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Exhibit 10.11  


 
  THE JOINT VENTURE CONTRACT    
    
    COMMUNICATION INTELLIGENCE COMPUTER CORPORATION, LTD.    
  





 
CHAPTER I—GENERAL PROVISION  


ARTICLE 1  


        In accordance with the "Law of the People's Republic of China on Joint Ventures Using Chinese and Foreign Investment" and other relevant laws and regulations, ED
Computer Software Development Corporation, Jiangsu Province, China, and Communication Intelligence Corporation International, Ltd. in conformity with the principles of equality and mutual
benefit and through friendly consultations, agree to jointly invest to set up a Joint Venture Company, Communication Intelligence Computer Corporation, Ltd. (hereinafter also referred to as the
"JV"), in Nanjing, the People's Republic of China. The Joint Venture Contract (hereinafter referred to as "Contract") is worked out hereunder. 


CHAPTER II—PARTIES TO THE JOINT VENTURE  


ARTICLE 2.1  


        Parties to this contract are as follows: 



	Chinese Side:	 	ED Computer Software Development Corporation, Jiangsu Province, China

(hereinafter referred to as Party A), duly registered in Jiangsu, China.
	

 	
 	

Legal Address:	
 	

285 North Zhong Shan Road

Nanjing

Jiangsu Province, China, PRC
	

 	
 	

Legal Representative:
	

 	
 	

 	
 	

Name:	
 	

Zhou Ping
	 	 	 	 	Position:	 	Manager
	 	 	 	 	Citizenship:	 	Chinese
	

American Side:	
 	

Communication Intelligence Corporation International, Ltd.

(hereinafter referred to as Party B), duly registered in Bermuda.
	

 	
 	

Legal Address:	
 	

275 Shoreline Drive, Suite 600

Redwood Shores, CA 94065, USA.
	

 	
 	

Legal Representative:
	

 	
 	

 	
 	

Name:	
 	

James Dao
	 	 	 	 	Position:	 	President
	 	 	 	 	Citizenship:	 	United States





CHAPTER III—ESTABLISHMENT OF THE JOINT VENTURE  


ARTICLE 3.1  


        In accordance with the "Law of the People's Republic of China on Joint Ventures Using Chinese and Foreign Investment" and other relevant Chinese Laws and
Regulations, both Party A and Party B agree to jointly invest to set up a Joint Venture Company, Limited (hereinafter referred to as JV). 


ARTICLE 3.2  


        The Chinese name of the JV is: 



        Communication
Intelligence Computer Corporation, Ltd. 



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        The
English name of the JV is: 



        Communication
Intelligence Computer Corporation, Ltd. 




        The
legal address of the JV is: 



        Nanjing,
Jiangsu Province, China, PRC 




ARTICLE 3.3  


        The JV is established by a foreign investor and a Chinese enterprise and has the status of a legal entity subject to the protection of the relevant laws of the
People's Republic of China. All its activities shall be governed by Chinese laws, decrees and other pertinent rules and regulations. 


ARTICLE 3.4  


        The organizational form of the JV is a limited liability company, each party to the JV is only liable up to the limit of the registered capital subscribed or to
be subscribed by the parties of the JV under the Contract. Subject thereto, the profits, risks and losses of the JV shall be shared by the parties in proportion to their investment of the registered
capital. 


ARTICLE 3.5  


        If the government or department of the People's Republic of China adopts new laws, decrees or other pertinent rules and regulations under which the JV or any
party to the JV would get more preferential treatment than that under the article of the Contract after the Contract is signed, the parties to the JV and the JV shall cooperate mutually and submit an
application at once so as to enjoy the more preferential treatment. 


CHAPTER IV—PURPOSE, SCOPE, AND SCALE OF PRODUCTION AND BUSINESS  



ARTICLE 4.1  


        The purpose of the JV is in conformity with the desire of both parties to enhance economic and technical cooperation through adoption of the most advanced
technology and scientific management methods in order to enhance economic efficiency and obtain a satisfactory financial return through: 



        1.)  The
design and creation (system integration) of turnkey multi-user pen input computer systems to automate China's business and government sectors. Systems will use
Communication Intelligence Corporations' ("CIC") advanced Chinese language handwriting recognition and pen operating environment to replace and/or supplement traditional keyboard entry. The
initial systems will also use IBM AS/400 computers. 


        2.)  Creation
of a dedicated Automation Training Institute that will train all levels of personnel. Training will focus upon the principles of modern management, computer
operating skills and all phases of computer education required to maximize benefits of the JV's computer systems. The JV plans to train over 50,000 people within the first five years of operations. 


        3.)  Within
18 months, or as opportunities arise, establish a manufacturing operation that will produce key automation products for both the China and export markets. 




        The
JV will endeavor to establish the leading competitive position in terms of quality and price for both overseas and domestic markets. 


ARTICLE 4.2  


        The production and business scope of the JV is to: market and sell the JV's computer products and systems, act as a systems integrator, create Chinese application
software, service and maintain computer systems, train managers and end users, and manufacture key products for China and export markets. 


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   ARTICLE 4.3  


        The annual production scale for the period 1993-2000 of the JV is forecast in the attached Feasibility Study. 


CHAPTER V—TOTAL INVESTMENT AND REGISTERED CAPITAL  


ARTICLE 5.1  


        The total investment of the JV is US Dollars Twenty-Five Million only. 


ARTICLE 5.2  


        Investment provided by the Party A and Party B will total US Dollars Ten Million only which shall be registered capital of the JV. This will include: 



	Party A	 	US	 	$	2,100,000  	(21%)
	Party B	 	US	 	$	7,900,000  	(79%)






ARTICLE 5.3  


        The planned investment of each party is detailed as follows: 



	Party A:	 	 	 	 	 
	 	Land Use Rights	 	US	 	$	2,100,000
	 	 	 	 	

	Total:	 	US	 	$	2,100,000
	

Party B:	
 	

 	
 	
 	

 
	 	Royalty free License of Technologies plus certain Distribution Rights:	 	US	 	$	2,500,000
	 	Cash:	 	US	 	$	5,400,000
	 	 	 	 	

	Total:	 	US	 	$	7,900,000
	

Total Registered Capital:	
 	

US	
 	
$	

10,000,000






        All
Cash amounts shall be provided in US $. See Appendix I for detailed description of the technology which will be invested by Party B. See Appendix II for description of Distribution
Rights to be provided. 


ARTICLE 5.4  


        The registered capital of the JV is planned to be paid in five installments by Party A and Party B according to the investment schedule, Appendix
IV, and respective investment percentages within two years after the Contract is signed. All planned investment dates after the original signing are subject to change depending on the cash
requirements of the JV. 


ARTICLE 5.5  


        If, after application has been submitted for approval by the relevant authority, either of the original parties wishes to transfer all or part of its investment
in the JV to a third party, the non-selling original party shall have a right of first refusal to acquire the investments to be transferred. Written notice of intent to transfer shall promptly be made
to the non-selling party and the non-selling party shall have 30 business days from notification to acquire the transferred investments. The terms of sale offered to any third party shall not be more
preferential than those offered to the non-selling party. 


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ARTICLE 5.6  


        If the JV draws down on the bank loan, the interest expense shall be treated as a production expense and deducted from revenues. 



