AMENDMENT NO. 1 TO CREDIT AGREEMENT dated as of May 28, 2009 by and among COMMUNICATION INTELLIGENCE CORPORATION, as Borrower, LENDERS AND ADDITIONAL LENDERS PARTIES HERETO, and SG PHOENIX LLC, as Collateral Agent
EXHIBIT 10.46
EXECUTION
VERSION
AMENDMENT
NO. 1
dated as
of May 28, 2009
by and
among
COMMUNICATION INTELLIGENCE
CORPORATION,
as
Borrower,
LENDERS AND ADDITIONAL LENDERS
PARTIES HERETO,
and
SG
PHOENIX LLC,
as
Collateral Agent
EXHIBIT
10.46
This AMENDMENT NO. 1 TO CREDIT AGREEMENT in entered
into as of May 28, 2009 (this “Amendment Agreement”) by and
among COMMUNICATION INTELLIGENCE CORPORATION, a Delaware corporation having an
address at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(together with its successors, the “Borrower”), PHOENIX VENTURE
FUND LLC, a Delaware limited liability company having an address at ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (“Phoenix”), ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, an
individual having an address at ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ (“▇▇▇▇▇▇▇”), those
additional lenders listed on the signature pages hereto(such additional lenders,
collectively, the “Additional
Lenders”, and each such additional lender, individually, an “Additional Lender”; the
Additional Lenders and the Existing Lenders are herein collectively referred to
as the “Lenders”), and
SG PHOENIX LLC, as collateral agent (the “Collateral
Agent”).
R E C I T A L
S:
WHEREAS, the Borrower,
Phoenix, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, an individual having an address at ▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (“▇▇▇▇▇▇▇”, and Phoenix, ▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇, collectively, the “Existing Lenders”), and the
Collateral Agent are parties to, among other documents, (a) the Credit Agreement
(the “Original Credit
Agreement”), dated as of June 5, 2008 (the “Closing Date”), pursuant to
which the Existing Lenders extended loans to the Borrower in the aggregate
principal amount of $3,637,500, and (b) the Pledge and Security Agreement, dated
as of June 5, 2008 (the “Pledge
and Security Agreement”), pursuant to which the Borrower secured all of
its Obligations under the Loan Documents by granting to the Collateral Agent,
for the benefit of the Existing Lenders, a first-priority Security Interest in
and Lien upon the Collateral, including the Pledged Stock (as defined in the
Pledge and Security Agreement);
WHEREAS, the Borrower,
Phoenix, ▇▇▇▇▇▇▇ and the Collateral Agent desire to amend the Original Credit
Agreement to, among other things, allow for additional loans in the aggregate
principal amount of $1,100,000 to be extended to the Borrower by Phoenix,
▇▇▇▇▇▇▇ and the Additional Lenders listed on the signature pages
hereto;
WHEREAS, Section 8.8 of the
Original Credit Agreement provides that amendments to the Loan Documents,
including the Original Credit Agreement, may only become effective with the
written concurrence of the Majority Lenders, and, that, upon execution by the
Majority Lenders and the Borrower of such amendments, such amendments shall be
binding on the Borrower and all Lenders;
WHEREAS, Phoenix and ▇▇▇▇▇▇▇
constitute the “Majority Lenders” under the Original Credit Agreement by holding
Obligations that exceed 50% of the Obligations outstanding under the Original
Credit Agreement; and
WHEREAS, the Additional
Lenders desire to become parties to the Original Credit Agreement, as amended by
this Amendment Agreement.
EXHIBIT
10.46
NOW, THEREFORE, in
consideration of the premises and the agreements, provisions and covenants
herein contained, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties do hereby agree, as
follows:
SECTION
1.
DEFINITIONS IN THIS AMENDMENT AGREEMENT
Except as
otherwise defined in this Amendment Agreement (including the preamble and the
recitals hereof), capitalized terms are used herein with the meanings ascribed
to such terms in the Original Credit Agreement.
SECTION
2. CONSENT
OF MAJORITY LENDERS TO AMENDMENTS TO ORIGINAL CREDIT AGREEMENT
Phoenix
and ▇▇▇▇▇▇▇, as the Majority Lenders, hereby consent to the amendments to the
Original Credit Agreement contained in this Amendment Agreement, such consent to
be evidenced by the execution of this Amendment Agreement by Phoenix and
▇▇▇▇▇▇▇.
SECTION
3. AMENDMENTS
TO ORIGINAL CREDIT AGREEMENT
3.1. Amendments to, and Addition
of, Certain Definitions in Original Credit Agreement.
(a) Amendment to Definition of
“Lenders” in Original Credit Agreement. The definition of
“Lenders” in the
Original Credit Agreement shall be deemed to include the Additional
Lenders.
(b) Amendment to Definition of
“Maturity Date” in Original Credit Agreement. The definition
of “Maturity Date” in
Section 10.1 of
the Original Credit Agreement is hereby amended to be “December 31,
2010”.
