Master Technology Development Agreement

MASTER TECHNOLOGY DEVELOPMENT AGREEMENT


This Master Technology Development Agreement is entered into as of the 14 day of October, 1997, by and between fonix corporation, a corporation of the State of Delaware having its principal place of business located at 1225 Eagle Gate Tower, 60 East South Temple Street, Salt Lake City, Utah 84111 ("fonix"), and Oregon Graduate Institute of Science and Technology, a non-profit corporation and educational institution duly organized and existing under the laws of the State of Oregon, with its principal place of business located at 20000 N.W. Walker Road, Beaverton, Oregon 97291-1000 ("OGI"), acting through its Oregon Graduate Institute of Science and Technology, Center for Spoken Language Understanding ("CSLU").


1. Purpose and Scope of Agreement


fonix is engaged in research and development of automatic speech recognition technologies, which technologies employ a proprietary phonetic speech modeling engine and a linguistic and contextual process based on a proprietary neural network system. CSLU is a center at OGI which has a professional staff and graduate students with special training and research skills in spoken language disciplines and which is also engaged in research and development of automatic speech recognition technologies. fonix desires OGI to perform certain development activities in order to develop and improve advanced technologies in key areas of spoken language systems, which may include: (a) robust speech recognition; (b) natural language understanding; (c) dialog modeling; (d) text-to-speech synthesis; (e) multi-modal input/output; and (f) advanced neural net architectures.


Therefore, from time to time fonix agrees to sponsor OGI, acting through its CSLU, to perform work regarding certain concepts concerning the design and implementation of spoken language computer systems and OGI agrees to provide the results to fonix in accordance with the terms and conditions of this Agreement.


2. Organization


This Agreement contains terms and conditions for all work transactions between fonix and OGI involving OGI's CSLU that are within the scope of this Agreement. fonix and OGI intend that all individual work transactions that are within the scope of this Agreement will be implemented through the individual Statements of Work to be attached hereto as Exhibit A-1, A-2, A-3 and so on, as they are mutually agreed to by the parties. As the parties identify future development projects, they will execute Statements of Work, consecutively numbered and attached to this Agreement.


Each of the parties agrees to appoint one individual to coordinate development activities under this Agreement. fonix and OGI designate the following individuals as their initial Coordinators under this Agreement. Each party will advise the other in writing of any changes regarding its Coordinator.


The OGI Coordinator is: The fonix Coordinator is:


Dr. Ronald A. Cole Lynn Shepherd
Oregon Graduate Institute 1225 Eagle Gate Tower
of Science & Technology 60 East South Temple Street
20000 N.W. Walker Road Salt Lake City, Utah 84111
Beaverton, Oregon 97291-1000 tel #: 801-328-0161
tel #: 503-690-1085 fax #: 801-328-8778
fax #: 503-690-1306


3. Control of Work


Control of the work will rest jointly with fonix and OGI. However, it is agreed that fonix through its Coordinator, will have principal responsibility and will maintain continuing communication with the OGI Coordinator. The frequency and nature of these communications will be mutually defined by the fonix and OGI Coordinators. Unless otherwise expressly agreed to in a Statement of Work, the fonix Coordinator and/or fonix Project Manager shall have day-to- day management responsibility for all fonix employees, contractors and agents performing work under said Statement of Work. Similarly, the OGI Coordinator and/or OGI Project Manager shall have day-to-day management responsibility for all OGI staff members performing work under a Statement of Work.


4. Administration of a Statement of Work


Each Statement of Work shall be deemed to incorporate by reference all of the provisions of this Agreement and, in the case of any inconsistency, this Agreement shall be the controlling document.


4.1 Procedure for Entering into a Statement of Work. An individual
Statement of Work shall only become effective upon execution by
authorized representatives of both parties, duly authorized according
to institutional policy and procedure.


4.2 Identification of an Individual Statement of Work. Each individual
Statement of Work will be identified by a numerical or alphanumerical
sequence, as determined by the parties, its title and effective date,
such as, for example, "Statement of Work No. A-1 for ABC Research
Effective on 1/1/98".


4.3 OGI Key Personnel. During the Term, OGI shall make available and
assign Ronald A. Cole and Yonghong Yan, as its primary professional
staff members for work on Statements of Work. OGI shall also assign
such additional professional staff members and graduate students as
are reasonably necessary to complete each Statement of Work pursuant
to its terms. The Coordinators at fonix and OGI shall advise


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individual staff members and graduate students at fonix and OGI of
their respective assignments and provide them with copies of the
proposed Statement of Work, as appropriate.


4.4 Required Contents of Each Statement of Work. Each Statement of Work
shall contain (or incorporate as attachments or by reference):


4.4.1 A reference to this Agreement by name and date of execution.
This reference shall act to incorporate the terms of this
Agreement into the Statement of Work unless the Statement of
Work explicitly states otherwise.


4.4.2 A title identifying the Statement of Work, an effective date
upon which the Statement of Work becomes effective between the
parties, dates for completion of "milestones" and the date of
completion and transfer of Deliverables.


4.4.3 A brief description of the scope of work of the Statement of
Work.


4.4.4 A list of all Intellectual Property Rights of fonix and/or OGI
which may be the subject of the development or other work to be
performed pursuant to the Statement of Work.


4.4.5 Description of fonix's responsibilities, including work or
services to be performed, staff members assigned and schedules
for any development or delivery.


4.4.6 Description of OGI's responsibilities, including work or
services to be performed, staff members assigned and schedules
for any development or delivery.