ARTICLE 5.7  


        The registered capital of the JV may not be reduced within the duration of the JV. Any increases in the registered capital and/or the changes in the investment
ratio shall be agreed to by the Board of Directors and approved by the original examination and approval authority. The registration shall also be changed by the organization that provided the
original registration. 


ARTICLE 5.8  


        For the duration of the JV, the General Manager should submit a proposal to the Board of Directors for their approval if the JV needs to arrange a bank loan for
its operating fund from a bank in China. It is already agreed that the JV will require a loan of US$ 15 Million which will be applied for following the award of the business license. 


CHAPTER VI—RESPONSIBILITIES OF EACH PARTY TO THE JOINT VENTURE  


ARTICLE 6.1  


        Party A's responsibilities: 



	 	6.1.1	Responsible for contributing 21% of the registered capital.
	 	6.1.2	To assist in sales and marketing of the JV's Chinese Business Automation Systems ("CBAS").
	 	6.1.3	Responsible for preparing and submitting the feasibility study and the economic/financial evaluation to apply for JV approval, to arrange the registration and obtain the business license from the relevant Chinese
authorities for establishing the JV.
	 	6.1.4	Responsible for doing preparation work for the JV including: arranging the land and applying the right for using the land from the Pukou and Kunshan Development Zones and/or the Department of Land
Administration.
	 	6.1.5	To assist in the design and construction of the various buildings required by the JV.
	 	6.1.6	To assist the JV in selecting its employees, to select and train the suitable professional technical persons and skilled workers. To assist overseas staff in applying for the entry visa, permission of stay, working
permission, and processing their traveling matters.
	 	6.1.7	Assist party B to secure favorable customs treatment for items imported for the JV and for resale to customers in China.
	 	6.1.8	To assist the JV for applying/obtaining the tax exemption from relevant authorities, and to provide advice for all other respects.
	 	6.1.9	To provide advice to the management of JV with information on local laws, regulations and other information, thus, the JV can follow the laws and regulations properly to ensure smooth operations.
	 	6.1.10	To assist the JV in arranging necessary loans from Chinese Banks.





ARTICLE 6.2  


        Party B's responsibilities: 



	 	6.2.1	Responsible for contributing 79% of the registered capital.



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	 	6.2.2	Responsible for providing the seven technologies licensed to the JV (see Appendix I—Licensing Agreement) and to help ensure that the JV's engineering personnel are familiar with the seven technologies
provided.
	 	6.2.3	Responsible for securing necessary third party products for the JV—computer hardware and software—on favorable terms that will be incorporated into the CBAS (see Appendix II, Distribution
Agreement).
	 	6.2.4	Responsible for the business management of the JV.
	 	6.2.5	Responsible for design and initial integration of CBAS, design of training institute.
	 	6.2.6	Assist in acquisition of training materials from third party vendors.
	 	6.2.7	Responsible for selecting items to be manufactured by JV and securing manufacturing rights for JV (terms to be defined at a later date).
	 	6.2.8	Assisting the sales of the product manufactured by the JV in overseas markets.
	 	6.2.9	To perform and fulfill such other duties as the JV may entrust.





ARTICLE 6.3  


        All work done by both Party A and Party B for the JV shall be compensated by the JV. Detailed terms shall be decided by the Board of Directors. 


CHAPTER VII: TECHNOLOGY LICENSE  



ARTICLE 7.1  


        Party B agrees to provide the JV with seven advanced technologies under the terms outlined in the attached License Agreement (Appendix I). The licensed
advanced technologies include: 



	1.
	Chinese
Handwriting Recognition Software



	2.
	Chinese
Pen Operating Environment



	3.
	Dynamic
Signature Verification



	4.
	Dynamic
Signature Reconstruction



	5.
	Compression
of Electronic Ink Utility



	6.
	Pen
Application Development Kits



	7.
	Speech
Recognition Technology Rights 




ARTICLE 7.2  


        If Party B fails to provide the technology as defined in the License Agreement (Appendix I), Party B should compensate for any direct losses suffered by
the JV. In addition, Party A and Party B will meet in a constructive discussion to determine how any delays or problems can be most equitably resolved. 


CHAPTER VIII—SELLING PRODUCTS  


ARTICLE 8.1  


        It is the intention of the JV to have 50% or more of the JV's manufactured products sold outside of China, as soon as conditions permit, provided that the
pricing, quality, and delivery terms of the JV products have reached the standards required in the international market. The rest of the product shall be sold in the domestic market. 


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   ARTICLE 8.2  


        The JV has the option to sell export products through Party B's worldwide distribution contacts. 



ARTICLE 8.3  


        The JV has the option to sell its products directly. Agents may also be appointed on a commissioned basis by the General Manager. 


CHAPTER IX—BOARD OF DIRECTORS  


ARTICLE 9.1  


        The date of the registration of the JV shall be the date of the establishment of the Board of Directors. 



ARTICLE 9.2  


        The Board of Directors shall be composed of five (5) directors, of which two (2) shall be designated by Party A and three (3) shall be designated by Party B.
Among the designated directors, Party B shall designate the Chairman and Party A shall designate the Vice Chairman of the Board. The term of the office for Directors, Chairman, and Vice Chairman is
four years. They may be reappointed if agreed to by the appropriate designating parties. The composition of the Board of Directors shall be subject to change if the proportion of investment by the
parties changes accordingly. 



        In
case either party intends to change its designated board members due to incompetence and/or for other reasons, written notice shall be provided to the other party one month in advance
to facilitate clear communications and understanding. 


ARTICLE 9.3  


        The highest authority of the JV shall be its Board of Directors. Unanimous approval from the Board of Directors shall be required before any actions are taken
concerning major issues, including: 



	 	9.3.1	 	Amendment of the Articles of Association of the JV.
	 	9.3.2	 	Extension, termination or dissolution of the JV.
	 	9.3.3	 	Increase or transfer of the JV's registered capital—transfer ownership.
	 	9.3.4	 	Any merger of the JV with another entity.





ARTICLE 9.4  


        All other issues to be decided by the Board of Directors shall be by majority vote (over 50%). 


ARTICLE 9.5  


        The Chairman of the Board of Directors is the legal representative of the JV. Should the Chairman be unable to exercise his responsibilities, he shall authorize
the Vice Chairman or any other Director to represent him temporarily. 



ARTICLE 9.6  


        The Board of Directors shall convene at least one board meeting every year. The meeting shall be called and presided over by the Chairman of the Board. The
Chairman may convene an interim meeting based on a proposal made by more than one-third of the total number of the Directors. Minutes of each meeting shall be placed on file in both Chinese and
English. 


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CHAPTER X—MANAGEMENT OFFICE  


ARTICLE 10.1  


        The JV shall establish a management office which shall be responsible for its daily management. The management office shall have a General Manager and a Deputy
General Manager. The General Manager and Deputy General Manager should be appointed by the Board of Directors. The term of the post for the General Manager and Deputy General Manager is two years
which may be renewed. 


ARTICLE 10.2  


        The responsibility of the General Manager is to carry out the decisions of the Board and organize/conduct the daily management of the JV. The General Manager
shall, within the scope empowered him by the Board, represent the JV in outside dealings, have the right to appoint and dismiss his subordinates, and exercise other responsibilities and rights as
authorized by the Board. The Deputy General Manager shall assist the General Manager in his work. The General Manager shall discuss major issues with the Deputy General Manager. 



