CICERO, INC. SECURED PROMISSORY NOTE

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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.]*

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

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.

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 it