ex10_17.htm


    
      

    

    Exhibit
10.17

    


    SN-<Number>

    CICERO,
INC.

    SECURED
PROMISSORY NOTE

    


    Cary,
North Carolina

    March 31,
2009

    


    <$Amount>

    


    Cicero, Inc., a Delaware corporation
(the “Company”), for value received, promises to pay to <Payee>, or order,
the principal sum of <$Amount> on January 31, 2012 and to pay interest
(computed on the basis of a 360-day year of 30-day months) on the unpaid balance
of such principal amount from the date hereof until paid at the rate of fifteen
percent (15%) per annum.  Such interest shall be payable each March
31, June 30, September 30 and December 31, commencing June 30,
2009.

     

    This Note is one of a series of Secured
Promissory Notes of the Company (collectively, the “Notes”), all of which are
secured by a certain account payable to the Company in February 2010 (the
“Collateral”) pursuant to that certain contract between Merrill Lynch, Pierce
Fenner and Smith and the Company dated December 21, 2007 (the “Merrill Lynch
Contract”).  These Notes are issued in the aggregate principal amount
of $________ on or about March 31, 2009, all of which are identical in all
respects except for the principal amount, payee and the date of issue thereof,
and all of which are also secured by the Collateral.  In connection
with the issuance of the Notes, the holder of each Note shall also be issued a
Warrant to purchase shares of Common Stock of the Company at the rate of one
share per $1.00 of principal amount thereof at the purchase price of $0.20 per
share. The Notes shall rank pari passu with each other in
all respects and shall be considered a single series for all purposes,
including, but not limited to, making a demand for payment, electing to
accelerate payment, amending the Notes, and foreclosing or otherwise pursuing
remedies against Collateral securing the Notes, except that each Note shall be
considered separate with respect to the date from which interest shall
accrue.

     

    The following is a statement of the
rights of the holder of this Note and the conditions to which this Note is
subject, to which the holder hereof, by the acceptance of this Note,
agrees:

    


    1.      
      Prepayment.  The
Company may prepay this Note in whole or in part at any time or from time to
time without premium or penalty; provided that all Notes shall then be prepaid
pro rata among all the outstanding Notes on the basis of the then outstanding
principal.  Each prepayment shall be accompanied by accrued interest
on the amount to be prepaid.

     

    *[The
Company shall, the extent it earns and is paid the February 2010 installment of
$1,250,000 under the Merrill Lynch Contract, utilize those proceeds to discharge
first any interest due and owing on the Notes through the date of payment and
second a portion of the principal amount of the Notes, pro rata among all the
outstanding Notes on the basis of the then outstanding
principal.]*


    
      
         


      

      
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    Exhibit
10.17

     

    2.       
     Use of
Proceeds.  The
proceeds of the Notes will be used by the Company for working capital
purposes.

     

    3.    
        Security
Interest.

     

    3.1           Grant of Security
Interest

     

    .  The
Company hereby unconditionally grants to the holders of the Notes a continuing
security interest (hereinafter the “Security Interest”) in and to the
Collateral.  This Note and the Security Interest created hereby secure
the payment and performance of all the Notes pari passu.

     

    3.2           Holders’
Duties.  The powers conferred on holders of the Notes hereunder
are solely to protect their interest in the Collateral, and shall not impose any
duty upon them to exercise any such powers.  Except for the accounting
for moneys actually received by it hereunder, the holder of this Note shall have
no duty as to the Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to the
Collateral.  The holder of this Note shall be deemed to have exercised
reasonable care in the custody and preservation of any Collateral in its actual
possession if such Collateral is accorded treatment substantially equal to that
which it accords its own property.

     

    4.        
    Events of
Default.  If any of the following events (“Events of Default”)
shall occur:

     

    4.1           if
the Company shall default in the payment of any part of the principal of or
interest on any Note for more than 10 days after the same shall have become due
and payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise; or

     

    4.2           if
the Company shall default in the performance of or compliance with any term
contained herein or in any agreement or instrument securing this Note and such
default shall not have been remedied within 20 days after written notice thereof
shall have been given to the Company by the holders, in the aggregate, of a
majority of the outstanding principal amount of the Notes; or

     

    4.3           if
the Company shall default (as principal or guarantor or other surety) in the
payment of any principal of or premium, if any, or interest on any indebtedness
for borrowed money (other than the Notes) or with respect to any of the terms of
any evidence of such indebtedness or of any mortgage, indenture or other
agreement relating thereto which default accelerates the maturity of such
indebtedness, and such default shall continue for more than the period of grace,
if any, provided therein without being consented to or waived by such lender;
or

     