        Several
department managers may be appointed by the management office, who shall be responsible to the General Manager and Deputy General Manager and carry out the work assigned by the
General Manager and the Deputy General Manager. 


ARTICLE 10.3  


        The JV will employ a certain number of non Chinese nationals (hereinafter referred to as "Expatriates") from time to time in key management positions. It is
agreed between the parties that a Management Fee Agreement may be required as the most appropriate means of having the JV compensate CIC for some portion of the expenses associated with these
Expatriates. The actual Management Fee Agreement will require the approval of the Board before taking effect. 


ARTICLE 10.4  


        In case of malfeasance or serious incompetence on the part of the General Manager or the Deputy General Manager, the Board of Directors may decide to dismiss them
at any time. 


CHAPTER XI—EQUIPMENT PURCHASING  



ARTICLE 11.1  


        In its purchases of required raw materials, fuel, parts, means of transportation, articles for office use, etc., the JV shall give first priority to purchases in
China where conditions are the same in terms of price, specifications, quality and service, except for such times that must be imported. 


CHAPTER XII—LABOR MANAGEMENT  


ARTICLE 12.1  


        Labor contracts covering the recruitment, employment, dismissal and resignation, wages, labor insurance, welfare, rewards, penalty and other matters concerning
the staff and workers of the JV shall be drawn up between the JV and its Trade Union as a whole or individual employees in accordance
with the "Regulations of the People's Republic of China on Labor Management in Joint Ventures Using Chinese and Foreign Investment" and its implementation rules and the JV's plan as approved by 


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the Board of Directors. A copy of the labor contract should be submitted to the Department of Administration for the Employee for file after the labor contract is signed. 



ARTICLE 12.2  


        The treatment of salary and/or wages, social insurance, welfare, and traveling expense, etc. for high ranking administrative personnel should be decided by the
Board. 


ARTICLE 12.3  


        The JV shall provide an incentive fund for rewarding employees who have made a contribution to the JV. The actual amount to be reserved shall be decided by the
Board based on the status of the JV for each year. 


CHAPTER XIII—TAX, FINANCE AND AUDIT  


ARTICLE 13.1  


        The JV shall pay taxes and apply for the tax exemption in accordance with the stipulations of Chinese laws and other regulations concerned. 


ARTICLE 13.2  


        Staff members and workers of the JV shall pay individual income tax in accordance with the "Individual Income Tax of the People's Republic of China." 



ARTICLE 13.3  


        The JV shall be exempt from customs duty for the following imported equipment: Machinery, equipment, parts, automobiles and all other materials imported with
funds that are part of the JV's total investment. 


ARTICLE 13.4  


        The JV shall create Reserve, Expansion and Employee welfare funds in accordance with the stipulations in "The Law of the People's Republic of China on Joint
Ventures Using Chinese and Foreign Investment." The actual percentage to be drawn shall be discussed/decided by the Board based on the status in the JV each year. 



ARTICLE 13.5  


        The JV shall establish its accounting system in accordance with the Internationally used accrual basis and debit and credit standard. All accounts shall be kept
in US Dollars. 


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        The fiscal year of the Accounting System for the JV shall be from January 1 to December 31 every year. All of the accounting vouchers, slips, books, and statements shall be
recorded in both Chinese and English versions. Both versions shall have equal authority. 



ARTICLE 13.6  


        The JV shall appoint an auditor for its financial auditing, who is registered in China and has reached international standards. The audit results shall be
reported to the Board of Directors and the General Manager. 


ARTICLE 13.7  


        In case Party B considers it is necessary to engage a foreign auditor registered in another country to undertake annual financial auditing, the JV shall give its
consent. The expenses thereof shall be borne by Party B. 



ARTICLE 13.8  


        Within 15 days of the end of every month, the JV shall submit the financial report for the previous month and other reports required by the Board of Directors to
each Board Member. 


CHAPTER XIV—DURATION OF THE JOINT VENTURE  


ARTICLE 14.1  


        The duration of the JV is fifty (50) years. The establishment of the JV shall begin on the date on which the business license of the JV is issued. 



        An
application for extending the JV may be proposed by one party and, if unanimously approved by the Board of Directors, should be submitted to the Ministry of Foreign Economic Relation
and Trade six months prior to the expiration date of the JV. 


        An
application for applying for nonlimited duration from the relevant authority may be proposed by one party and, if unanimously approved by the Board of Directors, submitted at the
appropriate time. 


CHAPTER XV—THE DISPOSITION OF THE ASSETS AFTER EXPIRATION OR TERMINATION  



ARTICLE 15.1  


        Upon the expiration of the JV or termination prior to the date of expiration, liquidation shall be carried out according to the relevant laws. The liquidated
assets shall be distributed in accordance in proportion to the investment contributed by Party A and Party B. 


CHAPTER XVI—INSURANCE  


ARTICLE 16.1  


        Insurance policies of the JV on various kinds of risks shall be underwritten with the People's Insurance Company of China. Types, value, and duration of insurance
shall be decided by the Board of Directors in accordance with the regulations defined by the People's Insurance Company of China. 


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CHAPTER XVII—THE AMENDMENT, ALTERATION AND DISCHARGE OF THE CONTRACT  



ARTICLE 17.1  


        The amendment of the Contract and its Appendices shall come into force only after the written agreement is signed by Party A and Party B, and approved by the
original examination and approval authority. 


ARTICLE 17.2  


        In case the terms of the Contract or Appendices cannot be fulfilled or the JV cannot continue operations due to heavy losses in successive years or as a result of
force majeure, the duration of the JV and the Contract and Appendices shall be terminated before the time of expiration after being unanimously agreed upon by the Board of Directors and approved by
the original examination and approval authority. 


ARTICLE 17.3  


        Should the JV be unable to continue its operations or achieve the business purpose stipulated in the Contract due to the fact that one of the contracted parties
fails to fulfill the obligations prescribed by the Contract and Articles of Association, or seriously violates the stipulations of the Contract and Articles of Association, the party shall be deemed
as unilaterally terminating the Contract. The other party shall have the right to terminate the Contract in accordance with the provisions of the Contract after being approved by the original
examination and approval authority as well as to claim damages. In case Party A and Party B of the JV agree to continue the operation, the party who fails to fulfill the obligations shall be liable
for the direct economic losses thus caused the JV. 


CHAPTER XVIII—LIABILITIES FOR BREACH OF CONTRACT  


ARTICLE 18.1  


        Should either Party A or Party B fail to pay on schedule the contributions in accordance with the provisions defined in Chapter V of this Contract, the breaching
party shall pay the interest to the other party starting from the first month after exceeding the time limit according to the US$ loan interest rate announced by the Bank of China. In addition, the
breaching party has to compensate the direct losses to the JV thus caused. Should the breaching party fail to pay exceeding three months, the other party has the right to terminate the contract and to
claim damages to the breaching party in accordance with the stipulations stipulated in the Article 17.3 of this Contract. 


ARTICLE 18.2  


        Should all or part of the Contract and its appendices be unable to be fulfilled owing to the fault of one party, the breaching party shall bear the
responsibilities thus caused. Should it be the fault of both parties, they shall bear their respective responsibilities according to the actual situations. 


