----

----

| SECTION      1. | AMOUNTS AND TERMS OF      LOANS                                                                             | 1  |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----|
| 1.1             | Loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 2  |
| 1.2             | Interest.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 3  |
| 1.3             | Use      of Proceeds                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 3  |
| 1.4             | Fees      and Expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 4  |
| 1.5             | Payments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 4  |
| 1.6             | Repayments      of Loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 5  |
| 1.7             | Loan      Accounts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 7  |
| 1.8             | Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 7  |
| 1.9             | Warrants                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 8  |
| 1.1             | Term      of This Agreement                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 8  |
| SECTION      2. | AFFIRMATIVE      COVENANTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 8  |
| 2.1             | Compliance      With Laws                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 8  |
| 2.2             | Maintenance      of Books and Records; Properties; Insurance.                                                                                                                                                                                                                                                                                                                                                                                                                                           | 9  |
| 2.3             | Inspection;      Lenders’ Meeting                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 9  |
| 2.4             | Legal      Existence, Etc                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 10 |
| 2.5             | Use      of Proceeds                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 10 |
| 2.6             | Authorized      Common Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 10 |
| 2.7             | Further      Assurances; Notices of Acquisition of Property                                                                                                                                                                                                                                                                                                                                                                                                                                             | 10 |
| 2.8             | Taxes      and other Government Charges                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 10 |
| SECTION      3. | NEGATIVE    COVENANTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 11 |
| 3.1             | Indebtedness                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 11 |
| 3.2             | Liens      and Related Matters                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 11 |
| 3.3             | Investments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 12 |
| 3.4             | Contingent      Obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 12 |
| 3.5             | Restricted      Junior Payments                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 12 |
| 3.6             | Restriction      on Fundamental Changes                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 12 |
| 3.7             | Disposal      of Assets or Subsidiary Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 12 |
| 3.8             | Transactions      with Affiliates                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 12 |
| 3.9             | Management      Fees                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 13 |
| 3.10            | Conduct      of Business                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 13 |
| 3.11            | Fiscal      Year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 13 |
| 3.12            | Subsidiaries;      Partnerships                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 13 |
| 3.13            | Modification      of Agreements                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 13 |
| 3.14            | Board      of Directors                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 13 |
| 3.15            | Management      of Borrower                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 13 |
| 3.16            | Investment      Company Act; Public Utility Holding Act                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 13 |
| SECTION      4. | FINANCIAL COVENANTS AND      REPORTING                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 14 |
| 4.1             | Reports      and Covenants                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 14 |
| 4.2             | Accounting      Terms; Utilization of GAAP                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 16 |
| SECTION      5. | REPRESENTATIONS AND      WARRANTIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 16 |
| 5.1             | Disclosure                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 16 |
| 5.2             | No      Material Adverse Effect                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 17 |

----

| 5.3  | Organization,      Powers, Authorization and Good Standing  | 17 |
|------|------------------------------------------------------------------|----|
| 5.4  | Compliance      with Applicable Law                              | 17 |
| 5.5  | Tax      Returns and Payments                                    | 18 |
| 5.6  | Environmental      Matters                                       | 18 |
| 5.7  | Financial      Statements                                        | 18 |
| 5.8  | Intellectual      Property                                  | 19 |
| 5.9  | Litigation,      Investigations, Audits, Etc.               | 19 |
| 5.10 | Employee      Labor Matters                                      | 20 |
| 5.11 | Employee      Benefit Plans                                      | 20 |
| 5.12 | Perfection      and Priority                                     | 20 |
| 5.13 | Solvency                                                         | 20 |
| 5.14 | Investment      Company Act; Federal Regulations                 | 20 |
| 5.15 | Material      Contracts                                          | 21 |
| 5.16 | Title      to Properties                                         | 21 |
| 5.17 | Subsidiaries      and Affiliates                                 | 21 |
| 5.18 | Filings                                                          | 21 |
| 5.19 | Insurance                                                        | 22 |

