0000727634-12-000002.txt : 20120209 0000727634-12-000002.hdr.sgml : 20120209 20120208183020 ACCESSION NUMBER: 0000727634-12-000002 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20120209 DATE AS OF CHANGE: 20120208 GROUP MEMBERS: ANDAX LLC GROUP MEMBERS: ANDREA GOREN GROUP MEMBERS: PHILIP S. SASSOWER GROUP MEMBERS: PHOENIX BANNER HOLDINGS LLC GROUP MEMBERS: PHOENIX ENTERPRISES FAMILY FUND LLC GROUP MEMBERS: PHOENIX VENTURE FUND LLC GROUP MEMBERS: SG PHOENIX LLC GROUP MEMBERS: SG PHOENIX VENTURES LLC SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: COMMUNICATION INTELLIGENCE CORP CENTRAL INDEX KEY: 0000727634 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER PERIPHERAL EQUIPMENT, NEC [3577] IRS NUMBER: 942790442 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-51123 FILM NUMBER: 12583460 BUSINESS ADDRESS: STREET 1: 275 SHORELINE DR STREET 2: STE 500 CITY: REDWOOD SHORES STATE: CA ZIP: 94065 BUSINESS PHONE: 6508027888 MAIL ADDRESS: STREET 1: 275 SHORELINE DR STREET 2: STE 500 CITY: REDWOOD SHORES STATE: CA ZIP: 94065 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: COMMUNICATION INTELLIGENCE CORP CENTRAL INDEX KEY: 0000727634 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER PERIPHERAL EQUIPMENT, NEC [3577] IRS NUMBER: 942790442 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 275 SHORELINE DR STREET 2: STE 500 CITY: REDWOOD SHORES STATE: CA ZIP: 94065 BUSINESS PHONE: 6508027888 MAIL ADDRESS: STREET 1: 275 SHORELINE DR STREET 2: STE 500 CITY: REDWOOD SHORES STATE: CA ZIP: 94065 SC 13D/A 1 phoen_13d262012.htm SCHEDULE 13D/A phoen_13d262012.htm

 
UNITED STATES
  
 
SECURITIES AND EXCHANGE COMMISSION
  
 
Washington, D.C. 20549
  
     
 
SCHEDULE 13D/A
  
[Rule 13d-102]

Under the Securities Exchange Act of 1934
(Amendment No. 5)

Communication Intelligence Corporation 
(Name of Issuer)

Common Stock, par value $0.01 per share 
(Title of Class of Securities)

20338K106 
(CUSIP Number)

Andrea Goren
  
Jonathan J. Russo, Esq.
Phoenix Venture Fund LLC
  
Pillsbury Winthrop Shaw Pittman LLP
110 East 59th Street, Suite 1901
  
1540 Broadway
New York, New York 10022
  
New York, New York 10036
(212) 759-1909
  
(212) 858-1000
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

February 3, 2012 
(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box.  o


*  The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 
 
 
 
 


CUSIP No.   20338K106
 
1.
Names of Reporting Persons
Phoenix Venture Fund LLC
 
2.
Check the Appropriate Box if a Member of a Group (See Instructions)
   
(a)
 x
   
(b)
  o
 
3.
  
 
4.
Source of Funds (See Instructions)
OO
 
5.
Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     o
 
6.
Citizenship or Place of Organization
Delaware
Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With
7.
Sole Voting Power
303,084,811
 
8.
Shared Voting Power
0
 
9.
Sole Dispositive Power
303,084,811
 
10.
Shared Dispositive Power
0
 
11.
Aggregate Amount Beneficially Owned by Each Reporting Person
303,084,811
 
12.
Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)   o
 
13.
Percent of Class Represented by Amount in Row (11)
69.11%
 
14.
Type of Reporting Person (See Instructions)
OO



 
2 
 


CUSIP No.   20338K106
 
 
1.
Names of Reporting Persons
SG Phoenix Ventures LLC
 
2.
Check the Appropriate Box if a Member of a Group (See Instructions)
   
(a)
 x
   
(b)
  o
 
3.
  
 
4.
Source of Funds (See Instructions)
OO
 
5.
Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     o
 
6.
Citizenship or Place of Organization
Delaware
Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With
7.
Sole Voting Power
0
 
8.
Shared Voting Power
303,084,811 (1)
 
9.
Sole Dispositive Power
0
 
10.
Shared Dispositive Power
303,084,811 (1)
 
11.
Aggregate Amount Beneficially Owned by Each Reporting Person
303,084,811 (1)
 
12.
Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)   o
 
13.
Percent of Class Represented by Amount in Row (11)
69.11%
 
14.
Type of Reporting Person (See Instructions)
OO
 
 
 
(1)
Owned directly by Phoenix Venture Fund LLC (“Phoenix”).  SG Phoenix Ventures LLC (“SGPV”) is the managing member of Phoenix.  Philip S. Sassower and Andrea Goren are the co-managers of SGPV.



 
3 
 


CUSIP No.   20338K106
 
 
1.
Names of Reporting Persons
SG Phoenix LLC
 
2.
Check the Appropriate Box if a Member of a Group (See Instructions)
   
(a)
 x
   
(b)
  o
 
3.
  
 
4.
Source of Funds (See Instructions)
OO
 
5.
Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     o
 
6.
Citizenship or Place of Organization
Delaware
Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With
7.
Sole Voting Power
13,506,843
 
8.
Shared Voting Power
0
 
9.
Sole Dispositive Power
13,506,843
 
10.
Shared Dispositive Power
0
 
11.
Aggregate Amount Beneficially Owned by Each Reporting Person
13,506,843
 
12.
Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)   o
 
13.
Percent of Class Represented by Amount in Row (11)
6.69%
 
14.
Type of Reporting Person (See Instructions)
OO



 
4 
 

CUSIP No.   20338K106
 
 
1.
Names of Reporting Persons
Phoenix Enterprises Family Fund LLC
 
2.
Check the Appropriate Box if a Member of a Group (See Instructions)
   
(a)
 x
   
(b)
 o
 
3.
  
 
4.
Source of Funds (See Instructions)
OO
 
5.
Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     o
 
6.
Citizenship or Place of Organization
Delaware
Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With
7.
Sole Voting Power
3,231,289
 
 
8.
Shared Voting Power
0
 
9.
Sole Dispositive Power
3,231,289
 
 
10.
Shared Dispositive Power
0
 
11.
Aggregate Amount Beneficially Owned by Each Reporting Person
3,231,289
 
 
12.
Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)   o
 
13.
Percent of Class Represented by Amount in Row (11)
1.66%
 
14.
Type of Reporting Person (See Instructions)
OO


 
5 
 

CUSIP No.   20338K106
 
 
1.
Names of Reporting Persons
Phoenix Banner Holdings LLC
 
2.
Check the Appropriate Box if a Member of a Group (See Instructions)
   
(a)
 x
   
(b)
  o
 
3.
  
 
4.
Source of Funds (See Instructions)
OO
 
5.
Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     o
 
6.
Citizenship or Place of Organization
Delaware
Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With
7.
Sole Voting Power
5,555,555
 
8.
Shared Voting Power
0
 
9.
Sole Dispositive Power
5,555,555
 
10.
Shared Dispositive Power
0
 
11.
Aggregate Amount Beneficially Owned by Each Reporting Person
5,555,555
 
12.
Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)   o
 
13.
Percent of Class Represented by Amount in Row (11)
2.82%
 
14.
Type of Reporting Person (See Instructions)
OO

 
6 
 

CUSIP No.   20338K106
 
 
1.
Names of Reporting Persons
Andax LLC
 
2.
Check the Appropriate Box if a Member of a Group (See Instructions)
   
(a)
 x
   
(b)
  o
 
3.
  
 
4.
Source of Funds (See Instructions)
OO
 
5.
Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     o
 
6.
Citizenship or Place of Organization
Delaware
Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With
7.
Sole Voting Power
2,267,461
 
8.
Shared Voting Power
0
 
9.
Sole Dispositive Power
2,267,461
 
10.
Shared Dispositive Power
0
 
11.
Aggregate Amount Beneficially Owned by Each Reporting Person
2,267,461
 
12.
Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)   o
 
13.
Percent of Class Represented by Amount in Row (11)
1.17%
 
14.
Type of Reporting Person (See Instructions)
OO


 
7 
 


CUSIP No.   20338K106
 
 
1.
Names of Reporting Persons
Philip S. Sassower
 
2.
Check the Appropriate Box if a Member of a Group (See Instructions)
   
(a)
 x
   
(b)
  o
 
3.
  
 
4.
Source of Funds (See Instructions)
OO
 
5.
Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     o
 
6.
Citizenship or Place of Organization
United States
Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With
7.
Sole Voting Power
5,620,445 (2)
 
8.
Shared Voting Power
322,147,209 (3)
 
9.
Sole Dispositive Power
5,620,445 (2)
 
10.
Shared Dispositive Power
322,147,209 (3)
 
11.
Aggregate Amount Beneficially Owned by Each Reporting Person
327,767,654
 
12.
Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)   o
 
13.
Percent of Class Represented by Amount in Row (11)
71.51%
 
14.
Type of Reporting Person (See Instructions)
IN

 
(2)
Includes 3,231,289 shares held by Phoenix Enterprises Family Fund LLC (“Family Fund”).  Also includes 333,600 shares subject to options exercisable within 60 days of February 3, 2012.  Mr. Sassower disclaims any beneficial ownership of the securities owned by Family Fund, except to the extent of his pecuniary interest, if any, in such securities.
 
(3)
Includes 303,084,811 shares owned directly by Phoenix, 13,506,843 shares beneficially owned directly by SG Phoenix LLC (“SG Phoenix”) and 5,555,555 shares beneficially owned directly by Phoenix Banner Holdings LLC (“Banner”).  Mr. Sassower is the co-manager of SGPV (the managing member of Phoenix) and SG Phoenix and the co-manager of the managing member of Banner.  Mr. Sassower and Mr. Goren have voting and dispositive power over Phoenix, SGPV, SG Phoenix and Banner.  Mr. Sassower disclaims any beneficial ownership of the securities owned by Phoenix, SGPV, SG Phoenix and Banner, except to the extent of his pecuniary interest, if any, in such securities.



 
8 
 


CUSIP No.   20338K106
 
 
1.
Names of Reporting Persons
Andrea Goren
 
2.
Check the Appropriate Box if a Member of a Group (See Instructions)
   
(a)
 x
   
(b)
 o
 
3.
  
 
4.
Source of Funds (See Instructions)
OO
 
5.
Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     o
 
6.
Citizenship or Place of Organization
United States
Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With
7.
Sole Voting Power
3,455,061 (4)
 
8.
Shared Voting Power
322,147,209 (5)
 
9.
Sole Dispositive Power
3,455,061 (4)
 
10.
Shared Dispositive Power
322,147,209 (5)
 
11.
Aggregate Amount Beneficially Owned by Each Reporting Person
325,602,270
 
12.
Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)   o
 
13.
Percent of Class Represented by Amount in Row (11)
71.06%
 
14.
Type of Reporting Person (See Instructions)
IN

 
(4)
Includes 19,000 shares owned directly by Mr. Goren and 2,267,461 shares beneficially owned directly by Andax LLC (“Andax”). Mr. Goren is the managing member of Andax.  Also includes 1,168,600 shares subject to options exercisable within 60 days of February 3, 2012.
     
 
(5)
Includes 303,084,811 shares owned directly by Phoenix, 13,506,843 shares beneficially owned directly by SG Phoenix and 5,555,555 shares beneficially owned directly by Banner.  Mr. Goren is the co-manager of SGPV (the managing member of Phoenix) and SG Phoenix, and the co-manager of the managing member of Banner.  Mr. Goren and Mr. Sassower have voting and dispositive power over Phoenix, SGPV, SG Phoenix and Banner.  Mr. Goren disclaims any beneficial ownership of the securities owned by Phoenix, SGPV, SG Phoenix, Banner and Andax, except to the extent of his pecuniary interest, if any, in such securities.