CHAPTER XIX—FORCE MAJEURE  


ARTICLE 19.1  


        Should either party to the Contract be prevented from executing the Contract or Appendices by interference of civil or military authority or force majeure, such
as earthquake, typhoon, flood, fire, war and/or other unforeseen events, and their occurrence and consequences are unpreventable and unavoidable, the prevented party shall notify the other party by
cable or telefax without any delay, and within 15 days thereafter provide a detailed description of the events and a valid document for evidence issued by the relevant public notary organization for
explaining the reason for its inability to 


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execute or need to delay the execution of all or part of the Contract or Appendices. Both parties shall, through consultations, decide whether to terminate the Contract or Appendices or to exempt the
part of obligations for implementation of the Contract or Appendices or whether to delay the execution of the Contract or Appendices according to the effects of the events on the performance of the
Contract or Appendices. 


ARTICLE 19.2  


        Neither party shall be in default hereunder by reason of its delay in the performance of or failure to perform any of its obligations hereunder if such delay or
failure is caused by strikes, acts of nature or the public enemy, riots, fires, interference by civil or military authorities, compliance with governmental laws, rules and regulations, delays in
transit or delivery, inability to secure necessary governmental approvals or materials, or any fault beyond its control. 


CHAPTER XX—APPLICABLE LAW  


ARTICLE 20.1  


        The formation of this Contract, its validity, interpretation, execution and settlement of the disputes shall be governed by the related laws of the People's
Republic of China. 


CHAPTER XXI—SETTLEMENT OF DISPUTES  


ARTICLE 21.1  


        Any disputes arising from the execution of, or in connection with, the Contract shall be settled through friendly consultation between both parties. In case no
settlement can be reached through consultations, the disputes shall be submitted to the International Economic and Trade Arbitration Commission of the China Council for the Promotion of International
Trade for arbitration in accordance with its rules of procedure. The arbitration award is final and binding upon both parties. 


CHAPTER XXII—LANGUAGE  


ARTICLE 22.1  


        The contract shall be written in Chinese version and in English version. Both languages are equally valid and authentic. 


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   CHAPTER XXIII—EFFECTIVENESS OF THE CONTRACT AND MISCELLANY  


ARTICLE 23.1  


        The appendices drawn up in accordance with the principles of this Contract are integral part of this contract, including: Appendix I, License Agreement;
Appendix II, Distribution Agreement; Appendix III, Joint Venture, Objectives, Philosophy and Principles and Appendix IV, Joint Venture Investment Schedule. 


ARTICLE 23.2  


        The Contract and its appendices shall come into force beginning from the date of approval by the Ministry of Foreign Economic Relations and Trade of the People's
Republic of China (or its entrusted examination and approval authority). 


ARTICLE 23.3  


        Should notices in connection with any party's rights and obligations be sent by either Party A or Party B by fax or telegram, etc., the
written letter notices shall be also required afterwards. The legal addresses of Party A and Party B listed in this Contract shall be the posting addresses. 


ARTICLE 23.4  


        The Contract is signed in Nanjing, Peoples Republic of China by the authorized representatives of both parties on September 30, 1993. 



	ED COMPUTER SOFTWARE DEVELOPMENT CORPORATION,

JIANGSU PROVINCE, CHINA
	

REPRESENTATIVE:	
 	

[ILLEGIBLE]
 (SIGNATURE)	
 	

 
	
COMMUNICATION INTELLIGENCE CORPORATION

INTERNATIONAL, LIMITED
	

REPRESENTATIVE:	
 	

/s/  JAMES DAO [ILLEGIBLE]      
 (SIGNATURE)

	
 	

 




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   APPENDIX I

LICENSE AGREEMENT  


        This agreement is effective September 30, 1993 between  Party A and Party B on behalf of the JV. 



        WHEREAS: 



        a.    Party
B possesses the right to certain natural input technology for computers developed by Communication Intelligence Corporation; and 


        b.    JV
desires to become a licensee of said technology, in accordance with the terms and conditions of this agreement. 




        NOW,
THEREFORE, IT IS HEREBY AGREED as follows: 



        1.    DEFINITIONS 


        In
this agreement where the context so indicates, the following terms and expressions shall bear the following meanings: 



        a.    The
"Technology" refers to the seven technologies as delineated in Exhibit I hereto. 


        b.    The
"Territory" comprises The People's Republic of China. 


        c.    The
"Joint Venture Contract" refers to the joint venture contract between Party A and Party B. 




        2.    LICENSE
GRANTS, DELIVERY SCHEDULE, WARRANTY, TRAINING AND SUPPORT 



        a.    Party
B hereby grants to JV a fully paid license during the term of this agreement to copy and sublicense within the Territory the Technology, using any patents,
copyrights or other intellectual rights related to the Technology which Party B is entitled to license within the Territory. The license is exclusive for use with IBM AS/400 based computer
systems in the Territory. 


        b.    Delivery
Schedule is delineated in Exhibit II hereto. 


        c.    Except
as specifically provided herein, JV will not, without Party B's written consent, directly or indirectly reproduce, alter, translate, reverse engineer,
decompile, disassemble, rent or electronically market, distribute, allow use of or transfer, any technology or any portion, copy or component thereof, or assist any person in doing so. 


        d.    Party
B warrants the legal ownership of the supplied technology and warrants the completeness, correctness and reliability of the technological materials (i.e., that
these materials shall conform in all substantial respects to the operational features and specifications contained in this License Agreement). If there is an error or inadequacy which affects the use
of the Technologies, Party B will substitute, supplement, or modify the Technologies in a timely fashion. Party B agrees to provide to JV all of the improvements and developments of the
Technologies and related materials. 


        e.    Party
B agrees to provide technical training to JV, free of charge, to enable JV's technical personnel to understand and use the Technology. 


        f.      Party
B agrees to provide technical support to JV for the licensed Technology. 



        g.    If
Party B fails to provide the Technology within the specified times and criteria pursuant to Exhibit I and Exhibit II to this Agreement, Party B
must pay JV certain economic compensation. 




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        3.    CONFIDENTIAL
INFORMATION 



        a.    JV
acknowledges that certain information relating to the Technology to be communicated to JV by Party B pursuant to this agreement is secret and confidential in
character and the exclusive property of Party B or its Licensor. Such information is provided to JV solely to enable JV to perform its obligations hereunder and should not be made available by
JV to third parties except to the extent that may be absolutely necessary to achieve the purposes of this agreement and only upon written authorization by Party B. JV further agrees to take all
reasonable measures to prevent such third parties and its employees or agents from divulging such information, including obtaining confidentiality agreements before making any disclosures. 



        b.    JV
agrees to conform to any reasonable requirements from Party B necessary to protect any of Party B's or its Licensor's trade secrets or other proprietary
rights. 




        4.    PATENT,
COPYRIGHT AND TRADEMARK NOTICES 



        a.    JV
shall make appropriate notations of any patents or copyrights relating to the Technology which Party B or its Licensor may own from time to time, including the
fulfillment of any affirmative acts which may be necessary under the applicable laws of the Territory in order to protect such patents or copyrights. 



        b.    Nothing
contained in this agreement shall give JV any rights in Party B or Party B's Licensor's trade names, copyrights, patents, logos, trade designations
or other intellectual property except as specifically provided herein. 




