Libra Investments, Inc. Main: (310) 312-5600
Fax: (310) 312-5666
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11766 Wilshire Boulevard, Suite 870, Los Angeles, CA 90025
EXHIBIT 1
May 29, 1996
Mr. James Dao
Chairman and Chief Executive Officer
and
Mr. Philip S. Sassower
Chairman, Finance Committee
Communication Intelligence Corporation
275 Shoreline Drive
Redwood Shores, CA 94065
Gentlemen:
Pursuant to the engagement letter dated May 28, 1996 between
Communication Intelligence Corporation (the "Company") and Libra Investments,
Inc. ("Libra"), this will confirm our understanding that Libra will place as
placement agent for the Company with no more than 10 accredited investors (the
"Buyers"), and the Company will sell, not less than 550,000 shares and up to
600,000 shares of Common Stock at a price of $4.50 per share (the "Placement"),
provided that the purchase and sale closes no later than the earlier of (i) the
date five (5) business days after the Company's Common Stock is approved for
listing, subject to notification of the consummation of the Placement, on the
NASDAQ/Small Cap market and (ii) July 31, 1996. Libra and the Company agree to
use their reasonable best efforts to cause such closing to occur by such date.
The purchase price of $4.50 per share relates to the market price of the Common
Stock on May 28, 1996 when we began discussions with Buyers.
As we discussed, the Buyers will receive registration rights from the
Company to effect the public resale of these shares, and the Company agrees to
provide a "make-whole" right to the Buyers so that in the event the average
closing public trading price of the Common Stock for the twenty (20) business
days immediately preceding the date the resale registration statement is
declared effective (the "Average Price") is less than the purchase price paid by
the Buyers, the Company will issue additional shares of Common Stock without
further payment by the Buyers as follows (assumes the Placement consists of
550,000 shares at $4.50 per share): Additional shares to be issued shall total
(a) $2,475,000 divided by the Average Price less (b) 550,000. The purchases and
sales contemplated hereby are subject to execution and delivery of mutually
acceptable documentation between the Company and each Buyer. Subscription
documents are expected to be executed the week of June 3, 1996. Funding will be
contingent upon the Common Stock being approved for listing, subject to
notification of the consummation of the Placement, on the NASDAQ/Small Cap
market.
Libra Investments, Inc.
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Mr. James Dao
Mr. Philip S. Sassower
May 29, 1996
Page Two
The Company acknowledges that Libra may confirm the foregoing
transaction with the Buyers on the terms set forth herein; provided that such
confirmations shall not diminish the obligations of Libra hereunder.
This letter may be executed in counterparts, each of which shall be an
original, but all of which shall constitute one instrument.
Please confirm the foregoing by signing this letter in the place
indicated below and returning it to me by facsimile.
Very truly yours,
LIBRA INVESTMENTS, INC.
By:/s/ Jess M. Ravich, Chairman
----------------------------
Jess M. Ravich, Chairman
Confirm and agreed:
COMMUNICATION INTELLIGENCE CORPORATION
By: /s/ James Dao
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James Dao, Chairman and Chief Executive Officer
By:
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Philip S. Sassower, Chairman of the Finance Committee
Libra Investments, Inc. Main: (310) 312-5600
Fax: (310) 312-5666
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11766 Wilshire Boulevard, Suite 870, Los Angeles, CA 90025
May 28, 1995
Strictly Confidential
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Communication Intelligence Corporation
275 Shoreline Drive
Redwood Shores, CA 94065
Gentlemen:
This letter will confirm our understanding that Communications
Intelligence Corporation, a Delaware corporation (the "Issuer"), has engaged
Libra Investments, Inc. (the "Advisor") to act on a non-exclusive basis as the
Issuer's placement agent in connection with the issuance and sale by the Issuer
of Common Stock (the "Securities") in a private placement to raise aggregate
gross proceeds of up to $2,500,000 (the "Private Placement").
Section 1. Services to be Rendered. In connection with this
-----------------------
engagement, the Advisor shall act as placement agent for the Issuer in
connection with the Private Placement, which duties will include:
(a) developing a list of potential purchasers of the
Securities;
(b) consulting with the Issuer from time to time as to
such potential purchasers;
(c) if requested, assisting the Issuer in the preparation
and distribution of appropriate offering materials in consultation
with the Issuer's counsel; and
(d) attempting to arrange the Private Placement of the
Securities at a price and on terms acceptable to the Issuer, it being
understood and agreed that the aggregate offering price for the
Securities is currently expected to be approximately $2,500,000.
Libra Investments, Inc.