| 5.20            | Approvals                                                | 22 |
|-----------------|----------------------------------------------------------|----|
| 5.21            | Internal      Accounting Controls                        | 22 |
| 5.22            | Foreign      Corrupt Practices                           | 22 |
| 5.23            | Representations      and Covenants Made to the Investors | 23 |
| SECTION      6. | EVENTS OF DEFAULT AND RIGHTS      AND REMEDIES           | 23 |
| 6.1             | Events      of Default                                   | 23 |
| 6.2             | Acceleration                                             | 26 |
| 6.3             | Rights      of Collection                                | 26 |
| 6.4             | Consents                                                 | 26 |
| 6.5             | Performance      by Lenders or Collateral Agent          | 27 |
| 6.6             | Set      Off and Sharing of Payments                     | 27 |
| 6.7             | Application      of Payments                             | 27 |
| 6.8             | Rescission                                               | 27 |
| SECTION      7. | CONDITIONS TO      LOANS                                 | 28 |
| 7.1             | Executed      Loan Documents                             | 28 |
| 7.2             | Executed      Debt Refinancing Documents                 | 28 |
| 7.3             | Certificate      of Designations                         | 28 |
| 7.4             | Cancelled      Notes                                     | 28 |
| 7.5             | Representations      and Warranties                      | 28 |
| 7.6             | Covenants                                                | 28 |
| 7.7             | No      Default                                          | 29 |
| 7.8             | Lien      Priority                                       | 29 |
| 7.9             | No      Litigation                                       | 29 |
| 7.10            | Fees      and Expenses                                   | 29 |
| 7.11            | Closing      Certificates; Opinions                      | 29 |
| 7.12            | Collateral                                               | 30 |
| 7.13            | Insurance                                                | 30 |
| 7.14            | Consents                                                 | 30 |
| 7.15            | No      Injunction, Etc.                                 | 30 |

----

| 7.16             | Fees,      Expenses, Taxes, Etc.                           | 31 |
|------------------|------------------------------------------------------------|----|
| 7.17             | Proceedings      and Documents                             | 31 |
| 7.18             | Other      Deliveries                                      | 31 |
| 7.19             | Post-Closing      Deliveries                               | 31 |
| SECTION      8.  | INTERCREDITOR      PROVISIONS                              | 32 |
| 8.1              | Appointment,      Powers and Immunities of Agents          | 32 |
| 8.2              | Reliance                                                   | 33 |
| 8.3              | Non-Reliance                                               | 33 |
| 8.4              | Defaults;      Material Adverse Effect                     | 33 |
| 8.5              | Successor      Agent                                       | 34 |
| 8.6              | Authorization                                              | 34 |
| 8.7              | Other      Roles                                           | 34 |
| 8.8              | Amendments      and Waivers                                | 35 |
| SECTION      9.  | MISCELLANEOUS                                              | 35 |
| 9.1              | Indemnities                                                | 35 |
| 9.2              | Notices                                                    | 36 |
| 9.3              | Failure      or Indulgence Not Waiver; Remedies Cumulative | 37 |
| 9.4              | Marshaling;      Payments Set Aside                        | 37 |
| 9.5              | Severability                                               | 37 |
| 9.6              | Headings                                                   | 37 |
| 9.7              | Applicable      Law                                        | 37 |
| 9.8              | Successors      and Assigns                                | 38 |
| 9.9              | Participations                                             | 38 |
| 9.10             | No      Fiduciary Relationship                             | 38 |
| 9.11             | Construction                                               | 38 |
| 9.12             | Confidentiality                                            | 39 |
| 9.13             | Consent      to Jurisdiction and Service of Process        | 39 |
| 9.14             | Waiver      of Jury Trial                                  | 40 |
| 9.15             | Survival      of Warranties and Certain Agreements         | 40 |
| 9.16             | Entire      Agreement                                      | 40 |
| 9.17             | Counterparts;      Effectiveness                           | 40 |
| SECTION      10. | DEFINITIONS                                                | 41 |
| 10.1             | Certain      Defined Terms                                 | 41 |
| 10.2             | Other      Definitional Provisions                         | 49 |

----

----

| Defined Term                      | Defined in Section |
|-----------------------------------|--------------------|
| 1933      Act                     | §5.18         |
| 1934      Act                     | §2.3          |
| 1940      Act                     | §3.16         |
| Accounting      Changes           | §4.2          |
| Additional      Note              | §1.2(b)       |
| Additional      Warrant           | §1.2(b)       |
| Affiliate                         | §10.1         |
| Agreement                         | §10.1         |
| Applicable      Law               | §10.1         |
| Asset      Disposition            | §10.1         |
| Bankruptcy      Code              | §10.1         |
| Borrower                          | Preamble           |
| Business      Day                 | §10.1         |
| Capital      Lease                | §10.1         |
| Cash      Equivalents             | §10.1         |
| Change      of Control            | §6.1(s)       |
| Closing      Date                 | §10.1         |
| Collateral                        | §10.1         |
| Collateral      Agent             | §8.1(a)       |
| Common      Stock                 | §10.1         |
| Compliance      Certificate       | §4.1(b)       |
| Contingent      Obligation        | §10.1         |
| Control                           | §10.1         |
| Debt      Refinancing             | §10.1         |
| Debt      Refinancing Documents   | §10.1         |
| Default                           | §10.1         |
| Engmann                           | Preamble           |
| Environmental      Laws           | §10.1         |
| Evaluation      Date              | §5.21         |
| Event      of Default             | §6.1          |
| GAAP                              | §10.1         |
| Goodman                           | Preamble           |
| Governmental      Authority       | §10.1         |
| Indebtedness                      | §10.1         |
| Indemnitees                       | §9.1          |
| Initial      Warrants             | §1.9          |
| Intellectual      Property Rights | §5.8          |
| Investment                        | §10.1         |
| Investors                         | §10.1         |
| IRC                               | §10.1         |
| Lender(s)                         | Preamble           |
| Lien                              | §10.1         |
| Loan(s)                           | §1.1(a)       |

