EXHIBIT 10.61
 
 
SUBSCRIPTION AGREEMENT

Name and Address of Subscriber
 
   __________________________
   __________________________
   __________________________
 
Total Amount of Investment
 
$                                                  
                                          
 
 
 

Communication Intelligence Corporation
c/o SG Phoenix LLC
110 East 59th Street, Suite 1901
New York, NY 10022
 
Re:           Series C Preferred Stock and Warrant Offering
 
Ladies and Gentlemen:
 
Reference is hereby made to (i) the confidential term sheet (the “Term Sheet”),
dated March 9, 2011, of Communication Intelligence Corp., a Delaware corporation
(the “Company”), attached hereto as Exhibit A; (ii) the Company’s Annual Report
on Form 10-K for the year ended December 31, 2009; (iii) the Company’s Quarterly
Reports on Form 10-Q for the three months ended March 31, 2010, June 30, 2010
and September 30, 2010; (iv) the Company’s Definitive Proxy Statement on
Schedule 14A filed with the Securities and Exchange Commission (the “SEC”) on
December 21, 2010; and (v) each of the Company’s Current Reports on Form 8-K
filed with the SEC between March 31, 2010 and the date hereof.
 
Pursuant to the Term Sheet, the Company proposes to offer and sell to accredited
investors up to $800,000 of the Company’s Series C Participating Convertible
Preferred Stock (the “Series C Preferred Stock”), at a purchase price of $1.00
per share (the “Offering”).  The Series C Preferred Stock issued in the Offering
will be convertible into shares of the Company’s common stock  (“Common Stock”)
at a conversion price equal to $0.0225 per share. Each share of Series C
Preferred Stock will include a detachable warrant (“Warrant”) to purchase that
number of shares of the Common Stock equal to the Total Amount of Investment (as
defined below) divided by $0.0225 and will expire on December 31, 2013.  The
Warrant will have an initial exercise price of $0.0225 per share.  The Offering
is expected to be consummated no later than March 31, 2011.
 
1. Subscription.  The undersigned hereby executes and delivers this Subscription
Agreement (the “Subscription Agreement”) and subscribes for and agrees to
purchase __________ shares of Series C Preferred Stock at a price per share of
$1.00 and the Warrants attached thereto in the Offering for $___________  (the
“Total Amount of Investment”). The Total Amount of Investment should be remitted
promptly to SG Phoenix LLC (“SG Phoenix”), as escrow agent, upon execution of
this Subscription Agreement and will be held in escrow by SG Phoenix to be used
to purchase shares of Series C Preferred Stock and Warrants in the Offering. The
Total Amount of Investment is payable either by check made out to “CIC Series C
 
 
 

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EXHIBIT 10.61
 
Escrow”, or by wire transfer using the following instructions:
 
 
 
 
 
 
 
 
 
2. Subscription Instruments.  The undersigned is delivering to the Company a
copy of this Subscription Agreement duly completed and executed by the
undersigned.
 
3. Representations and Warranties.  In connection with the undersigned’s
subscription, the undersigned hereby represents and warrants as follows:
 
(a)           (i)           The undersigned acknowledges that the undersigned
has carefully reviewed the Company’s Annual Report on Form 10-K for the year
ended December 31, 2009, including, without limitation, the description of risk
factors contained therein, each of the Company’s Quarterly Reports on Form 10-Q
for the three months ended March 31, 2010, June 30, 2010 and September 30, 2010,
each of the Company’s Current Reports on Form 8-K filed with the SEC between
March 31, 2010 and the date hereof, and the Company’s Definitive Proxy Statement
on Schedule 14A filed with the SEC on December 21, 2010.
 
(ii)           The undersigned has such knowledge and experience in financial
and business matters that he, she or it is capable of evaluating the merits and
risks of an investment in the Company and making an informed investment decision
with respect thereto.  The undersigned has obtained sufficient information to
evaluate the merits and risks of the investment and to make such a decision.
 
(iii)           The undersigned is an “Accredited Investor” (as such term is
defined in Rule 501(a) of Regulation D of the Securities Act of 1933, as amended
(the “Securities Act”)).
 
(b)           The undersigned has had access to all documents, records and books
of the Company which the undersigned (or the undersigned’s advisor) considers
necessary or appropriate to make an informed decision pertaining to this
investment.  Additionally, the undersigned has been provided the opportunity to
ask questions and receive answers concerning the terms and provisions of the
Series C Preferred Stock and the Warrants and to obtain any additional
information which the Company possesses, or can acquire without unreasonable
effort or expense that is relevant to the undersigned’s investment decision.  To
the extent the undersigned has not sought information regarding any particular
matter, the undersigned represents that he, she or it had and has no interest in
doing so and that such matters are not material to the undersigned in connection
with this investment.
 
