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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. 

3

 

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 

7

 

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. 

8

   
        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. 

9

 

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 

2

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EXHIBIT 10.29    
  

Information Deleted Pursuant To A Request For Confidential Treatment

Is Indicated By [***]  

CONTRACT MANUFACTURING AGREEMENT

DATED DECEMBER 30, 2002  

  

 
 

TABLE OF CONTENTS    
  

	SECTION 1: DEFINITIONS.	 	1
	 	 	1.1	 	Definitions.	 	1
	
SECTION 2: REPRESENTATIONS OF CUSTOMER.	
 	

1
	 	 	2.1	 	Authorization to Conduct Business; Certification.	 	1
	 	 	2.2	 	Authority.	 	1
	 	 	2.3	 	Consents; Licenses.	 	1
	 	 	2.4	 	Declaration by Customer.	 	1
	 	 	2.5	 	Litigation.	 	1
	
SECTION 3: REPRESENTATIONS OF MANUFACTURER.	
 	

2
	 	 	3.1	 	Authorization to Conduct Business; Certification.	 	2
	 	 	3.2	 	Authority.	 	2
	 	 	3.3	 	Consents; Licenses.	 	2
	 	 	3.4	 	Declaration by Manufacturer.	 	2
	 	 	3.5	 	Litigation.	 	2
	 	 	3.6	 	Limited Warranty.	 	2
	
SECTION 4: INSURANCE	
 	

2
	 	 	4.1	 	Additional Insureds.	 	2
	 	 	4.2	 	Types of Insurance.	 	2
	 	 	4.3	 	Types of Insurance.	 	3
	 	 	4.4	 	Certificates of Insurance.	 	3
	 	 	4.5	 	General Requirements.	 	3
	
SECTION 5: INDEPENDENT CONTRACTORS	
 	

3
	 	 	5.1	 	Disclaimer of Intent to Become Partners.	 	3
	 	 	5.2	 	Equipment, tools, materials, and supplies.	 	3
	 	 	5.3	 	Federal, state and local payroll taxes.	 	3
	 	 	5.4	 	No Agency.	 	3
	
SECTION 6: MANUFACTURING OF PRODUCTS.	
 	

3
	 	 	6.1	 	Annual Product Plans.	 	3
	 	 	6.2	 	Periodic Forecasts.	 	4
	 	 	6.3	 	Orders for Products.	 	4
	 	 	6.4	 	Incorporation of Terms and Conditions.	 	4
	 	 	6.5	 	Fulfillment of Orders.	 	4
	 	 	6.6	 	Quality Control.	 	4
	
SECTION 7: SHIPMENT; RISK.	
 	

4
	 	 	7.1	 	Shipping to Customer.	 	4
	 	 	7.2	 	Title to Products and Risk of Loss.	 	4
	
SECTION 8: INVOICES.	
 	

5
	 	 	8.1	 	Services Invoices.	 	5
	 	 	8.2	 	Manufactured Products Invoices.	 	5
	 	 	8.3	 	Other Rabon Products Invoices.	 	5
	 	 	8.4	 	Payment of Invoices.	 	5
	 	 	8.5	 	Charges for Product.	 	5
	 	 	8.6	 	Price Adjustments.	 	5

ii

 

	
SECTION 9: INVENTORY.	
 	

5
	 	 	9.1	 	Raw Materials.	 	5
	 	 	9.2	 	Technical Rabon Inventory.	 	5
	 	 	9.3	 	Other Rabon Products Inventory.	 	5
	 	 	9.4	 	Warehousing.	 	6
	 	 	9.5	 	Storage.	 	6
	
SECTION 10: EQUIPMENT.	
 	

6
	 	 	10.1	 	Equipment.	 	6
	 	 	10.2	 	Maintenance of Equipment.	 	6
	 	 	10.3	 	Removal of Equipment.	 	6
	
SECTION 11: DURATION AND TERMINATION.	
 	

6
	 	 	11.1	 	Term of Agreement.	 	6
	 	 	11.2	 	Immediate Termination.	 	7
	 	 	11.3	 	Termination upon Notice and Cure.	 	7
	 	 	11.4	 	Termination of Manufacturing Services.	 	7
	
SECTION 12: INDEMNIFICATION.	
 	