    4.4           if
the Company shall make an assignment for the benefit of creditors, or shall
admit in writing its inability to pay its debts as they become due, or shall
file a voluntary petition in bankruptcy, or shall be adjudicated a bankrupt or
insolvent, or shall file any petition or answer seeking for itself any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any present or future statute, law or regulation, or
shall file any answer admitting or not contesting the material allegations of a
petition filed against the Company in any such proceeding, or shall seek or
consent to or acquiesce in the appointment of any trustee, receiver or
liquidator of the Company or of all or any substantial part of the properties of
the Company, or the Company shall take any corporate action looking to the
dissolution or liquidation of the Company; or

     

    
      
         


      

      
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    Exhibit
10.17

     

    4.5           if,
within 30 days after the commencement of an action against the Company seeking
any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation, such action shall not have been dismissed or all orders or
proceedings thereunder affecting the operations or the business of the Company
stayed, or if the stay of any such order or proceeding shall thereafter be set
aside, or if, within 30 days after the appointment without the consent or
acquiescence of the Company or any trustee, receiver or liquidator of the
Company or of all or any substantial part of the properties of the Company, such
appointment shall not have been vacated;

     

    4.6           if
any material portion of the Company’s or any subsidiary of the Company’s assets
is attached, seized, subjected to a writ or distress warrant, levied upon, or
comes into the possession of any third person;

     

    4.7           if
the Company or any subsidiary is enjoined, restrained, or in any way prevented
by court or regulatory agency order from continuing to conduct all or any
material part of its business affairs;

     

    4.8           if
one or more final judgments in excess of the amount covered by insurance,
becomes a lien or encumbrance upon any of the Company’s or any subsidiary’s
assets;

     

    4.9           if
any document or instrument that purports to create a lien on or with respect to
the Collateral shall, for any reason, fail or cease to create a valid and
perfected and, except to the extent permitted by the terms hereof or thereof,
first priority lien on and security interest in the Collateral covered thereby;
or

     

    4.10         any
provision of a Note or any document or instrument securing a Note shall at any
time for any reason be declared to be null and void, or the validity or
enforceability thereof shall be contested by the Company or any subsidiary of
the Company, or a proceeding shall be commenced by the Company or any subsidiary
of the Company, or by any governmental authority having jurisdiction over the
Company or any subsidiary, seeking to establish the invalidity or
unenforceability thereof, or the Company or any subsidiary of the Company shall
deny that it has nay liability or obligation purported to be created
thereunder;

     

    then and
in any such event any holder or holders of a majority in principal amount of the
Notes at any time outstanding, voting or consenting together as a single series
for purposes of such determination, may at any time (unless all defaults shall
have theretofore been remedied) at its or their option, (i) by written notice or
notices to the Company, declare all the Notes to be due and payable, whereupon
the same shall forthwith mature and become due and payable together with
interest accrued thereon, without presentment, demand, protest or notice, all of
which are hereby waived; and (ii) exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein, or otherwise
available to it or them, all the rights and remedies of a secured party on
default under the Uniform Commercial Code or any other applicable law. Without
limiting the generality of the foregoing, the Company expressly agrees that, in
any such event, the holders of the Notes may notify Merrill Lynch, Pierce Fenner
and Smith that the Collateral has been assigned to the holders of the Notes and
that they have a security interest therein.


    
      
         


      

      
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    Exhibit 10.17

     

    In case any one or more Events of
Default shall occur and be continuing, the holders of the Notes may proceed to
protect and enforce the rights of such holders by an action at law, suit in
equity or other appropriate proceeding, whether for the specific performance of
any agreement contained herein, or for an injunction against a violation of any
of the terms hereof, or in aid of the exercise of any power granted hereby or by
law.  In case of a default in the payment of any principal of or
interest on any Note, the Company will pay to the holder thereof such further
amount as shall be sufficient to cover the cost and expenses of collection,
including (without limitation) reasonable attorneys' fees, expenses and
disbursements.  No course of dealing and no delay on the part of the
holder of this Note in exercising any right, power or remedy shall operate as a
waiver thereof or otherwise prejudice such holder's rights, powers and
remedies.  No right, power or remedy conferred hereby upon any holder
hereof shall be exclusive of any other right, power or remedy referred to herein
or now or hereafter available at law, in equity, by statute or
otherwise.

    


    5.        
    Representations of the
Holder.

     

    5.1           Access

     

    .  The
holder of this Note has conducted its own independent review and analysis of the
business, operations, technology, assets, liabilities, results of operations,
financial condition and prospects of the Company and its subsidiaries, and
acknowledges that the Company has provided the holder of this Note access to the
personnel, properties, premises and books and records of the Company and its
subsidiaries for this purpose, and the holder of this Note has had an
opportunity to ask questions of and receive responses from management of the
Company. 

