NONEXCLUSIVE INDEPENDENT CONSULTING AGREEMENT
THIS
NONEXCLUSIVE CONSULTING AGREEMENT (“Agreement”)
is
made and entered into effective March 20, 2006, by and between Fonix
Corporation,
a
Delaware corporation (“Fonix”),
and
Xxxxxx
Xxxxxxxxxx (“Consultant”).
Hereinafter either party may be referred to as “Party”
and
collectively as “Parties.”
RECITALS:
WHEREAS,
Fonix is a telecommunications and speech technology company, of which the
primary business activity is presently the (i) marketing and sales of local,
long distance and Internet telecommunications services in the Southeastern
United States and (ii) development, marketing, sales and licensing of certain
proprietary human-computer interface technologies and products. Fonix is seeking
new marketing and licensing opportunities as well as other significant business
development opportunities in Europe and Asia; and
WHEREAS,
Consultant is generally familiar with many of Fonix’s technologies and products,
and has expertise identifying and making introductions to European and Asian
companies interested in purchasing, licensing or otherwise acquiring the rights
to market or use technologies and products of a type offered by Fonix; and
WHEREAS,
Fonix desires that Consultant provide such services in Europe and Asia 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
1.2 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 Fonix’s efforts to identify and
enter into appropriate agreements for sales and third-party licensing and
co-development partners located principally in Europe and Asia. Such services
shall include, without limitation, (i) consultation regarding strategic
planning, partnerships and similar alliances; (ii) finding and introducing,
on a
best efforts and nonexclusive basis, potential buyers and licensing and
co-development partners located principally in Europe and Asia; and (iii) to
the
extent requested by Fonix, participating in negotiations with such potential
purchasers and partners.
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 its duties under this
Agreement, it 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,
it
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 of 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 July 20,
2006, except as provided in this Article II below.
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2 of 6
2.2
Termination
for Cause.
Consultant acknowledges that its engagement under this Agreement may be
terminated for Cause as set forth herein. For the purpose of this paragraph,
“Cause”
shall
mean any of the following:
2.2.1 fraud
or
misrepresentation;
2.2.2 Fonix,
after consultation with legal counsel of its choice, reasonably has determined
that a violation of law has taken place or is about to take place in connection
with this Agreement; or
2.2.3 violation
of a Confidentiality Covenant.,
ARTICLE
III
COMPENSATION
3.1
Compensation.
As soon
as possible after the mutual execution of this Agreement by all Parties, Fonix
shall issue as compensation for Consultant’s services under this Agreement, Four
Million (4,000,000) shares of the Company’s common stock, par value $.0001 per
share (the “Compensation
Shares”).
3.2 Registration
of Stock.
Any
offer or issuance of the Compensation 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, on Form S-8, covering the Compensation 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 Disclosure,
Access to Information.
Consultant confirms that it 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 it 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 it. Without limiting the generality of the foregoing, Consultant
acknowledges that it has received and has reviewed copies of the following
reports filed by Fonix:
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3 of 6
(a) |
Annual
Report on Form 10-K for the fiscal year ended December 31,
2005;
|
(b) |
Quarterly
Report on Form 10-Q, for the quarters ended March 31, 2005, June
30, 2005
and September 30, 2005; and
|
(c) |
Current
Reports on Form 8-K filed during 2005 and up to and including March
20,
2006.
|
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 telecommunication products and services
and speech technologies, statements regarding Fonix’s ability to enter into
appropriate sales, 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.
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.
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4 of 6
Fonix:
Fonix
Corporation
Attention:
Xxxxx Xxxxxx
Executive
Vice President
0000
X.
000 X., Xxxxx 000
Xxxx
Xxxx
Xxxx, Xxxx 84070
United
States of America
Consultant:
Xxxxxx
Xxxxxxxxxx
Third
Floor
00
Xxxxxxxx Xxxxxx
Xxxxxx
X0X 0XX
Xxxxxxx,
Xxxxxx Xxxxxxx
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 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.
5.8 Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
England and the parties hereto agree to submit to the exclusive jurisdiction
of
English courts.
5.9 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.
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5 of 6
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day
and year first above written.
FONIX:
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FONIX
CORPORATION
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By:
|
/s/
Xxxxxx X.
Xxxxxxx
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Xxxxxx
X. Xxxxxxx
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CEO,
President, Chairman
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CONSULTANT:
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Xxxxxx
Xxxxxxxxxx
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By:
|
/s/
Xxxxxx Xxxxxxxxxx
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