(c) Amendment to Definition of
“Warrant” in Original Credit Agreement. The definition of
“Warrant” in Section
10.1 of the Original Credit Agreement is hereby amended and restated in
its entirety to read as follows:
““Warrants” means the Initial
Warrants, the Additional Warrants and the Agent Warrants.”
(d) Addition of Certain
Definitions to Original Credit Agreement. The following
definitions are hereby added to Section 10.1 of the
Original Credit Agreement:
““Additional Closing Date” means
the date of Amendment No. 1.”
““Agent Warrants” means warrants
issued to the Collateral Agent pursuant to Section 5.2 of
Amendment No. 1, in substantially the form of Exhibit 1.9
hereto.”
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10.46
““Amendment No. 1” means that
certain Amendment No. 1 to the Credit Agreement, dated as of May 28, 2009, among
the Borrower, the Majority Lenders and the Collateral Agent, as acknowledged and
agreed to by the additional lenders listed on the signatures pages
thereto.”
3.2. Amendments to Section 1.1 of
Original Credit Agreement.
(a) Amendments to Section 1.1(a)
of, Schedule 1.1(a) to, and Exhibit 1.1(a) to Original Credit Agreement.
Section 1.1(a)
of the Original Credit Agreement is hereby amended and restated in its entirety
to read as follows:
“(a) Loans to
Borrower. The Lenders agree to lend to the Borrower, on the
Closing Date, an aggregate of Three Million Six Hundred Thirty-Seven Thousand
Five Hundred Dollars ($3,637,500), each Lender to lend the amount set forth on
Schedule 1.1(a)
opposite its name with respect to the Closing Date; provided that all conditions
precedent set forth in Section 7 are
satisfied or waived. The Lenders agree to lend to the Borrower, on the
Additional Closing Date, an aggregate of One Million One Hundred Thousand
Dollars ($1,100,000), each Lender to lend the amount set forth on Schedule 1.1(a)
opposite its name with respect to the Additional Closing Date (such loans made
on the Additional Closing Date, together with the loans made on the Closing
Date, collectively, the “Loans”, and, each
individually, a “Loan”);
provided that all
conditions precedent set forth in Section 5 of
Amendment No. 1 are satisfied or waived. Amounts borrowed under this Section 1.1(a) that
are repaid or prepaid may not be reborrowed. The Borrower shall execute and
deliver to each Lender a Note in the amount of each of such Lender's Loans in
the form attached to this Agreement as Exhibit 1.1(a)
(together with any Notes issued pursuant to Section 1.2(b)),
dated as of the Closing Date or the Additional Closing Date, as the case may
be.”
Schedule 1.1(a) and
Exhibit 1.1(a)
referenced in Section
1.1(a) of the Original Credit Agreement and attached to the Original
Credit Agreement are hereby replaced by Schedule 1.1(a) and
Exhibit 1.1(a),
respectively, attached hereto.
(b) Amendment to Section
1.1(b)(i) of Original Credit Agreement. Section 1.1(b)(i) of
the Original Credit Agreement is hereby amended and restated in its entirety to
read as follows:
“(i) with
respect to the Loans made by Phoenix on the Closing Date and the Loans made on
the Additional Closing Date, by wire transfer of immediately available funds to
such account or accounts as may be authorized by the Borrower, less the
aggregate amount of all fees and expenses due to the Lenders
hereunder”.
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10.46
3.3. Amendments to Section 1.2 of
Original Credit Agreement.
(a) Amendment to Section 1.2(a)
of Original Credit Agreement. Section 1.2(a) of the
Original Credit Agreement is hereby amended and restated in its entirety to read
as follows:
“(a) Interest. (i)
Commencing as of the Closing Date, the Loans made on such date shall accrue
interest on a monthly basis at a rate equal to eight percent (8%) per annum
until the Maturity Date. (ii) Commencing on the Additional Closing Date, the
Loans made on such date shall accrue interest on a monthly basis at a rate equal
to eight percent (8%) per annum until the Maturity Date.”
(b) Amendments to Section 1.2(b)
of and Exhibits 1.2(b)-1 and 1.2(b)-2 to Original Credit Agreement. Section 1.2(b) of the
Original Credit Agreement is hereby amended by the replacement of the reference
to “0.14” in such Section with the reference to “0.06”. Such Section is further
amended by the amendment and restatement of the last sentence of such Section,
such last sentence to read in its entirety as follows:
“Notwithstanding
the foregoing, the Borrower shall not have an option to pay interest in kind in
the event that (i) an Event of Default has occurred and is continuing, or (ii)
the Borrower does not have sufficient authorized, unissued and unreserved Common
Stock to fully reserve shares of Common Stock for issuance upon exercise of the
Additional Warrants, or is otherwise unable to comply with the terms of the
Additional Warrants.”
Exhibit 1.2(b)-1 and
Exhibit
1.2(b)-2 referenced in Section 1.2(b) of the
Original Credit Agreement and attached to the Original Credit Agreement are
hereby replaced by Exhibit 1.2(b)-1 and
Exhibit
1.2(b)-2, respectively, attached hereto.