 
9 
 


This Amendment No. 5 (the “Statement”) filed by the Reporting Persons, amends and supplements Items 2, 3, 4, 6 and 7 and amends and restates Item 5 of Schedule 13D originally filed by the Reporting Persons on October 15, 2007 and amended by Amendment No. 1 filed on June 17, 2008 and further amended by Amendment No. 2 filed on May 28, 2009 and further amended by Amendment No. 3 filed on August 17, 2010 and further amended by Amendment No. 4 filed on January 5, 2011.  The Statement is also being filed to add Family Fund, Banner and Andax as Reporting Persons.

Item 2.
Identity and Background

Item 2 is hereby amended and supplemented to include the following:

The principal businesses of Family Fund, Banner and Andax is investments.

The principal offices of Family Fund, Banner and Andax are located at 110 East 59 Street, Suite 1901, New York, New York 10022.

During the five years prior to the date hereof, none of Family Fund, Banner and Andax have (i) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction, as a result of such proceeding such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

Item 3.
Source and Amount of Funds or Other Consideration

Item 3 is hereby amended and supplemented to include the following:

On each of May 4, 2010, May 19, 2010 and June 3, 2010, Andax acquired a warrant to purchase 20,833 shares of Common Stock with an exercise price of $0.06 per share.

On June 30, 2010, Andax acquired a warrant to purchase 71,409 shares of Common Stock with an exercise price per share of $0.06.

On August 5, 2010, Andax acquired 20,098 shares of Series B Preferred Stock at a purchase price of $1.00 per share in connection with the Issuer’s recapitalization.  The shares of Series B Preferred Stock are convertible into Common Stock at the current conversion price of $0.0433, subject to adjustment.

On December 31, 2010, Andax purchased 5,000 shares of the Series C Preferred Stock at a purchase price of $1.00 and warrants to purchase 222,222 shares of Common Stock with an exercise price per share of $0.0225.  The Issuer’s shares of Series C Preferred Stock are convertible into Common Stock at the current conversion price of $0.0225, subject to adjustment.

On March 31, 2011, Family Fund and Andax purchased 35,000 and 6,250 shares, respectively, of Series C Preferred Stock and Family Fund and Andax acquired warrants to purchase 1,555,556 and 277,778 shares, respectively, of Common Stock with an exercise price per share of $0.0225, pursuant to subscription agreements with the Issuer.

On March 31, 2011, SG Phoenix received a warrant to purchase 1,777,778 shares of Common Stock with an exercise price of  $0.0225 per share for administrative services in connection with the private placement of Series C Preferred Stock.  The warrants are exercisable until December 31, 2013.

On September 20, 2011, Banner acquired warrants to purchase 5,555,555 shares of Common Stock with an exercise price per share of $0.0225 pursuant to a Note and Warrant Purchase Agreement by and among the Issuer and the investors listed therein.

On December 2, 2011, Andax and Philip Sassower each acquired a warrant to purchase 555,556 and 2,555,556 shares, respectively, of Common Stock with an exercise price per share of $0.0225 pursuant to a Note and Warrant Purchase Agreement by and among the Issuer and the investors listed therein.

On January 4, 2012, Phoenix transferred 6,500,000 shares of Common Stock to the Issuer in connection with a settlement with a stockholder of the Issuer and the Issuer related to a Section 16(b) claim.

On January 24, 2012, Philip Sassower exercised a warrant to purchase 2,555,556 shares of Common Stock pursuant to its cashless exercise provision and acquired 2,055,556 shares of Common Stock.

Phoenix received paid-in-kind dividends on its shares of Series B Preferred Stock as follows: 120,794 shares at March 31, 2011; 125,147 shares at June 30, 2011; 129,677 shares at September 30, 2011; and 132,946 shares at December 31, 2011.

 
11
 
Phoenix received paid-in-kind dividends on its shares of Series C Preferred Stock as follows: 29,589 shares at March 31, 2011; 30,656 shares at June 30, 2011; 31,765 shares at September 30, 2011; and 32,566 shares at December 31, 2011.

Family Fund received paid-in-kind dividends on its shares of Series C Preferred Stock as follows: 873 shares at June 30, 2011, 904 shares at September 30, 2011 and 927 shares at December 31, 2011.

Andax received paid-in-kind dividends on its shares of Series B Preferred Stock as follows:  314 shares at September 30, 2010, 514 shares at December 31, 2010, 516 shares at March 31, 2011, 535 shares at June 30, 2011, 554 shares at September 30, 2011 and 568 shares at December 31, 2011.

Andax received paid-in-kind dividends on its shares of Series C Preferred Stock as follows: 123 shares at March 31, 2011, 284 shares at June 30, 2011, 294 shares at September 30, 2011 and 301 shares at December 31, 2011.

Item 4.
Purpose of Transaction

Item 4 is hereby amended and supplemented to include the following:

See Item 3, which is hereby incorporated by reference, for a discussion of how the equity securities of the Issuer to which this Statement relates were acquired.

Except as set forth in this Statement, the Reporting Persons do not presently have any specific plans or proposals that relate to or would result in any of the actions described in subparagraphs (a) through (j) of Item 4 of Schedule 13D.

Item 5.
Interest in Securities of the Issuer

Item 5 is hereby amended and restated in its entirety as follows:

(a)  Phoenix, for the purpose of Rule 13d-3 promulgated under the Exchange Act, beneficially owns 303,084,811 shares of Common Stock representing approximately 69.11% of the outstanding shares of Common Stock.

SGPV, for the purposes of Rule 13d-3 promulgated under the Exchange Act, beneficially owns 303,084,811 shares of Common Stock representing approximately 69.11% of the outstanding shares of Common Stock.  SGPV is the managing member of Phoenix.  SGPV disclaims any beneficial ownership of the shares of Common Stock held by Phoenix, except to the extent of its pecuniary interest, if any, in such shares.

SG Phoenix, for the purposes of Rule 13d-3 promulgated under the Exchange Act, beneficially owns 13,506,843 shares of Common Stock representing approximately 6.69% of the outstanding shares of Common Stock. 

Family Fund, for the purposes of Rule 13d-3 promulgated under the Exchange Act, beneficially owns 3,231,289 shares of Common Stock representing approximately 1.66% of the outstanding shares of Common Stock.

Banner, for the purposes of Rule 13d-3 promulgated under the Exchange Act, beneficially owns 5,555,555 shares of Common Stock representing approximately 2.82% of the outstanding shares of Common Stock.

Andax, for the purposes of Rule 13d-3 promulgated under the Exchange Act, beneficially owns 2,267,461 shares of Common Stock representing approximately 1.17% of the outstanding shares of Common Stock.

Mr. Sassower, for the purposes of Rule 13d-3 promulgated under the Exchange Act, beneficially owns 327,767,654 shares of Common Stock representing approximately 71.51% of the outstanding shares of Common Stock.  Mr. Sassower is the co-manager of SGPV, the managing member of Phoenix, a co-manager of SG Phoenix, a co-manager of the managing member of Banner and the sole managing member of the Family Fund.  Mr. Sassower disclaims any beneficial ownership of the shares of held by Phoenix, SGPV, SG Phoenix, Family Fund and Banner, except to the extent of his pecuniary interest, if any, in such shares.

Mr. Goren, for the purposes of Rule 13d-3 promulgated under the Exchange Act, beneficially owns 325,602,270 shares of Common Stock representing approximately 71.06% of the outstanding shares of Common Stock.  Mr. Goren is the co-manager of SGPV, the managing
 
 
12
 
 
member of Phoenix, a co-manager of SG Phoenix, a co-manager of the managing member of Banner and the managing member of Andax LLC.  Mr. Goren disclaims any beneficial ownership of the shares held by Phoenix, SGPV, SG Phoenix, Banner and Andax, except to the extent of his pecuniary interest, if any, in such shares.

(b)  Phoenix has the sole power to vote and the sole power to dispose of 303,084,811 shares of Common Stock.

SGPV has the sole power to vote and the sole power to dispose of 0 shares of Common Stock and has the shared power to vote and the shared power to dispose of 303,084,811 shares of Common Stock.

SG Phoenix has the sole power to vote and the sole power to dispose of 13,506,843 shares of Common Stock.

Family Fund has the sole power to vote and the sole power to dispose of 3,231,289 shares of Common Stock.

Banner has the sole power to vote and the sole power to dispose of 5,555,555 shares of Common Stock.

Andax has the sole power to vote and the sole power to dispose of 2,267,461 shares of Common Stock.

Mr. Sassower has the sole power to vote and the sole power to dispose of 5,620,445 shares of Common Stock and has the shared power to vote and the shared power to dispose of 322,147,209 shares of Common Stock.

Mr. Goren has the sole power to vote and the sole power to dispose of 3,455,061 shares of Common Stock and has the shared power to vote and the shared power to dispose of 322,147,209 shares of Common Stock.

(c)  See the information as set forth in Item 3, which is hereby incorporated by reference.

(d)  Not applicable.

(e)  Not applicable.

Item 6.
Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

Item 6 is hereby amended and supplemented as follows:

Family Fund, Banner and Andax are parties to one or more of the following agreements with respect to securities of the Issuer:

1. Form of Subscription Agreement between the Issuer and Family Fund.

2. Note and Warrant Purchase Agreement, dated September 20, 2011, by and between the Issuer and the investors listed therein.

3. Note and Warrant Purchase Agreement, dated December 2, 2011, by and between the Issuer and the investors listed therein.

Item 7.
Material to be Filed as Exhibits

Item 7 is hereby amended and supplemented as follows:

Exhibit M – Form of Subscription Agreement between the Issuer and Family Fund.

Exhibit N-Note and Warrant Purchase Agreement, dated September 20, 2011, by and between the Issuer and the investors listed therein.

Exhibit O – Note and Warrant Purchase Agreement, dated December 2, 2011, by and between the Issuer and the investors listed therein.


 
13 
 


SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Schedule 13D is true, complete and correct.


Dated:       February 6, 2012
    
 
PHOENIX VENTURE FUND LLC
     
 
By: SG Phoenix Ventures LLC, its Managing Member
     
 
By:
/s/ Andrea Goren
 
Name:
Andrea Goren
 
Title:
Managing Member




 
14 
 

 SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Schedule 13D is true, complete and correct.


Dated:        February 6, 2012
    
 
SG PHOENIX VENTURES LLC
     
 
By:
/s/ Andrea Goren
 
Name:
Andrea Goren
 
Title:
Managing Member


 
15 
 


SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Schedule 13D is true, complete and correct.


Dated:        February 6, 2012
    
 
SG PHOENIX LLC
     
 
By:
/s/ Andrea Goren
 
Name:
Andrea Goren
 
Title:
Co-Manager

 
16 
 



SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Schedule 13D is true, complete and correct.


Dated:        February 6, 2012
    
 
Phoenix Enterprises Family Fund LLC
     
 
By:
/s/ Philip Sassower
 
Name:
Philip Sassower
 
Title:
Managing Member


 
17 
 


SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Schedule 13D is true, complete and correct.


Dated:        February 6, 2012
    
 
Phoenix Banner Holdings LLC
     
 
By:
/s/ Andrea Goren
 
Name:
Andrea Goren
 
Title:
Managing Member


 
18 
 

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Schedule 13D is true, complete and correct.


Dated:        February 6, 2012
    
 
Andax LLC
     
 
By:
/s/ Andrea Goren
 
Name:
Andrea Goren
 
Title:
Managing Member


 
19 
 


SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Schedule 13D is true, complete and correct.


Dated:      February 6, 2012

 
/s/ Philip S. Sassower
 
Philip S. Sassower



 
20 
 


SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Schedule 13D is true, complete and correct.


