CICERO INC (Form: 8-K, Received: 01/20/2010 15:14:09)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

^{______________}

FORM 8-K

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CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 15, 2010

Cicero Inc.

(Exact name of registrant as specified in its charter)


Delaware	0-26392	11-2920559
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)


8000 Regency Parkway, Suite 542 Cary, North Carolina (Address of principal executive offices)		27518 (Zip Code)

Registrant’s telephone number, including area code (919) 380-5000

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01

Entry into a Material Definitive Agreement.

On January 15, 2010, Cicero Inc. (the “ Company ”) entered into an asset purchase agreement (the “ Asset Purchase Agreement ”) with SOAdesk, LLC, a Delaware limited liability company (“ SOAdesk ”), and Vertical Thought, Inc., a Delaware corporation (“ VTI ” and, together with SOAdesk, “ Sellers ”), pursuant to which the Company acquired the Sellers’ “United Desktop” and “United Data Model” software programs, as well as substantially all of the other assets owned by Sellers directly or indirectly used (or intended to be used) in or related to Sellers’ business of providing customer interaction consulting and technology services for organizations and contact centers throughout the world (the “ Business ”). The Company also assumed certain liabilities of Sellers related to the Business, as described in the Asset Purchase Agreement. The foregoing transaction (the “ Asset Purchase Transaction ”) closed on January 15, 2010 (the “ Closing Date ”).

Asset Purchase Agreement

Upon the terms and subject to the conditions set forth in the Asset Purchase Agreement, the aggregate consideration payable by the Company to Sellers consists of the following:

$300,000 paid in cash to Sellers on the Closing Date, subject to adjustment following the closing pursuant to the terms of the Asset Purchase Agreement;

an unsecured convertible note in the aggregate principal amount of $700,000, payable to SOAdesk and convertible into shares of the Company’s Series B Preferred Stock, par value $.001 per share (the “ Series B Preferred Stock ”), as described in more detail below (the “ Short Term Convertible Note ”);

$525,000, payable in cash to SOAdesk on March 31, 2010;

an unsecured convertible note in the aggregate principal amount of $1,000,000, payable to SOAdesk and convertible into shares of the Company’s common stock, par value $.001 per share (“ Common Stock ”), as described in more detail below (the “ Stock-Payable Convertible Note ” and, together with the Short Term Convertible Note, the “ Notes ”);

earn-out payments related to Product Revenues (as defined in the Asset Purchase Agreement) during the period from January 1, 2010 through March 31, 2011, payable (if at all) in cash and shares of Common Stock in the proportions set forth in the Asset Purchase Agreement (the “ Product Revenue Earn-Out ”); and

earn-out payments related to Enterprise Revenues (as defined in the Asset Purchase Agreement) during the period from January 1, 2010 through July 31, 2011, payable (if at all) in shares of Common Stock (the “ Enterprise Revenue Earn-Out ”).

The amount (if any) of the Product Revenue Earn-Out and Enterprise Revenue Earn-Out payable to SOAdesk will depend on whether the Company achieves certain revenue targets, and the maximum aggregate values of such Earn-Outs are limited as set forth in the Asset Purchase Agreement, in each case taking into account the value of any shares of Common Stock issued to SOAdesk. The Asset Purchase Agreement provides that any shares of Common Stock issued by the Company to SOAdesk in satisfaction of the Product Revenue Earn-Out or the Enterprise Revenue Earn-Out, as applicable, will be valued based on an assumed per share price of $0.15, subject to adjustment for stock splits, stock combinations or similar events.

The Asset Purchase Agreement contains customary representations, warranties, covenants and indemnities, including certain post-closing covenants with respect to confidentiality, non-competition and non-solicitation. In addition, in connection with the Asset Purchase Transaction, Antony Castagno, James Hunt and Michael Garner, former executive officers of SOAdesk, have entered into employment and non-competition and non-solicitation agreements with the Company. The Company will also, in its discretion, offer at-will employment to each other employee actively employed in the Business.

Following the closing, SOAdesk will have the right to appoint one (1) individual to serve on the Company’s Board of Directors for a single one (1) year term, subject to renewal by the affirmative vote of the Company’s stockholders in accordance with the Company’s Certificate of Incorporation and Bylaws.

The foregoing description of the Asset Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Asset Purchase Agreement, which is attached as Exhibit 2.1 and is incorporated herein by reference.

Short Term Convertible Note and Stock-Payable Convertible Note

The Short Term Convertible Note is for an aggregate principal amount of $700,000 and is convertible, at the option of the holder, into shares of Series B Preferred Stock at a conversion price of $150.00 per share, as such conversion price may be adjusted for stock dividends, stock splits and similar events. The Stock-Payable Convertible Note is for an aggregate principal amount of $1,000,000 and is convertible, at the option of the holder, into shares of Common Stock at a conversion price of $0.15 per share, as such conversion price may be adjusted for stock dividends, stock splits and similar events, subject to certain limitations on the holder’s right to convert the Stock-Payable Convertible Note in each of the first three (3) years following its original issuance. The obligations of the Company under each of the Notes are unsecured.

The Company has the right, under each Note, to prepay the Note at any time or from time to time without any premium or penalty. In addition, the Short Term Convertible Note is mandatorily pre-payable with fifty percent (50%) of the gross proceeds received by the Company from the sale of shares of Series B Preferred Stock to investors after the date of the Note and prior to March 31, 2010.

Each Note accrues interest at the rate of five percent (5%) per annum. All unpaid principal on the Short Term Convertible Note, together with the balance of unpaid and accrued interest and other amounts payable thereunder, if not converted by the holder or pre-paid in cash, will be due and payable, and will be paid through the issuance of shares of Series B Preferred Stock valued at the then-applicable conversion price, on the earlier of (i) March 31, 2010, or (ii) upon the occurrence of certain events of default. All unpaid principal on the Stock-Payable Convertible Note, together with the balance of unpaid and accrued interest and other amounts payable thereunder, if not converted by the holder, will be due and payable, and will be paid through the issuance of shares of Common Stock valued at the then-applicable conversion price, on the earlier of (i) five (5) years from the date of the Stock-Payable Convertible Note, or (ii) upon the occurrence of certain events of default.

The foregoing description of the Notes does not purport to be complete and is qualified in its entirety by reference to the full text of the Notes, which are attached as Exhibits 4.1 and 4.2 and are incorporated herein by reference.

A copy of the Company’s press release, dated January 19, 2010, which describes the Asset Purchase Transaction and the Series B Financing, is attached hereto as Exhibit 99.

Item 2.01

Completion of Acquisition or Disposition of Assets.

Please refer to Item 1.01 hereof for a description of the Asset Purchase Transaction, which closed on January 15, 2010.

Item 3.02

Unregistered Sales of Equity Securities

Issuance of Securities in Connection with Asset Purchase Transaction

As described in Item 1.01 hereof, on January 15, 2010 the Company entered into an Asset Purchase Agreement with Sellers that provides for the issuance of Notes and the possible issuance of shares of Series B Preferred Stock and/or Common Stock to Sellers upon the terms and subject to the conditions set forth in the Asset Purchase Agreement and the Notes. The issuance of the foregoing securities was made in connection with the Company’s purchase of identified assets owned by Sellers, pursuant to the terms of the Asset Purchase Agreement and in reliance upon certain representations and warranties of Sellers set forth therein. The terms of the Series B Preferred Stock are described more fully below.

Issuance of Securities in Connection with Series B Financing

On January 15, 2010, the Company received $1,360,000 in gross proceeds (including $500,000 in cash and the cancellation of $860,000 of existing indebtedness owed to two of the Investors) from a private placement to certain accredited investors (the “ Investors ”) of 9,067 shares of Series B Preferred Stock and warrants (the

“ Warrants ”) to purchase 2,266,667 shares of Common Stock (the “ Series B Financing ”), in an offering exempt from the registration requirements of the Securities Act of 1933, as amended (the “ Securities Act ”). The Company used a portion of the cash proceeds from the Series B Financing in connection with the Asset Purchase Transaction described in Item 1.01 above.

Series B Preferred Stock

The Series B Preferred Stock ranks senior to the Common Stock and on parity with the Company’s outstanding Series A-1 Preferred Stock, par value $.001 per share (the “ Series A-1 Preferred Stock ”). As required by the Certificate of Designations applicable to the Series A-1 Preferred Stock, the Company obtained the consent of a holder representing in excess of two thirds of the outstanding shares of Series A-1 Preferred Stock to authorize and issue the shares of Series B Preferred Stock.

Dividends will accrue on each share of Series B Preferred Stock at the rate per annum of eight percent (8%) of the Series B Original Issue Price, as defined below (the “ Accruing Dividends ”). Dividends will accrue from the date on which a share of Series B Preferred Stock was issued by the Company until paid, whether or not declared, and shall be cumulative; provided , however , that except as set forth in the Certificate of Designations, Preferences and Rights of Series B Convertible Preferred Stock (the “ Series B Certificate ”), such Accruing Dividends will be payable only when, as, and if declared by the Board of Directors, and the Company will be under no obligation to pay such Accruing Dividends.

Each share of Series B Preferred Stock is convertible, at the option of the holder, into that number of shares of Common Stock equal to $150.00 (the “ Series B Original Issue Price ”) divided by the conversion price of the Series B Preferred Stock then in effect, which is initially $0.15, subject to adjustment under certain circumstances as set forth in the Series B Certificate. The shares of Common Stock into which the Series B Preferred Stock is convertible have certain registration rights, as described below.

In the event of certain specified liquidation events, the holders of Series B Preferred Stock will be entitled to receive an amount per share equal to the Series B Original Issue Price plus any dividends accrued or declared but unpaid thereon before the payment of any amount to the holders of Common Stock and other junior securities.

The holders of Series B Preferred Stock will be entitled to vote, on an as-converted basis, on all matters submitted to a vote of the stockholders of the Company, and the holders of Series B Preferred Stock, Series A-1 Preferred Stock and Common Stock will vote together as a single class. In addition, until such time as the Company consummates at least an additional $5,000,000 equity financing from institutional or strategic investors, the approval of the holders of at least 2/3 of the outstanding shares of the Series B Preferred Stock voting together separately as a class will be required for the Company to take certain specified actions set forth in the Series B Certificate.

The foregoing summary description of the terms of the Series B Preferred Stock does not purport to be complete and is qualified in its entirety by reference to the full text of the Series B Certificate, which is attached as Exhibit 3.1 and is incorporated herein by reference.

Warrants

The Warrants issued to the Investors in connection with the Series B Financing are immediately exercisable to purchase Common Stock at an initial exercise price of $0.25 per share, subject to adjustment as set forth in the Warrants. The Warrants expire on January 19, 2015. The shares of Common Stock underlying the warrants have certain registration rights, as described below, and have a cashless exercise provision in the event no registration statement is effective for resales of the underlying shares, if a registration statement is required.

The foregoing summary description of the terms of the Warrants does not purport to be complete and is qualified in its entirety by reference to the full text of the Form of Investor Warrant Agreement, which is attached as Exhibit 4.3.

Registration Rights Agreement

In connection with the Series B Financing, the Company and the Investors entered into a Registration Rights Agreement with respect to the shares of Common Stock issued or issuable upon conversion of the Series B

Preferred Stock and upon exercise of the Warrants (collectively, the “ Registrable Securities ”). Under the terms of the Registration Rights Agreement, the Company agreed to file with the Securities and Exchange Commission, within 120 days, a resale registration statement relating to the resale of the Registrable Securities. The Company is obligated to keep such resale registration statement continuously effective under the Securities Act until the earlier of (i) the date as of which all of the Registrable Securities have been sold, and (ii) the date as of which each of the holders of the Registrable Securities is permitted to sell its Registrable Securities without registration pursuant to Rule 144 under the Securities Act.

The foregoing summary description of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the Registration Rights Agreement, which is attached as Exhibit 4.4 hereto and is incorporated herein by reference.

The Company issued and sold the securities described in this Item 3.02 in reliance upon the exemption afforded by the provisions of Section 4(2) of the Securities Act, based upon representations made by Sellers and the Investors. The securities issued are not registered under the Securities Act, and therefore may not be offered or sold in the United States without registration or an applicable exemption from the registration requirements of the Securities Act.

Item 3.03

Material Modification to Rights of Security Holders.

As described in Item 3.02, as part of the Series B Financing, the Company issued to the Investors shares of its Series B Preferred Stock. The holders of the Series B Preferred Stock have preferential dividend and liquidation rights over the holders of the Company’s Common Stock. Further, the Company’s ability to declare or pay dividends with respect to, or to redeem, purchase or make a liquidation payment with respect to the Company’s Common Stock is limited by the terms of the Series B Preferred Stock. The terms of the Series B Preferred Stock are more fully described in Item 3.02 above.

Item 5.03.

Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

In connection with the Series B Financing, on January 19, 2010, the Company filed with the Secretary of State of the State of Delaware the Series B Certificate establishing the rights, preferences, restrictions and other matters relating to the Series B Preferred Stock.

A copy of the Series B Certificate is attached hereto as Exhibit 3.1. The terms of the Series B Preferred Stock are more fully described in Item 3.02 above.

Item 9.01.

Financial Statements and Exhibits.

(a), (b)

Financial information to come.

(d) Exhibits


Exhibit Number		Exhibit description
2.1		Asset Purchase Agreement, dated January 15, 2010, between Cicero Inc., Vertical Thought, Inc. and SOAdesk, LLC
3.1		Certificate of Designations, Preferences and Rights of Series B Convertible Preferred Stock
4.1		Short Term Convertible Note
4.2		Stock-Payable Convertible Note
4.3		Form of Investor Warrant Agreement
4.4		Registration Rights Agreement
99		Press release, dated January 19, 2010, issued by Cicero Inc.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.


	CICERO INC.


Date: January 20, 2010	By:	/s/ J OHN P. B RODERICK
		John P. Broderick Chief Executive and Financial Officer
		John P. Broderick Chief Executive and Financial Officer

Exhibit 2.1

ASSET PURCHASE AGREEMENT

BY AND BETWEEN

CICERO INC.,

VERTICAL THOUGHT, INC.

AND

SOADESK, LLC

Dated as of January 15, 2010

TABLE OF CONTENTS

(continued)

Page

ARTICLE I DEFINITIONS

SECTION 1.1

Certain Definitions.

SECTION 1.2

Calculation of Time Period

No Drafting Presumptions

ARTICLE II PURCHASE AND SALE

SECTION 2.1

Agreement to Purchase and Sell

SECTION 2.2

Excluded Assets

SECTION 2.3

Assumption of Assumed Liabilities

SECTION 2.4

Nonassignable Contracts and Permits

SECTION 2.5

License

ARTICLE III PURCHASE PRICE; EARN-OUT; ALLOCATIONS; ADJUSTMENTS

SECTION 3.1

Purchase Price; Payments

SECTION 3.2

Earn-Outs.

SECTION 3.3

Allocation of Purchase Price

SECTION 3.4

Estimated Net Working Capital Adjustment

SECTION 3.5

Final Net Working Capital Adjustment

SECTION 3.6

Optional Repurchase Right

ARTICLE IV CLOSING AND TERMINATION

SECTION 4.1

Closing Date

SECTION 4.2

Termination of Agreement

SECTION 4.3

Effect of Termination

ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLERS

SECTION 5.1

Organization and Good Standing

Exhibit 2.1

TABLE OF CONTENTS

(continued)

Page

SECTION 5.2

Authorization

SECTION 5.3

Conflicts; Consents of Third Parties

Intellectual Property; Proprietary Rights; Software

SECTION 5.7

Sufficiency

SECTION 5.8

Material Contracts; Assumed Contracts

SECTION 5.9

Labor and Employment; Employee Benefits

SECTION 5.10

Litigation

SECTION 5.11

Compliance with Laws; Permits

SECTION 5.12

Environmental Matters

SECTION 5.13

Insurance

SECTION 5.14

No Questionable Payments

SECTION 5.15

Major Customers and Distributors

SECTION 5.16

Brokers, Finders and Investment Bankers

SECTION 5.17

Financial Information

Absence of Material Changes

SECTION 5.21

Transactions with Affiliates; Sharing of Assets, Continuity of Operations 33

Performance of Services

SECTION 5.26

Purchase Entirely for Own Account.

SECTION 5.27

Disclosure of Information.

SECTION 5.28

Restricted Securities.

SECTION 5.29

Legend

Exhibit 2.1

TABLE OF CONTENTS

(continued)

Page

SECTION 5.30

Full Disclosure

ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PURCHASER

SECTION 6.1

Organization and Good Standing

SECTION 6.2

Authorization of Agreement

SECTION 6.3

Conflicts; Consents of Third Parties.

SECTION 6.4

Litigation

SECTION 6.5

Brokers, Finders and Investment Bankers

SECTION 6.6

Capital Structure.

SECTION 6.7

SEC Filings; Financial Statements.

SECTION 6.8

Valid Issuance of Shares

SECTION 6.9

Not a Shell Company

ARTICLE VII COVENANTS

SECTION 7.1

No Solicitation of Transactions

SECTION 7.2

Conduct of the Business Pending the Closing

Employment and Employee Benefits.

SECTION 7.8

Use of Seller Names

SECTION 7.9

Non-competition; Non-solicitation.

SECTION 7.10

Information and Documents

SECTION 7.11

Accounts Receivable

SECTION 7.12

Warranty Work Reimbursement

SECTION 7.13

Reimbursement for Payment of Excluded Liabilities by Purchaser

SECTION 7.14

Board Appointment Right

ARTICLE VIII CONDITIONS TO CLOSING; CLOSING DELIVERIES

SECTION 8.1

Conditions Precedent to Obligations of Purchaser

SECTION 8.2

Conditions Precedent to Obligations of Sellers

iii

Exhibit 2.1

TABLE OF CONTENTS

(continued)

Page

SECTION 8.3

Sellers’ Closing Deliveries

SECTION 8.4

Purchaser’s Closing Deliveries

SECTION 8.5

Frustration of Closing Conditions

ARTICLE IX INDEMNIFICATION

SECTION 9.1

Indemnification Obligations of Sellers

SECTION 9.2

Indemnification Obligations of Purchaser

SECTION 9.3

Indemnification Procedure.

ARTICLE X MISCELLANEOUS

SECTION 10.1

Payment of Sales, Use or Similar Taxes

Entire Agreement; Amendments and Waivers

Binding Effect; Assignment; Third Party Beneficiaries

Exhibit 2.1

TABLE OF CONTENTS
(Continued)

Page

Exhibits

Exhibit 1.1(a)(1)

Assumption Agreement

Exhibit 1.1(a)(2)

Bill of Sale and Assignment

Exhibit 3.1(b)

Short Term Convertible Note

Exhibit 3.1(d)

Convertible Stock-Payable Note

Exhibit 3.3

Purchase Price Allocation

Exhibit 5.4(c)

Lease Assignment

Exhibit 2.1

ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT (this “ Agreement ”), dated as of January 15 , 2010, is between Cicero Inc., a Delaware corporation (“ Purchaser ”), SOAdesk, LLC, a Delaware limited liability company (“ SOAdesk ”), and Vertical Thought, Inc., a Georgia corporation (“ VTI ”; SOAdesk and VTI each a “ Seller ” and collectively “ Sellers ”).

WHEREAS, Sellers are engaged in the business of providing customer interaction consulting and technology services for organizations and contact centers throughout the world (collectively, and including the Programs and lines of business that SOAdesk may reasonably be interested in pursuing, the “ Business ”);

WHEREAS , Sellers propose to sell to Purchaser, and Purchaser proposes to purchase from Sellers, substantially all of the assets of Sellers directly or indirectly used (or intended to be used) in or related to the Business, and Purchaser proposes to assume certain liabilities and obligations of Sellers incurred in furtherance of the Business, upon the terms and subject to the conditions set forth in this Agreement; and

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements hereinafter contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereby agree as follows:

ARTICLE I
DEFINITIONS

SECTION 1.1

Certain Definitions .

(a)

Defined terms used in this Agreement shall have the meanings ascribed to them by definition in this Agreement or as specified in this Section 1.1 :

“ Affiliate ” means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person, and the term “ control ” (including the terms “ controlled by ” and “ under common control with ”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by Contract or otherwise.

“ Ancillary Agreements ” means the Bill of Sale and Assignment, the Assumption Agreement, the assignments of Proprietary Rights and Lease Assignment to be delivered by Sellers to Purchaser as contemplated by Section 8.3 , and the Non-Solicitation and Non-Competition Agreements.

“ Assumption Agreement ” means the Assumption Agreement from Purchaser to Sellers, substantially in the form of Exhibit 1.1(a)(1) hereto.

Exhibit 2.1

“ Bill of Sale and Assignment ” means the Bill of Sale and Assignment from Sellers to Purchaser, substantially in the form of Exhibit 1.1(a)(2) hereto.

“ Business Day ” means any day of the year on which national banking institutions in New York, New York are open to the public for conducting business and are not required or authorized to close.

“ Code ” means the Internal Revenue Code of 1986, as amended.

“ Contract ” means any contract, subcontract, lease, license, commitment, sale and purchase order, or other agreement, arrangement or understanding of any kind, whether written or oral, and whether expressed or implied.

“ Current Assets ” means, to the extent included in the Assets, (i) those prepaid expenses of SOAdesk taken as a whole in the Ordinary Course of Business, and (ii) those trade accounts receivable arising in the Ordinary Course of Business owed by Persons that are not Affiliates of a Seller and payable solely in cash, in each case as determined in accordance GAAP.

“ Current Liabilities ” means, to the extent included in the Assumed Liabilities, (i) accounts payable and accrued expenses of SOAdesk and (ii) deferred income or revenue of SOAdesk, and/or deferred subscription or maintenance/support liability of SOAdesk, Prepaid Expenses and Deposits, in each case as determined in accordance with GAAP.

“ Employee Agreements ” means agreements with employees and consultants to the Business or employees of or consultants to a Seller which agreements contain non-competition, non-solicitation, non-disclosure, invention assignment and non-use clauses covering the Business, but not any obligation of a Seller for the payment of money or to perform any obligation.

“ Enterprise Revenues ” shall mean, for any applicable time period, the total cumulative revenues of Purchaser, including Product Revenues, and its subsidiaries, on a consolidated basis, during such time period, as determined in accordance with GAAP.

“ Environmental Law ” means any Law or other legal requirement relating to Hazardous Materials, pollution, environmental matters and/or health and safety.

“ Environmental Liability ” means any Losses resulting from (i) failure to comply with or any violation of any requirement of an Environmental Law, (ii) failure to obtain or comply with any required Environmental Permit, (iii) a remedial action or (iv) harm or injury to any property, to any Person, to public health, or to natural resources as a result of a release of or exposure to Hazardous Materials.

“ Environmental Permits ” shall mean a permit, license, certificate, approval or authorization issued by a Governmental Body pursuant to an Environmental Law.

Exhibit 2.1

“ Executive Employment Agreements ” shall mean the executive employment agreements to be entered into on the Closing Date between Purchaser and each of the Specified Employees.

“ GAAP ” means generally accepted accounting principles and practices in effect in the United States.

“ Governmental Body ” means any government or governmental or regulatory or quasi-governmental entity, body thereof, or political subdivision thereof, whether federal, state, local, foreign, or supranational, or any agency, instrumentality or authority thereof, or any court or arbitrator (public or private).

“ Hazardous Material ” means any substance, material or waste, whether solid, liquid or gas, that is regulated, classified, or otherwise characterized under or pursuant to any Environmental Law as capable of causing harm or injury to health, safety or the environment or as “hazardous,” “toxic,” “pollutant,” “contaminant,” “radioactive,” or words of similar meaning or effect, including petroleum and its by-products, asbestos, polychlorinated biphenyls, radon, mold and urea formaldehyde insulation.

“ Indebtedness ” means indebtedness for borrowed money or the equivalent or represented by notes, bonds or other similar instruments or letters of credit (or reimbursement agreements in respect thereof) or representing the balance deferred and unpaid of the purchase price of any property, and including, without limitation, capital lease obligations, including all accrued and unpaid interest thereon, and applicable prepayment, breakage or other premiums, fees or penalties and the costs of discharging such indebtedness.

“ Indemnified Party ” means a Purchaser Indemnified Party or a Seller Indemnified Party.

“ Intellectual Property ” means know-how, proprietary rights or other intellectual property, including without limitation, trade secrets, inventions, formulae, processes, databases, patents (including all reissues, divisions, continuations, continuations in part, and extensions thereof), patent applications, trademarks, trademark registrations, trademark applications, service marks, service mark registrations, service mark applications, logos, copyrights, copyright registrations, copyright applications, web sites and home pages, universal resource locaters, domain names and other legal rights in confidential and proprietary information, moral rights, and other proprietary rights throughout the world, all rights to, and all intellectual property used or necessary to, create, publish, modify or maintain, any website or home page, customer and advertiser information, mailing and subscription lists, information not known to the general public, literary works, whether or not copyrightable, ideas, concepts, designs, drawings, discoveries, properties, formulas, compositions, methods, data, databases, materials, documentation, writings, pictures and graphic images, audio, video, works of authorship, product and service developments, inventions (whether or not patentable), improvements, innovations, processes, software, programs, source codes and materials, object codes and materials, algorithms, techniques, procedures, systems, technology, technical information, research material, prototypes and models.

Exhibit 2.1

“ IRS ” means the Internal Revenue Service.

“ Knowledge of Sellers ” means the actual knowledge of the Specified Employees on the date hereof or on the Closing Date with respect to the matters at hand.

“ Laws ” means all laws, statutes, common law, rules, codes, regulations, restrictions, ordinances, orders, decrees, approvals, directives, judgments, rulings, injunctions, writs, awards, policies, guidance and decrees of, or issued or entered by, all Governmental Bodies.

“ Legal Proceeding ” means any judicial, administrative, investigative or arbitral actions, suits or proceedings (public or private) by or before a Governmental Body.

“ Licensed Materials ” means any materials that VTI utilizes for the benefit of SOAdesk, or delivers to SOAdesk or SOAdesk’s customers, which (i) do not constitute Programs or other Intellectual Property included in the Assets, (ii) are created by VTI or of which VTI is otherwise in lawful possession, and (iii) VTI may lawfully utilize for the benefit of, or distribute to, SOAdesk or SOAdesk’s customers.

“ Lien ” means any lien, encumbrance, pledge, mortgage, deed of trust, security interest, claim, lease, charge, financing statement, option, right of first refusal, easement, encroachment, assignment of rents, equitable interest, deposit arrangement, community property interest, servitude or transfer or other restriction of any kind, including but not limited to, any restriction on the use, voting, receipt of income or other exercise of any attribute of ownership.

“ Material Adverse Effect ” means a material adverse effect on (i) the business, assets, properties, results of operations, or condition (financial or otherwise) of a Seller or the Business, (ii) the value of the Assets or a material increase in the Assumed Liabilities, or (iii) the ability of a Seller to consummate the transactions contemplated by this Agreement or perform its obligations under this Agreement or any of the Ancillary Agreements.

“ Net Working Capital ” means the Current Assets of SOAdesk included in the Assets to be transferred to Purchaser at the Closing, minus (ii) the Current Liabilities of SOAdesk included in the Assumed Liabilities to be assumed by Purchaser at the Closing, all calculated in accordance with GAAP. Anything to the contrary notwithstanding, the calculation of Net Working Capital shall not include any Excluded Assets or any Excluded Liabilities.

“ Non-Solicitation and Non-Competition Agreements ” shall mean the non-solicitation and non-competition agreements to be entered into on the Closing Date between Purchaser and each of the Persons listed on Schedule 1.1 , which non-solicitation and non-competition agreements shall be in a form satisfactory to Purchaser.

“ Order ” means any order, injunction, judgment, decree, ruling, writ, assessment or arbitration award of a Governmental Body.

“ Ordinary Course of Business ” means the ordinary and usual course of business of Sellers with respect to its use and operation of the Business, consistent with past practice.

Exhibit 2.1

“ Permits ” means any approvals, authorizations, consents, licenses, permits or certificates of a Governmental Body.

“ Permitted Exceptions ” means (i) Liens for assessments or other governmental charges not yet due and payable and, if not paid by a Seller at or before the Closing, such current taxes shall be deducted from the Purchase Price through reduction of the Closing Date Payment; (ii) mechanics’, carriers’, workers’, repairers’ and similar Liens arising or incurred in the Ordinary Course of Business or that are being contested in good faith by appropriate proceedings and for which appropriate reserves have been taken in accordance with GAAP through reduction of the Closing Date Payment; (iii) in the case of Liens on the Leased Real Property, zoning, building, or other similar restrictions, variances, covenants, rights of way, encumbrances, easements and other minor irregularities in or to the Leased Real Property, none of which, individually or in the aggregate, materially interfere with the conduct of the Business or the present use of or occupancy of the affected premises by Sellers; (iv) Liens that will be released prior to or as of the Closing; (v) Liens created by or through Purchaser, and (vi) such other Liens, if any, disclosed on Schedule 1.1(a)(1) , none of which, individually or in the aggregate, materially interfere with the continued use or operation or value of the Assets to which they relate or conduct of the Business.

“ Person ” means any individual, corporation, partnership, firm, joint venture, limited liability company, association, joint-stock company, trust, unincorporated organization, Governmental Body or other entity.

“ Product Revenues ” means, for any applicable time period, the total revenues of Purchaser and its subsidiaries, on a consolidated basis, during such time period from the sale of Products or Product Services to unaffiliated third parties, as determined in accordance with GAAP.

“ Product Services ” means customization, programming, maintenance, support, warranty and other services with respect to Products.

“ Programs ” means the following Software: United Desktop and United Data Model, including all Source Code for components known as SAIL, RUDDER, PIER, HARBOR, HARBORMASTER and TIDE.

“ Purchase Price ” means the aggregate amounts payable to Sellers under Section 3.1 .

“ Purchaser Common Stock ” means the shares of common stock, par value $0.001 per share, of Purchaser.

“ Purchaser Indemnified Parties ” means Purchaser and its Affiliates, their respective officers, directors, employees, agents and representatives and the heirs, executors, successors and assigns of any of the foregoing.

“ Purchaser Material Adverse Effect ” means a material adverse effect on the business, assets, properties, results of operations, or condition (financial or otherwise) of

Exhibit 2.1

Purchaser or the ability of Purchaser to consummate the transactions contemplated by this Agreement or perform its obligations under this Agreement or the Ancillary Agreements.

“ Seller Disclosure Schedules ” means the disclosure schedules prepared by Sellers and delivered to Purchaser simultaneously with the execution and delivery of this Agreement.

“ Seller Indemnified Parties ” means Sellers and their respective Affiliates, their respective officers, directors, employees, agents and representatives and the heirs, executors, successors and assigns of any of the foregoing.

“ Software ” means computer software, whether in the form of Source Code, object code, executable code, firmware or otherwise, and whether tangible or intangible, together with all related engineering and product specifications, schematics, logic diagrams, flow charts, designs, routines, sub-routines, program and system logic, program architecture, program documentation, operating instructions, technical and user manuals and training materials, all updates, upgrades, modifications, enhancements, improvements and derivatives of the foregoing and all other information and technical data related to the ownership, use, design, development, testing, enhancement, support and/or maintenance of the Software.

“ Specified Employees ” means Antony Castagno, Michael Garner and James Hunt.

“ Tax ” or “ Taxes ” shall mean all taxes, charges, duties, fees, levies or other assessments, including but not limited to, income, excise, property, sales, value added, profits, license, withholding (with respect to compensation or otherwise), payroll, employment, net worth, capital gains, transfer, stamp, social security, environmental, occupation and franchise taxes, imposed by any Governmental Body, and including any interest, penalties and additions attributable thereto.

“ Tax Return ” means all returns, declarations, reports, estimates, information returns and statements required to be filed in respect of any Taxes.

“ Territory ” means North America (including, without limitation, the United States of America and its possessions and any departments or agencies of the United States government, including the armed services, wherever located in the world).

“ Web Site ” or “ Web Sites ” means, individually or collectively, all web sites of or maintained by or for SOAdesk or the Business.

(b)

Other Definitional and Interpretive Matters . Unless otherwise expressly provided, for purposes of this Agreement, the following rules of interpretation shall apply:

SECTION 1.2

Calculation of Time Period

. When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded. If the last day of such period is a non-Business Day, the period in question shall end on the next succeeding Business Day.

Exhibit 2.1

SECTION 1.3

Dollars

. Any reference in this Agreement to $ or Dollars shall mean United States dollars.

SECTION 1.4

Exhibits/Schedules

. The Exhibits and Schedules to this Agreement are hereby incorporated and made a part hereof and are an integral part of this Agreement. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms used in any Schedule or Exhibit but not otherwise defined therein shall be defined as set forth in this Agreement.

SECTION 1.5

Gender and Number

. Any reference in this Agreement to gender shall include all genders, and words imparting the singular number only shall include the plural and vice versa.

SECTION 1.6

Headings

. The provision of a Table of Contents, the division of this Agreement into Articles, Sections and other subdivisions and the insertion of headings are for convenience of reference only and shall not affect or be utilized in construing or interpreting this Agreement. All references in this Agreement to any “ Article ” or “ Section ” are to the corresponding Article or Section of this Agreement unless otherwise specified.

SECTION 1.7

Herein

. The words such as “ herein ,” “ hereinafter ,” “ hereof ,” and “ hereunder ” refer to this Agreement as a whole and not merely to a subdivision in which such words appear unless the context otherwise requires.

SECTION 1.8

Including

. The word “ including ” or any variation thereof means “ including, without limitation ” and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it.

SECTION 1.9

No Drafting Presumptions

. The parties hereto have participated jointly in the negotiation and drafting of this Agreement and the other agreements contemplated hereby and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.

