[FONIX LETTERHEAD]
February ___,
2009
James Jiang
21 West Coast
Cres, #09-06
Singapore,
128045
Haim
Shafrir
9 Ousishkin
Street, Ramat hasharon
P.O. Box
16536
Tel Aviv,
Israel
Michael Iechel
Wigderhaus
18 b’
Rupin St.
Tel-Aviv,
Israel 63457
Rafael
Mandelman
471 Links
Drive
East Oceanside,
NY 11572
Adam
Goldberg
330 16
th Street
Brooklyn, New
York 11215
|
Re:
|
Change in
Control of G-Soft Limited, G-Soft, Inc. and Shanghai Gaozhi
Software System Limited
|
Gentlemen:
Reference is hereby
made to the Exchange Agreement, as amended by the First Amendment
on December 9, 2008, by and among Fonix Corporation, Fonix GS
Acquisition Corporation, Inc, Southridge, LLC, G-Soft Limited, and
all of the legal owners of G-Soft Limited (the “ Exchange
Agreement ”), the Contribution Agreement, as amended on
December 9, 2008, by and between G-Soft Limited and G-Soft, Inc.
(the “ Contribution Agreement ”) and the Equity
Interest Purchase Agreement, as amended on December 9, 2008 (the
“ Equity Purchase Agreement ”,
collectively with the Exchange Agreement and Contribution
Agreement, the “ Agreements ”) by and among the
legal owners of Shanghai Gaozhi Software System Limited (the
“ Company ”, together with G-Soft Limited and
G-Soft, Inc., the “ Companies ”), and G-Soft,
Inc. Capitalized terms used but not defined herein shall
have the meaning given them in the Agreements.
Upon closing
the Agreements, as amended, and the related transactions, Fonix
Corporation (“ Fonix ”) will be the ultimate
parent of the Companies. In connection with the closing of the
Agreements and related transactions, the parties have agreed to the
following:
1.
Resignation of Directors and Officers . In
accordance with the Agreements, all directors and officers of the
Companies (the “ Representatives ”) shall resign
their respective positions with the
Companies. Notwithstanding this Section 1 , James
Jiang shall serve as the general manager (the “ General
Manager ”) of the Company pursuant to the terms of his
current employment agreement with the Company.
Side Letter
Agreement
Page 2 of
8
2.
Disbursements . The Representatives agree that as
of the date of this Side Letter Agreement they will forebear from
making disbursements from any account of the Companies, and that
they will not cause or permit any officer, director, agent,
employee or other individual to make any distribution from the
Companies’ accounts. Nothing in this Section
2 shall prohibit the Escrow Agent from making disbursements
from the Current Account in accordance with Section 11
below.
3.
Operating Activities . The Representatives agree
that they will forebear from representing the Companies in any
transaction during the period of time necessary to replace them and
appoint new representatives of the
Companies. Furthermore, prior to the replacement of the
Representatives, the Representatives will consult with Roger Dudley
prior to making any decisions with respect to the Companies,
operational or otherwise.
4.
Appointment of Directors . Within ninety (90)
days (the “ Appointment Period ”) of this Side
Letter Agreement, Fonix and its advisors shall appoint independent
directors to join the current board of Fonix (the “ Board
of Directors ”). James Jiang shall be
appointed as a director of the Company in addition to such other
individuals that will be appointed. It is further the
intent of the parties to maintain continuity of management of the
Company for a period of twenty-four (24) months (the “
Management Period ”) from the date of this Side Letter
Agreement. In the event the Board of Directors is not
appointed within the Appointment Period, each of the Appointment
Period and Management Period shall be extended by consecutive
ninety (90) day periods (the “ Extension Period
”) until the Board of Directors is appointed. The
maximum Extension Period shall be twelve (12) months and the
Management Period shall in no event extend beyond thirty-six (36)
months from the date of this Side Letter Agreement.
5.
Control of the Companies . As of the date of this
Side Letter Agreement, Fonix, or such representatives as Fonix
shall elect, shall have management and control of the Companies in
the same manner as Fonix will have after all delivery of the
Government Documents (as defined in Section 6
below).
6.
Government Documents . The Representatives shall
deliver all government business licenses/certificates, stock
certificates and change of Legal Representative and board of
director certificates within thirty (30) days of execution of this
Side Letter Agreement (collectively, the “ Government
Documents ”).
7.
Applications . Within five (5) days of this Side
Letter Agreement, the Representatives will stamp all required
applications with the required company/accounting/individual chops
and del
