form_certofdesignation.htm


    EXHIBIT
4-23

b

     

     

    CERTIFICATE
OF DESIGNATIONS,

     

    POWERS,
PREFERENCES AND RIGHTS OF THE SERIES A

     

     CUMULATIVE
CONVERTIBLE PREFERRED STOCK

     

     

    OF

     

     

    COMMUNICATION
INTELLIGENCE CORPORATION

     

    Pursuant to Section 151 of
the

     

    Delaware General Corporation
Law

     

    Communication
Intelligence Corporation (the “Corporation”), organized and
existing under the laws of the State of Delaware, does, by its Chief Executive
Officer, hereby certify that, pursuant to the authority contained in Article
Fourth of its Amended and Restated Certificate of Incorporation and in
accordance with the provisions of Section 151 of the Delaware General
Corporation Law, its Board of Directors has adopted the following resolution
creating the following class and series of the Corporation’s Preferred Stock and
determining the voting powers, designations, powers, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations and restrictions thereof, of such classes and series:

     

    RESOLVED,
that, pursuant to authority conferred upon the Board of Directors by the Amended
and Restated Certificate of Incorporation of the Corporation (the “Certificate of
Incorporation”), there is hereby created the following series of
Preferred Stock:

     

    
      	
              ·  

            	
              2,000,000
      shares shall be designated Series A Cumulative Convertible Preferred
      Stock, par value $0.01 per share (the “Series A Preferred
      Stock”).

            


    

     

    The
designations, powers, preferences, and rights and the qualifications,
limitations and restrictions of the Series A Preferred Stock in addition to
those set forth in the Certificate of Incorporation shall be as
follows:

     

    Section
1. Designation and
Amount.  2,000,000 shares of the unissued preferred stock of
the Corporation shall be designated as Series A Cumulative Convertible Preferred
Stock, par value $0.01 per share.  The Series A Preferred Stock shall
be issued in accordance with the Purchase Agreement at a purchase price of $1.00
per share (the “Series A Issue
Price”).

     

    Section
2. Rank.  The
Series A Preferred Stock shall rank: (i) junior to any other class or series of
capital stock of the Corporation hereafter created specifically ranking as to
dividend rights, redemption rights, liquidation preference and other rights
senior to the Series A Preferred Stock (the “Senior Securities”); (ii)
senior to all of the Corporation’s common stock, par value $0.01 per share (the
“Common Stock”); (iii)
senior to any class or series of capital stock of the Corporation hereafter
created not specifically ranking as to dividend rights, redemption rights,
liquidation preference and other rights senior to or on parity with any Series A
Preferred Stock of whatever subdivision (collectively, with the Common Stock,
the “Junior
Securities”); and (iv) on a parity with any class or series of capital
stock of the Corporation hereafter created specifically ranking as to dividend
rights, redemption rights, liquidation preference and other rights on a parity
with the Series A Preferred Stock (the “Parity
Securities”).

     

    
      
        
        

      

      
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    EXHIBIT 4-23

     

    Section
3. Dividends.  (a) So
long as shares of Series A Preferred Stock remain outstanding, the holders of
each share of the Series A Preferred Stock shall be entitled, from and after the
date of issuance of such share, to receive, and shall be paid quarterly in
arrears on the last day of each calendar quarter (beginning on September 30,
2008) in cash out of funds legally available therefor, cumulative dividends
which shall accrue regardless of whether they are declared by the Board, of an
amount equal to 8.00% per share (as adjusted for any stock dividends, stock
splits, combinations, recapitalizations involving equity securities of the
Corporation, reclassifications or other similar events involving a change with
respect to the Series A Preferred Stock) per annum with respect to each share of
the Series A Preferred Stock; provided, however, that such dividend
may, at the option of the Corporation, be paid to the holders of Series A
Preferred Stock in shares of the Series A Preferred Stock in the amount of such
dividend on a one (1) share of Series A Preferred Stock per one dollar ($1.00)
basis (as adjusted for any stock dividends, stock splits, combinations,
recapitalizations involving equity securities of the Corporation,
reclassifications or other similar events involving a change with respect to the
Series A Preferred Stock).  The holders of shares of Series A
Preferred Stock shall be entitled to receive such dividends immediately after
the payment of any dividends to Senior Securities required by the Certificate of
Incorporation, as amended or amended and restated and in effect, including for
this purpose any certificate(s) of designation, prior and in preference to any
dividends paid to Junior Securities but in parity with any distribution to the
holders of Parity Securities.