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Nothing contained herein constitutes a commitment on the part of the Advisor to
purchase any of the Securities, a commitment on the part of the Issuer to sell
any such Securities or an assurance that the Private Placement will be
completed, and the Advisor shall not have the power or authority to bind the
Issuer to any sale of the Securities without the Issuer's written consent. The
Advisor acknowledges that it is retained on a non-exclusive basis and that the
Issuer may retain other financial advisors and placement agents in connection
with the Private Placement; provided, that any such engagement shall not limit
the Issuer's obligations to the Advisor hereunder.
Section 2. Compensation. In consideration of the Advisor's
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agreements hereunder, the Advisor shall be paid an advisory fee of 5.0% of the
aggregate gross proceeds from the Securities placed by the Advisor and sold by
the Issuer, payable in immediately available funds at the closing of the Private
Placement. In addition, as further consideration for Advisor's agreements
hereunder, the Issuer shall issue to the Advisor warrants to purchase that
number of shares of the Issuer's Common Stock equal to 5.0% of the number of
shares of Common Stock placed by the Advisor and sold by the Issuer in the
Private Placement (the "Warrants"). The Warrants shall have an exercise price
per share equal to the price per share paid by the purchasers of the Securities
at the closing and a five year term and shall be in a form reasonably acceptable
to both the Issuer and the Advisor. In addition, the Advisor shall be granted
certain demand and "piggyback" registration rights with respect to the Common
Stock issuable upon exercise of the Warrants on terms mutually acceptable to the
Issuer and the Advisor pursuant to a registration rights agreement in form
reasonably acceptable to both the Issuer and the Advisor.
No fee payable to any other financial advisor either by the
Issuer or any other entity shall reduce or otherwise affect the fees payable
hereunder to the Advisor. If the Advisor enters into any agreement or
understanding with any broker, finder or other similar person to assist it in
placing the Securities hereunder, any fee or other compensation due such person
shall be payable by the Advisor.
Section 3. The Advisor's Expenses. In addition to the
----------------------
compensation payable pursuant to Section 2 of this Agreement, the Issuer shall
reimburse the Advisor for all reasonable costs and expenses (including without
limitation reasonable fees and disbursements of its legal counsel) incurred in
connection with this engagement; provided the maximum amount of costs and
expenses reimbursable by the Issuer hereunder shall not exceed $6,250; and
provided further, that the foregoing limitation shall not apply with respect to
cost and expenses payable pursuant to Section 5 hereof.
Section 4. Term of Engagement. Any party to this Agreement may
------------------
terminate this Agreement at any time after July 31, 1996, with or without cause,
by giving 10 days'
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Libra Investments, Inc.
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written notice to the other parties; provided, however, that Section 3, the
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second paragraph of this Section 4 and Sections 5 and 6 hereof shall survive
termination of this Agreement.
The Advisor shall be entitled to receive its full compensation
under Section 2 hereof if at any time prior to the date twelve months after the
termination of this Agreement a transaction is agreed to or consummated by the
Issuer involving the sale or issuance of securities to a person or entity
contacted by the Advisor with respect to the Private Placement (except to the
extent previously contacted by or on behalf of the Issuer) and identified in
writing to the Issuer promptly after termination of this Agreement.
Section 5. Indemnification. The Company agrees to the
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indemnification, contribution and expense reimbursement obligations set forth in
Exhibit A hereto, the provisions of which are incorporated herein in their
entirety.
Section 6. Cooperation. The issuer shall furnish the Advisor
-----------
with all information, data or documents that the Advisor shall reasonably deem
appropriate in connection with its activities hereunder and shall provide the
Advisor access to the Issuer's officers, employees and professional advisors at
such times and dates as the Advisor may reasonably request. Issuer represents
and warrants that all such information, data and documents shall be complete and
correct in all material respects and shall not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein not misleading. The Issuer agrees to advise the Advisor in
writing if any such information, data or documents becomes inaccurate,
misleading or incomplete in any respect during the term of this engagement.
Unless so advised, the Advisor shall be entitled to rely on the accuracy and
completeness of such information, data and documents, and the Advisor shall not
be required to make an independent verification thereof. If requested by the
Advisor, the Issuer shall provide to the Advisor a certificate signed by two of
its executive officers as to the accuracy of the second sentence of this
paragraph at each closing of a sale of the Securities.
It is further understood that the Issuer shall involve the
Advisor in all discussions between the Issuer and potential purchasers located
by the Advisor and shall make available to the Advisor all information regarding
such potential purchasers that it shall receive from any source whatsoever. The
Issuer recognizes and confirms that the Advisor in acting pursuant to this
authorization will be using information provided by the Issuer and that the
Advisor does not assume responsibility for the accuracy or completeness of any
information so provided by the Issuer.