7
	 	 	12.1	 	Customer's Indemnification.	 	7
	 	 	12.2	 	Manufacturer's Indemnification.	 	7
	 	 	12.3	 	Applicability of Indemnification Obligation.	 	7
	 	 	12.4	 	Remedies non-exclusive.	 	7
	
SECTION 13: EXPENSES.	
 	

7
	
SECTION 14: MISCELLANEOUS.	
 	

8
	 	 	14.1	 	Notices.	 	8
	 	 	14.2	 	Jurisdiction; Service of Process.	 	8
	 	 	14.3	 	Waiver of Jury Trial.	 	8
	 	 	14.4	 	Waiver.	 	8
	 	 	14.5	 	Entire Agreement and Modification.	 	8
	 	 	14.6	 	Assignments, Successors, and No Third-party Rights.	 	9
	 	 	14.7	 	Severability.	 	9
	 	 	14.8	 	Force Majeure.	 	9
	 	 	14.9	 	Section Headings, Construction.	 	9
	 	 	14.10	 	Time of Essence.	 	9
	 	 	14.11	 	Governing Law.	 	10
	 	 	14.12	 	Counterparts.	 	10

        EXHIBIT
A—DEFINITIONS 

        EXHIBIT
B—SPECIFICATIONS 

        EXHIBIT
C—PRICE FOR FINISHED PRODUCT ON EFFECTIVE DATE 

iii

 
 

CONTRACT MANUFACTURING AGREEMENT    
  

        THIS CONTRACT MANUFACTURING AGREEMENT is made and entered into between Boehringer Ingelheim
Vetmedica, Inc., a Delaware corporation (the "Manufacturer") and KMG Bernuth, Inc., a Delaware corporation (the  "Customer"), on this 30th day of
December, 2002 (the "Effective Date"). 

RECITALS  

        WHEREAS, Contemporaneously with the execution of this Agreement, Customer has acquired from Manufacturer under the
terms of the Asset Purchase Agreement, the Manufacturer's business of producing and selling the Products; 

        WHEREAS, Manufacturer has significant experience in manufacturing the Products; 

        WHEREAS, Customer has agreed to purchase the raw materials inventory necessary to manufacture the Products and Customer desires to retain
Manufacturer, under the terms and conditions described herein, to manufacture the Products; 

        WHEREAS, Customer has acquired the Equipment necessary to manufacture the Products and such Equipment is currently housed within the
Manufacturer's facility; and 

        NOW, THEREFORE, in consideration of the premises and mutual promises, terms and conditions hereinafter set forth, and other good and
valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties, intending to be legally bound, do hereby agree as follows: 

 
 

SECTION 1: DEFINITIONS.    
  

        1.1    Definitions.    Unless context otherwise requires, capitalized terms shall have the meaning set forth in the
Definitions attached hereto as EXHIBIT A, which is incorporated herein by reference. 

 
 

SECTION 2: REPRESENTATIONS OF CUSTOMER.    
  

        Customer hereby makes the following representations and warranties to Manufacturer, each of which shall be true as of the Effective Date and throughout the Term: 

        2.1    Authorization to Conduct Business; Certification.    Customer is duly authorized to transact business in the
manner contemplated by this Agreement. 

        2.2    Authority.    Customer has full corporate power and authority to enter into and perform (a) this
Agreement; and (b) all documents and instruments to be executed by Customer pursuant to this Agreement. This Agreement has been duly executed and delivered by Customer and is enforceable in
accordance with its terms. 

        2.3    Consents; Licenses.    No consent, authorization, license, order or approval of, or filing or registration
with, any governmental authority or other Person is required for the execution and delivery by Customer of this Agreement and the consummation by Customer of the transactions contemplated by this
Agreement. 

        2.4    Declaration by Customer.    Customer declares that Customer has complied with all federal, state and local laws
regarding business permits, certificates and licenses that may be required to sell and distribute the Products. 

        2.5    Litigation.    There is no pending litigation, which would materially impact or affect this Agreement or
Customer's execution or performance hereof. 

 

 
 

SECTION 3: REPRESENTATIONS OF MANUFACTURER.    
  

        Manufacturer hereby makes the following representations and warranties to Customer, each of which shall be true as of the Effective Date and throughout the Term: 

        3.1    Authorization to Conduct Business; Certification.    Manufacturer is duly authorized to transact business in
the manner contemplated by this Agreement. 

