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Exhibit 10.10    
  

 
  Equity Line of Credit Agreement    
  

EQUITY LINE OF CREDIT AGREEMENT  

        AGREEMENT dated as of the 12th day of February, 2003 (the
"Agreement") between CORNELL CAPITAL PARTNERS, LP, a Delaware limited partnership (the
"Investor"), and COMMUNICATION INTELLIGENCE CORP., a corporation organized and existing under the laws
of the State of Delaware (the "Company"). 

        WHEREAS, the parties desire that, upon the terms and subject to the conditions contained herein, the Company shall issue and sell to the
Investor, from time to time as provided herein, and the Investor shall purchase from the Company up to Fifteen Million ($15,000,000) Dollars of the Company's common stock, par value $0.01 per share
(the "Common Stock"), for a total purchase price of Fifteen Million ($15,000,000) Dollars; and 

        WHEREAS, such investments will be made in reliance upon the provisions of Regulation D ("Regulation
D") of the Securities Act of 1933, as amended, and the regulations promulgated there under (the "Securities Act"), and or upon
such other exemption from the registration requirements of the Securities Act as may be available with respect to any or all of the investments to be made hereunder. 

        WHEREAS, the Company has engaged Westrock Advisors, Inc. to act as the Company's exclusive placement agent in connection with the
sale of the Company's Common Stock to the Investor hereunder. 

        NOW, THEREFORE, the parties hereto agree as follows: 

ARTICLE 1.

Certain Definitions  

        Section 1.1. "Advance" shall mean the portion of the Commitment Amount requested by the Company in the
Advance Notice. 

        Section 1.2.
"Advance Date" shall mean the date Butler Gonzalez LLP/Wachovia Bank, N.A. Escrow Account is in receipt of the funds
from the Investor and Butler Gonzalez LLP, as the Investor's Counsel, is in possession of Free Trading Shares from the Company and therefore an Advance by the Investor to the Company can be made and
Butler Gonzalez LLP can release the Free Trading Shares to the Investor. No Advance Date shall be less than six (6) Trading Days after an Advance Notice Date. 

        Section 1.3.
"Advance Notice" shall mean a written notice to the Investor setting forth the Advance amount that the Company
requests from the Investor and the Advance Date. 

        Section 1.4.
"Advance Notice Date" shall mean each date the Company delivers to the Investor an Advance Notice requiring the
Investor to advance funds to the Company, subject to the terms of this Agreement. No Advance Notice Date shall be less than seven (7) Trading Days after the prior Advance Notice Date. 

        Section 1.5.
"Bid Price" shall mean, on any date, the closing bid price (as reported by Bloomberg L.P.) of the Common Stock on the
Principal Market or if the Common Stock is not traded on a Principal Market, the highest reported bid price for the Common Stock, as furnished by the National Association of Securities
Dealers, Inc. 

        Section 1.6.
"Closing" shall mean one of the closings of a purchase and sale of Common Stock pursuant to Section 2.3. 

        Section 1.7.
"Commitment Amount" shall mean the aggregate amount of up to Fifteen Million Dollars ($15,000,000) which the Investor
has agreed to provide to the Company in order to purchase the Company's Common Stock pursuant to the terms and conditions of this Agreement, provided
that the Company shall not request an Advance if the issuance of the full number of shares of Common Stock issuable in connection with such Advance would result in a violation of the Listing
Qualifications 

of the National Association of Securities Dealers, Inc., Market Place Rules (or any similar applicable section) unless the necessary shareholder approval or consent has been received prior to
such request. 

        Section 1.8.
"Commitment Period" shall mean the period commencing on the earlier to occur of (i) the Effective Date, or
(ii) such earlier date as the Company and the Investor may mutually agree in writing, and expiring on the earliest to occur of (x) the date on which the Investor shall have made payment
of Advances pursuant to this Agreement in the aggregate amount of Fifteen Million Dollars ($15,000,000), (y) the date this Agreement is terminated pursuant to Section 2.5, or
(z) the date occurring twenty four (24) months after the Effective Date. 

        Section 1.9.
"Common Stock" shall mean the Company's common stock, par value $0.01 per share. 

        Section 1.10.
"Condition Satisfaction Date" shall have the meaning set forth in Section 7.2. 

        Section 1.11.
"Damages" shall mean any loss, claim, damage, liability, costs and expenses (including, without limitation,
reasonable attorney's fees and disbursements and costs and expenses of expert witnesses and investigation). 

        Section 1.12.
"Effective Date" shall mean the date on which the SEC first declares effective a Registration Statement registering
the resale of the Registrable Securities as set forth in Section 7.2(a). 

        Section 1.13.
"Escrow Agreement" shall mean the escrow agreement among the Company, the Investor, the Investor's Counsel and
Wachovia Bank, N.A. dated the date hereof. 

        Section 1.14.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated
there under. 

        Section 1.15.
"Free Trading Shares" shall mean shares of Common Stock that are covered by a Registration Statement with an
effective date prior to the date such shares are delivered to Investor's Counsel. 

        Section 1.16.
"Material Adverse Effect" shall mean any condition, circumstance, or situation that would prohibit or otherwise
materially interfere with the ability of the Company to enter into and perform
any of its obligations under this Agreement or the Registration Rights Agreement in any material respect. 

        Section 1.17.
"Market Price" shall mean the average of the four (4) lowest VWAPs of the Company's common stock during the Pricing
Period. 

        Section 1.18.
"Maximum Advance Amount" shall be equal up to One Million Dollars ($1,000,000), in the aggregate, in any thirty
(30) calendar day period after the Effective Date. 

        Section 1.19.
"NASD" shall mean the National Association of Securities Dealers, Inc. 

        Section 1.20.
"Person" shall mean an individual, a corporation, a partnership, an association, a trust or other entity or
organization, including a government or political subdivision or an agency or instrumentality thereof. 

        Section 1.21.
"Placement Agent" shall mean Westrock Advisors, Inc. a registered broker-dealer. 

        Section 1.22.
"Pricing Period" shall mean the five (5) consecutive Trading Days after the Advance Notice Date. 

        Section 1.23.
"Principal Market" shall mean the Nasdaq National Market, the Nasdaq SmallCap Market, the American Stock Exchange,
the OTC Bulletin Board or the New York Stock Exchange, whichever is at the time the principal trading exchange or market for the Common Stock. 

        Section 1.24.
"Purchase Price" shall be set at one hundred percent (100%) of the Market Price during the Pricing Period. 

        Section 1.25.
"Registrable Securities" shall mean the shares of Common Stock (i) issuable to the Investor under this
Agreement, (ii) which have not been sold under circumstances meeting all of the applicable conditions of Rule 144 (or any similar provision then in force) under the Securities Act 

("Rule 144") or (iii) which have not been otherwise transferred to a holder who may trade such shares without restriction under the
Securities Act, and the Company has delivered a new certificate or other evidence of ownership for such securities not bearing a restrictive legend. 

        Section 1.26.
"Registration Rights Agreement" shall mean the Registration Rights Agreement dated the date hereof, regarding the
filing of the Registration Statement for the resale of the Registrable Securities, entered into between the Company and the Investor. 

