CONSULTING AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into effective as of the
1st day of January, 1997 by and between fonix corporation, a Delaware
corporation ("fonix"), and Xxxxxx Xxx ("Consultant"). Hereinafter either party
may be referred to as "Party" and collectively as "Parties".
RECITALS:
WHEREAS, fonix is a development stage company, of which the primary
business activity is presently research and development associated with the
commercial exploitation of certain proprietary computer voice recognition
technology and the development and manufacture of a prototype device employing
such technology; and
WHEREAS, fonix desires to develop licensing or strategic partnership
relationships with technology companies in Korea; and
WHEREAS, Consultant desires to introduce fonix to technology companies in
Korea.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties agree as follows:
ARTICLE I
CONSULTING
1.1 Description. fonix hereby retains Consultant to perform, and
Consultant hereby agrees to perform, consulting services to fonix as herein
provided.
1.2 Services to be Performed . Consultant will (a) introduce fonix to
Korean technology companies and (b) assist fonix in obtaining executed
confidentiality agreements in a form satisfactory to fonix from such companies.
1.3. Independent Contractor. Consultant acknowledges that Consultant's
retention does not confer upon Consultant any ownership interest in or personal
claim upon any license, right, product of fonix , nor does this Agreement confer
any employment right on Consultant. Consultant agrees that in performing its
duties under this Agreement, it shall be operating as an independent contractor
as that term is defined in Treasury Department regulations and Internal Revenue
Service rulings and interpretations. Nothing contained herein shall in any way
constitute any association, partnership, employer/employee relationship, or
joint venture between the parties hereto, or be construed to evidence the
intention of the parties to establish any such relationship. Neither party
shall have any right, power or authority to make any representation nor to
assume or create any obligation, whether express or implied, on behalf of the
other, or to bind the other party in any manner whatsoever. Both of the parties
agree, respectively, that they shall not hold themselves out in any manner that
would be contrary to the terms of this Paragraph 1.3
1.4 Confidentiality and Non-disclosure. Consultant acknowledges that in
the performance of services under this Agreement, he may acquire confidential
information concerning fonix technology, know-how, product plans and
specifications, records, business concepts, financial matters and other
information which are valuable, special and unique assets of fonix (herein
"Information"). Consultant will not, during or after the term of this
Agreement, disclose any Information, no matter how acquired, to any person or
entity for any reason or purpose outside of fonix's usual business activities
as defined hereunder, and will not in any manner directly or indirectly aid or
be a party to any acts, the effects of which would tend to divert, diminish or
prejudice the technology, good will, business or business opportunities of
fonix. In the event of a threatened breach by Consultant of the provisions of
this paragraph, fonix shall be entitled to an injunction restraining Consultant
from disclosing any such information or from rendering any services to any
person or entity to whom any such information has been disclosed or threatened
to be disclosed. Nothing herein shall be construed as prohibiting fonix from
pursuing any other remedies available to fonix for actual breach of the
provision of this paragraph, including the recovery of damages from Consultant.
1.4.1 In exchange for fonix executing this Agreement and agreeing to the
retention of Consultant's Services by fonix, Consultant does hereby enter into
this Covenant of Confidentiality and acknowledges the adequacy of the
consideration to support this Covenant.
1.4.2 The covenants made by Consultant under Section 1.4 shall survive
the expiration or termination of this Agreement
ARTICLE II
TERM OF CONTRACT
2.1 Term. The term of this Agreement shall be from the effective date
hereof until May 31, 1997, except as provided in Article III.
2.2 Termination for Cause. Consultant acknowledges that his retainer
under this Agreement may be terminated for Cause as set forth herein. For the
purposes of this paragraph,
"Cause" shall mean any of the following:
(a)Fraud;
(b)It is determined that a violation of law has taken place or
is about to take place in connection with this Agreement.
(c)Violation of the confidentiality provisions of this Agreement.
ARTICLE III
COMPENSATION
3.1 Compensation. Consultant by executing this Agreement has earned Five
Thousand (5000) shares of fonix common stock.
3.2. May 31 Letter of Intent. If (a) there is a letter of intent signed
on or before May 31, 1997 between fonix and a Korean technology company which
has been introduced to fonix by Consultant and (b) a definitive agreement
arising from such letter of intent between fonix and a Korean technology
company is entered into and closed no later than 180 days from May 31, 1997,
Consultant will receive warrants which will allow Consultant to purchase two
hundred fifty thousand (250,000) shares of fonix common stock at $7.49 per
share which price is eighty-five percent (85%) of the closing price for shares
of fonix common stock on January 14th, 1997.