        3.2    Authority.    Manufacturer has full corporate power and authority to enter into and perform (a) this
Agreement; and (b) all documents and instruments to be executed by Manufacturer pursuant to this Agreement. This Agreement has been duly executed and delivered by Manufacturer and is
enforceable in accordance with its terms. 

        3.3    Consents; Licenses.    No consent, authorization, license, order or approval of, or filing or registration
with, any governmental authority or other Person is required for the execution and delivery by Manufacturer of this Agreement and the consummation by Manufacturer of the transactions contemplated by
this Agreement. 

        3.4    Declaration by Manufacturer.    Manufacturer declares that Manufacturer has complied with all federal, state
and local laws regarding business permits, certificates and licenses that may be required to carry out the work to be performed by Manufacturer under this Agreement. Except for the Equipment,
Manufacturer owns all equipment and employs all personnel sufficient to manufacture Products in a timely and workmanlike manner. 

        3.5    Litigation.    There is no pending litigation, which would materially impact or affect this Agreement or
Manufacturer's execution or performance hereof. 

        3.6    Limited Warranty.    Manufacturer warrants that the Products sold hereunder will conform to the specifications,
including packaging specifications, set forth on EXHIBIT B (the "Specifications"). THE WARRANTIES
SET FORTH IN THIS Section 3 ARE INTENDED SOLELY FOR THE BENEFIT OF THE CUSTOMER. ALL CLAIMS HEREUNDER SHALL BE MADE BY CUSTOMER AND SHALL NOT BE MADE BY ANY THIRD PARTY. THE WARRANTIES SET
FORTH ABOVE ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, WHICH ARE HEREBY DISCLAIMED AND EXCLUDED BY MANUFACTURER, INCLUDING ANY WARRANTY OF MERCHANTIBILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE. EXCEPT AS EXPRESSLY PROVIDED HEREIN, THE PRODUCTS ARE SOLD ON AN "AS IS" BASIS. 

 
 

SECTION 4: INSURANCE    
  

        Customer and Manufacturer shall maintain, throughout the Term, the insurance policies described in this Section 4. 

        4.1    Additional Insureds.    All insurance maintained by any Party pursuant to this Agreement shall name the other
Party, as an additional insured, and shall provide a waiver of subrogation. 

        4.2    Types of Insurance.    During the Term, Customer shall maintain at its sole expense, the following insurance: 

        (a)  Commercial
General Liability insurance coverage including products and completed operations, contractual liability, bodily injury and property damage. This coverage
shall provide for limits of $3,000,000 per occurrence and in the aggregate; 

        (b)  Property
damage insurance covering the Equipment and Customer's Inventory at the Facility in an amount not less than 100% of the insurable value thereof. 

2

 

        (c)  Employer's
Liability Insurance and Worker's compensation insurance as required of Customer by the State of Texas and with a waiver of subrogation for Manufacturer and
Manufacturer's subcontractors. 

        4.3    Types of Insurance.    During the Term, Manufacturer shall maintain at its sole expense, the following
insurance: 

        (a)  Commercial
General Liability insurance coverage including products and completed operations, contractual liability, bodily injury and property damage. This coverage
shall be for limits of $3,000,000 per occurrence and in the aggregate; 

        (b)  Property
damage insurance covering the Facility and the Technical Rabon Inventory On Hand from time to time in an amount not less than 100% of the insurable value
thereof; 

        (c)  Employer's
Liability Insurance to the extent required of Manufacturer at the Facility, and Worker's compensation insurance as required of Manufacturer by the State of
Kansas and with a waiver of subrogation for Customer and Customer's subcontractors. 

        4.4    Certificates of Insurance.    Each Party shall deliver to the other Party, within 10 days of the
execution of this Agreement Certificates of Insurance in form and substance satisfactory to such other Party evidencing the required coverages with limits not less than those specified in this
Section 4. 

        4.5    General Requirements.    All insurance coverage procured by the Parties under this Section 4 shall be
provided by insurance companies having policyholder ratings no lower than "A" and financial ratings not lower than "VIII" in the Best's insurance Guide, latest edition in effect as of the date of this
Agreement. 

 
 

SECTION 5: INDEPENDENT CONTRACTORS    
  

        5.1    Disclaimer of Intent to Become Partners.    Manufacturer and Customer shall not by virtue of this Agreement be
deemed partners or joint venturers. It is expressly understood that each of the Parties is acting as an independent contractor. 