        Section 1.27.
"Registration Statement" shall mean a registration statement on Form S-3 (if use of such form is
then available to the Company pursuant to the rules of the SEC and, if not, on such other form promulgated by the SEC for which the Company then qualifies and which counsel for the Company shall deem
appropriate, and which form shall be available for the resale of the Registrable Securities to be registered there under in accordance with the provisions of this Agreement and the Registration Rights
Agreement, and in accordance with the intended method of distribution of such securities), for the registration of the resale by the Investor of the Registrable Securities under the Securities Act. 

        Section 1.28.
"Regulation D" shall have the meaning set forth in the recitals of this Agreement. 

        Section 1.29.
"SEC" shall mean the Securities and Exchange Commission. 

        Section 1.30.
"Securities Act" shall have the meaning set forth in the recitals of this Agreement. 

        Section 1.31.
"SEC Documents" shall mean Annual Reports on Form 10K, Quarterly Reports on Form 10Q, Current Reports
on Form 8 K and Proxy Statements of the Company as supplemented to the date hereof, filed by the Company for a period of at least twelve (12) months immediately preceding the date hereof
or the Advance Date, as the case may be, until such time as the Company no longer has an obligation to maintain the effectiveness of a Registration Statement as set forth in the Registration Rights
Agreement. 

        Section 1.32.
"Trading Day" shall mean any day during which the New York Stock Exchange shall be open for business. 

        Section 1.33.
"VWAP" shall mean the volume weighted average price of the Common Stock as reported on Bloomberg, L.P. 

ARTICLE 2.

Advances  

        Section 2.1.    Investments.    

        (a)  Advances.
Upon the terms and conditions set forth herein (including, without limitation, the provisions of Article VII hereof), on any Advance Notice Date the
Company may request an Advance by the Investor by the delivery of an Advance Notice. The number of shares of Common Stock that the Investor shall receive for each Advance shall be determined by
dividing the amount of the Advance by the Purchase Price. No fractional shares shall be issued. Fractional shares shall be rounded to the next higher whole number of shares. The aggregate maximum
amount of all Advances that the Investor shall be obligated to make under this Agreement shall not exceed the Commitment Amount. 

        (b)  The
Company acknowledges that the Investor may sell the Company's Common Stock purchased pursuant to an Advance Notice during the corresponding Pricing Period.
Notwithstanding the foregoing, the Investor shall not make any short sales of the Company's Common Stock during the term of this Agreement. 

        Section 2.2.    Mechanics.    

        (a)    Advance Notice.    At any time during the Commitment Period, the Company may deliver an Advance Notice to the
Investor, subject to the conditions set forth in Section 7.2; provided, however, the amount for each Advance as designated by the Company in the applicable Advance Notice, as well as the
aggregate amount of multiple Advances in any thirty (30) calendar day period, shall not be more 

than the Maximum Advance Amount. The aggregate amount of the Advances pursuant to this Agreement shall not exceed the Commitment Amount. The Company acknowledges that the Investor may sell shares of
the Company's Common Stock corresponding with a particular Advance Notice on the day the Advance Notice is received by the Investor. There will be a minimum of seven (7) Trading Days between
each Advance Notice Date. In no event shall the number of shares issuable to the Investor pursuant to an Advance exceed nine and 9/10 percent (9.9%) of the then outstanding Common Stock of the
Company. 

        (b)    Date of Delivery of Advance Notice.    An Advance Notice shall be deemed delivered on (i) the Trading
Day it is received by facsimile or otherwise by the Investor if such notice is received prior to 12:00 noon Eastern Time, or (ii) the immediately succeeding Trading Day if it is received by
facsimile or
otherwise after 12:00 noon Eastern Time on a Trading Day or at any time on a day which is not a Trading Day. No Advance Notice may be deemed delivered on a day that is not a Trading Day. 

        (c)  In
the event the Investor sells the Company's Common Stock pursuant to Section 2.1 (b) herein and the Company fails to perform it's obligations as mandated
in Section 2.5, and specifically fails to provide the Investor with the shares of Common Stock for the applicable Advance, the Company acknowledges that the Investor shall suffer financial
hardship and therefore shall be liable for any and all losses, commissions, fees, or financial hardship caused to the Investor. 

        Section 2.3.    Closings.    On each Advance Date, which shall be six (6) Trading Days after an Advance
Notice Date, (i) the Company shall deliver to the Investor's Counsel, as defined pursuant to the Escrow Agreement, shares of the Company's Common Stock, representing the amount of the Advance
by the Investor pursuant to Section 2.1 herein, registered in the name of the Investor which shall be delivered to the Investor, or otherwise in accordance with the Escrow Agreement and
(ii) the Investor shall deliver to Wachovia Bank, N.A. (the "Escrow Agent") the amount of the Advance specified in the Advance Notice by wire
transfer of immediately available funds, which shall be delivered to the Company, or otherwise in accordance with the Escrow Agreement. In addition, on or prior to the Advance Date each of the Company
and the Investor shall deliver to the other through the Investor's Counsel all documents, instruments and writings required to be delivered or reasonably requested by either of them pursuant to this
Agreement in order to implement and effect the transactions contemplated herein. Payment of funds to the Company and delivery of the Company's Common Stock to the Investor shall occur in accordance
with the conditions set forth above and those contained in the Escrow Agreement; provided, however, that to the extent the Company has not paid the
fees, expenses, and disbursements of the Investor or its Investor's counsel in accordance with Section 12.4, the amount of such fees, expenses, and disbursements may be deducted by the Investor
(and shall be paid to the relevant party) from the amount of the Advance with no reduction in the amount of shares of the Company's Common Stock to be delivered on such Advance Date. 

        Section 2.4.    Termination of Investment.    The obligation of the Investor to make an Advance to the Company
pursuant to this Agreement shall terminate permanently (including with respect to an Advance Date that has not yet occurred) in the event that (i) there shall occur any stop order or suspension
of the effectiveness of the Registration Statement for an aggregate of fifty (50) Trading Days, other than due to the acts of the Investor, during the Commitment Period, and (ii) the
Company shall at any time fail materially to comply with the requirements of Article VI and such failure is not cured within thirty (30) days after receipt of written notice from the
Investor, provided, however, that this termination provision shall not apply to any period commencing upon the filing of a post-effective
amendment to such Registration Statement and ending upon the date on which such post effective amendment is declared effective by the SEC. 

        Section 2.5.    Agreement to Advance Funds.    

        (a)  The
Investor agrees to advance the amount specified in the Advance Notice to the Company after the completion of each of the following conditions and the other
conditions set forth in this Agreement: 

          (i)  the
execution and delivery by the Company, and the Investor, of this Agreement, and the Exhibits hereto; 

        (ii)  Investor's
Counsel shall have received the shares of Common Stock applicable to the Advance; 

        (iii)  the
Company's Registration Statement with respect to the resale of the Registrable Securities in accordance with the terms of the Registration Rights Agreement shall
have been declared effective by the SEC; 

        (iv)  the
Company shall have obtained all material permits and qualifications required by any applicable state for the offer and sale of the Registrable Securities, or shall
have the availability of exemptions there from. The sale and issuance of the Registrable Securities shall be legally permitted by all laws and regulations to which the Company is subject; 

        (v)  the
Company shall have filed with the Commission in a timely manner all reports, notices and other documents required of a "reporting company" under the Exchange Act and
applicable Commission regulations; 

        (vi)  the
fees as set forth in Section 12.4 below shall have been paid or can be withheld as provided in Section 2.3; 

      (vii)  the
conditions set forth in Section 7.2 shall have been satisfied. 