Dated:      February 6, 2012

 
/s/ Andrea Goren
 
Andrea Goren





 
21 
 

EX-99.1 2 frm_subagmt.htm EXHIBIT M - FORM OF SUBSCRIPTION AGREEMENT AND THE ISSUER AND FAMILY FUND frm_subagmt.htm
EXHIBIT M
 
CONFIDENTIAL
 
SUBSCRIPTION AGREEMENT

Dated: March 9, 2011

Name and Address of Subscriber
 
__________________________
__________________________
__________________________
 
Total Amount of Investment
 
$                                           
 
 
 

Communication Intelligence Corporation
c/o SG Phoenix LLC
110 East 59th Street, Suite 1901
New York, NY 10022
 
Re:           Series C Preferred Stock and Warrant Offering
 
Ladies and Gentlemen:
 
Reference is hereby made to (i) the confidential term sheet (the “Term Sheet”), dated March 9, 2011, of Communication Intelligence Corp., a Delaware corporation (the “Company”), attached hereto as Exhibit A; (ii) the Company’s Annual Report on Form 10-K for the year ended December 31, 2009; (iii) the Company’s Quarterly Reports on Form 10-Q for the three months ended March 31, 2010, June 30, 2010 and September 30, 2010; (iv) the Company’s Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission (the “SEC”) on December 21, 2010; and (v) each of the Company’s Current Reports on Form 8-K filed with the SEC between March 31, 2010 and the date hereof.
 
Pursuant to the Term Sheet, the Company proposes to offer and sell to accredited investors up to $800,000 of the Company’s Series C Participating Convertible Preferred Stock (the “Series C Preferred Stock”), at a purchase price of $1.00 per share (the “Offering”).  The Series C Preferred Stock issued in the Offering will be convertible into shares of the Company’s common stock  (“Common Stock”) at a conversion price equal to $0.0225 per share. Each share of Series C Preferred Stock will include a detachable warrant (“Warrant”) to purchase that number of shares of the Common Stock equal to the Total Amount of Investment (as defined below) divided by $0.0225 and will expire on December 31, 2013.  The Warrant will have an initial exercise price of $0.0225 per share.  The Offering is expected to be consummated no later than March 31, 2011.
 
1. Subscription.  The undersigned hereby executes and delivers this Subscription Agreement (the “Subscription Agreement”) and subscribes for and agrees to purchase __________ shares of Series C Preferred Stock at a price per share of $1.00 and the Warrants attached thereto in the Offering for $___________  (the “Total Amount of Investment”). The Total Amount of Investment should be remitted promptly to SG Phoenix LLC (“SG Phoenix”), as escrow agent, upon execution of this Subscription Agreement and will be held in escrow
 
 
 
EXHIBIT M
 
by SG Phoenix to be used to purchase shares of Series C Preferred Stock and Warrants in the Offering.  The Total Amount of Investment is payable either by check made out to “CIC Series C Escrow”, or by wire transfer using the following instructions:
 
XXXXXXXXX
Attn.:  XXXXXXXXXX
ABA# XXXXXXXXXX
Account Name: CIC Series C Round
Account XXXXXXXXXX
 
2. Subscription Instruments.  The undersigned is delivering to the Company a copy of this Subscription Agreement duly completed and executed by the undersigned.
 
3. Representations and Warranties.  In connection with the undersigned’s subscription, the undersigned hereby represents and warrants as follows:
 
(a)           (i)           The undersigned acknowledges that the undersigned has carefully reviewed the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, including, without limitation, the description of risk factors contained therein, each of the Company’s Quarterly Reports on Form 10-Q for the three months ended March 31, 2010, June 30, 2010 and September 30, 2010, each of the Company’s Current Reports on Form 8-K filed with the SEC between March 31, 2010 and the date hereof, and the Company’s Definitive Proxy Statement on Schedule 14A filed with the SEC on December 21, 2010.
 
(ii)           The undersigned has such knowledge and experience in financial and business matters that he, she or it is capable of evaluating the merits and risks of an investment in the Company and making an informed investment decision with respect thereto.  The undersigned has obtained sufficient information to evaluate the merits and risks of the investment and to make such a decision.
 
(iii)           The undersigned is an “Accredited Investor” (as such term is defined in Rule 501(a) of Regulation D of the Securities Act of 1933, as amended (the “Securities Act”)).
 
(b)           The undersigned has had access to all documents, records and books of the Company which the undersigned (or the undersigned’s advisor) considers necessary or appropriate to make an informed decision pertaining to this investment.  Additionally, the undersigned has been provided the opportunity to ask questions and receive answers concerning the terms and provisions of the Series C Preferred Stock and the Warrants and to obtain any additional information which the Company possesses, or can acquire without unreasonable effort or expense that is relevant to the undersigned’s investment decision.  To the extent the undersigned has not sought information regarding any particular matter, the undersigned represents that he, she or it had and has no interest in doing so and that such matters are not material to the undersigned in connection with this investment.
 
(c)           The undersigned (i) has adequate means of providing for the undersigned’s current needs and possible personal contingencies and those of the undersigned’s family, if applicable, in the same manner as the undersigned would have been able to provide
 
 
 
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EXHIBIT M
 
prior to making the investment contemplated herein, (ii) has no need for liquidity in this investment, (iii) is aware of and able to bear the risks of the investment for an indefinite period of time and (iv) presently, based on existing conditions, is able to afford a complete loss of such investment.
 
(d)           The undersigned recognizes that an investment in the Series C Preferred Stock and the Warrants (collectively, the “Securities”) involves significant risks and the undersigned may lose his, her or its entire investment in the Securities.
 
(e)           The undersigned understands that the Securities are “restricted securities” as that term is defined pursuant to Rule 144 of the Securities Act, and have not been registered under the Securities Act or under certain state securities laws in reliance upon exemptions therefrom for nonpublic offerings.  The undersigned understands that the Securities must be held indefinitely unless the sale thereof is subsequently registered under the Securities Act and under certain state securities laws or an exemption or exemptions from such registration are available.  The undersigned understands that, except as expressly provided in the Term Sheet, the Company is under no obligation to register the Securities under the Securities Act or to register or qualify the Securities under any other applicable securities law, or to comply with any other exemption under the Securities Act or any other securities law, and that the undersigned has no right to require such registration.
 
(f)           The Securities are being purchased solely for the undersigned’s account for investment and not for the account of any other person and not with a view to or for distribution, assignment or resale in connection with any distribution within the meaning of the Securities Act, and no other person has a direct or indirect beneficial interest in such Securities.  The undersigned represents that the undersigned has no agreement, understanding, commitment or other arrangement with any person and no present intention to sell, transfer or assign any Securities.
 
(g)           The undersigned agrees not to sell or otherwise transfer the Securities or the underlying shares of common stock unless they are registered under the Securities Act and under any applicable state securities laws, or an exemption or exemptions from such registration are available.
 
(h)           The undersigned has all requisite legal capacity and power to enter into this Subscription Agreement which constitutes a valid and binding agreement of the undersigned enforceable against the undersigned in accordance with its terms; and the person signing this Subscription Agreement on behalf of the undersigned is empowered and duly authorized to do so.  The undersigned, if a corporation, partnership, trust or other entity, is authorized and otherwise duly qualified to purchase and hold the Securities and to enter into this Subscription Agreement and such entity has not been formed for the specific purpose of acquiring the Securities in the Company unless all of its equity owners qualify as accredited individual investors.
 
(i)           All information which the undersigned has provided to SG Phoenix and the Company concerning the undersigned, the undersigned’s financial position and knowledge of financial and business matters, or, in the case of a corporation, partnership, trust or
 
 
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EXHIBIT M
other entity, concerning such knowledge of the person making the investment decision on behalf of such entity, including all information contained in this Subscription Agreement, is true, correct and complete as of the date set forth on the signature page hereof, and if there should be any adverse change in such information prior to the subscription being accepted, the undersigned will immediately provide the Company with such information.
 
(j)           The offering and sale of the Securities to the undersigned were not made through any advertisement in printed media of general and regular paid circulation, radio or television or any other form of advertisement, or as part of a general solicitation.
 
(k)           The undersigned shall pay all sales, transfer, income, use, and similar taxes arising out of or in connection with the Securities in accordance with all applicable laws.
 
4. Confidentiality.  The undersigned hereby acknowledges and agrees that the Term Sheet and the information contained in this Subscription Agreement may contain material information about the Company that has not been disclosed to the public generally.  The undersigned understands that it and its representatives could be subject to fines, penalties and other liabilities under applicable securities laws if the undersigned or any of its representatives trades in the Company’s securities while in possession of any material, non-public information concerning the Company.  The undersigned agrees not to trade, and not to allow any of its representatives to trade, in the Company’s securities until such time as the undersigned or such representatives are no longer prohibited from so trading under all applicable securities laws (whether because the Company publicly disclosed all material information about the Company contained in the Term Sheet and this Subscription Agreement, neither the Term Sheet nor this Subscription Agreement contains material, non-public information or otherwise).
 
5. Indemnification.  The undersigned agrees to indemnify and hold harmless the Company and its stockholders, officers, directors, employees, advisors, attorneys and agents (including SG Phoenix) from and against all liability, damage, losses, costs and expenses (including reasonable attorneys’ fees and court costs) which they may incur by reason of any breach of the representations and warranties and agreements made by the undersigned herein or in any document provided by the undersigned to the Company.
 
6. Market Standoff Provision.  The undersigned hereby agrees that, if so requested in writing by the Company or any managing underwriter (the “Managing Underwriter”) in connection with any registration of the offering by the Company of any securities of the Company under the Securities Act, the undersigned shall not sell or otherwise transfer any securities of the Company during the 180-day period (or such other period as may be requested in writing by the Managing Underwriter and agreed to in writing by the Company) (the “Market Standoff Period”) following the effective date of a registration statement of the Company filed under the Securities Act.  The Company may impose stop-transfer instructions with respect to the Securities subject to the foregoing restrictions until the end of such Market Standoff Period.
 
7. Legend.  The undersigned understands and agrees that the Company will cause the legend set forth below, or a legend substantially equivalent thereto, to be placed upon any certificate(s) evidencing ownership of the Securities (or the securities underlying the Securities), together with any other legend that may be required by federal or state securities laws or deemed necessary or desirable by the Company:
 
 
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EXHIBIT M
 
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SAID ACT OR, IN THE OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION DOES NOT VIOLATE THE PROVISIONS THEREOF.
 
8. Additional Action.  The undersigned shall, upon the request of SG Phoenix or the Company, from time to time, execute and deliver promptly to SG Phoenix or the Company all instruments and documents of further assurances or otherwise, and will do any and all such acts and things, as may be reasonably required to carry out the obligations of the undersigned hereunder and to consummate the transactions contemplated hereby.
 
9. Miscellaneous.
 
(a)           The undersigned agrees not to transfer or assign this Subscription Agreement, or any of the undersigned’s interest herein, and further agrees that the transfer or assignment of the Securities acquired pursuant hereto shall be made only in accordance with all applicable laws.  The covenants, representations and warranties contained in this Subscription Agreement shall be binding on the undersigned’s heirs, legal representatives, successors and assigns and shall inure to the benefit of the respective successors and assigns of the Company.
 
(b)           The undersigned agrees that subject to any applicable state law, the undersigned may not cancel, terminate or revoke this Subscription Agreement or any agreement of the undersigned made hereunder and that this Subscription Agreement shall survive the acceptance hereof by the Company as well as the death or disability of the undersigned and shall be binding upon the undersigned’s heirs, executors, administrators, successors and assigns.
 
(c)           This Subscription Agreement, together with the Exhibits attached hereto, constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and may be amended only by a writing executed by all parties hereto.
 
(d)           This Subscription Agreement shall be enforced, governed and construed in all respects in accordance with the laws of the State of New York, without regard to its conflicts of law rules.
 
(e)           Within five (5) days after receipt of a written request from the Company, the undersigned agrees to provide such information, to execute and deliver such documents and to take, or forbear from taking, such actions as may be necessary to consummate the transactions contemplated herein and to comply with any and all laws and ordinances to which the Company is subject.
 
 
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EXHIBIT M
(f)           For the convenience of the parties, any number of counterparts hereof may be executed and each such executed counterpart shall be deemed an original, but all such counterparts together shall constitute one and the same instrument.
 