3.3. Letter of Intent after May 31. If (a) there is a letter of intent
signed after May 31, 1997 between fonix and a Korean technology company which
has been introduced to fonix by Consultant and (b) a definitive agreement
arising from such letter of intent between fonix and a Korean technology company
is entered into and closed within one year of May 31, 1997, Consultant will
receive warrants which will allow Consultant to purchase 100,000 shares of fonix
common stock at $7.49 per share which price is eighty-five percent (85%) of the
closing price for shares of fonix common stock on January 14th, 1997.
3.4 Failure to Obtain Letter of Intent. If Consultant fails to achieve
the events set forth in section 3.2 or 3.3 above, Consultant will receive no
compensation other than the five thousand ( 5000) shares of fonix common stock
recited in section 3.1 above.
3.5. Registration of Stock. fonix will register as soon as reasonably
possible, any shares of its common stock received by Consultant under this
Agreement pursuant to an S-8 Registration. Consultant represents and warrants
that he has received the most recent annual report (Form 10-KSB) and quarterly
report (Form 10-QSB) for fonix which are delivered with this Agreement. If the
S-8 Registration is successfully challenged by the Securities and Exchange
Commission, making such registration invalid, fonix will, as soon a practicable,
provide registration for Consultant's shares such that Consultant's shares will
be free trading. Warrants will be valid for two years.
3.6 Expenses. Consultant shall be responsible for the payment of any
expenses incurred by Consultant in the providing of Services hereunder.
3.7 Receipt of Stock. If at the time that Consultant desires to receive
shares of stock subject to the warrants referred to in sections 3.2 or 3.3
above, fonix is using the services of a broker to assist its employees in the
exercise of stock options and the sale of stock subject to such options, fonix
will request such broker to assist Consultant and extend the same services to
Consultant in the purchase and sale of stock which Consultant receives under
this Agreement.
ARTICLE IV
MISCELLANEOUS PROVISIONS
4.1 Entire Agreement. This Agreement constitutes the entire agreement
between the parties and supersedes any prior written or oral agreements
concerning the subject matter contained herein.
4.2 Amendment. This Agreement may be amended only by the written consent
of the parties.
4.3 Waiver. No waiver of any breach or default of this Agreement by
either party hereto shall be considered to be a waiver of any other breach or
default of this Agreement.
4.4 Notices. Any notices pertaining to this Agreement shall be in
writing and shall be transmitted by personal hand delivery or fax to an officer
or director of fonix or to Consultant, or through the facilities of the United
States Post Office, certified mail, return receipt requested. The addresses set
forth below for the respective parties shall be the places where notices shall
be sent, unless written notice of a change of address is given.
fonix:
fonix corporation
Attention Xxxxxxx X. Xxxxxxx
Vice President - Legal
60 East South Temple
0000 Xxxxx Xxxx Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Consultant:
Xxxxxx Xxx
000 Xxxx Xxx Xxxxxx # 00X
Xxx Xxxx, XX 00000
Notices given by mail shall be deemed to be delivered on the day such
notice is deposited in the United States mail, postage prepaid.
4.5 Cost of Default. In addition to any other rights or damages
contained herein, in the event either party defaults in the performance of any
term or condition hereunder, the defaulting party shall pay all expenses and
costs incurred by the other party in enforcing the terms hereof, including, but
not limited to, costs, reasonable attorney's fees, expert witness fees and/or
deposition costs, whether incurred through legal action or otherwise and whether
incurred before or after judgment.
4.6 Assignment. The Consultant's rights and duties pursuant to this
Agreement are not assignable without the express written agreement of fonix.
fonix may assign any of its rights or obligations hereunder.
4.7 Consultant not Exclusive Consultant of fonix. Nothing herein shall
restrict or otherwise limit the right of fonix to engage or retain other
consultants, either as employees or as independent contractors.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
fonix:
fonix corporation
By: /s/ Xxxxx X. Xxxxxx
-----------------------------
Xxxxx X. Xxxxxx
Title: Executive Vice President
CONSULTANT:
Xxxxxx Xxx
/s/ Xxxxxx Xxx
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February 25, 0000
Xxx Xxxx, Xxx Xxxx
