NONEXCLUSIVE INDEPENDENT CONSULTING AGREEMENT
THIS NONEXCLUSIVE CONSULTING AGREEMENT ("Agreement") is made
and entered into effective September 1, 2003, by and between FONIX CORPORATION,
a Delaware corporation ("Fonix"), and XXXX XXX XXXX ("Consultant"). Hereinafter
either party may be referred to as "Party" and collectively as "Parties."
RECITALS:
WHEREAS, Fonix is a software company which develops, markets,
sells and licenses certain proprietary human-computer interface solutions,
solution components and products. Fonix desires assistance in communicating
about its products and growth opportunities with the public;
WHEREAS, Consultant (i) is an expert in communicating with
stockholders and is willing to use this expertise to assist Fonix, (ii) has
experience in writing press releases and (iii) desires to assist Fonix in
developing a strategy to share its growth plans with all of Fonix's
stakeholders; and
WHEREAS, Fonix desires that Consultant provide such services
as hereinafter set forth.
AGREEMENT
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 shall provide bona
fide consulting services to Fonix in connection with (i) Fonix's efforts to
prepare strategies for communicating with Fonix's stakeholders, (ii) the
preparation of press releases and (iii) Fonix's shareholder communications.
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 or product of Fonix, nor does this
Agreement confer any employment right on Consultant. Consultant agrees that in
performing his duties under this Agreement, she shall be operating as an
independent contractor as that term is defined in United States Treasury
Department regulations and United States 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 be evidence of 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 Section 1.3.
1.4 Confidentiality and Non-Disclosure. Consultant
acknowledges that in performance of services under this Agreement, she may
acquire confidential information concerning Fonix technology, know-how, product
development and marketing plans, 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 Consultant'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 the covenant of confidentiality set forth in
this Section 1.4 (the "Confidentiality Covenant") and acknowledges the adequacy
of the consideration to support the Confidentiality Covenant.
1.4.2 The Confidentiality Covenant 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 August 31, 2004, except as provided in this Article
II below.
2.2 Termination. Consultant acknowledges that its
engagement under this Agreement may be terminated by Fonix on five (5) days
notice to Consultant.
ARTICLE III
COMPENSATION
3.1 Compensation. After the mutual execution of this Agreement
by all Parties, Fonix shall issue as compensation for Consultant's services
under this Agreement, up to Three Hundred Thousand (300,000) shares of the
Company's common stock, par value $.0001 per share (the "Shares") at the rate of
Twenty-Five Thousand (25,000) Shares per month. The Shares shall be transferred
to Consultant on the first business day of each calendar month commencing
September 1, 2003.
3.2 Registration of Stock. Any offer or issuance of the Shares
under this Agreement shall be subject to the filing and effectiveness, at or
prior to the time this Agreement is executed by Fonix, of a registration
statement under the U.S. Securities Act of 1933, as amended (the "Securities
Act"), on Form S-8, covering the Shares.
3.3 Expenses. Consultant shall be responsible for the payment
of any expenses incurred by Consultant in the providing of services hereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of Consultant. To
induce Fonix to enter into this Agreement, Consultant hereby represents and
warrants as follows:
4.1.1 Restrictions; Limitations. Consultant is
under no obligation or restriction which would in any way interfere or be
inconsistent with, or present a conflict of interest concerning the services to
be furnished to Fonix under this Agreement. Consultant will not enter into any
such obligation or restriction prior to the termination of this Agreement.
4.1.2 Disclosure, Access to Information.
Consultant confirms that she has received and thoroughly read and is familiar
with and understands this Agreement, and that all documents, records, books and
other information pertaining to Consultant's performance under this Agreement
requested by Consultant have been made available for inspection and copying and
that there are no additional materials or documents that have been requested by
Consultant that have not been made available by Fonix. Consultant further
acknowledges that she understands that Fonix is subject to the periodic
reporting requirements of the U.S. Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and Consultant has reviewed or received copies of any such
reports that have been requested by him. Without limiting the generality of the
foregoing, Consultant acknowledges that it has received and has reviewed copies
of the following reports filed by Fonix:
(1) Annual Report on Form 10-K for the fiscal year ended December 31,
2002; (1)
(2) Quarterly Report on Form 10-Q, for the quarter ended June 30,
2003;
(3) Current Reports on Form 8-K filed during 2003 and up to and
including September 16, 2003.