(c) Amendment to Section 1.2(c)
of Original Credit Agreement. Section 1.2(c) of the
Original Credit Agreement is hereby amended and restated in its entirety to read
as follows:
“(c) Default Rate of
Interest. Upon the occurrence of an Event of Default and for
so long as it continues, all Loans and other Obligations shall bear interest at
a rate equal to thirteen percent (13%) per annum.”
3.4 Amendment to Section 1.3 of
Original Credit Agreement. Section 1.3 of the
Original Credit Agreement is hereby amended and restated in its entirety to read
as follows:
“1.3 Use of
Proceeds. The Borrower agrees that (a) the proceeds of the
Loans made on the Closing Date shall be used only in accordance with the
following: (1) to refinance the loans due and payable on May 15, 2008 to certain
of the Lenders as set forth on Schedule 1.3 hereto
pursuant to the Debt Refinancing, (2) for working capital and general corporate
purposes, in each case in the ordinary course of business, and (3) to pay fees
and expenses in connection with the Debt Refinancing, including the fees and
expenses hereunder, and (b) the proceeds of the Loans made on the Additional
Closing Date shall be used only (1) for working capital and general corporate
purposes, in each case in the ordinary course
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10.46
of
business, and (2) to pay fees and expenses relating to or in connection with
Amendment No. 1. In no event shall the proceeds of the Loans be used to (i) make
distributions or (ii) make a contribution to the capital of any Subsidiary of
the Borrower.”
3.5. Amendment to Section 1.4(a)
of Original Credit Agreement. Section 1.4(a) of the
Original Credit Agreement is hereby amended by the removal of the word “and”
before clause (vi) of such Section and the addition of clause (vii) at the end
of clause (vi), such clause (vii) to read as follows:
“(vii)
any registration or filing (or the like) with, or report or notice (or the like)
to, any Governmental Authority, including, without limitation, the SEC, by any
of the Lenders or their Affiliates relating to or in connection with the
transactions contemplated by Amendment No. 1 or the Loan
Documents”.
3.6. Amendment to Section 1.5(a)
of Original Credit Agreement. Section 1.5(a) of the
Original Credit Agreement is hereby amended by the addition of account
information for the Additional Lenders, after the account information for
▇▇▇▇▇▇▇, as follows:
“If to Kendu Partners
Company:
Bank of
the West
▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
ABA #
▇▇▇-▇▇▇-▇▇▇
for account #756-00-7043 for the
account of Kendu Partners Company
If to
MDNH Partners L.P.:
Bank of
the West
▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
ABA #
▇▇▇-▇▇▇-▇▇▇
for
account #756-00-5971 for the account of MDNH Partners L.P.”.
3.7 Amendment to Section 1.6 of
Original Credit Agreement. Section 1.6 of the
Original Credit Agreement is hereby amended by the removal of Section 1.6(h) from
Section
1.6.
3.8 Amendments to Section 1.9 of
and Exhibit 1.9 to Original Credit Agreement. Section 1.9 of the
Original Credit Agreement is hereby amended by the replacement of the reference
to “0.14” in such Section with the reference to “0.06”. Exhibit 1.9
referenced in such Section and
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10.46
attached
to the Original Credit Agreement is hereby replaced by Exhibit 1.9 attached
hereto.
3.9 Amendments to Section 2 of
Original Credit Agreement. Section 2 of the
Original Credit Agreement is hereby amended by the addition of Section 2.9 , Section 2.10, Section 2.11 and
Section 2.12 at
the end of such Section 2, such added
Section 2.9,
Section 2.10,
Section 2.11
and Section
2.12 to read in their entirety as follows:
“2.9 Salary Reduction
Plans. The Borrower shall, commencing with the first pay
period subsequent to the Additional Closing Date, implement salary reduction
plans for its executive officers and employees as proposed by the Borrower and
agreed to by the Borrower and the Collateral Agent, which plans shall result in
at least a 13%
aggregate reduction in the salaries of the Borrower’s executive officers and
employees. Both salary reduction plans shall remain in effect until the Borrower
has, for two (2) consecutive fiscal quarters, positive cash flows from operating
activities, as determined by the Borrower’s consolidated statements of cash
flows filed with the SEC in connection with the Borrower’s quarterly or annual
reports, as the case may be. The Borrower may grant, to each of its executive
officers or employees subject to the salary reduction plans, options to purchase
Common Stock of the Borrower with an aggregate value equivalent to the amount of
the salary reduction for such executive officer or employee; provided that such options
shall have an exercise price equal to the closing market price of the Common
Stock of the Borrower on the date of grant and shall be exercisable for not
longer than three (3) years from the date of such grant.”