     

    (b) In case
the Corporation shall at any time or from time to time declare, order, pay or
make a dividend or other distribution (including, without limitation, any
distribution of stock or other securities or property or rights or warrants to
subscribe for securities of the Corporation or any of its subsidiaries by way of
a dividend, distribution or spin-off) on its Common Stock, other than (i) a
distribution made in compliance with the provisions of Section 4 or (ii) a
dividend or distribution made in Common Stock, the holders of the Series A
Preferred Stock shall be entitled to receive from the Corporation with respect
to each share of Series A Preferred Stock held, any dividend or distribution
that would be received by a holder of the number of shares (including fractional
shares) of Common Stock into which such Series A Preferred Stock is convertible
on the record date for such dividend or distribution, with fractional shares of
Common Stock deemed to be entitled to the corresponding fraction of any dividend
or distribution that would be received by a whole share.  Any such
dividend or distribution shall be declared, ordered, paid and made at the same
time such dividend or distribution is declared, ordered, paid and made on the
Common Stock.  No dividend or distribution shall be declared, ordered,
paid or made on the Common Stock unless the dividend or distribution on the
Series A Preferred Stock provided for by this paragraph shall be declared,
ordered, paid or made at the same time.

     

    Section
4. Liquidation
Preference.

     

    (a) In the
event of any liquidation, dissolution or winding up of the Corporation (which
shall not include any corporate recapitalizations), either voluntary or
involuntary, the holders of Series A Preferred Stock shall be entitled to be
paid out of the assets of the Corporation available for distribution to its
stockholders, whether from capital, surplus or earnings, immediately after any
distributions to Senior Securities required by the Certificate of Incorporation,
and prior and in preference to any distribution to Junior Securities but in
parity with any distribution to the holders of Parity 

     

    
      
        
        

      

      
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      EXHIBIT 4-23

       

      Securities,
an amount per share equal to the Series A Issue Price (as adjusted for any stock
splits, combinations, recapitalizations involving equity securities of the
Corporation, reclassifications of other similar events involving a change with
respect to the Series A Preferred Stock), plus any accrued but unpaid dividends
on the Series A Preferred Stock; provided that each holder of
Series A Preferred Stock may, upon written notice to the Corporation sent prior
to any distribution under this Section 4(a) (which
notice may, but is not required to be, a Notice of Conversion (as defined under
Section 5(b)),
elect to receive a distribution pursuant to Section 4(c) in lieu
of the distribution under this Section 4(a), on an
as converted to Common Stock basis, upon completion of the distributions
pursuant to Section
4(a) and Section
4(b).  For the purpose of clarity, if a holder of Series A
Preferred Stock elects to receive a distribution pursuant to Section 4(c), such
holder shall not receive a distribution pursuant to Section
4(a).  If upon the occurrence of such event, and after the
payment in full of the preferential amounts with respect to the Senior
Securities, the assets and funds available to be distributed among the holders
of the Series A Preferred Stock pursuant to Section 4(a) and the
holders of any Parity Securities shall be insufficient to permit the payment to
such holders of the full preferential amounts due to such holders of the Series
A Preferred Stock and the holders of the Parity Securities, respectively, then
the entire assets and funds of the Corporation legally available for
distribution shall be distributed among the holders of such Series A Preferred
Stock and the Parity Securities, pro rata, based on the amount each such holder
would receive if such full preferential amounts were paid unless otherwise
provided in the Certificate of Incorporation.

    

     

    (b) Upon the
completion of the distributions required by Section 4(a), if
assets remain in the Corporation, they shall be distributed to the holders of
Junior Securities, other than Common Stock with respect to any liquidation
preference payable to such holders.