ARTICLE II
PURCHASE AND SALE

SECTION 2.1

Agreement to Purchase and Sell

. Subject to the terms and conditions of this Agreement, at the Closing, each Seller shall sell, assign, transfer and deliver to Purchaser, and Purchaser shall purchase and acquire from each Seller, all of the assets owned by such Seller or any Affiliate thereof directly or indirectly used (or intended to be used) in or related to the Business, on a going concern basis, including, without limitation, all right, title and interest of Seller in and to all business, properties, assets, goodwill, claims and rights of Sellers used in or necessary for the continued operation of the Business, of every nature, kind and description, tangible and intangible, owned, leased or licensed, personal or mixed, wherever located and whether or not carried or reflected on the books and records of a Seller, but excluding the Excluded Assets specified in Section 2.2 , in each case free and clear of all Liens

Exhibit 2.1

other than Permitted Exceptions. All of the foregoing (other than the Excluded Assets) are herein collectively referred to as the “ Assets ” and include, without limitation, all of each Seller’s right, title, and interest, in, to and under the following:

(a)

all Software, products and systems produced, conceived, created, developed, licensed, sold, marketed or distributed by each Seller directly or indirectly used (or intended to be used) in or related to the Business, whether extant, discontinued, defunct or currently provided or licensed or under development or to be provided or licensed in the future, and any and all applications, versions, revisions, operating environments, translations, products, enhancements, extensions and/or spin-offs relating to, derived from, based on, resulting from or suggested by, any of the foregoing, and whether embodied in disc, internet, web-based, electronic, or any other form or medium whatsoever, and all rights to market, publish, create, provide, develop, license, sell, distribute, modify, adapt and otherwise exploit any and all of the foregoing throughout the world, including the “United Desktop” and “United Data Model” products (all of the foregoing being, collectively, the “ Products ”);

(b)

all United States and foreign patents, and applications therefor, and all patent continuations, continuations in part, reissues and patent disclosures of each Seller (collectively “ Patent Rights ”), including those set forth on Schedule 2.1(b) , and all inventions (whether or not patentable) and improvements, directly or indirectly used in (or intended to be used in) or relating to any of the Business or the Products;

(c)

all United States and foreign copyrights directly or indirectly used (or intended to be used) in or related to the Business, whether registered or not, and applications to register the same, of each Seller, registered or not, and where not owned, each Seller’s right to use copyrights used or intended to be used by such Seller in the Business, and all rights to obtain renewals and extensions of such Copyrights (collectively “ Copyrights ”), together with all causes of action in favor of a Seller or any prior owner or operator of the Business (and the proceeds thereof) heretofore accrued or hereafter accruing with respect thereto;

(d)

all names, titles, trademarks, trade names, service marks, company names, logos, devices, insignias, formats and designations of each Seller used or intended for use in connection with any of the Business or the Products, and all trademark registrations and applications therefor, and the goodwill related thereto (collectively, “ Trademarks ”), including those set forth on Schedule 2.1(d) , together with all causes of action (and the proceeds thereof) in favor of Seller heretofore accrued or hereafter accruing with respect to any of the Trademarks;

(e)

all visual and machine readable embodiments of an algorithm, mask work rights or computer program of each Seller or marketed or used (or intended to be marketed or used) by or for the Business, including the process or method thereof and the concepts contained therein, and the representation in the original language in which the program was coded and any languages into which the same may have been translated, together with instructions and any other information necessary or convenient to the compilation and/or editing of such code into object code, including any and all comments by authors, procedural code (such as job control language) and all associated Documentation (as hereinafter defined) (collectively, “ Source Code ”);

Exhibit 2.1

(f)

all documentation, records and software, whether in machine or visually readable or other tangible form, evidencing, representing or containing, embodying or related to any Source Code or Program or directly or indirectly used (or intended to be used) in or related to the Business, including, without limitation, any manuals, functional and design specifications, notes on architecture, logic, flow charts, user and programmer instructions, coding, test suites, test plans, testing notes, regression suites, error reports and logs, patches and patch instructions, itemizations of development tools, project history documents and other technology or information, and all other writings which would be necessary or helpful to a skilled programmer to create, understand, maintain, modify and enhance any Source Code (collectively, “ Documentation ”);

(g)

all know-how, trade secrets and other Intellectual Property of each Seller directly or indirectly used (or intended to be used ) in or related to the Business, including, without limitation any of same relating to, derived from, based on, resulting from or suggested by, any of the foregoing, and all information not known to the general public, literary works, whether or not copyrightable, vendor, supplier, customer and license records and other files of each Seller related to the Business and/or the Products, and each Website or home page of or maintained by or for a Seller and indirectly or indirectly used (or intended to be used) in or related to the Business, all property and assets (tangible and intangible) used or necessary to create and publish any such Website or home page, and any and all universal resource locators (“URLs”) and domain names, of each Seller directly or indirectly maintained by or for the Business (all of the foregoing, together with the Products, Patent Rights, Copyrights, Trademarks, Source Code and Documentation referred to above being, collectively, the “ Proprietary Rights ”);

(h)

all inventories of Seller, including raw materials, works in process, finished goods, packaging and packaging materials, wherever located;

(i)

all rights and benefits of each Seller under those customer, maintenance, support and other Contracts set forth on Schedule 2.1(i) or entered into after the date hereof in accordance with Section 7.2 in the Ordinary Course of Business (the “ Assumed Contracts ”); provided that Purchaser shall not assume, and Sellers shall retain and perform or pay, any customer Contract which, over the remaining term of the Contract, has a negative gross margin or which would impose on Purchaser an extraordinary financial obligation beyond what is reasonable or customary in the industry in which SOAdesk operates;

(j)

all files, lists, books and records of each Seller relating to the Assets, customers, licensees, subscribers, advertisers, and sponsors of, for or in any of the Products and all purchase and sale orders and invoices, sales and sales promotional data, advertising materials, marketing analyses, price lists, customer service files, credit files, cost data, written operating methods and procedures, together with all reports, discs and tapes of computer and other data, relating to any of the foregoing or the Products;

(k)

to the extent assignable, all Permits of each Seller throughout the world, directly or indirectly used (or intended to be used) in or relating to the Products or the Business (the “ Assumed Permits ”);

Exhibit 2.1

(l)

all accounts receivable, rights to payment, causes of action, claims and rights of recovery of each Seller, originating or resulting from or arising in connection with any of the Business, the Products and/or the Assets, whether arising or accruing prior to, on or after the Closing Date, whether in respect of licenses, installation, services, upgrades, enhancements, programming, development, mailing lists or otherwise, together with the proceeds thereof, and all rights to collect from customers (and to retain) all fees and other amounts payable, or that may become payable, to each Seller with respect to services performed by or on behalf of a Seller on or prior to the Closing Date originating or resulting from or arising in connection with any of the Business, the Products and/or the Assets, other than any such receivables owed by any of Seller’s Affiliates to Seller;

(m)

all machinery, installations, computer hardware, equipment, prototypes, vehicles, fixtures, laptops, mobile phones, blackberries, office supplies, furniture, tools, spare parts, supplies, materials and other tangible personal property and physical assets directly or indirectly used, or held for use, by or for each Seller, including, without limitation, those items described on Schedule 2.1(m) , together with all replacements thereof, additions and alterations thereto, and all express and implied warranties related to any of the foregoing;

(n)

to the extent assignable, all title to, interest in and rights under the leases, tenancies and other rights of occupancy of real property described on Schedule 2.1(n) (the “ Real Property Leases ” and the property subject thereto, together with all buildings, plants and other structures and improvements thereon leased to or occupied by SOAdesk or used by the Business, any and all rights and privileges pertaining thereto or to any of such buildings, plants or other structures or improvements and to the extent constituting real property to which it has any rights as lessee or occupant, any and all fixtures, machinery, installations, equipment and other property attached thereto or located thereon, the “ Leased Real Property ”);

(o)

all title to, interest in and rights under the leases of personal property described on Schedule 2.1(o) if and to the extent the same are assignable or for which consents to assignment are received (the “ Personal Property Leases ”);

(p)

all of each Seller’s rights under Employee Agreements if and to the extent the same are assignable or for which consents to assignment are received, and the right to enforce any restrictive covenants of other employees of Seller to the extent relating to the Business;

(q)

all prepaid expenses relating to the Business and deposits under or for Assets or Assumed Liabilities or otherwise used or relating to an Asset or Assumed Liability used in connection with the Business (“ Prepaid Expenses and Deposits ”); and

(r)

the goodwill of or pertaining to any or all of the Assets, the Products and/or the Business.

SECTION 2.2

Excluded Assets

. Notwithstanding the foregoing, Sellers are not selling and Purchaser is not purchasing, pursuant to this Agreement, and the term “ Assets ” shall not include, any of the following assets (collectively, the “ Excluded Assets ”):

(a)

the assets and Contracts set forth on Schedule 2.2(a) ;

Exhibit 2.1

(b)

any Contracts not assumed by Purchaser by reason of the proviso in Section 2.1(i) ;

(c)

the consideration received by Sellers pursuant to this Agreement;

(d)

the rights of Sellers under this Agreement and the Ancillary Agreements, and all files, documents, reports, and communications in whatever medium related to the negotiation, execution, or performance of such agreement;

(e)

any cash, commercial paper and cash equivalents, other than Prepaid Expenses and Deposits;

(f)

any and all amounts owed by any Affiliate of a Seller to a Seller, including from a Seller to a Seller;

(g)

all personnel records and other records that Sellers are required by Law to retain in their possession; and

(h)

all minute books and related company records and all financial books and records of Sellers including ledgers, accounting reports, and related files, in each case other than those directly relating to any of the Assets.

SECTION 2.3

Assumption of Assumed Liabilities

(a)

At the Closing, Purchaser shall assume, and agree to pay, perform, fulfill and discharge, to the extent they are not Excluded Liabilities, the following obligations, and only the following obligations, of Sellers (collectively, the “ Assumed Liabilities ”):

(i)

all obligations and liabilities which (i) arise or accrue after the Closing and which relate to events which transpire subsequent to the Closing or (ii) are scheduled to arise or accrue subsequent to the Closing (whether or not related to any event which transpires subsequent to the Closing), in each case, under the Real Property Lease, the Personal Property Leases, the Assumed Contracts and Assumed Permits;

(ii)

all customer Contracts, bids and proposals and other customer obligations related to the Business entered into by a Seller in the Ordinary Course of Business; provided that Purchaser shall not assume, and each Seller shall retain and perform and/or pay, any customer Contract which, over the remaining term of the Contract, has a negative gross margin or which would impose on Purchaser an extraordinary financial obligation beyond what is reasonable or customary in the industry in which a Seller operates;

(iii)

all ongoing warranty obligations of SOAdesk, so long as Purchaser is reimbursed for costs associated with performing such warranty work, as provided herein; and

(iv)

all trade accounts payable and accrued expenses incurred by SOAdesk in connection with the Business in the Ordinary Course of Business and in accordance with this Agreement subsequent to the date hereof and through the Closing Date, and included within the calculation of Net Working Capital.

Exhibit 2.1

(b)

Except as provided in Section 2.3(a) , Purchaser shall not assume, in connection with the transactions contemplated hereby, any liability or obligation of a Seller whatsoever, whether known or unknown, disclosed or undisclosed, accrued or hereafter arising, absolute or contingent, and Sellers shall retain responsibility for all such liabilities and obligations (with all such unassumed liabilities and obligations referred to herein as the “ Excluded Liabilities ”). Excluded Liabilities will include, without limitation, any of the following liabilities and obligations:

(i)

any liabilities or obligations for Indebtedness of a Seller;

(ii)

any liabilities for foreign, federal, state and local Taxes of a Seller;

(iii)

any liabilities or obligations under the Real Property Lease, the Personal Property Leases or Contracts that arose or accrued prior to the Closing;

(iv)

any liabilities or obligations arising out of any legal action, suit, proceeding or investigation pending as of the Closing or commenced after the Closing and to the extent arising out of any occurrence or event happening prior to the Closing;

(v)

any Environmental Liability or any liabilities or obligations arising out of a Seller’s compliance or non-compliance with any Law;

(vi)

any liabilities (other than Assumed Liabilities) to which Purchaser or any of the other Purchaser Indemnified Parties may become subject and that arises from or relates to any Product produced or sold or any services performed by a Seller prior to Closing;

(vii)

any liabilities to the extent arising out of employment, employment grievances or termination of employment of any persons employed by a Seller on or before the Closing Date, including any workmen’s compensation claims relating to events which transpired on or before the Closing Date (whether or not known or reported as of the Closing Date), or any bonus, retention, severance or similar payment that Seller is obligated to make to any current or former employee, director, consultant or other Person as a result of the acquisition of the Assets or the Business;

(viii)

any liabilities to the extent Purchaser is indemnified therefor pursuant to the terms of this Agreement;

(ix)

any liabilities under any employee benefit or welfare plan covering any present or former employee of a Seller or any of their respective Affiliates (including, without limitation, any liabilities relating to any health care plans or benefits); and

(x)

any obligations to the extent arising under or in respect of any Excluded Asset, or otherwise described on Schedule 2.3(b) .

SECTION 2.4

Nonassignable Contracts and Permits

. In the case of any Contracts or Permits that are not by their terms or under Law freely assignable or transferable (a “ Nonassignable Contracts ”), Sellers shall at their expense use commercially reasonable efforts to obtain, or cause to be obtained, on or prior to the Closing, any approvals or

Exhibit 2.1

consents necessary to convey to Purchaser the benefit thereof. Purchaser shall cooperate with Sellers in such manner as may be reasonably required in connection therewith. In the event any consent or approval to an assignment contemplated hereby is not obtained on or prior to the Closing Date, Sellers shall continue to use commercially reasonable efforts to obtain any such approval or consent after the Closing Date for a period of three (3) months from the Closing Date or until such time as such consent or approval has been obtained or it shall become reasonably apparent that such consent or approval shall not be forthcoming, whichever is shorter, and Sellers shall cooperate with Purchaser to effect an appropriate arrangement (a “ Work-around ”) to provide that Purchaser or an Affiliate of Purchaser shall receive each Seller’s interest in the benefits under any such Nonassignable Contract, provided that all rights and benefits under such Nonassignable Contracts shall be for Purchaser or Purchaser’s Affiliate’s benefit and Purchaser or Purchaser’s Affiliate shall undertake to pay or satisfy the corresponding liabilities for the enjoyment of such benefit to the extent Purchaser or Purchaser’s Affiliate would have been responsible therefor if such consent or approval had been obtained, in which case such Nonassignable Contract will be treated as an Asset for all purposes hereunder. Each Seller shall take such actions as Purchaser may reasonably request in connection with the Nonassignable Contract underlying any Work-around. No Nonassignable Contract shall be deemed an Asset hereunder unless and until any required consent or approval has been obtained, except to the extent that a Work-around has been implemented. No Nonassignable Contract shall be deemed to have been conveyed to Purchaser (directly or indirectly) if an attempted sale, conveyance, assignment, sublease or transfer thereof without consent of a third party would constitute a breach thereof or affect the rights of a Seller or Purchaser thereunder.

SECTION 2.5

License

. VTI hereby grants to Purchaser an irrevocable, nonexclusive, worldwide, transferable, royalty-free license to: (a) make, use, sell, copy, perform, display, distribute or otherwise utilize and exploit the Licensed Materials, (b) prepare, use and distribute derivative works, of or based upon the Licensed Materials, and (c) authorize others to do (a), (b) or both. Upon request, VTI shall provide Purchaser a list of any Licensed Materials.

ARTICLE III
PURCHASE PRICE; EARN-OUT; ALLOCATIONS; ADJUSTMENTS

SECTION 3.1

Purchase Price; Payments

(a)

. Subject to and upon the terms and conditions set forth in this Agreement, as consideration for the sale, assignment, transfer and delivery of the Assets to Purchaser, Purchaser will pay a total price for the Assets as follows:

(a)

by payment of an amount equal to $300,000 plus (if positive) or minus (if negative) the Estimated Closing Net Working Capital Adjustment, payable in cash to Sellers on the Closing Date (the “ Closing Date Payment ”), as such amount may be adjusted pursuant to Section 3.5 , in such proportion as Sellers shall agree;

(b)

by delivery of an unsecured convertible note in the aggregate principal amount of $700,000, in the form set forth as Exhibit 3.1(b) hereto, payable to the order of SOAdesk and convertible into shares of Purchaser’s Series B Preferred Stock and mandatorily pre-payable with fifty percent (50%) of the gross proceeds received by the Company from the sale of shares of

Exhibit 2.1

Series B Preferred Stock to investors after the Closing Date and prior to March 31, 2010, as provided therein (the “ Short Term Convertible Note ”);

(c)

by payment of an amount equal to $525,000, payable in cash to SOAdesk on March 31, 2010;

(d)

by delivery of an unsecured convertible note in the aggregate principal amount of $1,000,000, in the form set forth as Exhibit 3.1(d) hereto, payable to the order of SOAdesk and convertible into shares of Purchaser’s Common Stock as provided therein (the “ Stock-Payable Convertible Note ” and, together with the Short Term Convertible Note, the “ Notes ”);

(e)

earn-out payments related to Product Revenues (the “ Product Revenue Earn-Out ”), payable (if at all) in cash and shares Purchaser Common Stock, in accordance with Section 3.2 ;

(f)

earn-out payments related to Enterprise Revenues (the “ Enterprise Revenue Earn-Out ”), payable (if at all) in shares of Purchaser Common Stock, in accordance with Section 3.2 ;

All cash payments required of Purchaser by any provision hereof shall be paid in cash by wire transfer of immediately available funds to such bank account as shall be designated in writing by SOAdesk at least two (2) Business Days prior to the Closing. If Purchaser fails to pay any amount due under this Section 3.1 when due, Purchaser shall pay interest on such unpaid amount from the date due through the date of payment at the rate of five percent per annum, except to the extent that such unpaid amounts bear interest under any of the aforementioned Notes.

SECTION 3.2

Earn-Outs .

(a)

Product Revenue Earn-Out . The “Product Revenue Earn-Out” shall be payable (if at all) as follows:

(i)

to the extent that Product Revenues during the period from January 1, 2010 through March 31, 2011 (the “ Product Earn-Out Period ”) shall be up to and including $1,000,000, SOAdesk shall be entitled to Product earn-out payments equal to the amount of such Product Revenues (up to $1,000,000), which earn-out payments shall be payable in cash and shares of Purchaser Common Stock as set forth in Section 3.2(c) ; and

(ii)

in addition to the foregoing, to the extent that Product Revenues are greater than $1,000,000 and less than or equal to $3,000,000 during the Product Earn-Out Period, SOAdesk shall be entitled to additional Product earn-out payments equal to (i) the amount of such Product Revenues in excess of $1,000,000 and less than $3,000,000, multiplied by (ii) fifty percent (50%), which earn-out payments shall be payable in cash and shares of Purchaser Common Stock as set forth in Section 3.2(c) ; and

(iii)

in addition to the foregoing, to the extent that Product Revenues are greater than $3,000,000 during the Product Earn-Out Period, SOAdesk shall be entitled to additional Product earn-out payments equal to the amount of such Product Revenues in excess of $3,000,000, which earn-out payments shall be payable in shares of Purchaser Common Stock as

Exhibit 2.1

set forth in Section 3.2(c) , up to an aggregate of 2,000,000 shares of Purchaser Common Stock in respect of the earn-out set forth in this clause (iii).

(b)

Enterprise Revenue Earn-Out . The “Enterprise Revenue Earn-Out” shall be payable (if at all) as follows:

(i)

if Enterprise Revenues during the period from January 1, 2010 through July 31, 2011 (the “ Enterprise Earn-Out Period ”) shall be $10,000,000 or more, SOAdesk shall be entitled to Enterprise earn-out payments valued at $500,000, which earn-out payment shall be payable in shares of Purchaser Common Stock as set forth in Section 3.2(c) ; and

(ii)

in addition to the foregoing, to the extent that Enterprise Revenues are greater than $10,000,000 during the Enterprise Earn-Out Period, SOAdesk shall be entitled to additional Enterprise earn-out payments valued at (i) the amount of such Enterprise Revenues in excess of $10,000,000 and less than $14,000,000 multiplied by (ii) twelve and one-half percent (12.5%), which earn-out payments shall be payable in shares of Purchaser Common Stock as set forth in Section 3.2(c) , up to an aggregate of $500,000 of Purchaser Common Stock in respect of the earn-out set forth in this clause (ii).

(c)

Form and Timing of Payments; Limitation of Amounts .

(i)

Any amounts payable to SOAdesk pursuant to Section 3.2(a)(i) and/or Section 3.2(a)(ii) shall be satisfied fifty percent (50%) in cash and fifty percent (50%) through the issuance of shares of Purchaser Common Stock. Any amounts payable to SOAdesk pursuant to Section 3.2(a)(iii) , Section 3.2(b)(i) and/or Section 3.2(b)(ii) shall be satisfied solely through the issuance of shares of Purchaser Common Stock.

(ii)

Any Product Revenue Earn-Out or Enterprise Revenue Earn-Out payments, as applicable, shall be paid by Purchaser to SOAdesk during the Earn-Out Period within forty five (45) days after the conclusion of each fiscal quarter following the date on which Seller becomes entitled to any such payments; provided that it shall be a condition to the issuance of any shares of Purchaser Common Stock that a holder other than SOAdesk executes and delivers customary documents with respect to its status and the qualification for an exemption under applicable securities Laws, and that the issuance of any such shares of Purchaser Common Stock to a holder other than SOAdesk not be in violation of any applicable securities Laws.

(iii)

Notwithstanding anything herein to the contrary, in no event shall the aggregate value of Product Revenue Earn-Out payments to SOAdesk exceed $2,000,000 or the aggregate value of Enterprise Revenue Earn-Out payments to Seller exceed $1,000,000, in each case taking into account the value of any Purchaser Common Stock issued to SOAdesk hereunder as determined pursuant to item (iv) below.

(iv)

For purposes of this Section 3.2 , any shares of Purchaser Common Stock issued by Purchaser to SOAdesk in satisfaction of the Product Revenue Earn-Out or the Enterprise Revenue Earn-Out, as applicable, shall be valued based on an assumed per share price of $0.15 (or such lower value which shall correspond with the conversion price applicable at

Exhibit 2.1

Closing to Purchaser’s then outstanding Series B Preferred Stock), subject to adjustment for stock splits, stock combinations or similar events.

(d)

Inspection; Earn-Out Dispute Resolution .

(i)

Upon reasonable advance notice, Purchaser shall permit SOAdesk and its representatives to have access, during regular business hours, to the books and records of Purchaser, and shall furnish to SOAdesk such financial and other data as SOAdesk may reasonably request with respect to the calculation of the Product Revenue Earn-Out and the Enterprise Revenue Earn-Out. Such data shall be held in confidence by SOAdesk and its representatives and not used for any purpose except in connection with the calculation of Product Revenue Earn-Out and Enterprise Revenue Earn-Out and the resolution of any dispute arising with respect thereto.

(ii)

As soon as practicable after the end of the Product Earn-Out Period and the Enterprise Earn-Out Period, Purchaser shall deliver to SOAdesk a calculation of earn-out payments due, if any, including such financial information as is reasonably necessary to calculate the Enterprise Revenue Earn-Out and the Product Revenue Earn-Out. If SOAdesk disputes Purchaser’s calculation, SOAdesk shall deliver a written description of such dispute (an “ Earn-Out Dispute Notice ”) to Purchaser within 30 days of the date on which Purchaser delivered such calculations to SOAdesk.

(iii)

If SOAdesk delivers an Earn-Out Dispute Notice to Purchaser and Purchaser and SOAdesk are unable to agree upon the amount of any earn-out within 15 days after delivery of an Earn-Out Dispute Notice, then an Accounting Expert (as defined in Section 3.5(e)) shall be appointed to conduct a review and determine any amounts in dispute between the parties relating to the calculation of either earn-out. The Accounting Expert shall be instructed in performing the review that Purchaser and SOAdesk shall each be provided with copies of any and all correspondence and drafts distributed to any party. Purchaser and SOAdesk shall be granted reasonable access to all documents made available to the Accounting Expert by the other party, provided that any information contained in the documents shall be subject to the confidentiality provisions set forth in this Agreement. Prior to the Accounting Expert’s issuance of its final determination, Purchaser and SOAdesk shall have the opportunity to provide the Accounting Expert with input and any additional information that they deem relevant, provided that the Accounting Expert shall not be required to use any such input or information in connection with its review and determination. The Accounting Expert shall promptly deliver copies of its report to Seller and Purchaser setting forth its determination of any amount due between the parties relating to the calculation of earn-outs. The Dispute Report will be conclusive and binding upon all parties to this Agreement; the subject earn-out shall be calculated based on the determinations set forth in the Accounting Expert’s Report; and the earn-out payment shall be adjusted accordingly. Fifty percent of the costs and expenses of the Accounting Expert and the Accounting Expert’s Report contemplated by this paragraph shall be borne by Sellers (jointly and severally), and the remainder shall be borne by Purchaser.

SECTION 3.3

Allocation of Purchase Price

. The Purchase Price shall be allocated as set forth on Exhibit 3.3 . Purchaser and Sellers shall file their respective Tax Returns on the basis of such allocation, as it may be amended, and no party shall thereafter take a

Exhibit 2.1

Tax Return position inconsistent with such allocation unless such inconsistent position shall arise out of or through an audit or other inquiry or examination by the IRS or other Governmental Body.

SECTION 3.4

Estimated Net Working Capital Adjustment

(a)

Sellers represent, jointly and severally, that the statement on Schedule 3.4 (the “ Estimated Closing Net Working Capital Statement ”) reflects Sellers’ good faith estimate of the Net Working Capital of the Business as of the close of business on the Business Day preceding the Closing Date (the “ Estimated Closing Net Working Capital ”), which Estimated Closing Net Working Capital Statement has been prepared based on SOAdesk’s books and records, and presents fairly the information and data contained therein. Sellers shall provide Purchaser and its representatives with copies of the balance sheets, work papers and other underlying documentation generated in connection with the preparation of Sellers’ Estimated Closing Net Working Capital Statement.

(b)

If the Estimated Closing Net Working Capital is less than $1,765.22 (the “ Target Net Working Capital ”), the difference shall be subtracted from the Closing Date Payment. If the Estimated Closing Net Working Capital exceeds the Target Net Working Capital, the excess shall be added to the Closing Date Payment. Any adjustment to the Closing Date Payment pursuant to this Section 3.4 is referred to herein as the “ Estimated Closing Net Working Capital Adjustment. ”

(c)

For purposes of this Agreement, items included within Net Working Capital shall be the value, as of the close of business on the day preceding the Closing Date, of such item conveyed to Purchaser on the Closing Date as herein provided, determined in accordance with GAAP.

SECTION 3.5

Final Net Working Capital Adjustment

(a)

Within ninety (90) days after the Closing Date, Purchaser or its accountant (the “ Purchaser’s Accountant ”) shall determine, on behalf and at the expense of Purchaser, and shall prepare and deliver to Sellers a statement of the Net Working Capital of the Business as of the close of business on the Business Day immediately preceding the Closing Date, which statement shall be prepared in accordance with GAAP (the “ Final Closing Statement ”). Purchaser or Purchaser’s Accountant shall consult with Sellers’ accountants in connection with the preparation of the Final Closing Statement and shall permit Sellers’ accountants at the earliest practicable date, subject to the execution by Sellers and their accountants of any reasonable release or indemnification agreement required by Sellers’ Accountant, to review and make copies of all work papers, schedules and calculations used in the preparation of the Final Closing Statement.

(b)

Sellers may dispute the amounts reflected on the Final Closing Statement (a “ Disputed Item ”), but only on the basis that a Disputed Item does not reflect, or is not consistent or in compliance with, the provisions of this Agreement; provided , however , that Seller shall notify Purchaser in writing of each Disputed Item, and specify the amount thereof in dispute and the basis therefor, within sixty (60) days after receipt of the Final Closing Statement. The failure

Exhibit 2.1

by Sellers to provide a notice of Disputed Items to Purchaser within such sixty (60) day period will constitute Sellers’ acceptance of the Final Closing Statement.

(c)

If a notice of Disputed Items shall be timely delivered pursuant to subclause (b) above, Sellers and Purchaser shall, during the ten (10) Business Days following the date of such delivery (the “ Resolution Period ”), negotiate in good faith to resolve the Disputed Items. If, during such Resolution Period the parties are unable to reach agreement, Sellers and Purchaser shall refer all unresolved Disputed Items to an accounting firm or expert of nationally recognized standing as Sellers and Purchaser shall mutually agree upon or, if the parties are unable to so agree, as appointed by the American Arbitration Association (the “ Accounting Expert ”). The Accounting Expert shall make a determination with respect to each unresolved Disputed Item within fifteen (15) days after its engagement by Sellers and Purchaser to resolve such Disputed Items, which determination shall be made in accordance with the rules set forth in Section 3.4 and this Section 3.5 . The Accounting Expert shall be directed to deliver to Sellers and Purchaser, within such fifteen (15) day period, a report setting forth its adjustments, if any, to the Final Closing Statement and the calculations supporting such adjustments. Such report shall be final and binding on the parties and conclusive. Sellers and Purchaser shall each pay one-half of all the costs incurred in connection with the engagement of the Accounting Expert; provided that if the final adjustment payment to be made pursuant to Section 3.5(d) (the “ Final Adjustment ”) and the Final Adjustment payment that would have resulted from the use of the proposed calculations of one of the parties hereto (the “ Erroneous Party ”) is more than the difference between the Final Adjustment and the Final Adjustment that would have resulted from the use of the other party’s proposed calculations, the Erroneous Party shall pay all of the fees and expenses of the Accounting Expert. As used herein, “ Final Net Working Capital ” shall mean (i) if no notice of Disputed Items is delivered by Seller within the period provided in subclause (b) above, Net Working Capital as shown in the Final Closing Statement as prepared by Purchaser, or (ii) if such a notice of Disputed Items is delivered by a Seller, either (x) as agreed to in writing by Sellers and Purchaser, or (y) Net Working Capital as shown in the Accounting Expert’s calculation delivered pursuant to this subclause (c).

(d)

The Final Net Working Capital less the Target Net Working Capital is referred to as the “ Total Adjustment .” If (i) the sum of the Purchase Price (without adjustment) plus the Total Adjustment exceeds the sum of the Closing Date Payment and the Estimated Net Working Capital Adjustment, Purchaser will pay to Sellers the amount of such excess or (ii) the sum of the Closing Date Payment and the Estimated Net Working Capital Adjustment exceeds the sum of the Purchase Price (without adjustment) plus the Total Adjustment, then Sellers will deliver to Purchaser the amount of such excess. Amounts payable pursuant to this Section shall be payable within ten (10) Business Days after such Final Net Working Capital shall be determined, in immediately available funds by wire transfer in accordance with written instructions given by the recipient not less than two (2) Business Days prior to such date.

SECTION 3.6

Optional Repurchase Right

. Notwithstanding anything herein to the contrary, in the event that any shares of Purchaser’s Series B Preferred Stock are issued under the terms of the Short Term Convertible Note, Purchaser shall have the right, exercisable in its sole discretion at any time prior to the twelve (12) month anniversary of any such issuance, to repurchase any such shares of Series B Preferred Stock so issued for a cash payment in an amount per share equal to the Conversion Price (as defined in the Short Term

Exhibit 2.1

Convertible Note), and Purchaser shall be entitled to affix an appropriate legend on the certificates representing any such shares of Series B Preferred Stock so issued evidencing such optional repurchase right.

ARTICLE IV
CLOSING AND TERMINATION

SECTION 4.1

Closing Date

. Subject to the satisfaction or waiver of the conditions set forth in Sections 8.1 and 8.2 hereof, the closing of the transactions contemplated hereby (the “ Closing ”) shall take place at such place and such time as Purchaser and Sellers shall agree on a date to be specified by Purchaser and Sellers, which date shall be no later than the first (1 ^st ) Business Day after the satisfaction or waiver of each condition to the Closing set forth in Article VIII (other than conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions), unless another time or date, or both, are agreed to by Purchaser and Sellers. The date on which the Closing shall occur is referred to in this Agreement as the “ Closing Date ”.

SECTION 4.2

Termination of Agreement

. This Agreement may be terminated as follows:

(a)

by Sellers or Purchaser (by written notice to the other) if the Closing has not occurred on or before March 31, 2010 for any reason other than delay or nonperformance of the party seeking such termination;

(b)

if the Closing has not occurred within two (2) Business Days following the date on which all of the conditions set forth in Article VIII are satisfied (other than conditions that by their nature are to be satisfied at the Closing) or waived because of a party’s refusal to consummate the transactions contemplated hereby, then by written notice from the other party;

(c)

by mutual written consent of Sellers and Purchaser;

(d)

by Sellers or Purchaser (by written notice to the other) if there shall be in effect a final non-appealable Order of a Governmental Body of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby;

(e)

by written notice from Purchaser to Sellers if (x) Purchaser is not then in material breach of any of its representations, warranties, covenants or agreements contained in this Agreement, and (y) any of the conditions set forth in Sections 8.1(a) or 8.1(b) is incapable of fulfillment, or if the breach giving rise to the failure of any such conditions to be satisfied is capable of being cured, such breach shall not have been cured within ten (10) days following receipt by Sellers of notice of such breach from Purchaser; or

(f)

by written notice from Sellers to Purchaser if (x) Seller is not then in material breach of any of its representations, warranties, covenants or agreements contained in this Agreement, and (y) any of the conditions set forth in Sections 8.2(a) or 8.2(b) is incapable of fulfillment, or if the breach giving rise to the failure of any such conditions to be satisfied is capable of being cured, such breach shall not have been cured within ten (10) days following receipt by Purchaser of notice of such breach from Sellers.