      (viii)  the
Company shall have provided to the Investor an acknowledgement, to the satisfaction of the Investor, from the Company's accountants as to the accountant's ability
to provide all consents required in order to file a registration statement in connection with this transaction; and 

        (ix)  The
Company's transfer agent shall be DWAC eligible. 

        Section 2.6.    Lock Up Period.    

        (a)  The
Company shall not, without the prior consent of the Investor, issue or sell (i) any Common Stock without consideration or for a consideration per share less
than the Bid Price on the date of issuance or (ii) issue or sell any warrant, option, right, contract, call, or other security or instrument granting the holder thereof the right to acquire
Common Stock without consideration or for a consideration per share less than the Bid Price on the date of issuance. 

        (b)  On
the date hereof, the Company shall obtain from each officer and director a lock-up agreement, as defined below, in the form annexed hereto as
Schedule 2.6(b) agreeing to only sell in compliance with the volume limitation of Rule 144. 

ARTICLE 3.

Representations and Warranties of Investor  

        Investor hereby represents and warrants to, and agrees with, the Company that the following are true and as of the date hereof and as of each Advance Date: 

        Section 3.1.    Organization and Authorization.    The Investor is duly incorporated or organized and validly
existing in the jurisdiction of its incorporation or organization and has all requisite power and authority to purchase and hold the securities issuable hereunder. The decision to invest and the
execution and delivery of this Agreement by such Investor, the performance by such Investor of its obligations hereunder and the consummation by such Investor of the transactions contemplated hereby
have been duly authorized and requires no other proceedings on the part of the Investor. The undersigned has the right, power and authority to execute and deliver this Agreement and all other 

instruments (including, without limitations, the Registration Rights Agreement), on behalf of the Investor. This Agreement has been duly executed and delivered by the Investor and, assuming the
execution and delivery hereof and acceptance thereof by the Company, constitutes the legal, valid and binding obligations of the Investor, enforceable against the Investor in accordance with its
terms. 

        Section 3.2.    Evaluation of Risks.    The Investor has such knowledge and experience in financial tax and
business matters as to be capable of evaluating the merits and risks of, and bearing the economic risks entailed by, an investment in the Company and of protecting its interests in connection with
this transaction. It recognizes that its investment in the Company involves a high degree of risk. 

        Section 3.3.    No Legal Advice From the Company.    The Investor acknowledges that it had the opportunity to
review this Agreement and the transactions contemplated by this Agreement with his or its own legal
counsel and investment and tax advisors. The Investor is relying solely on such counsel and advisors and not on any statements or representations of the Company or any of its representatives or agents
for legal, tax or investment advice with respect to this investment, the transactions contemplated by this Agreement or the securities laws of any jurisdiction. 

        Section 3.4.    Investment Purpose.    The securities are being purchased by the Investor for its own account,
for investment and without any view to the distribution, assignment or resale to others or fractionalization in whole or in part. The Investor agrees not to assign or in any way transfer the
Investor's rights to the securities or any interest therein and acknowledges that the Company will not recognize any purported assignment or transfer except in accordance with applicable Federal and
state securities laws. No other person has or will have a direct or indirect beneficial interest in the securities. The Investor agrees not to sell, hypothecate or otherwise transfer the Investor's
securities unless the securities are registered under Federal and applicable state securities laws or unless, in the opinion of counsel satisfactory to the Company, an exemption from such laws is
available. 

        Section 3.5.    Accredited Investor.    The Investor is an "Accredited
Investor" as that term is defined in Rule 501(a)(3) of Regulation D of the Securities Act. 

        Section 3.6.    Information.    The Investor and its advisors (and its counsel), if any, have been furnished
with all materials relating to the business, finances and operations of the Company and information it deemed material to making an informed investment decision. The Investor and its advisors, if any,
have been afforded the opportunity to ask questions of the Company and its management. Neither such inquiries nor any other due diligence investigations conducted by such Investor or its advisors, if
any, or its representatives shall modify, amend or affect the Investor's right to rely on the Company's representations and warranties contained in this Agreement. The Investor understands that its
investment involves a high degree of risk. The Investor is in a position regarding the Company, which, based upon employment, family relationship or economic bargaining power, enabled and enables such
Investor to obtain information from the Company in order to evaluate the merits and risks of this investment. The Investor has sought such accounting, legal and tax advice, as it has considered
necessary to make an informed investment decision with respect to this transaction. 

        Section 3.7.    Receipt of Documents.    The Investor and its counsel has received and read in their entirety:
(i) this Agreement and the Exhibits annexed hereto; (ii) all due diligence and other information necessary to verify the accuracy and completeness of such representations, warranties and
covenants; (iii) the Company's Form 10- K for the year ended year ended December 31, 2001; and (v) answers to all questions the Investor submitted to the
Company regarding an investment in the Company; and the Investor has relied on the information contained therein and has not been furnished any other documents, literature, memorandum or prospectus. 

        Section 3.8.    Registration Rights Agreement and Escrow Agreement.    The parties have entered into the
Registration Rights Agreement and the Escrow Agreement, each dated the date hereof. 

        Section 3.9.    No General Solicitation.    Neither the Company, nor any of its affiliates, nor any person
acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with the offer
or sale of the shares of Common Stock offered hereby. 

        Section 3.10.    Not an Affiliate.    The Investor is not an officer, director or a person that directly, or
indirectly through one or more intermediaries, controls or is controlled by, or is under common control with the Company or any "Affiliate" of the
Company (as that term is defined in Rule 405 of the Securities Act). Neither the Investor nor its Affiliates has an open short position in the Common Stock of the Company, and the Investor
agrees that it will not, and that it will cause its Affiliates not to, engage in any short sales of or hedging transactions with respect to the Common Stock,  provided that the Company acknowledges and
agrees that upon receipt of an Advance Notice the Investor will sell the Shares to be issued to the Investor
pursuant to the Advance Notice, even if the Shares have not been delivered to the Investor. 

ARTICLE 4.

Representations and Warranties of the Company  

        Except as stated below, on the disclosure schedules attached hereto or in the SEC Documents (as defined herein), the Company hereby represents and warrants to,
and covenants with, the Investor that the following are true and correct as of the date hereof: 

        Section 4.1.    Organization and Qualification.    The Company is duly incorporated or organized and validly
existing in the jurisdiction of its incorporation or organization and has all requisite power and authority corporate power to own its properties and to carry on its business as now being conducted.
Each of the Company and its subsidiaries is duly qualified as a foreign corporation to do business and within ten (10) days of the date hereof will be in good standing in every jurisdiction in
which the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse
Effect on the Company and its subsidiaries taken as a whole. 