4.4.7 Description or specification of any Deliverables.


4.5 Optional Contents of Each Statement of Work. In addition, a Statement
of Work may contain (or incorporate as attachments or by reference):


4.5.1 Provision for progress reports by the Project Manager(s).


4.5.2 Additional specifications, such as acceptance criteria,
documentation specifications and standards, quality standards,
performance specifications, or usability and architecture
requirements.


4.5.3 Resource requirements, such as training or assignment of key
personnel.


4.5.4 Special term or termination provisions.


4.5.5 A list of some or all of the Confidential Information to be
disclosed by fonix and/or OGI in connection with the Statement
of Work.


4.5.6 Other appropriate terms.


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4.6 Project Managers. Unless otherwise specified in a Statement of Work,
each party's Project Manager shall be responsible for managing that
party's performance under the Statement of Work and for all necessary
coordination with the other party's Project Manager. Each party's
Project Manager will provide periodic progress reports to the other
party's Project Manager and will promptly respond to reasonable
requests of the other party for reports. Each party will advise the
other in writing of any change regarding its Project Manager.


5. Definitions


As used in this Agreement, the following terms shall have the following respective meanings:


5.1 "Affiliate" shall mean a party that controls, is controlled by, or is
under common control with a party, including but not limited to
subsidiaries, parents and sister corporations.


5.2 "Code" shall mean computer programming code. Unless specifically
agreed otherwise, Code shall include Executable Code, Object Code and
Source Code.


5.3 "Source Code" shall mean the human-readable form of the Code and
related system documentation, including all comments and any
procedural language.


5.4 "Object Code" shall mean the Code that results when Source Code is
processed by a software compiler, but is not Executable Code.


5.5 "Executable Code" shall mean Code that loads and executes without
further processing by a software compiler or linker.


5.6 "Confidential Information" shall mean that information which a
disclosing party desires to protect against unrestricted disclosure or
use by the receiving party (the "Recipient"). Confidential Information
shall not include any information that is (i) already in the
possession of the Recipient without obligation of confidence; or (ii)
independently developed by the Recipient, as evidenced by written
records; or (iii) becomes available to the general public without
breach of this agreement; or (iv) rightfully received by the Recipient
from a third party without obligation of confidence; or (v) released
for disclosure by the disclosing party with its prior written consent.


5.7 "Deliverables" shall mean any work product or material procured or
prepared by OGI and required to be delivered to fonix by virtue of
their description or specification as a Deliverable in a Statement of
Work. Whether or not actually delivered, Deliverables shall in all
cases include all programming, documentation, media and other objects
identified as Deliverables in the Statement of Work.


5.8 "Derivative Work" shall mean a work which is based on one or more pre-
existing works (such as a revision, enhancement, modification,


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translation, abridgement, condensation, expansion, or any other form
in which such pre-existing work may be recast, transformed, or
adapted) and which, if prepared without authorization of the copyright
owner of such pre-existing work, would constitute copyright
infringement under U.S. law.


5.9 "Intellectual Property Rights" shall mean (i) all rights, title and
interests in all letters of patent and application for letters of
patent including any reissue, division, continuation or continuation-
in-part applications throughout the world now or hereafter, (ii) all
rights, title and interest in all trade secrets, and all trade secret
rights and equivalent rights arising under the common law, state law,
federal law and laws of the foreign countries; (iii) all rights, title
and interests in all mask works, copyrights and copyrighted interests,
and all mask work, rights, copyright rights and other literary
property or authors rights, whether or not protectable by copyright or
as a mask work; and (iv) all rights, title and interests in any and
all know-how and show-how, whether or not patentable, copyrightable or
protectable by trade secret.


5.10 "Invention" shall mean any idea, design, concept, technique,
invention, discovery or improvement whether or not patentable, that is
conceived and reduced to practice by one or more of the inventing
party's employees.


5.11 "Joint Invention" shall mean any idea, design, concept, technique,
invention, discovery or improvement, whether or not patentable, that
is conceived and reduced to practice by employees, independent
contractors or agents of both parties and which arises out of the
performance of a Statement of Work under this Agreement.


5.12 "Residuals" means generalized information which may be retained in
non-tangible form by persons who have worked on a Statement of Work or
have had access to Confidential Information, including without
limitation general ideas, concepts, know-how or techniques contained
therein.


5.13 "Technology" shall mean the Intellectual Property Rights pertaining to
Deliverables. "Technology" shall not include any fonix Confidential
Information, and shall not incorporate fonix Confidential Information
in either an explicit or inherent manner.


6. Term and Termination


Each Statement of Work shall be deemed to incorporate by reference this Section 6 unless the Statement of Work explicitly states otherwise.


6.1 Term of Agreement. This Agreement shall be effective upon the date
specified at the beginning of this Agreement, and shall remain in
force for a period of twelve (12) months, unless otherwise terminated
as provided in Section 6.3. Such term may be extended upon written
agreement of both parties.


6.2 Statement of Work.


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6.2.1 Term of a Statement of Work. Each Statement of Work shall
become effective upon its full execution and shall continue in
effect for the term specified in the Statement of Work unless
earlier extended, terminated by mutual written agreement of the
parties, terminated in accordance with its provisions, or
terminated for cause in accordance with Section 6.3 below. In
the event that a Statement of Work fails to contain a term, the
Statement of Work shall be deemed to have a term of one (1)
year.


6.2.2 Earlier Termination of the Agreement. A termination of the
Agreement shall have no effect upon a Statement of Work that is
itself still in effect.


6.3 Termination for Cause. Either party may terminate this Agreement or a
Statement of Work for the substantial breach by the other party of a
material term. The terminating party shall first give the other party
written notice of the alleged breach and a period of sixty (60) days
in which to cure the alleged breach.


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