     

    (c) Upon the
completion of the distributions required by Section 4(a) and
Section 4(b),
if assets remain in the Corporation, they shall be distributed pro rata, on an
as converted to Common Stock basis, to the holders of Common Stock and the
holders of Series A Preferred Stock who have so elected pursuant to Section
4(a).

     

    (d) A sale,
lease, conveyance or disposition of all or substantially all of the capital
stock or assets of the Corporation or a merger, consolidation, share exchange,
reorganization or other transaction or series of related transactions (whether
involving the Corporation or a subsidiary thereof) in which the Corporation’s
stockholders immediately prior to such transaction do not retain a majority of
the voting power in the surviving entity (a “Transaction”), shall be
deemed to be a liquidation, dissolution or winding up within the meaning of this
Section 4,
unless (i) the holders of a majority of the then outstanding shares of the
Series A Preferred Stock vote affirmatively or consent in writing that such
Transaction shall not be treated as a liquidation, dissolution or winding up
within the meaning of this Section 4, or (ii)
the surviving or acquiring corporation unconditionally assumes the Preferred
Stock and all obligations thereunder; provided, however, that each holder of
Series A Preferred Stock shall have the right to elect the conversion benefits
of the provisions of Section 5(a) or other
applicable conversion provisions in lieu of receiving payment in liquidation,
dissolution or winding up of 

     

    
      
        
        

      

      
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      EXHIBIT 4-23

       

      the
Corporation pursuant to this Section; and provided, further, that shares of the
surviving entity held by holders of the capital stock of the Corporation
acquired by means other than the Transaction shall not be used in determining if
the shareholders of the Corporation own a majority of the voting power of the
surviving entity, but shall be used for determining the total outstanding voting
power of such entity.

    

     

    (e) Prior to
the closing of a Transaction described in Section 4(d) which
would constitute a liquidation, dissolution or winding up within the meaning of
this Section 4,
the Corporation shall, at its sole option, either (i) make all distributions of
cash or other property that it is required to make to the holders of Series A
Preferred Stock pursuant to the first sentence of Section 4(a), (ii)
set aside sufficient funds or other property from which the distributions
required to be made to such holders can be made, or (iii) establish an escrow or
other similar arrangement with a third party pursuant to which the proceeds
payable to the Corporation from the Transaction will be used to make the
liquidating payments to such holders immediately after the consummation of the
Transaction.  In the event that the Corporation is unable to fully
comply with any of the foregoing alternatives, the Corporation shall either: (x)
cause such closing to be postponed until the Corporation complies with one of
the foregoing alternatives, or (y) cancel such Transaction, in which event the
rights of the holders of Series A Preferred Stock shall be the same as existing
immediately prior to such proposed Transaction.

     

    Section
5. Conversion of Series A
Preferred Stock.  The Corporation and the record holders of the
Series A Preferred Stock shall have conversion rights as follows:

     

    (a) Right to
Convert.  Each record holder of Series A Preferred Stock shall
be entitled to convert whole shares of Series A Preferred Stock for the Common
Stock issuable upon conversion of the Series A Preferred Stock, at any time
after June 30, 2008, at the option of the holder thereof, subject to adjustment
as provided in Section
5(c) hereof, as follows: Each share of Series A Preferred Stock shall be
convertible into such number of fully paid and nonassessable shares of Common
Stock as is obtained by (i) multiplying the number of shares of Series A
Preferred Stock so to be converted by the
Series A Issue Price and (ii) dividing the result thereof by the Conversion
Price.  The Conversion Price shall initially be $0.14 per share of
Series A Preferred Stock, subject to adjustment as provided in Section
5(c).  Accrued but unpaid dividends will be paid in cash upon
any such conversion.

     

    
      
        
        

      

      
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    EXHIBIT 4-23

     

    (b) Mechanics of
Conversion.  In order to convert Series A Preferred Stock into
full shares of Common Stock pursuant to Section 5(a), the
holder shall (i) fax or e-mail a copy of a fully executed notice of conversion
(“Notice of Conversion”)
to the Corporation at the office of the Corporation or to the Corporation’s
designated transfer agent (the “Transfer Agent”) for the
Series A Preferred Stock stating that the holder elects to convert, which notice
shall specify the Date of Conversion (as defined in Section 5(b)(iii)
below), the number of shares of Series A Preferred Stock to be converted, the
Conversion Price (together with a copy of the front page of each certificate to
be converted) and (ii) surrender to a common courier for either overnight or two
(2) day delivery to the office of the Corporation or the Transfer Agent, the
original certificates representing the Series A Preferred Stock (the “Preferred Stock
Certificates”) being converted, duly endorsed for transfer.