        5.2    Equipment, tools, materials, and supplies.    Unless otherwise agreed by the Parties in writing, each Party
shall supply, at such Party's sole expense, all of such Party's equipment, tools, materials and/or supplies to accomplish the jobs to be performed in connection with this Agreement. The Parties
acknowledge, however, that throughout the Term, Manufacturer shall have the right to use (without charge) the Equipment. 

        5.3    Federal, state and local payroll taxes.    Each Party shall be responsible for paying or withholding any
federal, state, or local income tax or payroll taxes, including Social Security tax of any kind, with respect to such Party's employees. 

        5.4    No Agency.    Nothing contained herein shall create an agency whereby either Party may bind the other. Without
limiting the generality of the foregoing, no Party shall, by virtue of this Agreement, have the right to (a) enter into contracts or commitments on behalf of or in the name of the other Party;
(b) sign such other Party's name to any commercial paper, contract or other instrument; (c) contract any debt or enter into any agreement, either express or implied, binding such other
Party to the payment of money;
(d) receive or make payment for or on behalf of such other Party; or (e) make promises or representations on behalf of such other Party. 

 
 

SECTION 6: MANUFACTURING OF PRODUCTS.    
  

        6.1    Annual Product Plans.    During the Term, within 60 days prior to the beginning of each calendar year,
Customer will share with Manufacturer its then-current annual Product production plans for the subsequent calendar year ("Annual Product
Plans"). The Annual Product Plans are provided for 

3

 

planning purposes only and are not binding obligations to purchase Products or undertake any other actions. 

        6.2    Periodic Forecasts.    During the Term, on a monthly basis, Customer shall deliver to Manufacturer a rolling
three-month forecast advising Manufacturer of Customer's then-current best estimate of all Products to be ordered from the Manufacturer (the
"Forecast") during the period covered by such Forecast. The information set forth in each Forecast provided to Manufacturer shall supercede all prior
inconsistent information. 

        6.3    Orders for Products.    Customer shall order Products hereunder by submitting a request to Manufacturer by mail
or by facsimile setting forth the desired: 

        (a)  shipping
destination; 

        (b)  quantity
in Batches; and 

        (c)  delivery
date. 

Except
as otherwise agreed by the Manufacturer, such Orders must be received by the Manufacturer at least 15 days prior to month in which delivery is requested and shall describe quantities
reasonably consistent with the monthly estimates set forth in the Forecast. Unless otherwise agreed by Manufacturer, no Forecast, Order or series of Orders shall require Manufacturer to produce more
than [***] Batches in any 30 day period. 

        6.4    Incorporation of Terms and Conditions.    The terms and conditions of this Agreement shall be deemed
incorporated into and made a part of each Order, and shall not be superseded by any Order, except as expressly agreed to in a writing which specifies the extent to which such Order overrides the terms
and conditions of this Agreement and which is signed by authorized representatives of both parties. 

        6.5    Fulfillment of Orders.    Manufacturer shall confirm receipt of each Order by written notice to Customer
confirming the quantity to be delivered and delivery date. Manufacturer shall fulfill each Order in accordance with its terms. Manufacturer may reject any Order that does not comply with the
requirements of Section 6.3 by delivering a notice in writing by mail or by facsimile to Customer within five days following receipt of any Order, which rejection sets forth the reason for
rejection of the corresponding Order. Manufacturer shall be deemed to have accepted any Order that it does not reject in accordance with this Section 6.5. Notwithstanding the foregoing,
Manufacturer shall be under no obligation to fulfill any Order to the extent that Manufacturer is not in possession of sufficient quantities of raw materials to fulfill such Order and Manufacturer has
provided written notice to Customer of the nature and extent of such deficiency. 

        6.6    Quality Control.    Manufacturer shall sample and analyze each Batch to assure that the Specifications have
been met and provide a certificate of analysis in support thereof when any Batch is shipped. 

 
 

SECTION 7: SHIPMENT; RISK.    
  

        7.1    Shipping to Customer.    Rabon Products (including the Products) delivered from Manufacturer to Customer shall
be delivered F.O.B. at the Facility. Upon receipt of any Rabon Products, Customer will promptly inspect the Rabon Products received. Customer shall not accept from shipper any Rabon Products that are
damaged or destroyed. Customer may reject any Rabon Products that do not conform to the Specifications or any law, rule, regulation, code, governmental determination, order or governmental
certification requirement applicable to the Rabon Products. 