Exhibit 2.1

SECTION 4.3

Effect of Termination

. In the event that this Agreement is validly terminated in accordance with Section 4.2 , then each of the parties shall be relieved of their duties and obligations arising under this Agreement after the date of such termination and such termination shall be without liability to Purchaser or Sellers; provided , that (i) no such termination shall relieve any party hereto from liability for any willful breach of this Agreement and, provided , further , that the obligations of the parties set forth in Article X hereof shall survive any such termination and shall be enforceable hereunder, and (ii) no termination shall impair the right of any party to compel specific performance by any other party of its obligations under Article X (excluding Section 10.13 ) of this Agreement.

ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLERS

Sellers represent and warrant to Purchaser, jointly and severally, that, except as set forth in a below referenced Seller Disclosure Schedule:

SECTION 5.1

Organization and Good Standing

. SOAdesk is a limited liability company and VTI is a corporation, each duly organized, validly existing and in good standing under the laws of its jurisdiction of organization and has all requisite power and authority to own, operate, lease and otherwise hold the Assets and use and operate the Assets and Business as they are and it is now being used and operated, and is duly qualified or licensed to do business as a foreign entity in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its activities makes such qualification or licensing necessary, except where the failure to be qualified or licensed or be in good standing would not have a Material Adverse Effect. Neither Seller has any subsidiaries.

SECTION 5.2

Authorization

. Each Seller has all requisite power and authority to own the Assets and operate the Business and execute and deliver this Agreement, the Ancillary Agreements and each other agreement, document, or instrument or certificate contemplated by this Agreement or to be executed by it in connection with the consummation of the transactions contemplated by this Agreement, and to perform fully its obligations hereunder and thereby. The execution and delivery of this Agreement and the Ancillary Agreements by each Seller and the performance by each Seller of the transactions contemplated hereby and thereby have been duly authorized by all requisite action on the part of such Seller and no other limited liability or other proceedings are required in connection with the execution, delivery and performance of this Agreement or any of the Ancillary Agreements. This Agreement has been, and each of the Ancillary Agreements will be at or prior to the Closing, duly and validly executed and delivered by each Seller and (assuming the due authorization, execution and delivery by the other parties hereto and thereto) this Agreement constitutes, and the Ancillary Agreements when so executed and delivered will constitute, the legal, valid and binding obligations of each Seller, enforceable against it in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity).

SECTION 5.3

Conflicts; Consents of Third Parties

Exhibit 2.1

(a)

None of the execution and delivery by a Seller of this Agreement or the Ancillary Agreements, the consummation of the transactions contemplated hereby or thereby, or compliance by a Seller with any of the provisions hereof or thereof will result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of acceleration, termination or cancellation of any obligation, modification of any right, or result in the creation of any Lien upon the Assets, or loss of any benefit under any provision of (i) the certificate of formation, operating agreement or any comparable organizational document of a Seller; (ii) any material Contract or Permit to which a Seller is a party or by which the Assets are bound; (iii) any Order applicable to a Seller or by which the Assets are bound; or (iv) any applicable Law.

(b)

No consent, waiver, approval, Order, Permit or authorization of, or declaration or filing with, or notification to, any Person (under any Contract or otherwise) or Governmental Body is required on the part of a Seller in connection with the execution and delivery of this Agreement or the Ancillary Agreements or the compliance by a Seller with any of the provisions hereof or thereof, or the consummation of the transactions contemplated hereby or thereby (the “ Required Consents ”).

SECTION 5.4

Real Property

(a)

Neither Seller owns any real property.

(b)

Schedule 2.1(n) sets forth a complete and accurate list of each parcel of Leased Real Property and the related Real Property Lease. The Real Property Leases are in full force and effect and are valid, binding and enforceable against such of the Sellers as shall purport to be a party thereto and, to the Knowledge of Sellers, the other parties thereto in accordance with their respective terms. VTI has a valid tenancy in, and the right to quiet enjoyment of, the Leased Real Property, and is in peaceful and undisturbed possession and occupancy under the Real Property Leases. Neither Seller is a party to any sublease or other occupancy arrangement in respect of any part of the Leased Real Property, except that SOAdesk is a month-to-month tenant of VTI with respect to the Leased Real Property. The Leased Real Property is suitable for the uses for which it is used by SOAdesk.

(c)

VTI has the right to assign to Purchaser its rights under the Real Property Lease pursuant to the assignment of lease in the form of Exhibit 5.4(c) (the “ Lease Assignment ”), and has obtained the requisite consent of its landlord and other Persons required with respect to such assignment. The Lease Assignment will entitle Purchaser to quiet enjoyment of and peaceful and undisturbed occupancy of the Leased Real Property.

SECTION 5.5

Personal Property

(a)

Schedule 2.1(j) sets forth a complete and accurate list of all of the equipment and other items of tangible personal property and assets of Sellers other than items having a book or market value individually of less than $5,000 directly or indirectly used (or intended to be used) in or related to the Business. All equipment and other items of tangible personal property and assets included in the Assets and used (or intended to be used) in the Business are in good operating condition free of all defects and in a state of good maintenance and repair, ordinary

Exhibit 2.1

wear and tear excepted, and are fit for use in accordance with the past practices of Sellers. Sellers have good and valid title to all personal property, other than those set forth in Schedule 5.5 , in each case free and clear of all Liens, except (i) such Liens as are set forth in Schedule 5.5 and (ii) Permitted Exceptions.

(b)

Schedule 2.1(o) sets forth a complete and accurate list of all leases by Seller of any item of personal property directly or indirectly used (or intended to be used) in or related to the Business. The Personal Property Leases are in full force and effect and are valid, binding and enforceable against Sellers and, to the Knowledge of Sellers, the other parties thereto in accordance with their respective terms.

SECTION 5.6

Intellectual Property; Proprietary Rights; Software

(a)

(i) Schedule 2.1(b) sets forth a true and complete list of all Patent Rights of Sellers directly or indirectly used (or intended to be used) in or related to the Business, (ii) Schedule 2.1(c) sets forth a true and complete list of all Trademarks of Sellers directly or indirectly used (or intended to be used) in or related to the Business or the Products, and (iii) Schedule 5.6(a) sets forth a true and complete list of all registered Copyrights of Sellers directly or indirectly used (or intended to be used) in or related to the Business, in each case including all applications for the same and indicating the registered or other owner, expiration date and number, if any. Section 5.6(a) also sets forth all Websites of or maintained by or for Sellers directly or indirectly used (or intended to be used) in or related to the Business, and all assumed or fictitious names under which Seller or its Affiliates is or has ever conducted any of the Business.

(b)

Schedule 5.6(b) contains (i) a true and complete list of all Products and Software owned or purported to be owned by Sellers or any Affiliate for license to others and directly or indirectly used (or intended to be used) in or related to the Business (“ Seller Software ”), and all other Software published, marketed licensed from others, supported used or maintained by each Seller or any Affiliate directly or indirectly used (or intended to be used) in or related to the Business (the “ Licensed Software ”), and (ii) an accurate description of any Software code, in whatever form embodied, which are included in or with any of Seller Software or the Licensed Software and which requires the consent (whether subject to royalty or otherwise) of any Person other than a Seller or any Affiliate in order for any of the same to be sold, transferred, used, licensed, updated, enhanced or modified or integrated with other Software by a Seller, Purchaser, any Affiliate or any other Person; provided that Schedule 5.6(b) need not list Software licensed to a Seller or any Affiliate that are commercially available at minor cost to the general public and subject to customary “shrink-wrap” license agreements.

(c)

Schedule 5.6(c) contains a true and complete list of all Contracts, licenses, sublicenses, assignments and indemnities (other than customary end-user licenses and in-bound agreements for licensing of “off-the-shelf” software) which relate to the Proprietary Rights or the Products and to which any Seller is a party and directly or indirectly used (or intended to be used) in or related to the Business or by which the Business is bound (the “ Proprietary Rights Agreements ”). True and complete copies of all of the Proprietary Rights Agreements have been made available to Purchaser. All of the Proprietary Rights Agreements are in full force and effect (unless expired in accordance with their terms) and enforceable against a Seller and, to

Exhibit 2.1

Sellers’ Knowledge, the applicable counterparty in accordance with their terms, and there is no violation or default by a Seller and, to Sellers’ Knowledge, by the counterparties, under the Proprietary Rights Agreements. No event has occurred or circumstance exists which with notice or lapse of time or both would constitute an event of default of a Seller, or give rise to a right of termination or cancellation of a Seller, or result in the loss or adverse modification of any right or benefit of a Seller under any of the Proprietary Rights Agreements, including, without limitation, the transactions contemplated by this Agreement. No party to any Proprietary Rights Agreement has given a Seller written notice of any material breach or default under any thereof. No amount payable or reserved under any Proprietary Rights Agreement has been assigned by a Seller and, no claim of offset or defense to payment of any amount under a Proprietary Rights Agreement has been asserted against a Seller.

(d)

Except as specifically disclosed in Schedules 5.6(a) , (b) , and (c) hereto, Sellers either: (i) own all the Proprietary Rights and Seller Software, or (ii) have the perpetual, royalty-free and unrestricted right to use the same anywhere in the world and in any medium, platform or language in each case free and clear of any Liens, and no part of the Proprietary Rights or Seller Software, including without limitation any Source Code, is subject to or held in escrow or in any third party’s possession.

(e)

Except as set forth on Schedule 5.6(e) , (i) all registrations for Patent Rights, Copyrights and Trademarks required to be identified pursuant to Section 5.6(a) are valid and in force, and all applications to register any Patent Rights or unregistered Copyrights and Trademarks so identified are pending and in good standing, all without challenge of any kind, and (ii) Sellers have the sole and exclusive right to bring actions for infringement or unauthorized use of any of the Proprietary Rights, and, to the Knowledge of Sellers, there is no material basis for any such action. Correct and complete copies of: (x) registrations for all Patent Rights and registered Copyrights and Trademarks identified in Schedule 5.6(a) , and (y) all pending applications to register unregistered Copyrights and Trademarks required to be identified pursuant to Section 5.6(a) have heretofore been delivered or made available by Sellers to Purchaser. Schedule 5.6(e) sets forth a list of all actions that are required to be taken by Sellers or Purchaser within 120 days of the Closing Date with respect to any of the Proprietary Rights (including any required filings, registrations, fees or other required payments) in order to avoid prejudice to, or impairment or abandonment of, such Proprietary Rights.

(f)

Except as disclosed in Schedule 5.6(f) , to Sellers’ Knowledge, no infringement of any Intellectual Property, or rights thereto of any other Person has occurred or results in any way by a Seller or from any aspect of the Products or the Business. Except as disclosed in Schedule 5.6(f) , no Seller has received written notice of any claim against a Seller, any Affiliate or any predecessor owner of the Business that any of the Products, Programs, or the Assets of or marketed or used by a Seller or any aspect of the Business infringes any Intellectual Property or rights thereto of any other Person.

(g)

Except as disclosed in Schedule 5.6(g) hereto, there has been no publication or distribution or delivery by a Seller or, to Sellers’ Knowledge, any other Person of any of the Source Code of any of the Seller Software that could in any way affect the right of a Seller or any Affiliate to seek, assert or enforce copyright or trade secret protection for such Seller Software. With respect to the Contracts pertaining to any Seller Software entered into by or

Exhibit 2.1

binding upon a Seller or any Affiliate, each Seller and such Affiliate has licensed the Seller Software and not sold any thereof, thus retaining all ownership of the underlying software, and no exclusive license, nor any other license other than non-exclusive licenses to end-users in the Ordinary Course of Business and on customary terms and conditions, has been granted in respect to any of the Products or the Seller Software.

(h)

Except as disclosed in Schedule 5.6(h) , (i) Sellers have the exclusive right to develop, publish, market, license and sell all of the Seller Software, (ii) no Person other than Sellers may develop, publish, market, license or sell all or any part of the Seller Software without the prior consent of Sellers (exercisable in its sole discretion) and Sellers have not given any such consent, and (iii) Sellers own all right, title and interest in and to the Seller Software and the exclusive right to apply for copyright and patent protection therefor.

(i)

Except as disclosed in Schedule 5.6(i) , neither Seller is a party to or bound by any Contract or understanding relating to or which is reasonably likely to interfere with the full exploitation of any rights or property by Purchaser or which restricts its right to enter into this Agreement or to perform in accordance herewith. Neither Seller has entered into any agreement which involves the publication, development, manufacture, license or marketing of any computer software or product in competition with, or which competes or is reasonably likely to compete with, any of the Seller Software.

(j)

Sellers have, and on the Closing Date Purchaser will have, the right to use all Proprietary Rights in the manner used by Sellers. Sellers have no Knowledge of any infringement or unlawful, unauthorized or conflicting use of any of the Proprietary Rights.

(k)

Except as disclosed in Schedule 5.6(k) , Sellers own or possess the perpetual, world-wide, royalty-free, fully assignable right to (i) operate each Web Site as presently conducted, and (ii) use, display, perform, publish, disseminate, transmit and distribute the content and other information displayed, published, performed, disseminated, transmitted or distributed by a Seller on or through each Web Site and to disseminate, transmit, distribute, market, sell or license the information, products and services disseminated, transmitted, marketed, sold or licensed on or through each Web Site.

(l)

No transaction heretofore engaged in by a Seller has, and none of the transactions contemplated by this Agreement will, require or obligate a Seller to provide, sell, license, assign or transfer any Products, Source Code or Proprietary Rights to any Person.

(m)

No Person who has performed services in connection with the development and/or enhancement of any of the Seller Software, or any other Proprietary Rights, whether as employee, consultant or as independent contractor, nor any other past or present employee of a Seller or any Affiliate, holds any proprietary or other ownership rights with respect to Seller Software. Except as disclosed in Schedule 5.6(m) , each employee, agent, consultant or contractor who has contributed to or participated in the creation or development of any Seller Software or any copyrightable, patentable or trade secret material on behalf of a Seller or any predecessor in interest thereto either: (i) is a party to a “work-for-hire” agreement under which Seller is deemed to be the original owner/author of all property rights therein; or (ii) has executed

Exhibit 2.1

an enforceable assignment in favor of such Seller (or such predecessor in interest, as applicable) of all right, title and interest in all of the same.

(n)

Except as disclosed in Schedule 5.6(n) , (i) neither Seller is aware of any claim under or purporting to be covered by any warranty coverage, express or implied, afforded to any licensee or user of any Seller Software or Products or alleging any error, omission or failure to perform, and (ii) to Sellers’ Knowledge, there are no significant recurring defects or bugs, or any computer virus, trojan horse, worm or destructive code, in any of the Seller Software or Products except as indicated in said Schedule 5.6(n) . Sellers have made available to Purchaser copies of all standard warranty Contracts entered into by a Seller in the Ordinary Course of Business.

(o)

Except as indicated in Schedule 5.6(o) , each Seller has complied in all material respects with all applicable Laws relating to, and all rules, policies and procedures established by a Seller from time to time with respect to, privacy, data protection and the collection and use of personally identifiable information and user information gathered or accessed in the course of its operations, and no claim alleging a violation of any Person’s privacy, personal or confidentiality rights under any of such Laws, policies or procedures has been asserted or, to the Knowledge of any Seller, threatened against a Seller or the Business.

(p)

No Seller Software or Product has been distributed in whole or in part or used, or is combined or integrated with, of is required by a Seller to be used in conjunction with, any Public Software (as hereinafter defined) in a manner which would require that such Seller Software or Product be disclosed or distributed in source code form or made available at no charge. Except as set forth on Schedule 5.6(p) , no Public Software constitutes a portion of any Seller Software or Product. Each Seller has complied with all of the material terms of any Contract, license or other agreement governing the use of Public Software. “ Public Software ” means any software that contains, or is derived in any manner (in whole or in part) from, any software that is distributed as free software, open source software (e.g., Linux) or similar licensing or distribution models.

(q)

Each Seller has established in accordance with general industry standards data back-up procedures which are complied with, and hardware back-up and disaster prevention facilities which are suitable, to minimize the effects on Sellers of human error or other circumstances resulting in computer hardware, software or data failure. No Source Code is held or stored off-site of the Leased Real Property.

(r)

All technical information developed by and belonging to a Seller has been kept confidential, except where the failure to keep such information confidential will have a Material Adverse Effect.

(s)

Neither Seller believes it is or will be necessary for Purchaser to utilize any inventions, trade secrets or proprietary information of any of a Seller’s former or current employees made prior to their employment by a Seller, except for inventions, trade secrets or proprietary information that have been assigned to Seller.

SECTION 5.7

Sufficiency

. Except as set forth on Schedule 5.7 and except for the Excluded Assets, the Assets constitute all of the assets, properties, interests and

Exhibit 2.1

rights used in, or held for use in, the Business during the twelve (12) month period preceding the date hereof (subject to any dispositions or acquisitions permitted by Section 7. 2) and are sufficient for Purchaser to conduct the Business from and after the Closing Date without interruption and in the Ordinary Course of Business, as it has been conducted by Sellers prior to Closing.

SECTION 5.8

Material Contracts; Assumed Contracts

(a)

Except for Contracts set forth on Schedule 5.8(a) , Proprietary Rights Agreements set forth on Schedule 5.6(c) or Contracts entered into after the date hereof in accordance with Section 7.2 (collectively, the “ Material Contracts ”), neither Seller is a party to or bound by any of the following directly or indirectly used (or intended to be used) in or related to the Business:

(i)

any Contract or commitment to pay or receive any royalty, license or management fees;

(ii)

any Internet or Website-related Contracts;

(iii)

any Contract providing for capital expenditures in excess of $10,000;

(iv)

any loan or advance to, or investment in, any Person or any Contract relating to the making of any such loan, advance or investment, other than travel and other business expenses to employees in the Ordinary Course of Business, or any Contract evidencing Indebtedness of a Seller;

(v)

any Contract for research or development with respect to Software or other Intellectual Property;

(vi)

any Contract involving the lease or other occupancy of real property;

(vii)

any Contract containing covenants which limit or restrict (or purport to limit or restrict) the ability of a Seller to operate the Business or any other trade or business in any geographic area, or which contain a covenant binding (or purporting to be binding) upon a Seller or, from and after the Closing, Purchaser or any of its Affiliates not to compete in the conduct or operation of the Business or any other trade or business (including non-competition, exclusive dealing, and customer non-solicitation agreements);

(viii)

any Contract establishing a joint venture or partnership;

(ix)

any Contract which is an Asset;

(x)

any Contract relating to sales agency, supply, broker, purchase, distribution, sales representation, advertising, promotional, support, maintenance, outsourcing, manufacture and fulfillment agreements or franchises, to which a Seller is a party or by which a Seller is bound, other than (B) customary end-user licenses providing for, in any single case or series of related cases involving the same or affiliated customers, payment of not more than $10,000 over the life or lives thereof, and (C) Contracts entered into in the Ordinary Course of Business on customary terms and conditions which are (and will be) terminable by a Seller (and

Exhibit 2.1

after the Closing Purchaser) on less than 60 days’ notice without any penalty or consideration and involving payments or receipts during the entire life of such contract of less than $10,000 in the case of any single contract but not more than $50,000 in the aggregate; and

(xi)

any other Contract which is material to the Business entered into outside of the Ordinary Course of Business.

(b)

Seller has made available to Purchaser true, correct and complete copies of each Material Contract.

(c)

All Assumed Contracts are enforceable in accordance with their terms against such Seller as shall be or purport to be a party thereto and, to the Knowledge of Sellers, the other parties thereto, in each case subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity). Neither Seller is (with or without the lapse of time or the giving of notice, or both) in material breach of any Assumed Contract and, to the Knowledge of Sellers, no other party to any Assumed Contract is (with or without the lapse of time or the giving of notice, or both) in material breach thereunder.

SECTION 5.9

Labor and Employment; Employee Benefits

(a)

Schedule 5.9(a) lists all of the employees employed in, and independent consultants retained by, or seconded, loaned out or leased to, a Seller and directly or indirectly providing services for or to the Programs or Business, and sets forth the name and current annual salary and other compensation payable by Sellers or any of their Affiliates to each such employee and consultant (including, but not limited to, wages, salary, commissions, normal bonus, profit sharing, deferred compensation and other extra compensation) for the annual period ended December 31, 2008 and the approximate amount expected to be received by such employee or consultant for the annual period ended December 31, 2009. Except as set forth on Schedule 5.9 , neither Seller has any Knowledge that any employee, independent consultant of a Seller or seconded, loaned out or leased person intends to terminate employment with or retention by such Seller prior to the Closing Date, intends not to accept employment or engagement with Purchaser on the Closing Date or intends to terminate employment or retention with Purchaser within 12 months following the Closing Date.

(b)

Each Seller is and has been in compliance in all material respects with all applicable laws and regulations respecting employment, termination of employment, discrimination in employment, terms and conditions of employment, wages, hours, and occupational safety and health and employment practices, and has not engaged in any unfair labor practice.

(c)

Except as set forth on Schedule 5.9(c) or Schedule 5.8(a)(x) , neither Seller has any employment contract with any employee, consulting agreement with any independent contractor or second, loan-out or lease with respect to any employee or consultant. A true,

Exhibit 2.1

correct and complete copy of each such employment agreement, consulting agreement or second, loan-out or lease agreement to which a Seller is a party has been made available to Purchaser.

(d)

Neither Seller is a party to any collective bargaining agreement with respect to employees, and no collective bargaining agreement is currently being negotiated by a Seller. No one has petitioned within the last five (5) years, and no one is now petitioning, for union representation of any of the employees of a Seller. There are no (i) strikes, work stoppages, work slowdowns or lockouts pending or, to the Knowledge of Sellers, threatened against or involving Seller with respect to employees or (ii) union organization campaigns or disputes concerning representation with respect to employees pending or, to the Knowledge of Sellers, threatened. Neither Seller has experienced any labor dispute-related work stoppage during the last five (5) years

(e)

Schedule 5.9(e) sets forth a true, correct and complete list of each pension, retirement, savings, profit-sharing, deferred compensation, incentive, severance, termination, reemployment assistance, stock ownership, stock purchase, stock option, performance, bonus, incentive, vacation or holiday pay, hospitalization or other medical, vision, dental and other health insurance plans, all life, disability or other insurance plans or arrangements or commitments and all other welfare, benefit, or fringe benefit plans, policies, trusts, understandings or arrangements of any kind, and each sick pay, personal day, education, and other welfare, benefit and fringe benefit plans, policies, trusts, understandings, agreements, arrangements and commitments of any kind, to which a Seller is a party or bound and which cover or relate to any present or former officer, director, employee or consultant of a Seller directly or indirectly providing services for the Programs or to the Business. No such employee benefit plan, as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”), or any other plan, program, agreement or arrangement, whether qualified under applicable Law or not, sponsored, maintained (or contributed to or required to be contributed to) or entered into by a Seller for the benefit of any present or former officer, director, employee or consultant of a Seller or individual otherwise providing services to the Business, is a defined benefit plan. Each of the arrangements set forth on Schedule 5.9(e) is herein referred to as an “ Employee Benefit Plan ”.

(f)

To Sellers’ Knowledge, each Employee Benefit Plan conforms to, and the administration thereof is in material compliance with, its terms and all applicable Laws, including (if applicable) to ERISA, and the Code. All contributions required, by Law or by contract, to be made to any Employee Benefit Plan for any plan year prior to the Closing Date, or other period on the basis of which contributions are required, have been made. All amounts required to be contributed by Sellers or which may accrue in respect of any period prior to Closing under any Employee Benefit Plan will have been made on or prior to the Closing Date or will be accrued on the Final Closing Statement. Neither Seller has any liability or obligation with respect to any Employee Benefit Plan or any trust related thereto that may have been terminated prior to the date hereof or prior to the Closing.

(g)

Each Seller has made available to Purchaser true, correct and complete copies of: (i) the text or a reasonable summary of all Employee Benefit Plans, all amendments thereto, all current summary plan descriptions, summaries of material modifications related to any Employee Benefit Plan; (ii) any trust or other funding agreements; (iii) all contracts relating to

Exhibit 2.1

any Employee Benefit Plans, including insurance contracts, investment management agreements, and recordkeeping agreements; and (iv) the annual reports (Form 5500 Series), if required under ERISA, for each of the last three years.

(h)

With respect to Employee Benefit Plans: (i) each Employee Benefit Plan which is intended to be qualified within the meaning of Section 401(a) of the Code has been determined by the IRS to be qualified (or, alternatively, if such Employee Benefit Plan is maintained pursuant to the adoption of a master or prototype plan document, the National Office of the IRS has issued an opinion letter to the effect that the form of the master or prototype plan document is acceptable for the implementation of a qualified retirement plan), and nothing has occurred since the date of any such determination or opinion letter that could reasonably be expected to give the IRS grounds to revoke such determination or to conclude that the Employee Benefit Plan is not qualified under Section 401(a) of the Code; (ii) no liability under Title IV of ERISA has been incurred and no condition exists that presents a risk of Seller or any Affiliate thereof incurring any liability under Title IV of ERISA; and (iii) neither a Seller nor any Affiliate thereof, nor any Employee Benefit Plan or any trust created thereunder, nor any trustee or administrator has engaged in any transaction (for which a statutory or regulatory exemption is not available) in connection with which a Seller or any Affiliate thereof would be subject to a civil penalty assessed pursuant to Section 409 or 502 of ERISA or a tax imposed pursuant to Section 4975 or 4976 of the Code.

(i)

Except for ordinary course claims for benefits, there are no claims, appeals of claims (including litigation), involving any Employee Benefit Plan presently asserted or, to Seller’s Knowledge, which may be asserted with respect to benefits under any Employee Benefit Plan.

(j)

Neither the operation or administration of any Employee Benefit Plan, nor execution or delivery of this Agreement or the consummation of the transactions contemplated by this Agreement, will (with or without the giving of notice or the passage of time or both) conflict with or result in a breach of or permit the termination of or require a payment under any Employee Benefit Plan, or result in a Seller incurring or suffering any Loss or other liability (including liability for severance pay, unemployment compensation, termination pay or any other payment, or withdrawal liability) or accelerate the time of payment or vesting or increase the amount of compensation or benefits due to any employee or their beneficiaries under any Employee Benefit Plan.

SECTION 5.10

Litigation

. There are no (a) investigations by a Governmental Body pending or, to the Knowledge of Sellers, threatened against a Seller, the Assets or the Business or (b) Legal Proceedings or Orders entered by, involving, pending against or, to the Knowledge of Sellers, threatened, against a Seller, the Assets or the Business.

SECTION 5.11

Compliance with Laws; Permits

(a)

Each Seller is, and at all times in the past two (2) years has been, in material compliance with all Laws, including those applicable to the ownership and operation of the Products and the Business.

Exhibit 2.1

(b)

Each Seller currently has all Permits which are required for its use and operation of the Products and the Business as presently used and operated, a complete and correct list of which is set forth on Schedule 5.11(b) . Each Permit has been duly obtained and is valid and in full force and effect, and is not subject to any pending or, to the Knowledge of Sellers, threatened Legal Proceeding to revoke, cancel, suspend or declare invalid such Permit in any respect. Neither Seller is in default or violation (and no event has occurred which, with notice or the lapse of time or both, would constitute a default or violation) of any term, condition or provision of any material Permit set forth on Schedule 5.11(b) .

(c)

Neither Seller has received within the past two (2) years any written notice from a Governmental Body that it or the operation of the Business is in violation of any such Laws or authorizations of any Governmental Body.

SECTION 5.12

Environmental Matters

(a)

Other than in compliance with applicable Environmental Laws, neither Seller has caused, arranged or allowed, or contracted with any party for, the transportation, treatment, storage or disposal of any Hazardous Material at or on any of the Leased Real Property. To the Knowledge of Sellers, no Hazardous Material has been released into the environment on or from any of the Leased Real Property and which is required under applicable Environmental Laws to be abated or remediated by a Seller. Each Seller has obtained all material Environmental Permits required under all applicable Environmental Laws in relation to the Assets and the Business.

(b)

The Assets, the Business and, to the Knowledge of Sellers, the Leased Real Property, are in compliance in all material respects with all applicable Environmental Laws and Environmental Permits, and no conditions exists and no claims have been made or, to the Knowledge of Sellers, are threatened, that could reasonably be expected to result in the imposition of an Environmental Liability or Losses relating to the Business.

SECTION 5.13

Insurance

. Each Seller maintains policies of fire and casualty, liability and other forms of insurance in such amounts, with such deductibles and against such risks and losses as are necessary for the operation of the Business insuring against risks of the kind customarily insured against. All such policies are in full force and effect and all premiums due and payable thereon have been paid.

SECTION 5.14

No Questionable Payments

. Neither a Seller nor any director, officer, agent, employee or other Person associated with or acting on behalf of a Seller has: used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity; made any unlawful payment to foreign or domestic government officials or employees or to foreign or domestic political parties or campaigns from corporate funds; or violated any provision of the Foreign Corrupt Practices Act of 1977, as amended.

SECTION 5.15

Major Customers and Distributors

. Schedule 5.15 sets forth (i) the ten (10) largest customers of the Business based on 2009 sales (the “ Major Customers ”) and (ii) the ten (10) largest distributors, value-added resellers or OEMs for the Products based on 2009 sales (the “ Major Distributors ”). Except as set forth on Schedule 5.15 ,

Exhibit 2.1

neither any of the Major Customers nor any of the Major Distributors has terminated, or threatened to terminate, its relationship with the Business.

SECTION 5.16

Brokers, Finders and Investment Bankers

. Neither Seller, nor any officer, director or employee of a Seller, nor any Affiliate of a Seller, nor any member or stockholder of a Seller has employed any broker, finder or investment banker or incurred any liability for any investment banking fees, financial advisory fees, brokerage fees or finders’ fees in connection with the transactions contemplated hereby.

SECTION 5.17

Financial Information

(a)

SOAdesk has delivered to Purchaser true and complete copies of its unaudited consolidated balance sheets and related statements of income and cash flow as at and for the fiscal years ended December 31, 2007 and December 31, 2008, and the unaudited consolidated balance sheets and related statements of income and cash flow of SOAdesk as at and for the nine (9) month period ended September 30, 2009 (such unaudited financial statements being collectively, the “ Financial Statements ”). Except as set forth on Schedule 5.17(a) , all of the Financial Statements have been prepared from the financial records of SOAdesk in accordance with GAAP, consistently applied and maintained throughout the periods indicated, and fairly present in all material respects the financial condition of SOAdesk, as at their respective dates and the results of operations of SOAdesk, for the periods covered thereby, subject, in the case of such interim statements, to normal year-end adjustments (the effect of which, individually or in the aggregate, will not be material) and the absence of footnotes.

(b)

Except as and to the extent set forth or reserved against in the Financial Statements, SOAdesk (i) has no any liabilities or obligations of any nature whatsoever, whether absolute, accrued, contingent or otherwise, required by GAAP to be set forth in a balance sheet or the notes thereto prepared in accordance with GAAP except those incurred in the Ordinary Course of Business after September 30, 2009, and (ii) has no off-balance-sheet arrangements, except in each such case for liabilities, obligations or arrangements which would not, individually or in the aggregate, give rise to a Material Adverse Effect.

(c)

SOAdesk maintains an adequate system of internal accounting controls.

(d)

The Financial Statements do not contain any items of nonrecurring income or any other material income not earned in the Ordinary Course of Business except as expressly specified therein or that GAAP would require to be listed as separate line items.

(e)

Except as indicated in Schedule 5.17(e) , none of the obligations or liabilities of SOAdesk or the Business is guaranteed by any other Person, nor has SOAdesk or the Business guaranteed any of the obligations or liabilities of any other Person.

(f)

There are no transactions relating to the Business reflected on any financial statements or books and records of VTI.

SECTION 5.18

Accounts Receivable .

Except as set forth on Schedule 5.18 , all accounts receivable of SOAdesk, whether reflected on the Financial Statements or otherwise, (i) represent actual amounts actually incurred and owed by the

Exhibit 2.1

applicable account debtors, (ii) arose from bona fide transactions in the Ordinary Course of Business, and (iii) are due and owing to SOAdesk without defense, counterclaim or set-off, and without dispute in any respect.

SECTION 5.19

Inventory .

Except as set forth on Schedule 5.19 , all inventory (including inventory ordered but not yet received) of a Seller consists of items of a quality usable or saleable in the Ordinary Course of Business and is in quantities reasonably sufficient for the Business and Purchaser to operate in the Ordinary Course of Business following the Closing. Each Seller maintains policies, practices and procedures with respect to the adequate safeguard and security of all such inventory.

SECTION 5.20

Absence of Material Changes

. Since December 31, 2008, except to the extent as set forth in Schedule 5.20 , there has not been any:

(a)

Material Adverse Effect;

(b)

damage, destruction or condemnation (whether or not covered by insurance) of any Asset resulting in a loss, individually or in the aggregate, in excess of $10,000;

(c)

sale, lease, license, abandonment or other disposition by a Seller of any Assets, except for non-exclusive licenses of Products in the Ordinary Course of Business;

(d)

increase or enhancement of the compensation or benefits of employees other than in the Ordinary Course of Business;

(e)

Liens, other than Permitted Exceptions, placed on any of the Assets;

(f)

sales to customers in higher or accelerated amounts compared with prior periods, other than normal increases in volume through growth in demand;

(g)

material change in the practices of a Seller in the operation of the Business or its method of accounting or accounting practice;

(h)

termination (other than at its stated expiry date), amendment in any material respect, suspension, cancellation or failure to renew any Material Contract;

(i)

write off as uncollectible, or establishment of an extraordinary reserve with respect to, any account receivable or other Indebtedness;

(j)

release or waiver of any material right or claim;

(k)

incurrence or assumption of any liability, other than accounts payable and other liabilities incurred by a Seller in bona fide transactions in the Ordinary Course of Business; or

(l)

entry into or agreement or commitment to enter into any agreement or transaction not in the Ordinary Course of Business.