“2.10 Registration of Common Stock
Issued Upon Exercise of Warrants. The Borrower shall,
promptly, but, in any event, not later than thirty (30) days after demand for
registration by the holders of the majority of the Registrable Securities (as
defined in the Registration Rights Agreement), file a registration statement
with the SEC on Form S-1 (or such other form the Borrower is qualified to file)
and register such Common Stock in accordance with the terms of Section 2(c) of the
Registration Rights Agreement. The Borrower shall use its reasonable best
efforts to cause such registration statement to be declared effective under the
Securities Act of 1933, as amended, as soon as possible but, in any event, not
later than its Effectiveness Date (as defined in the Registration Rights
Agreement).”
“2.11 Board Meetings; Observation
Rights. The Borrower shall hold, in person or by telephone
conference, regular or special meetings of its Board of Directors at least once
per each fiscal quarter. Phoenix shall be permitted to designate two (2)
representatives of its choice to attend all such meetings of the Board of
Directors or any committees thereof in a nonvoting observer capacity. The
Borrower shall give each Phoenix representative notice of such meetings and
copies of all minutes, consents and other materials (financial or otherwise)
provided in connection therewith, concurrently with those provided at any time
to its Board of Directors or any committees thereof, and in the same manner;
provided, however, that
the Borrower may exclude any Phoenix representatives from access to any material
or meeting, or a portion thereof, if the Borrower
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believes,
upon advice of counsel, that such exclusion is reasonably necessary to preserve
the attorney-client privilege. The Borrower shall promptly reimburse Phoenix’s
representatives for all reasonable costs and expenses, including travel
expenses, incurred in connection with attendance and observation of such
meetings. All such information provided under this Section shall be considered
confidential and provided to such Phoenix representatives pursuant to the
Bi-Lateral Non-disclosure Agreement, dated as of April 1, 2009, between the
Borrower and Phoenix.”
“2.12 Additional Authorized Common
Stock. The Borrower shall, by not later than May 29, 2009,
take all necessary steps required in connection with the holding of its annual
meeting of shareholders, including (a) the filing with the SEC of the Borrower’s
definitive proxy statement with a proposal to increase its authorized Common
Stock by a number of shares as shall be sufficient to fully reserve shares of
Common Stock for issuance upon exercise of any Warrants (including any
Additional Warrants that may be issued in the event of the Borrower’s election
to make payments in kind in accordance with the terms of this Agreement), and
(b) the mailing of all applicable proxy materials to the Borrower’s
shareholders. The Borrower shall, by not later than June 30, 2009, obtain
shareholder approval of such increase in its authorized Common Stock, and,
within one (1) Business Day of such approval, take all requisite actions
(including the filing of an amendment to its certificate of incorporation and/or
other organizational documents, if applicable, with the Secretary of State of
the State of Delaware) to effect such increase in its authorized Common
Stock.”
3.10 Amendment to Section 6.1(c)
of Original Credit Agreement. Section 6.1(c) of the
Original Credit Agreement is hereby amended by the addition of the references to
“Section 2.9”,
“Section 2.10”,
“Section 2.11”
and “Section
2.12” after the reference to “Section 2.6” and
before the reference to “Section 3” in Section 6.1(c) of the
Original Credit Agreement.
3.11 Amendment to Section 6.3 of
Original Credit Agreement. Section 6.3 of the
Original Credit Agreement is hereby amended and restated in its entirety to read
as follows:
“6.3 Rights of Collection.
Without limiting the other rights and remedies of the Lenders or the Collateral
Agent set forth in Section 6 and
notwithstanding anything to the contrary contained in any other Loan Document,
upon the occurrence and during the continuation of any Event of Default, unless
and until such Event of Default is cured or waived by the Majority Lenders, the
Collateral Agent may (i) exercise all of its rights and remedies under this
Agreement, the other Loan Documents and Applicable Law and (ii) at any time and
from time to time, take all other actions, including, but not limited to,
collection, realization and foreclosure on any or all of the
Collateral.”
3.12 Amendment to Section 8.8(a)
of Original Credit Agreement. Section 8.8(a) of the
Original Credit Agreement is hereby amended by the addition of the following
proviso at the end of such Section:
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“; provided, however, that Section 2.11 may not
be amended, modified or waived without the written concurrence of the Majority
Lenders and the prior written consent of Phoenix.”
3.13 Amendments to Section 9.2 of
Original Credit Agreement. Section 9.2 of the
Original Credit Agreement is hereby amended by the addition, after the notice
information for ▇▇▇▇▇▇▇, of notice information for the Additional Lenders as
follows:
“If to Kendu Partners or MDNH Partners,
L.P.:
c/▇ ▇▇▇▇▇▇▇ Options
▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇”.
Section 9.2 of the
Original Credit Agreement is further amended by the replacement of the address
for copies of notices sent to the Collateral Agent with the
following:
“Pillsbury
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ LLP
▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇”.