        7.2    Title to Products and Risk of Loss.    Title and risk of loss as to (i) any Technical Rabon Inventory On
Hand shall pass to Customer upon removal from storage by Manufacturer to fulfill an 

4

 

Order, and (ii) finished Rabon Products or work in process shall pass to Customer upon shipment by Manufacturer pursuant to an Order to the extent title and risk of loss thereto did not pass
in accordance with clause (i) of this Section 7.2. Title and risk of loss as to Technical Rabon Inventory other than Technical Rabon Inventory On Hand shall at all times be with
Customer. 

 
 

SECTION 8: INVOICES.    
  

        8.1    Services Invoices.    Each month, Manufacturer shall deliver to Customer an invoice for amounts payable to
Manufacturer under this Agreement with respect to the amount of the following charges, if any, that accrued during the preceding month: (a) warehousing charges, as described below in
Section 9.4, and (b) Equipment maintenance charges, as described below under Section 10. 

        8.2    Manufactured Products Invoices.    Upon shipment of each Batch that is manufactured by Manufacturer pursuant to
an Order, Manufacturer shall deliver to Customer an invoice for amounts payable to Manufacturer under this Agreement with respect to the production of such Batch as set forth in Section 8.5,
delivery thereof, and the sale of Technical Rabon Inventory On Hand used in the production of such Batch. 

        8.3    Other Rabon Products Invoices.    Upon shipment of any finished Rabon Products purchased pursuant to
Section 9.3, Manufacturer shall deliver to Customer an invoice for amounts payable to Manufacturer under this Agreement with respect thereto. 

        8.4    Payment of Invoices.    Customer shall remit payment for each invoice issued by Manufacturer in accordance with
Section 8.1, 8.2 or 8.3 within [***] days of the date of such invoice, provided that under no circumstances shall Customer have less [***]
following receipt of such invoice to remit payment. 

        8.5    Charges for Product.    The initial price for Product manufacturing shall be [***]. 

        8.6    Price Adjustments.    [***]. 

 
 

SECTION 9: INVENTORY.    
  

        During the Term, Manufacturer shall manufacture and deliver the Products to Customer in accord with the following terms and conditions: 

        9.1    Raw Materials.    Customer shall provide, at no charge to Manufacturer all Raw Materials, including the
Technical Rabon Inventory. Customer and Manufacturer acknowledge that Manufacturer currently
owns and is in possession of a quantity of Technical Rabon Inventory that is to be sold to Customer under the terms of this Agreement. If at any time, Manufacturer's supply of Technical Rabon
Inventory is inadequate to fulfill an Order, Manufacturer will notify Customer of the amount of the deficiency and Customer shall procure and deliver to the Facility, at Customer's sole cost,
Technical Rabon Inventory in the amount of such deficiency. Upon Manufacturer's acceptance of any Order from Customer, Manufacturer shall be deemed to have sold, transferred, and conveyed to Customer
and Customer shall be deemed to have acquired, taken title to, and purchased a sufficient quantity of Technical Rabon Inventory to fill such Order. All other Raw Materials shall be provided by
Customer and at Customer's cost to the Facility. 

        9.2    Technical Rabon Inventory.    The Technical Rabon Inventory On Hand will be sold to Customer at a price of
[***]. "Technical Rabon Inventory On Hand" means all of the Technical Rabon Inventory owned by Manufacturer as of the Effective
Date [***]. 

        9.3    Other Rabon Products Inventory.    From time to time during the Term, Customer shall purchase finished Rabon
Products, other than the Products, that are owned by Manufacturer as of the Effective Date. The prices for such finished Rabon Products shall be as set forth on  EXHIBIT C. If (a) the Customer
has not purchased the entire supply of such Rabon Products on or before 

5

 

December 31, 2004, or (b) this Agreement is terminated for any reason prior to the expiration of the scheduled Term, then Manufacturer shall sell, transfer and convey to the Customer
and Customer shall acquire, take title to, and purchase all remaining quantities of such Rabon Products owned by Manufacturer as of such date at the prices set forth on  EXHIBIT C. 

        9.4    Warehousing.    Customer's invoice shall reflect a warehousing fee of $3.00/pallet for each month during which
finished Products are held at the Manufacturer's facility (to the extent that such finished Products were available for delivery) and for all Technical Rabon Inventory that is stored with the
Manufacturer other than the Technical Rabon Inventory On Hand. 