(g)           This Subscription Agreement may be executed by the undersigned and transmitted by facsimile to SG Phoenix, as administrative agent, with the original Subscription Agreement being sent to SG Phoenix and if so executed and transmitted this Subscription Agreement will be for all purposes as effective as if the parties had delivered an executed original Subscription Agreement.
 
[Signature Pages Follow]
 


 
6 
EXHIBIT M
 

SUBSCRIBER SIGNATURE PAGE

IN WITNESS WHEREOF, the undersigned has duly executed this Subscription Agreement as of the date first above written.

Total Amount of Investment
 
 
$
 
 
 
For Individuals:
 
 
 
Print Name Above
 
 
Sign Name Above
 
 
Social Security Number
 
For Entities:
 
 
 
Print Name of Entity Above
 
By:        
Name:
Title:
 
 
Employer Identification Number
  or Tax ID Number
 



 
 
7 
EXHIBIT M
 


SUBSCRIPTION ACCEPTANCE

IN WITNESS WHEREOF, the undersigned hereby accepts the subscription on behalf of the Company in accordance with the terms of the foregoing Subscription Agreement as of the date first above written.


SG PHOENIX LLC


By:                                                                
Name:
Title:           Member
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8
 EX-99.2 3 nw_agremt9202011.htm EXHIBIT N - NOTE AND WARRANT PURCHASE AGREEMENT, DATED SEPTEMBER 20, 2011, BY AND BETWEEN THE ISSUER AND THE INVESTORS LISTED THEREIN. nw_agremt9202011.htm
EXHIBIT N






EXECUTION COPY



Communication Intelligence Corporation
 
___________________________________
 
Note and Warrant Purchase Agreement
 
___________________________________
 

 

 

 
Dated as of
 
September 20, 2011
 


















 
 
 
EXHIBIT N
 

TABLE OF CONTENTS
 
Page
 
1. Purchase and Sale of the Note and Warrant                                                                                                   
 1
1.1             Authorization of Issuance of the Note and the Warrant                                                                                       
 1
1.2             Purchase and Sale of the Note and the Warrant                                                                                       
 1
1.3             Use of Proceeds                                                                                       
 1
1.4             Closing                                                                                       
 2
1.5             Delivery                                                                                       
 2
   
2. Representations and Warranties of the Company                                                                                                   
 2
2.1             Organization, Standing and Power                                                                                       
 2
2.2             Certificate of Incorporation and Bylaws
 2
2.3             Power; Authority and Enforceability                                                                                       
 2
2.4             Capitalization                                                                                       
 2
2.5             Authorization; Consents                                                                                       
 3
2.6             Absence of Conflicts                                                                                       
 3
2.7             Compliance of Conflicts                                                                                       
 4
2.8             Governmental Consents                                                                                       
4
2.9             SEC Reports; Disclosure                                                                                       
4
2.10           Financial Statements                                                                                       
 5
2.11           Disclosure                                                                                       
 5
   
3. Representations and Warranties the Each Investor
5
3.1             Organization and Qualification                                                                                       
 5
3.2             Authorization and Enforceability                                                                                       
 5
3.3             Purchase Entirely for Own Account                                                                                       
 6
3.4             Access to Information                                                                                       
 6
3.5             Investment Experience                                                                                       
 6
3.6             Accredited Investor                                                                                       
 6
3.7             Restricted Securities                                                                                       
6
3.8             Legends                                                                                       
 6
   
4. Conditions to Closing, Covenants of Company                                                                                                   
 7
4.1             Conditions of Investor’s Obligations at Closing                                                                                       
 7
4.2             Conditions to Obligations of the Company                                                                                       
 7
4.3             Reservation of Stock                                                                                       
 8
   
5. Miscellaneous                                                                                                
 8
5.1            Wavers and Amendments
 8
5.2             Governing Law                                                                                       
8
5.3             Survival                                                                                       
8
5.4             Successors and Assigns                                                                                       
8
5.5             Entire Agreement                                                                                       
8
5.6             Notices, etc                                                                                       
 8
5.7             Severability                                                                                       
 9
 
 
 
 
EXHIBIT N
 
5.8             Counterparts                                                                                       
9
5.9             Non-Liability of Investor                                                                                       
9
5.10             Expenses                                                                                       
10
5.11             Waiver of Jury Trial                                                                                       
10
5.12             Further Assurances                                                                                       
10
5.13             Delays or Omissions                                                                                       
10
   
Schedule A             -         List of investors
  
Exhibit A                 -         Form of Unsecured Convertible Promissory Note
  
Exhibit B                  -         Form of Warrant to Purchase Preferred Stock
  
   
   
   
   
   
   
   
   
   
   
 
 
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EXHIBIT N
Communication Intelligence Corporation
 
Note and Warrant Purchase Agreement
 
This Note and Warrant Purchase Agreement (the “Agreement”) is dated as of September 20, 2011, by and among Communication Intelligence Corporation, a Delaware corporation (the “Company”), and the investor listed on Schedule A attached hereto (the “Investor”).
 
W I T N E S S E T H:
 
WHEREAS, subject to the terms and conditions set forth herein, the Company desires to issue and sell to the Investor at the Closing (i) an unsecured convertible promissory note in the original aggregate principal amount of $500,000 in the form attached hereto as Exhibit A (the “Note”) and (ii) a warrant (the “Warrant”) to purchase such number of shares of Common Stock of the Company as determined by dividing (x) 25% of the aggregate principal amount of the Note purchased by the Investor, by (y) the exercise price of $0.0225 per share (the “Warrant Exercise Price”) in the form attached hereto as Exhibit B, and the Investor desires to purchase the Note and the Warrant from the Company on the terms and conditions set forth herein;
 
WHEREAS, the board of directors of the Company, the Special Committee of the board of directors of the Company (the “Special Committee”), the requisite holders of the Series B Preferred Stock of the Company (the “Series B Preferred Stock”) and the requisite holders of the Series C Preferred Stock of the Company (the “Series C Preferred Stock”) have approved the execution and delivery of this Agreement, the Note, the Warrant and all ancillary agreements related hereto, and the transactions contemplated hereby.
 
NOW, THEREFORE, in consideration of the premises and agreements contained in this Agreement, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, THE PARTIES HEREBY AGREE AS FOLLOWS:
 
1. Purchase and Sale of the Note and Warrant.
 
1.1 Authorization of Issuance of the Note and the Warrant.  Subject to the terms and conditions of this Agreement, on or prior to the date of the Closing, the Company shall have authorized the issuance and sale to the Investor of the Note and the Warrant.
 
1.2 Purchase and Sale of the Note and the Warrant.  Subject to the terms and conditions of this Agreement, the Investor hereby agrees to purchase at the Closing, and the Company hereby agrees to issue and sell to such Investor at the Closing (i) a Note, dated as of the date of the Closing, in the original principal amount equal to the dollar amount set forth opposite such Investor’s name under the heading “Original Principal Amount” on Schedule A hereto and (ii) a Warrant to purchase shares of Common Stock of the Company as set forth opposite such Investor’s name under the heading “Number of Warrant Shares” on Schedule A hereto, in exchange for cash in the amount set forth opposite such Investor’s name under the heading “Original Principal Amount” on Schedule A hereto.
 
1.3  
Use of Proceeds.  The Company agrees to use the net proceeds from the sale and issuance of the Note and Warrant pursuant to this Agreement for working capital and other general corporate purposes.
 

 
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EXHIBIT N
 
1.4 Closing.  The purchase and sale of the Note and the Warrant will take place at the offices of Pillsbury Winthrop Shaw Pittman LLP, 1540 Broadway, New York, New York 10036 on the date hereof, or at such other time and place the Company and the Investor shall mutually agree, either orally or in writing (which time and place are designated as the “Closing”).
 
1.5 Delivery.  At the Closing, the Company will deliver to the Investor (a) the Note, the original principal amount of which shall be in such amount as is indicated next to such Investor’s name under the heading “Original Principal Amount” on Schedule A attached hereto, (b) the Warrant to purchase shares of Common Stock of the Company as set forth opposite such Investor’s name under the heading “Number of Warrant Shares” on Schedule A hereto, and (c) this Agreement, each executed by the Company.  At the Closing, the Investor shall deliver to the Company the amount set forth opposite such Investor’s name under the heading “Original Principal Amount” on Schedule A hereto by bank check, personal check or wire transfer of immediately available funds to such account as the Company designates, and this Agreement, executed by the Investor.
 
2. Representations and Warranties of the Company. The Company hereby represents and warrants to the Investor as follows:
 
2.1 Organization, Standing and Power.  The Company is a corporation duly incorpo­rated, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as contemplated to be conducted.  The Company is duly qualified to transact business as a foreign corporation and is in good standing in any jurisdiction in which the failure to do so would have a material adverse effect on its business, properties, prospects or condition (financial or otherwise).
 
2.2 Certificate of Incorporation and Bylaws.  The Company has delivered to the Investor true, correct, and complete copies of the certificate of incorporation of the Company as in effect on the date hereof (the “Certificate of Incorporation”) and the Company’s bylaws as in effect on the date hereof (the “Bylaws”).
 
2.3 Power; Authority and Enforceability.  The Company has all requisite corporate power and authority to execute and deliver this Agreement, the Note and the Warrant (each, a “Loan Document” and, collectively, the “Loan Documents”) and to perform fully its obligations hereunder and thereunder.  The Company has all requisite corporate power and authority to issue and sell the Note and the Warrant to the Investor hereunder.  The execution and delivery of the Loan Documents and the consummation of the transactions contemplated thereby have been duly authorized by all necessary corporate action on the part of the Company.  The Loan Documents have been duly executed and delivered by the Company and constitute legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors’ rights and remedies generally and subject, as to enforceability, to general principles of equity, regardless of whether enforceability is considered in a proceeding at law or in equity.
 
2.4 Capitalization.
 
(a) Immediately prior to the date hereof, the Company is authorized to issue 1,074,500,000 shares of capital stock of which (i) 1,050,000,000 are designated as Common Stock, of which 191,228,541 shares are issued and outstanding (ii) and 24,500,000 are designated as Preferred Stock, of which (A) 2,000,000 are designated as Series A-1 Cumulative Convertible Preferred Stock (“Series A-1 Preferred Stock”) of which 845,895 shares are issued and outstanding, (B) 14,000,000 of which are designated Series B Participating Convertible Preferred Stock (“Series B Preferred Stock”) of which 8,801,274 shares are issued and outstanding, (C) 4,100,000 of which are designated Series C Participating Convertible Preferred Stock  (“Series C Preferred Stock”) of which 3,376,066 shares are issued and outstanding, and (D)
 
 
 
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EXHIBIT N
 
 
4,400,000 which remain unallocated.  4,000,000 shares of Common Stock are reserved for issuance under the Company’s 1999 Stock Option Plan, under which 1,248,828 shares are subject to outstanding options and no further grants will be made; 7,000,000 shares of Common Stock are reserved for issuance under the Company’s 2009 Stock Compensation Plan, under which 2,478,913 shares are subject to outstanding awards and 4,448,102 shares are available for grant; 50,000,000 shares of Common Stock are reserved for issuance under the Company’s 2011 Stock Compensation Plan, under which 40,221,257 shares are subject to outstanding awards and 9,778,743 shares are available for grant; and 3,679,443 shares are subject to outstanding non-plan awards An aggregate of 542,106,699 shares of Common Stock are reserved for issuance upon the exercise of warrants and other convertible securities outstanding on the date hereof. As of the date hereof the Company has no other shares of capital stock authorized, issued, outstanding or reserved.
 
(b) As of the date hereof, other than as set forth in Section 2.4(a), (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 or exercisable or exchangeable for, any shares of capital stock of the Company, or arrangements by which the Company is or may become bound to issue additional shares of capital stock, nor are any such issuances or arrangements contemplated; (ii) the Company has no obligation (contingent or otherwise) to purchase, redeem or otherwise acquire any of its equity securities or any interests therein or, other than in connection with its Series B Preferred Stock or Series C Preferred Stock in accordance with its terms, to pay any dividend or make any distribution in respect thereof; and (iii) the Company has not reserved any shares of capital stock for issuance pursuant to any stock option plan or similar arrangement.
 