        5.    REMUNERATION




        The
licenses granted herein are granted as part of Party B's equity contribution in JV and are valued at U.S. $2.0 million. 




        6.    REPORTING




        JV
shall render to Party B thirty (30) days after the end of each quarterly calendar period beginning with the end of the quarter in which JV first sells a product incorporating
any of the Technology, a written statement of the production and shipment of the products using the Technology during such period. 




        7.    DURATION
AND TERMINATION 



        According
to the terms of the Joint Venture Contract. 




        8.    EFFECT
OF TERMINATION 



        a.    Upon
termination of this Agreement, Party B's obligations shall forthwith terminate and JV shall immediately: 



            i.  Return
all originals and copies of drawings, specifications, written descriptions, processes, documents, materials, plans, designs, samples, files, lists, computer tapes
and diskettes and all other tangible or recorded parts of the Technology and confidential information furnished to JV pursuant to this Agreement; other documents and materials related to, embodying or
associated with such Technology and/or confidential information; and leased or loaned tools and equipment, if any; 


        ii.    Cease
to use such Technology and confidential information for any purpose; and 


        iii.    Subject
to Article 8.b. hereof, cease manufacturing, marketing, selling, licensing and supporting any Technology thereof. 





2





 







        b.    Upon
termination of this Agreement, JV shall have the right to liquidate its existing inventory, subject to Party B's right to purchase, at Party B's sole
option, all or a portion of such inventory at the cost paid by the JV. JV shall ensure that, upon termination of this Agreement, all agreements with any third parties including manufacturing licenses
that acquire rights or privileges from JV with respect to the Technology shall terminate, unless Party B elects to require the assignment and delegation of any such agreement to itself. In the
absence of any such election, JV shall use its best efforts, including litigation, to ensure that all such parties comply with the terms of Article 8.a. hereof. 



        c.    Termination
of this Agreement shall not reduce or eliminate JV's obligations which have accrued, or which rightfully exist, as of the date of termination hereof, nor
relieve JV of liability for damage caused by, or claims arising from, JV's breach, nonobservation or nonperformance of its obligations or duties to Party B or to any other person, firm or entity. 


        d.    Articles
2c, 3 and 4 shall survive termination of this Agreement. 


        e.    Upon
termination of this Agreement, unless termination is caused by Party B's default, Party B shall not be liable to JV for, and JV hereby expressly waives all
rights to, compensation or damages of any kind, whether on account of the loss by JV of present or prospective profits, anticipated orders, expenditures, investments or commitments made in connection
with this Agreement, goodwill created or on account of any other reason whatsoever. 




        9.    INDEPENDENT
CONTRACTOR 


        Nothing
in this Agreement shall be construed to constitute either party as an agent of the other for any purpose whatsoever, and neither party hereto shall bind, or attempt to bind, the
other party to any contract or to the performance of any obligation, nor represent to third parties that it has any right to enter into any binding obligation on the other's behalf. 


        10.  FORCE
MAJEURE 


        According
to the terms of the Joint Venture Contract. 


        11.  WAIVERS



        Any
waiver by either party of a breach of any term or condition of this agreement shall not be considered a waiver of any subsequent breach of the same or any other term or conditions
hereof. 



        12.  ARTICLE
HEADINGS 


        The
article headings are for convenience only and shall not be deemed to affect in any way the language of the provisions to which they refer. 



3





 





        IN
WITNESS WHEREOF, the parties hereto, intending to be bound hereby have caused this agreement to be executed by their duly authorized representatives. 



	
Party A:	
 	
ED COMPUTER SOFTWARE DEVELOPMENT

CORPORATION, JIANGSU PROVINCE, CHINA
	

 	
 	
By	

    

	

 	
 	
Print Name	

[ILLEGIBLE]

	

 	
 	
Title	

    

	


 Party B:	

 	


 COMMUNICATION INTELLIGENCE CORPORATION

INTERNATIONAL, LIMITED
	

 	
 	
By	

/s/  JAMES DAO          [ILLEGIBLE]

	

 	
 	
Print Name	

    

	

 	
 	
Title	

    





4






   EXHIBIT I TO LICENSE AGREEMENT  


        1.    Chinese Handwriter® Recognition System:    The final commercial version of the recognition software
will recognize the 6,763 Chinese characters included in the GB 2312-80, the People's Republic of China national standard for information interchange of Chinese characters. The beta version of the
recognition software will recognize at least 5,000 of the characters included in the GB 2312-80 standard. The performance of the Chinese recognition system will at least equal the performance
standards of Communication Intelligence Corporation's (CIC's) current recognition systems for the roman and Japanese languages within 18 months from the effective date of this agreement. 


        2.    Chinese Pen Operating Environment:    This Chinese language operating environment will replace the traditional
keyboard user interface and input system with a pen-based user interface and input system that comes as close as possible to duplicating the way people work with ordinary pen and paper. CIC's current
user interface for the Macintosh computer provides an example of a similar user interface CIC designed for the Japanese market. 


        3.    Dynamic Signature VerificationTM:    CIC's existing Dynamic Signature Verification (DSV) product will
be adapted to the Chinese user and provided to JV. Upon delivery of the first eight systems, the DSV product will have been integrated into the Business Automation Systems as an optional security
device (to replace traditional password use). 


        The
DSV product allows the computer to digitally record the characteristics of an individual's signature including not only the written image itself, but also the direction and velocity
of the pen with which the signature was created. These characteristics can then be stored and used as a security device to verify the identity of a system user to either access information or provide
approvals. 


        4.    Dynamic Signature ReconstructionTM:    CIC's existing Dynamic Signature Reconstruction (DSR) will be
adapted to the Chinese user and provided to the JV in Beta test form. 


        DSR
allows for the visual reconstruction of an individual's signature based upon the digitally stored information contained in the DSR database outlined above. 


        5.    Compression of Electronic Ink:    CIC's existing INKshrINKTM product will be adapted to the Chinese
user and provided to the JV in Beta test form. 


        Capturing
electronic ink in the form of signatures, notes or drawings is a valuable feature for pen-capable computers. Unfortunately, storing this electronic ink requires a great deal of
hard disk storage. The INKshrINK product allows for the compression of this 'electronic ink' so that hard disk storage requirements are significantly reduced. This product will then be available to
include in the Chinese Business Automation Systems as needed. 


        6.    Pen Application Software Development Kits:    Pen Application Software Development Kits (SDK) will be adapted to
the needs of the Chinese user and provided to the JV in Beta Test form. The SDK's will provide an application program interface for the Chinese Pen User Interface so that applications can be written
by third parties. 


        7.    Speech Recognition Technology:    All speech recognition technology with Party B subsequently acquires
rights to or develops will be made available to JV under the terms of this agreement to be used in the development of a Chinese Speech Recognition System. 


NO SOURCE CODE  


        No Source Code will be provided for any Technology. 


5






   EXHIBIT II TO LICENSE AGREEMENT  



	Deliverable
 
	 	Due Date

	1.	Chinese Handwriter® Recognition System	 	12 months from effective date of this agreement
	

2.	

Chinese Pen Operating Environment	
 	

12 months from effective date of this agreement
	

3.	

Dynamic Signature VerificationTM	
 	

6 months from effective date of this agreement
	

4.	

Dynamic Signature ReconstructionTM	
 	

6 months from effective date of this agreement
	

5.	

