approval of the                Plan of                Merger defined below will be subject to a mandatory conversion of                the                principal amount of the note into shares of Cicero, Inc. common stock                at a                conversion rate of $0.037. (Equivalent of $0.00185 for Level 8 stock)                Based upon a $1,000,000 investment, holders of these Senior Notes                will own                approximately 40% ownership of Cicero, Inc. post                merger. |
| **Coupon:**                                                | 10%                per annum on the principal amount, payable in arrears in cash on                the                maturity date. |
| **Maturity                Date:**                          | Consummation                of the Merger (as defined below), but no later than **January                15, 2006** At                maturity, the principal balance of the Notes, together with all accrued                and unpaid interest, will become due and payable, subject to the                Optional                Exchange described below. |
| **Events                of Default:**                      | Standard                events of default for debt instruments will be included in the                Notes. |
| **Ranking:**                                               | The                Notes will constitute senior obligations of the Company. While the                Notes                are outstanding, the Company will not be permitted to incur indebtedness                ranking senior with the Notes, except for such senior indebtedness                of the                Company, if any, as is outstanding on the initial closing date of                the sale                of the Notes, including Notes from the initial Note and Warrant offering                in the amount of $2,580,000. |
| **Protective                Provisions:**                  | The                Notes will contain customary affirmative and negative covenants of                the                Company. |
| **Allocation                and Closings:**                | The                Notes will be offered to the Investors for purchase at one or more                closings.  The                initial closing of the sale of the Notes will occur not earlier than                10                days after the commencement of the offering. |
| **Mandatory                Exchange:**                     | Upon                consummation of the Merger and simultaneously therewith, all of the                Notes                held by each Investor will be automatically exchanged for and in                consideration of (without the payment of additional consideration)                the                shares issuable upon exercise of the conversion right of each investor’s                promissory note to the extent of the principal and accrued but unpaid                interest then due and owing on the Notes. |

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| **Use                of Proceeds:**    | The                Company will use the proceeds from this offering to finance its                operations. The proceeds would not                be                used to repay any short-term or long term debt                instruments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
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| **Other                Conditions**    | 1.                The Company will work with the Consortium to effect the proposed                merger no                later than September 15, 2005. To that end, the Company agrees to                place as                a retainer the sum of $50,000 with a selected legal firm of its choice                to                facilitate the remaining filings and approvals necessary to conclude                the                merger. 2.                The Company will cause a change in management including the                following: a)                the immediate resignation as Chairman, and Chief Executive Officer                (CEO)                by Anthony Pizi, who will retain the role of Chief Information Officer                (CIO). Mr. Pizi agrees that his resignation will not be as a result                of a                change in control of the Company. b)                the appointment by John Broderick as “Acting CEO”, in addition to his                current duties as Chief Financial Officer (CFO) and Chief Operating                Officer (COO). c)                as soon as reasonably practicable, the Company will launch a search                for a                highly qualified software executive with extensive sales and marketing                experience to assume the permanent position of CEO. 3.                The Consortium will have the immediate right to elect a majority                of the                Board of Directors. The Consortium will also obtain the resignations                of                Nicholas Hatalski and Ken Nielsen and the appointment of Bruce Miller,                Fredric Mack, John Broderick and Mark Landis to the Board of Directors,                leaving a total of eight directors. 4.                The Consortium will have the immediate right to create an Advisory                Board                to assist in the development of policy and strategy of the Company                for                implementation by the Board of Directors and management. 5.                The Company will develop a program for reducing cash flow and/or                operating                expenses by approximately twenty percent (20%) from current                levels. 6.                The Consortium will create an equity set-aside for incenting management                of                no less than 10% of the total shares outstanding on a fully diluted                basis                after completion of this contemplated financing and the subsequent                merger. 7.                The Company and the Consortium agree that any future financings that                may                be required prior to the effectiveness of the proposed merger must                be                approved by a majority of those investors that participate in this                current                round. Investors voting percentages will be equal to their percentage                of                investment in the total offering. 8.                Should the proposed merger not be declared effective by October 31,                2005,                the Company agrees that the pre money valuation of Level 8 Systems                of                $1,500,000 be lowered to $1,250,000. Holders of Senior Promissory                Notes                from this offering would then convert into shares of Cicero, Inc.                common                stock at a conversion rate of $0.0314. 9.                Should the proposed merger not be declared effective by December                31, 2005,                the Company agrees that the pre money valuation of Level 8 Systems                of                $1,250,000 (as adjusted above) be lowered to $1,000,000. Holders                of Senior                Promissory Notes from this offering would then convert into shares                of                Cicero, Inc. common stock at a conversion rate of                $0.025. |
| **Deposit**                            | Upon                acceptance of this term sheet by the Company, Consortium will immediately                deposit a minimum of $45,000, representing 10% of the minimum pledged                to                be made immediately available for working capital                purposes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| **Expiration                of Offer** | This                offer expires on January 15, 2006                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |

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**LEVEL      8 SYSTEMS, INC.**

**PRIVATE      CONSORTIUM**

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**A      T T A C H M E N T**

**LEVEL      8 SYSTEMS, INC.**