(c) There have been no adjustments to the exercise price or the conversion price of any options, warrants or other securities convertible into or exchangeable for shares of Common Stock, including Series A-1 Preferred Stock, Series B Preferred Stock and Series C Preferred Stock.  The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not trigger any conversion or exercise price adjustments or any other anti-dilution rights or provisions relating to any shares of capital stock of the Company or any securities or rights convertible into or exercisable or exchangeable for shares of capital stock of the Company.
 
2.5 Authorization; Consents.  The execution, delivery and performance by the Company of this Agreement and the other Loan Documents, the sale, issuance and delivery of the Note and the Warrant and the performance of all of the obligations of the Company under this Agreement and each of the other Loan Documents have been authorized by the Company’s board of directors, the Special Committee, the requisite holders of the Series B Preferred Stock and the requisite holders of the Series C Preferred Stock, and no other corporate action on the part of the Company and no other corporate or other approval or authorization is required on the part of the Company or any other individual, corporation, limited liability company, partnership, trust, incorporated or unincorporated organization, joint venture, joint stock company, or a government or any agency or political subdivision thereof or other entity of any kind (each a “Person”), by Law or otherwise, in order to make this Agreement and the other Loan Documents the valid, binding and enforceable obligations (subject to (i) Laws of general application relating to bankruptcy, insolvency, and the relief of debtors, and (ii) rules of Law governing specific performance, injunctive relief, or other equitable remedies) of the Company, as the case may be.  “Law” shall mean any foreign, federal, state or local law, statute, rule, regulation, ordinance, code, directive, writ, injunction, decree, judgment or order applicable to the Company.
 
2.6 Absence of Conflicts.  The Company is not in violation of or default under any provision of its Certificate of Incorporation or its Bylaws.  Other than the consent required from the holders of each of the Series B Preferred Stock and Series C Preferred Stock to the
 
 
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EXHIBIT N
 
transactions contemplated hereby, which consent shall be obtained prior to Closing, the execution, delivery, and performance of, and compliance with the Loan Documents, and the consummation of the transactions contemplated hereby and thereby, have not and will not:
 
(a)           violate, conflict with or result in a breach of any provision of or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, any of the terms, conditions or provisions of the Company’s Certificate of Incorporation or its Bylaws or any Material Contract; or
 
(b)           violate any judgment, ruling, order, writ, injunction, award, decree, or any Law or regulation of any court or federal, state, county or local government or any other governmental, regulatory or administrative agency or authority which is applicable to the Company or any of its assets, properties or businesses.
 
“Material Contract” shall mean all written and oral contracts, agreements, deeds, mortgages, leases, subleases, licenses, instruments, notes, commitments, commissions, undertakings, arrangements and understandings (i) which by their terms involve, or would reasonably be expected to involve, aggregate payments by or to the Company during any 12-month period in excess of $50,000, (ii) the breach of which by the Company or its subsidiary would be material to the Company or its subsidiary or (iii) which are required to be filed as exhibits by the Company with the SEC pursuant to Items 601(b)(4) and 601(b)(10) of Regulation S-K promulgated by the SEC.
 
2.7 Compliance with All Securities Laws; Offering Exemption.  Assuming the truth and accuracy of the Investor’s representations and warranties set forth in Section 3 hereof, (i) the offer and sale of the Note and the Warrant are exempt from registration under the Securities Act, and will be registered or qualified (or exempt from registration or qualification) under applicable state securities and “blue sky” Laws, as currently in effect, and (ii) the issuance and delivery of the Note, and the shares of Preferred Stock issuable upon conversion thereof, and the Warrant, and the shares of Common Stock issuable upon conversion thereof, respectively (and the Common Stock issuable upon conversion of the Preferred Stock) (collectively, the “Securities”), as contem­plated by this Agreement, do not violate or breach any applicable securities laws.
 
2.8 Governmental Consents.  No consent, approval, qualification, order or authoriza­tion of, or filing with, any local, state or federal governmental authority is required on the part of the Company in connection with the Company’s valid execution, delivery or performance of this Agreement or the issuance and sale of the Securities, except such filings as have been made prior to the Closing, any notices of sale required to be filed with the Securities and Exchange Commission under Regulation D of the Securities Act of 1933, as amended (the “Securities Act”), or such post-closing filings as may be required under applicable state securities laws, which will be timely filed within the applicable periods thereafter.
 
2.9 SEC Reports; Disclosure.  The Company has filed all required forms, reports and documents with the Securities and Exchange Commission (the “SEC”) since December 31, 2010, each of which has complied in all material respects with all applicable requirements of the Securities Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder, each as in effect on the date such forms, reports and documents were filed.  The Company has made available to the Investor, in the form filed with the SEC (including any amendments thereto) its (i) Annual Report on Form 10-K for the year ended December 31, 2010; (ii) Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2011 and June 30, 2011; (iii) Current Reports on Form 8-K dated December 31, 2010, January 24, 2011, January 28, 2011, March 7, 2011, March 29, 2011, March 31, 2011, May 26, 2011, July 14, 2011 and August 11, 2011 and on Form 8-K/A dated August 11, 2011 and (iv) all definitive proxy statements relating to the Company’s meeting of
 
 
 
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EXHIBIT N
 
shareholders (whether annual or special) held since December 31, 2010 (collectively, the “SEC Reports”).  None of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading.
 
2.10 Financial Statements.  Included in the SEC Reports are the audited financial statements of the Company as at and for the years ended December 31, 2010 and 2009 and the unaudited financial statements of the Company for the fiscal quarters ended March 31, 2011 and June 30, 2011 (the “Financial Statements”).  The Financial Statements have been prepared in accordance with GAAP and fairly present the financial condition and operating results of the Company and its subsidiary on a consolidated basis as of the dates, and for the periods, indicated therein, except that the unaudited financial statements as at and for the quarters ended March 31, 2011 and June 30, 2011 are subject to normal year-end adjustments and do not contain all notes required under GAAP.  As of the date hereof, the Company has no liabilities, obligations or commitments of any nature (whether accrued, absolute, contingent, unliquidated or otherwise, due or to become due and regardless of when addressed) other than (a) liabilities that have arisen in the ordinary course of business consistent with past practice since the date of the Company’s most recent quarterly report on Form 10-Q that are not in excess of $100,000 in the aggregate and (b) obligations to perform after the date hereof any contracts or agreements which have been disclosed or which are not required to be disclosed in the SEC Reports because such contracts and agreements are not material to the Company.
 
2.11 Disclosure.  The Company understands and confirms that the Investor will rely on the foregoing representations in purchasing securities of the Company.  No representation or warranty by the Company contained in this Agreement contains any untrue statement of a material fact or omits to state a material fact in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.  The Company acknowledges and agrees that the Investor does not make and has not made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3 hereof.
 
3. Representations and Warranties of the Investor.  The Investor hereby represents and warrants to the Company that:
 
3.1 Organization and Qualification.  The Investor is duly organized, validly existing and in good standing under the Laws of its jurisdiction of incorporation or organization to carry on its business as it is now being conducted or proposed to be conducted.
 
3.2 Authorization and Enforceability.  The Investor has all requisite corporate power and authority to enter into the Loan Documents, as applicable.  The execution, delivery and performance by the Investor of the Loan Documents to which it is a party, and the performance of all of the obligations of such Investor under each of such Loan Documents have been duly and validly authorized, and no other action, approval or authorization is required on the part of such Investor in order to make the Loan Documents the valid, binding and enforceable obligations (subject to (i) Laws of general application relating to bankruptcy, insolvency, and the relief of debtors, and (ii) rules of Law governing specific performance, injunctive relief, or other equitable remedies) of such Investor.  The Loan Documents constitute legal, valid and binding obligations of the Investor, enforceable against it in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors’ rights and remedies generally and subject, as to enforceability, to general principles of equity, regardless of whether enforceability is considered in a proceeding at law or in equity.
 
 
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3.3 Purchase Entirely for Own Account.  The Securities will be acquired for investment for Investor’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and the Investor has no present intention of selling, granting any participation in, or otherwise distributing the same.  The Investor does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation in any of the Securities to such person or to any third person.
 
3.4 Access to Information.  The Investor has been given access to the Company and has had an opportunity to ask questions and receive answers from the Company regarding the Company’s business, prospects, properties and condition (financial or otherwise) and the terms and conditions of the offering and sale of the Securities.  The foregoing, however, does not limit or modify in any respect the representations and warranties of the Company in Section 2 of this Agreement or the right of the Investor to rely thereon.
 
3.5 Investment Experience.  The Investor acknowledges that it is able to fend for itself and bear the economic risk of its investment, including the complete loss thereof, and has such knowledge and experi­ence in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Securities.  The Investor has not been organized for the purpose of acquiring the Securities.
 
3.6 Accredited Investor.  The Investor is an “accredited investor” within the meaning of the Securities and Exchange Commission’s Rule 501 of Regulation D as promulgated under the Securities Act.
 
3.7 Restricted Securities.  The Investor understands that the Securities it is purchasing are characterized as “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act only in certain limited circumstances.  In this connection, the Investor is familiar with Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.  The Investor understands Rule 144 is not currently available for the sale of the Securities.
 
3.8 Legends.  It is understood that the certificates evidencing the Securities may bear one or all of the following legends:
 
(a) “NEITHER THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT, OR (B) IF REASONABLY REQUESTED BY THE COMPANY, AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT.  THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES.”
 
(b) Any legend required by the laws of any applicable state.
 
 
 
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4. Conditions to Closing; Covenants of Company.
 
4.1 Conditions of Investor’s Obligations at Closing.  The obligations of the Investor under this Agreement are subject to the fulfillment, on or prior to the date of the Closing, of each of the following conditions, any of which may be waived in whole or in part in writing by the Investor:
 
(a) The representations and warranties made by the Company in Section 2 shall be true and correct when made, and shall be true and correct on the date of Closing with the same force and effect as if they had been made on and as of the same date.
 
(b) The Company shall have performed and complied with all agreements, obliga­tions and conditions contained in this Agreement that are required to be performed or complied with by it on or prior to the date of Closing.
 
(c) No material adverse effect on the Company’s business, properties, prospects or condition (financial or otherwise) shall have occurred between June 30, 2011 and the date of the Closing and the President and/or Chief Executive Officer of the Company shall deliver to the Investor at the Closing a certificate stating that the conditions specified in Sections 4.1(a), (b) and (c) have been fulfilled.
 
(d) Except for the notices required or permitted to be filed after the date of Closing pursuant to applicable federal and state securities laws, the Company shall have obtained all governmental approvals required in connection with the lawful sale and issuance of the Securities.
 
(e) At the Closing, the sale and issuance by the Company, and the purchase by the Investor, of the Securities shall be legally permitted by all laws and regulations to which such Investor and/or the Company are subject.
 
(f) At the Closing, the Company shall have delivered to the Investor a certificate executed by the Secretary of the Company dated as of the date of the Closing certifying with respect to (i) a copy of the Company’s Certificate of Incorporation and its Bylaws in effect on such date and that the Company is not in violation of or default under any provision of its Certificate of Incorporation or Bylaw as of and on the date of the Closing and (ii) board resolutions of the Company authorizing the transactions contemplated by this Agreement and the other Loan Documents.
 
(g) The Company shall have executed and delivered to the Investor the Note, in the form attached hereto as Exhibit A, and the Warrant, in the form attached hereto as Exhibit B, in each case in accordance with the original principal amounts and number of shares set forth on Schedule A opposite such Investor’s name.
 
4.2 Conditions to Obligations of the Company.  The Company’s obligation to issue and sell the Note and the Warrant at the Closing is subject to the fulfillment, to the Company’s reasonable satisfaction, on or prior to the date of Closing, of the following conditions, any of which may be waived in whole or in part by the Company:
 
(a) The representations and warranties made by the Investor in Section 3 shall be true and correct when made, and shall be true and correct on the date of Closing with the same force and effect as if they had been made on and as of the same date.
 