Section 7. Outside Advisors and Conflicts. The Issuer
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acknowledges that the Advisor and its affiliates may have and may continue to
have investment banking, broker-dealer and other relationships with parties
other than the Issuer pursuant to which the Advisor
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Libra Investments, Inc.
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may acquire information of interest to the Issuer. The Advisor shall have no
obligation to disclose such information to the Issuer (except to the extent such
information relates directly to the Issuer or the Securities), or to use such
information in connection with its efforts hereunder.
The Issuer acknowledges that certain employees of the Advisor own
shares of Common Stock of the Issuer, either directly or indirectly through
indirect ownership of interests in CIC Standby Ventures, L.P., a shareholder of
the Issuer and through LB-CIC Investors, L.P.
Section 8. Notices. All notices and other communications
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provided for in this Agreement shall be made by first class mail or telecopier.
All notices to the Issuer shall be delivered at the address shown on the first
page of this agreement or to telecopier number (415) 802-7777. All notices to
the Advisor shall be delivered as follows:
Libra Investments, Inc.
11766 Wilshire Boulevard
Suite 870
Los Angeles, CA 90025
Attn: Mr. Jess M. Ravich
Telecopier: (310) 312-5640
Either party hereto may amend such addresses or telecopier
information by written notice to the other party delivered as provided in this
Section 8.
Section 9. Third Party Beneficiaries. This Agreement is
-------------------------
intended solely for the benefit of the parties hereto and, with the exception of
the rights and benefits conferred upon the Indemnified Parties by Section 5 of
this Agreement, shall not be deemed or interpreted to confer any rights upon any
third parties.
Section 10. Governing Law. This Agreement shall be governed and
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construed in accordance with the laws of the State of California without giving
effect to the choice of law or conflict of law principles thereof.
Section 11. Counterparts. This Agreement may be executed in any
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number of counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
Agreement.
Section 12. Complete Agreement; Amendments; Assignment. This
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Agreement sets forth the entire understanding of the parties relating to the
subject matter hereof and supersedes and cancels any prior communications,
understandings and agreements between the
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Libra Investments, Inc.
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parties. This Agreement may not be amended or modified except in writing. This
Agreement shall apply to, inure to the benefit of and be binding upon and
enforceable against the Advisor and its successors and assigns; provided,
--------
however, that the Advisor shall not assign this Agreement to any party that is
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not an affiliate of the Advisor.
If the foregoing terms meet with your approval, please indicate
your acceptance by signing and returning the attached copy of this letter to us.
Very truly yours,
LIBRA INVESTMENTS, INC.
By:/s/ Jess M. Ravich
------------------------
Jess M. Ravich
Chairman
AGREED TO AND ACCEPTED:
COMMUNICATIONS INTELLIGENCE
CORPORATION
By:/s/ James Dao
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Name:
Title:
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EXHIBIT A
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The Issuer agrees to indemnify and hold harmless Libra
Investments, Inc. ("Libra"), its affiliates, and each person, if any, who
controls Libra, or any of its affiliates, within the meaning of either the
Securities Act of 1933, as amended (the "Act") or the Securities Exchange Act of
1934, as amended (a "Controlling Person"), and the respective agents, employees,
officers and directors of Libra, its affiliates, and any such Controlling Person
(each an "Indemnified Party" and collectively, the "Indemnified Parties" or the
"Libra Group"), from and against any and all losses, claims, damages,
liabilities and expenses (including, without limitation and as incurred,
reasonable costs of investigating, preparing or defending any such claim or
action, whether or not an Indemnified Party is a party thereto, provided that
the Issuer shall not be obligated to advance such costs to any Indemnified Party
unless it has received from such Indemnified Party an undertaking to repay to
the Issuer the costs so advanced if it should be determined by final judgment of
a court of competent jurisdiction that such Indemnified Person was not entitled
to indemnification hereunder with respect to such costs) arising out of, or in
connection with any activities contemplated by the letter to which this Exhibit
A is attached or any other services rendered in connection therewith, including,
but not limited to, losses, claims, damages, liabilities or expenses arising out
of or based upon (i) any untrue statement or any alleged untrue statement of a
material fact or any omission or any alleged omission to state a material fact
in any of the disclosure or offering or confidential information documents,
including any documents publicly filed by the Issuer with the Securities and
Exchange Commission and delivered to purchasers of the Issuer's securities in
connection with the transaction contemplated by the letter to which this Exhibit
A is attached (the "Disclosure Documents") pertaining to any of the transactions
or proposed transactions contemplated by such letter (collectively, the
"Transaction"), or (ii) any engagement or retention by the Issuer of any other
person, corporation or entity that has acted or is acting as a finder, agent,
broker, dealer, consultant or advisor to or on behalf of the Issuer. The Issuer
will not, however, be responsible for any claims, liabilities, losses, damages
or expenses that are determined by final judgment of a court of competent
jurisdiction to result from such Indemnified Party's gross negligence, willful
misconduct or bad faith or from information provided by Libra to the Issuer for
inclusion in the Disclosure Documents. The Issuer also agrees that (i) no
Indemnified Party shall have liability to the Issuer or any other person in
connection with the services rendered pursuant to the agreement except for
claims, liabilities, damages, losses or expenses, including reasonable legal
fees, incurred by the Issuer that are determined by final judgment of a court
of competent jurisdiction, not subject to appeal, to have resulted from such
Indemnified Person's gross negligence, willful misconduct or had faith or from
information provided by Libra to the Issuer for inclusion in the Disclosure
Documents and (ii) in no event shall the Indemnified Parties be liable, in the
aggregate, to the Issuer for an
amount greater than the fee actually received by Libra pursuant to the letter to
which this Exhibit A is attached.