        Section 4.2.    Authorization, Enforcement, Compliance with Other Instruments.    (i) The Company has
the requisite corporate power and authority to enter into and perform this Agreement, the Registration Rights Agreement and any related agreements, in accordance with the terms hereof and thereof,
(ii) the execution and delivery of this Agreement, the Registration Rights Agreement, the Escrow Agreement and any related agreements by the Company and the consummation by it of the
transactions contemplated hereby and thereby, have been duly authorized by the Company's Board of Directors and no further consent or authorization is required by the Company, its Board of Directors
or its stockholders, (iii) this Agreement, the Registration Rights Agreement, the Escrow Agreement and any related agreements have been duly executed and delivered by the Company,
(iv) assuming the execution
and delivery thereof and acceptance by the Investor this Agreement, the Registration Rights Agreement, the Escrow Agreement and any related agreements constitute the valid and binding obligations of
the Company enforceable against the Company in accordance with their terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of creditors' rights and remedies. 

        Section 4.3.    Capitalization.    As of the date hereof, the authorized capital stock of the Company consists
of 125,000,000 shares of Common Stock, par value $0.01 per share and 10,000,000 shares of Preferred Stock, par value $0.01 per share, of which 91,480,777 shares of Common Stock and no shares of
Preferred Stock were issued and outstanding. All of such outstanding shares have been validly issued and are fully paid and nonassessable. Except as disclosed in the SEC Documents, no shares of Common
Stock are subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company. Except as disclosed in the SEC Documents, as of the date hereof,
(i) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares
of capital stock of the Company or any of its subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the Company or any of its subsidiaries, (ii) there 

are no outstanding debt securities and (iii) there are no agreements or arrangements under which the Company or any of its subsidiaries is obligated to register the sale of any of their
securities under the Securities Act (except pursuant to the Registration Rights Agreement). There are no securities or instruments containing anti-dilution or similar provisions that will
be triggered by this Agreement or any related agreement or the consummation of the transactions described herein or therein.. The Company has furnished to the Investor true and correct copies of the
Company's Certificate of Incorporation, as amended and as in effect on the date hereof (the "Certificate of Incorporation"), and the Company's
By-laws, as in effect on the date hereof (the "By-laws"), and the terms of all securities convertible into or exercisable for
Common Stock and the material rights of the holders thereof in respect thereto. 

        Section 4.4.    No Conflict.    The execution, delivery and performance of this Agreement by the Company and
the consummation by the Company of the transactions contemplated hereby will not (i) result in a violation of the Certificate of Incorporation, any certificate of designations of any
outstanding series of preferred stock of the Company or By-laws or (ii) conflict with or constitute a default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its subsidiaries is a
party, or result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and the rules and regulations of the Principal
Market on which the Common Stock is quoted) applicable to the Company or any of its subsidiaries or by which any material property or asset of the Company or any of its subsidiaries is bound or
affected and which would cause a Material Adverse Effect. Except as disclosed in the SEC Documents, neither the Company nor its subsidiaries is in violation of any term of or in default under its
Certificate of Incorporation or By-laws or their organizational charter or by-laws, respectively, or any material contract, agreement, mortgage, indebtedness, indenture,
instrument, judgment, decree or order or any statute, rule or regulation applicable to the Company or its subsidiaries which would cause a Materially Adverse Effect. The business of the Company and
its
subsidiaries is not being conducted in violation of any material law, ordinance, regulation of any governmental entity. Except as specifically contemplated by this Agreement and as required under the
Securities Act and any applicable state securities laws, the Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its obligations under or contemplated by this Agreement or the Registration Rights Agreement in accordance with the terms
hereof or thereof where the failure to obtain such consents, authorizations or orders would have a Materially Adverse Effect. All consents, authorizations, orders, filings and registrations which the
Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date hereof. To the knowledge of the Company and its subsidiaries there is no fact or
circumstance which might give rise to any of the foregoing. 

        Section 4.5.    SEC Documents; Financial Statements.    Since May 20, 1991, the Company has filed all
reports, schedules, forms, statements and other documents required to be filed by it with the SEC under of the Exchange Act. The Company has delivered to the Investor or its representatives, or made
available through the SEC's website at http://www.sec.gov, true and complete copies of the SEC Documents. As of their respective dates, the financial statements of the Company disclosed in the SEC
Documents (the "Financial Statements") complied as to form in all material respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles, consistently applied, during the periods involved
(except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes
or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). No other information provided by or on behalf of the Company to the
Investor which is not included in the SEC Documents contains any untrue statement of a material 

fact or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. 

        Section 4.6.    10b-5.    The SEC Documents do not include any untrue statements of material fact,
nor do they omit to state any material fact required to be stated therein necessary to make the statements made, in light of the circumstances under which they were made, not misleading. 

        Section 4.7.    No Default.    Except as disclosed in Section 4.4, Schedule 4.7 or the SEC
Documents, the Company is not in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any indenture, mortgage, deed of trust or other
material instrument or agreement to which it is a party or by which it is or its property is bound and neither the execution, nor the delivery by the Company, nor the performance by the Company of its
obligations under this Agreement or any of the exhibits or attachments hereto will conflict with or result in the breach or violation of any of the terms or provisions of, or constitute a default or
result in the creation or imposition of any lien or charge on any assets or properties of the Company under its Certificate of Incorporation, By-Laws, any material indenture, mortgage,
deed of trust or other material agreement applicable to the Company or instrument to which the Company is a party or by which it is bound, or any statute, or any decree, judgment, order, rules or
regulation of any court or governmental agency or
body having jurisdiction over the Company or its properties, in each case which default, lien or charge is likely to cause a Material Adverse Effect on the Company's business or financial condition. 

        Section 4.8.    Absence of Events of Default.    Except for matters described in the SEC Documents and/or this
Agreement, no Event of Default, as defined in the respective agreement to which the Company is a party, and no event which, with the giving of notice or the passage of time or both, would become an
Event of Default (as so defined), has occurred and is continuing, which would have a Material Adverse Effect on the Company's business, properties, prospects, financial condition or results of
operations. 

        Section 4.9.    Intellectual Property Rights.    The Company and its subsidiaries own or possess adequate
rights or licenses to use all material trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets and rights necessary to conduct their respective businesses as now conducted. The Company and its subsidiaries do not have any knowledge of any infringement
by the Company or its subsidiaries of trademark, trade name rights, patents, patent rights, copyrights, inventions, licenses, service names, service marks, service mark registrations, trade secret or
other similar rights of others, and, to the knowledge of the Company, there is no claim, action or proceeding being made or brought against, or to the Company's knowledge, being threatened against,
the Company or its subsidiaries regarding trademark, trade name, patents, patent rights, invention, copyright, license, service names, service marks, service mark registrations, trade secret or other
infringement; and the Company and its subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing. 

        Section 4.10.    Employee Relations.    Neither the Company nor any of its subsidiaries is involved in any
labor dispute nor, to the knowledge of the Company or any of its subsidiaries, is any such dispute threatened. None of the Company's or its subsidiaries' employees is a member of a union and the
Company and its subsidiaries believe that their relations with their respective employees are good. 