SECTION
4. REPRESENTATIONS
AND WARRANTIES
The
Borrower represents and warrants to the Lenders and the Collateral Agent that,
except as set forth on the Bring-Down Disclosure Schedule attached hereto as
Annex A (the
“Bring-Down Disclosure
Schedule”), all representations and warranties contained in the Original
Credit Agreement and in the Pledge and Security Agreement are true and correct
in all respects at and as of the date hereof as if made on the date hereof;
provided, however,
that, for the purpose of the representations and warranties made by the Borrower
under this Section
4, the references in the Original Credit Agreement to the schedules in
the Disclosure Schedule attached to the Original Credit Agreement shall be
deemed to be the references to the schedules in the Bring-Down Disclosure
Schedule. The Borrower further represents and warrants to the Lenders and the
Collateral Agent that (a) no Default has occurred, or will occur, before and
after giving effect to the transactions contemplated by this Amendment
Agreement, (b) the Borrower and its Subsidiaries do not have outstanding, as of
the date hereof, and will not have after giving effect to the Loans made on the
date hereof, any Indebtedness for borrowed money or Contingent Obligations
except as set forth in Schedule 4(b) hereto,
(c) the Grantors (under and as defined in the Pledge and Security Agreement) did
not have on the Closing Date, and do not have on the date hereof, (i) any
property in which the grant of the security interest contemplated by Section 2 of the
Pledge and Security Agreement is prohibited by any Requirements of Law (as
defined in the Pledge and Security Agreement) of a Governmental Authority
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10.46
or
requires a consent not obtained of any Governmental Authority pursuant to such
Requirement of Law or (ii) any property that is evidenced or constituted by any
contract, license, agreement, instrument or other document prohibiting the grant
of the security interest contemplated by Section 2 of the
Pledge and Security Agreement or providing that such grant constitutes a breach
or default under, or results in the termination of or requires any consent not
obtained under, such contract, license, agreement, instrument or other document
(or, in the case of any Investment Property, Pledged Stock or Pledged Note, any
applicable shareholder or similar agreement prohibiting the grant of such
security interest or providing that such grant constitutes a breach or default
under, or results in the termination of or requires any consent not obtained
under, such shareholder or similar agreement), except to the extent that such
Requirement of Law or the term in such contract, license, agreement, instrument
or other document (or, with respect to any Investment Property, Pledged Stock or
Pledged Note, such shareholder or similar agreement) providing for such
prohibition, breach, default or termination or requiring such consent is
ineffective under Applicable Law, and except as set forth in Schedule 4(c) hereto
and (d) the Borrower maintains the same insurance coverage with the same
carriers as Borrower had on the Closing Date. Based solely on the
representations made to Phoenix, the Collateral Agent, on behalf of Phoenix,
represents to the Borrower that the holders of the Additional Warrants issued on
the Additional Closing Date are “accredited investors” as such term is defined
in the Securities Act of 1933, as amended.
SECTION
5. CONDITIONS
PRECEDENT TO EFFECTIVENESS OF THIS AMENDMENT AGREEMENT AND MAKING OF LOANS ON
DATE OF THIS AMENDMENT AGREEMENT
The
effectiveness of this Amendment Agreement and the obligations of the Lenders to
make the Loans on the date of this Amendment Agreement are subject to
satisfaction, in sole determination by the Collateral Agent, of all of the
conditions set forth below.
5.1 Cancellation of Notes and
Initial Warrants Issued on Closing Date; Issuance of Replacement Notes and
Initial Warrants. The Notes and the Initial Warrants
issued to the Lenders on the Closing Date shall have been cancelled, and Notes
in the form of Exhibit
1.1(a) hereto and Initial Warrants in the form of Exhibit 1.9 hereto,
in each case with respect to the Loans made on the Closing Date and the date
hereof, shall have been issued to the Lenders.
5.2 Issuance of Agent
Warrants. The Agent Warrants for 3,947,917 shares of Common
Stock of the Borrower shall have been issued to the Collateral Agent, in
substantially the form of Exhibit 1.9
hereto.
5.3 Amendment to Registration
Rights Agreement. The Registration Rights Agreement, dated as of June 5,
2008, shall have been amended to provide for registration of the Borrower’s
Common Stock issuable upon exercise of the Warrants upon demand for registration
by the holders of the majority of such Common Stock, such amendment to be in
form and substance satisfactory to the Collateral Agent (the “Registration Rights Agreement
Amendment”).
5.4 Executed Documents.
The replacement Notes and the Initial Warrants issued pursuant to Section 5.1 hereof,
the Agent Warrants, this Amendment Agreement, the Registration Rights Agreement
Amendment, and all other documents and instruments contemplated hereby and
thereby shall have been duly authorized and executed by each of the parties
thereto in form and substance satisfactory to the Collateral Agent, and the
Borrower shall have delivered sufficient original counterparts thereof to the
Collateral Agent.
5.5 Lien
Priority. The Security Interests in favor of the Collateral
Agent and the Lenders pursuant to the Loan Documents shall be valid and
perfected first priority Liens on the Collateral, subject to no Liens other than
Permitted Encumbrances.
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5.6 No
Litigation. No action, suit, proceeding, claim or
dispute shall have been brought or otherwise have arisen at law, in equity, in
arbitration or by or before any Governmental Authority or arbitrator against the
Borrower or any of its Subsidiaries or any of their respective
assets.