Compression of Electronic Ink ("INKshrINKTM")	
 	

6 months from effective date of this agreement
	

6.	

Pen Application Software Development Kits	
 	

12 months from effective date of this agreement
	

7.	

Speech Recognition Technology	
 	

If and when available





Demonstration and Test Versions  


        A Demonstration system including Dynamic Signature Verification, Dynamic Signature Reconstruction and INKshrINK will be provided within 30 days from the effective
date of this Agreement. Test Versions will be provided as soon as available in the Chinese Language. 



Upgrades  


        Upgrades will be made available to JV on a biannual basis at no cost. 


Acceptance Criteria  



 Function  


        Handwriter
Recognition System will recognize GB-2312-80 PRC National Standard. 


 Performance  


        Handwriter
will perform with at least equivalent speed and acceptance rates as CIC's Japanese Kanji System. 


 Software Quality  


        Software
will have fewer than 1.5 defects per 100 lines of code. 



6






   APPENDIX II

DISTRIBUTION AGREEMENT  


        This Agreement is entered into by and between Party A and Party B on behalf of JV. 


        WHEREAS,
the parties desire to provide integrated pen-based computer systems built on a foundation of existing market leading hardware platforms, application software and training
programs to provide the complete range of resources necessary to computerize China's business and government sectors (referred to as the Chinese Pen-Based Business Automation Computer System), 


        WHEREAS,
Communication Intelligence Corporation ("CIC") has existing strategic relationships and agreements with leading hardware manufacturers and software developers which can
provide the necessary components for the Chinese Pen-Based Business Automation Computer System on very favorable terms to CIC, 


        WHEREAS,
Party A and Party B desire JV to benefit from these existing and new relationships and agreements, 


        WHEREAS,
Party B has been authorized and empowered to contract on behalf of CIC to provide the CIC services under the terms described herein. 


        Therefore
the parties agree as follows: 


        1.0    EXCLUSIVE SALE OF COMPONENTS TO JV    



        a.    Through
its strategic relationships with leading hardware manufacturers and software developers, CIC shall negotiate agreements to obtain components for the Chinese
Pen-Based Business Automation Computer System on very favorable terms. Certain agreements have already been negotiated such as
the agreement with International Business Machines (IBM) for IBM AS/400 hardware and software (hereinafter referred to as the "IBM Agreement"). 


        b.    For
the China market, CIC shall sell such components exclusively to JV for use on IBM AS/400 pen-based systems to be marketed by JV or its sublicensees. Such
components shall be sold to JV on very favorable terms. JV is CIC's only distributor in China for selling AS/400 pen input commercial systems including CIC's seven technologies as identified in the
Joint Venture contract. 




        2.0    PRICING    



        Prices
to JV will be based upon component list prices and discounts granted to CIC by specific manufacturers. CIC will provide components to JV at CIC's cost plus 8% of the China sales
price for all non IBM Agreement products and 8% of the IBM U.S. list price for IBM Agreement products. The price the JV can obtain from CIC should be lower than the price the JV can obtain from other
sources. 




        3.0    PAYMENT    



        a.    JV
shall pay for components in advance of shipment by CIC by establishment of irrevocable letters of credit payable to CIC. Prior to shipment, the availability of the
letter of credit will be confirmed by a U.S. bank and payment instructions will be approved by CIC. 


        b.    Cost
of insurance and freight from CIC's designated point of shipment shall be borne by JV. 




        4.0    TAXES AND IMPORT DUTIES    



        All
taxes (other than CIC's income taxes) and import duties shall be the responsibility of JV. CIC shall cooperate with JV to help insure the lowest duty costs. 



1





 

        5.0    WARRANTY    



        The
life and other particulars of component warranties provided to JV by CIC shall coincide with the warranties provided by the component manufacturers to CIC. 




        6.0    TERMINATION    



        According
to the provisions of the Joint Venture contract. 




        7.0    INTERPRETATION FOR MAXIMUM BENEFIT TO JV    



        a.    CIC
will interpret its third party agreements, made subject to this agreement, to provide maximum benefit to JV without increasing CIC's liabilities under such third
party agreements. 


        b.    JV
agrees to be bound by any restrictions placed on CIC by such third party agreements used to provide components hereunder. 




        In
witness whereof, the parties hereto, intending to be bound hereby have caused this agreement to be executed by their duly authorized representative. 



	Agreed to:	 	Agreed to:
	
ED COMPUTER SOFTWARE

DEVELOPMENT CORPORATION,

JIANGSU PROVINCE, CHINA	
 	

COMMUNICATION INTELLIGENCE

CORPORATION INTERNATIONAL, LIMITED
	

285 North Zhong Shan Road

Nanjing

Jiangsu Province, China, PRC

  	
 	

275 Shoreline Drive, 6th Floor

Redwood Shores, CA 94065 USA
	

By:	

 	
 	

By:	

/s/  JAMES DAO          [ILLEGIBLE]
	 	
 Authorized Signature	 	 	
 Authorized Signature
	

Name:	

[ILLEGIBLE]
	
 	

Name:	

James Dao

	

Title:	

 	
 	

Title:	
Chairman, Pres.
	 	
	 	 	

	

Date:	

 	
 	

Date:	

9/30/93
	 	
	 	 	





2






   APPENDIX III

JV'S OBJECTIVES  


PROFIT  



        To achieve sufficient profit to finance our Company's growth and to provide the resources that we need to achieve our other corporate objectives. 


CUSTOMERS  


        To provide products and services of the greatest possible value to our customers, thereby gaining and holding their respect and loyalty. 


FIELDS OF INTEREST  


        To enter new fields only when the ideas we have, together with our technical, manufacturing and marketing skills, provide assurance that we can make a needed and
profitable contribution to the field. 


GROWTH  


        To let our growth be limited only by our profits and our ability to develop and produce technical products that satisfy real customers' needs. 


OUR PEOPLE  


        To help JV employees share in the company's success which they make possible; to recognize their individual achievements; and to try to provide an environment
that promotes the personal satisfaction that comes from a sense of accomplishment in their work. 



MANAGEMENT  


        To foster initiative and creativity by allowing, wherever possible, freedom of action in attaining well-defined objectives. 


CITIZENSHIP  


        To honor our obligations to society by being an economic, intellectual and social asset to each nation and each community in which we operate. This includes
honoring and respecting the culture and customs of each nation in which we pursue our activities. 



RELATIONSHIP WITH CIC IN CHINA  


        JV will be CIC's primary business representative in China. CIC will deal through JV for any business opportunities that are available to JV in China. CIC will
only consider dealing with Chinese businesses directly after consultation and agreement by JV which agreement will not be unreasonably withheld. JV will be eligible for a negotiated commission for
such business. 


1





 
JV PHILOSOPHY AND PRINCIPLES  


        The achievements of an organization are the result of the combined efforts of each individual in the organization working toward common objectives. These
objectives should be realistic, clearly understood by everyone in the organization, and reflect the organization's basic character and personality. 


        If
the organization is to fulfill its objectives, it should strive to meet certain other fundamental requirements: 



        FIRST, the Company must try to assemble the most capable team for meeting its objectives, whether from outside hiring or promotion from
within. Moreover, its policies and benefit programs must encourage employees to upgrade their skills and capabilities. Techniques that are accepted practice today will be outdated in the future and
individuals throughout the organization must continually look for new and better ways to accomplish their tasks. 