     

    (i) Lost or Stolen
Certificates.  Upon receipt by the Corporation of evidence of
the loss, theft, destruction or mutilation of any Preferred Stock Certificates
representing shares of Series A Preferred Stock, and (in the case of loss, theft
or destruction) of indemnity or security reasonably satisfactory to the
Corporation, and upon surrender and cancellation of the Preferred Stock
Certificates, if mutilated, the Corporation shall execute and deliver new
Preferred Stock Certificates of like tenor and date; provided that the Corporation
shall pay all costs of delivery (including insurance against loss and theft
until delivered in an amount satisfactory to the holders of Series A Preferred
Stock).  However, the Corporation shall not be obligated to reissue
such lost or stolen Preferred Stock Certificates if the holder contemporaneously
requests the Corporation to convert such Series A Preferred Stock into Common
Stock or if such shares of Series A Preferred Stock have been otherwise
converted into Common Stock.

     

    (ii) Delivery of Common Stock
Upon Conversion.  The Corporation no later than 6:00 p.m.
(Pacific time) on the third (3rd) business day after receipt by the Corporation
or its Transfer Agent of all necessary documentation duly executed and in proper
form required for conversion, including the original Preferred Stock
Certificates to be converted (or after provision for security or indemnification
in the case of lost, stolen or destroyed certificates, if required), shall issue
and surrender to a common courier for either overnight or (if delivery is
outside the United States) two (2)-day delivery to the holder as shown on the
stock records of the Corporation a certificate for the number of shares of
Common Stock to which the holder shall be entitled as aforesaid.

     

    (iii) Date of
Conversion.  The date on which conversion pursuant to Section 5(a) occurs
(the “Date of
Conversion”) shall be deemed to be the date the applicable Notice of
Conversion is faxed or emailed to the Corporation or the Transfer Agent, as the
case may be, provided
that the copy of the Notice of Conversion is faxed to the Corporation on or
prior to 6:00 p.m. (Pacific time) on the Date of Conversion.  The
original Preferred Stock Certificates representing the shares of Series A
Preferred Stock to be converted shall be surrendered by depositing such
certificates with a common courier for either overnight or two (2)-day delivery,
as soon as practicable following the Date of Conversion. The person or persons
entitled to receive the shares of Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such shares
of Common Stock on the Date of Conversion.

     

    (iv) No Fractional Shares on
Conversion.  No fractional shares of Common Stock shall be
issued upon conversion of the Series A Preferred Stock.  In lieu of
any fractional share to which the holder would otherwise be entitled, the
Corporation shall (after aggregating all shares into which shares of Series A
Preferred tendered by the holder for conversion) pay cash equal to such fraction
multiplied by the market price per share of Common Stock (as determined in a
reasonable manner by the Board) at the close of business on the Date of
Conversion.

     

    (c) Adjustment of Conversion
Price.

     

    (i) Adjustments of Conversion
Price Upon Certain Events.  Upon the occurrence at any time
after the first filing of this Certificate of Designations of any of the events
set forth in Section
5(c)(i)(A) through (D) below, the
Corporation shall be deemed to have issued or sold 

     

    
      
        
        

      

      
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      EXHIBIT 4-23

       

      shares of
Common Stock for a consideration per share less than the Conversion Price in
effect immediately prior to the time of such deemed issue or sale, and,
forthwith upon such event, the Conversion Price shall be reduced to the price
determined by dividing (x) an amount equal to the sum of (a) the number of
shares of Common Stock outstanding immediately prior to such deemed issue or
sale multiplied by the then existing Conversion Price and (b) the consideration,
if any, received by the Corporation upon such deemed issue or sale, by (y) the
total number of shares of Common Stock outstanding immediately after such deemed
issue or sale.  For purposes of determining the number of shares of
Common Stock outstanding as provided in clauses (x) and (y) above, the number of
shares of Common Stock issuable upon conversion of all outstanding shares of
Series A Preferred Stock, exercise of all outstanding Options (as defined below)
and conversion of all outstanding Convertible Securities (as defined below)
shall be deemed to be outstanding.