Exhibit 2.1

SECTION 5.21

Transactions with Affiliates; Sharing of Assets, Continuity of Operations

(a)

Other than as set forth in Schedule 5.21 , neither a Seller nor any director, officer, stockholder or other Affiliate of a Seller will, immediately following the Closing:

(i)

own or control, or have any interest in, any asset or right directly or indirectly used (or intended to be used) in or related to the Business, or be a party to any Assumed Contract, other than the Licensed Materials;

(ii)

have any material contractual or other claim, express or implied, of any kind whatsoever against or in respect of the Business (except with respect to the Executive Employment Agreements); or

(iii)

be engaged in any transaction with any Major Customer or Major Supplier.

(b)

None of the Excluded Assets are directly or indirectly used (or intended to be used) in or related to the conduct of the Business as historically conducted. Except as set forth on Schedule 5.21(b) , there are no assets, rights or services provided to a Seller prior to the Closing which are necessary for the continued conduct of the Business following the Closing in substantially the same manner.

SECTION 5.22

Records .

The books and records of each Seller relating to the Business and the Assets are and have been prepared in the Ordinary Course of Business and appropriately reflect the operations and transactions thereof in all material respects, and there has been no transaction involving any of the Business or Assets which properly should have been set forth therein and which has not been accurately so set forth.

SECTION 5.23

Taxes .

(a)

All Tax Returns due to have been filed by each Seller in accordance with all applicable Laws have been duly filed and are true, correct and complete in all material respects. Any Tax required to have been withheld or collected by a Seller has been duly withheld and collected, and (to the extent required) each such Tax has been paid to the appropriate Governmental Body.

(b)

All Taxes, deposits and other payments for which a Seller has liability (whether or not shown on any Tax Return) have been timely paid in full or are accrued in full as liabilities for Taxes on the books and records of such Seller, and to the extent pertaining to any period covered by any of the Financial Statements, on the applicable Financial Statements.

(c)

Except for Permitted Exceptions, there are no Liens for Taxes with respect to any of the Assets or the Products, nor is there any such Lien that is pending or, to the Knowledge of Sellers, threatened.

(d)

Neither Seller has entered into or become bound by any agreement or consent pursuant to Section 341(f) of the Code. There is no agreement, plan, arrangement or other

Exhibit 2.1

Contract covering any of a Seller’s employees that, individually or collectively, could give rise directly or indirectly to the payment of any amount that would not be deductible pursuant to Section 280G or Section 162 of the Code. Each Seller has delivered to Purchaser accurate and complete copies of all Tax Returns that have been filed on behalf of or with respect to such Seller, and the information contained in such Tax Returns is accurate and complete in all material respects. Schedule 5.23(d) accurately identifies each examination or audit of any Tax Return of each Seller. Schedule 5.23(d) contains a complete and accurate list of states, territories and jurisdictions (whether foreign or domestic) in which each Seller is required to file Tax Returns.

SECTION 5.24

Sale of Products .

Each Product that has been sold by or on behalf of a Seller to any Person and warranted by a Seller conformed and complied in all material respects with the terms and requirements of any applicable warranty of such Seller. Each Product that has been sold and warranted by a Seller to any Person conformed and complied in all material respects with the terms and requirements of all applicable Law. Neither Seller will incur or otherwise become subject to any liability arising directly or indirectly from any Product manufactured or sold by or on behalf of a Seller on or at any time prior to the Closing Date, other than bugs, fixes and warranty claims in the Ordinary Course of Business. To Sellers’ Knowledge, no product manufactured or sold by or on behalf of a Seller has at the time of such sale been the subject of any recall or other similar action.

SECTION 5.25

Performance of Services

. All services that have been required to be performed by or on behalf of a Seller were performed in accordance with customary industry standards in all material respects and with all applicable Laws. Purchaser will not incur or otherwise become subject to any liability arising directly or indirectly from any services performed by a Seller, except to the extent of a Seller’s warranty covering such services. There is no claim pending or, to Sellers’ Knowledge, threatened against a Seller relating to any services performed by or on behalf of Seller, other than requests for additions and changes and in connection with bugs, errors and system problems, in each case within normal industry standards.

SECTION 5.26

Purchase Entirely for Own Account .

The shares of Purchaser Common Stock and the Notes, and any shares of Series B Preferred Stock, issuable hereunder are being acquired by SOAdesk for its own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and SOAdesk has no present intention of selling, granting any participation in, or otherwise distributing the same.

SECTION 5.27

Disclosure of Information .

Each Seller has had an opportunity to discuss Purchaser’s business, management, financial affairs and the terms and conditions of the offering of the shares of Purchaser Common Stock, the Series B Preferred Stock and the Notes with Purchaser’s management, has had an opportunity to review Purchaser’s facilities and Products, and has had an opportunity to review Purchaser’s public filings under federal securities Laws at www.sec.gov. In addition to the foregoing, each Seller acknowledges that it has had the opportunity to review and consider this Agreement and the provisions, terms and effects hereof with tax and financial advisors of its choosing and that neither Purchaser nor any Person employed by or representing or advising Purchaser has made any representations, warranties or assurances of any kind to such Seller (other than those set forth in this Agreement

Exhibit 2.1

regarding the potential tax, financial or legal implications of this Agreement or any of the transactions or other agreements provided for herein or connected herewith.

SECTION 5.28

Restricted Securities .

Each Seller understands that the shares of Purchaser Common Stock, Series B Preferred Stock and the Notes have not been, and will not be, registered under the Securities Act of 1933, as amended (the “ Securities Act ”), by reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the representations and warranties of Seller as expressed herein. Sellers understand that the shares of Purchaser Common Stock, Series B Preferred Stock and the Notes are “restricted securities” under applicable U.S. federal and state securities Laws and that, pursuant to these Laws, Sellers must hold such securities indefinitely unless they are registered with the Securities and Exchange Commission and qualified by state authorities, or an exemption from such registration and qualification requirements is available. Sellers acknowledge that Purchaser has no obligation to register or qualify the shares of Purchaser Common Stock, Series B Preferred Stock and the Notes for resale. Sellers further acknowledge that if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the securities, and on requirements relating to Purchaser which are outside of the control of Sellers, and which Purchaser is under no obligation and may not be able to satisfy.

SECTION 5.29

Legend

. Each Seller understands that the securities issuable hereunder and any securities issued in respect of or exchange for such securities, if applicable, may bear the following legend:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE ISSUER IN ITS SOLE DISCRETION THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.”

SECTION 5.30

Full Disclosure

. Neither this Agreement nor any of Ancillary Agreements, the information set forth in the Disclosure Schedule, and all other information regarding a Seller and their business, condition, assets, liabilities, operations, financial performance and net income delivered or to be delivered by a Seller in connection with the transactions contemplated in this Agreement, in the aggregate and to Sellers’ Knowledge, contains any untrue statement relating to the Assets or omits to state any material fact relating to the Assets necessary to make any of the representations, warranties or other statements or information contained therein, in light of the circumstances under which they were made, not misleading.

Exhibit 2.1

ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser represents and warrants to Sellers that:

SECTION 6.1

Organization and Good Standing

. Purchaser is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and has all requisite power and authority to own, operate, lease and otherwise hold its assets and to carry on its business as it is now being conducted, and is duly qualified or licensed to do business as a foreign corporation in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its activities makes such qualification or licensing necessary, except where the failure to be qualified or licensed would not have a Purchaser Material Adverse Effect.

SECTION 6.2

Authorization of Agreement

. Purchaser has all requisite corporate power and authority to execute and deliver this Agreement, the Ancillary Agreements and each other agreement, document, instrument or certificate contemplated by this Agreement or to be executed by Purchaser in connection with the consummation of the transactions contemplated hereby and thereby, including the Ancillary Agreements, and to perform fully its obligations hereby and thereby. The execution, delivery and performance by Purchaser of this Agreement and each Ancillary Agreement has been duly authorized by all necessary corporate action on behalf of Purchaser. This Agreement has been, and each Ancillary Agreement will be at or prior to the Closing, duly executed and delivered by Purchaser, and (assuming the due authorization, execution and delivery by the other parties hereto and thereto) this Agreement constitutes, and each Ancillary Agreement when so executed and delivered will constitute, the legal, valid and binding obligations of Purchaser, enforceable against Purchaser in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity).

SECTION 6.3

Conflicts; Consents of Third Parties .

(a)

None of the execution and delivery by Purchaser of this Agreement or the Ancillary Agreements, the consummation of the transactions contemplated hereby or thereby, or compliance by Purchaser with any of the provisions hereof or thereof will conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination or cancellation under, any provision of (i) the certificate of incorporation and bylaws of Purchaser; (ii) any material Contract or Permit to which Purchaser is a party or by which any of the properties or assets of Purchaser are bound; (iii) any Order applicable to Purchaser or by which any of the properties or assets of Purchaser are bound; or (iv) any applicable Law.

(b)

No consent, waiver, approval, Order, Permit or authorization of, or declaration or filing with, or notification to, any Person or Governmental Body is required on the part of

Exhibit 2.1

Purchaser in connection with the execution and delivery of this Agreement or the Ancillary Agreements or the compliance by Purchaser with any of the provisions hereof or thereof.

SECTION 6.4

Litigation

. There are no Legal Proceedings pending or, to the knowledge of Purchaser, threatened that are reasonably likely to prohibit or restrain the ability of Purchaser to enter into this Agreement or consummate the transactions contemplated hereby.

SECTION 6.5

Brokers, Finders and Investment Bankers

. Neither Purchaser, nor any officer, member, director or employee of Purchaser, nor any Affiliate of Purchaser, nor any stockholder of Purchaser has employed any broker, finder or investment banker or incurred any liability for any investment banking fees, financial advisory fees, brokerage fees or finders’ fees in connection with the transactions contemplated hereby.

SECTION 6.6

Capital Structure .

(a)

As of October 31, 2009, the authorized capital stock of Purchaser consists of (i) 215,000,000 shares of Purchaser Common Stock par value $0.001 per share and (ii) 10,000,000 shares of Preferred Stock, par value $0.001 per share, of Purchaser (“ Purchaser Preferred Stock ”). As of October 31, 2009, (i) 47,098,185 shares of Purchaser Common Stock were issued and outstanding, all of which are duly authorized, validly issued, fully paid and non-assessable, and (ii) 4,713,873 shares of Purchaser Common Stock were reserved for future issuance pursuant to outstanding, unexercised options or warrants to purchase Purchaser Common Stock. As of October 31, 2009, 1,543.6 shares of Series A-1 Purchaser Preferred Stock were issued and outstanding. As of October 31, 2009, no other shares were outstanding or subject to options, warrants, or other rights to purchase, and since October 31, 2009 no other shares have been issued other than (i) shares issued upon the exercise of options in the ordinary course and (ii) shares of Series B Preferred Stock and warrants issued in connection therewith.

(b)

As of October 31, 2009, except for outstanding options and warrants referred to in clauses (ii) and (iii) of the second sentence of subsection (a) above and otherwise as disclosed in the Purchaser SEC Reports (as defined below), there were no outstanding options, warrants, or other agreements relating to the issuance of capital stock of Purchaser or obligating Purchaser to issue or sell any shares of its capital stock.

SECTION 6.7

SEC Filings; Financial Statements .

(a)

At all times since January 1, 2006, Purchaser has been subject to the reporting requirements of section 13 or 15(d) of the Securities Exchange Act of 1934 and has filed all forms, reports, exhibits and schedules required to be filed by it with the Securities and Exchange Commission (the “SEC”) through the date hereof (collectively, the “Purchaser SEC Reports”). As of the respective dates they were filed (and if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing), (i) the Purchaser SEC Reports complied in all material respects with the requirements of the Securities Act of 1933 or the Securities Exchange Act of 1934, as the case may be, and (ii) none of the Purchaser SEC Reports contained any untrue statement of a material fact or omitted to state a material fact required to be stated

Exhibit 2.1

therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.

(b)

Each of the consolidated financial statements (including, in each case, any notes thereto) contained in the Purchaser SEC Reports was prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q or 8-K promulgated by the SEC) and each presented fairly, in all material respects, the consolidated financial position of Purchaser and its consolidated subsidiaries as at the respective dates thereof and for the respective periods indicated therein, except as otherwise noted therein (subject, in the case of unaudited statements, to normal and recurring year-end adjustments which were not and are not expected, individually or in the aggregate, to be material).

SECTION 6.8

Valid Issuance of Shares

. The shares of Purchaser Common Stock and any shares of Series B Preferred Stock to be issued pursuant to this Agreement will, when issued, be duly authorized, validly issued, fully paid and non-assessable.

SECTION 6.9

Not a Shell Company

. Purchaser is not and has not at any time previously been an issuer described in paragraph (i)(1)(i) of Rule 144 of the SEC.

ARTICLE VII
COVENANTS

SECTION 7.1

No Solicitation of Transactions

. Until the earlier of the Closing or the termination of this Agreement pursuant to Section 4.2 , neither Seller shall, directly or indirectly, through any stockholder, member, officer, director, manager, professional advisor or agent of any of them or otherwise, initiate, solicit or encourage (including by way of furnishing non-public information or assistance), or enter into discussions or negotiations of any type, directly or indirectly, or enter into a confidentiality agreement, letter of intent or other similar Contract with any Person other than Purchaser with respect to a sale of all or any substantial portion of a Seller, the Business or the Assets, any joint venture, any sale of equity ownership of a Seller or any other business arrangement, amalgamation, merger or otherwise (an “ Acquisition Transaction ”). Each Seller shall, and shall cause each of its stockholders, members, officers, directors, managers and agents to, immediately discontinue any ongoing discussions or negotiations with any Person (other than Purchaser) relating to a possible Acquisition Transaction.

SECTION 7.2

Conduct of the Business Pending the Closing

(a)

Prior to the Closing, except as required by applicable Law, as otherwise contemplated by this Agreement or with the prior written consent of Purchaser, each Seller shall operate only in the Ordinary Course of Business and shall use its commercially reasonable best efforts to maintain satisfactory relationships with suppliers, customers and others having material business relationships with it in respect of the Business.

(b)

Without limiting the generality of the foregoing, except as required by applicable Law, as otherwise contemplated by this Agreement or with the prior written consent of Purchaser, neither Seller shall:

Exhibit 2.1

(i)

subject any of the Assets to any Lien, except for Permitted Exceptions;

(ii)

dispose of or permit to lapse any ownership and/or right to the use of any Proprietary Rights or other Intellectual Property or enter into any Contract relating to the research, development or license of any Intellectual Property;

(iii)

enter into any collective bargaining agreement with respect to Seller’s employees or increase or enhance the compensation or benefits of employees other than in the Ordinary Course of Business;

(iv)

sell, transfer, lease or license any of the Assets to any Person except in the Ordinary Course of Business;

(v)

enter into any new Contract, renew, extend or modify any existing Contract, terminate or fail to renew any existing Contract, in each case relating to the Business or the Products;

(vi)

fail to maintain insurance coverage for the Business at levels consistent with presently existing levels;

(vii)

market or distribute Products at prices at a material discount to Seller’s historical pricing for such marketing and distribution of Products;

(viii)

take any action that would reasonably be expected to cause any of the representations and warranties of a Seller set forth in this Agreement not to be true and correct as of the date of such action or as of the Closing or otherwise prevent, materially delay or materially impede the consummation of the transactions contemplated herein; or

(ix)

authorize any of, or commit or agree to do, anything prohibited by this Section 7.2 .

SECTION 7.3

Consents

. Each Seller shall use commercially reasonable efforts to obtain at the earliest practicable date all consents and approvals required to consummate the transactions contemplated by this Agreement.

SECTION 7.4

Further Assurances

. Each party hereto shall use commercially reasonable efforts to (i) take all actions necessary or appropriate to consummate the transactions contemplated by this Agreement and (ii) cause the fulfillment at the earliest practicable date of all of the conditions to their respective obligations to consummate the transactions contemplated by this Agreement. Purchaser and each Seller shall use commercially reasonable efforts to cause the Closing to occur. Each of Purchaser and each Seller shall not, and shall not permit any of their respective Affiliates to, take any action that would, or that would reasonably be expected to, result in any of the conditions set forth in Article VIII not being satisfied. From and after the Closing, the parties shall execute and deliver, or cause to be executed and delivered, such other instruments and take, or cause to be taken, such other action as may be reasonably necessary or desirable to effectuate the transactions contemplated by this Agreement.

Exhibit 2.1

SECTION 7.5

Confidentiality

. Each party hereto acknowledges and in the case of VTI agrees that the information provided to it in connection with this Agreement and the transactions contemplated hereby are subject to the terms of the confidentiality agreement between Purchaser and SOAdesk dated May 19, 2009 (the “ Confidentiality Agreement ”), the terms of which are incorporated herein by reference. Upon the Closing, all confidential or proprietary information related to the Business, whether or not disclosed to Purchaser, shall be and become the property of Purchaser, and thereafter shall not be used or disclosed by a Seller for any purpose whatsoever, without the prior written consent of Purchaser.

SECTION 7.6

Publicity

. Neither a Seller nor Purchaser shall issue any press release, public announcement or other disclosure of information concerning this Agreement or the transactions contemplated hereby without obtaining the prior written approval of Purchaser, on the one hand, or a Seller, on the other hand, which approval will not be unreasonably withheld, unless, in the judgment of a Seller or Purchaser, disclosure is otherwise required by applicable Law or by the applicable rules of any stock exchange or market on which Purchaser lists securities, provided that, to the extent required by applicable Law, the party intending to make such release shall use its commercially reasonable efforts consistent with applicable Law to consult with the other party with respect to the text thereof. Sellers and Purchaser agree that the initial press release to be issued in connection with the transactions contemplated hereby shall be in a form mutually agreed by them.

SECTION 7.7

Employment and Employee Benefits .

(a)

Purchaser shall offer at-will employment to each employee who is actively employed in the Business, which in its sole discretion it desires to retain as described to Sellers, contingent upon the Closing and subject to proof evidencing a legal right to work within the United States and Purchaser’s standard conditions of employment for such personnel (including the entry into of standard agreements with respect to confidentiality and assignment of inventions). An employee shall be considered “actively employed” if they are (A) actively employed in the Business on the Closing Date, including employees on vacation and employees on a regularly scheduled day off from work, as well as employees on temporary leave for purposes of jury or annual two-week national service/military duty, (B) on a nonmedical leave of absence from the Business (for purposes of the foregoing, nonmedical leave of absence shall include maternity or paternity leave, leave under the Family and Medical Leave Act of 1993, educational leave, military leave with veteran’s reemployment rights under federal Law, or personal leave, unless any of such is determined to be a medical leave), or (C) on disability or medical leave and for whom it has been ninety (90) calendar days or less since their last day of active employment. Employees who accept such offers shall become employees of Purchaser (“ Transferred Employees ”) on the later of the Closing Date or the date the individual first reports to work for Purchaser. Each Seller shall terminate the employment of all Transferred Employees effective on the Closing Date, and shall have and retain exclusive liability and responsibility for benefits due and payable to or in respect of, or accrued with respect to, all such Transferred Employees and all other employees and participants and other beneficiaries under all Employee Benefit Plans and other benefit and welfare plans, and for all salary and bonus expenses, reimbursements, holiday, vacation, personal and sick days accrued prior to the Closing Date, and employee benefits and expenses, including retirement and separation payments, associated with termination. Purchaser’s offers of employment described above shall provide each Transferred

Exhibit 2.1

Employee, so long as such Transferred Employee remains employed by Purchaser, for a period of twelve (12) months immediately following the Closing Date with employee benefit plans, programs, contracts and arrangements that are no less favorable, in the aggregate, than similar employee benefit plans, programs, contracts and arrangements provided by Purchaser to its United States employees similarly situated prior to the Closing Date (excluding for this purpose, such employees who may be a party to an employment agreement with, or subject to collective bargaining arrangements, union rules or other unique or limited situations relating to, Purchaser or its Affiliates).

(b)

Notwithstanding the foregoing, at the Closing, Purchaser and the Specified Employees shall enter into Executive Employment Agreements, in form and substance reasonably satisfactory to Purchaser and the applicable Specified Employee, and such Persons shall continue to provide executive services to Purchaser in connection with the operation of the Business as provided in the applicable Executive Employment Agreement, free of any non-competition, non-solicitation or similar obligations with any Seller or third party.

(c)

Notwithstanding anything to the contrary contained in this Agreement, Sellers shall be liable (and jointly and severally shall indemnify Purchaser) for any and all liabilities and obligations relating to any and all employees who do not accept Purchaser’s offer of employment, and any plan employees who are not Transferred Employees, including any and all liabilities and obligations under any Law (including any termination Law) and under any and all compensation and benefit plans, agreements and arrangements (including those of a Seller or to which a Seller may be subject under Law, and including any severance plan, agreement or arrangement).

(d)

To the extent certain employees (“ DC Participants ”) are participants in a 401(k) Plan of a Seller (“ Seller’s DC Plan ”), all account balances of such DC Participants under such Seller’s DC Plan will remain the liability of Seller’s DC Plan after the Closing Date and no assets of Seller’s DC Plan will be transferred in connection with the transaction contemplated hereby. All account balances of DC Participants under Seller’s DC Plan shall, as of the Closing Date, be treated as provided in Seller’s DC Plan. In any such case where distribution is available, promptly following the Closing Date under Seller’s DC Plan, Purchaser and Sellers shall reasonably cooperate to facilitate the direct rollover of distributions due Transferred Employees (including among the assets transferred, promissory notes evidencing loans to participants in Seller’s 401(k) Plan), where elected by a Transferred Employee, to any defined contribution plan intended to qualify under Section 401(a) of the Code of or adopted by Purchaser or an Affiliate thereof, provided any such plan shall not be required to accept any distribution not in the form of cash or the distributee’s promissory note. In no event shall Purchaser or any Purchaser Affiliate have or retain any liability with respect to any Employee Benefit Plan for any contribution due or payable, or arising out of any period or accruing, on or prior to the Closing Date or any benefit accrued prior to the Closing Date with respect to any employees.

(e)

The provisions of this Section 7.7 , are for the sole benefit of Sellers and Purchaser, and are not for the benefit of any third parties. Nothing contained in this Agreement, whether expressed or implied, is intended to confer upon any employee or any Transferred Employee any benefits or the right to employment or continued employment with Purchaser or

Exhibit 2.1

its Affiliates for any period by reason of this Agreement. Nothing in this Agreement shall constitute an amendment to any employee benefit plan.

SECTION 7.8

Use of Seller Names

. Purchaser is purchasing, the Assets include, and the Ancillary Agreements shall convey to Purchaser, all rights in and to all names used in the Business, and therefore none of a Seller or its Affiliates shall be entitled to use any names used in the Business prior to Closing, or any abbreviation, derivation or variation thereof, in or for the name or title of any entity, trade, product or business anywhere in the world from and after the Closing. SOAdesk shall, simultaneously with the Closing, undertake and promptly pursue all necessary action to change its business and corporate names, including Internet domain names, to new names bearing no resemblance to any of its present names so as to permit the use of such names by Purchaser. Without limiting the foregoing, at the Closing, each Seller will deliver to Purchaser such documents as Purchaser shall reasonably request to effectuate the foregoing.

SECTION 7.9

Non-competition; Non-solicitation .

(a)

Each of the parties acknowledges that the covenants and agreements in this Section 7.9 are conditions precedent to Purchaser’s obligations to consummate the transactions contemplated by this Agreement and the other Ancillary Agreements, and that Purchaser would not enter into the transactions contemplated by this Agreement and the other Ancillary Agreements but for the agreements of Sellers with Purchaser in this Section 7.9 . Sellers acknowledges that from and after the Closing Date, Purchaser and its Affiliates will sell Products to customers located in markets throughout the Territory and that engagement by a Seller in the activities restricted by this Section 7.9 during the applicable periods anywhere in the Territory other than for the benefit of Purchaser or any of its Affiliates could cause Purchaser or any of its Affiliates irreparable damage.

(b)

Subject to the provisions of this Section 7.9 , each Seller agrees that for a period of five (5) years from the Closing Date, neither it nor any Specified Employee or Affiliates, as a director, officer, employee, investor, lender, consultant or in any other capacity, shall, directly or indirectly (A) engage (including as a director, officer, employee, investor, lender, consultant or in any other capacity with respect to an entity that engages in whole or in part) in any business that is substantially similar to the Business or that competes with the Business, or develops, manufactures, markets or sells any product that is or would be competitive with, or a substitute for, or includes features, functionality, structure or architecture substantially similar to, any of the Products, anywhere in the Territory, (B) hire, including as a director, officer, employee, investor, lender, consultant or in any other capacity, any current employee of a Seller other than such employees who are not offered employment by Purchaser or whose employment with Purchaser has been terminated by Purchaser for reasons other than the conduct of the employee consisting of: (i) improper performance or nonperformance of the employee’s duties and responsibilities that is not cured within a reasonable time after written notice from Purchaser, (ii) engaging in willful misconduct, including fraud or intentional misrepresentation, (iii) engaging in dishonest activity or conviction of, or pleading guilty or nolo contendere to, any felony or a misdemeanor involving fraud, deceit, moral turpitude or unethical business conduct, (iv) habitual alcohol or drug abuse that continues after written notice from Purchaser, which abuse has (a) had an adverse effect on such employee’s productivity or ability to carry out his duties to Purchaser,

Exhibit 2.1

(b) jeopardized the safety of any other employee of Purchaser or any person having business relations with Purchaser, (c) damaged the reputation of Purchaser, or (d) endangered Purchaser’s ability to compete for business, (v) material breach of the terms of such employee’s employment agreement with Purchaser, policies or the code of conduct or regulations promulgated by the Board of Directors of Purchaser, or any invention assignment, confidentiality, non-solicitation or non-competition agreement to which such employee is a party, which breach is not cured within a reasonable time after written notice from Purchaser, or (vi) the commission of any other act materially detrimental to the business or reputation of Purchaser (each of the foregoing clauses (i) through (vi), “ Cause ”), (C) induce or attempt to induce, any director, officer, employee, representative or agent of Purchaser or any of its Affiliates engaged in the manufacture, storage, distribution or sale of the Products to leave the employ of Purchaser or any such Affiliate, or violate the terms of their contracts, or any employment arrangements, with Purchaser or any such Affiliate, or (D) solicit or divert or attempt to solicit or divert any current or former customer of a Seller; provided , however , that it shall not be deemed to be a violation of this subsection (b) for Sellers and their Affiliates to invest in securities having less than one percent (1%) of the outstanding voting power of the entity set forth on Schedule 7.9(b) and any Person, the securities of which are publicly traded or listed on any securities exchange or automated quotation system; provided , further , that in the event a Specified Employee is terminated by Purchaser without Cause, the restrictions set forth in this Section 7.9(b)(A) with respect to such Specified Employee shall cease after a period of one (1) year from the date of such termination or five (5) years after the date of Closing whichever is earlier (so long as Purchaser shall have made the payment required to be made pursuant to Section 3.1(c) of this Agreement and, if Purchaser shall not have made such payment, such restrictions shall cease after a period of six (6) months from the date of such termination or five (5) years after the date of Closing whichever is earlier); provided further that the restrictions set forth in Section 7.9(b)(A) shall terminate immediately with respect to a Specified Employee if Purchaser fails to make any required severance payments payable to such Specified Employee within thirty (30) days after written notice that such severance payment obligation has arisen and not been paid.

(c)

Sellers and Purchaser acknowledge that this Section 7.9 constitutes an independent covenant and shall not be affected by performance or nonperformance of any other provision of this Agreement. Each Sellers and Purchaser has independently consulted with its counsel and after such consultation agrees that the covenants set forth in this Section 7.9 are reasonable and proper. It is the desire and intent of the parties that the provisions of this Section 7.9 shall be enforced to the fullest extent permissible under applicable Law. If all or part of this Section 7.9 is held invalid, illegal or incapable of being enforced by any Law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect. Each of the parties agrees that in the event of a breach by a party of the provisions of this Section 7.9 , money damages would not be an adequate remedy and that the other party shall be entitled to seek temporary, preliminary or permanent injunctive relief without the necessity of proving damages or posting a bond. If any part of this Section 7.9 is held to be excessively broad as to duration, scope, activity or subject, such part will be construed by limiting and reducing it so as to be enforceable to the maximum extent compatible with applicable Law.

SECTION 7.10

Information and Documents

. From and after the date hereof and pending the Closing, upon reasonable advance notice, each Seller shall permit Purchaser and its representatives to have access, during regular business hours, to the assets,

Exhibit 2.1

employees, books and records of such Seller, and shall furnish, or cause to be furnished, to Purchaser, such financial, Tax and operating data and other available information with respect to the Business as Purchaser shall from time to time reasonably request; provided , that no such access shall unreasonably interfere with such Seller’s operation of its businesses; provided further , that, prior to the Closing, all information received by Purchaser and given by or on behalf of a Seller in connection with this Agreement and the transactions contemplated hereby will to the extent permitted under applicable Law, be held in confidence by Purchaser and its Affiliates, agents and representatives and will not be disclosed to any other Persons without the prior consent of such Seller (provided that the foregoing obligation of non-disclosure shall not apply to any information which prior to or after the time of disclosure, becomes generally available to the public, not as a result of any act or omission by Purchaser or its Affiliates, agents and representatives).

SECTION 7.11

Accounts Receivable

. From and after the Closing, all accounts receivable included in the Assets received by a Seller or any of its Affiliates shall be remitted and/or delivered to Purchaser in the form received on a bi-weekly basis.

SECTION 7.12

Warranty Work Reimbursement

. Sellers hereby agree, jointly and severally, to promptly reimburse Purchaser at the rate of $100/hour for all services performed after the Closing Date by any Purchaser employees or consultants (including Transferred Employees) in connection with any warranty work. Such reimbursement amount shall be paid by Sellers within thirty (30) days after Purchaser delivers a statement to Sellers detailing the number of hours of such warranty work performed by Purchaser’s employees and/or consultants along with any other reasonably necessary supporting evidence. Any payment required under this Section 7.12 and not made within thirty (30) days of deliver of such statement shall bear interest at the rate per annum determined under the provisions of Section 6621(a)(2) of the Code for each day until paid.

SECTION 7.13

Reimbursement for Payment of Excluded Liabilities by Purchaser

. Sellers hereby agree, jointly and severally, to reimburse Purchaser in full in connection with Purchaser’s payment (after the Closing Date) of any accounts payable or other liabilities of a Seller that are not Assumed Liabilities. In the event that a Seller receives written notice from Purchaser detailing the non-payment of any accounts payable or other liabilities of a Seller that are not Assumed Liabilities, Sellers shall remit payment to Purchaser within thirty (30) days of receipt of notice of an unpaid account payable or contest in good faith such amount. If Sellers fail to respond within thirty (30) days of receipt of such notice and Purchaser pay such account payable on behalf of Sellers, Sellers must promptly reimburse Purchaser in cash for such amounts within ten (10) days of Purchaser’s written notice to Sellers detailing the account(s) payable and the total amounts paid together with any other reasonably necessary supporting evidence. Any payment required under this Section 7.13 and not made within 10 days of delivery of the statement shall bear interest at the rate per annum determined under the provisions of Section 6621(a)(2) of the Code for each day until paid.

SECTION 7.14

Board Appointment Right

. Following the Closing, SOAdesk shall have the right to appoint one (1) individual to serve on the Board of Directors of Purchaser for a single one (1) year term, subject to renewal by the affirmative vote of

Exhibit 2.1

Purchaser’s shareholders in accordance with Purchaser’s Certificate of Incorporation and Bylaws.

ARTICLE VIII
CONDITIONS TO CLOSING; CLOSING DELIVERIES

SECTION 8.1

Conditions Precedent to Obligations of Purchaser

. The obligation of Purchaser to consummate the transactions contemplated by this Agreement is subject to the fulfillment, prior to or on the Closing Date, of each of the following conditions (any or all of which may be waived by Purchaser in whole or in part to the extent permitted by applicable Law):

(a)

each of the representations and warranties of a Seller contained in this Agreement that are not qualified by materiality or Material Adverse Effect, shall be true and correct in all material respects as of the Closing Date as if made on and as of the Closing Date (or, if given as of a specific date, at and as of such date), and if qualified by materiality or Material Adverse Effect, shall be true and correct in all respects as of the Closing Date as if made on and as of the Closing Date (or, if given as of a specific date, at and as of such date);

(b)

each Seller shall have performed and complied in all material respects with all obligations and agreements required by this Agreement to be performed or complied with by it on or prior to the Closing Date;

(c)

there shall not have occurred a Material Adverse Effect;

(d)

each Seller shall have delivered to Purchaser in writing, at and as of the Closing Date, a certificate duly executed by such Seller, in form and substance reasonably satisfactory to Purchaser and its counsel, certifying that the conditions in each of Sections 8.1(a) , (b) and (c) have been satisfied;

(e)

there shall not be in effect any Order by a Governmental Body of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby;

(f)

all Required Consents set forth on Schedule 8.1(f) shall have been obtained or made on terms and conditions reasonably satisfactory to Purchaser; provided , that with the mutual approval of Purchaser and a Seller and without waiving any rights under Section 4.2 , Purchaser shall be entitled to characterize any Contract or Permit as a Nonassignable Contract;

(g)

all consents, approvals, Orders or authorizations of, or registrations, declarations or filings with, any Governmental Body required in connection with the execution, delivery or performance hereof and the transfer of all Permits shall have been obtained or made on terms and conditions reasonably satisfactory to Purchaser;

(h)

Sellers shall have delivered the Estimated Net Working Capital Statement;

(i)

each Seller shall have made each of the closing deliveries set forth in Section 8.3 to Purchaser; and

Exhibit 2.1

(j)

Sellers shall have cooperated fully with Purchaser prior to the Closing Date in preparing for a seamless transition of operational responsibility for the Business from Sellers to Purchaser commencing on the Closing Date.