        Section 4.11.    Environmental Laws.    The Company and its subsidiaries are (i) in compliance with any
and all applicable material foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants ("Environmental Laws"), (ii) have received all permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval. 

        Section 4.12.    Title.    Except as set forth in the SEC Documents, the Company has good and marketable title
to its properties and material assets owned by it, free and clear of any pledge, lien, security interest, encumbrance, claim or equitable interest other than such as are not material to the business
of the Company. Any real property and facilities held under lease by the Company and its subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its subsidiaries. 

        Section 4.13.    Insurance.    The Company and each of its subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company and its subsidiaries
are engaged. Neither the Company nor any such subsidiary has been refused any insurance coverage sought or applied for and neither the Company nor any such subsidiary has any reason to believe that it
will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost
that would not materially and adversely affect the condition, financial or otherwise, or the earnings, business or operations of the Company and its subsidiaries, taken as a whole. 

        Section 4.14.    Regulatory Permits.    The Company and its subsidiaries possess all material certificates,
authorizations and permits issued by the appropriate federal, state or foreign regulatory authorities necessary to conduct their respective businesses, and neither the Company nor any such subsidiary
has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit. 

        Section 4.15.    Internal Accounting Controls.    The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management's general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management's general or specific authorization and (iv) the recorded 

accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. 

        Section 4.16.    No Material Adverse Breaches, etc.    Except as set forth in the SEC Documents, neither the
Company nor any of its subsidiaries is subject to any charter, corporate or other legal restriction, or any judgment, decree, order, rule or regulation which in the judgment of the Company's officers
has or is expected in the future to have a Material Adverse Effect on the business, properties, operations, financial condition, results of operations or prospects of the Company or its subsidiaries.
Except as set forth in the SEC Documents, neither the Company nor any of its subsidiaries is in breach of any contract or agreement which breach, in the judgment of the Company's officers, has or is
expected to have a Material Adverse Effect on the business, properties, operations, financial condition, results of operations or prospects of the Company or its subsidiaries. 

        Section 4.17.    Absence of Litigation.    Except as set forth in the SEC Documents, there is no action, suit,
proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending against or affecting the Company, the Common
Stock or any of the Company's subsidiaries, wherein an unfavorable decision, ruling or finding would (i) have a Material Adverse Effect on the transactions contemplated hereby
(ii) adversely affect the validity or enforceability of, or the authority or ability of the Company to perform its obligations under, this Agreement or any of the documents contemplated herein,
or (iii) except as expressly disclosed in the SEC Documents, have a Material Adverse Effect on the business, operations, properties, financial condition or results of operation of the Company
and its subsidiaries taken as a whole. 

        Section 4.18.    Subsidiaries.    Except as disclosed in the SEC Documents, the Company does not presently own
or control, directly or indirectly, any interest in any other corporation, partnership, association or other business entity. 

        Section 4.19.    Tax Status.    The Company and each of its subsidiaries has made or filed all federal and
state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject and (unless and only to the extent that the Company and each of its subsidiaries
has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes) has paid all taxes and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and has set aside on its books provision reasonably adequate for the payment
of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and to the Company's knowledge there is no basis for any such claim. 

        Section 4.20.    Certain Transactions.    Except as set forth in the SEC Documents none of the officers,
directors, or employees of the Company is presently a party to any transaction with the Company (other than for services as employees, officers and directors), including any contract, agreement or
other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or
such employee or, to the knowledge of the Company, any corporation, partnership, trust or other entity in which any officer, director, or any such employee has a substantial interest or is an officer,
director, trustee or partner. 

        Section 4.21.    Rights of First Refusal.    Except as set forth in the SEC Documents, the Company is not
obligated to offer the securities offered hereunder on a right of first refusal basis or otherwise to any third parties including, but not limited to, current or former shareholders of the Company,
underwriters, brokers, agents or other third parties. 

        Section 4.22.    Use of Proceeds.    The Company represents that the net proceeds from this offering will be
used for general corporate purposes. However, in no event shall the net proceeds from this offering be used by the Company for the payment (or loaned to any such person for the payment) of any
judgment, or other liability, incurred by any executive officer, officer, director or employee of the Company, except for any liability owed to such person for services rendered, or if any judgment or 

other liability is incurred by such person originating from services rendered to the Company, or the Company has indemnified such person from liability. 

        Section 4.23.    Further Representation and Warranties of the Company.    For so long as any securities
issuable hereunder held by the Investor remain outstanding, the Company acknowledges, represents, warrants and agrees that it will maintain the listing of its Common Stock on the Principal Market 

        Section 4.24.    Opinion of Counsel.    Investor shall receive an opinion letter, at the Company's expense,
from Davis Wright Termaine LLP, counsel to the Company (updated where applicable) on the date hereof including and any and all opinions of counsel which may be reasonably required in order to sell the
securities issuable hereunder without restriction. 

        Section 4.25.    Dilution.    The Company is aware and acknowledges that issuance of shares of the Company's
Common Stock could cause dilution to existing shareholders and could significantly increase the outstanding number of shares of Common Stock. 

ARTICLE 5.

Indemnification  

        The Investor and the Company represent to the other the following with respect to itself: 

        Section 5.1.    Indemnification.    

        (a)  In
consideration of the Investor's execution and delivery of this Agreement, and in addition to all of the Company's other obligations under this Agreement, the Company
shall defend, protect, indemnify and hold harmless the Investor, and all of its officers, directors, partners, employees and agents (including, without limitation, those retained in connection with
the transactions contemplated by this Agreement) (collectively, the "Investor Indemnitees") from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and expenses in connection therewith (irrespective of whether any such Investor Indemnitee is a party to the action for which indemnification hereunder is sought), and
including reasonable attorneys' fees and disbursements (the "Indemnified Liabilities"), incurred by the Investor Indemnitees or any of them as a result of, or arising out of, or relating to
(a) any misrepresentation or breach of any representation or warranty made by the Company in this Agreement or the Registration Rights Agreement or any other certificate, instrument or document
contemplated hereby or thereby, (b) any breach of any covenant, agreement or obligation of the Company contained in this Agreement or the Registration Rights Agreement or any other certificate,
instrument or document contemplated hereby or thereby, or (c) any cause of action, suit or claim brought or made against such Investor Indemnitee not arising out of any action or inaction of an
Investor Indemnitee, and arising out of or resulting from the execution, delivery, performance or enforcement of this Agreement or any other instrument, document or agreement executed pursuant hereto
by any of the Investor Indemnitees. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities, which is permissible under applicable law. 

        (b)  In
consideration of the Company's execution and delivery of this Agreement, and in addition to all of the Investor's other obligations under this Agreement, the Investor
shall defend, protect, indemnify and hold harmless the Company and all of its officers, directors, shareholders, employees and agents (including, without limitation, those retained in connection with
the transactions contemplated by this Agreement) (collectively, the "Company Indemnitees") from and against any and all Indemnified Liabilities incurred
by the Company Indemnitees or any of them as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or warranty made by the Investor in this
Agreement, the Registration Rights Agreement, or any instrument or document contemplated hereby or thereby executed by the Investor, (b) any breach of any covenant, agreement or obligation of
the Investor contained in this Agreement, the Registration Rights Agreement or any other certificate, instrument or document contemplated hereby or thereby executed by the Investor, or (c) any
cause of action, suit or claim brought or made against such Company 

Indemnitee based on misrepresentations or due to a breach by the Investor and arising out of or resulting from the execution, delivery, performance or enforcement of this Agreement or any other
instrument, document or agreement executed pursuant hereto by any of the Company Indemnitees. To the extent that the foregoing undertaking by the Investor may be unenforceable for any reason, the
Investor shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities, which is permissible under applicable law. 