----

|                                  |         |
|---------------------------------------|--------------|
| Loan      Documents                   | §10.1   |
| Majority      Lenders                 | §10.1   |
| Material      Adverse Effect          | §10.1   |
| Material      Contracts               | §10.1   |
| Maturity      Date                    | §10.1   |
| Net      Proceeds                     | §10.1   |
| Note(s)                               | §1.1(a) |
| Obligation(s)                         | §10.1   |
| Permitted      Encumbrances           | §10.1   |
| Person                                | §10.1   |
| Phoenix                               | Preamble     |
| Pledge      and Security Agreement    | §10.1   |
| Purchase      Agreement               | §10.1   |
| Real      Property                    | §5.6    |
| Registration      Rights Agreement    | §10.1   |
| Restricted      Junior Payment        | §10.1   |
| SEC                                   | §10.1   |
| Secured      Party or Secured Parties | §10.1   |
| Security      Documents               | §10.1   |
| Security      Interest                | §10.1   |
| Series      A Preferred Stock         | §10.1   |
| Subsidiary                            | §10.1   |
| Warrant(s)                            | §10.1   |

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

|   | If      to the Borrower: | Communication      Intelligence Corporation |
|--------|--------------------------|---------------------------------------------|

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

|   | Davis      Wright Tremaine LLP |
|--------|--------------------------------|

|   | 23rd      Floor |
|--------|-----------------|

|   | 1300      S.W. Fifth Ave. |
|--------|---------------------------|

|   | Portland,      Oregon 97201 |
|--------|-----------------------------|

|   | Attn:  Michael      C. Phillips |
|--------|-------------------------------------------|

|   | Facsimile:  (503)      778-5299 |
|--------|-------------------------------------------|

|   | If      to Phoenix: | Phoenix      Venture Fund LLC |
|--------|---------------------|-------------------------------|

|   | 110      East 59th      Street, Suite 1901 |
|--------|--------------------------------------------|

|   | New      York, New York  10022 |
|--------|------------------------------------------|

|   | Attn:  Andrea      Goren |
|--------|------------------------------------|

|   | Facsimile:  (212)      202-7565 |
|--------|-------------------------------------------|

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

|   | Thelen      Reid Brown Raysman & SteinerLLP |
|--------|-------------------------------------------------|

|   | 875      Third Avenue |
|--------|-----------------------|

|   | New      York, New York 10022 |
|--------|-------------------------------|

|   | Attn:  Herman      Sassower, Esq. |
|--------|---------------------------------------------|

|   | Facsimile:  (212)      603-2001 |
|--------|-------------------------------------------|

|   |  If to      Engmann:             |  Michael W.      Engmann |
|--------|-------------------------------------------------|-------------------------------|
|   |  38 San      Fernando Way                  |
|   |  San Francisco,      California 94127      |
|   |  Facsimile:  (415)      781-4641 |

----

|        | If to      Goodman:        |  Ronald Goodman |
|--------|--------------------------------------|----------------------|
|   |  31 Tierra      Verde Court     |
|   | Walnut Creek,      California 94598  |
|   |  Facsimile:      (925) 933-7548 |

|  If      to Collateral Agent: |  SG      Phoenix LLC                  |
|------------------------------------|--------------------------------------------|
|                               | 110      East 59th      Street, Suite 1901 |

|   | New      York, New York  10022 |
|--------|------------------------------------------|

|   | Attn:  Andrea      Goren |
|--------|------------------------------------|

|   | Facsimile:  (212)      202-7565 |
|--------|-------------------------------------------|

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

|   | Thelen      Reid Brown Raysman & SteinerLLP |
|--------|-------------------------------------------------|

|   | 875      Third Avenue |
|--------|-----------------------|

|   | New      York, New York 10022 |
|--------|-------------------------------|

|   | Attn:  Herman      Sassower, Esq. |
|--------|---------------------------------------------|

|   | Facsimile:  (212)      603-2001 |
|--------|-------------------------------------------|

----

----

----

----

----

----

----

----

----

----

----

----

----

----