        SECOND, the Company wants each employee to be proud of JV's technical excellence and business reputation. To that end, it conducts its
business affairs, public relations, technical interactions and employee relations on the highest ethical plane. All employees are expected to handle their assignments in such a way that the
reputation, respect and trust the Company presently enjoys will be maintained and enhanced. 



        THIRD, enthusiasm should exist at all levels. Individuals in supervisory positions should not only be enthusiastic themselves, they should
be selected for their ability to engender enthusiasm among their associates and subordinates. There can be no place, especially among individuals charged with supervisory responsibility, for
half-hearted interest or half-hearted effort. 


        FOURTH, even though an organization is made up of people fully meeting the first three requirements, all levels should work in unison
toward common objectives. Working at cross purposes should be avoided in order to attain maximum efficiency and achievement. 




        It
is JV's policy not to have a rigid organization but, rather, to have overall objectives which are clearly stated and shared. 


2






APPENDIX IV  


JOINT VENTURE INVESTMENT SCHEDULE  


(All
values measured in US$ at the time of contribution) 



	 
	 	FIRST

PAYMENT
	 	SECOND

PAYMENT
	 	THIRD

PAYMENT
	 	FOURTH

PAYMENT
	 	FIFTH

PAYMENT
	 	TOTAL
	 
	DATE INVESTMENT MADE:	 	 	(@ Signing)	 	 	(+6 months)	 	 	(+12 months)	 	 	(+18 months)	 	 	(+24 months)	 	 	 	 
	

TOTAL EQUITY INVESTMENT	
 	
$	

1,875,000	
 	
$	

2,375,000	
 	
$	

3,050,000	
 	
$	

900,000	
 	
$	

1,800,000	
 	
$	

10,000,000	
 
	

PARTY B INVESTMENT	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 
	 	

CASH	
 	
$	

900,000	
 	
$	

900,000	
 	
$	

900,000	
 	
$	

900,000	
 	
$	

1,800,000	
 	
$	

5,400,000	
 
	 	

EXCLUSIVE DISTRIBUTION & MNFG. RIGHTS MANAGEMENT KNOWHOW FROM CIC	
 	
$	

75,000	
 	
$	

175,000	
 	
$	

250,000	
 	
 	

 	
 	
 	

 	
 	
$	

500,000	
 
	 	

TECHNOLOGY LICENSE	
 	
$	

300,000	
 	
$	

700,000	
 	
$	

1,000,000	
 	
 	

 	
 	
 	

 	
 	
$	

2,000,000	
 
	

PARTY A INVESTMENT	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 
	 	

LAND	
 	
$
	

600,000

(30 Muo Nanjing	

)	
$
	

600,000

(40 Muo Kunshan	

)	
$
	

900,000

(45 Muo Nanjing	

)	
 	

 	
 	
 	

 	
 	
$	

2,100,000	
 
	

CUMULATIVE CASH OR IN-KIND EQUITY	
 	
$	

1,875,000	
 	
$	

4,250,000	
 	
$	

7,300,000	
 	
$	

8,200,000	
 	
$	

10,000,000	
 	
$	

10,000,000	
 
	

MATCHING LOANS OR AVAILABLE CREDIT PROVIDED BY CHINESE BANKS	
 	
$	

1,875,000	
 	
$	

2,375,000	
 	
$	

3,050,000	
 	
$	

900,000	
 	
$	

6,800,000	
 	
$	

15,000,000	
 
	

CUMULTIVE LOANS OR AVAILABLE CREDIT PROVIDED BY CHINESE BANKS	
 	
$	

1,875,000	
 	
$	

4,250,000	
 	
$	

7,300,000	
 	
$	

8,200,000	
 	
$	

15,000,000	
 	
 	

 	
 
	

TOTAL JV FUNDING BY STAGE	
 	
$	

3,750,000	
 	
$	

4,750,000	
 	
$	

6,100,000	
 	
$	

1,800,000	
 	
$	

8,600,000	
 	
$	

25,000,000	
 
	 	 	
	 	
	 	
	 	
	 	
	 	
	 
	

PERCENT OF TOTAL REGISTERED CAPITAL	
 	
 	

18.75	
%	
 	

23.75	
%	
 	

30.50	
%	
 	

9.00	
%	
 	

18.00	
%	
 	

100.00	
%
	

PERCENTAGE OF TOTAL EQUITY	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 
	 	

PARTY B	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 	
 	

79.0	
%
	 	

PARTY A	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 	
 	

21.0	
%







Note: (1) All planned investment dates after the original signing are subject to change depending on the cash requirements of the JV. 








	

 	 	COMMUNICATION INTELLIGENCE CORPORATION	 	 





April
14, 1997 



	To:	 	Tang Shenyan

Guo Yongxiang

Herbert Lechner	 	Fr:	 	James Dao
	

Re:	
 	

CICC Second Stage Investment	
 	

 	
 	

 





        This
memorandum is to incorporate our understanding, as agreed upon and documented in the Minutes of the February 4, 1997 Meeting of the Board of Directors of
CICC, into the September 30, 1993 Joint Venture Contract between ED Computer Software Development Corporation and Communication Intelligence Corporation International, Ltd. 


        The
enclosed Attachment 1, entitled Joint Venture Investment Schedule—April 14, 1997 outlines the Second Stage Investment to be made by the parties to the Joint
Venture. The enclosed Attachment 2, entitled, Delivery Status of CIC Technologies to CICC April 9, 1997 lists the technologies delivered to CICC according to the Joint Venture Contract. 



        Please
confirm your agreement with the above by signing below, and faxing and mailing us a signed copy of this document, so that we can move forward with the second stage investment as
soon as possible. Thank you for your cooperation. 



	Sincerely,	 	 	 
	

/s/  JAMES DAO      
 James Dao	
 	

 	

 
	

Agreed:	
 	

 	

 
	

For:	

ED Computer Software

Development Corporation	
 	

For:	

CIC
	

/s/  TANG SHENYAN      
 Tang Shenyan	
 	

/s/  JAMES DAO      
 James Dao
	

/s/  GUO YONGXIANG      
 Guo Yongxiang	
 	

/s/  HERBERT LECHNER      
 Herbert Lechner




275 SHORELINE DRIVE • REDWOOD SHORES • CA 94065 U.S.A. • TELEPHONE: 415-802-7885 • FAX:
415-802-7777 








COMMUNICATION INTELLIGENCE COMPUTER CORPORATION, LTD.

APRIL 14, 1997—ATTACHMENT 1.  


JOINT VENTURE INVESTMENT SCHEDULE

(All values measured in US$ at the time of contribution)  



	 
	 	FIRST

PAYMENT

MADE
	 	SECOND

PAYMENT

TO BE MADE
	 	TOTAL

FIRST & SECOND

PAYMENT
	 
	DATE OF INVESTMENT:	 	 	at Signing	 	 	Mar-97	 	 	 	 
	

TOTAL EQUITY INVESTMENT	
 	
$	

2,300,000	
 	
$	

2,470,000	
 	
$	

4,770,000	
 
	

CIC INVESTMENT:	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 
	 	

CASH	
 	
$	

900,000	
 	
$	

900,000	
 	
$	

1,800,000	
 
	 	

EXCLUSIVE DISTRIBUTION & MNFG. RIGHTS MANAGEMENT KNOW HOW FROM CIC	
 	
$	

500,000	
 	
$	

0	
 	
$	

500,000	
 
	 	

TECHNOLOGY LICENSE (SEE ATTACHMENT 2.)	
 	