        9.5    Storage.    Manufacturer shall have the right to store the Inventory with its own raw materials, packaging and
finished products, provided that the Inventory shall be clearly identified as the property of Customer. Manufacturer shall provide Customer with a book inventory of the Inventory at the Facility each
month and Customer shall have access to the Facility during reasonable business hours and on reasonable notice to inspect or remove the Equipment and conduct a physical inventory of the Inventory. 

 
 

SECTION 10: EQUIPMENT.    
  

        10.1    Equipment.    During the Term: 

        (a)  Manufacturer
shall have full and unencumbered use of the Equipment without charge; and 

        (b)  Manufacturer
shall store and warehouse the Equipment on Customer's behalf without additional charge. 

        10.2    Maintenance of Equipment.    During the Term, Manufacturer shall maintain and repair the Equipment in a manner
consistent with the Manufacturer's past practice. For such maintenance and repairs, Manufacturer shall invoice for Manufacturer's actual cost of any replacement parts or supplies used in connection
with such repairs. During the first three years of the Term, Manufacturer shall bear all labor costs of Manufacturer's employees, contractors and agents related to the maintenance of the Equipment
("Labor Costs"). During the fourth and fifth years of the Term, Manufacturer shall invoice Customer for Labor Costs at a rate not greater than rates
charged by Manufacturer to any similarly situated third party. 

        10.3    Removal of Equipment.    Within 100 days subsequent to the end of the Term, Customer shall remove from
the Facility any and all Equipment or, to the extent owned by Customer, Inventory (collectively, the "Personalty") and Manufacturer shall provide
reasonable access to the Facility to enable such removal. Customer will fully repair any damage to the Facility (ordinary wear and tear excepted) occasioned by the removal by Customer or its
representatives of any Personalty. All Personalty not removed will be deemed to have been abandoned by Customer and may be stored or otherwise disposed of by Manufacturer upon 30 days prior
written notice to Customer. Customer will pay Manufacturer all reasonable out-of-pocket expenses incurred by Manufacturer in connection with Manufacturer's disposition of such
property, and will hold Manufacturer harmless from loss, liability or expense arising from the claims of third parties who assert a property interest in the Personalty, such as lenders whose loans are
secured by such property. Customer's obligation to observe and perform this covenant will survive the termination or expiration of this Agreement. 

 
 

SECTION 11: DURATION AND TERMINATION.    
  

        11.1    Term of Agreement.    This Agreement shall commence on the Effective Date and shall expire on the last day of
the calendar year of the fifth (5th) anniversary of the Effective Date, unless sooner terminated pursuant to Section 11.2 or 11.4 below. The period from the Effective Date through expiration or
termination as provided herein, including any renewal, shall be referred to as the "Term". 

6

 

        11.2    Immediate Termination.    Either Party may terminate this Agreement, effective immediately, without liability
for said termination, upon written notice to the other Party, if any of the following events occur: 

        (a)  the
other files a voluntary petition in bankruptcy; 

        (b)  the
other is adjudged bankrupt; 

        (c)  a
court assumes jurisdiction of the assets of the other under a federal reorganization act; 

        (d)  a
trustee or receiver is appointed by a court for all or a substantial portion of the assets of the other; 

        (e)  the
other becomes insolvent or suspends its business; or 

        (f)    the
other makes an assignment of its assets for the benefit of its creditors. 

        11.3    Termination upon Notice and Cure.    Either Party may terminate this Agreement for a material breach or
default of the Agreement by the other Party, provided that such termination may be made only following the expiration of a thirty (30) day period during which the other Party has failed to cure
such breach after having been given written notice of such breach. 

        11.4    Termination of Manufacturing Services.    Customer may terminate all rights and obligations of the parties
with respect to the manufacturing obligations under this Agreement at its sole option by providing Manufacturer with at least 90 days written notice prior to the date of termination of such
obligations. 

 
 

SECTION 12: INDEMNIFICATION.    
  

        12.1    Customer's Indemnification.    Customer will indemnify, defend and hold harmless Manufacturer, its affiliates,
and their respective employees, agents, officers, directors, and shareholders against all Damages, arising from (a) any sale of the Products by Customer; (b) any breach of any
representation, warranty or covenant of Customer under this Agreement; or (c) any claims by Customer's employees or third party contractors at the facility. 