(c)           The undersigned (i) has adequate means of providing for the
undersigned’s current needs and possible personal contingencies and those of the
undersigned’s family, if applicable, in the same manner as the undersigned would
have been able to provide prior to making the investment contemplated herein,
(ii) has no need for liquidity in this
 
 
 
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EXHIBIT 10.61
 
investment, (iii) is aware of and able to bear the risks of the investment for
an indefinite period of time and (iv) presently, based on existing conditions,
is able to afford a complete loss of such investment.
 
(d)           The undersigned recognizes that an investment in the Series C
Preferred Stock and the Warrants (collectively, the “Securities”) involves
significant risks and the undersigned may lose his, her or its entire investment
in the Securities.
 
(e)           The undersigned understands that the Securities are “restricted
securities” as that term is defined pursuant to Rule 144 of the Securities Act,
and have not been registered under the Securities Act or under certain state
securities laws in reliance upon exemptions therefrom for nonpublic
offerings.  The undersigned understands that the Securities must be held
indefinitely unless the sale thereof is subsequently registered under the
Securities Act and under certain state securities laws or an exemption or
exemptions from such registration are available.  The undersigned understands
that, except as expressly provided in the Term Sheet, the Company is under no
obligation to register the Securities under the Securities Act or to register or
qualify the Securities under any other applicable securities law, or to comply
with any other exemption under the Securities Act or any other securities law,
and that the undersigned has no right to require such registration.
 
(f)           The Securities are being purchased solely for the undersigned’s
account for investment and not for the account of any other person and not with
a view to or for distribution, assignment or resale in connection with any
distribution within the meaning of the Securities Act, and no other person has a
direct or indirect beneficial interest in such Securities.  The undersigned
represents that the undersigned has no agreement, understanding, commitment or
other arrangement with any person and no present intention to sell, transfer or
assign any Securities.
 
(g)           The undersigned agrees not to sell or otherwise transfer the
Securities or the underlying shares of common stock unless they are registered
under the Securities Act and under any applicable state securities laws, or an
exemption or exemptions from such registration are available.
 
(h)           The undersigned has all requisite legal capacity and power to
enter into this Subscription Agreement which constitutes a valid and binding
agreement of the undersigned enforceable against the undersigned in accordance
with its terms; and the person signing this Subscription Agreement on behalf of
the undersigned is empowered and duly authorized to do so.  The undersigned, if
a corporation, partnership, trust or other entity, is authorized and otherwise
duly qualified to purchase and hold the Securities and to enter into this
Subscription Agreement and such entity has not been formed for the specific
purpose of acquiring the Securities in the Company unless all of its equity
owners qualify as accredited individual investors.
 
(i)           All information which the undersigned has provided to SG Phoenix
and the Company concerning the undersigned, the undersigned’s financial position
and knowledge of financial and business matters, or, in the case of a
 
 
 
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EXHIBIT 10.61
 
corporation, partnership, trust or other entity, concerning such knowledge of
the person making the investment decision on behalf of such entity, including
all information contained in this Subscription Agreement, is true, correct and
complete as of the date set forth on the signature page hereof, and if there
should be any adverse change in such information prior to the subscription being
accepted, the undersigned will immediately provide the Company with such
information.
 
(j)           The offering and sale of the Securities to the undersigned were
not made through any advertisement in printed media of general and regular paid
circulation, radio or television or any other form of advertisement, or as part
of a general solicitation.
 
(k)           The undersigned shall pay all sales, transfer, income, use, and
similar taxes arising out of or in connection with the Securities in accordance
with all applicable laws.
 
          4. Confidentiality.  The undersigned hereby acknowledges and agrees
that the Term Sheet and the information contained in this Subscription Agreement
may contain material information about the Company that has not been disclosed
to the public generally.  The undersigned understands that it and its
representatives could be subject to fines, penalties and other liabilities under
applicable securities laws if the undersigned or any of its representatives
trades in the Company’s securities while in possession of any material,
non-public information concerning the Company.  The undersigned agrees not to
trade, and not to allow any of its representatives to trade, in the Company’s
securities until such time as the undersigned or such representatives are no
longer prohibited from so trading under all applicable securities laws (whether
because the Company publicly disclosed all material information about the
Company contained in the Term Sheet and this Subscription Agreement, neither the
Term Sheet nor this Subscription Agreement contains material, non-public
information or otherwise).
 
           5. Indemnification.  The undersigned agrees to indemnify and hold
harmless the Company and its stockholders, officers, directors, employees,
advisors, attorneys and agents (including SG Phoenix) from and against all
liability, damage, losses, costs and expenses (including reasonable attorneys’
fees and court costs) which they may incur by reason of any breach of the
representations and warranties and agreements made by the undersigned herein or
in any document provided by the undersigned to the Company.
 