$	

300,000	
 	
$	

1,700,000	
 	
$	

2,000,000	
 
	

CHINA INVESTMENT:	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 
	 	

LAND	
 	
$
	

600,000

(30 Muo Nanjing)	
 	
$
	

(200,000

(-10 Muo	
)
)	
$	

400,000	
 
	 	

EQUIPMENT	
 	
$	

0	
 	
$	

70,000	
 	
$	

70,000	
 
	

CUMULATIVE CASH OR IN-KIND EQUITY	
 	
$	

2,300,000	
 	
$	

4,770,000	
 	
$	

4,770,000	
 
	

MATCHING LOANS OR AVAILABLE CREDIT PROVIDED BY CHINESE BANKS	
 	
$	

0	
 	
$	

0	
 	
$	

0	
 
	

CUMULATIVE LOANS OR AVAILABLE CREDIT PROVIDED BY CHINESE BANKS	
 	
$	

0	
 	
$	

0	
 	
$	

0	
 
	

TOTAL JV FUNDING BY STAGE	
 	
$	

2,300,000	
 	
$	

2,470,000	
 	
$	

4,770,000	
 
	

PERCENT OF TOTAL REGISTERED CAPITAL	
 	
 	

23.00	
%	
 	

24.70	
%	
 	

47.70	
%
	

PERCENTAGE OF TOTAL EQUITY	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 
	 	CIC	 	 	 	 	 	 	 	 	90.0	%
	 	CHINA PARTNERS	 	 	 	 	 	 	 	 	10.0	%








Attachment 2. (English Version)

Delivery Status of CIC Technologies to CICC
  April 9, 1997 


        Following
are the items of technology CIC was to deliver according to the terms of the JV license. Below each numbered item (which are copied exactly from the original JV agreement), we
have noted the delivery date and commented on the delivered technologies. 



        1.    Chinese Handwriter® Recognition System:    The final commercial version of
the recognition software will recognize the 6,763 included in the GB 2312-80, the People's Republic of China national standard for information interchange of Chinese characters. The beta
version of the recognition software will recognize at least 5,000 of the characters included in the GB 2312-80 standard. The performance of the Chinese recognition system will at least equal
the performance standards of Communication Intelligence Corporation's (CIC's) current recognition systems for the roman and Japanese languages within 18 months from the effective date of
this agreement. 



	Delivered:	 	The CIC Chinese Recognizer was delivered January 23, 1997. This Chinese character recognizer is of more advanced design than the original system (based on the Japanese Recognizer) that CIC planned to deliver at the
time of JV contract signing. CIC spent more than $2.5 million dollars on Chinese character recognition research and development during the last three years. The new recognizer not only meets the GB 2312-80 PRC specification standard,
but is also designed to accommodate future developments.






        2.    Chinese Pen Operating Environment:    This Chinese language operating environment will
replace the traditional keyboard user interface and input system with a pen-based user interface and input system that comes as close as possible to duplicating the way people work with ordinary pen
and paper. CIC's current user interface for the Macintosh computer provides an example of similar user interface CIC designed for the Japanese market. 



	Delivered:	 	The CIC Handwriter Manta for Windows 95 and NT operating environments were delivered in December, 1996. The CIC Handwriter for Windows (3.1 for the original tablet) environment was delivered earlier in 1996.
	

 	
 	

Microsoft Pen Extensions and Services as well as CIC's Pen Extensions to Windows 95 and NT were delivered to CICC in December, 1996.
	

 	
 	

CIC has provided or funded joint CIC/CICC developments of several Chinese Pen User interfaces such as WritePal, Virtual Keyboards and demonstration games. CICC has these products and has been selling them.
	

 	
 	

CIC has provided CIC three pen applications:
	 	 	        YPad (Source Code)	 	delivered March 19, 1997
	 	 	        Gopher (Source Code)	 	delivered February 28, 1997
	 	 	        Personal Ink (Source Code)	 	delivered March 12, 1997






        3.    Dynamic Signature VerificationTM;    CICC's existing Dynamic Signature
Verification (DSV) product will be adapted to the Chinese user and provided to JV. Upon delivery of the first eight systems, the DSV product will have been integrated into the Business
Automation Systems as an optional security device (to replace traditional password use). 


        The
DSV product allows the computer to digitally record the characteristics of an individual's signature including not only the written image itself, but also the direction and velocity
of the pen with which the signature was created. These characteristics can then be stored and used as a 






 





security device to verify the identity of a system user to either access information or provide approvals. 



	Delivered:	 	The English version of this CIC product was delivered in 1994. Subsequent testing of the system determined that further adaptation was desired for use in China. In 1996 CIC funded collection and processing of signatures
by CICC in China needed to complete adaptation of this product for China.






        4.    Dynamic Signature Reconstruction:    CIC's existing Dynamic Signature
Reconstruction (DSR) will be adapted to the Chinese user and provided to the JV in Beta test form. 


        DSR
allows for the visual reconstruction of an individual's signature based upon the digitally stored information contained in the DSR database outlined above. 



	Delivered:	 	This technology was delivered in 1994.






        5.    Compression of Electronic Ink:    CIC's existing INKshrINKTM product will be
adapted to the Chinese user and provided to the JV in Beta test form. 


        Capturing
electronic ink in the form of signatures, notes or drawings is a valuable feature for pen-capable computers. Unfortunately, storing this electronic ink requires a great deal of
hard disk storage. The INKshrINK product allows for the compression of this 'electronic ink' so that hard disk storage requirements are significantly reduced. This product will then be available to
include in the Chinese Business Automation Systems as needed. 



	Delivered:	 	This technology was delivered in 1994.






        6.    Pen Application Software Development Kits:    Pen Application Software Development
Kits (SDK) will be adapted to the needs of the Chinese user and provided to the JV in Beta Test form. The SDK's will provide an application program interface for the Chinese Pen User Interface
so that applications can be written by third parties. 



	Delivered:	 	This technology was delivered by providing Ypad, Gopher, Personal Ink, DSV, DSR, and INKshrINK in a form useable by third party developers.






        7.    Speech Recognition Technology:    All speech recognition technology which Party B
subsequently acquires rights to or develops will be made available to JV under the terms of this agreement to be used in the development of a Chinese Speech Recognition System. 



	Delivered:	 	This technology will be delivered according to the original contract, "if and when available"






        CIC
has delivered required Pen technology products some of which are much superior to those products contemplated at the time of formation of the joint venture. CIC has invested more in
Chinese Pen Technology research and development in the three years since forming the JV than has been valued in Registered Capital Technology credit. Of course this does not include the millions of
R&D dollars CIC already invested in core recognition technology prior to the formation of the JV and millions that will be invested in the future to improve and develop new technology of
benefit to the JV. Such development includes product improvement, enhancement, new products, applications, demonstrations, related collaterals and training materials including those CICC developments
funded by CIC. Product development relevant to CICC will be made available license free to JV for the duration of the contract. 


Sincerely,



Jim
Dao 


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