        12.2    Manufacturer's Indemnification.    Manufacturer will indemnify, defend and hold harmless Customer, its
affiliates, and their respective employees, agents, officers, directors, and shareholders against all Damages, arising from (a) any failure of the Products delivered under this Agreement to
conform with the Specifications; (b) any breach of any representation, warranty or covenant of Manufacturer under this Agreement or (c) any claims by Manufacturer's employees or third
party contractors at the facility. 

        12.3    Applicability of Indemnification Obligation.    EACH OF THE AGREEMENTS TO INDEMNIFY,
DEFEND OR HOLD HARMLESS CONTAINED IN SECTION 12.1 OR 12.2 SHALL APPLY IRRESPECTIVE OF WHETHER THE SUBJECT CLAIM IS BASED IN WHOLE OR IN PART UPON THE SOLE OR CONTRIBUTORY NEGLIGENCE (WHETHER ACTIVE,
PASSIVE OR GROSS), BREACH OF COVENANT, OR BREACH OR VIOLATION OF ANY DUTY IMPOSED BY ANY LAW OR REGULATION, ON THE PART OF THE BENEFICIARY OF THE AGREEMENT, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
THIS AGREEMENT.

        12.4    Remedies non-exclusive.    The remedies provided in this Section 12 are not exclusive of
nor will they limit any other remedies that may be available to any Party. 

 
 

SECTION 13: EXPENSES.    
  

        Except as otherwise provided herein, each Party shall pay its own expenses in connection with (a) the preparation and negotiation of this Agreement;
(b) performance of this Agreement and the 

7

 

transactions contemplated hereby; and (c) any advertising, sales or other expenses incurred by such Party. 

 
 

SECTION 14: MISCELLANEOUS.    
  

        14.1    Notices.    All notices and other communications required to be given hereunder, or which may be given
pursuant or relative to the provisions hereof, shall be in writing and shall be deemed to have been given when delivered by hand or by an overnight courier service, or mailed, postage prepaid, by
first class United States mail, certified return receipt requested, or transmitted by facsimile (with transmission acknowledgment received, provided written notice delivered by any of the other means
of delivery specified in this Section 14.1 follows such facsimile), as follows: 

	If to Manufacturer:	 	Boehringer Ingelheim Vetmedica, Inc.	 	If to Customer:	 	KMG Bernuth, Inc.
	 	 	2621 North Belt Highway

St. Joseph, Missouri 64506-2002

Attn: James Kroman

Fax: 816-233-3487	 	 	 	10611 Harwin, Suite 402

Houston, TX 77036

Attn: John V. Sobchak

Fax: 713-988-9298
	

Copy to:	
 	

Armstrong Teasdale LLP	
 	

Copy to:	
 	

Roger C. Jackson, Esq.
	 	 	One Metropolitan Square, Suite 2600

St. Louis, Missouri 63102-2740

Attention: Mark L. Stoneman

Fax: 314-621-5065	 	 	 	10611 Harwin, Suite 402

Houston, TX 77036

General Counsel

Fax: 713-988-9298

        14.2    Jurisdiction; Service of Process.    Any action or proceeding seeking to enforce any provision of, or based on
any right arising out of, this Agreement may be brought against any of the Parties in the courts of the State of Texas, County of Harris, or, if it has or can acquire jurisdiction, in the United
States District Court for the Southern District of Texas, and each of the Parties consents to the jurisdiction of such courts (and of the appropriate appellate courts) in any such action or proceeding
and waives any objection to venue laid therein. Process in any action or proceeding referred to in the preceding sentence may be served on any Party anywhere in the world. 

        14.3    Waiver of Jury Trial.    EACH OF THE PARTIES HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT,
PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATING TO THIS AGREEMENT. 

        14.4    Waiver.    The rights and remedies of the Parties to this Agreement are cumulative and not alternative.
Neither the failure nor any delay by any Party in exercising any right, power, or privilege under this Agreement or the documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power, or privilege will preclude any other or further exercise of such right, power, or privilege or the exercise of any
other right, power, or privilege. To the maximum extent permitted by applicable law, (a) no claim or right arising out of this Agreement or the documents referred to in this Agreement can be
discharged by one Party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the other Party; (b) no waiver that may be given by a Party will be
applicable except in the specific 

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instance for which it is given; and (c) no notice to or demand on one Party will be deemed to be a waiver of any obligation of such Party or of the right of the Party giving such notice or
demand to take further action without notice or demand as provided in this Agreement or the documents referred to in this Agreement. 