    

     

    (A) Change in Option Price or
Conversion Rate.  If, at any time after the date of that
certain Credit Agreement by and among the Corporation, SG Phoenix LLC, Phoenix
Venture Fund LLC, Michael Engmann and Ronald Goodman (the “Credit Agreement”) (1) the
purchase price or exercise price provided for in any warrants or other rights to
subscribe for or to purchase, or any options for the purchase of, Common Stock
or any stock or security convertible into or exchangeable for Common Stock
outstanding as of the date of the Credit Agreement (such warrants, rights or
options being called “Options” and such convertible
or exchangeable stock or securities being called “Convertible Securities”)
issued by the Corporation is reduced, (2) the number of shares into which the
Option is exercisable is increased, (3) the additional consideration, if any,
payable upon the conversion or exchange of any Convertible Securities is
increased (if such consideration is payable to the holder of the Convertible
Securities) or decreased (if such consideration is payable by the holder of the
Convertible Securities), or (4) the rate at which Convertible Securities are
convertible into or exchangeable for Common Stock is increased or the conversion
price is decreased (including, but not limited to, such increases or decreases,
as applicable, under or by reason of provisions designed to protect against
dilution), the Conversion Price in effect at the time of such event shall
forthwith be readjusted to the Conversion Price which would have been in effect
at such time had such Options or Convertible Securities still outstanding
provided for such changed purchase price, additional consideration or conversion
rate, as the case may be, at the time initially granted, issued or
sold.

     

    (B) Stock
Dividends.  In case the Corporation shall declare a dividend or
make any other distribution upon any stock of the Corporation (other than Common
Stock or Series A Preferred Stock) payable in Common Stock, then any Common
Stock issuable in payment of such dividend or distribution shall be deemed to
have been issued or sold for $0.01 per share, unless the holders of more than
50% of the then outstanding Series A Preferred Stock shall have consented to
such dividend or distribution.

     

    (C) Record
Date.  In case the Corporation shall take a record of the
holders of its Common Stock for the purpose of entitling them (i) to receive a
dividend or other distribution payable in Common Stock, Options or Convertible
Securities or (ii) to otherwise determine the effective date of any such event
described in this Section 5, then such
record date shall be deemed to be the date of the issue or sale of the shares of
Common Stock deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution or the date of such other
event, as the case may be.

     

    
      
        
        

      

      
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    EXHIBIT 4-23

     

    (D) Treasury
Shares.  The number of shares of Common Stock outstanding at
any given time shall not include shares owned or held by or for the account of
the Corporation, and the disposition of any such shares shall be considered an
issue or sale of Common Stock for the purpose of this Section
5(c)(i).

     

    (ii) Certain Issues of Common
Stock Excepted.  Anything herein to the contrary
notwithstanding, the Corporation shall not be required to make any adjustment of
the Conversion Price in the case of the issuance or sale from and after the date
of filing of this Certificate of Designations of Anti-Dilution Excluded
Securities (as defined below).

     

    (iii) Adjustments for
Subdivisions, Common Stock Dividends, Combinations or Consolidations of Common
Stock.  If the outstanding shares of Common Stock shall be
subdivided or increased, by stock split, stock dividend or otherwise, into a
greater number of shares of Common Stock, the Conversion Price shall
concurrently with the effectiveness of such subdivision or payment of such stock
dividend, be proportionately decreased.  If the outstanding shares of
Common Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common Stock, the Conversion Price
shall, concurrently with the effectiveness of such combination or consolidation,
be proportionately increased.