Consultant acknowledges that the statements contained in the above-described
Exchange Act Reports are not purely historical and include forward-looking
statements within the meaning of Section 27A of the Act and Section 21E of the
Exchange Act, including statements regarding the Company's expectations, hopes,
intentions or strategies regarding the future. Forward looking statements
include statements regarding future development of Fonix's automatic human
computer interaction technologies, statements regarding Fonix's ability to enter
into appropriate licensing and co-development agreements, and projections for
the timing and amount of revenues to be received from Fonix in connection with
such agreements. All such forward looking statements are based on information
available to Fonix on the date hereof, and Fonix assumes no obligation to update
any such forward looking statements. Fonix's actual results could differ
materially from the results predicted in such forward looking statements.
4.1.3 Consultant is an "accredited investor" as
such term is defined in Rule 501(a) of Regulation D promulgated under the
Securities Act.
4.1.4 Consultant has been advised that (i) there
may not be a market for the Shares; and (ii) it may not be possible to readily
liquidate the Shares. Consultant understands that she may not offer for sale,
sell, pledge, hypothecate or otherwise transfer or dispose of his interest in
the Shares unless the Shares are registered under the Securities Act and
applicable state securities laws or the transfer is exempt from such
registration.
4.1.5 Consultant's overall commitment to
investments which are not readily marketable is not disproportionate to his net
worth; and his investment in the Company will not cause such overall commitment
to become excessive.
4.1.6 Consultant satisfies any special
suitability or other applicable requirements of its state of residence and/or
the state in which the transaction by which the Shares are exchanged occurs.
4.1.7 Consultant has such knowledge and experience
in financial and business matters that it is capable of evaluating the merits
and risks of acquiring the Shares.
4.1.8 Consultant acknowledges that no general
solicitation or general advertising (including communications published in any
newspaper, magazine or other broadcast) has been received by him and that no
public solicitation or advertisement with respect to the offering of the Shares
has been made to him.
4.1.9 Consultant has relied solely upon the
advice of his own tax and legal advisors with respect to the tax and other legal
aspects of the acquisition of the shares.
ARTICLE V
MISCELLANEOUS PROVISIONS
5.1 Entire Agreement. This Agreement constitutes the
entire agreement between the parties and supercedes any prior written or oral
agreements concerning the subject matter contained herein.
5.2 Amendment. This Agreement may be amended only by the
written consent of the parties.
5.3 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 of default of this Agreement.
5.4 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: Xxxxx X. Xxxxxx
Executive Vice President
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000
Consultant:
Xxxx xxx Xxxx
Notices given by mail shall be deemed to be delivered on the day such notice is
deposited in the United States mail, postage prepaid.
5.5 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.
5.6 Consultant not Exclusive Consultant of Fonix.
Nothing in this Agreement shall restrict or otherwise limit the right of Fonix
to engage or retain other consultants, either as employees or as independent
contractors.
5.7 Indemnification. Consultant will indemnify and hold
harmless Fonix and its directors, officers, and each person, if any, who
controls Fonix within the meaning of the Securities Act, from and against any
and all losses, claims, damages, expenses, liabilities or actions to which any
of them may become subject under applicable law (including, without limitation,
the Act) and will reimburse them or any legal or other expenses incurred by them
in connection with investigating or defending any claims or actions, whether or
not resulting in liability, insofar as such losses, claims, damages, expenses,
liabilities or actions arise out of or are based upon Consultant's failure to
comply with the provisions of this Agreement or the inaccuracy of any
representation made by Consultant in connection with this Agreement. The
indemnification agreement contained in this paragraph shall remain in full force
or effect, regardless of any investigation made by or on behalf of Consultant,
and shall survive the consummation of the transactions contemplated by this
Agreement.
5.8 Attorney Fees and Costs. The parties agree that, in the
event of any dispute arising under this Agreement, the prevailing party in any
such dispute shall be entitled to an award of all costs and expenses, including
without limitation attorneys' fees and legal costs, which may arise from the
enforcement of this Agreement, whether such enforcement is pursued by filing of
a suit or otherwise.
5.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Utah of the United States
of America.
5.10 Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original, and such counterparts together shall constitute one and the same
instrument.
[Remainder of page intentionally left blank.
Signature page follows.]
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
Executive Vice President
CONSULTANT:
/s/ Xxxx xxx Xxxx
------------------------------------
Xxxx xxx Xxxx