     

    5.2           Investment
Intent.  The holder of this Note is making the loan evidenced
by this Note and acquiring the Warrant solely for the purpose of investment and
not with a view to, or for resale in connection with, any distribution thereof
in violation of the Securities Act of 1933, as amended.

     

    5.3           Accredited
Investor.  The holder of this Note has the financial ability to
bear the economic risk of such holder’s investment, has adequate means for
providing for such holder’s current needs and personal contingencies and has no
need for liquidity with respect to such holder’s investment in the
Company.  The holder of this Note has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of the prospective investment.  If other than an individual, the
holder of this Note also represents (A) it has not been organized for the
purpose of acquiring the Note or (B) it is an entity in which each of the equity
owners is an accredited investor as defined in Rule 501(a) promulgated under the
Securities Act of 1933, as amended.  If the holder of this Note is an
individual, such holder represents he or she is an accredited investor as
defined in such Rule 501(a).

     

    
      
         


      

      
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    Exhibit 10.17

     

    6.        
    Covenants.

     

    6.1           Reports.  (a)  So
long as this Note remains outstanding, the Company shall have its annual
consolidated financial statements audited by a nationally recognized firm of
independent registered accountants and its interim consolidated financial
statements reviewed by a nationally recognized firm of independent registered
accountants in accordance with Statement on Auditing Standards 101 issued by the
American Institute of Certified Public Accountants (or any similar replacement
standard).  In addition, so long as this Note is outstanding, the
Company shall furnish to the holder of this Note all annual and quarterly
reports on Forms 10-K and 10-Q, respectively, and all current reports on Form
8-K, in each case filed by it with the Securities and Exchange Commission
(“SEC”).  If the Company shall not be subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), it shall nevertheless furnish the holder of this
Note with (a) the financial information that would be required to be contained
in a filing on such annual or quarterly report, including a “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and
(b) all information that would be required to be contained in filings with the
SEC on Form 8-K.  All such annual reports shall be furnished within
120 days after the end of the fiscal year to which they relate, and all such
quarterly reports shall be furnished within 45 days after the end of the fiscal
quarter to which they relate.  All such current reports shall be
furnished within the time periods specified in the SEC’s rules and regulations
for reporting companies under the Exchange Act.

     

    (b)    At
the Company’s option, the Company shall either (i) distribute such information
and such reports (as well as the details regarding the conference call described
below) electronically to the holder of this Note, and/or (ii) make available
such information to such holder by posting such information on the Internet
(which may be its own site, IntraLinks or any comparable password protected
online data system which will require a confidentiality acknowledgement or
otherwise, and the Company shall provide such password thereto to the holder of
this Note and make such information readily available to such holder, who agrees
to treat such information as confidential).

    


    6.2           Taxes.  The
Company shall, and shall cause each of its subsidiaries to, pay prior to
delinquency all material taxes, assessments, and governmental levies except as
contested in good faith and by appropriate proceedings.

     

    6.3           Limitations on
Liens.  The
Company shall not create, incur, assume or permit or suffer to exist any lien,
claim or encumbrance of any nature whatsoever against any of the Collateral,
unless contemporaneously therewith, such lien is subordinated in right of
payment to the Notes to the extent reasonably acceptable to holders of a
majority in principal amount of the Notes.

     

    6.4           Conduct of
Business.  The
Company shall not, and shall not permit any subsidiary to, engage in any
business other than the business of providing business integration software and
related services.  The Company will not change its name, FEIN, state
of organization or organizational identity; provided that the Company may change
its name upon at least thirty (30) days prior written notice to the holder of
this Note and so long as, at the time of such written notification, the Company
provides any financing statements necessary to perfect and continue perfected
the Security Interest in the Collateral.

     

    
      
         


      

      
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    Exhibit 10.17

     

    6.5           Maintenance of Properties;
Insurance; Compliance with Law.

     

    (a)           The
Company shall, and shall cause each of its subsidiaries to, at all times cause
all properties used or useful in the conduct of their business to be maintained
and kept in good condition, repair and working order (reasonable wear and tear
excepted) and supplied with all necessary equipment, and shall cause to be made
all necessary repairs, renewals, replacements, necessary betterments and
necessary improvements thereto.

    


    (b)           The
Company shall maintain, and shall cause to be maintained for each of its
subsidiaries, insurance covering such risks as are usually and customarily
insured against by corporations similarly situated in the markets where the
Company and its subsidiaries conduct homebuilding operations, in such amounts as
shall be customary for corporations similarly situated and with such deductibles
and by such methods as shall be customary and reasonably consistent with past
practice.