SECTION 8.2

Conditions Precedent to Obligations of Sellers

. The obligations of Sellers to consummate the transactions contemplated by this Agreement are subject to the fulfillment, prior to or on the Closing Date, of each of the following conditions (any or all of which may be waived by a Seller in whole or in part to the extent permitted by applicable Law):

(a)

each of the representations and warranties of Purchaser contained in this Agreement that are not qualified by materiality or Material Adverse Effect, shall be true and correct in all material respects as of the Closing Date as if made on and as of the Closing Date (or, if given as of a specific date, at and as of such date), and if qualified by materiality or Material Adverse Effect, shall be true and correct in all respects as of the Closing Date as if made on and as of the Closing Date (or, if given as of a specific date, at and as of such date);

(b)

Purchaser shall have performed and complied in all material respects with all obligations and covenants required by this Agreement to be performed or complied with by Purchaser on or prior to the Closing Date;

(c)

Purchaser shall have delivered to Sellers in writing, at and as of the Closing Date, a certificate duly executed by Purchaser, in form and substance reasonably satisfactory to Sellers and their counsel, certifying that the conditions in each of Sections 8.2(a) and (b) have been satisfied;

(d)

there shall not be in effect any Order by a Governmental Body of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby;

(e)

all consents, approvals, Orders or authorizations of, or registrations, declarations or filings with, any Governmental Body required in connection with the execution, delivery or performance hereof shall have been obtained or made on terms and conditions reasonably satisfactory to Sellers; and

(f)

Purchaser shall have made each of the closing deliveries set forth in Section 8.4 to Seller.

SECTION 8.3

Sellers’ Closing Deliveries

. At the Closing, Sellers shall deliver to Purchaser the following:

(a)

the Bill of Sale and Assignment, duly executed by Sellers, and Sellers shall duly execute and deliver, or cause to be duly executed and delivered, to Purchaser such other deeds, bills of sale, certificates of title and other instruments of assignment or transfer with respect to the Assets as Purchaser may reasonably request and as may be necessary to vest in Purchaser’s title to all of the Assets as herein provided, in each case subject to no Lien except for Permitted Exceptions;

Exhibit 2.1

(b)

the Executive Employment Agreements, duly executed by the applicable employees of Sellers party thereto;

(c)

the Non-Solicitation and Non-Competition Agreements, duly executed by the applicable employees of Sellers party thereto;

(d)

such documents as Purchaser shall require to effect the transfer of all Proprietary Rights of Sellers, in a form acceptable to Purchaser;

(e)

a copy of the current version of Source Code for all Seller Software;

(f)

the Employee Agreements shall be assigned and transferred to Purchaser or an Affiliate by written documents reasonably satisfactory to Purchaser and its counsel;

(g)

the resignations of each of the Specified Employees as an officer, employee and consultant to each of the Sellers, duly accepted by each Seller;

(h)

the Lease Assignment, duly executed by VTI and acknowledged by SOAdesk; and

(i)

all such other documents and instruments as are to be delivered by it at the Closing pursuant to this Agreement or as Purchaser and its counsel may reasonably request in connection with the consummation of the transaction contemplated hereby.

SECTION 8.4

Purchaser’s Closing Deliveries

. At the Closing, Purchaser shall deliver to Seller the following:

(a)

the Closing Date Payment, adjusted to take into account the Estimated Closing Net Working Capital Adjustment pursuant to Section 3.4 , if any;

(b)

the Short Term Convertible Note, duly executed by Purchaser;

(c)

the Stock-Payable Convertible Note, duly executed by Purchaser;

(d)

an executed copy of the Assumption Agreement, and Purchaser shall duly execute and deliver to Sellers such other instruments of assumption with respect to the Assumed Obligations as Sellers may reasonably request;

(e)

the Executive Employment Agreements, duly executed by Purchaser; and

(f)

a sublease from Purchaser to VTI with respect to an office for Brian Leslie within the Leased Real Property, duly executed by Purchaser, in form and substance reasonably satisfactory to Purchaser, Sellers and their counsel.

SECTION 8.5

Frustration of Closing Conditions

. Neither Sellers nor Purchaser may rely on the failure of any condition set forth in Sections 8.1 or 8.2 , as the case may be, if such failure was caused by such parties’ or party’s failure to use its reasonable best efforts to comply with any provision of this Agreement.

Exhibit 2.1

ARTICLE IX
INDEMNIFICATION

SECTION 9.1

Indemnification Obligations of Sellers

. Sellers, jointly and severally, shall indemnify, defend and hold harmless the Purchaser Indemnified Parties from, against, and in respect of, any and all claims, causes of actions, liabilities, obligations, damages, losses, costs, expenses, penalties, fines, or judgments and awards (at equity or at law, including statutory and common) and damages whenever arising or incurred (including amounts paid in settlement, costs of investigation and reasonable attorneys’ fees and expenses), or any diminution in value (collectively, “ Losses ” for purposes of this Agreement, including both Sections 9.1 and 9.2 ) arising out of or relating to:

(a)

any Excluded Liabilities;

(b)

any breach or inaccuracy of any representation or warranty made by a Seller in this Agreement or in any of the Ancillary Agreements whether such representation and warranty is made as of the date hereof or as of the Closing Date;

(c)

any breach of any covenant, agreement or undertaking made by a Seller in this Agreement or in any Ancillary Agreement; or

(d)

any liabilities under any applicable “bulk sales” laws with respect to the sale and transfer of Assets.

The Losses of the Purchaser Indemnified Parties described in this Section 9.1 as to which the Purchaser Indemnified Parties are entitled to indemnification are collectively referred to as “ Purchaser Losses ”.

SECTION 9.2

Indemnification Obligations of Purchaser

. Purchaser shall indemnify and hold harmless the Seller Indemnified Parties from, against and in respect of any and all Losses arising out of or relating to:

(a)

the Assumed Liabilities;

(b)

any breach or inaccuracy of any representation or warranty made by Purchaser in this Agreement whether such representation or warranty is made as of the date hereof or as of the Closing Date; or

(c)

any breach of any covenant, agreement or undertaking made by Purchaser in this Agreement or in any Ancillary Agreement.

The Losses of the Seller Indemnified Parties described in this Section 9.2 as to which the Seller Indemnified Parties are entitled to indemnification are collectively referred to as “ Seller Losses ”.

SECTION 9.3

Indemnification Procedure .

(a)

Promptly following receipt by an Indemnified Party of notice by a third party (including any Governmental Body) of any complaint, dispute or claim or the commencement of

Exhibit 2.1

any audit, investigation, action or proceeding with respect to which such Indemnified Party may be entitled to receive payment from the other party for any Purchaser Losses or any Seller Losses (as the case may be), such Indemnified Party shall provide written notice thereof to Purchaser or Seller, as the case may be (the “ Indemnifying Party ”), provided , however , that the failure to so notify the Indemnifying Party shall not relieve the Indemnifying Party from liability hereunder with respect to such claim only, except only to the extent that the Indemnifying Party shall have been prejudiced thereby. The Indemnifying Party shall have the right, upon written notice delivered to the Indemnified Party within twenty (20) days thereafter assuming full responsibility for any Purchaser Losses or Seller Losses (as the case may be) resulting from such audit, investigation, action or proceeding, to assume the defense of such audit, investigation, action or proceeding, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of the fees and disbursements of such counsel. In the event, however, that the Indemnifying Party declines or fails to assume the defense of the audit, investigation, action or proceeding on the terms provided above or to employ counsel reasonably satisfactory to the Indemnified Party, in either case within such twenty (20) day period, then any Purchaser Losses or any Seller Losses (as the case may be), shall include the reasonable fees and disbursements of counsel for the Indemnified Party as incurred. In any audit, investigation, action or proceeding for which indemnification is being sought hereunder the Indemnified Party or the Indemnifying Party, whichever is not assuming the defense of such action, shall have the right to participate in such matter and to retain its own counsel at such party’s own expense. The Indemnifying Party or the Indemnified Party (as the case may be) shall at all times use reasonable efforts to keep the Indemnifying Party or Indemnified Party (as the case may be) reasonably apprised of the status of the defense of any matter the defense of which it is maintaining and to cooperate in good faith with each other with respect to the defense of any such matter.

(b)

No Indemnified Party may settle or compromise any claim or consent to the entry of any judgment with respect to which indemnification is being sought hereunder without the prior written consent of the Indemnifying Party (which may not be unreasonably withheld or delayed), unless (i) the Indemnifying Party fails to assume and maintain the defense of such claim pursuant to Section 9.3(a) or (ii) such settlement, compromise or consent includes an unconditional release of the Indemnifying Party and its officers, directors, employees and Affiliates from all liability arising out of, or related to, such claim. An Indemnifying Party may not, without the prior written consent of the Indemnified Party, settle or compromise any claim or consent to the entry of any judgment with respect to which indemnification is being sought hereunder unless such settlement, compromise or consent (x) includes an unconditional release of the Indemnified Party and its officers, directors, employees and Affiliates from all liability arising out of, or related to, such claim, (y) does not contain any admission or statement suggesting any wrongdoing or liability on behalf of the Indemnified Party and (z) involves only the payment of money damages by the Indemnifying Party and does not contain any equitable order, judgment or term that in any manner affects, restrains or interferes with the business of the Indemnified Party or any of the Indemnified Party’s Affiliates.

(c)

In the event an Indemnified Party claims a right to payment pursuant hereto, such Indemnified Party shall send written notice of such claim to the appropriate Indemnifying Party (a “ Notice of Claim ”). Such Notice of Claim shall specify the basis for such claim in reasonable detail. The failure by any Indemnified Party so to notify the Indemnifying Party shall not relieve the Indemnifying Party from any liability that it may have to such Indemnified Party with respect

Exhibit 2.1

to any claim made pursuant to this Section 9.3(c) , it being understood that notices for claims in respect of a breach of a representation or warranty must be delivered prior to the expiration of the survival period for such representation or warranty under Section 9.4 . In the event the Indemnifying Party does not notify the Indemnified Party within thirty (30) days following its receipt of such notice that the Indemnifying Party disputes its liability to the Indemnified Party under this Article or the amount thereof, the claim specified by the Indemnified Party in such Notice of Claim shall be conclusively deemed a liability of the Indemnifying Party under this Article IX , and the Indemnifying Party shall pay the amount of such liability to the Indemnified Party on demand or, in the case of any notice in which the amount of the claim (or any portion of the claim) is estimated, on such later date when the amount of such claim (or such portion of such claim) becomes finally determined. In the event the Indemnifying Party has timely disputed its liability with respect to such claim as provided above, as promptly as possible, such Indemnified Party and the appropriate Indemnifying Party shall establish the merits and amount of such claim (by mutual agreement, litigation, arbitration or otherwise) and, within five (5) Business Days following the final determination of the merits and amount of such claim, the Indemnifying Party shall pay to the Indemnified Party immediately available funds in an amount equal to such claim as determined hereunder. The unpaid balance of a liquidated claim shall bear interest at the rate of five percent (5%) per annum from the date thirty (30) days after written Notice of Claim thereof is given by an Indemnified Party to an Indemnifying Party pursuant hereto.

SECTION 9.4

Survival Period

. The representations and warranties of the parties contained herein shall not be extinguished by the Closing, but shall survive the Closing until, and all claims for indemnification in connection therewith shall be asserted not later than twenty-four (24) months following the Closing Date, except that the representations and warranties contained in Sections 5.1 (Organization and Good Standing), 5.2 (Authorization), 5.3 (Conflicts; Consents of Third Parties), 5.7 (Sufficiency), 5.16 (Brokers, Finders and Investment Bankers), 5.21 (Transactions With Affiliates; Sharing of Assets; Continuity of Operations), 5.26 (Purchase Entirely for Own Account), 5.28 (Restricted Securities) and 5.29 (Legend) (collectively, the “ Specified Representations ”) and indemnification in connection therewith shall survive the Closing without limitation. The covenants and agreements of the parties hereunder shall survive without limitation as to time, and nothing contained herein shall limit the period during which a claim for indemnification may be asserted in connection therewith. Notwithstanding the foregoing, if, prior to the close of business on the last day a claim for indemnification may be asserted hereunder, an Indemnifying Party shall have been properly notified of a claim for indemnity hereunder and such claim shall not have been finally resolved or disposed of at such date, such claim shall continue to survive and shall remain a basis for indemnity hereunder until such claim is finally resolved or disposed of in accordance with the terms hereof.

SECTION 9.5

Liability Limits .

(a)

Notwithstanding anything to the contrary set forth herein, the Purchaser Indemnified Parties shall not make a claim against Sellers for indemnification under Section 9.1(a) for Purchaser Losses unless and until the aggregate amount of such Purchaser Losses exceeds on a cumulative basis $50,000) (the “ Purchaser Liability Cushion ”), in which event the Purchaser Indemnified Parties may claim indemnification for all Purchaser Losses and

Exhibit 2.1

not merely the portion of such Losses in excess of $50,000; provided , that Purchaser Losses arising out of (i) any of the Specified Representations, (ii) any Excluded Liability, (iii) any breach of any covenant, obligation or undertaking of a Seller in this Agreement (including, without limitation, those to be performed or which arise after the Closing), (iv) any claim arising out of or based on fraud or intentional misrepresentation by a Seller, and (v) in each case claims for indemnification made thereunder (collectively, all such Purchaser Losses referred to in this proviso being referred to as “ Non-Deductible Claims ”), shall, subject to the provisions of Section 9.5(b) , be indemnified in their entirety by the Indemnifying Party and shall not be subject to the limitations set forth in this Section 9.5 . The Non-Deductible Claims will not count towards or reduce the Purchaser Liability Cushion.

(b)

The total aggregate amount of the liability of Sellers for Purchaser Losses with respect to any claims made pursuant to Section 9.1(b) (other than Non-Deductible Claims) shall be limited to the Purchase Price paid and payable as of the end of the Enterprise Earn-Out Period. The foregoing limitation on indemnification in this Section 9.5(b) shall not apply to any indemnification claim (i) arising from any circumstance of which a Seller had Knowledge on or prior to the Closing Date or (ii) involving fraud, willful concealment or the commission of any crime by a Seller.

(c)

The parties agree that with respect to any representation or warranty, if such representation or warranty contains a materiality qualification (e.g., “material,” “materially,” “material to the Business,” “in all material respects,” “Material Adverse Effect,” or similar qualifiers), then solely for purposes of this Article IX, the threshold for determining whether a breach of such representation or warranty has occurred, individually or in the aggregate together with any breaches of any other representations and warranties (whether or not such representations and warranties contain materiality qualifications), shall be Purchaser Losses in excess of the Purchaser Liability Cushion (without separately giving effect to any such materiality qualification).

SECTION 9.6

Set-Off

. In addition to any rights that Purchaser may have at common law or otherwise, Purchaser may set off against and reduce amounts or shares otherwise payable to one or both Sellers under this Agreement to satisfy the amount of (i) any pending or outstanding unsatisfied indemnification claim of a Purchaser Indemnified Party against a Seller under this Article IX, (b) any unpaid obligations of Sellers pursuant to the Net Working Capital Adjustment (as set forth in Section 3.4 of this Agreement) or (c) any unpaid or unresolved obligations of Sellers pursuant to Sections 7.12 and 7.13 ; provided that such set-off shall be limited to the exact amount of such indemnification claims and/or specified unpaid amounts; and provided , further , that Purchaser shall satisfy such offset rights equally against cash and shares of Purchaser Common Stock owed to one or both Sellers to satisfy such off-set right to the extent of such cash and shares of Purchaser Common Stock and thereafter against such of the cash or shares of Purchaser Common Stock as shall be remaining. In the event of the exercise of a set-off right against shares of Purchaser Common Stock, each such share shall be valued at $0.17 (subject to adjustment for stock splits, combinations and the like). The exercise of such right of set-off by Purchaser, in good faith, whether or not ultimately determined to be justified, shall not constitute a breach of this Agreement. Purchaser shall exercise its right of set-off hereunder to the extent available prior to seeking to recover any amount from Sellers pursuant to this Agreement.

Exhibit 2.1

SECTION 9.7

Exclusive Remedy

. Following the Closing, the indemnities provided in this Article IX shall constitute the sole and exclusive remedy of any Indemnified Party for damages arising out of, resulting from or incurred in connection with any claims related to this Agreement or arising out of the transactions contemplated hereby (other than Non-Deductible Claims); provided , however , that this exclusive remedy for damages does not preclude a party from bringing an action for specific performance or other equitable remedy to require a party to perform its obligations under this Agreement or any agreement entered into in connection herewith, including the Ancillary Agreements; and provided , further , that this Section 9.7 shall not affect any adjustments to the Purchase Price contemplated by Article III, and that the parties do not waive and expressly reserve all fraud claims against the other party (by way of a lawsuit, cross-claim or otherwise).

ARTICLE X
MISCELLANEOUS

SECTION 10.1

Payment of Sales, Use or Similar Taxes

. All sales, use, transfer, intellectual property, recordation, documentary stamp or similar taxes or charges, of any nature whatsoever, applicable to, or resulting from, the transactions contemplated by this Agreement shall be borne equally by Purchaser, on the one hand, and Sellers, on the other hand, and the parties shall use commercially reasonable efforts and shall cooperate with the other to minimize the amount of any such taxes.

SECTION 10.2

Expenses

. Whether or not the transactions contemplated hereby are consummated, and except as otherwise provided in this Agreement, the parties shall bear their own expenses incurred in connection with the negotiation and execution of this Agreement and each other agreement, document and instrument contemplated by this Agreement and the consummation of the transactions contemplated hereby and thereby.

SECTION 10.3

Arbitration

. All disputes and controversies of every kind and nature between the parties hereto arising out of or in connection with the Agreement (except as set forth in Sections 3.2, 3.5, 9.3 and 10.11) as to the construction, validity, interpretation or meaning, performance, non-performance, enforcement, operation, or breach, shall be submitted to arbitration pursuant to the following procedures:

(a)

After a dispute or controversy arises, either party may, in a written notice delivered to the other party, demand such arbitration.

(b)

Within 30 days after receipt of such demand, the parties shall agree upon an arbitrator. If they are unable to agree, then the arbitrator shall be named by the American Arbitration Association (“ AAA ”).

(c)

The arbitration hearing shall be held in Charlotte, North Carolina. The Commercial Arbitration Rule of the AAA shall be used and the substantive laws of the State of New York (excluding conflict of laws provisions) shall apply.

(d)

The arbitration hearing shall be concluded within ten days unless otherwise ordered by the arbitrator and the award thereon shall be made within fifteen days after the close of submission of evidence. An award rendered by the arbitrator shall be final and binding on all

Exhibit 2.1

parties to the proceeding, shall deal with the question of costs of the arbitration and all related matters, and judgment on such award may be entered by either party in a court of competent jurisdiction.

(e)

The parties stipulate that the provisions of this Section shall be a complete defense to any suit, action or proceeding instituted in any federal, state, or local court or before any administrative tribunal with respect to any controversy or dispute arising out of this Agreement. Nothing in this Section 10.3 shall in any way diminish or alter Purchaser’s set-off rights provided in Section 9.6.

SECTION 10.4

Entire Agreement; Amendments and Waivers

. This Agreement (including the Seller Disclosure Schedules and exhibits hereto), the Ancillary Agreements and the Confidentiality Agreement represent the entire understanding and agreement between the parties hereto with respect to the subject matter hereof. This Agreement can be amended, supplemented or changed, and any provision hereof can be waived, only by written instrument making specific reference to this Agreement signed by the party against whom enforcement of any such amendment, supplement, modification or waiver is sought. No action taken pursuant to this Agreement, including any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representation, warranty, covenant or agreement contained herein. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or subsequent breach. No failure on the part of any party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such party preclude any other or further exercise thereof or the exercise of any other right, power or remedy.

SECTION 10.5

Governing Law

. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and performed in such State, without giving effect to principles of conflicts of laws thereof.

SECTION 10.6

Notices

. All notices and other communications under this Agreement shall be in writing and shall be deemed given (i) when delivered personally by hand (with written confirmation of receipt), (ii) when sent by facsimile (with written confirmation of transmission) or (iii) one Business Day following the day sent by overnight courier (with written confirmation of receipt), in each case at the following addresses and facsimile numbers (or to such other address or facsimile number as a party may have specified by notice given to the other party pursuant to this provision):

Exhibit 2.1

If to either Seller, to:

SOAdesk, LLC
3780 Mansell Rd.
Suite 275
Alpharetta, GA 30022
Facsimile: ___________________
Attn:

With a copy (which shall not constitute notice) to:

Ledbetter Wanamaker Glass LLP

1175 Peachtree Street, N.E.

100 Colony Square, Suite 1100

Atlanta, GA 30361

Facsimile: 404-835-9450

Attn: Larry D. Ledbetter, Esq.

If to Purchaser, to:

Cicero Inc.

8000 Regency Parkway

Cary, NC 27511

Facsimile: (919) 380-5121

Attn: John Broderick

With a copy (which shall not constitute notice) to:

Golenbock Eiseman Assor Bell & Peskoe LLP

437 Madison Avenue

New York, New York 10022

Facsimile: (212) 754-0330

Attn: Lawrence M. Bell, Esq.

SECTION 10.7

Severability

. If any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced by any law or public policy, all other terms or provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal, or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

SECTION 10.8

Binding Effect; Assignment; Third Party Beneficiaries

. This Agreement shall be binding upon and inure to the benefit of the parties and

Exhibit 2.1

their respective successors and permitted assigns. Nothing in this Agreement shall create or be deemed to create any third party beneficiary rights in any person or entity not a party to this Agreement. No assignment of this Agreement or of any rights or obligations hereunder may be made by any party, directly or indirectly (by operation of Law or otherwise), without the prior written consent of the other parties hereto and any attempted assignment without the required consents shall be void; provided, however, Purchaser may (i) assign any or all of its rights and interests hereunder to one or more of its Affiliates or to any Person or Persons purchasing all or substantially all of the Business conveyed by this Agreement and (ii) designate one or more of its Affiliates to perform its obligations hereunder; provided, further, however, that in any such case, Purchaser shall remain responsible for the performance of all of its obligations hereunder. No assignment of any obligations hereunder shall relieve the parties hereto of any such obligations.

SECTION 10.9

Counterparts

. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.

SECTION 10.10

Waiver of Jury Trial

. Each party hereto hereby waives to the fullest extent permitted by applicable Law, any right it may have to a trial by jury in respect of any Legal Proceeding directly or indirectly arising out of, under or in connection with this Agreement, any Ancillary Agreements or any transaction contemplated hereby or thereby. Each party hereto (i) certifies that no representative, agent or attorney of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce that foregoing waiver and (ii) acknowledges that it and the other parties hereto have been induced to enter into this Agreement and the Ancillary Agreements, as applicable, by, among other things, the mutual waivers and certifications in this Section 10.10 .

SECTION 10.11

Performance

. Purchaser acknowledges and agrees that the breach of this Agreement by it would cause irreparable damage to Seller and that Seller will not have an adequate remedy at Law, and Sellers acknowledge and agree that the breach of this Agreement by a Seller would cause irreparable damage to Purchaser and that Purchaser will not have an adequate remedy at Law. Therefore, the obligations of the parties hereto under this Agreement shall be enforceable by a decree of specific performance issued by any court of competent jurisdiction, and appropriate injunctive relief may be applied for and granted in connection therewith (without any needs to post a bond or additional security, and without any need to prove the absence or availability of other remedies). Such remedies shall, however, be cumulative and not exclusive and shall be in addition to any other remedies which any party may have under this Agreement or otherwise.

** REMAINDER OF PAGE INTENTIONALLY LEFT BLANK **

Exhibit 2.1

IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase Agreement to be executed by their respective officers thereunto duly authorized, as of the date first written above.


	CICERO INC

	By:	/s/
	Name: John Broderick
	Title: CEO


	SOADESK, LLC

	By:	/s/
	Name: Antony Castagno
	Title: CEO


	VERTICAL THOUGHT, INC

	By:	/s/
	Name: Brian Leslie
	Title: President

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Exhibit 3.1

CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS

OF
SERIES B CONVERTIBLE PREFERRED STOCK
OF

CICERO INC.

(Pursuant to Section 151 of the Delaware General Corporation Law)

Cicero Inc., a corporation organized and existing under the laws of the State of Delaware (the “ Company ”), hereby certifies that, pursuant to the authority conferred upon the Board of Directors of the Company (the “ Board of Directors ” or the “ Board ”) by the Company’s Certificate of Incorporation and pursuant to the provisions of Section 151 of the Delaware General Corporation Law, the Board of Directors, at a meeting, held on December 21, 2009, adopted the following resolution (which has not been modified, altered or amended and is presently in full force and effect) providing for the designation, rights, preferences, qualifications, limitations and restrictions of Series B Preferred Stock (as defined below):

WHEREAS, the Certificate of Incorporation of the Company authorizes ten million (10,000,000) shares of preferred stock, par value $.001 per share, of the Company (the “ Preferred Stock ”) issuable from time to time in one or more series; and

WHEREAS, the Board of Directors is authorized by the Certificate of Incorporation to establish and fix from time to time the number of shares to be included in any series of Preferred Stock and the designation, preferences and rights of the shares of each such series and the qualifications, limitations and restrictions thereof;

NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors deems it advisable to, and hereby does, designate Series B Convertible Preferred Stock, par value $.001 per share, and fixes and determines the rights, preferences, qualifications, limitations and restrictions relating to such Series B Convertible Preferred Stock as follows:

Designation and Amount; Rank .

(a)

Designation and Amount . The shares of Preferred Stock created hereby shall be designated the “Series B Convertible Preferred Stock” (the “ Series B Preferred Stock ”) and the authorized number of shares constituting such series shall be 28,000 shares. The rights, preferences, qualifications, limitations, restrictions and other matters relating to the Series B Preferred Stock are as set forth herein.

(b)

Rank . The Series B Preferred Stock shall rank, with respect to dividend rights and rights upon any voluntary or involuntary liquidation, dissolution or winding up of the Company (each, a “ Liquidation Event ”), (a) senior in preference and priority to the common stock, par value $.001, of the Company (the “ Common Stock ”) and any other class or series of equity security established and designated by the Board of Directors the terms of which do not expressly provide that it ranks senior in preference or priority to or on parity with the Series B Preferred Stock with respect to dividend rights and rights upon a Liquidation Event (collectively, “ Junior Securities ”), (b) on parity, without preference or priority, with the outstanding series of Preferred Stock that is designated as “Series A-1 Preferred Stock”, par value $.001, of the Company (the “ Series A-1 Preferred Stock ”) and each other class or series of equity security established and designated by the Board of Directors the terms of which expressly provide that it ranks on parity, without preference or priority to, the Series B Preferred Stock with respect to dividend rights and rights upon a Liquidation Event (collectively, “ Parity Securities ”), and (c) junior in

Exhibit 3.1

-2-

preference and priority to each other class or series of equity security established and designated by the Board of Directors the terms of which expressly provide that it ranks senior in preference or priority to the Series B Preferred Stock with respect to dividend rights and rights upon a Liquidation Event (collectively, “ Senior Securities ”).

Dividends .

(a)

Rate . Dividends at the rate per annum of eight percent (8%) of the Series B Original Issue Price (as hereinafter defined) per share shall accrue on shares of Series B Preferred Stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series B Preferred Stock) (the “ Accruing Dividends ”). Accruing Dividends shall accrue on each share of Series B Preferred Stock from the date on which such share of Series B Preferred Stock is issued by the Company (the “ Original Issue Date ”), and shall accrue from day to day until paid, whether or not declared, and shall be cumulative; provided , however , that except as set forth in subsection (b) of this Section 2 , such Accruing Dividends shall be payable only when, as, and if declared by the Board of Directors, and the Company shall be under no obligation to pay such Accruing Dividends. No accumulation of dividends on the Series B Preferred Stock shall bear any interest. Notwithstanding the foregoing, the provisions of this Section 2(a) may be waived, in whole or in part, with the consent of the holders of a majority of the issued and outstanding shares of Series B Preferred Stock voting together as a separate class. The “ Series B Original Issue Price ” shall mean $150.00 ¹ per share, subject to adjustment in the event of any recapitalization, stock dividend, stock split, combination or other similar event with respect to the Series B Preferred Stock.

(b)

Priority of Dividends . So long as any share of Series B Preferred Stock remains outstanding, unless (in addition to the obtaining of any consents required elsewhere in the Certificate of Incorporation) a dividend on each outstanding share of Series B Preferred Stock in an amount at least equal to the amount of the aggregate Accruing Dividends then accrued on such share of Series B Preferred Stock and not previously paid has been paid in full or declared and set aside for payment to the holders of shares of Series B Preferred Stock, (i) no dividend shall be declared or paid or set aside for payment and no distribution shall be declared or made or set aside for payment on any Junior Securities, other than a dividend payable solely in Junior Securities, (ii) no shares of Junior Securities shall be purchased, redeemed or otherwise acquired for consideration by the Company, directly or indirectly (other than as a result of a reclassification of Junior Securities for or into Junior Securities, or the exchange or conversion of one share of Junior Securities for or into another share of Junior Securities, and other than through the use of the proceeds of a substantially contemporaneous sale of other shares of Junior Securities), nor shall any monies be paid to or made available for a sinking fund for the redemption of any such securities by the Company, and (iii) no shares of Parity Securities shall be purchased, redeemed or otherwise acquired for consideration by the Company, directly or indirectly (other than as a result of a reclassification of Parity Securities for or into Parity Securities or Junior Securities, or the exchange or conversion of one share of Parity Securities for or into another share of Parity Securities or for or into Junior Securities, and other than through the use of the proceeds of a substantially contemporaneous sale of other shares of Parity Securities or Junior Securities), nor shall any monies be paid to or made available for a sinking fund for the redemption of any such securities by the Company, otherwise than pursuant to pro rata offers to purchase all, or a pro rata portion, of the Series B Preferred Stock and such Parity Securities; provided , however , that the foregoing restrictions shall not apply to Permitted Repurchases. For purposes hereof, a “ Permitted Repurchase ” shall mean the repurchase by the Company of shares of Common Stock or Preferred Stock held by employees, officers, directors, consultants, independent contractors, advisors, or other persons performing services for the Company or a
———————

On a one-for-one basis, the equivalent of $0.15 per share.

Exhibit 3.1

-3-

subsidiary that are subject to restricted stock purchase agreements or stock option exercise agreements under which the Company has the option to repurchase such shares: (i) at such price as is set forth in an

agreement between the holder and the Company, approved by the Board of Directors, upon the occurrence of certain events, such as the termination of employment or services; or (ii) at any price pursuant to the Company’s exercise of a right of first refusal to repurchase such shares. Subject to the foregoing, and not otherwise, such dividends (payable in cash, stock or otherwise) as may be determined by the Board of Directors may be declared and paid on any Junior Securities from time to time out of any funds legally available therefor, and the holders of shares of Series B Preferred Stock shall not be entitled to participate in any such dividends.

Liquidation .

(a)

Series B Liquidation Preference . In the event of any Liquidation Event, the holders of shares of Series B Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders before any payment shall be made to the holders of any Junior Securities by reason of their ownership thereof, an amount per share equal to the Series B Original Issue Price plus any dividends accrued or declared but unpaid thereon as of the date of such Liquidation Event (the “ Liquidation Preference ”). If upon any such Liquidation Event the assets of the Company available for distribution to its stockholders shall be insufficient to pay the holders of shares of Series B Preferred Stock the full amount to which they shall be entitled under this Section 3 , the holders of shares of Series B Preferred Stock and Parity Securities shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

(b)

Distribution to Holders of Common Stock, Series A-1 Preferred Stock, and Series B Preferred Stock . Upon a Liquidation Event, after the payment (or the setting aside for payment or distribution) of all preferential amounts required to be paid to the holders of any Senior Securities, the holders of shares of Series B Preferred Stock, and the holders of any shares of Series A-1 Preferred Stock and any other Parity Securities, the remaining assets (if any) of the Company available for distribution to its stockholders shall be distributed first to the holders of any Junior Securities entitled to a liquidation preference in payment of the aggregate liquidation preference of all such holders and then to the holders of Common Stock, and the holders of Series B Preferred Stock shall not be entitled to any further participation in any distribution of assets by the Company by reason of their ownership thereof.

(c)

Consolidation, Merger, Etc. A consolidation or merger of the Company with or into any other corporation or corporations, or a sale, conveyance or disposition of all or substantially all of the assets of the Company in one or a series of related transactions or the effectuation by the Company of a transaction or series of related transactions in which more than fifty percent (50%) of the voting power of the Company is disposed, shall be deemed to be a Liquidation Event within the meaning of this Certificate of Designations, in each case, unless the holders of a majority of the outstanding Series B Preferred Stock elect not to treat such event as a Liquidation Event; provided , that, as a result of such consolidation, merger or similar transaction or series of transactions (each, a “ Combination Transaction ”) in which the Company is a constituent corporation or a party, the voting securities of the Company that are outstanding immediately prior to the consummation of such Combination Transaction (other than any such securities that are held by an “ Acquiring Stockholder ”, as defined below) do not represent, or are not converted into, securities of the surviving corporation of such Combination Transaction (or such surviving corporation’s parent corporation if the surviving corporation is owned by the parent corporation) that, immediately after the consummation of such Combination Transaction, together possess at least a majority of the total voting power of all securities of such surviving corporation (or its parent

Exhibit 3.1

-4-

corporation, if applicable) that are outstanding immediately after the consummation of such Combination Transaction, such outstanding securities of such surviving corporation (or its parent corporation, if applicable) expressly include securities that are held by the Acquiring Stockholder. For purposes of this Section 3(c) , an “ Acquiring Stockholder ” means a stockholder or stockholders of the Company that (i) merges or combines with the Company in such Combination Transaction or (ii) owns or controls a majority of another corporation that merges or combines with the Company in such Combination Transaction. Notwithstanding the foregoing, the sale by the Company of securities in an equity financing shall not be deemed a Combination Transaction.

