--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

Exhibit 10.1

EXTENSION AGREEMENT

($1,000,000 Revolving Line of Credit Agreement)

This Extension Agreement (the “Agreement”) is made, executed and delivered
effective the 22nd day of June 2006 by Fonix Corporation, a Delaware corporation
(“Borrower”), in favor of Thomas A. Murdock, Trustee (“Lender”).

RECITALS

A.  On or about October 7, 2002, Borrower executed and delivered to Lender an
Amended and Restated Revolving Line of Credit Agreement (the “LOC Agreement”)
pursuant to which Borrower could borrow up to $1,000,000 from Lender and (ii) a
Promissory Note (the “Note”) in the original principal amount of $1,000,000;

B.  In connection with the execution and delivery of the Note, Borrower also
executed and delivered an Intellectual Property Security Agreement and Security
Agreement as collateral security for repayment of the Note;

C.  The Note was due and payable in full on December 31, 2003. Payment of the
balance due under the LOC Agreement and the Note has been extended at various
times through and including June 30, 2006. Borrower has not paid the Note so an
additional extension is needed. As of June 22, 2006, the balance due and owing
under the Note is $435,722.11; and

D.  Borrower desires to execute and deliver this Agreement in favor of Lender in
order to extend the terms of repayment of the Note, as more fully set forth
below.

NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other consideration, the receipt and sufficiency of which
is hereby acknowledged, Borrower and Lender hereby agree as follows:

1.  Borrower and Lender hereby extend the term of repayment of the Note from
June 30, 2006, to September 30, 2006. Borrower agrees that all unpaid amounts
owing under the Note shall be due and payable on or before September 30, 2006.

2.  From and after June 22, 2006, interest due and owing under the Note shall
continue to accrue at the rate of twelve percent (12%) per annum.

3.  Borrower hereby agrees that this Agreement is executed merely to memorialize
an extension of the term of repayment of the Note and does not constitute or in
any way operate as a release, discharge, satisfaction, payment, or cancellation
of said indebtedness or any part thereof. Except as expressly set forth in
paragraphs 1 and 2 above, nothing herein contained shall affect or be construed
to affect any of the terms or provisions of the Note, LOC Agreement, the
Intellectual Property Security Agreement or the Security Agreement (the “Loan
Documents”) nor impair the validity or security thereof or any rights or powers
which Lender now or hereafter may have under or by virtue thereof for recovery
of the obligation evidenced by the Note or other obligations evidenced by the
Loan Documents in case of any default or non-fulfillment of the terms of the
Loan Documents, this Agreement, or otherwise.
 
 

 
 

--------------------------------------------------------------------------------

 

 
Exhibit 10.1

4.  Borrower hereby specifically ratifies and consents to each and every term of
the Loan Documents.

5.  Unless expressly defined herein, any defined term used herein shall have the
meaning established and set forth therefore in the LOC Agreement.

6.  As consideration for the Lender’s willingness to extend the due date of the
Note, the Lender and the Borrower agree that Section 8 of the LOC Agreement
shall be amended to include the following paragraph:

(f) Borrower hereby grants to Thomas A. Murdock and Roger D. Dudley the right to
appoint the greater of (A) three (3) directors or (B) a majority of the members
of the Board of Directors of the Borrower so long as any amounts remain
outstanding under the Note.

DATED the day and year first written above.

 
Fonix Corporation
 
a Delaware corporation
         
By: _________________________________________
 
Its: _________________________________________
                 
____________________________________________
 
Thomas A. Murdock, Trustee

 
 
 
 
 
 

--------------------------------------------------------------------------------