     

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

     

    (v) Adjustments for Merger,
Sale, Lease or Conveyance.  In case of any share exchange,
reorganization, consolidation with or merger of the Corporation with or into
another corporation, or in case of any sale, lease, conveyance or disposition to
another Corporation of the assets of the Corporation as an entirety or
substantially as an entirety, which is not treated as a liquidation, dissolution
or winding up pursuant to Section 4(d) above,
the Series A Preferred Stock shall after the date of such share exchange,
reorganization, consolidation, merger, sale, lease, conveyance or disposition be
convertible into the number of shares of stock or other securities or property
(including cash) to which the Common Stock issuable (at the time of such
consolidation, merger, sale, lease, conveyance or disposition) upon conversion
of the Series A Preferred Stock would have been entitled upon such share
exchange, reorganization, consolidation, merger, sale, lease, conveyance or
disposition; and in any such case, if necessary, the provisions set


     

    
      
        
        

      

      
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      EXHIBIT 4-23

       

      forth
herein with respect to the rights and interests thereafter of the holders of the
Series A Preferred Stock shall be appropriately adjusted so as to be applicable,
as nearly as may reasonably be, to any shares of stock or other securities or
property thereafter deliverable on the conversion of the shares of Series A
Preferred Stock.

    

     

    (vi) Fractional
Shares.  If any adjustment under this Section 5(c) would
create a fractional share of Common Stock or a right to acquire a fractional
share of Common Stock, such fractional share shall be rounded to the nearest
whole number of shares with one-half share being rounded up.

     

    (vii) Notice of
Adjustment.  Concurrent with any adjustment pursuant to this
Section 5(c),
the Corporation shall provide prompt notice to the holders of Series A Preferred
Stock notifying such holders of any such adjustment.  Upon written
request by a holder, the Corporation will promptly deliver a copy of each such
certificate to such holder and to the Corporation’s Transfer Agent.

     

    Section
6. Voting
Rights.  The holders of Series A Preferred Stock shall have no
voting rights incident thereto.

     

    Section
7. Status of Converted
Stock.  In the event any shares of Series A Preferred Stock are
converted pursuant to Section 5 hereof, the
shares of Series A Preferred Stock so converted shall be canceled, shall return
to the status of authorized but unissued Preferred Stock of no designated
series, and shall not be issuable by the Corporation as Series A Preferred
Stock.

     

    Section
8. Reservation of
Stock.  The Corporation shall at all times after June 30, 2008,
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the conversion of shares of Series A
Preferred Stock issued or issuable to the holders, such number of shares of
Common Stock as shall from time to time be sufficient to effect the conversion
of all outstanding shares of Series A Preferred Stock; if at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of all then outstanding shares of Series A Preferred
Stock, in addition to such other remedies as shall be available to the holder of
Series A Preferred Stock, the Corporation shall take such corporate action as
may, in the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number as shall be sufficient for such
purposes, including, without limitation, using best efforts to obtain
stockholder approval of any necessary amendment to the Charter.

     

    Section
9. Redemption
Rights.  The holders of the Series A Preferred Stock shall have
no redemption rights.

     

    Section
10. Rescission
Rights.  On or before June 30, 2008, the Corporation (i) shall
have obtained approval of holders of its Common Stock, and shall have taken all
requisite actions (including filing an amendment to its Certificate of
Incorporation with the Delaware Secretary of State) to effect, an increase in
the Corporation’s authorized Common Stock by 116% of the number of shares as
shall be sufficient to fully reserve shares of Common Stock for issuance upon
exercise or conversion of all securities or other rights that are convertible
into, or exchangeable or exercisable for, or otherwise entitle the holder to,
shares of Common Stock of the Corporation, including the Series A Preferred
Stock (including any additional Series A Preferred Stock 

     

    
      
        
        

      

      
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      EXHIBIT 4-23

       