5.7 Fees and
Expenses. The Collateral Agent shall have been paid a
fee of Twenty-Two Thousand Dollars ($22,000) in connection with this Amendment
Agreement, and all fees and expenses payable pursuant to Section 1.4 of the
Original Credit Agreement shall have been paid in full.
5.8
Closing Certificates;
Opinions.
(a) Officer's
Certificate. The Collateral Agent shall have received a
certificate from the chief executive officer or chief financial officer of the
Borrower in form and substance reasonably satisfactory to the Collateral Agent,
to the effect that, except as set forth in the Bring-Down Disclosure Schedule,
all representations and warranties of the Borrower contained in this Amendment
Agreement and the Original Credit Agreement are true, correct and complete; that
neither the Borrower nor any of its Subsidiaries is in violation of any of the
covenants contained in the Original Credit Agreement; that, before and after
giving effect to the transactions contemplated by this Amendment Agreement, no
Default or Event of Default has occurred and is continuing; that the Borrower
has satisfied each of the closing conditions to be satisfied hereby; that the
Borrower and its Subsidiaries have filed all required tax returns and owe no
delinquent taxes.
(b) Certificate of Secretary of
Borrower. he Collateral Agent shall have received a
certificate of the secretary or assistant secretary of the Borrower certifying
as to the incumbency and genuineness of the signature of each officer of the
Borrower executing any document in connection with the transactions contemplated
hereby and certifying that attached thereto is (i) a true and complete copy of
the certificate of incorporation of the Borrower, and all amendments thereto
including the Certificate of Designations of the Series A Preferred Stock,
certified by the appropriate Governmental Authority in its jurisdiction of
incorporation; (ii) a true and complete copy of the certificate of incorporation
of CIC Acquisition Corp., a Delaware corporation, and all amendments thereto,
certified by the appropriate Governmental Authority in its jurisdiction of
incorporation, and a true and complete copy of the articles of association of
Communication Intelligence Computer Corporation, Ltd., and all amendments
thereto, as on file as of the date
10
EXHIBIT
10.46
hereof in
the People's Republic of China and which is in full force and effect on the date
hereof; (iii) a true and complete copy of the bylaws of the Borrower as in
effect on the date of such certification; (iv) a true and complete copy of
resolutions duly adopted by the Board of Directors of the Borrower authorizing
the Loans made on the date hereof, the execution, delivery and performance of
this Amendment Agreement, the Registration Rights Agreement Amendment, the
replacement Notes and Initial Warrants issued pursuant to Section 5.1 hereof,
the Agent Warrants, and the other documents relating hereto or thereto; (v) a
true and complete copy of each of the Borrower's insurance policies, as in
effect on the date of such certification; and (vi) true, complete and correct
copies of certificates of insurance for each of the Borrower's insurance
policies, except for its directors and officers insurance policy, each showing
the Collateral Agent as an additional insured and/or loss
payee.
(c) Certificates of Good
Standing. The Collateral Agent shall have received
certificates as of a recent date of the good standing of the Borrower under the
laws of its jurisdiction of incorporation and the State of
California.
(d) Opinions of
Counsel. The Collateral Agent shall have received favorable
opinions of counsel to the Borrower addressed to the Collateral Agent and the
Lenders with respect to the Borrower covering such matters as requested by the
Collateral Agent or the Lenders, including, without limitation, this Amendment
Agreement, the Registration Rights Agreement Amendment, the replacement Notes
and Initial Warrants issued pursuant to Section 5.1 hereof,
the Agent Warrants, and the other documents relating hereto or thereto, the
Security Interest, due authorization and other corporate matters, local laws and
choice of laws issues and which are reasonably satisfactory in form and
substance to the Collateral Agent and the Lenders.
5.9 Collateral. The
Collateral Agent shall have received the results of Lien searches of all filings
made against each of the Borrower and its Subsidiaries under the Uniform
Commercial Code (and local tax and judgment filing offices) as in effect in any
jurisdiction in which any of its respective assets are located, indicating,
among other things, that the assets of the Borrower and its Subsidiaries and the
stock of the Borrower and its Subsidiaries are free and clear of any Liens,
except for Permitted Encumbrances.
5.10 Insurance. The
Collateral Agent shall have received certificates of insurance in the form
required under Section
2.2(b) of the Original Credit Agreement and the Security Documents and
otherwise in form and substance reasonably satisfactory to the Collateral
Agent.
5.11 Consents. The
Borrower shall have delivered to the Collateral Agent all necessary approvals,
authorizations and consents, if any, of all Persons, Governmental Authorities,
and courts having jurisdiction with respect to the execution and delivery of
this Amendment Agreement, the Registration Rights Agreement Amendment, the
replacement Notes and Initial Warrants issued pursuant to Section 5.1 hereof,
the Agent Warrants,
11
EXHIBIT
10.46
and the
other documents relating hereto or thereto, the granting of the Security
Interest and all such approvals shall be in form and substance satisfactory to
the Collateral Agent.