In case any action shall be brought against an Indemnified Party
with respect to which indemnity may be sought against the Issuer under this
agreement, Libra or another Indemnified Party shall promptly notify the Issuer
in writing and the Issuer shall have the right to assume the defense thereof,
including the employment of counsel reasonably satisfactory to Libra and payment
of all reasonable fees and expenses; provided, however, in the event the Issuer
assumed the defense of any such action, an Indemnified Person may,
notwithstanding such assumption by the Issuer of such defense, retain separate
counsel the cost of which shall be borne by Issuer if (i) the Issuer has failed
to provide counsel reasonably satisfactory to such Indemnified Person in a
timely manner, (ii) counsel which will be provided by the Issuer reasonably
determines that its representation of such Indemnified Person would present it
with a conflict of interest or (iii) the Indemnified Person based upon an
opinion of reputable counsel reasonably determines that there may be legal
defenses to it which are materially different from or in addition to those
available to the Issuer. The failure to so notify the Issuer on a prompt basis
shall not affect any obligations the Issuer may have to the Indemnified Parties
under this letter agreement or otherwise unless the Issuer is materially
adversely affected by such failure.
The Issuer shall not be liable for any settlement of any such
action effected without the written consent of the Issuer (which shall not be
unreasonably withheld) and the Issuer agrees to indemnify and hold harmless the
Indemnified Parties from and against any loss or liability by reason of
settlement of any action effected with the consent of the Issuer. In addition,
the Issuer will not, without the prior written consent of Libra, settle or
compromise or consent to the entry of any judgment in or otherwise seek to
terminate any pending or threatened action, claim, suit or proceeding in respect
to which indemnification or contribution may be sought hereunder (whether or not
Libra is a party thereto) unless such settlement, compromise, consent or
termination includes an express unconditional release of Libra and the other
Indemnified Parties, satisfactory in form and substance to Libra, from all
liability arising out of such action, claim, suit or proceeding.
If for any reason the foregoing indemnity is unavailable to an
Indemnified Party or insufficient to hold an Indemnified Party harmless, then in
lieu of indemnifying such Indemnified Party, the Issuer shall contribute to the
amount paid or payable by such Indemnified Party as a result of such claims,
liabilities, losses, damages, or expenses (i) in such proportion as is
appropriate to reflect the relative benefits received by the Issuer on the one
hand and by Libra on the other from the Transaction or (ii) if the allocation
provided by clause (i) is not permitted under applicable law, in such proportion
as is appropriate to reflect not only the relative benefits received by the
Issuer on the one hand and Libra on the other, but also the
relative fault of the Issuer and Libra as well as any other relevant equitable
considerations. Notwithstanding the provisions of this Exhibit A, the aggregate
contribution of all Indemnified Parties shall not exceed the amount of fees
actually received by Libra pursuant to the letter to which this Exhibit A is
attached. It is hereby further agreed that the relative benefits to the Issuer
on the one hand and Libra on the other with respect to any Transaction shall be
deemed to be in the same proportion as (i) the total value of the Transaction
bears to (ii) the fees paid to Libra with respect to such Transaction. The
relative fault of the Issuer on the one hand and Libra on the other with respect
to the Transaction shall be determined by reference to, among other things,
whether any untrue or alleged untrue statement of material fact or the omission
or alleged omission to state a material fact related to information supplied by
the Issuer or by Libra and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act), or of gross negligence, willful misconduct or bad faith shall
be entitled to contribution from any person who was not guilty of such
fraudulent representation, gross negligence, willful misconduct or bad faith.
The indemnity, contribution and expense reimbursement obligations
set forth herein (i) shall be in addition to any equitable remedies the
Indemnified Parties may have at common law or otherwise, (ii) shall survive the
conclusion of Libra's services in connection with the Transaction and (iii)
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of Libra or any other Indemnified Party.