      that may
be issued in the event the Corporation opts to make dividend payments in shares
of Series A Preferred Stock in accordance with Section 3) and (ii)
shall have taken all actions necessary to reserve for issuance such number of
shares of Common Stock as is issuable upon conversion of the Series A Preferred
Stock (including any additional Series A Preferred Stock that may be issued in
the event the Corporation opts to make dividend payments in shares of Series A
Preferred Stock in accordance with Section
3).  In the event that the Corporation fails to comply with the
requirements set forth in the immediately preceding sentence, the Corporation
shall make a rescission offer to the holders of the Series A Preferred Stock by
sending to each holder, on or before July 7, 2008, a notice (the “Rescission Notice”) of such
rescission offer, which shall specify the rescission rights including the date
by which the rescission offer must be accepted, the method of acceptance, the
documents (including certificates for Series A Preferred Stock) that are
required for acceptance, and the consideration to be received in accordance with
this Section
10.  Each holder may accept such rescission offer, in whole or
in part, in its sole discretion, by sending a notice of acceptance (“Notice of Acceptance”) of
such rescission offer on or prior to August 4, 2008 (or such later date as the
Corporation shall specify in the Rescission Notice), stating the number of
shares of Series A Preferred Stock such holder will rescind.  The
Corporation shall make a payment to each holder of Series A Preferred Stock who
accepts the rescission offer, promptly (and in no event more than three (3)
business days) following such holder’s tendering certificate(s) for all or such
portion of its Series A Preferred Stock as are specified in the Notice of
Acceptance, consideration identical to the consideration paid by such holder for
such shares of Series A Preferred Stock, plus an amount in cash equal to all
accrued but unpaid dividends thereon (as adjusted to reflect forward or reverse
stock splits, stock dividends, recapitalizations or other similar capital
reorganization or reclassification of capital stock (the “Rescission
Price”)).  The shares of Series A Preferred Stock not rescinded
shall remain outstanding and entitled to all the rights and preferences provided
herein, including, but not limited to, those rights and preferences set forth in
Section 10(i)
and (ii).  To
the extent applicable, the Corporation shall issue replacement certificates
representing any shares of Series A Preferred Stock not rescinded to be
delivered to such holder with such holder’s Rescission Price.  Upon
rescission, all rights of the holders of shares of the Series A Preferred Stock
so rescinded shall cease with respect to such shares, and such shares shall not
thereafter be transferred on the books of the Corporation or be deemed to be
outstanding for any purpose and shall be automatically and immediately canceled
and shall not be reissued or sold, and neither the Corporation nor any of its
subsidiaries shall be a holder of, nor may any of them exercise any rights
granted to holders of, such shares of Series A Preferred Stock following
rescission.

    

     

    Section
11. Definitions.  As
used in this Certificate, the following capitalized terms have the following
meanings.

     

    “Anti-Dilution Excluded
Securities” mean any of the following securities:
(1)  securities issued to employees, consultants, officers or
directors of the Corporation or options to purchase Common Stock granted by the
Corporation to employees, consultants, officers or directors of the Corporation
pursuant to any option plan, agreement or other arrangement duly adopted by the
Corporation and the grant of which is approved by the compensation committee of
the Board; (2) the Series A Preferred Stock and any Common Stock issued upon
conversion of the Series A Preferred Stock; (3) 

     

     

    
      
        
        

      

      
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    EXHIBIT 4-23

     

    for the
avoidance of doubt, securities issued on the conversion of any Convertible
Securities or the exercise of any Options, in each case, outstanding on the date
of the first filing of this Certificate of Designations; and (4) for the
avoidance of doubt, securities issued in connection with a stock split, stock
dividend, combination, reorganization, recapitalization or other similar event
for which adjustment is made in accordance with Section 5(c)(iii) or
(iv).

     

    “Purchase Agreement” means the
Purchase Agreement, dated June 5, 2008, between the Corporation and the initial
purchasers of the Series A Preferred Stock.

     

     

    Signature
on following page.

    


    


    
      
        
          
                                                                               


            


          

           


        

        
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    EXHIBIT 4-23

     

    


    IN
WITNESS WHEREOF, the Corporation has caused this Certificate to be duly executed
on its behalf by its __________________ this 5th day of June, 2008.

     

    COMMUNICATION
INTELLIGENCE CORPORATION

     

    
      	
               
      

            	
               

            	
                By:  s/  Guido
      DiGregorio               
      

            


    

    
      	
               
      

            	
               

            	
                Name:  
      Guido D.
      DiGregorio          
      

            


    

    
      	
               
      

            	
               

            	
                Title:     Chief
      Executive Officer and President

            


    

    


     

     

     

     

     

     

     

     

     

     

     

     

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