ARTICLE 6.

Covenants of the Company  

        Section 6.1.    Registration Rights.    The Company shall cause the Registration Rights Agreement to remain in
full force and effect and the Company shall comply in all material respects with the terms thereof. 

        Section 6.2.    Listing of Common Stock.    The Company shall maintain the Common Stock's authorization for
quotation on the Principal Market. 

        Section 6.3.    Exchange Act Registration.    The Company will cause its Common Stock to continue to be
registered under Section 12(g) of the Exchange Act, will file in a timely manner all reports and other documents required of it as a reporting company under the Exchange Act and will not take
any action or file any document (whether or not permitted by Exchange Act or the rules there under to terminate or suspend such registration or to terminate or suspend its reporting and filing
obligations under said Exchange Act. 

        Section 6.4.    Transfer Agent Instructions.    Not later than two (2) days after each Advance Notice
Date and prior to each Closing and resale of the Common Stock by the Investor, the Company will deliver instructions to its transfer agent to issue shares of Common Stock free of restrictive legends. 

        Section 6.5.    Corporate Existence.    The Company will take all steps necessary to preserve and continue the
corporate existence of the Company. 

        Section 6.6.    Notice of Certain Events Affecting Registration; Suspension of Right to Make an Advance.    The
Company will immediately notify the Investor upon its becoming aware of the occurrence of any of the following events in respect of a registration statement or related prospectus relating to an
offering of Registrable Securities: (i) receipt of any request for additional information by the SEC or any other Federal or state governmental authority during the period of effectiveness of
the Registration Statement for amendments or supplements to the registration statement or related prospectus; (ii) the issuance by the SEC or any other Federal or state governmental authority
of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (iii) receipt of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose;
(iv) the happening of any event that makes any statement made in the Registration Statement or related prospectus of any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires the making of any changes in the Registration Statement, related prospectus or documents so that, in the case of the Registration Statement, it will not
contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the
related prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading; and (v) the Company's reasonable determination that a post-effective amendment to the Registration Statement
would be appropriate; and the Company will promptly make available to the Investor any such supplement or amendment to the related prospectus. The Company shall not deliver to the Investor any Advance
Notice during the continuation of any of the foregoing events. 

        Section 6.7.    Expectations Regarding Advance Notices.    Within ten (10) days after the commencement
of each calendar quarter occurring subsequent to the commencement of the Commitment Period, the Company must notify the Investor, in writing, as to its reasonable expectations as to the dollar amount
it intends to raise during such calendar quarter, if any, through the issuance of Advance Notices. Such notification shall constitute only the Company's good faith estimate and shall in no way
obligate the Company to raise such amount, or any amount, or otherwise limit its ability to deliver Advance Notices. The failure by the Company to comply with this provision can be cured by the
Company's notifying the Investor, in writing, at any time as to its reasonable expectations with respect to the current calendar quarter. 

        Section 6.8.    Consent of Investor to Sell Common Stock.    Except with the consent of the Investor, which
consent shall not be unreasonably withheld, during the Commitment Period, the Company shall not issue or sell (i) any Common Stock without consideration or for a consideration per share less
than its Bid Price determined immediately prior to its issuance or (ii) issue or sell any warrant, option, right, contract, call, or other security or instrument granting the holder thereof the
right to acquire Common Stock without consideration or for a consideration per share less than such Common Stock's Bid Price determined immediately prior to its issuance, provided, however, nothing
herein shall prevent the Company from issuing any Common Stock or any warrant, option, right, contract, call, or other security or instrument granting the holder thereof the right to acquire Common
Stock under a registration statement on Form S-8 or a registration statement on Form S-4. 

        Section 6.9.    Consolidation; Merger.    The Company shall not, at any time after the date hereof, effect any
merger or consolidation of the Company with or into, or a transfer of all or substantially all the assets of the Company to another entity (a "Consolidation
Event") unless the resulting successor or acquiring entity (if not the Company) assumes by written instrument the obligation to deliver to the Investor such shares of stock
and/or securities as the Investor is entitled to receive pursuant to this Agreement. 

        Section 6.10.    Issuance of the Company's Common Stock.    The sale of the shares of Common Stock shall be
made in accordance with the provisions and requirements of Regulation D and any applicable state securities law. 

ARTICLE 7.

Conditions for Advance and Conditions to Closing  

        Section 7.1.    Conditions Precedent to the Obligations of the Company.    The obligation hereunder of the
Company to issue and sell the shares of Common Stock to the Investor incident to each Closing is subject to the satisfaction, or waiver by the Company, at or before each such Closing, of each of the
conditions set forth below. 

        (a)    Accuracy of the Investor's Representations and Warranties.    The representations and warranties of the
Investor shall be true and correct in all material respects. 

        (b)    Performance by the Investor.    The Investor shall have performed, satisfied and complied in all respects with
all covenants, agreements and conditions required by this Agreement and the Registration Rights Agreement to be performed, satisfied or complied with by the Investor at or prior to such Closing. 

        Section 7.2.    Conditions Precedent to the Right of the Company to Deliver an Advance Notice and the Obligation of the Investor to Purchase
Shares of Common Stock.    The right of the Company to deliver an Advance Notice and the obligation of the Investor hereunder to acquire and pay for shares of the
Company's Common Stock incident to a Closing is subject to the satisfaction on (i) the date of delivery of such Advance Notice and (ii) the applicable Advance Date (each a "Condition
Satisfaction Date"), of each of the following conditions: 

        (a)    Registration of the Common Stock with the SEC.    The Company shall have filed with the SEC a Registration
Statement with respect to the resale of the Registrable Securities in accordance with the terms of the Registration Rights Agreement. As set forth in the Registration Rights Agreement, the 

Registration Statement shall have previously become effective and shall remain effective on each Condition Satisfaction Date and (i) neither the Company nor the Investor shall have received
notice that the SEC has issued or intends to issue a stop order with respect to the Registration Statement or that the SEC otherwise has suspended or withdrawn the effectiveness of the Registration
Statement, either temporarily or permanently, or intends or has threatened to do so (unless the SEC's concerns have been addressed and the Investor is reasonably satisfied that the SEC no longer is
considering or intends to take such action) and (ii) no other suspension of the use or withdrawal of the effectiveness of the Registration Statement or related prospectus shall exist. The
Registration Statement must have been declared effective by the SEC prior to the first Advance Notice Date. 

        (b)    Authority.    The Company shall have obtained all permits and qualifications required by any applicable state
in accordance with the Registration Rights Agreement for the offer and sale of the shares of Common Stock, or shall have the availability of exemptions there from. The sale and issuance of the shares
of Common Stock shall be legally permitted by all laws and regulations to which the Company is subject. 