(d)

Non-Cash Distributions . In any Liquidation Event, if proceeds received by the Company or its stockholders are other than cash, the value of such non-cash consideration shall be determined in good faith by the Board of Directors.

Voting Rights .

(a)

General . Except as otherwise expressly provided in this Certificate of Designations or as otherwise required by law, (a) each holder of Series B Preferred Stock shall be entitled to vote on all matters submitted to a vote of the stockholders of the Company and shall be entitled to that number of votes equal to the number of shares of Common Stock into which such holder's shares of Series B Preferred Stock could then be converted at the record date for the determination of stockholders entitled to vote on such matters or, if no such record date is established, at the date such vote is taken or any written consent of stockholders is solicited, and (b) the holders of shares of Series B Preferred Stock, Series A-1 Preferred Stock and Common Stock shall vote together (or tender written consents in lieu of a vote) as a single class on all matters submitted to the stockholders of the Company. Fractional votes shall not, however, be permitted and any fractional voting rights available on an as-converted basis (after aggregating all shares of Common Stock into which shares of Series B Preferred Stock held by each holder could be converted) shall be rounded to the nearest whole number. In connection with the foregoing, the Company shall provide each holder of Series B Preferred Stock with prior notification of any meeting of the stockholders (and copies of proxy materials and other information sent to stockholders) at the same time such notice and materials are provided to the holders of Common Stock.

(b)

Series B Protective Provisions . Until such time as the Company consummates at least an additional $5,000,000.00 equity financing from institutional or strategic investors, the approval of the holders of at least 2/3 of the outstanding shares of the Series B Preferred Stock voting together separately as a class will be required for:

(i)

the merger, sale of all, or substantially all of the assets or intellectual property, recapitalization, or reorganization of the Company, unless such action (i) results in a paid per share amount distributable to holders of Common Stock equal to at least $0.45 ² (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Common Stock) and (ii) has received the prior approval of the Board of Directors;

(ii)

the authorization or issuance of any equity security having any right, preference or priority superior to or on parity with the Series B Preferred Stock (excluding debt not convertible into any such Senior Security or Parity Security);

(iii)

the redemption, repurchase or acquisition, directly or indirectly, through subsidiaries or otherwise, of any equity securities (other than Permitted Repurchases or a repurchase of the Series B Preferred Stock) or the payment of dividends or other distributions on equity securities by the Company (other than on the Series B Preferred Stock);

———————

² To be equivalent to 3X the Original Issue Price.

Exhibit 3.1

-5-

(iv)

any amendment or repeal of any provision of the Company’s Certificate of Incorporation or By-laws that would adversely affect the rights, preferences, or privileges of the Series B Preferred Stock;

(v)

a significant change in the principal business of the Company as conducted on the Original Issue Date;

(vi)

the making of any loan or advance to any entity other than in the ordinary course of business, unless such entity is wholly owned by the Company;

(vii)

the making of any loan or advance to any person, including, without limitation, any employee or director of the Company or any subsidiary, except advances and similar expenditures in the ordinary course of business or under the terms of an employee stock or option plan approved by the Board of Directors and the holders of the Series B Preferred Stock;

(viii)

the guarantee, directly or indirectly, of any indebtedness or obligations, except for trade accounts and other obligations of any subsidiary; or

(ix)

the liquidation, dissolution or winding-up of the business and affairs of the Company, the effectuation of any Liquidation Event, or the consent to any of the foregoing, unless such action (i) results in a paid per share amount distributable to holders of Common Stock equal to at least $0.45 ³ (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Common Stock) and (ii) has received the prior approval of the Board of Directors.

Conversion . The holders of Series B Preferred Stock shall have conversion rights as follows (the “ Conversion Rights ”):

(a)

Optional Conversion . Each share of Series B Preferred Stock shall be convertible, at the option of the holder thereof, at any time and from time to time, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing the Series B Original Issue Price by the Conversion Price (as defined below) in effect at the time of conversion. The conversion price at which shares of Common Stock shall be deliverable upon conversion of Series B Preferred Stock without the payment of additional consideration by the holder thereof (the “ Conversion Price ”) shall initially be $0.15 ⁴ . Such initial Conversion Price, and the rate at which shares of Series B Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment as provided below.

(b)

Fractional Shares . No fractional shares of Common Stock shall be issued upon conversion of Series B Preferred Stock. In lieu of any fractional shares to which the holder would otherwise be entitled, the Company at its election shall either (i) pay cash equal to the product (calculated to the nearest cent) of such fraction and the then-effective Conversion Price, or (ii) issue one whole share of Common Stock for each fractional share to which the holder would otherwise be entitled.

———————

³ To be equivalent to 3X the Original Issue Price.

⁴ To be based on the Original Issue Price.

Exhibit 3.1

-6-

(c)

Mechanics of Conversion .

(i)

In order for a holder of Series B Preferred Stock to convert shares of Series B Preferred Stock into shares of Common Stock, such holder shall surrender the certificate or certificates for such shares of Series B Preferred Stock at the office of the transfer agent for the Series B Preferred Stock (or at the principal office of the Company if the Company serves as its own transfer agent), together with written notice that such holder elects to convert all or any number of the shares of the Series B Preferred Stock represented by such certificate or certificates. Such notice shall state such holder’s name or the names of the nominees in which such holder wishes the certificate or certificates for shares of Common Stock to be issued. If required by the Company, certificates surrendered for conversion shall be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Company, duly executed by the registered holder or his or its attorney duly authorized in writing. The Company shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon a conversion unless the certificates evidencing such shares of Series B Preferred Stock are either delivered to the Company or its transfer agent as provided above, or the holder notifies the Company or its transfer agent that such certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the Company to indemnify the Company from any loss incurred by it in connection with such certificates. The date of receipt of such certificates and notice by the transfer agent (or by the Company if the Company serves as its own transfer agent) shall be the conversion date (the “ Conversion Date ”) and such shares of Series B Preferred Stock shall thereupon be converted, without further action, into the number of shares of Common Stock provided for in this Section 5 , and such number of shares of Common Stock into which the Series B Preferred Stock is converted shall thereupon be deemed to have been issued to such holder(s) or nominee(s) of such holder(s) of the Series B Preferred Stock.

(ii)

The Company shall, as soon as practicable after the Conversion Date, issue and deliver at such office to such holder of Series B Preferred Stock, or to his or its nominees, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled, together with cash in lieu of any fraction of a share (if applicable). Notwithstanding the foregoing, if the Company’s transfer agent is participating in the Depository Trust Company (" DTC ") Fast Automated Securities Transfer program, and so long as the certificates therefore do not bear a legend, and the holder thereof is not then required to return such certificate for the placement of a legend thereon, the Company shall cause its transfer agent to promptly electronically transmit the Common Stock issuable upon conversion to the holder by crediting the account of the holder or its nominee with DTC through its Deposit Withdrawal Agent Commission system (" DTC Transfer "). If the aforementioned conditions to a DTC Transfer are not satisfied, the Company shall deliver as provided above to the holder physical certificates representing the Common Stock issuable upon conversion. Further, a holder may instruct the Company to deliver to the holder physical certificates representing the Common Stock issuable upon conversion in lieu of delivering such shares by way of DTC Transfer.

(iii)

The Company shall at all times when the Series B Preferred Stock shall be outstanding, reserve and keep available out of its authorized but unissued stock, for the purpose of effecting the conversion of the Series B Preferred Stock, such number of its duly authorized shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Series B Preferred Stock. Before taking any action which would cause an adjustment reducing the Conversion Price below the then par value of the shares of Common Stock issuable upon conversion of the Series B Preferred Stock, the Company will take any corporate action which may, in the opinion of its counsel, be necessary so that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock at such adjusted Conversion Price.

Exhibit 3.1

-7-

(iv)

On the Conversion Date, all shares of Series B Preferred Stock which have been surrendered for conversion as herein provided shall no longer be deemed to be outstanding and all rights with respect to such shares, including the rights, if any, to receive notices and to vote and the accrual of dividends thereon, shall immediately cease and terminate on the Conversion Date, except only the right of the holders thereof to receive shares of Common Stock in exchange therefore (and cash, if any, with respect to any fractions of a share as provided in Section 5 ).

(v)

If the conversion is in connection with an underwritten offering of securities registered pursuant to the Securities Act of 1933, as amended, the conversion may at the option of any holder tendering Series B Preferred Stock for conversion, be conditioned upon the closing with the underwriter of the sale of securities pursuant to such offering, in which event the person(s) entitled to receive the Common Stock issuable upon such conversion of Series B Preferred Stock shall not be deemed to have converted such Series B Preferred Stock until immediately prior to the closing of the sale of securities.

(d)

Adjustment for Stock Splits and Combinations . If the Company shall at any time or from time to time after the Original Issue Date effect a subdivision of the outstanding Common Stock, whether by way of a stock split or a stock split by way of a stock dividend, the Conversion Price then in effect immediately before that subdivision shall be proportionately decreased. If the Company shall at any time or from time to time after the Original Issue Date combine the outstanding shares of Common Stock, the Conversion Price then in effect immediately before the combination shall be proportionately increased. Any adjustment under this subsection shall become effective at the close of business on the date the subdivision or combination becomes effective.

(e)

Adjustment for Certain Dividends and Distributions . In the event the Company at any time, or from time to time after the Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in additional shares of Common Stock, then and in each such event the Conversion Price then in effect shall be decreased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying the Conversion Price then in effect by a fraction:

(i)

the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and

(ii)

the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution;

provided , however , if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Conversion Price shall be recomputed accordingly as of the close of business on such record date and thereafter the Conversion Price shall be adjusted pursuant to this subsection as of the time of actual payment of such dividends or distributions.

(f)

Adjustments for Other Dividends and Distributions . In the event the Company at any time or from time to time after the Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in securities of the Company other than shares of Common Stock (other than as otherwise adjusted in this Section 5 ), in cash otherwise than out of retained earnings, in stock or other securities of other persons, in

Exhibit 3.1

-8-

evidences of indebtedness issued by the Company or other persons, in assets (excluding cash dividends) or in options or rights (excluding options to purchase and rights to subscribe for Common Stock or other securities of the Company convertible into or exchangeable for Common Stock), then and in each such event provision shall be made so that the holders of Series B Preferred Stock shall receive upon conversion thereof in addition to the number of shares of Common Stock receivable thereupon, the amount of securities and other assets of the Company that they would have received had their Series B Preferred Stock been converted into Common Stock on the date of such event and had thereafter, during the period from the date of such event to and including the Conversion Date, retained such securities and other assets receivable by them as aforesaid during such period giving application to all adjustments called for during such period (subject to all other adjustments called for during such period under this Section 5 ), under this paragraph with respect to the rights of the holders of Series B Preferred Stock.

(g)

Adjustment for Reclassification, Exchange, or Substitution . If the Common Stock issuable upon the conversion of the Series B Preferred Stock shall be changed into the same or a different number of shares of any class or classes of stock, whether by capital reorganization, reclassification, or otherwise (other than a subdivision or combination of shares provided for above), the Conversion Price then in effect shall, concurrently with the effectiveness of such reorganization or reclassification, be proportionately adjusted such that the Series B Preferred Stock shall be convertible into, in lieu of the number of shares of Common Stock which the holders would otherwise have been entitled to receive, a number of shares of such other class or classes of stock equivalent to the number of shares of Common Stock that would have been subject to receipt by the holders upon conversion of the Series B Preferred Stock immediately before that change.

(h)

Adjustment for Merger or Reorganization or Sale of Assets . Subject to Section 3 , in case of any consolidation or merger of the Company with or into another corporation or other entity or the sale of all or substantially all of the assets of the Corporation to another corporation or other entity, each share of Series B Preferred Stock shall thereafter be convertible into the kind and amount of shares of stock or other securities or property to which a holder of the number of shares of Common Stock of the Company deliverable upon conversion of such Series B Preferred Stock would have been entitled upon such consolidation, merger or sale; and, in such case, appropriate adjustment (as determined in good faith by the Board of Directors) shall be made in the application of the provisions set forth in this Section 5 with respect to the rights and interest thereafter of the holders of Series B Preferred Stock, to the end that the provisions set forth in this Section 5 (including provisions with respect to changes in and other adjustments of the Conversion Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other property thereafter deliverable upon the conversion of the Series B Preferred Stock.

(i)

No Duplication . If any action would require adjustment of the Conversion Price pursuant to more than one of the provisions described in this Section 5 in a manner such that adjustments are duplicative, only one such adjustment shall be made.

(j)

No Impairment . The Company will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, purposefully avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Section 5 and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of Series B Preferred Stock against impairment.

(k)

Certificate as to Adjustments . Upon the occurrence of each adjustment of the Conversion Price pursuant to this Section 5 , the Company at its expense shall promptly compute such

Exhibit 3.1

-9-

adjustment in accordance with the terms hereof and, in the case of adjustments amounting to a more than five percent (5%) change in the Conversion Price, furnish to each holder of Series B Preferred Stock a certificate setting forth such adjustment and showing in detail the facts upon which such adjustment is based. The Company shall, upon the written request at any time of any holder of Series B Preferred Stock, furnish or cause to be furnished to such holder a similar certificate setting forth (i) such adjustments, (ii) the Conversion Price then in effect, and (iii) the number of shares of Common Stock and the amount, if any, of other property which then would be received upon the conversion of Series B Preferred Stock.

(l)

Notices of Record Date . In the event of any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend) or other distribution, the Company shall mail to each holder of Series B Preferred Stock at least ten (10) days prior to the date specified therein, a notice specifying the date on which any such record is to be taken of the purpose of such dividend or distribution.

Automatic Conversion .

(a)

Automatic Conversion of Series B Preferred Stock . Notwithstanding anything herein to the contrary, each outstanding share of Series B Preferred Stock shall automatically be converted into shares of Common Stock at the then applicable conversion rate determined pursuant to Section 5 upon the earlier to occur of the following events (each, an “ Automatic Conversion Triggering Event ”): (i) the Company consummates at least an additional $5,000,000 equity financing from institutional or strategic investors; and/or (ii) the Company has four (4) consecutive quarters of positive cash flow as reflected on the Company’s financial statements prepared in accordance with generally accepted accounting principles and filed with the Securities and Exchange Commission. The foregoing automatic conversion shall be effective upon the occurrence of the applicable Automatic Conversion Triggering Event (the “ Automatic Conversion Date ”), notwithstanding that the holders of Series B Preferred Stock may not receive notice of conversion until after the Automatic Conversion Date.

(b)

Mechanics of Automatic Conversion . In the event of an automatic conversion pursuant to this Section 6 , the outstanding shares of Series B Preferred Stock shall be converted automatically without any further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Company or its transfer agent, and provided further that the Company shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon such automatic conversion unless the certificates evidencing such shares of Series B Preferred Stock are either delivered to the Company or its transfer agent as provided above, or the holder notifies the Company or its transfer agent that such certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the Company to indemnify the Company from any loss incurred by it in connection with such certificates. If so required by the Company, certificates surrendered for conversion shall be endorsed or accompanied by written instrument or instruments of transfer, in form satisfactory to the Company, duly authorized in writing. As soon as reasonably practicable after the date of such automatic conversion and the surrender of the certificate or certificates for Series B Preferred Stock, the Company shall cause to be issued and delivered to such holder a certificate or certificates for the number of full shares of Common Stock issuable on such conversion in accordance with the provisions hereof and cash, if any, as provided in Section 5 in respect of any fraction of a share of Common Stock otherwise issuable upon such conversion. Notwithstanding the foregoing, if the Company’s transfer agent is participating in the DTC Fast Automated Securities Transfer program, and so long as the certificates therefore do not bear a legend, and the holder thereof is not then required to return such certificate for the placement of a legend thereon, the Company shall cause its transfer agent to effect a DTC Transfer. If the aforementioned conditions to a DTC Transfer are not satisfied, the Company shall deliver as provided

Exhibit 3.1

-10-

above to the holder physical certificates representing the Common Stock issuable upon conversion. On the Automatic Conversion Date, all rights with respect to the Series B Preferred Stock so converted, including the rights, if any, to receive notices and vote and the accrual of dividends thereon, shall immediately cease and terminate, except only the rights of the holders thereof, upon surrender of their certificate or certificates therefor, to receive certificates for the number of shares of Common Stock into which such Series B Preferred Stock has been converted (and cash, if any, with respect to any fraction of a share as provided in Section 5 ).

Miscellaneous .

(a)

No Pre-emptive Rights . No Holder of Series B Preferred Stock shall be entitled as a matter of right to subscribe for or purchase, or have any pre-emptive right with respect to, any part of any new or additional issue of stock of any class whatsoever, or of securities convertible into any stock of any class whatsoever, or any other shares, rights, options or other securities of any class whatsoever, whether now or hereafter authorized and whether issued for cash or other consideration or by way of dividend.

(b)

Waiver . Notwithstanding any provision in this Certificate of Designations to the contrary, any provision contained herein and any right of the holders of Series B Preferred Stock granted hereunder may be waived as to all shares of Series B Preferred Stock (and the holders thereof) upon the written consent of the holders of not less than a majority of the shares of Series B Preferred Stock then outstanding, unless a higher percentage is required by applicable law, in which case the written consent of the holders of not less than such higher percentage shall be required.

(c)

Retirement and Cancellation of Shares . Shares of Series B Preferred Stock which have been converted or otherwise cancelled shall be deemed to have been retired and cancelled and, following the filing of any certificates required by applicable law, have the status of authorized and unissued shares of Series B Preferred Stock.

(d)

Lost or Stolen Certificates . Upon receipt by the Company of (i) evidence of the loss, theft, destruction or mutilation of any Series B Preferred Stock Certificate(s) and (ii) (y) in the case of loss, theft or destruction, indemnity (without any bond or other security) reasonably satisfactory to the Company, or (z) in the case of mutilation, the Series B Preferred Stock Certificate(s) (surrendered for cancellation), the Company shall execute and deliver new Series B Preferred Stock Certificate(s) of like tenor and date. However, the Company shall not be obligated to reissue such lost or stolen Series B Preferred Stock Certificate(s) if the holder contemporaneously requests the Company to convert such Series B Preferred Stock.

(e)

Severability . If any provision of this Certificate of Designations shall be held to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision of this Certificate of Designations.

(f)

Captions . The caption headings of the sections of this Certificate of Designations are for convenience of reference only and shall not affect the interpretation of any of the provisions hereof.

(g)

Notices . Any notices required or permitted to be given under the terms hereof shall be sent by certified or registered mail (return receipt requested) or delivered personally, by responsible overnight carrier or by confirmed facsimile, and shall be effective five (5) days after being placed in the mail, if mailed, or upon receipt or refusal of receipt, if delivered personally or by responsible overnight carrier or confirmed facsimile, in each case addressed to a party. The addresses for such

Exhibit 3.1

-11-

communications are: (i) if to the Company to Cicero Inc., 8000 Regency Parkway, Cary, NC 27511 Telephone: (919) 380-5000, Facsimile: (919) 380-5121, Attention: John P. Broderick, and (ii) if to any holder to the address set forth on the Company’s stock transfer records, or such other address as may be designated in writing hereafter, in the same manner, by such person.

(h)

No Other Rights . The Series B Preferred Stock shall not have any relative, participating, optional or other special rights or powers except as set forth herein or as may be required by law.

Exhibit 3.1

IN WITNESS WHEREOF, the Company has caused this Certificate of Designations to be duly executed and acknowledged by it undersigned duly authorized officer this 8th day of January, 2010.


	CICERO INC

	By:	/s/
	Name: John Broderick
	Title: CEO/CFO

Exhibit 3.1

EXHIBIT 4.1

NEITHER THIS NOTE NOR THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE OR AS PAYMENTS DUE UNDER THIS NOTE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND NONE OF THEM MAY BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING THE NOTE OR SUCH SECURITIES, THE TRANSFER IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF SUCH SECURITIES REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.

SHORT TERM CONVERTIBLE PROMISSORY NOTE


$700,000		Cary, North Carolina
		January 15, 2010

For value received, Cicero Inc., a Delaware corporation (the " Company "), HEREBY UNCONDITIONALLY PROMISES TO PAY to SOAdesk, LLC, a Delaware limited liability company (the " Holder "), or its permitted assigns, the principal sum of Seven Hundred Thousand Dollars ($700,000) (the “ Original Principal Amount ”), together with interest from the date of this Note on the unpaid principal balance at a rate equal to five percent (5%) simple interest per annum, or the maximum amount permitted by law, whichever is less, in each case payable through the issuance of shares of Series B Convertible Preferred Stock, par value $0.001, of the Company (the “ Series B Preferred Stock ”) valued at the then-applicable Conversion Price (as defined below). The simple interest rate shall be computed on the basis of the actual number of days elapsed and a year of 365 days. All unpaid principal, together with the balance of unpaid and accrued interest and other amounts payable hereunder, if not converted by the Holder pursuant to the provisions of Section 5 below or pre-paid in cash in accordance with Section 4 below, shall be due and payable, and shall be paid through the issuance of shares of Series B Preferred Stock valued at the then-applicable Conversion Price, on the earlier of (i) March 31, 2010 (the " Maturity Date ") or (ii) upon the occurrence of an Event of Default (as defined below). The obligations of the Company owed to the Holder are unsecured.

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

Definitions . As used in this Note, the following capitalized terms have the following meanings:

(a)

“ Conversion Price ” shall mean $150.00 per share, subject to adjustment in accordance with Section 6.

(b)

“ Conversion Shares ” shall mean those shares of Series B Preferred Stock issued to Holder upon Holder’s conversion or as payment of all or part of the principal and interest owed under this Note pursuant to Section 5 below.

(c)

" Obligations " shall mean all principal and accrued interest due hereunder.

Issuance . This Note is the Short Term Convertible Promissory Note issued pursuant to that certain Asset Purchase Agreement, dated as of January 15, 2010, between the Company and the Holder, and is subject to the provisions thereof with respect to indemnification and set-off in respect thereof.

Events of Default . The occurrence of any one or more of the following events shall constitute an " Event of Default " hereunder:

(a)

Payments and Issuance of Series B Preferred Stock . The Company shall fail to pay (i) when due all principal on the Maturity Date, or (ii) all interest or other payment required under the terms of this Note on the Maturity Date, in each case through the issuance of shares of Series B Preferred Stock valued at the then-applicable Conversion Price.

(b)

Failure to Make Mandatory Prepayment . The Company shall fail to make any mandatory prepayment in accordance with Section 4.2 within fifteen (15) business days after the same shall have become due and payable to the Holder.

(c)

Insolvency . (i) The Company shall be dissolved, liquidated, wound up or cease its corporate existence, except to the extent expressly permitted hereunder; or (ii) the Company (A) shall make a general assignment for the benefit of creditors, or shall generally fail to pay, or admit in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any, whether at stated maturity or otherwise; (B) shall voluntarily cease to conduct its business in the ordinary course, except to the extent expressly permitted hereby; (C) shall commence any Insolvency Proceeding with respect to itself; or (D) shall take any action to effectuate or authorize any of the foregoing. As used herein, " Insolvency Proceeding " means (i) any case, action or proceeding before any court or other governmental agency or authority relating to Bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors, or (ii) any general assignment for the benefit of creditors, composition, marshalling of assets for creditors, or other, similar arrangement in respect of its creditors generally or any substantial portion of its creditors, in each case undertaken under U.S. federal, state or foreign law, including the Bankruptcy Code; and " Bankruptcy Code " means Title 11 of the United States Code entitled "Bankruptcy".

(d)

Involuntary Proceedings . (i) Any involuntary Insolvency Proceeding is commenced or filed against the Company or any writ, judgment, warrant of attachment, execution or similar process, is issued or levied against a substantial part of the Company's properties, and any such proceeding or petition shall not be dismissed, or such writ, judgment, warrant of attachment, execution or similar process shall not be released, vacated or fully bonded within thirty (30) days after commencement, filing or levy; (ii) the Company admits the material allegations of a petition against it in any Insolvency Proceeding, or an order for relief (or similar order under non-U.S. law) is ordered in any Insolvency Proceeding; or (iii) the Company

acquiesces in the appointment of a receiver, trustee, custodian, conservator, liquidator, mortgagee in possession (or agent therefore), or other similar Person for itself or a substantial portion of its property or business.

If any Event of Default shall occur and be continuing, the Holder may, by notice to the Company, (i) (A) in the case of an Event of Default set forth in paragraphs 3(a), (c) or (d) above, declare the entire outstanding Obligations payable by the Company hereunder to be forthwith due and payable through the issuance of shares of Series B Preferred Stock valued at the then-applicable Conversion Price or (B) in the case of an Event of Default set forth in paragraph 3(b) above, declare the entire outstanding Obligations payable by the Company hereunder to be forthwith due and payable in cash, whereupon the principal hereof, all such accrued interest and all such other amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Company, provided that if an event described in paragraph 3(d) above shall occur, the result which would otherwise occur only upon giving of notice by the Holder to the Company as specified above shall occur automatically, without the giving of any such notice; and (ii) exercise all rights and remedies available to the Holder under the Agreement and applicable law. The rights and remedies under the Agreement are cumulative and not exclusive of any rights, remedies, powers and privileges that may otherwise be available to the Holder. No delay or omission on the part of the Holder in exercising any right under the Agreement shall operate as a waiver of such right or any other right hereunder.

Prepayments .

4.1

Voluntary Prepayment . The Company shall have the right, but not the obligation, to prepay the Note in cash at any time or from time to time without any premium or penalty.

4.2

Mandatory Prepayment . The Company shall, to the extent it receives cash proceeds from the sale of shares of Series B Preferred Stock to investors after the date of this Note and prior to or on the Maturity Date, utilize fifty percent (50%) of the gross proceeds from such sales of shares of Series B Preferred Stock to prepay in cash the principal amount, and any interest accrued on, the Note by wire transfer of funds to an account designated in writing to the Company by the Holder.

Conversion .

5.1

Voluntary Conversion . At the sole discretion of the Holder, the Holder shall have the right, but not the obligation, at any time to convert all or part of the then outstanding Obligations into a number of shares of Series B Preferred Stock equal to the quotient obtained by dividing (a) the then outstanding Obligations to be converted by (b) the Conversion Price in effect at the time of such conversion. The Holder shall effect conversions by delivering to the Company a Notice of Conversion, the form of which is attached hereto as Annex A (each, a “ Notice of Conversion ”), specifying therein the amount of principal and interest accrued under this Note to be converted and the date on which such conversion shall be effected (such date, the “ Conversion Date ”). At the Maturity Date, in the event the Holder has not converted the amount of the Obligations into Conversion Shares, the entire amount of the then outstanding Obligations

(as reduced by any prepayments in accordance with Section 4) shall become due and payable, and such outstanding Obligations shall be satisfied solely through the issuance of shares of Series B Preferred Stock valued at the then-applicable Conversion Price.

5.2

Reservation of Shares . The Company shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance, the number of shares of Series B Preferred Stock issuable upon conversion or payment of the principal and interest of the Note. The Company covenants that all shares of Series B Preferred Stock that shall be so issuable shall, upon issuance, be duly authorized, validly issued, fully paid and nonassessable.

5.3

Fractional Shares. The Company shall not be required to issue fractions of shares on the Maturity Date or upon the conversion or payment hereof or to distribute certificates that evidence fractional shares nor shall the Company be required to make any cash payments in lieu of fractional shares. In lieu of issuance any fractional shares or payment therefore, the Company will round up to the nearest whole share.

Certain Adjustments .

6.1

Stock Dividends and Stock Splits . If the Company, at any time while this Note is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Series B Preferred Stock on shares of Series B Preferred Stock or any Series B Preferred Stock equivalents (which, for avoidance of doubt, shall not include any shares of Series B Preferred Stock issued by the Company upon conversion of the Note), (ii) subdivides outstanding shares of Series B Preferred Stock into a larger number of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Series B Preferred Stock into a smaller number of shares or (iv) issues, in the event of a reclassification of shares of the Series B Preferred Stock, any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Series B Preferred Stock (excluding any treasury shares of the Company) outstanding immediately before such event and of which the denominator shall be the number of shares of Series B Preferred Stock outstanding immediately after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or reclassification.

6.2

assets as would have been issuable or payable with respect to or in exchange for a number of Conversion Shares equal to the number of Conversion Shares immediately theretofore issuable upon conversion of the Note, had such reorganization, reclassification, consolidation, merger, sale, transfer or other disposition not taken place, and in any such case appropriate provision shall be made with respect to the rights and interests of Holder to the end that the provisions hereof (including, without limitation, provision for adjustment of the Conversion Price) shall thereafter be applicable, as nearly equivalent as may be practicable in relation to any shares of stock, securities or assets thereafter deliverable upon the exercise hereof. In the case of clause (ii) above, the Company shall not effect any such consolidation, merger, sale, transfer or other disposition unless prior to or simultaneously with the consummation thereof the successor corporation (if other than the Company) resulting from such consolidation or merger, or the corporation purchasing or otherwise acquiring such assets or other appropriate corporation or entity shall assume the obligation to deliver to the Holder, at the last address of the Holder appearing on the books of the Company, such shares of stock, securities or assets as, in accordance with the foregoing provisions, the Holder may be entitled to purchase, and the other obligations under this Note. The provisions of this paragraph 6.2 shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales, transfers or other dispositions.

6.3

Calculations . All calculations under this Section 6 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be, provided however, that the Company shall not be required to issue fractions of shares pursuant to Section 5.3 above.

6.4

Notice of Adjustment . In each case of an adjustment or readjustment of the Conversion Price or the number and kind of any securities issuable upon conversion of the Note, the Company will promptly calculate such adjustment in accordance with the terms of this Note and prepare a certificate setting forth such adjustment, including a statement of the adjusted Conversion Price and adjusted number of shares of Series B Preferred Stock or type of alternate consideration issuable upon conversion of the Note (as applicable), describing the transactions giving rise to such adjustments and showing in reasonable detail the facts upon which such adjustment is based. Upon request, the Company will promptly deliver a copy of each such certificate to the Holder.

Company Optional Repurchase Right . Notwithstanding anything herein to the contrary, in the event that any shares of Series B Preferred Stock are issued under the terms of this Note, the Company shall have the right, exercisable in its sole discretion at any time prior to the twelve (12) month anniversary of any such issuance, to repurchase any such shares of Series B Preferred Stock so issued for a cash payment in an amount per share equal to the Conversion Price, and the Company shall be entitled to affix an appropriate legend on the certificates representing any such shares of Series B Preferred Stock so issued evidencing such optional repurchase right.

Representations of Holder .

8.1

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, and has had an opportunity to review the Company’s public filings under the federal securities laws at www.sec.gov.

8.2

Investment Intent . The Holder of this Note is making the loan evidenced by this Note 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 (the " Act ").

Successors and Assigns . Subject to the restrictions on transfer described in Section 11 below, the rights and obligations of the Company and the Holder of this Note shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the parties.

10.

Waiver and Amendment . Any provision of this Note may be amended, waived or modified upon the written consent of the Company and the Holder.

11.

Transfer of this Note. Subject to the terms of the Agreement, this Note may not be transferred in part or in violation of any restrictive legend set forth hereon. Subject to the terms of the Agreement, each new Note issued upon transfer of this Note shall bear a legend as to the applicable restrictions on transferability in order to ensure compliance with the Act, and any applicable state securities laws, unless in the opinion of counsel for the Company such legend is not required in order to ensure compliance with the Act and any applicable state securities laws, and the Company may issue stop transfer instructions to its transfer agent in connection with such restrictions. Prior to presentation of this Note for registration of transfer, the Company shall treat the registered Holder hereof as the owner and holder of this Note for the purpose of receiving all payments of principal and interest hereon, in each case which are to be satisfied through the issuance of shares of Series B Preferred Stock, and for all other purposes whatsoever, and the Company shall not be affected by notice to the contrary.

12.

Assignment by the Company . Neither this Note nor any of the rights, interests or obligations hereunder may be assigned, by operation of law or otherwise, in whole or in part, by the Company, without the prior written consent of the Holder.

13.

Treatment of Note. To the extent permitted by generally accepted accounting principles, the Company will treat, account and report this Note as debt and not equity for accounting purposes and with respect to any returns filed with federal, state or local tax authorities.

14.

No Rights as Member and/or Shareholder. This Note, as such, creates a lender/borrower relationship and shall not entitle the Holder to any rights as a member, shareholder, officer, director, manager, other employee or agent of the Company, except as otherwise specified herein. In no event shall any shares of Series B Preferred Stock issuable to Holder hereunder be deemed to be outstanding until such shares of Series B Preferred Stock are actually issued to the Holder.

15.

Payment in Shares of Series B Preferred Stock. Except for any prepayments in cash pursuant to Section 4, payment of any amounts due under this Note shall be made in shares of Series B Preferred Stock valued at the then-applicable Conversion Price.

16.

Headings . Headings and numbers have been set forth herein for convenience only and shall be given no substantive meaning whatsoever in construing the terms and conditions of this Note.

17.

Benefits of this Note . Nothing in this Note shall be construed to give to any person, corporation or other entity other than the Company and any Holder of the Note any legal or equitable right, remedy or claim under the Note, and the Note shall be for the sole and exclusive benefit of the Company and any Holder of the Note.

18.

Governing Law. This Note and all actions arising out of or in connection with this Note shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflicts of law provisions thereof.

19.