    


    (c)           The
Company shall, and shall cause each of its subsidiaries to, comply with all
statutes, laws, ordinances or government rules and regulations to which they are
subject, non compliance with which would materially adversely affect the
business, earnings, properties, assets or financial condition of the Company and
its subsidiaries taken as a whole.

    


    6.6           Legal
Existence.  Subject
to Section 6.7, the Company shall do or cause to be done all things necessary to
preserve and keep in full force and effect its legal existence, in accordance
with its organizational documents (as the same may be amended from time to
time).  The Company shall not be required to preserve any such right,
license or franchise, or the corporate, partnership or other existence of any of
its subsidiaries if the Board of Directors of the Company shall determine that
the preservation thereof is no longer desirable in the conduct of the business
of the Company and its subsidiaries, taken as a whole, and that the loss thereof
is not adverse in any material respect to the holders of the Notes.

     

    6.7           Limitations on Mergers,
Consolidations, etc.  (a)
The Company shall not, directly or indirectly, in a single transaction or a
series of related transactions, (i) consolidate or merge with or into another
person, or sell, lease, transfer, convey or otherwise dispose of or assign all
or substantially all of the assets of the Company and its subsidiaries (taken as
a whole) or (ii) adopt a plan of liquidation unless, in either
case:

     

    (A)           the
Company will be the surviving or continuing person; or

    


    (B)           the
person formed by or surviving such consolidation or merger or to which such
sale, lease, conveyance or other disposition shall be made (or, in the case of a
plan of liquidation, any person to which assets are transferred) (collectively,
the “Successor”) is a corporation, limited liability company or limited
partnership organized and existing under the laws of any State of the United
States of America or the District of Columbia, and the Successor expressly
assumes, by agreements in form and substance reasonably satisfactory to the
holders of a majority in principal amount of the Notes, all of the obligations
of the Company under this Note and the other Notes.


    
      
         


      

      
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    Exhibit 10.17

     

    (b)           Upon
any consolidation, combination or merger of the Company or any transfer of all
or substantially all of the assets of the Company in accordance with the
foregoing, in which the Company is not the continuing obligor under the Notes,
the surviving entity formed by such consolidation or into which the Company is
merged or the person to which the conveyance, lease or transfer is made will
succeed to, and be substituted for, and may exercise every right and power of,
the Company under the Notes, with the same effect as if such surviving entity
had been named therein as the Company and, except in the case of a lease, the
Company will be released from the obligation to pay the principal of and
interest on the Notes and all of the Company’s other obligations and covenants
under the Notes.

    


    (c)           Notwithstanding
the foregoing, any subsidiary may consolidate with, merge with or into or
convey, transfer or lease, in one transaction or a series of transactions, all
or substantially all of its assets to the Company or another
subsidiary.

    


    7.           Miscellaneous.

     

    7.1           Savings
Clause.  In no event shall the interest rate or rates payable
under this Note, plus
any other amounts paid in connection herewith, exceed the highest rate
permissible under any law that a court of competent jurisdiction shall, in a
final determination, deem applicable.  The Company, in executing and
delivering this Note, and the holder of this Note in accepting it, intend
legally to agree upon the rate or rates of interest and manner of payment stated
herein; provided,
however, that, anything contained herein to the contrary notwithstanding,
if said rate or rates of interest or manner of payment exceeds the maximum
allowable under applicable law, then, ipso facto, as of the date of this
Note, the Company is and shall be liable only for the payment of such maximum as
allowed by law, and payment received from the Company in excess of such legal
maximum, whenever received, shall be applied to reduce the principal balance of
this Note to the extent of such excess.

     

    7.2           Governing Law;
Venue.  This Note shall be governed by and construed in
accordance with the laws of the State of North Carolina.

     

    ALL
ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS NOTE SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN WAKE COUNTY, STATE OF
NORTH CAROLINA; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
PROPERTY MAY BE BROUGHT, AT THE HOLDER OF THIS NOTE’S OPTION, IN THE COURTS OF
ANY JURISDICTION WHERE SUCH PROPERTY MAY BE FOUND.  THE COMPANY AND
HOLDERS OF THIS NOTE WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY
RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT
TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION
7.2.

     

    7.3           Financing Statements.
The Company authorizes the filing by the holders of the Notes of financing or
continuation statements. or amendments thereto, and the Company will execute and
deliver to holders of the Notes such other instruments or notices, as may be
necessary or as the holders of the Notes may reasonably request, in order to
perfect and preserve the Security Interest granted or purported to be granted
hereby.  The Company acknowledges that it is not authorized to file
any financing statement or amendment or termination statement with respect to
any financing statement filed in connection with this Note without the prior
written consent of holders of the Notes, subject to the Company’s rights under
Section 9-509(d)(2) of the Uniform Commercial Code.