5.12
No Injunction,
Etc. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any
Governmental Authority or arbitrator challenging or seeking to enjoin, restrain
or prohibit, or to obtain substantial damages in respect of, or which is related
to or arises out of this Amendment Agreement, the Registration Rights Agreement
Amendment, the replacement Notes and Initial Warrants issued pursuant to Section 5.1 hereof,
the Agent Warrants, and the other documents relating hereto or thereto, or the
consummation of the transactions contemplated hereby or thereby, or which, as
determined by the Lenders in their reasonable discretion, would make it
inadvisable to consummate such transactions. No order, decree, temporary
restraining order, preliminary or permanent injunction or other order issued by
any Governmental Authority or arbitrator preventing such transactions shall be
in effect. The making of the Loans on the date hereof and the consummation of
such transactions shall not be prohibited by any Applicable Law or other legal
requirement and shall not subject any Lender to any penalty or, in its
reasonable judgment, any other liability or onerous condition under any
Applicable Law.
5.13 Proceedings and
Documents. All opinions, certificates and other
instruments and all proceedings in connection with the transactions contemplated
by this Amendment Agreement, the Registration Rights Agreement Amendment, the
replacement Notes and Initial Warrants issued pursuant to Section 5.1 hereof,
the Agent Warrants, and the other documents relating hereto or thereto shall be
reasonably satisfactory in form and substance to the Collateral Agent. The
Collateral Agent shall have received copies of all other instruments and other
evidence as the Lenders may reasonably request, in form and substance reasonably
satisfactory to the Collateral Agent, with respect to the transactions
contemplated by this Amendment Agreement, the Registration Rights Agreement
Amendment, the replacement Notes and Initial Warrants issued pursuant to Section 5.1 hereof,
the Agent Warrants, and the other documents relating hereto or thereto and the
taking of all actions in connection herewith or therewith. The Collateral Agent
shall have received such other agreements (including, without limitation,
deposit account control agreements), instruments, approvals, opinions,
certificates and other documents as the Collateral Agent may reasonably request
in connection with such transactions and actions, all in form and substance
satisfactory to the Collateral Agent, in its sole discretion.
SECTION
6. EFFECTIVENESS
OF AMENDMENTS
The
amendments to the Original Credit Agreement contained in this Amendment
Agreement shall become effective on and as of the date of the satisfaction of
the conditions precedent set forth in Section 5 hereof.
From and after such date, each reference in the Original Credit Agreement
(including the schedules and exhibits thereto) to the “Agreement”, or any like
expression referring to the Original Credit Agreement, shall be deemed to refer
to the Original Credit Agreement as amended by this Amendment Agreement. The
Original Credit Agreement, other than as amended hereby, shall remain unchanged
and in full force and effect.
12
EXHIBIT
10.46
SECTION
7. MISCELLANEOUS
7.1 Severability. The
invalidity, illegality, or unenforceability in any jurisdiction of any provision
of this Amendment Agreement shall not affect or impair the remaining provisions
in this Amendment Agreement or any such invalid, unenforceable or illegal
provision in any jurisdiction in which it is not invalid, unenforceable or
illegal.
7.2 Headings. Sections
and Section headings in this Amendment Agreement are included herein for
convenience of reference only and shall not constitute a part of this Amendment
Agreement for any other purposes or be given substantive effect.
7.3 Applicable
Law. THIS AMENDMENT AGREEMENT SHALL BE GOVERNED BY AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THAT REQUIRE OR PERMIT
APPLICATION OF THE LAWS OF ANY OTHER STATE OR JURISDICTION (OTHER THAN SECTION
5-1401 AND SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).
7.4 Consent to Jurisdiction and
Service of Process.
(a) THE BORROWER HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL COURT OR
STATE COURT IN THE STATE OF NEW YORK, COUNTY OF NEW YORK, HAVING SUBJECT MATTER
JURISDICTION OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AMENDMENT AGREEMENT. THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT,
PERSONAL JURISDICTION OF ANY SUCH COURT OR THAT SUCH COURT IS AN INCONVENIENT
FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE LENDERS TO BRING PROCEEDINGS
AGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.
(b) THE
BORROWER HEREBY AGREES THAT SERVICE OF THE SUMMONS AND COMPLAINT AND ALL OTHER
PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE
EFFECTED BY MAILING BY REGISTERED MAIL, RETURN RECEIPT REQUESTED, A COPY OF SUCH
PROCESS TO THE BORROWER AT THE ADDRESS TO WHICH NOTICES TO THE BORROWER ARE THEN
TO BE SENT PURSUANT TO SECTION 9.2 OF THE
ORIGINAL CREDIT AGREEMENT AND THAT PERSONAL SERVICE OF PROCESS SHALL NOT BE
REQUIRED. NOTHING HEREIN SHALL BE CONSTRUED TO PROHIBIT SERVICE OF PROCESS BY
ANY OTHER METHOD PERMITTED BY LAW.