Usury . The terms of this Note are based upon all available usury exceptions. If, however, such exceptions are not available, all agreements between the Company and the Holder, whether now existing or hereafter arising and whether written or oral, are expressly limited so that in no contingency or event whatsoever shall the amount paid, or agreed to be paid, to the Holder for the use, forbearance or detention of the money to be loaned hereunder or otherwise, exceed the maximum amount permissible under applicable law. If from any circumstances whatsoever fulfillment of any provision of this Note or of any other document evidencing, securing or pertaining to the indebtedness evidenced hereby, at the time performance of such provision shall be due, shall involve transcending the limit of validity prescribed by law, then ipso facto, the obligation to be fulfilled shall be reduced to the limit of such validity, and if from any such circumstances the Holder shall ever receive anything of value as interest or deemed interest by applicable law under this Note or any other document evidencing, securing or pertaining to the indebtedness evidenced hereby or otherwise an amount that would exceed the highest lawful rate, such amount that would be excessive interest shall be applied to the reduction of the principal amount owing under this Note or on account of any other amounts owed by the Company to the Holder relating to this Note, and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal of this Note and such other indebtedness, such excess shall be refunded to the Company. In determining whether or not the interest paid or payable with respect to any indebtedness of the Company to the Holder, under any specific contingency, exceeds the highest lawful rate, the Company and the Holder shall, to the maximum extent permitted by applicable law: (i) characterize any nonprincipal payment as an expense, fee or premium rather than as interest; (ii) amortize, prorate, allocate and spread the total amount of interest throughout the full term of such indebtedness so that the actual rate of interest on account of such indebtedness is uniform throughout the term thereof; and/or (iii) allocate interest between portions of such indebtedness, to the end that no such portion shall bear interest at a rate greater than that permitted by law. The terms and provisions of this Section 18 shall control and supersede every other conflicting provision of all agreements between the Company and the Holder.

IN WITNESS WHEREOF, the Company has caused this Note to be issued as of the date first written above.


			CICERO INC., a Delaware corporation

			By:	/s/
			Name:	John Broderick
			Title:	CEO

ANNEX A

NOTICE OF CONVERSION

The undersigned hereby elects to convert such currently outstanding principal and accrued interest as set forth below under the Convertible Note due _________, 20__ of Cicero Inc., a Delaware corporation (the “ Company ”), into shares of Series B Convertible Preferred Stock (the “ Series B Preferred Stock ”), of the Company according to the conditions hereof, as of the date written below. If shares of Series B Preferred Stock are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.

The undersigned agrees to comply with the prospectus delivery requirements under the applicable securities laws in connection with any transfer of the aforesaid shares of Series B Preferred Stock.

Conversion calculations:

Date to Effect Conversion:

Principal Amount of Note:

Principal Amount of Note for Which Conversion Has Previously Been Elected (if any):

Principal Amount of Note to be Converted:

Number of Shares of Series B Preferred Stock to be Issued

(Principal and Accrued Interest to be Converted Divided by the Conversion Price on the Date of Conversion):



			Signature:

			Name:

			Address for Delivery of Series B Preferred Stock Certificates:

			Or

			DWAC Instructions:

			Broker No:
			Account No:

EXHIBIT 4.2

CONVERTIBLE STOCK-PAYABLE PROMISSORY NOTE


$1,000,000		Cary, North Carolina
(payable in shares of Common Stock)		January 15, 2010

For value received, Cicero Inc., a Delaware corporation (the " Company "), HEREBY UNCONDITIONALLY PROMISES TO PAY to SOAdesk, LLC, a Delaware limited liability company (the " Holder "), or its permitted assigns, the principal sum of ONE MILLION Dollars ($1,000,000) (the “ Original Principal Amount ”), together with interest from the date of this Note on the unpaid principal balance at a rate equal to five percent (5%) simple interest per annum, or the maximum amount permitted by law, whichever is less, in each case payable through the issuance of shares of Common Stock, par value $0.001, of the Company (the “ Common Stock ”) valued at the then-applicable Conversion Price (as defined below). The simple interest rate shall be computed on the basis of the actual number of days elapsed and a year of 365 days. All unpaid principal, together with the balance of unpaid and accrued interest and other amounts payable hereunder, if not converted by the Holder pursuant to the provisions of Section 4 below, shall be due and payable, and shall be paid through the issuance of shares of Common Stock valued at the then-applicable Conversion Price, on the earlier of (i) five (5) years from the date set forth above, unless extended pursuant to the terms of this Note (the " Maturity Date ") or (ii) upon the occurrence of an Event of Default (as defined below). The obligations of the Company owed to the Holder are unsecured. For the avoidance of doubt, this Note shall entitle the Holder thereof to receive shares of Common Stock (issuable upon conversion of the Note and/or on the Maturity Date or upon an Event of Default (as defined below)) and shall not entitle the Holder to any payments in cash at any time.

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

Definitions . As used in this Note, the following capitalized terms have the following meanings:

(a)

“ Conversion Price ” shall mean $0.15 per share, subject to adjustment in accordance with Section 6.

(b)

“ Conversion Shares ” shall mean those shares of Common Stock issued to Holder upon Holder’s conversion or as payment of all or part of the principal and interest owed under this Note pursuant to Section 5 below.

(c)

" Obligations " shall mean all principal and accrued interest due hereunder.

Issuance . This Note is the Convertible Stock-Payable Promissory Note issued pursuant to that certain Asset Purchase Agreement, dated as of January 15, 2010, between the Company and the Holder, and is subject to the provisions thereof with respect to indemnification and set-off in respect thereof.

Events of Default . The occurrence of any one or more of the following events shall constitute an " Event of Default " hereunder:

(a)

Payments and Issuance of Common Stock . The Company shall fail to pay (i) when due all principal on the Maturity Date, or (ii) all interest or other payment required under the terms of this Note on the Maturity Date, in each case through the issuance of shares of Common Stock valued at the then-applicable Conversion Price.

(b)

(c)

mortgagee in possession (or agent therefore), or other similar Person for itself or a substantial portion of its property or business.

If any Event of Default shall occur and be continuing, the Holder may, by notice to the Company, (i) declare the entire outstanding Obligations payable by the Company hereunder to be forthwith due and payable through the issuance of shares of Common Stock valued at the then-applicable Conversion Price, whereupon the principal hereof, all such accrued interest and all such other amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Company, provided that if an event described in paragraph 3(c) above shall occur, the result which would otherwise occur only upon giving of notice by the Holder to the Company as specified above shall occur automatically, without the giving of any such notice; and (ii) exercise all rights and remedies available to the Holder under the Agreement and applicable law. The rights and remedies under the Agreement are cumulative and not exclusive of any rights, remedies, powers and privileges that may otherwise be available to the Holder. No delay or omission on the part of the Holder in exercising any right under the Agreement shall operate as a waiver of such right or any other right hereunder.

Prepayments . The Company shall have the right, but not the obligation, to prepay the Note at any time or from time to time without any premium or penalty.

Conversion.

5.1

Voluntary Conversion . At the sole discretion of the Holder, the Holder shall have the right, but not the obligation, at any time on or after the third (3 ^rd ) anniversary of the date of this Note, to convert all or part of the then outstanding Obligations into a number of shares of Common Stock equal to the quotient obtained by dividing (a) the then outstanding Obligations to be converted by (b) the Conversion Price in effect at the time of such conversion; provided , that, notwithstanding the foregoing, (i) on or after the first (1 ^st ) anniversary of the date of this Note, the Holder shall be entitled to effect optional conversions with respect to up to one third (33-1/3%) of the Original Principal Amount plus any accrued interest, (ii) on or after the second (2 ^nd ) anniversary of the date of this Note, the Holder shall be entitled to effect optional conversions with respect to up to two thirds (66-2/3%) of the Original Principal Amount plus any accrued interest (taking into account any conversions effected on or after the first anniversary of the date of this Note), and (iii) on or after the third (3 ^rd ) anniversary of the date of this Note, the Holder shall be entitled to effect optional conversions with respect to the entire Original Principal Amount plus any accrued interest. The Holder shall effect conversions by delivering to the Company a Notice of Conversion, the form of which is attached hereto as Annex A (each, a “ Notice of Conversion ”), specifying therein the amount of principal and interest accrued under this Note to be converted and the date on which such conversion shall be effected (such date, the “Conversion Date”). At the Maturity Date, in the event the Holder has not converted the amount of the Obligations into Conversion Shares, the entire amount of the then outstanding Obligations shall become due and payable, and such outstanding Obligations shall be satisfied solely through the issuance of shares of Common Stock valued at the then-applicable Conversion Price.

5.2

Reservation of Shares . The Company shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance, the number of shares of

Common Stock issuable upon conversion or payment of the principal and interest of the Note. The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issuance, be duly authorized, validly issued, fully paid and nonassessable.

5.3

Certain Adjustments .

6.1

Stock Dividends and Stock Splits . If the Company, at any time while this Note is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any Common Stock equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon conversion of the Notes), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Company) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or reclassification.

6.2

Reorganization, Reclassification, Consolidation, Merger, Sale; Company Not Survivor . If any capital reorganization, reclassification of the capital stock of the Company, consolidation or merger of the Company with another corporation in which the Company is not the survivor, or sale, transfer or other disposition of all or substantially all of the Company’s assets to another corporation shall be effected, then, at the Company’s option, either (i) the Holder of the Note shall be paid an amount equal to the outstanding principal and accrued interest under the Note at the time of such reorganization, reclassification, consolidation, merger, sale, transfer or other disposition, or (ii) as a condition of such reorganization, reclassification, consolidation, merger, sale, transfer or other disposition, lawful and adequate provision shall be made whereby each Holder shall thereafter have the right to purchase and receive upon the basis and upon the terms and conditions herein specified and in lieu of the Conversion Shares immediately theretofore issuable upon conversion of the Note, such shares of stock, securities or assets as would have been issuable or payable with respect to or in exchange for a number of Conversion Shares equal to the number of Conversion Shares immediately theretofore issuable upon conversion of the Note, had such reorganization, reclassification, consolidation, merger, sale, transfer or other disposition not taken place, and in any such case appropriate provision shall be made with respect to the rights and interests of Holder to the end that the provisions hereof (including, without limitation, provision for adjustment of the Conversion Price) shall

thereafter be applicable, as nearly equivalent as may be practicable in relation to any shares of stock, securities or assets thereafter deliverable upon the exercise hereof. In the case of clause (ii) above, the Company shall not effect any such consolidation, merger, sale, transfer or other disposition unless prior to or simultaneously with the consummation thereof the successor corporation (if other than the Company) resulting from such consolidation or merger, or the corporation purchasing or otherwise acquiring such assets or other appropriate corporation or entity shall assume the obligation to deliver to the Holder, at the last address of the Holder appearing on the books of the Company, such shares of stock, securities or assets as, in accordance with the foregoing provisions, the Holder may be entitled to purchase, and the other obligations under this Note. The provisions of this paragraph 6.2 shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales, transfers or other dispositions.

6.3

6.4

Notice of Adjustment . In each case of an adjustment or readjustment of the Conversion Price or the number and kind of any securities issuable upon conversion of the Note, the Company will promptly calculate such adjustment in accordance with the terms of this Note and prepare a certificate setting forth such adjustment, including a statement of the adjusted Conversion Price and adjusted number of shares of Common Stock or type of alternate consideration issuable upon conversion of the Note (as applicable), describing the transactions giving rise to such adjustments and showing in reasonable detail the facts upon which such adjustment is based. Upon request, the Company will promptly deliver a copy of each such certificate to the Holder.

Representations of Holder .

7.1

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, and has had an opportunity to review the Company’s public filings under the federal securities laws at www.sec.gov.

7.2

Successors and Assigns . Subject to the restrictions on transfer described in Section 10 below, the rights and obligations of the Company and the Holder of this Note shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the parties.

Waiver and Amendment . Any provision of this Note may be amended, waived or modified upon the written consent of the Company and the Holder.

10.

Transfer of this Note. Subject to the terms of the Agreement, this Note may not be transferred in part or in violation of any restrictive legend set forth hereon. Subject to the terms of the Agreement, each new Note issued upon transfer of this Note shall bear a legend as to the applicable restrictions on transferability in order to ensure compliance with the Act, and any applicable state securities laws, unless in the opinion of counsel for the Company such legend is not required in order to ensure compliance with the Act and any applicable state securities laws, and the Company may issue stop transfer instructions to its transfer agent in connection with such restrictions. Prior to presentation of this Note for registration of transfer, the Company shall treat the registered Holder hereof as the owner and holder of this Note for the purpose of receiving all payments of principal and interest hereon, in each case which are to be satisfied through the issuance of shares of Common Stock, and for all other purposes whatsoever, and the Company shall not be affected by notice to the contrary.

11.

12.

13.

No Rights as Member and/or Shareholder. This Note, as such, creates a lender/borrower relationship and shall not entitle the Holder to any rights as a member, shareholder, officer, director, manager, other employee or agent of the Company, except as otherwise specified herein. In no event shall any shares of Common Stock issuable to Holder hereunder be deemed to be outstanding until such shares of Common Stock are actually issued to the Holder.

14.

Payment in Shares of Common Stock. Payment of any amounts due under this Note shall be made in shares of Common Stock valued at the then-applicable Conversion Price.

15.

Headings . Headings and numbers have been set forth herein for convenience only and shall be given no substantive meaning whatsoever in construing the terms and conditions of this Note.

16.

17.

18.

IN WITNESS WHEREOF, the Company has caused this Note to be issued as of the date first written above.


			CICERO INC., a Delaware corporation

			By:	/s/
			Name:	John Broderick
			Title:	CEO

ANNEX A

NOTICE OF CONVERSION

The undersigned hereby elects to convert such currently outstanding principal and accrued interest as set forth below under the Convertible Note due _________, 20__ of Cicero Inc., a Delaware corporation (the “ Company ”), into shares of common stock (the “ Common Stock ”), of the Company according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.

The undersigned agrees to comply with the prospectus delivery requirements under the applicable securities laws in connection with any transfer of the aforesaid shares of Common Stock.

Conversion calculations:

Date to Effect Conversion:

Principal Amount of Note:

Principal Amount of Note for Which Conversion Has Previously Been Elected (if any):

Principal Amount of Note to be Converted:

Number of Shares of Common Stock to be Issued

(Principal and Accrued Interest to be Converted Divided by the Conversion Price on the Date of Conversion):



			Signature:

			Name:

			Address for Delivery of Common Stock Certificates:

			Or

			DWAC Instructions:

			Broker No:
			Account No:

EXHIBIT 4.3

NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE 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 APPLICABLE STATE SECURITIES LAWS 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. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

INVESTOR WARRANT AGREEMENT

Investor Warrant Agreement (the “ Warrant ”), dated as of January 15, 2010, between Cicero Inc. (the “ Company ”) and _____________________ (the “ Holder ”).

WITNESSETH:

WHEREAS, the Company and the Holder have entered into a Securities Purchase Agreement (the “ Purchase Agreement ”) of even date, and the Purchase Agreement provides for, among other things, the issuance of this Warrant for the purchase of an aggregate of ____________ shares of common stock, $.001 par value per share, of the Company (“ Common Stock ”), as provided herein; and

WHEREAS, this Warrant is being issued on a private placement basis, and the Holder understands the limitations and responsibilities of acquiring the restricted securities comprising the Warrant and the underlying shares of Common Stock (the “ Warrant Shares ”).

NOW, THEREFORE, in consideration of the premises contained herein, the agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Grant and Period.

1.1

Grant . The Holder is hereby granted the right to purchase from the Company, at any time during the exercise period, up to an aggregate of _______ Warrant Shares of the Company at an initial exercise price (subject to adjustment as provided in Section 5 hereof) of $0.25 per Warrant Share (the “ Exercise Price ”), such exercise to be subject to the terms and conditions of this Warrant.

1.2

Period . This Warrant will be exercisable commencing on January 15, 2010, and expire at 5:00 PM on January 14, 2015 (the “ Expiration Time ”). If the Expiration Time is not a Business Day in the City of New York, then the expiration date will be extended to 5:00 PM on the next Business Day in the City of New York. “Business Day” means any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of New York generally are authorized or required by law or other government actions to close.

Exercise of Warrant .

2.1

Full Exercise . Except as provided in Section 2.3 below, the Holder shall effect an exercise of the Warrant by surrendering to the Company this Warrant, together with a Subscription in the form of Exhibit A attached thereto, duly executed by such Holder, at any time prior to the Expiration Time, at the Company’s principal office, accompanied by payment in cash or by certified or official bank check payable to the order of the Company in the amount of the aggregate purchase price (the “ Aggregate Price ”), subject to any adjustments provided for in the Warrant. The Aggregate Price shall be the amount that is the result of the Exercise Price multiplied by the number of Warrant Shares that are the subject of the Warrant (as adjusted as hereinafter provided) being purchased by the Holder.

2.2

Partial Exercise . The Warrant may also be exercised from time to time in part by surrendering the Warrant in the manner specified in Sections 2.1 or 2.3 hereof, except that the Purchase Price payable shall be the amount that is the result of the number of Warrant Shares being purchased hereunder multiplied by the Exercise Price, subject to any adjustments provided for in the Warrant. Upon any such partial exercise, the Company, at its expense, will forthwith issue to the Holder a new Warrant of like tenor for the aggregate number of securities (as constituted as of the date hereof) for which the Warrant shall not have been exercised, issued in the name of the Holder or as the Holder (upon payment by such Holder of any applicable transfer taxes) may direct.

2.3

Conversion Right . The Holder may effect an exercise of the Warrants and pay the Exercise Price through a conversion of the Warrant (“ Conversion Right ”); provided, that such right shall exist only at such time that the Company has the obligation to the Holder to provide a resale registration statement for the underlying securities of the Warrant and the Company does not have a registration statement effective and currently available for the resale by the Holder of the underlying securities of the Warrant. The Holder may effect a Conversion Right of the Warrant by surrendering to the Company this Warrant, together with a Subscription in the form of Exhibit B attached hereto, duly executed by such Holder, prior to the Expiration Time, at the Company’s principal office, upon which the Company shall issue to the Holder the number of Warrant Shares determined as follows:



	X	=	Y x (A-B)/A

where	X	=	the number of Warrant Shares to be issued to the Holder;

	Y	=	the number of Warrant Shares with respect to which this Warrant is being exercised;

	A	=	the Market Price of a share of Common Stock as of the Date of Exercise; and

	B	=	the Exercise Price.

2.4

Certain Defined Terms . “ Market Price ” of a share of Common Stock on any date shall mean, (i) if the shares of Common Stock are traded on the Nasdaq Global Market, Nasdaq Global Select Market or the Nasdaq Capital Market, the last bid price reported on that date; (ii) if the shares of Common Stock are not quoted on a Nasdaq market and are listed on any other national securities exchange, the last sale price of the Common Stock reported by such exchange on that date; (iii) if the shares of Common Stock are not quoted on any such market or listed on any such exchange and the shares of Common Stock are traded in the over-the-counter market, the last price reported on such day by the OTC Bulletin Board; (iv) if the shares of Common Stock are not quoted on a any such market, listed on any such exchange or quoted on the OTC Bulletin Board, then the last price quoted on such day in the over-the-counter market

as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding its functions of reporting prices); or (v) if none of clauses (i)-(iv) are applicable, then as determined, in good faith, by the Board of Directors of the Company. “Date of Exercise” means the date on which the Holder shall have delivered to the Company (i) the Warrant, (ii) the applicable Subscription form attached thereto, appropriately completed and duly signed, and (iii) if applicable, payment of the Exercise Price.

Issuance of Certificates . Upon the exercise of the Warrant, the issuance of certificates for Warrant Shares shall be made promptly (and, in any event within five (5) Business Days thereafter) without charge to the Holder thereof including, without limitation, any tax which may be payable in respect of the issuance thereof, and such certificates shall (subject to the provisions of Section 4 and Section 5 hereof) be issued in the name of, or in such names as may be directed by, the Holder thereof; provided , however , that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any such certificates in a name other than that of the Holder and the Company shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.

Restriction on Transfer . The Warrant and the Warrant Shares may be transferred only pursuant to a registration statement filed under the Securities Act and the applicable state securities laws or an exemption from such registrations. Subject to such restrictions, the Company shall transfer the Warrant and the Warrant Shares, from time to time, upon the books to be maintained by the Company for that purpose, upon surrender thereof, for transfer properly endorsed or accompanied by appropriate instructions for transfer and such other documents as may be reasonably required by the Company, including, if required by the Company, an opinion of its counsel to the effect that such transfer is exempt from the registration requirements of the Securities Act, and to establish that such transfer is being made in accordance with the terms hereof. Upon such surrender to the Company of this Warrant for its transfer, the Company shall execute and deliver a new Warrant, representing the new Warrant or Warrants in the name of the transferee or transferees and in the denomination or denominations specified in such instructions, and shall issue to the transferor a new Warrant evidencing the portion of the Warrant not so transferred, and this Warrant shall promptly be cancelled. A Warrant, if properly transferred, may be exercised by a new holder without having a new Warrant issued.

Adjustments to Exercise Price and Number of Securities .

5.1

Stock Dividends and Splits . If the Company, (i) pays a stock dividend on its Common Stock, (ii) subdivides outstanding shares of Common Stock into a greater number of shares, or (iii) combines outstanding shares of Common Stock into a lesser number of shares, then in each such case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend, and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall become effective immediately after the effective date of such subdivision or combination.

5.2

Extraordinary Transactions . If, (i) the Company effects any merger or consolidation of the Company with or into another Person and the Company is not the surviving entity, or (ii) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, (in either such case, an “ Extraordinary Transaction ”), then the Warrant will become the right thereafter to receive, upon exercise,

the same amount and kind of securities as the Holder would have been entitled to receive upon the occurrence of such Extraordinary Transaction if it had been, immediately prior to such Extraordinary Transaction, the holder of the number of Warrant Shares then issuable upon exercise in full of the Warrant (the “ Alternate Consideration ”) in lieu of the Warrant Shares. The aggregate Exercise Price for each Warrant will not be affected by any such Extraordinary Transaction, but the Company shall apportion such aggregate Exercise Price to the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities to be received in an Extraordinary Transaction, then each Holder, to the extent practicable, shall be given the same choice as to the Alternate Consideration it receives upon any exercise of the Warrant following such Extraordinary Transaction. In addition, at the request of the Holder, upon surrender of the Warrant, any successor to the Company or surviving entity in such Extraordinary Transaction shall issue to the Holder a new Warrant consistent with the foregoing provisions and evidencing the Holder’s right to purchase the Alternate Consideration for the aggregate Exercise Price upon exercise thereof. Each Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to an Extraordinary Transaction.

5.3

Adjustment in Number of Securities . Upon each adjustment of the Exercise Price pursuant to the provisions of Sections 5.1 and 5.2, the number of securities issuable upon the exercise of the Warrant shall be adjusted to the nearest full amount by multiplying a number equal to the Exercise Price in effect immediately prior to such adjustment by the number of securities issuable upon exercise of the Warrant immediately prior to such adjustment and dividing the product so obtained by the adjusted Exercise Price.

5.4

No Adjustment of Exercise Price in Certain Cases . No adjustment of the Exercise Price shall be made if the amount of said adjustment shall be less than $.01 per Warrant Share; provided , however , that in such case any adjustment that would otherwise be required then to be made shall be carried forward and shall be made at the time of and together with the next subsequent adjustment which, together with any adjustment so carried forward, shall amount to at least $.01 per Warrant Share.

5.5

Notice of Adjustment . In each case of an adjustment or readjustment of the Exercise Price or the number and kind of any securities issuable upon exercise of the Warrant, the Company at its expense will promptly calculate such adjustment in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment, including a statement of the adjusted Exercise Price and adjusted number of shares of Common Stock or type of Alternate Consideration issuable upon exercise of the Warrant (as applicable), describing the transactions giving rise to such adjustments and showing in detail the facts upon which such adjustment is based. The Company will promptly deliver to each Holder who makes a request in writing, a copy of each such certificate.

Elimination of Fractional Interests . The Company shall not be required to issue certificates representing fractions of securities upon the exercise of the Warrant, nor shall it be required to issue script or pay cash in lieu of fractional interests, it being the intent of the parties that all fractional interests may be eliminated, at the Company’s option, by rounding any fraction up to the nearest whole number of shares of Common Stock or other securities, properties or rights issuable on exercise, or in lieu thereof paying cash equal to such fractional interest.

Reservation, Validity and Listing . The Company covenants and agrees that during the exercise period, the Company shall at all times reserve and keep available out of its authorized shares of Common Stock, solely for the purpose of issuance upon the exercise of the Warrant, such number of shares of Common Stock or other securities, properties or rights as shall be issuable upon the exercise under this Warrant. The Company covenants and agrees that, upon exercise of the Warrant, and payment of the Exercise Price therefore, all shares of Common Stock and other securities issuable upon such exercise

shall be duly authorized, validly issued, fully paid, non-assessable and not subject to the preemptive rights of any shareholder. As long as the Warrant is outstanding, the Company shall use its reasonable commercial efforts to cause all shares of Common Stock issuable upon the exercise of the Warrant to be listed and quoted (subject to official notice of issuance) on all securities exchanges and systems on which the other outstanding shares of Common Stock are then listed and/or quoted, including Nasdaq, the American Stock Exchange and the OTC Bulletin Board.

Registration Rights . The Warrant Shares issuable upon exercise of the Warrant, as adjusted pursuant to the terms of the Warrant, shall be entitled to the registration rights set forth in the Registration Rights Agreement, dated the date hereof (the “ Registration Rights Agreement ”), by and among the Company, the Holder and the other persons or entities that may become party thereto in accordance with the terms thereof.

Notices to Warrant Holder . Nothing contained in this Warrant shall be construed as conferring upon the Holder of the Warrant the right to vote or to consent or to receive notice as a stockholder in respect of any meetings of stockholders for the election of directors or any other matter, or as having any rights whatsoever as a stockholder of the Company. If, however, at any time prior to the Expiration Time of the Warrant and its exercise in full, any of the following events shall occur:

(a)

the Company shall take a record of the holders of its shares of Common Stock for the purpose of entitling them to receive a dividend or distribution payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of current or retained earnings, as indicated by the accounting treatment of such dividend or distribution on the books of the Company; or

(b)

the Company shall offer to all the holders of its Common Stock any additional shares of capital stock of the Company or securities convertible into or exchangeable for shares of capital stock of the Company, or any option, right or warrant to subscribe therefore; or

(c)

a dissolution, liquidation or winding up of the Company (other than in connection with a consolidation or merger) or a sale of all or substantially all of its property, assets and business as an entirety shall be proposed;

then, in any one or more of said events, the Company to the extent practicable shall give written notice of such event at least fifteen (15) days prior to the date fixed as a record date of the date of closing the transfer books for the determination of the stockholders entitled to such dividend, distribution, convertible or exchangeable securities or subscription rights, or entitled to vote on such proposed dissolution, liquidation, winding up or sale. Such notices shall specify such record date or the date of closing the transfer books, as the case may be.

10. Notices . Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand delivery or delivery by telex (with correct answer back received) or facsimile at the address or number designated below (if delivered on a Business Day during normal business hours where such notice is to be received), or the first Business Day following such delivery (if delivered other than on a Business Day during normal business hours where such notice is to be received) or (b) on the second Business Day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:

(a)

If to the Company, to the address of below or as such may be changed from time to time.

Cicero Inc.

8000 Regency Parkway

Cary, NC 27518

Tel: (919) 380-5000

Fax: (919) 380-5121

Attn: John P. Broderick

With a copy to (which copy shall not constitute notice):

Golenbock Eiseman Assor Bell & Peskoe LLP

437 Madison Avenue

New York, New York 10022

Attn: Lawrence M. Bell, Esq.

Tel: (212) 907-7300

Fax: (212) 754-0330

(b)

If to the Holder, to the address set forth below or as shown on the books of the Company as such may be changed from time to time.

Tel:

Fax:

With a copy to (which copy shall not constitute notice):

Tel:

Fax:

11.

Entire Agreement: Modification . This Warrant, together with the registration rights provisions contained in the Registration Rights Agreement, contains the entire understanding between the parties hereto with respect to the subject matter hereof, and the terms and provisions of this Warrant may only be modified, waived or amended in writing. Any modification, waiver or amendment executed by the Company and the Holder (or the Holders holding a majority of the Warrant Shares or the other securities, property or rights issuable upon exercise of the Warrants, as the case may be) shall be binding on the Holder (or all Holders, as the case may be). Notice of any modification, waiver or amendment shall be promptly provided to any Holder not consenting to such modification, waiver or amendment.

12.

Assignment . The Holder may assign to one or more assignees (each an “ Assignee ”) all, or any part, of the Warrant; provided that the Company may continue to deal solely and directly with the Holder in connection with the interest assigned to the Assignee until (i) written notice of such assignment has been given to the Company by the Holder and the Assignee, and (ii) the Holder and the Assignee have

delivered to the Company a document reflecting the assignment and acceptance, as reasonably acceptable to the Company. The assignment of the Warrant does not transfer the registration rights provided pursuant to the Registration Rights Agreement, which are unique to the initial Holder.

13.

Successors . All the covenants and provisions of the Warrant shall be binding upon and inure to the benefit of the Company, the Holders and their respective permitted successors and assigns hereunder.

14.

Governing Law; Submission to Jurisdiction . This Warrant shall be governed by and construed in accordance with the internal laws of the State of Delaware without regard to the conflicts of laws principles thereof. The parties hereto hereby irrevocably agree that any suit or proceeding arising directly and/or indirectly pursuant to or under this Warrant, shall be brought solely in a federal or state court located in the State of Delaware. By its execution hereof, the parties hereby covenant and irrevocably submit to the in personam jurisdiction of the federal and state courts located in the City of Wilmington, State of Delaware and agree that any process in any such action may be served upon any of them personally, or by certified mail or registered mail upon them or their agent, return receipt requested, with the same full force and effect as if personally served upon them in the City of Wilmington, State of Delaware. The parties hereto waive any claim that any such jurisdiction is not a convenient forum for any such suit or proceeding and any defense or lack of in personam jurisdiction with respect thereto. In the event of any such action or proceeding, the party prevailing therein shall be entitled to payment from the other party hereto of its reasonable counsel fees and disbursements in an amount judicially determined.

15.

Severability . If any term, provision, covenant or restriction of this Warrant is held to be invalid, illegal, void or unenforceable in any respect, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

16.

Headings . The caption headings of the sections of the Warrant are for convenience of reference only and are not intended to be, nor should they be construed as, a part of the Warrant and shall be given no substantive effect.

17.

Benefits of This Warrant . Nothing in the Warrant shall be construed to give to any person, corporation or other entity other than the Company and any registered Holder(s) of the Warrant(s) any legal or equitable right, remedy or claim under the Warrant; and the Warrant shall be for the sole and exclusive benefit of the Company and any Holder(s) of the Warrant.

18.

Counterparts . This Warrant may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same instrument and shall become effective when counterparts have been signed by each party and delivered to the other parties hereto, it being understood that all parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof.

IN WITNESS HEREOF, the parties hereto have caused this Warrant to be duly executed by their respective authorized officer as of the date first above written.


			CICERO INC.

			By:	/s/
			Name:	John Broderick
			Title:	CEO


			HOLDER

			By:
			Name:
			Title:

EXHIBIT A

FORM OF SUBSCRIPTION (CASH EXERCISE)

(To be signed only upon exercise of Warrant)


TO:	Cicero Inc.

The undersigned holder of Warrant dated ________________ (the “ Warrant ”), of Cicero Inc. (the “ Company ”), which is being delivered herewith, hereby irrevocably elects to purchase ______________ Warrant Shares (as defined in the Warrant), and herewith makes payment of $ _________________ therefore, all in accordance with the Warrant. Certificates for the Warrant Shares shall be issued in the name of ________________ and delivered to the following address:


By:
Name:
Social Security Number or Tax Identification Number:
Date:

(Signature must conform in all respects to name of Holder as specified in the Warrant)

EXHIBIT B

FORM OF SUBSCRIPTION (CASHLESS EXERCISE)


TO:	Cicero Inc.

The undersigned holder of Warrant dated _________________ (the “ Warrant ”), of Cicero Inc. (the “ Company ”), which Warrant is being delivered herewith, hereby irrevocably elects to exercise (on a conversion right basis, in accordance with the formula set forth in Section 2.3 of the Warrant with respect to __________________ Warrant Shares (as defined in the Warrant), all in accordance with the Warrant. Certificates for the Warrant Shares shall be issued in the name of _____________________ and delivered to the following address:


By:
Name:
Social Security Number or Tax Identification Number:
Date:

(Signature must conform in all respects to name of Holder as specified on the face of the Warrant)

FORM OF ASSIGNMENT

(To be used by the registered holder if such Holder desires to transfer the Warrant)

FOR VALUE RECEIVED ______________________________________________ hereby sells, assigns and transfers unto:

Print Name of Transferee: ____________________________________________________

Address: ___________________________________________________________________

City State Zip Code:_________________________________________________________

Social Security or Federal Tax ID Number: _____________________________________

this Warrant, originally dated __________ 2010, and issued by Cicero Inc. (“ Company ”), together with all right, title and interest therein, and does hereby irrevocably constitute and appoint ___________________________ as its Attorney in Fact, to transfer the Warrant on the books of the Company, with full power of substitution.


Dated:			Signature:




			(Signature must conform in all respects to name of Holder as specified on the face of the Warrant)

Exhibit 4.4

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (this “ Agreement ”) is made and entered into as of January 15, 2010, by and among Cicero Inc., a corporation organized and existing under the laws of the State of Delaware (the “ Company ”), the purchaser whose signature appears on the signature pages of this Agreement under the caption “Purchaser” and any additional purchasers of Series B Preferred Stock and Warrants (each as defined below) that become parties to this Agreement in accordance with Section 8(m) hereof (collectively, the “ Purchasers ”).