        (c)    Material Changes.    There shall not exist any material changes to the information set forth in the
Registration Statement which would require the Company to file a post-effective amendment to the Registration Statement. 

        (d)    Performance by the Company.    The Company shall have performed, satisfied and complied in all material
respects with all covenants, agreements and conditions required by this Agreement (including, without limitation, the conditions specified in Section 2.5 hereof) and the Registration Rights
Agreement to be performed, satisfied or complied with by the Company at or prior to each Condition Satisfaction Date. 

        (e)    No Injunction.    No statute, rule, regulation, executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits or directly and adversely affects any of the transactions contemplated by this
Agreement, and no proceeding shall have been commenced that may have the effect of prohibiting or adversely affecting any of the transactions contemplated by this Agreement. 

        (f)    No Suspension of Trading in or Delisting of Common Stock.    The trading of the Common Stock is not suspended
by the SEC or the Principal Market (if the Common Stock is traded on a Principal Market). The issuance of shares of Common Stock with respect to the applicable Closing, if any, shall not violate the
shareholder approval requirements of the Principal Market (if the Common Stock is traded on a Principal market). The Company shall not have received any notice threatening the continued listing of the
Common Stock on the Principal Market (if the Common Stock is traded on a Principal Market). 

        (g)    Advances.    The amount of the individual Advance, as well as the aggregate amount of Advances in any thirty
(30) calendar day period, requested by the Company does not exceed the Maximum Advance Amount. In addition, in no event shall the number of shares issuable to the Investor pursuant to an
Advance cause the Investor to own in excess of nine and 9/10 percent (9.9%) of the then outstanding Common Stock of the Company. 

        (h)    No Knowledge.    The Company has no knowledge of any event more likely than not to have the effect of causing
such Registration Statement to be suspended or otherwise ineffective. 

        (i)    Prior Approval.    The Company shall have obtained all approvals necessary under the rules and regulations
under the Listing Qualifications of the Market Place Rules established and maintained by the National Association of Securities Dealers, Inc., for the issuance of the shares of Common Stock to
the Investor pursuant to Advances under this Agreement. 

        (j)    Other.    On each Condition Satisfaction Date, the Investor shall have received and been reasonably satisfied
with such other certificates and documents as shall have been reasonably requested by the Investor in order for the Investor to confirm the Company's satisfaction of the conditions set forth in this
Section 7.2, including, without limitation, a certificate executed by an executive officer of 

the Company and to the effect that all the conditions to such Closing shall have been satisfied as at the date of each such certificate substantially in the form annexed hereto on  Exhibit A.

ARTICLE 8.

Due Diligence Review; Non-Disclosure of Non-Public Information  

        Section 8.1.    Due Diligence Review.    Prior to the filing of the Registration Statement the Company shall
make available for inspection and review by the Investor, advisors to and representatives of the Investor, any underwriter participating in any disposition of the Registrable Securities on behalf of
the Investor pursuant to the Registration Statement, any such registration statement or amendment or supplement thereto or any blue sky, NASD or other filing, all financial and other records, all SEC
Documents and other filings with the SEC, and all other corporate documents and properties of the Company as may be reasonably necessary for the purpose of such review, and cause the Company's
officers, directors and employees to supply all such information reasonably requested by the Investor or any such representative, advisor or underwriter in connection with such Registration Statement
(including, without limitation, in response to all questions and other inquiries reasonably made or submitted by any of them), prior to and from time to time after the filing and effectiveness of the
Registration Statement for the sole purpose of enabling the Investor and such representatives, advisors and underwriters and their respective accountants and attorneys to conduct initial and ongoing
due diligence with respect to the Company and the accuracy of the Registration Statement. 

        Section 8.2.    Non-Disclosure of Non-Public Information.    

        (a)  The
Company shall not disclose non-public information to the Investor, advisors to or representatives of the Investor unless prior to disclosure of such
information the Company identifies such information as being non-public information and provides the Investor, such advisors and representatives with the opportunity to accept or refuse to
accept such non-public information for review. The Company may, as a condition to disclosing any non-public information hereunder, require the Investor's advisors and
representatives to enter into a confidentiality agreement in form reasonably satisfactory to the Company and the Investor. 

        (b)  Nothing
herein shall require the Company to disclose non-public information to the Investor or its advisors or representatives, and the Company represents
that it does not disseminate non-public information to any investors who purchase stock in the Company in a public offering, to money managers or to securities analysts; provided, however,
that notwithstanding anything herein to the contrary, the Company will, as hereinabove provided, immediately notify the advisors and representatives of the Investor and, if any, underwriters, of any
event or the existence of any circumstance (without any obligation to disclose the specific event or circumstance) of which it becomes aware, constituting non-public information (whether
or not requested of the Company specifically or generally during the course of due diligence by such persons or entities), which, if not disclosed in the prospectus included in the Registration
Statement, would cause such prospectus to include a material misstatement or to omit a material fact required to be stated therein in order to make the statements, therein, in light of the
circumstances in which they were made, not misleading. Nothing contained in this Section 8.2 shall be construed to mean that such persons or entities other than the Investor (without the
written consent of the Investor prior to disclosure of such information) may not obtain non-public information in the course of conducting due diligence in accordance with the terms of
this Agreement and nothing herein shall prevent any such persons or entities from notifying the Company of their opinion that based on such due diligence by such persons or entities, that the
Registration Statement contains an untrue statement of material fact or omits a material fact required to be stated in the Registration Statement or necessary to make the statements contained therein,
in light of the circumstances in which they were made, not misleading. 

ARTICLE 9.

Choice of Law/Jurisdiction  

        Section 9.1.    Governing Law.    This Agreement shall be governed by and interpreted in accordance with the
laws of the State of Delaware without regard to the principles of conflict of laws. The parties further agree that any action between them shall be heard in Hudson County, New Jersey, and expressly
consent to the jurisdiction and venue of the Superior Court of New Jersey, sitting in Hudson County, New Jersey and the United States District Court of New Jersey, sitting in Newark, New Jersey, for
the adjudication of any civil action asserted pursuant to this paragraph. 

ARTICLE 10.

Assignment; Termination  

        Section 10.1.    Assignment.    Neither this Agreement nor any rights of the Company hereunder may be assigned
to any other Person. 

        Section 10.2.    Termination.    The obligations of the Investor to make Advances under Article II
hereof shall terminate twenty-four (24) months after the Effective Date. The Company may terminate this Agreement, with or without cause, on not less than thirty (30) days
advance written notice to the Investor. 

ARTICLE 11.

Notices  

        Section 11.1.    Notices.    Any notices, consents, waivers, or other communications required or permitted to
be given under the terms of this Agreement must be in writing and will be deemed to have been delivered (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile, provided a copy is mailed by U.S. certified mail, return receipt requested; (iii) three (3) days after being sent by U.S. certified mail, return receipt requested, or
(iv) one (1) day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile
numbers for such communications shall be: 

	If to the Company, to:	 	Communication Intelligence Corp.