(b) The Investor shall have delivered to the Company in accordance with Section 1.5 the dollar amount set forth opposite such Investor’s name under the heading “Original Principal Amount” on Schedule A hereto.
 
 
 
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4.3 Reservation of Stock.  The Company covenants that during the term the Note is convertible and the Warrant is exercisable, the Company will (i) reserve from its authorized and unissued Preferred Stock (and Common Stock issuable upon conversion thereof), a sufficient number of shares to provide for the issuance of the Preferred Stock (and Common Stock issuable upon conversion thereof), upon conversion of the Note, (ii) reserve from its authorized and unissued Common Stock, a sufficient number of shares to provide for the issuance of the Common Stock, upon exercise of the Warrant, and (iii) take all necessary steps to amend its Certificate of Incorporation to provide sufficient reserves of shares of Preferred Stock (and Common Stock issuable upon conversion thereof) issuable upon conversion of the Note and Common Stock issuable upon exercise of the Warrant.
 
5. Miscellaneous.
 
5.1 Waivers and Amendments.  Any provision of this Agreement, the Note or the Warrant may be amended, waived or modified (either generally or in a particular instance, either retroactively or prospectively, and either for a specified period of time or indefinitely), upon the written consent of the Company and the Investor.
 
5.2 Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflict of laws provisions thereof.  Each of the parties hereto hereby irrevocably consents to the (non-exclusive) jurisdiction of the courts of the State of New York and of any Federal court located therein in connection with any suit, action or other proceeding arising out of or relating to the Loan Documents and waives any objection to venue in the State of New York.  Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction or any such court.  Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 5.6 shall be deemed effective service of process on such party.
 
5.3 Survival.  The representations, warranties, covenants and agreements made herein shall survive any investigation made by the Investor and the Closing of the transactions contem­plated hereby indefinitely.
 
5.4 Successors and Assigns.  The Company may not assign its rights or obligations under the Loan Documents without the prior written consent of the Investor.  Subject to the foregoing sentence and the restrictions on transfer described in the Note, the provisions hereof and of the other Loan Documents shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto and thereto.
 
5.5 Entire Agreement.  This Agreement (including the Schedules and Exhibits attached hereto), the Note and the Warrant constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof.
 
5.6 Notices, etc.  All notices and other communications required or permitted here­under shall be effective upon receipt, shall be in writing, and may be delivered in person, by fax, overnight delivery service or United States mail, in which event they may be mailed by first-
 
 
 
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EXHIBIT N
 
 
class, certified or registered, postage prepaid, addressed (a) if to the Investor, at the Investor’s address and facsimile number set forth on the signature page hereto, or to such other address or facsimile number as such Investor shall have furnished to the parties hereto in writing, or (b) if to the Company, at its address and facsimile number set forth on the signature page hereto, or at such other address or facsimile number as the Company shall have furnished to the parties hereto in writing.
 
5.7 Severability.  If any provision of this Agreement shall be judicially determined to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
 
5.8 Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall be deemed to constitute one instrument.  Any signature page delivered by a fax machine or email shall be binding to the same extent as an original signature page, with regard to any agreement subject to the terms hereof or any amendment thereto.  Any party who delivers such a signature page agrees to deliver promptly an original counterpart to each party to whom the faxed or emailed signature page was sent.
 
5.9 Non-Liability of Investor.  The relationship between the Company and the Investor is a debtor and creditor relationship and not fiduciary in nature, nor is the relationship to be construed as creating any partnership or joint venture between such Investor and the Company.  All information supplied to the Investor is for Investor’s protection only and no other party is entitled to rely on such information.  There is no duty for the Investor to review, inspect, supervise, or inform the Company of any matter with respect to the Company’s business.  The Investor and the Company intend that such Investor may reasonably rely on all information supplied by the Company to such Investor, together with all representations and warranties given by the Company to such Investor, without investigation or confirmation by such Investor and that any investigation or failure to investigate will not diminish such Investor’s right to so rely.
 
 
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5.10 Expenses. Regardless of whether the Closing is effected, except as otherwise provided in the Note, each party shall pay all costs and expenses that it incurs with respect to the negotiation, execution, delivery and performance of this Agreement and the other Loan Documents; provided, however, that the Company agrees to promptly pay all legal fees and out-of-pocket expenses incurred by counsel to the Investor in connection with the transactions contemplated by this Agreement and the other Loan Documents.
 
5.11 Waiver of Jury Trial.  TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED, THE INVESTOR AND THE COMPANY HEREBY WAIVE, AND COVENANT THAT NEITHER THE COMPANY NOR THE INVESTOR WILL ASSERT, ANY RIGHT TO TRIAL BY JURY ON ANY ISSUE IN ANY PROCEEDING, WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE, IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS
 
AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE SUBJECT MATTER HEREOF OR THEREOF OR IN ANY WAY CONNECTED WITH, RELATED OR INCIDENTAL TO THE DEALINGS OF THE INVESTOR AND THE COMPANY HEREUNDER OR THEREUNDER, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER IN TORT OR CONTRACT OR OTHERWISE.  The Company acknowledges that it has been informed by the Investor that the provisions of this Section 5.11 constitute a material inducement upon which the Investor is relying and will rely in entering into this Agreement. The Investor or the Company may file an original counterpart or a copy of this Section 5.11 with any court as written evidence of the consent of the Investor and the Company to the waiver of the right to trial by jury.
 
5.12 Further Assurances.  At any time or from time to time after any Closing, the Company, on the one hand, and the Investor, on the other hand, agrees to cooperate with each other, and at the request of the other party, to execute and deliver any further instruments or documents and to take all such further action as the other party may reasonably request in order to evidence or effectuate the consummation of the transactions contemplated hereby relating to the purchase contemplated herein and to otherwise carry out the intent of the parties hereunder.
 
5.13 Delays or Omissions.  No delay or omission to exercise any right, power or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power or remedy of such nonbreaching or nondefaulting party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.
 

 
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In Witness Whereof, the parties have caused this Note and Warrant Purchase Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.
 
Company:
 
COMMUNICATION INTELLIGENCE CORPORATION



By:                                                                 
Name: 
Title:          


Investor:



By:                                                          
       its                                                
 

 

By:                                                                                          
Name:  
Title:   






-SA-1-
 
 
SCHEDULE A
(OMITTED)
 
EXHIBIT N
 
 
 
     
     
 
 
 

A-1
 
 
 
EXHIBIT N
EXHIBIT A
 
Form of Unsecured Convertible Promissory Note
 

OMITTED
 

 
 
 
A-2
EXHIBIT N
 
 

Exhibit B
 
Form of Warrant to Purchase Shares of Common Stock
 
 
 
 
OMITTED
 
 
 
 
 
 
 
B-1
 
 
 
 
 
 
 
 
 
 

 
 EX-99.3 4 frm_notwarntpuragmt2.htm EXHIBIT O- NOTE AND WARRANT PURCHASE AGREEMENT, DATED DECEMBER 2, 2011, BY AND BETWEEN THE ISSUER ANS THE INVESTORS LISTED THEREIN. frm_notwarntpuragmt2.htm




EXHIBIT O






Communication Intelligence Corporation

___________________________________

Note and Warrant Purchase Agreement
___________________________________

 

 

 
Dated as of
 
December 2, 2011
 


















 
 
 
EXHIBIT O
 

TABLE OF CONTENTS
 

   
Page
1.
Purchase and Sale of the Notes and Warrants.
1
1.1
Authorization of Issuance of the Notes and the Warrants
1
1.2
Purchase and Sale of the Notes and the Warrants
1
1.3
Use of Proceeds
2
1.4
Closing
2
1.5
Delivery
2
2.
Representations and Warranties of the Company
2
2.1
Organization, Standing and Power
2
2.2
Certificate of Incorporation and Bylaws
2
2.3
Power; Authority and Enforceability
2
2.4
Capitalization
3
2.5
Authorization; Consents
3
2.6
Absence of Conflicts
4
2.7
Compliance with All Securities Laws; Offering Exemption
4
2.8
Governmental Consents
5
2.9
SEC Reports; Disclosure
5
2.10
Financial Statements
5
2.11
Disclosure
5
3.
Representations and Warranties of the Investors
6
3.1
Organization and Qualification
6
3.2
Authorization and Enforceability
6
3.3
Purchase Entirely for Own Account
6
3.4
Access to Information
6
3.5
Investment Experience
6
3.6
Accredited Investor
7
3.7
Restricted Securities
7
3.8
Legends
7
4.
Conditions to Closing; Covenants of Company
7
4.1
Conditions of Investors’ Obligations at Closing
7
4.2
Conditions to Obligations of the Company
8
4.3
Reservation of Stock
8
5.
Miscellaneous.
9
5.1
Waivers and Amendments
9
5.2
Governing Law
9
5.3
Survival
9
5.4
Successors and Assigns
9
5.5
Entire Agreement
9
5.6
Notices, etc.
9
5.7
Severability
10
 
i
 
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5.8
Counterparts
10
5.9
Non-Liability of Investors
10
5.10
Expenses
10
5.11
Waiver of Jury Trial
10
5.12
Further Assurances
11
5.13
Delays or Omissions
11
Schedule A                      -           List of Investors
Exhibit A                      -           Form of Unsecured Convertible Promissory Note
Exhibit B                      -           Form of Warrant to Purchase Common Stock

  
ii
 
EXHIBIT O
  
  Communication Intelligence Corporation
 
Note and Warrant Purchase Agreement
 
This Note and Warrant Purchase Agreement (the “Agreement”) is dated as of December 2, 2011, by and among Communication Intelligence Corporation, a Delaware corporation (the “Company”), and the investors listed on Schedule A attached hereto (each an “Investor,” and, collectively, the “Investors”).
 
W I T N E S S E T H:
 
WHEREAS, subject to the terms and conditions set forth herein, the Company desires to issue and sell to each Investor at the Closing (i) an unsecured convertible promissory note in the form attached hereto as Exhibit A (each a “Note,” and, collectively, the “Notes”) and (ii) a warrant (each a “Warrant,” and, collectively, the “Warrants”) to purchase such number of shares of Common Stock of the Company as determined by dividing (x) 25% of the aggregate principal amount of the Note purchased by the Investor, by (y) the exercise price of $0.0225 per share (the “Warrant Exercise Price”) in the form attached hereto as Exhibit B, and each Investor desires to purchase a Note and a Warrant from the Company on the terms and conditions set forth herein, with the aggregate principal amount of the Notes issued by the Company under the terms hereof not to exceed $500,000;
 
WHEREAS, the board of directors of the Company, the Special Committee of the board of directors of the Company (the “Special Committee”), the requisite holders of the Series B Preferred Stock of the Company (the “Series B Preferred Stock”) and the requisite holders of the Series C Preferred Stock of the Company (the “Series C Preferred Stock”) have approved the execution and delivery of this Agreement, the Notes, the Warrants and all ancillary agreements related hereto, and the transactions contemplated hereby.
 
NOW, THEREFORE, in consideration of the premises and agreements contained in this Agreement, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, THE PARTIES HEREBY AGREE AS FOLLOWS:
 
1. Purchase and Sale of the Notes and Warrants.
 
1.1 Authorization of Issuance of the Notes and the Warrants
 
.  Subject to the terms and conditions of this Agreement, on or prior to the date of the Closing, the Company shall have authorized the issuance and sale to the Investors of the Notes and the Warrants.
 
1.2 Purchase and Sale of the Notes and the Warrants
 
.  Subject to the terms and conditions of this Agreement, each Investor hereby agrees to purchase at the Closing, and the Company hereby agrees to issue and sell to each such Investor at the Closing (i) a Note, dated as of the date of the Closing, in the original principal amount equal to the dollar amount set forth opposite such Investor’s name under the heading “Original Principal Amount” on Schedule A hereto and (ii) a Warrant to purchase shares of Common Stock of the Company as set forth opposite such Investor’s name under the heading “Number of Warrant Shares” on Schedule A hereto, in exchange for cash in the amount set forth opposite such Investor’s name under the heading “Original Principal Amount” on Schedule A hereto.
 