        14.5    Entire Agreement and Modification.    This Agreement supersedes all prior agreements between the Parties with
respect to its subject matter and constitutes (along with the exhibits attached hereto and the other documents referred to in this Agreement) a complete and exclusive statement of the terms of the
agreement between the Parties with respect to its subject matter. This Agreement may not be amended except by a written agreement executed by the Party to be charged with the amendment. 

        14.6    Assignments, Successors, and No Third-party Rights.    Neither Party may assign any of its rights under this
Agreement without the prior consent of the other Party, which may be withheld in the consenting Party's sole discretion. Notwithstanding the foregoing, Manufacturer may assign this Agreement in the
event of a sale of the Facility to a third party, provided that Manufacturer guarantees the obligations of such third party under this Agreement or obtains the prior written consent of Customer, which
consent shall not be unreasonably withheld. Subject to the preceding sentence, this Agreement will apply to, be binding in all respects upon, and inure to the benefit of the successors and permitted
assigns of the Parties. Nothing expressed or referred to in this Agreement will be construed to give any Person other than the Parties to this Agreement any legal or equitable right, remedy, or claim
under or with respect to this Agreement or any provision of this Agreement. This Agreement and all of its provisions and conditions are for the sole and exclusive benefit of the Parties to this
Agreement and their successors and assigns. 

        14.7    Severability.    If any provision of this Agreement is held invalid or unenforceable by any court of competent
jurisdiction, the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full
force and effect to the extent not held invalid or unenforceable. 

        14.8    Force Majeure.    Either Party shall be excused from performance hereunder (except as to payment for Product
delivered hereunder), if and to the extent performance is prevented of delayed by any cause beyond its control, such as, and not by way of limitation, fire, floods, windstorms, explosions, strikes,
work stoppages, labor disputes, riots, acts of God, sabotage, acts of the public enemy, wars, government intervention (including regulatory intervention), and general industry unavailability of
transportation (any of the foregoing shall be referred to as a "Force Majeure Event"), provided that: (a) the non-performing Party
gives the other Party reasonably prompt written notice describing the particulars of the occurrence; and (b) the suspension of performance is of no greater scope and of no longer duration than
is required by the Force Majeure Event. 

        14.9    Section Headings, Construction.    The headings of Sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. All references to "Section" or "Sections" refer to the corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances require. Unless otherwise expressly provided, the word "including" does not limit the preceding words or terms. The
Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. 

        14.10    Time of Essence.    With regard to all dates and time periods set forth or referred to in this Agreement,
time is of the essence. 

9

 

        14.11    Governing Law.    This Agreement will be governed by the laws of the State of Missouri, without regard to
conflicts of laws principles. 

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

[REMAINDER OF PAGE INTENTIONALLY BLANK—SIGNATURE PAGE FOLLOWS]

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        IN WITNESS WHEREOF, the undersigned have entered into this Contract Manufacturing Agreement to be effective as of the Effective Date. 

	KMG BERNUTH, INC.	 	BOEHRINGER INGELHEIM VETMEDICA, INC.
	

By:	

/s/  DAVID L. HATCHER      
	
 	

By:	

/s/  DAVID J. ROBERTS      

	

Printed Name: David L. Hatcher	
 	

Printed Name: David J. Roberts
	

Title: President	
 	

Title: Vice President—Finance

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QuickLinks

EXHIBIT 10.29

TABLE OF CONTENTS

CONTRACT MANUFACTURING AGREEMENT

SECTION 1: DEFINITIONS.

SECTION 2: REPRESENTATIONS OF CUSTOMER.

SECTION 3: REPRESENTATIONS OF MANUFACTURER.

SECTION 4: INSURANCE

SECTION 5: INDEPENDENT CONTRACTORS

SECTION 6: MANUFACTURING OF PRODUCTS.

SECTION 7: SHIPMENT; RISK.

SECTION 8: INVOICES.

SECTION 9: INVENTORY.

SECTION 10: EQUIPMENT.

SECTION 11: DURATION AND TERMINATION.

SECTION 12: INDEMNIFICATION.

SECTION 13: EXPENSES.

SECTION 14: MISCELLANEOUS.

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