275 Shoreline Drive—Suite 520

Redwood Shores, California 94065

Attention: Frank Dane

Telephone: (650) 802-7737

Facsimile: (419) 735-7922
	

With a copy to:	
 	

Davis Wright Termaine LLP

1300 S.W. Fifth Avenue, 23rd Floor

Portland, Oregon 97201

Attention: David C. Baca

Telephone: (503) 241-2300

Facsimile: (503) 779-5299
	

If to the Investor(s):	
 	

Cornell Capital Partners, LP

101 Hudson Street—Suite 3606

Jersey City, New Jersey 07302

Attention: Mark Angelo

                  Portfolio Manager

Telephone: (201) 985-8300

Facsimile: (201) 985-8266

	

With a Copy to:	
 	

Butler Gonzalez LLP

1000 Stuyvesant Avenue—Suite 6

Union, New Jersey 07083

Attention: David Gonzalez, Esq.

Telephone: (908) 810-8588

Facsimile: (908) 810-0973

Each
party shall provide five (5) days' prior written notice to the other party of any change in address or facsimile number. 

ARTICLE 12.

Miscellaneous  

        Section 12.1.    Counterparts.    This Agreement may be executed in two or more identical counterparts, all of
which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. In the event any signature page is
delivered by facsimile transmission, the party using such means of delivery shall cause four (4) additional original executed signature pages to be physically delivered to the other party
within five (5) days of the execution and delivery hereof. 

        Section 12.2.    Entire Agreement; Amendments.    This Agreement supersedes all other prior oral or written
agreements between the Investor, the Company, their affiliates and persons acting on their behalf with respect to the matters discussed herein, and this Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Investor
makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the
party to be charged with enforcement. 

        Section 12.3.    Reporting Entity for the Common Stock.    The reporting entity relied upon for the
determination of the trading price or trading volume of the Common Stock on any given Trading Day for the purposes of this Agreement shall be Bloomberg, L.P. or any successor thereto. The written
mutual consent of the Investor and the Company shall be required to employ any other reporting entity. 

        Section 12.4.    Fees and Expenses.    The Company hereby agrees to pay the following fees: 

        (a)    Commitment Fees.    On each Advance Date the Company shall pay to the Investor, directly from the gross
proceeds held in escrow, an amount equal to six and one half percent (6.5%) of the amount of each Advance. The Company hereby agrees that if such payment, as is described above, is not made by the
Company on the Advance Date, such payment will be made at the direction of the Investor as outlined and mandated by Section 2.3 of this Agreement. 

        Section 12.5.    Brokerage.    Each of the parties hereto represents that it has had no dealings in connection
with this transaction with any finder or broker who will demand payment of any fee or commission from the other party. The Company on the one hand, and the Investor, on the other hand, agree to
indemnify the other against and hold the other harmless from any and all liabilities to any person claiming brokerage commissions or finder's fees on account of services purported to have been
rendered on behalf of the indemnifying party in connection with this Agreement or the transactions contemplated hereby. 

        Section 12.6.    Confidentiality.    If for any reason the transactions contemplated by this Agreement are not
consummated, each of the parties hereto shall keep confidential any information obtained from any other party (except information publicly available or in such party's domain prior to the date hereof,
and except as required by court order) and shall promptly return to the other parties all schedules,
documents, instruments, work papers or other written information without retaining copies thereof, previously furnished by it as a result of this Agreement or in connection herein. 

        IN
WITNESS WHEREOF, the parties hereto have caused this Line of Credit Agreement to be executed by the undersigned, thereunto duly authorized, as of the date first set forth above. 

	 	 	COMPANY:

COMMUNICATION INTELLIGENCE CORP.
	

 	
 	

By:	
 	

    

	 	 	Name:	 	Frank Dane
	 	 	Title:	 	Chief Legal Officer
	

 	
 	

INVESTOR:

CORNELL CAPITAL PARTNERS, LP
	

 	
 	

By:	
 	

Yorkville Advisors, LLC
	 	 	Its:	 	General Partner
	

 	
 	

By:	
 	

    

	 	 	Name:	 	Mark Angelo
	 	 	Title:	 	Portfolio Manager

EXHIBIT A  

 Advance Notice/Compliance Certificate  

 Communication Intelligence Corp.  

 The undersigned,                        hereby certifies, with respect to the sale of shares of Common Stock
of Communication Intelligence Corp. (the "Company"), issuable in connection with this Advance
Notice and Compliance Certificate dated                        (the "Notice"), delivered pursuant to the Equity Line of Credit
Agreement (the "Agreement"), as follows:  

         1.    The undersigned is the duly elected Chief Executive Officer of the Company.  

         2.    There are no material changes to the information set forth in the Registration Statement which would require the Company to file a post effective
amendment to the
Registration Statement.  

        3.    The Company has performed in all material respects all covenants and agreements to be performed by the Company on or prior to the Advance Date related to the
Notice and
has complied in all material respects with all obligations and conditions contained in the Agreement.  

         4.    The Advance requested
is                        .  

        The undersigned has executed this Certificate this            day
of                        .
 

	 	 	COMMUNICATION INTELLIGENCE CORP.
	

 	
 	

By:	
 	

    

	 	 	Name:	 	    

	 	 	Title:	 	    

 
 

SCHEDULE 2.6(b)    
  

 
  Communication Intelligence Corp.    
  

        The undersigned hereby agrees that for a period commencing on the date hereof and expiring on the termination of the Equity Line of Credit Agreement dated
February 12, 2003 between Communication Intelligence Corp. (the "Company"), and Cornell Capital Partners, LP, (the "Investor") (the "Lock-up Period"), he, she or it will not,
directly or indirectly, without the prior written consent of the Investor, issue, offer, agree or offer to sell, sell, grant an option for the purchase or sale of, transfer, pledge, assign,
hypothecate, distribute or otherwise encumber or dispose of except pursuant to Rule 144 of the General Rules and Regulations under the Securities Act of 1933, any securities of the Company,
including common stock or options, rights, warrants or other securities underlying, convertible into, exchangeable or exercisable for or evidencing any right to purchase or subscribe for any common
stock (whether or not beneficially owned by the undersigned), or any beneficial interest therein (collectively, the "Securities") during any Pricing Period and pending the Closing of an Advance
pursuant to this Agreement. 

        In
order to enable the aforesaid covenants to be enforced, the undersigned hereby consents to the placing of legends and/or stop-transfer orders with the transfer agent of
the Company's securities with respect to any of the Securities registered in the name of the undersigned or beneficially owned by the undersigned, and the undersigned hereby confirms the undersigned's
investment in the Company. 

Dated:
February 12, 2003 

	 	 	Signature
	 	 	    

	

 	
 	

Address:	
 	

    

	

 	
 	

City, State, Zip Code:	
 	

    

	

 	
 	

    

	 	 	Print Social Security Number

or Taxpayer I.D. Number

QuickLinks

Exhibit 10.10

Equity Line of Credit Agreement

SCHEDULE 2.6(b)

Communication Intelligence Corp.QuickLinks
 -- Click here to rapidly navigate through this document

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. 

1

 

        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. 

2

   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.

4

 

	 	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. 

5

   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. 

6

 

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 

10

 

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. 

11

   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)

	
 	

 

12

   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. 

1

 

        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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