This Agreement is being entered into pursuant to the Securities Purchase Agreement, dated as of the date hereof, between the Company and the Purchaser (the “ Purchase Agreement ”), relating to the private offering of not less than $1,000,000 in the aggregate of Series B Preferred Stock, par value $.001 per share, of the Company (the “ Series B Preferred Stock ”), and warrants (the “ Warrants ”) to acquire shares of Common Stock, par value $.001 per share, of the Company.

The Company and the Purchasers hereby agree as follows:

Definitions .

As used in this Agreement, the following terms shall have the following meanings:

“ 415 Notice ” shall have the meaning set forth in Section 2(b ).

“ 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.

“ Board ” shall have meaning set forth in Section 3(k) .

“ Business Day ” means any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of New York generally are authorized or required by law or other government actions to close.

“ Commission ” means the Securities and Exchange Commission.

“ Common Stock ” means the Common Stock, par value $.001 per share, of the Company.

“ Conversion Shares ” means shares of Common Stock issued or issuable upon conversion of the Series B Preferred Stock.

Exhibit 4.4

“ Effectiveness Date ” means, subject to Section 2(b) hereof, with respect to the Registration Statement the earlier of (A) the one hundred eightieth (180 ^th ) day following the Initial Closing Date or (B) the date which is within three (3) Business Days after the date on which the Commission informs the Company (i) that the Commission will not review the Registration Statement or (ii) that the Company may request the acceleration of the effectiveness of the Registration Statement and the Company makes such request; provided that , if the Effectiveness Date falls on a Saturday, Sunday or any other day which shall be a legal holiday or a day on which the Commission is authorized or required by law or other government actions to close, the Effectiveness Date shall be the following Business Day.

“ Effectiveness Period ” shall have the meaning set forth in Section 2(a) .

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

“ Filing Date ” means, subject to Section 2(b) hereof, the one hundred twentieth (120 ^th ) day following the Initial Closing Date; provided that , if the Filing Date falls on a Saturday, Sunday or any other day which shall be a legal holiday or a day on which the Commission is authorized or required by law or other government actions to close, the Filing Date shall be the following Business Day.

“ FINRA ” means the Financial Industry Regulatory Authority.

“ Holder ” or “ Holders ” means the holder or holders, as the case may be, from time to time of Registrable Securities.

“ Indemnified Party ” shall have the meaning set forth in Section 6(c) .

“ Indemnifying Party ” shall have the meaning set forth in Section 6(c) .

“ Initial Closing Date ” means the date of the initial closing of the purchase and sale of the shares of Series B Preferred Stock and the Warrants pursuant to the Purchase Agreement.

“ Losses ” shall have the meaning set forth in Section 6(a) .

“ Person ” means an individual or a corporation, limited or general partnership, trust, incorporated or unincorporated association, firm, joint venture, limited liability company, joint stock company, government (or an agency or political subdivision thereof) or other entity of any kind.

“ Proceeding ” means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened.

Exhibit 4.4

“ Prospectus ” means the prospectus included in the Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference in such Prospectus.

“ Registrable Securities ” means (i) the Conversion Shares, (ii) the Warrant Shares and (iii) shares of Common Stock issued in respect of the foregoing as a result of stock splits, stock dividends, reclassifications, recapitalizations, or other similar events. At such time as any Conversion Shares or Warrant Shares or shares of Common Stock are sold pursuant to the Registration Statement or Rule 144, or may be sold without restriction pursuant to Rule 144, then such shares shall cease to be Registrable Securities.

“ Registration Statement ” means the registration statement and any additional registration statements contemplated by Section 2 , including (in each case) the Prospectus, amendments and supplements to such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference in such registration statement.

“ Rule 144 ” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

“ Rule 158 ” means Rule 158 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

“ Rule 415 ” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

“ Rule 424 ” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

“ Securities Act ” means the Securities Act of 1933, as amended.

“ Warrant Shares ” means shares of Common Stock issued or issuable upon the exercise of the Warrants.

Resale Registration .

Exhibit 4.4

(a)

On or prior to the Filing Date, the Company shall prepare and file with the Commission a “resale” Registration Statement providing for the resale of all Registrable Securities for an offering to be made on a continuous basis pursuant to Rule 415. The Registration Statement shall be on Form S-1 (or another appropriate form in accordance herewith and with the Securities Act and the rules promulgated thereunder). Such Registration Statement shall cover to the extent allowable under the Securities Act and the rules promulgated thereunder (including Rule 416), such indeterminate number of additional shares of Common Stock resulting from stock splits, stock dividends or similar transactions with respect to the Registrable Securities. The Company shall use commercially reasonable efforts to cause the Registration Statement to be declared effective under the Securities Act as promptly as possible after the filing thereof, but in any event prior to the Effectiveness Date, and to keep such Registration Statement continuously effective under the Securities Act until such date as is the earlier of (x) the date when all Registrable Securities covered by such Registration Statement have been sold or (y) the date on which the Registrable Securities may be sold without any restriction pursuant to Rule 144 as determined by the counsel to the Company pursuant to a written opinion letter, addressed to the Company’s transfer agent to such effect (the “ Effectiveness Period ”). If at any time and for any reason an additional Registration Statement is required to be filed because at such time the actual number of Conversion Shares and Warrant Shares exceeds the number of shares of Registrable Securities remaining under the Registration Statement, the Company shall have thirty (30) Business Days to file such additional Registration Statement, and the Company shall use commercially reasonable efforts to cause such additional Registration Statement to be declared effective by the Commission as soon as possible, but in no event later than ninety (90) days after.

(b)

Notwithstanding anything to the contrary set forth in this Section 2 , in the event the Commission does not permit the Company to register all of the Registrable Securities in the Registration Statement because of the Commission’s application of Rule 415 (a “ 415 Notice ”), the Company shall, within ten (10) days of receipt of the 415 Notice, register in the Registration Statement such number of Registrable Securities as is permitted by the Commission, provided , however , that the Registrable Securities to be included in such Registration Statement or any subsequent registration statement shall be determined in the following order: (i) first, the Warrant Shares shall be registered on a pro rata basis among the Purchasers, (ii) second, the Conversion Shares shall be registered on a pro rata basis among the Purchasers, and (iii) third, any securities of the Company included or to be included in such Registration Statement pursuant to piggyback or demand registration rights shall be registered on a pro rata basis. In the event the Commission does not permit the Company to register all of the Registrable Securities in the initial Registration Statement, the Company shall file subsequent Registration Statements to register the Registrable Securities that were not registered in the initial Registration Statement as promptly as possible and in a manner permitted by the Commission. For purposes of this Section 2(b), “ Filing Date ” means with respect to each subsequent Registration Statement filed pursuant hereto, the later of (i) thirty (30) days following the sale of substantially all of the Registrable Securities included in the initial Registration Statement or any subsequent Registration Statement and (ii) six (6) months following the effective date of the initial Registration Statement or any subsequent Registration Statement, as applicable, or such earlier date as permitted by the Commission. For purposes of this Section 2(b) , “ Effectiveness Date ” means with respect to each subsequent Registration Statement filed pursuant hereto, the earlier of (A) the ninetieth (90 ^th ) day following the filing date of such Registration Statement (or in the

Exhibit 4.4

event the Commission reviews the Registration Statement, the one hundred twentieth (120 ^th ) day following such filing date) or (B) the date which is within three (3) Business Days after the date on which the Commission informs the Company (i) that the Commission will not review such Registration Statement or (ii) that the Company may request the acceleration of the effectiveness of such Registration Statement and the Company makes such request; provided that , if the Effectiveness Date falls on a Saturday, Sunday or any other day which shall be a legal holiday or a day on which the Commission is authorized or required by law or other government actions to close, the Effectiveness Date shall be the following Business Day.

Registration Procedures .

In connection with the Company’s registration obligations hereunder, the Company shall:

(a)

Prepare and file with the Commission, on or prior to the applicable Filing Date, a Registration Statement on Form S-1 (or another appropriate form in accordance herewith and with the Securities Act and the rules promulgated thereunder) (which, subject to any comments of the Commission, shall contain a plan of distribution substantially as set forth on Exhibit A hereto) and in accordance with applicable law, rules, regulations and Commission policies, and use commercially reasonable efforts to cause the Registration Statement to become effective and remain effective as provided herein; provided , however , that not less than five (5) Business Days prior to the filing of the Registration Statement or any related Prospectus or any amendment or supplement thereto, the Company shall furnish to the Holders copies of all such documents proposed to be filed, which documents will be subject to the review of such Holders. The Company shall not file the Registration Statement or any such Prospectus or any amendments or supplements thereto to which the Holders of a majority of the Registrable Securities shall reasonably object in writing within three (3) Business Days of their receipt thereof.

(b)

(i) Prepare and file with the Commission such amendments, including post-effective amendments, to the Registration Statement as may be necessary to keep the Registration Statement continuously effective as to the applicable Registrable Securities for the Effectiveness Period and, subject to Section 2(b) , prepare and file with the Commission such additional Registration Statements in order to register for resale under the Securities Act all of the Registrable Securities; (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424 (or any similar provisions then in force) promulgated under the Securities Act; (iii) respond as promptly as possible, but in no event later than twenty (20) Business Days, to any comments received from the Commission with respect to the Registration Statement or any amendment thereto and as promptly as possible provide the Holders true and complete copies of all material correspondence from and to the Commission relating to the Registration Statement; provided , however , that the Company shall not provide the Holders with any portion of such correspondence that in the reasonable opinion of counsel to the Company constitutes material non-public information or that is otherwise competitively sensitive; (iv) file the final prospectus pursuant to Rule 424 of the Securities Act no later than 9:00 a.m. Eastern Time on the second Business Day following the date the Registration Statement is declared effective by the Commission; and (v) comply in all material respects with the provisions of the Securities Act

Exhibit 4.4

and the Exchange Act with respect to the disposition of all Registrable Securities covered by the Registration Statement during the Effectiveness Period in accordance with the intended methods of disposition by the Holders thereof set forth in the Registration Statement as so amended or in such Prospectus as so supplemented.

(c)

Notify the Holders of Registrable Securities as promptly as possible (and, in the case of (i)(A) below, not less than three (3) days prior to such filing, and in the case of (iii) below, on the same day of receipt by the Company of such notice from the Commission): (i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment to the Registration Statement is filed, (B) when the Commission notifies the Company whether there will be a “review” of such Registration Statement and whenever the Commission comments in writing on such Registration Statement, and (C) with respect to the Registration Statement or any post-effective amendment, when the same has become effective; (ii) of any request by the Commission or any other Federal or state governmental authority for amendments or supplements to the Registration Statement or Prospectus or for additional information; (iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement covering any or all of the Registrable Securities or the initiation or threatening of any Proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose; and (v) of the occurrence of any event that makes any statement made in the Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to the Registration Statement, Prospectus or other documents so that, in the case of the Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(d)

Use commercially reasonable efforts to avoid the issuance of, or, if issued, obtain the withdrawal of, as promptly as possible, (i) any order suspending the effectiveness of the Registration Statement or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction.

(e)

Promptly deliver to each Holder, without charge, one copy of the Prospectus or Prospectuses (including each form of prospectus) and each amendment or supplement thereto; and subject to the provisions of Sections 3(e) and 3(k) , the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto.

(f)

Prior to any public offering of Registrable Securities, use its commercially reasonable efforts to register or qualify or cooperate with the selling Holders in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions within the United States as any Holder requests in writing, to keep each such registration or qualification (or exemption therefrom) effective during the Effectiveness Period

Exhibit 4.4

and to do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Registrable Securities covered by a Registration Statement; provided , however , that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or to take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject or subject the Company to any material tax in any such jurisdiction where it is not then so subject.

(g)

Cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold pursuant to a Registration Statement, which certificates, to the extent permitted by the Purchase Agreement and applicable federal and state securities laws, shall be free of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any Holder may reasonably request in connection with any sale of Registrable Securities.

(h)

Upon the occurrence of any event contemplated by Section 3(c)(vi) , as promptly as possible, prepare a supplement or amendment, including a post-effective amendment, to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, neither the Registration Statement nor such Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(i)

Use commercially reasonable efforts to cause all Registrable Securities relating to the Registration Statement to be quoted on the OTC Bulletin Board or any other securities exchange, quotation system or market, if any, on which similar securities issued by the Company are then listed, quoted or traded.

(j)

Comply in all material respects with all applicable rules and regulations of the Commission and make generally available to its security holders all documents filed or required to be filed with the Commission.

(k)

Notwithstanding anything in this Agreement to the contrary, if (i) there is material non-public information regarding the Company which the Company’s Board of Directors (the “ Board ”) determines not to be in the Company’s best interest to disclose and which the Company is not otherwise required to disclose, (ii) there is a significant business opportunity (including, but not limited to, the acquisition or disposition of assets (other than in the ordinary course of business) or any merger, consolidation, tender offer or other similar transaction) available to the Company which the Board determines not to be in the Company’s best interest to disclose, or (iii) the Company is required to file a post-effective amendment to the Registration Statement to incorporate the Company’s quarterly and annual reports and audited financial statements on Forms 10-Q and 10-K, then the Company may (x) postpone or suspend filing of a registration statement for a period not to exceed sixty (60) consecutive days or (y) postpone or suspend effectiveness of a registration statement for a period not to exceed sixty (60) consecutive days; provided that the Company may not postpone or suspend effectiveness of a registration statement under this Section 3(k) for more than ninety (90) days in the aggregate during any 360 day period; provided , further , that no such postponement or suspension shall be

Exhibit 4.4

permitted for consecutive sixty (60) day periods arising out of the same set of facts, circumstances or transactions.

Obligations of the Holders .

(a)

It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Agreement that the selling Holders shall furnish to the Company information regarding such Holder and the distribution of such Registrable Securities as is required by law to be disclosed in the Registration Statement, Prospectus, or any amendment or supplement thereto, and the Company may exclude from such registration the Registrable Securities of any such Holder who unreasonably fails to furnish such information promptly after receiving such request. Additionally, each Holder shall promptly notify the Company of any changes in the information furnished to the Company pursuant hereto.

(b)

Each Holder agrees to cooperate with the Company as reasonably requested by the Company in connection with the filing of any Registration Statement hereunder, unless such Holder has notified the Company in writing that such Holder elects to exclude all of its Registrable Securities from such Registration Statement.

(c)

Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it or an exemption therefrom in connection with sale of Registrable Securities pursuant to any Registration Statement.

(d)

Each Holder who is a member or affiliated or associated with members of FINRA will agree, if requested by FINRA, to sign a lock-up, the form of which shall be satisfactory to FINRA, with respect to any Registrable Securities.

(e)

Each Holder agrees by its acquisition of such Registrable Securities that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Section 3(c)(ii ), 3(c)(iii) , 3(c)(iv) , 3(c)(v) or 3(k) , such Holder will forthwith discontinue disposition of such Registrable Securities under the Registration Statement until such Holder’s receipt of the copies of the supplemented Prospectus and/or amended Registration Statement contemplated by Section 3(h) , or until it is advised in writing by the Company that the use of the applicable Prospectus may be resumed, and, in either case, has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus or Registration Statement.

Registration Expenses .

All fees and expenses incident to the performance of or compliance with this Agreement by the Company, except as and to the extent specified in this Section 5 , shall be borne by the Company whether or not the Registration Statement is filed or becomes effective and whether or not any Registrable Securities are sold pursuant to the Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses (A) with respect to filings required to be made with the OTC Bulletin Board and/or each other securities exchange or market on which Registrable Securities are required hereunder to be quoted or listed, if any (B) with respect to filing fees required to be paid to FINRA, if any, each as applicable, and (C) in

Exhibit 4.4

compliance with state securities or Blue Sky laws), (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities Act liability insurance, if the Company so desires such insurance, and (vi) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement, including, without limitation, the Company’s independent public accountants (including the expenses of any comfort letters or costs associated with the delivery by independent public accountants of a comfort letter or comfort letters). In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit, the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder. The Company shall not be responsible for any discounts, commissions, transfer taxes or other similar fees incurred by the Holders in connection with the sales of the Registrable Securities.

Indemnification .

(a)

Indemnification by the Company . The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder, the officers, directors, managers, partners, members, shareholders, agents, brokers, investment advisors and employees of each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, agents and employees of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, costs of preparation and reasonable attorneys’ fees) and expenses (collectively, “ Losses ”), as incurred, arising out of or relating to any violation of securities laws by the Company or untrue or alleged untrue statement of a material fact contained in the Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, except to the extent, but only to the extent, that such untrue statements or omissions are based solely upon information about the plan of distribution or regarding such Holder or such other Indemnified Party furnished or approved in writing to the Company by such Holder expressly for use therein. The Company shall notify the Holders promptly of the institution, written threat or assertion of any Proceeding of which the Company is aware in connection with the transactions contemplated by this Agreement.

(b)

Indemnification by Holders . Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents and employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses, as incurred, arising out of or based upon (i) any breach of this Agreement by such Holder and (ii) any untrue statement of a material fact contained in the Registration Statement, any

Exhibit 4.4

Prospectus, or any form of prospectus, or in any amendment or supplement thereto, or arising out of or based upon any omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, to the extent, but only to the extent, that such untrue statement or omission is contained in any information (including the plan of distribution) so furnished or approved in writing by such Holder or other Indemnifying Party to the Company specifically for inclusion in the Registration Statement or such Prospectus. Notwithstanding anything to the contrary contained herein, each Holder shall be liable under this Section 6(b) for only that amount as does not exceed the net proceeds to such Holder as a result of the sale of Registrable Securities pursuant to such Registration Statement.

(c)

Conduct of Indemnification Proceedings . If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “ Indemnified Party ”), such Indemnified Party promptly shall notify the Person from whom indemnity is sought (the “ Indemnifying Party ) in writing, and the Indemnifying Party shall be entitled to assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof (including reasonable attorneys’ fees and expenses); provided , that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have proximately and materially adversely prejudiced the Indemnifying Party.

An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses; or (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such parties shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and such counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld or delayed. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending or threatened Proceeding in respect of which any Indemnified Party is a party and indemnity has been sought hereunder, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.

All fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such

Exhibit 4.4

Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten (10) Business Days of written notice thereof to the Indemnifying Party (regardless of whether it is ultimately determined that an Indemnified Party is not entitled to indemnification hereunder; provided , that the Indemnified Party shall reimburse all such fees and expenses to the extent it is finally judicially determined that such Indemnified Party is not entitled to indemnification hereunder).

(d)

Contribution . If a claim for indemnification under Section 6(a) or 6(b) is due but unavailable to an Indemnified Party because of a failure or refusal of a governmental authority to enforce such indemnification in accordance with its terms (by reason of public policy or otherwise), then each 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, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party 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 of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying, Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in Section 6(c) , any reasonable attorneys’ or other reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms. In no event shall any selling Holder be required to contribute an amount under this Section 6(d) in excess of the net proceeds received by such Holder upon sale of such Holder’s Registrable Securities pursuant to the Registration Statement giving rise to such contribution obligation.

The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 6(d) were determined by pro rata allocation or by any other method of allocation that does not take into account 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.

Rule 144 . Until such time as all of the Registrable Securities may be sold without restriction pursuant to Rule 144, as long as any Holder owns shares of Series B Preferred Stock, Warrants or Registrable Securities, 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 Section 13(a) or 15(d) of the Exchange Act. Until such time as all of the Registrable Securities may be sold without restriction pursuant to Rule 144, as long as any Holder owns shares of Series B Preferred Stock, Warrants or Registrable Securities, if the Company is not required to file reports pursuant to Section 13(a) or 15(d) of the Exchange Act, it will use its commercially reasonable efforts to prepare and make publicly available in accordance with Rule 144(c) promulgated under the Securities Act annual and

Exhibit 4.4

quarterly financial statements, together with a discussion and analysis of such financial statements in form and substance substantially similar to those that would otherwise be required to be included in reports required by Section 13(a) or 15(d) of the Exchange Act, as well as any other information required thereby, in the time period that such filings would have been required to have been made under the Exchange Act; provided that the provisions of this sentence shall be of no further force and effect in the event of any sale of the Company or substantially all of its assets.

Miscellaneous .

(a)

Remedies . In the event of a breach by the Company or by a Holder, of any of their obligations under this Agreement, such Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. The Company and each Holder agrees that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law would be adequate.

(b)

No Inconsistent Agreements . Neither the Company nor any of its subsidiaries has, as of the date hereof entered into and currently in effect, nor shall the Company or any of its subsidiaries, on or after the date of this Agreement, enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof.

(c)

Amendments and Waivers . The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and the Holders of a majority of the Registrable Securities outstanding (the “ Required Holders ”).

(d)

Notices . Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand delivery or delivery by telex (with correct answer back received) or facsimile at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:

If to the Company:

Cicero Inc.

8000 Regency Parkway

Cary, NC 27518

Attention: John Broderick

Tel. No.: (919) 380-5000

Fax No.: (919) 380-5121

Exhibit 4.4



with a copy to (which copy shall not constitute notice):	Golenbock Eiseman Assor Bell & Peskoe LLP 437 Madison Avenue New York, New York 10022 Attention: Lawrence Bell, Esq. Tel. No.: (212) 907-7300 Fax No.: (212) 754-0330
If to any Purchaser:	To the address set forth on the signature page hereto

Any party hereto may from time to time change its address for notices by giving at least ten (10) days’ written notice of such changed address to the other party hereto.

(e)

Assignment . The Company may not assign this Agreement or any of its rights or obligations hereunder without the prior written consent of the Required Holders. Subject to Section 8(f) below, the Holders may not assign this Agreement or any of their rights or obligations hereunder without the prior written consent of the Company.

(f)

Assignment of Registration Rights for Conversion Shares . The rights of each Holder hereunder to have the Company register for resale the Conversion Shares in accordance with the terms of this Agreement shall be assignable by such Holder to any Person to whom shares of Preferred Stock or Conversion Shares are transferred if: (i) the Holder agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment, (ii) the Company is, as promptly as possible after such transfer or assignment, furnished with written notice of (a) the name and address of such transferee or assignee, and (b) the securities with respect to which such registration rights are being transferred or assigned, (iii) following such transfer or assignment the further disposition of such securities by the transferee or assignees is restricted under the Securities Act and applicable state securities laws, (iv) at or before the time the Company receives the written notice contemplated by clause (ii) of this Section, the transferee or assignee agrees in writing with the Company to be bound by all of the provisions of this Agreement, and (v) such transfer shall have been made in accordance with the applicable requirements of the Purchase Agreement and applicable law. The rights to assignment shall apply to the Holders (and to subsequent) successors and assigns. For the avoidance of doubt, the assignment of any Warrant or Warrant Shares shall not transfer the registration rights applicable to Warrant Shares provided herein, which registration rights are unique to the initial Holders of the Warrants.

(g)

Counterparts . This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement and shall become effective when counterparts have been signed by each party and delivered to the other parties hereto, it being understood that all parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the

Exhibit 4.4

party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof.

(h)

Cumulative Remedies . The remedies provided herein are cumulative and not exclusive of any remedies provided by law.

(i)

Severability . If any term, provision, covenant or restriction of this Agreement is held to be invalid, illegal, void or unenforceable in any respect, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

(j)

Headings . The caption headings of the sections of this Agreement are for convenience of reference only and are not intended to be, nor should they be construed as, a part of this Agreement and shall be given no substantive effect.

(k)

Shares Held by the Company and its Affiliates . Whenever the consent or approval of Holders of a specified percentage of Registrable Securities is required hereunder, Registrable Securities held by the Company or its Affiliates (other than any Holder or transferees or successors or assigns thereof if such Holder is deemed to be an Affiliate solely by reason of its holdings of such Registrable Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage.

(l)

Aggregation of Stock . All securities held or acquired by Affiliates shall be aggregated together for the purpose of determining the availability of any rights under this Agreement and such Affiliated persons may apportion such rights as among themselves in any manner they deem appropriate.

(m)

Additional Investors . Notwithstanding anything to the contrary contained herein, if the Company issues additional shares of the Company’s Series B Preferred Stock, any purchaser of such shares of Series B Preferred Stock and Warrants may become a party to this Agreement by executing and delivering an additional counterpart signature page to this Agreement, and thereafter shall be deemed a “Purchaser” for all purposes hereunder. No action or consent by the Purchasers shall be required for such joinder to this Agreement by such additional Purchaser, so long as such additional Purchaser has agreed in writing to be bound by all of the obligations as a “Purchaser” hereunder.

(n)

Governing Law; Submission to Jurisdiction . This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware without regard to the conflicts of laws principles thereof. The parties hereto hereby irrevocably agree that any suit or proceeding arising directly and/or indirectly pursuant to or under this Agreement, shall be brought solely in a federal or state court located in the State of Delaware. By its execution hereof, the parties hereby consent and irrevocably submit to the in personam

Exhibit 4.4

jurisdiction of the federal and state courts located in the City of Wilmington, State of Delaware and agree that any process in any such action may be served upon any of them personally, or by certified mail or registered mail upon them or their agent, return receipt requested, with the same full force and effect as if personally served upon them in the City of Wilmington, State of Delaware. The parties hereto waive any claim that any such jurisdiction is not a convenient forum for any such suit or proceeding and any defense or lack of in personam jurisdiction with respect thereto. THE PARTIES HERETO AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DOCUMENT OR AGREEMENT CONTEMPLATED HEREBY. THE PARTY PREVAILING THEREIN SHALL BE ENTITLED TO PAYMENT FROM THE OTHER PARTY HERETO OF ALL OF ITS REASONABLE COUNSEL FEES AND DISBURSEMENTS.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officer as of the date first above written.


	COMPANY:

	CICERO INC

	By:	/s/
	Name: John Broderick
	Title: CEO/CFO

Exhibit 4.4


	PURCHASER:

	[PURCHASER]

	By:	/s/
	Name:
	Title

	Address:





	Email:

EXHIBIT A

Plan of Distribution

The selling security holders and any of their pledgees, donees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of common stock being offered under this prospectus on any stock exchange, market or trading facility on which shares of our common stock are traded or in private transactions. These sales may be at fixed or negotiated prices. The selling security holders may use any one or more of the following methods when disposing of shares:

ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

purchases by a broker-dealer as principal and resales by the broker-dealer for its account;

an exchange distribution in accordance with the rules of the applicable exchange;

privately negotiated transactions;

broker-dealers may agree with the selling security holders to sell a specified number of such shares at a stipulated price per share;

a combination of any of these methods of sale; and

any other method permitted pursuant to applicable law.

The shares may also be sold under Rule 144 under the Securities Act of 1933, as amended (“Securities Act”), if available, rather than under this prospectus. The selling security holders have the sole and absolute discretion not to accept any purchase offer or make any sale of shares if they deem the purchase price to be unsatisfactory at any particular time.

The selling security holders may pledge their shares to their brokers under the margin provisions of customer agreements. If a selling security holder defaults on a margin loan, the broker may, from time to time, offer and sell the pledged shares.

Broker-dealers engaged by the selling security holders may arrange for other broker-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling security holders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated, which commissions as to a particular broker or dealer may be in excess of customary commissions to the extent permitted by applicable law.

The selling security holders and any broker-dealers or agents that are involved in selling the shares offered under this prospectus may be deemed to be “underwriters” within the meaning of the Securities Act in connection with these sales. Commissions received by these broker-

dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Any broker-dealers or agents that are deemed to be underwriters may not sell shares offered under this prospectus unless and until we set forth the names of the underwriters and the material details of their underwriting arrangements in a supplement to this prospectus or, if required, in a replacement prospectus included in a post-effective amendment to the registration statement of which this prospectus is a part.

We have agreed to pay all fees and expenses we incur incident to the registration of the shares being offered under this prospectus. However, each selling security holder and purchaser is responsible for paying any discounts, commissions and similar selling expenses they incur.

We and the selling security holders have agreed to indemnify one another against certain losses, damages and liabilities arising in connection with this prospectus, including liabilities under the Securities Act.

Exhibit 99

[CICN_EX99002.GIF]

Cicero Inc. Acquires Assets of SOAdesk, LLC;

Closes Initial Round of Series B Preferred Offering

Acquisition Unites Best of Breed Desktop Integration and Leading Customer Interaction Management Software; Combined Products Offer Complete Customer Interaction Management Platform to Reduce Enterprise Costs and Help Companies Deliver an Improved Customer Experience

Cary, NC—January 19, 2010—Cicero Inc. (BB: CICN), a leading provider of desktop automation and integration solutions, announced today that it has completed the acquisition of SOAdesk, LLC’s innovative Customer Interaction Management (CIM) technology – United Desktop® -- through an Asset Purchase Agreement dated as of January 15, 2010 among Cicero, SOAdesk, and Vertical Thought, Inc., an affiliate of SOAdesk. Simultaneously, Cicero has also closed an offering of an initial round of its Series B Convertible Preferred Stock.

As a result of the acquisition, Cicero will provide a new set of product offerings called Cicero XM™ that combine Cicero’s leading desktop integration software with SOAdesk’s United Desktop® technology. Under the terms of the acquisition, Cicero has agreed to pay a minimum of $2.525 million over the next three years through a combination of stock and cash for the assets of SOAdesk. In addition, SOAdesk could earn additional consideration based upon certain earn-out formulas within the contract. The initial Series B round of Convertible Preferred Stock, in excess of $1.35 million, will provide funding for the acquisition and working capital to launch the new products.

“This acquisition combines our expertise in surface integration with SOAdesk’s United Desktop technology, enabling us to provide our customers and partners with the tools and solutions they need to deliver exceptional customer interactions while leveraging an enterprise’s existing technology assets and data. Partners and analysts all agree – to win and keep customers, you must be able to work faster, smarter and provide better service to your customers,” said John Broderick, Chief Executive Officer for Cicero. “Today, we can say that we believe we provide the first and only CIM solution that excels in all three areas – while allowing clients to adapt to changes in their business model practically overnight. This combination enables real business transformation for our clients and we’re excited to be able to deliver it all under one roof.”

The acquisition makes Cicero, a pioneer in desktop integration and automation, a much broader provider of solutions in the contact services marketplace, estimated by many analysts to be in excess of $1.5 billion per year. By acquiring SOAdesk’s United Desktop® technology, Cicero is now the only company to offer organizations a complete customer interaction management platform that leverages an enterprise’s existing technology assets and data, and repurposes it to provide employees the information they need, when they need it and how they need it, to be able to serve customers faster, more accurately and in a brand-positive way.

“Cicero’s sweet spot has been its ability to integrate disparate applications quickly and seamlessly, providing a very rapid return on investment for its customers,” added Broderick. “Our core technology will be enhanced by SOADesk’s United Desktop, which together will allow customers to choose and grow from surface integration solutions up the solutions stack, to complete customer interaction management solutions.”

Complementing the existing Cicero team, Tony Castagno, CEO of SOAdesk, will lead the technology team as Chief Technology Officer (CTO). Jim Hunt, CTO of SOAdesk, will head product development, and Mike Garner, President and founder of SOAdesk, will lead worldwide sales.

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Cicero’s current desktop product, Cicero Integrator, will continue to provide award-winning application automation features, and Cicero XM will allow customers to use the power of desktop integration to share data, automate processes, and unify desktop applications, as well as improve customer interactions using the many new features from the United Desktop technology.

Cicero XM will expand Cicero’s existing desktop integration or surface integration solution with new features such as enhanced workflow, a powerful new workspace, and a new configuration toolkit. This combined offering provides an enterprise model for truly managing customer interactions using the best of breed applications and systems that customers already have. Cicero XM will:

Enable business transformation through dramatic improvements in business user efficiency, effectiveness and operational insight.

Help companies improve the overall customer experience they deliver by combining enterprise data from the desktop with telephony and other sources, creating long-term customer loyalty and value to the enterprise.

Reduce costs and increase profitability of each customer interaction using new features such as dynamic scripting, reporting, integrated messaging, and many others.

Under the direction of Tony Castagno as Cicero’s CTO, the company will continue to innovate and leverage emerging technologies to maintain its leadership position in the Customer Interaction Management space.

“My experience with desktop integration has shown that the ultimate goal is to provide organizations with the tools they need to deliver the best customer interaction possible,” said Castagno. “Cicero XM builds upon surface integration by leveraging existing technology investments and adding new features such as dynamic scripting, cross application workflow, telephony integration, and universal enterprise data access, to improve both the agent and customer experience while reducing costs.”

About Cicero Inc.

Cicero, Inc. provides solutions that enable business transformation of enterprise interactions for Global Fortune 500 and other companies and government organizations. Cicero’s XM technology delivers this capability via a unique and innovative combination of integration, automation, presentation and analytics capabilities, built to transform customer interaction into the most powerful marketing and branding asset a company can own. Learn more about Cicero at www.ciceroinc.com .

Cicero, Cicero Integrator, Cicero XM, and United Desktop are trademarks or registered trademarks of Cicero Inc. and/or its affiliates. Other company names and/or products are for identification purposes and are the property of, and may be trademarks of, their respective owners.

Safe Harbor: Except for any historical information contained herein, this news release may contain forward-looking statements on such matters as strategic direction, anticipated return on investment, business prospects, the development and capabilities of the Cicero product group, new products and similar matters. Actual results may differ materially from the anticipated results or other expectations expressed in this release of a variety of factors, including risks that customers may not adopt the Cicero technology, which Cicero Inc. may not successfully execute its new strategic initiative and other risks and uncertainties that could cause actual results to differ materially from such statements. For a description of other factors that could cause such a difference, please see Cicero Inc.’s filings with the Securities and Exchange Commission.

Contact:

Keith Anderson

Director of Client Services

kanderson@ciceroinc.com

919-380-5092