1.3  
Use of Proceeds
 
.  The Company agrees to use the net proceeds from the sale and issuance of the Notes and Warrants pursuant to this Agreement for working capital and other general corporate purposes.
 
 
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1.4 Closing
 
.  The purchase and sale of the Notes and Warrants will take place at the offices of Davis Wright Tremaine LLP, 1300 SW Fifth Ave., Suite 2300, Portland, Oregon 97201 on the date hereof, or at such other time and place the Company and the Investors shall mutually agree, either orally or in writing (which time and place are designated as the “Closing”).
 
1.5 Delivery
 
.  At the Closing, the Company will deliver to each Investor (a) a Note, the original principal amount of which shall be in such amount as is indicated next to such Investor’s name under the heading “Original Principal Amount” on Schedule A attached hereto, (b) a Warrant to purchase shares of Common Stock of the Company as set forth opposite such Investor’s name under the heading “Number of Warrant Shares” on Schedule A hereto, and (c) this Agreement, each executed by the Company.  At the Closing, each Investor shall deliver to the Company the amount set forth opposite such Investor’s name under the heading “Original Principal Amount” on Schedule A hereto by bank check, personal check or wire transfer of immediately available funds to such account as the Company designates, and this Agreement, executed by the Investor.
 
2. Representations and Warranties of the Company
 
. The Company hereby represents and warrants to the Investors as follows:
 
2.1 Organization, Standing and Power
 
.  The Company is a corporation duly incorpo­rated, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as contemplated to be conducted.  The Company is duly qualified to transact business as a foreign corporation and is in good standing in any jurisdiction in which the failure to do so would have a material adverse effect on its business, properties, prospects or condition (financial or otherwise).
 
2.2 Certificate of Incorporation and Bylaws
 
.  The Company has delivered to the Investors true, correct, and complete copies of the certificate of incorporation of the Company as in effect on the date hereof (the “Certificate of Incorporation”) and the Company’s bylaws as in effect on the date hereof (the “Bylaws”).
 
2.3 Power; Authority and Enforceability
 
.  The Company has all requisite corporate power and authority to execute and deliver this Agreement, the Notes and the Warrants (each, a “Loan Document” and, collectively, the “Loan Documents”) and to perform fully its obligations hereunder and thereunder.  The Company has all requisite corporate power and authority to issue and sell the Notes and the Warrants to the Investors hereunder.  The execution and delivery of the Loan Documents and the consummation of the transactions contemplated thereby have been duly authorized by all necessary corporate action on the part of the Company.  The Loan Documents have been duly executed and delivered by the Company and constitute legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors’ rights and remedies generally and subject, as to enforceability, to general principles of equity, regardless of whether enforceability is considered in a proceeding at law or in equity.
 
2.4 Capitalization
 
(a) Immediately prior to the date hereof, the Company is authorized to issue 1,074,500,000 shares of capital stock of which (i) 1,050,000,000 are designated as Common Stock, of which 191,228,541 shares are issued and outstanding (ii) and 24,500,000 are designated as Preferred Stock, of which (A) 2,000,000 are designated as Series A-1 Cumulative Convertible Preferred Stock (“Series A-1 Preferred Stock”) of which 862,953 shares are issued and outstanding, (B) 14,000,000 of which are designated Series B Participating Convertible Preferred Stock (“Series B Preferred Stock”) of which 9,023,022 shares are issued and outstanding, (C) 4,100,000 of which are designated Series C Participating Convertible Preferred Stock  (“Series C Preferred Stock”) of which 3,459,631 shares are issued and outstanding, and (D)
 
 
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4,400,000 which remain unallocated.  4,000,000 shares of Common Stock are reserved for issuance under the Company’s 1999 Stock Option Plan, under which 1,248,828 shares are subject to outstanding options and no further grants will be made; 7,000,000 shares of Common Stock are reserved for issuance under the Company’s 2009 Stock Compensation Plan, under which 2,412,273 shares are subject to outstanding awards and 4,514,742 shares are available for grant; 50,000,000 shares of Common Stock are reserved for issuance under the Company’s 2011 Stock Compensation Plan, under which 41,638,057 shares are subject to outstanding awards and 8,361,943 shares are available for grant; and 3,679,443 shares are subject to outstanding non-plan awards An aggregate of 557,619,209 shares of Common Stock are reserved for issuance upon the exercise of warrants and other convertible securities outstanding on the date hereof. As of the date hereof the Company has no other shares of capital stock authorized, issued, outstanding or reserved.
 
(b) As of the date hereof, other than as set forth in Section 2.4(a), (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 or exercisable or exchangeable for, any shares of capital stock of the Company, or arrangements by which the Company is or may become bound to issue additional shares of capital stock, nor are any such issuances or arrangements contemplated; (ii) the Company has no obligation (contingent or otherwise) to purchase, redeem or otherwise acquire any of its equity securities or any interests therein or, other than in connection with its Series B Preferred Stock or Series C Preferred Stock in accordance with its terms, to pay any dividend or make any distribution in respect thereof; and (iii) the Company has not reserved any shares of capital stock for issuance pursuant to any stock option plan or similar arrangement.
 
(c) There have been no adjustments to the exercise price or the conversion price of any options, warrants or other securities convertible into or exchangeable for shares of Common Stock, including Series A-1 Preferred Stock, Series B Preferred Stock and Series C Preferred Stock.  The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not trigger any conversion or exercise price adjustments or any other anti-dilution rights or provisions relating to any shares of capital stock of the Company or any securities or rights convertible into or exercisable or exchangeable for shares of capital stock of the Company.
 
2.5 Authorization; Consents.  The execution, delivery and performance by the Company of this Agreement and the other Loan Documents, the sale, issuance and delivery of the Notes and Warrants and the performance of all of the obligations of the Company under this Agreement and each of the other Loan Documents have been authorized by the Company’s board of directors, the Special Committee, the requisite holders of the Series B Preferred Stock and the requisite holders of the Series C Preferred Stock, and no other corporate action on the part of the Company and no other corporate or other approval or authorization is required on the part of the Company or any other individual, corporation, limited liability company, partnership, trust, incorporated or unincorporated organization, joint venture, joint stock company, or a government or any agency or political subdivision thereof or other entity of any kind (each a “Person”), by Law or otherwise, in order to make this Agreement and the other Loan Documents the valid, binding and enforceable obligations (subject to (i) Laws of general application relating to bankruptcy, insolvency, and the relief of debtors, and (ii) rules of Law governing specific performance, injunctive relief, or other equitable remedies) of the Company, as the case may be.  “Law” shall mean any foreign, federal, state or local law, statute, rule, regulation, ordinance, code, directive, writ, injunction, decree, judgment or order applicable to the Company.
 
2.6 Absence of Conflicts.  The Company is not in violation of or default under any provision of its Certificate of Incorporation or its Bylaws.  Other than the consent required from the holders of each of the Series B Preferred Stock and Series C Preferred Stock to the
 
 
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transactions contemplated hereby, which consent shall be obtained prior to Closing, the execution, delivery, and performance of, and compliance with the Loan Documents, and the consummation of the transactions contemplated hereby and thereby, have not and will not:
 
(a)           violate, conflict with or result in a breach of any provision of or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, any of the terms, conditions or provisions of the Company’s Certificate of Incorporation or its Bylaws or any Material Contract; or
 
(b)           violate any judgment, ruling, order, writ, injunction, award, decree, or any Law or regulation of any court or federal, state, county or local government or any other governmental, regulatory or administrative agency or authority which is applicable to the Company or any of its assets, properties or businesses.
 
“Material Contract” shall mean all written and oral contracts, agreements, deeds, mortgages, leases, subleases, licenses, instruments, notes, commitments, commissions, undertakings, arrangements and understandings (i) which by their terms involve, or would reasonably be expected to involve, aggregate payments by or to the Company during any 12-month period in excess of $50,000, (ii) the breach of which by the Company or its subsidiary would be material to the Company or its subsidiary or (iii) which are required to be filed as exhibits by the Company with the SEC pursuant to Items 601(b)(4) and 601(b)(10) of Regulation S-K promulgated by the SEC.
 
2.7 Compliance with All Securities Laws; Offering Exemption.  Assuming the truth and accuracy of each Investor’s representations and warranties set forth in Section 3 hereof, (i) the offer and sale of the Notes and Warrants are exempt from registration under the Securities Act, and will be registered or qualified (or exempt from registration or qualification) under applicable state securities and “blue sky” Laws, as currently in effect, and (ii) the issuance and delivery of the Notes, and the shares of Preferred Stock issuable upon conversion thereof, and the Warrants, and the shares of Common Stock issuable upon conversion thereof, respectively (and the Common Stock issuable upon conversion of the Preferred Stock) (collectively, the “Securities”), as contem­plated by this Agreement, do not violate or breach any applicable securities laws.
 
2.8 Governmental Consents.  No consent, approval, qualification, order or authoriza­tion of, or filing with, any local, state or federal governmental authority is required on the part of the Company in connection with the Company’s valid execution, delivery or performance of this Agreement or the issuance and sale of the Securities, except such filings as have been made prior to the Closing, any notices of sale required to be filed with the Securities and Exchange Commission under Regulation D of the Securities Act of 1933, as amended (the “Securities Act”), or such post-closing filings as may be required under applicable state securities laws, which will be timely filed within the applicable periods thereafter.
 
2.9 SEC Reports; Disclosure.  The Company has filed all required forms, reports and documents with the Securities and Exchange Commission (the “SEC”) since December 31, 2010, each of which has complied in all material respects with all applicable requirements of the Securities Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder, each as in effect on the date such forms, reports and documents were filed.  Each Investor has had the opportunity through the SEC’s web site to review the following reports in the form filed by the Company with the SEC (including any amendments thereto): (i) Annual Report on Form 10-K for the year ended December 31, 2010; (ii) Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2011 and June 30, 2011; (iii) Current Reports on Form 8-K dated December 31, 2010, January 24, 2011, January 28, 2011, March 7, 2011, March 29, 2011, March 31, 2011, May 26, 2011, July 14, 2011, August 11, 2011, September 21, 2011, and October 24, 2011, and (iv) all definitive proxy
 
 
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statements relating to the Company’s meeting of shareholders (whether annual or special) held since December 31, 2010 (collectively, the “SEC Reports”).  None of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading.
 
 
2.10 Financial Statements.  Included in the SEC Reports are the audited financial statements of the Company as at and for the years ended December 31, 2010 and 2009 and the unaudited financial statements of the Company for the fiscal quarters ended March 31, 2011, June 30, 2011, and September 30, 2011 (the “Financial Statements”).  The Financial Statements have been prepared in accordance with GAAP and fairly present the financial condition and operating results of the Company and its subsidiary on a consolidated basis as of the dates, and for the periods, indicated therein, except that the unaudited financial statements as at and for the quarters ended March 31, 2011, June 30, 2011 and September 30, 2011 are subject to normal year-end adjustments and do not contain all notes required under GAAP.  As of the date hereof, the Company has no liabilities, obligations or commitments of any nature (whether accrued, absolute, contingent, unliquidated or otherwise, due or to become due and regardless of when addressed) other than (a) liabilities that have arisen in the ordinary course of business consistent with past practice
since the date of the Company’s most recent quarterly report on Form 10-Q that are not in excess of $100,000 in the aggregate and (b) obligations to perform after the date hereof any contracts or agreements which have been disclosed or which are not required to be disclosed in the SEC Reports because such contracts and agreements are not material to the Company.
 
2.11 Disclosure.  The Company understands and confirms that the Investors will rely on the foregoing representations in purchasing securities of the Company.  No representation or warranty by the Company contained in this Agreement contains any untrue statement of a material fact or omits to state a material fact in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.  The Company acknowledges and agrees that the Investors do not make and have not made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3 hereof.
 