     

    
      
         


      

      
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    Exhibit 10.17

     

    7.4           Attorney-in-Fact.  The
Company hereby irrevocably appoints the holders of the Notes its
attorney-in-fact, with full authority in the place and stead of the Company and
in the name of the Company or otherwise, at such time as an Event of Default has
occurred and is continuing under this Note to take any action and to execute any
instrument which the holders of the Notes may reasonably deem necessary or
advisable to accomplish the purposes of this Note and the other Notes
including:

     

    (a)           to
ask, demand, collect, sue for, recover, compromise, receive and give acquittance
and receipts for moneys due and to become due under or in connection with the
Collateral;

    


    (b)           to
file any claims or take any action or institute any proceedings which the
holders of the Notes may deem necessary or desirable for the collection of any
of the Collateral or otherwise to enforce the rights of holders of the Notes
with respect to any of the Collateral; and

    


    (c)           to
bring suit in its own name to enforce the Collateral and, if the holders of the
Notes shall commence any such suit, the Company shall, at the request of the
holders of the Notes, do any and all lawful acts and execute any and all proper
documents reasonably required by the holders of the Notes in aid of such
enforcement.

    


    To the
extent permitted by law, the Company hereby ratifies all that such
attorney-in-fact shall lawfully do or cause to be done by virtue hereof. This
power of attorney is coupled with an interest and shall be irrevocable until
this Note paid in full.

     

    7.5           Remedies
Cumulative.  The
rights and remedies of holders of the Notes under the Notes, shall be
cumulative.  The holders of the Notes shall have all other rights and
remedies not inconsistent herewith as provided under the Uniform Commercial
Code, by law, or in equity.  No exercise by the holders of the Notes
of one right or remedy shall be deemed an election, and no waiver by the holders
of the Notes of any Event of Default shall be deemed a continuing
waiver.  No delay by the holders of the Notes shall constitute a
waiver, election, or acquiescence by it.

     

    7.6           Amendment.  This
Note and its terms may be changed, waived or amended only by the written consent
of the Company and the holders of a majority in principal amount of the Notes
outstanding, voting or consenting together for purposes of such
determination.

     

    7.7           Severability.   In
case any provision contained herein (or part thereof) shall for any reason be
held to be invalid, illegal, or unenforceable in any respect, such invalidity,
illegality, or other unenforceability shall not affect any other provision (or
the remaining part of the affected provision) hereof, but this Note shall be
construed as if such invalid, illegal, or unenforceable provision (or part
thereof) had never been contained herein, but only to the extent that such
provision is invalid, illegal, or unenforceable.

     

    
      
         


      

      
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    Exhibit 10.17

     

    7.8           Assignment.  This
Note and Warrant will be made and issued as a unit, and neither may be detached
or ownership separated from the other, except to the extent this Note shall be
in excess of $_________.  The holders of the this Note may assign to
one or more assignees (each an “Assignee”) all, or any ratable part of all, of
this Note and the other rights and obligations of such holder hereunder; provided, however, that simultaneously
with and as part of any such assignment it assigns a pro rata amount of the
Warrant based on the aggregate number of shares issuable upon the exercise
thereof; except that the holder of a Note may assign the Note and Warrant
separately to the extent that the principal amount of the Note exceeds
$_______and, provided,
further, that the Company may continue to deal solely and directly with
the holder of this Note in connection with the interest so assigned to an
Assignee until (i) written notice of such assignment, together with payment
instructions, addresses, and related information with respect to the Assignee,
have been given to the Company by the holders and the Assignee, and (ii) the
holder and its Assignee have delivered to the Company a document reflecting such
assignment and acceptance reasonably acceptable to the Company.

     

    7.9           Headings.  Headings
and numbers have been set forth herein for convenience only.  Unless
the contrary is compelled by the context, everything contained in each Section
applies equally to this entire Note.

     

    


    [signature
on next page]


    
      
         


      

      
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    Exhibit 10.17

     

    IN WITNESS WHEREOF, the Company has
caused this Note to be signed in its name as of the date above
written.

    


    
      
        
          	 	
                  CICERO,
      I NC.

                
	 	 
      	 
      
	 	 
      	 
      
	 	
                  By:

                	
                   

                
	 	
                  Name:
      John Broderick

                
	 	
                  Title:
      Chief Executive Officer

                


        

      

    

     

     

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