           6. Market Standoff Provision.  The undersigned hereby agrees that, if
so requested in writing by the Company or any managing underwriter (the
“Managing Underwriter”) in connection with any registration of the offering by
the Company of any securities of the Company under the Securities Act, the
undersigned shall not sell or otherwise transfer any securities of the Company
during the 180-day period (or such other period as may be requested in writing
by the Managing Underwriter and agreed to in writing by the Company) (the
“Market Standoff Period”) following the effective date of a registration
statement of the Company filed under the Securities Act.  The Company may impose
stop-transfer instructions with respect to the Securities subject to the
foregoing restrictions until the end of such Market Standoff Period.
 
           7. Legend.  The undersigned understands and agrees that the Company
will cause the legend set forth below, or a legend substantially equivalent
thereto, to be placed upon any certificate(s) evidencing ownership of the
Securities (or the securities underlying the Securities), together with any
other legend that may be required by federal or state securities laws or deemed
necessary or desirable by the Company:
 
 
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EXHIBIT 10.61
 
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
UNLESS AND UNTIL REGISTERED UNDER SAID ACT OR, IN THE OPINION OF COUNSEL IN FORM
AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE
OR TRANSFER, PLEDGE OR HYPOTHECATION DOES NOT VIOLATE THE PROVISIONS THEREOF.
 
         8. Additional Action.  The undersigned shall, upon the request of SG
Phoenix or the Company, from time to time, execute and deliver promptly to SG
Phoenix or the Company all instruments and documents of further assurances or
otherwise, and will do any and all such acts and things, as may be reasonably
required to carry out the obligations of the undersigned hereunder and to
consummate the transactions contemplated hereby.
    
       9. Miscellaneous.
 
(a)           The undersigned agrees not to transfer or assign this Subscription
Agreement, or any of the undersigned’s interest herein, and further agrees that
the transfer or assignment of the Securities acquired pursuant hereto shall be
made only in accordance with all applicable laws.  The covenants,
representations and warranties contained in this Subscription Agreement shall be
binding on the undersigned’s heirs, legal representatives, successors and
assigns and shall inure to the benefit of the respective successors and assigns
of the Company.
 
(b)           The undersigned agrees that subject to any applicable state law,
the undersigned may not cancel, terminate or revoke this Subscription Agreement
or any agreement of the undersigned made hereunder and that this Subscription
Agreement shall survive the acceptance hereof by the Company as well as the
death or disability of the undersigned and shall be binding upon the
undersigned’s heirs, executors, administrators, successors and assigns.
 
(c)           This Subscription Agreement, together with the Exhibits attached
hereto, constitutes the entire agreement among the parties hereto with respect
to the subject matter hereof and may be amended only by a writing executed by
all parties hereto.
 
(d)           This Subscription Agreement shall be enforced, governed and
construed in all respects in accordance with the laws of the State of New York,
without regard to its conflicts of law rules.
 
(e)           Within five (5) days after receipt of a written request from the
Company, the undersigned agrees to provide such information, to execute and
deliver such documents and to take, or forbear from taking, such actions as may
be necessary to consummate the transactions contemplated herein and to comply
with any and all laws and ordinances to which the Company is subject.
 
 
 
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EXHIBIT 10.61
 
(f)           For the convenience of the parties, any number of counterparts
hereof may be executed and each such executed counterpart shall be deemed an
original, but all such counterparts together shall constitute one and the same
instrument.
 
(g)           This Subscription Agreement may be executed by the undersigned and
transmitted by facsimile to SG Phoenix, as administrative agent, with the
original Subscription Agreement being sent to SG Phoenix and if so executed and
transmitted this Subscription Agreement will be for all purposes as effective as
if the parties had delivered an executed original Subscription Agreement.
 
[Signature Pages Follow]
 

 
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EXHIBIT 10.61

SUBSCRIBER SIGNATURE PAGE

IN WITNESS WHEREOF, the undersigned has duly executed this Subscription
Agreement as of the date first above written.

Total Amount of Investment
 
 
$                                                        
 
 
 
For Individuals:
 
                  
Print Name Above   
 
 
                           
Sign Name Above  
 
 
                      
Social Security Number
 
For Entities:
 
 
                      
Print Name of Entity Above
 
By:                             
Name:
Title:
 
                      
Employer Identification Number
  or Tax ID Number
 

 
 
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EXHIBIT 10.61

SUBSCRIPTION ACCEPTANCE

IN WITNESS WHEREOF, the undersigned hereby accepts the subscription on behalf of
the Company in accordance with the terms of the foregoing Subscription Agreement
as of the date first above written.

SG PHOENIX LLC

By:                                                                                   
Name:
Title:           Member
 
 
 
 
 
 
 
 
 
 
 
                                                                                                                                          
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