EXHIBIT 10.46
EXECUTION VERSION
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
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 275 Shoreline Drive, Suite 500, Redwood Shores, California 94065
(together with its successors, the “ Borrower
”), PHOENIX VENTURE FUND LLC, a Delaware limited liability
company having an address at 110 East 59th Street, Suite 1901, New
York, New York 10022 (“ Phoenix ”), MICHAEL
ENGMANN, an individual having an address at 38 San Fernando Way,
San Francisco, California 94127 (“ Engmann ”),
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, Engmann and Ronald
Goodman, an individual having an address at 31 Tierra Verde Court,
Walnut Creek, California 94598 (“ Goodman ”, and
Phoenix, Engmann and Goodman, 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, Engmann 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, Engmann 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 Engmann 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.
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 Engmann, 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
Engmann.
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.”
““ 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”.
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
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
Goodman, as follows:
“If to Kendu Partners
Company:
180 Montgomery St., 3
rd Floor
for account #756-00-7043 for the
account of Kendu Partners Company
If to MDNH Partners L.P.:
180 Montgomery St., 3
rd Floor
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
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
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 representat