3. Representations and Warranties of the Investors.  Each Investor hereby represents and warrants to the Company that:
 
3.1 Organization and Qualification.  The Investor is duly organized, validly existing and in good standing under the Laws of its jurisdiction of incorporation or organization to carry on its business as it is now being conducted or proposed to be conducted.
 
3.2 Authorization and Enforceability.  The Investor has all requisite corporate power and authority to enter into the Loan Documents, as applicable.  The execution, delivery and performance by the Investor of the Loan Documents to which it is a party, and the performance of all of the obligations of such Investor under each of such Loan Documents have been duly and validly authorized, and no other action, approval or authorization is required on the part of such Investor in order to make the Loan Documents the valid, binding and enforceable obligations (subject to (i) Laws of general application relating to bankruptcy, insolvency, and the relief of debtors, and (ii) rules of Law governing specific performance, injunctive relief, or other equitable remedies) of such Investor.  The Loan Documents constitute legal, valid and binding obligations of the Investor, enforceable against it in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors’ rights and remedies generally and subject, as to enforceability, to general principles of equity, regardless of whether enforceability is considered in a proceeding at law or in equity.
 
 
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3.3 Purchase Entirely for Own Account.  The Securities will be acquired for investment for Investor’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and the Investor has no present intention of selling, granting any participation in, or otherwise distributing the same.  The Investor does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation in any of the Securities to such person or to any third person.
 
3.4 Access to Information.  The Investor has been given access to the Company and has had an opportunity to ask questions and receive answers from the Company regarding the Company’s business, prospects, properties and condition (financial or otherwise) and the terms and conditions of the offering and sale of the Securities.  The foregoing, however, does not limit or modify in any respect the representations and warranties of the Company in Section 2 of this Agreement or the right of the Investor to rely thereon.
 
3.5 Investment Experience.  The Investor acknowledges that it is able to fend for itself and bear the economic risk of its investment, including the complete loss thereof, and has such knowledge and experi­ence in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Securities.  The Investor has not been organized for the purpose of acquiring the Securities.
 
3.6 Accredited Investor.  The Investor is an “accredited investor” within the meaning of the Securities and Exchange Commission’s Rule 501 of Regulation D as promulgated under the Securities Act.
 
3.7 Restricted Securities
 
.  The Investor understands that the Securities it is purchasing are characterized as “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act only in certain limited circumstances.  In this connection, the Investor is familiar with Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.  The Investor understands Rule 144 is not currently available for the sale of the Securities.
 
3.8 Legends.  It is understood that the certificates evidencing the Securities may bear one or all of the following legends:
 
(a) “NEITHER THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT, OR (B) IF REASONABLY REQUESTED BY THE COMPANY, AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT.  THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES.”
 
(b) Any legend required by the laws of any applicable state.
 
 
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4. Conditions to Closing; Covenants of Company
 
.
 
4.1 Conditions of Investors’ Obligations at Closing.  The obligations of the Investors under this Agreement are subject to the fulfillment, on or prior to the date of the Closing, of each of the following conditions, any of which may be waived in whole or in part in writing by the Investors:
 
(a) The representations and warranties made by the Company in Section 2 shall be true and correct when made, and shall be true and correct on the date of Closing with the same force and effect as if they had been made on and as of the same date.
 
(b) The Company shall have performed and complied with all agreements, obliga­tions and conditions contained in this Agreement that are required to be performed or complied with by it on or prior to the date of Closing.
 
(c) No material adverse effect on the Company’s business, properties, prospects or condition (financial or otherwise) shall have occurred between June 30, 2011 and the date of the Closing and the President and/or Chief Executive Officer of the Company shall deliver to the Investors at the Closing a certificate stating that the conditions specified in Sections 4.1(a), (b) and (c) have been fulfilled.
 
(d) Except for the notices required or permitted to be filed after the date of Closing pursuant to applicable federal and state securities laws, the Company shall have obtained all governmental approvals required in connection with the lawful sale and issuance of the Securities.
 
(e) At the Closing, the sale and issuance by the Company, and the purchase by the Investors, of the Securities shall be legally permitted by all laws and regulations to which such Investors and/or the Company are subject.
 
(f) At the Closing, the Company shall have delivered to the Investors a certificate executed by the Secretary of the Company dated as of the date of the Closing certifying with respect to (i) a copy of the Company’s Certificate of Incorporation and its Bylaws in effect on such date and that the Company is not in violation of or default under any provision of its Certificate of Incorporation or Bylaw as of and on the date of the Closing and (ii) board resolutions of the Company authorizing the transactions contemplated by this Agreement and the other Loan Documents.
 
(g) The Company shall have executed and delivered to each Investor a Note, in the form attached hereto as Exhibit A, and a Warrant, in the form attached hereto as Exhibit B, in each case in accordance with the original principal amounts and number of shares set forth on Schedule A opposite such Investor’s name.
 
4.2 Conditions to Obligations of the Company.  The Company’s obligation to issue and sell the Notes and Warrants at the Closing is subject to the fulfillment, to the Company’s reasonable satisfaction, on or prior to the date of Closing, of the following conditions, any of which may be waived in whole or in part by the Company:
 
(a) The representations and warranties made by each Investor in Section 3 shall be true and correct when made, and shall be true and correct on the date of Closing with the same force and effect as if they had been made on and as of the same date.
 
(b) Each Investor shall have delivered to the Company in accordance with Section 1.5 the dollar amount set forth opposite such Investor’s name under the heading “Original Principal Amount” on Schedule A hereto.
 
 
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4.3 Reservation of Stock.  The Company covenants that during the term the Notes are convertible and the Warrants are exercisable, the Company will (i) reserve from its authorized and unissued Preferred Stock (and Common Stock issuable upon conversion thereof), a sufficient number of shares to provide for the issuance of the Preferred Stock (and Common Stock issuable upon conversion thereof), upon conversion of the Notes, (ii) reserve from its authorized and unissued Common Stock, a sufficient number of shares to provide for the issuance of the Common Stock, upon exercise of the Warrants, and (iii) take all necessary steps to amend its Certificate of Incorporation to provide sufficient reserves of shares of Preferred Stock (and Common Stock issuable upon conversion thereof) issuable upon conversion of the Notes and Common Stock issuable upon exercise of the Warrants.
 
5. Miscellaneous.
 
5.1 Waivers and Amendments.  Any provision of this Agreement, the Notes or the Warrants may be amended, waived or modified (either generally or in a particular instance, either retroactively or prospectively, and either for a specified period of time or indefinitely), upon the written consent of the Company and Investors holding a majority of the aggregate outstanding principal amount of Notes issued to the Investors under the terms of this Agreement.
 
5.2 Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflict of laws provisions thereof.  Each of the parties hereto hereby irrevocably consents to the (non-exclusive) jurisdiction of the courts of the State of New York and of any Federal court located therein in connection with any suit, action or other proceeding arising out of or relating to the Loan Documents and waives any objection to venue in the State of New York.  Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction or any such court.  Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 5.6 shall be deemed effective service of process on such party.
 
5.3 Survival.  The representations, warranties, covenants and agreements made herein shall survive any investigation made by the Investors and the Closing of the transactions contem­plated hereby indefinitely.
 
5.4 Successors and Assigns.  The Company may not assign its rights or obligations under the Loan Documents without the prior written consent of the Investors.  Subject to the foregoing sentence and the restrictions on transfer described in the Notes, the provisions hereof and of the other Loan Documents shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto and thereto.
 
5.5 Entire Agreement.  This Agreement (including the Schedules and Exhibits attached hereto), the Notes and the Warrants constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof.
 
5.6 Notices, etc.  All notices and other communications required or permitted here­under shall be effective upon receipt, shall be in writing, and may be delivered in person, by fax, overnight delivery service or United States mail, in which event they may be mailed by first-class, certified or registered, postage prepaid, addressed (a) if to an Investor, at the Investor’s address and facsimile number set forth on the signature page hereto, or to such other address or facsimile number as such Investor shall have furnished to the parties hereto in writing, or (b) if to the Company, at its address and facsimile number set forth on the signature page hereto, or at such other address or facsimile number as the Company shall have furnished to the parties hereto in writing.
 
 
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5.7 Severability.  If any provision of this Agreement shall be judicially determined to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
 
5.8 Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall be deemed to constitute one instrument.  Any signature page delivered by a fax machine or email shall be binding to the same extent as an original signature page, with regard to any agreement subject to the terms hereof or any amendment thereto.  Any party who delivers such a signature page agrees to deliver promptly an original counterpart to each party to whom the faxed or emailed signature page was sent.
 
5.9 Non-Liability of Investors.  The relationship between the Company and the Investors is a debtor and creditor relationship and not fiduciary in nature, nor is the relationship to be construed as creating any partnership or joint venture between such Investors and the Company.  All information supplied to the Investors is for the Investors’ protection only and no other party is entitled to rely on such information.  There is no duty for the Investors to review, inspect, supervise, or inform the Company of any matter with respect to the Company’s business.  The Investors and the Company intend that the Investors may reasonably rely on all information supplied by the Company to such Investors, together with all representations and warranties given by the Company to such Investors, without investigation or confirmation by such Investors and that any investigation or failure to investigate will not diminish such Investors' right to so rely.
 
5.10 Expenses.  Regardless of whether the Closing is effected, except as otherwise provided in the Notes, each party shall pay all costs and expenses that it incurs with respect to the negotiation, execution, delivery and performance of this Agreement and the other Loan Documents; provided, however, that the Company agrees to promptly pay all legal fees and out-of-pocket expenses incurred by one counsel to the Investors in connection with the transactions contemplated by this Agreement and the other Loan Documents.
 
5.11 Waiver of Jury Trial.  TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED, THE INVESTORS AND THE COMPANY HEREBY WAIVE, AND COVENANT THAT NEITHER THE COMPANY NOR THE INVESTORS WILL ASSERT, ANY RIGHT TO TRIAL BY JURY ON ANY ISSUE IN ANY PROCEEDING, WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE, IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE SUBJECT MATTER HEREOF OR THEREOF OR IN ANY WAY CONNECTED WITH, RELATED OR INCIDENTAL TO THE DEALINGS OF THE INVESTORS AND THE COMPANY HEREUNDER OR THEREUNDER, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER IN TORT OR CONTRACT OR OTHERWISE.  The Company acknowledges that it has been informed by the Investors that the provisions of this Section 5.11 constitute a material inducement upon which the Investors are relying and will rely in entering into this Agreement. The Investors or the Company may file an original counterpart or a copy of this Section 5.11 with any court as written evidence of the consent of the Investors and the Company to the waiver of the right to trial by jury.
 
 
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5.12 Further Assurances.  At any time or from time to time after any Closing, the Company, on the one hand, and each of the Investors, on the other hand, agrees to cooperate with each other, and at the request of the other parties, to execute and deliver any further instruments or documents and to take all such further action as the other party may reasonably request in order to evidence or effectuate the consummation of the transactions contemplated hereby relating to the purchase contemplated herein and to otherwise carry out the intent of the parties hereunder.
 
5.13 Delays or Omissions.  No delay or omission to exercise any right, power or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power or remedy of such nonbreaching or nondefaulting party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.
 

 
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In Witness Whereof, the parties have caused this Note and Warrant Purchase Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.
 

COMPANY

COMMUNICATION INTELLIGENCE CORPORATION



By:                                                                                                     
Name:             
Title:              
Address: 


INVESTORS
 
INVESTOR SIGNATURES OMITTED




By:                                                                                                                             
Name:                                                                        
Title:           










Signature Page to Note and Warrant Purchase Agreement

 
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SCHEDULE A
 
INVESTOR NAMES OMITTED

NAME OF INVESTOR
ORIGINAL PRINCIPAL AMOUNT
 
NUMBER OF WARRANT SHARES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

 

 

 

SA-1
 
 
EXHIBIT O
 

Exhibit A
 
Form of Unsecured Convertible Promissory Note
 

OMITTED

 

A-
 
 
EXHIBIT O
 

Exhibit B
 
Form of Warrant to Purchase Shares of Common Stock
 

OMITTED

 

B-