Maximum Put Amount. The Maximum Put Amount with respect to a Put shall be determined based upon an interpolation of the Average Daily Trading Volume of shares of Class A Common Stock for the ten Trading Days prior to the Put Date with respect to the relevant Put Date and the Market Price as of such Put Date of shares of Class A Common Stock as follows: Stock Price $0.75 $1.00 $1.25 $1.50 $2.00 $2.50 $3.00 100,000 $78,750 $105,000 $131,250 $157,500 $210,000 $262,000 $315,000 Avg 300,000 $236,250 $315,000 $393,750 $472,500 $630,000 $787,000 $945,000 Daily 500,000 $393,750 $525,000 $656,250 $787,500 $1,050,000 $1,312,500 $1,575,000 Volume 700,000 $551,250 $735,000 $918,750 $1,102,500 $1,470,000 $1,837,500 $2,205,000 Traded 900,000 $708,750 $945,000 $1,181,250 $1,417,500 $1,890,000 $2,362,500 $2,835,000 1,100,000 $866,250 $1,155,000 $1,443,750 $1,732,500 $2,310,000 $2,887,500 $3,465,000 The Maximum Put Amount shall be calculated by multiplying the Average Daily Trading Volume of shares of Class A Common Stock for the ten Trading Days prior to the Put Date by the Market Price as of such Put Date by one hundred five percent (105%). EXHIBIT A ACCOUNT INFORMATION Key Bank of Utah Crossroads Branch ▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ABA# XXXXXXXXX Account # XXXXXXXXXXXXX Beneficiary: Fonix Corporation EXHIBIT B [FORM OF REGISTRATION RIGHTS AGREEMENT] EXHIBIT C FORM OF OPINION OF THE COMPANY'S INDEPENDENT COUNSEL [FORM PROVIDED BY COMPANY COUNSEL] EXHIBIT D INSTRUCTIONS TO TRANSFER AGENT FONIX CORPORATION TRANSFER AGENT INSTRUCTIONS April ___, 2001 Ladies and Gentlemen: Reference is made to the Second Private Equity Line Agreement (the "Agreement"), dated as of __________________, 2001 between Queen LLC (the "Investor") and Fonix Corporation (the "Company"). Pursuant to the Agreement, subject to the terms and conditions set forth in the Agreement the Investor has agreed to purchase from the Company and the Company has agreed to sell to the Investor from time to time during the term of the Agreement shares of Class A Common Stock of the Company, $.0001 par value per share (the "Class A Common Stock"). As a condition to the effectiveness of the Agreement, the Company has agreed to issue to you, as the transfer agent for the Class A Common Stock (the "Transfer Agent"), these instructions relating to the Class A Common Stock to be issued to the Investor (or a permitted assignee) pursuant to the Agreement. All terms used herein and not otherwise defined shall have the meaning set forth in the Agreement. The shares of Common Stock issuable to the Investor pursuant to the Agreement are referred to herein as "Underlying Shares." This letter shall serve as our irrevocable authorization and direction to you (provided that you are the transfer agent of the Company at such time) to issue shares of Common Stock upon a request from the Company for the issuance of certificates. So long as you have previously received an opinion of the Company's outside counsel substantially in the form of Exhibit I attached hereto (which the Company shall direct be delivered to you by such outside counsel upon the effectiveness of the registration statement covering Underlying Shares) stating that a registration statement covering resales of Underlying Shares has been declared effective by the Securities and Exchange Commission under the Securities Act of 1933, as amended, and that Underlying Shares may be resold without any restrictive legend (the "Opinion"), certificates representing Underlying Shares shall bear the following legend: THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN ANY MANNER UNLESS THE HOLDER OR A BROKER, ON BEHALF OF THE HOLDER, REPRESENTS THAT IT HAS COMPLIED WITH THE PROSPECTUS DELIVERY REQUIREMENTS CONTAINED IN SECTION 5 OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNLESS AN EXEMPTION FROM THE REGISTRATION PROVISIONS OF SUCH ACT IS AVAILABLE. Provided, however, that if you have not previously received a copy of the Opinion, then the certificates for Underlying Shares shall bear the following legend: THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. and, provided further, that the Company may from time to time notify you to place stop-transfer restrictions on the certificates for Underlying Shares in the event a registration statement covering Underlying Shares is subject to amendment for events then current. Please be advised that the Holders have relied upon this letter as an inducement to enter into the Purchase Agreement and, accordingly, the Holder is a third party beneficiary to these instructions. Should you have any questions concerning this matter, please contact me at (801) ▇▇▇- ▇▇▇▇. Very truly yours, Fonix Corporation By: ------------------------------- Name: ------------------------------- Title: ------------------------------ Acknowledged and agreed to: CONTINENTAL STOCK TRANSFER & TRUST CO. By: ------------------------------------------ Title: -------------------------------------- Dated: ___________________, 2001 Exhibit I [Form of Outside Counsel Opinion] [Addressee] [Address] To Whom It May Concern:
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Maximum Put Amount. The Maximum Put Amount with respect to a Put shall be determined based upon an interpolation of the Average Daily Trading Volume of shares of Class A Common Stock for the ten Trading Days prior to the Put Date with respect to the relevant Put Date and the Market Price as of such Put Date of shares of Class A Common Stock as follows: Stock Price $0.75 $1.00 $1.25 $1.50 $2.00 $2.50 $3.00 100,000 $$ 78,750 $105,000 $131,250 $157,500 $210,000 $262,000 $315,000 Avg Avg. 300,000 $236,250 $315,000 $393,750 $472,500 $630,000 $787,000 $945,000 Daily 500,000 $393,750 $525,000 $656,250 $787,500 $1,050,000 $1,312,500 $1,575,000 Volume 700,000 $551,250 $735,000 $918,750 $1,102,500 $1,470,000 $1,837,500 $2,205,000 Traded 900,000 $708,750 $945,000 $1,181,250 $1,417,500 $1,890,000 $2,362,500 $2,835,000 1,100,000 $866,250 $1,155,000 $1,443,750 $1,732,500 $2,310,000 $2,887,500 $3,465,000 --------- -------- ---------- ----------- ---------- ---------- ---------- ---------- The Maximum Put Amount shall be calculated by multiplying the Average Daily Trading Volume of shares of Class A Common Stock for the ten Trading Days prior to the Put Date by the Market Price as of such Put Date by one hundred five percent (105%). EXHIBIT A ACCOUNT INFORMATION Key Bank of Utah Crossroads Branch ▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ABA# XXXXXXXXX Account # XXXXXXXXXXXXX Beneficiary: Fonix Corporation EXHIBIT B [FORM OF REGISTRATION RIGHTS AGREEMENT] EXHIBIT C FORM OF OPINION OF THE COMPANY'S INDEPENDENT COUNSEL [FORM PROVIDED BY COMPANY COUNSEL] EXHIBIT D INSTRUCTIONS TO TRANSFER AGENT FONIX CORPORATION TRANSFER AGENT INSTRUCTIONS April ___August 8, 2001 2000 Ladies and Gentlemen: Reference is made to the Second Private Equity Line Agreement (the "Agreement"), dated as of __________________August 8, 2001 2000 between Queen LLC (the "Investor") and Fonix Corporation (the "Company"). Pursuant to the Agreement, subject to the terms and conditions set forth in the Agreement the Investor has agreed to purchase from the Company and the Company has agreed to sell to the Investor from time to time during the term of the Agreement shares of Class A Common Stock of the Company, $.0001 par value per share (the "Class A Common Stock"). As a condition to the effectiveness of the Agreement, the Company has agreed to issue to you, as the transfer agent for the Class A Common Stock (the "Transfer Agent"), these instructions relating to the Class A Common Stock to be issued to the Investor (or a permitted assignee) pursuant to the Agreement. All terms used herein and not otherwise defined shall have the meaning set forth in the Agreement. The shares of Common Stock issuable to the Investor pursuant to the Agreement are referred to herein as "Underlying Shares." This letter shall serve as our irrevocable authorization and direction to you (provided that you are the transfer agent of the Company at such time) to issue shares of Common Stock upon a request from the Company for the issuance of certificates. So long as you have previously received an opinion of the Company's outside counsel substantially in the form of Exhibit I attached hereto (which the Company shall direct be delivered to you by such outside counsel upon the effectiveness of the registration statement covering Underlying Shares) stating that a registration statement covering resales of Underlying Shares has been declared effective by the Securities and Exchange Commission under the Securities Act of 1933, as amended, and that Underlying Shares may be resold without any restrictive legend (the "Opinion"), certificates representing Underlying Shares shall bear the following legend: THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN ANY MANNER UNLESS THE HOLDER OR A BROKER, ON BEHALF OF THE HOLDER, REPRESENTS THAT IT HAS COMPLIED WITH THE PROSPECTUS DELIVERY REQUIREMENTS CONTAINED IN SECTION 5 OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNLESS AN EXEMPTION FROM THE REGISTRATION PROVISIONS OF SUCH ACT IS AVAILABLE. Provided, however, that if you have not previously received a copy of the Opinion, then the certificates for Underlying Shares shall bear the following legend: THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. and, provided further, that the Company may from time to time notify you to place stop-transfer restrictions on the certificates for Underlying Shares in the event a registration statement covering Underlying Shares is subject to amendment for events then current. Please be advised that the Holders have relied upon this letter as an inducement to enter into the Purchase Agreement and, accordingly, the Holder is a third party beneficiary to these instructions. Should you have any questions concerning this matter, please contact me at (801) ▇▇▇- ▇▇▇▇. Very truly yours, Fonix Corporation By: ------------------------------- Name: ------------------------------- Title: ------------------------------ Acknowledged and agreed to: CONTINENTAL STOCK TRANSFER & TRUST CO. By: ------------------------------------------ Title: -------------------------------------- Dated: ___________________August, 2001 2000 Exhibit I [Form of Outside Counsel Opinion] [Addressee] [Address] To Whom It May Concern:
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