13
EXHIBIT
10.46
7.5 Waiver of Jury
Trial. THE LENDERS, THE BORROWER AND THE COLLATERAL AGENT
HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AMENDMENT AGREEMENT OR ANY DEALINGS
BETWEEN OR AMONG THEM RELATING TO THE SUBJECT MATTER OF THIS AMENDMENT AGREEMENT
AND ANY RELATIONSHIP THAT IS BEING ESTABLISHED AMONG ANY OF THEM. THE SCOPE OF
THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY
BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION,
INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THE LENDERS, THE BORROWER
AND THE COLLATERAL AGENT ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT
TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE
WAIVER IN ENTERING INTO THIS AMENDMENT AGREEMENT AND THAT EACH WILL CONTINUE TO
RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. THE LENDERS, THE BORROWER
AND THE COLLATERAL AGENT FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED
THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS
WAIVER IS IRREVOCABLE, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THE LOAN DOCUMENTS, OR TO ANY OTHER
DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS. IN THE EVENT OF LITIGATION, THIS
AMENDMENT AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
7.6 Counterparts. This
Amendment Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all of which
counterparts together shall constitute but one and the same
instrument.
SECTION
8. ACCESSION
OF ADDITIONAL LENDERS TO ORIGINAL CREDIT AGREEMENT AS AMENDED BY THIS AMENDMENT
AGREEMENT
By acknowledging and agreeing to this
Amendment Agreement, which acknowledgement and agreement shall be evidenced by
the signatures of the Additional Lenders below, the Additional Lenders agree to
accede to the Original Credit Agreement, as amended by this Amendment Agreement,
and to be bound by all terms and conditions set forth in the Original Credit
Agreement, as amended by this Amendment Agreement.
[Signatures
follow.]
14
EXHIBIT
10.46
IN
WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to be
duly executed by their respective officers as of the day and year first above
written.
|
BORROWER:
|
By:
/s/ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇
Title: Chief
Financial Officer
|
|
MAJORITY
LENDERS:
|
PHOENIX
VENTURE FUND LLC
By:
SG Phoenix Ventures LLC,
its
Managing Member
By: /s/ ▇▇▇▇▇▇
▇▇▇▇▇
Name: ▇▇▇▇▇▇
▇▇▇▇▇
Title: Member
|
|
/s/
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
|
|
|
COLLATERAL
AGENT:
|
SG
PHOENIX LLC
By:
/s/ ▇▇▇▇▇▇
▇▇▇▇▇
Name: ▇▇▇▇▇▇
▇▇▇▇▇
Title: Member
|
EXHIBIT
10.46
ACKNOWLEDGED
AND AGREED TO:
|
ADDITIONAL
LENDERS:
|
KENDU
PARTNERS COMPANY
By:
/s/ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Name:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: General
Partner
|
|
MDNH
PARTNERS L.P.
By:
/s/ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Name:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: General
Partner
|
EXHIBIT
10.46
Annex
A
BRING-DOWN DISCLOSURE
SCHEDULE
[To be
provided by the Borrower.]
EXHIBIT
10.46
Schedule
1.1(a)
LOANS
I. Loans
made on Closing Date (total: $3,637,500)
|
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
|
$450,000,
plus $28,125 in interest due as of May 31, 2008
|
|
▇▇▇▇▇▇
▇▇▇▇▇▇▇
|
$150,000,
plus $9,375 in interest due as of May 31, 2008
|
|
Phoenix
Venture Fund LLC
|
$3,000,000
|
II. Loans
made on Additional Closing Date (total: $1,100,000)
|
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
|
$100,000
|
|
Phoenix
Venture Fund LLC
|
$850,000
|
|
Kendu
Partners Company
|
$100,000
|
|
MDNH
Partners L.P.
|
$50,000
|
EXHIBIT 10.46
Schedule
4(b)
INDEBTEDNESS FOR BORROWED
MONEY AND CONTINGENT OBLIGATIONS
|
Principal
|
Interest
|
|
|
Basso
Multi-Strategy Holding Fund, Ltd.
|
$ 35,000
|
$ 1,371
|
|
Phoenix
Ventures Fund LLC
|
$
3,059,178
|
$
40,110
|
|
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
|
$ 487,556
|
$ 6,392
|
|
▇▇▇
▇▇▇▇▇▇▇
|
$ 162,519
|
$ 2,131
|
EXHIBIT 10.46
Schedule
4(c)
DOCUMENTS PROHIBITING GRANT
OF SECURITY INTEREST
[To be
provided by the Borrower.]
EXHIBIT 10.46
Exhibit
1.1(a)
FORM OF
NOTE
EXHIBIT 10.46
Exhibit
1.2(b)-1
FORM OF ADDITIONAL
NOTE
EXHIBIT 10.46
Exhibit
1.2(b)-2
FORM OF ADDITIONAL
WARRANT
EXHIBIT 10.46
Exhibit
1.9
FORM OF
WARRANT