FONIX CORP
EXHIBIT 10(XXXX)
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>7
<FILENAME>0007.txt
<DESCRIPTION>EXHIBIT 10(XXXX)
<TEXT>



                                    EXHIBIT J

                            AUDIUM SECURITY AGREEMENT




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<PAGE>


                               SECURITY AGREEMENT


         THIS SECURITY AGREEMENT (this  "Agreement"),  entered into this 9th day
of April, 2001, is between AUDIUM CORPORATION,  a Delaware  corporation with its
principal place of business at 150 Lafayette  Street,  9th Floor,  New York, New
York 10013 (the "Debtor"),  and Fonix Corporation,  a Delaware  corporation with
its principal place of business at 180 West Election Drive,  Draper,  Utah 84020
(the "Secured Party").

                                    RECITALS

         A. The  Debtor  and the  Secured  Party  are  parties  to that  certain
Promissory  Note in the  original  principal  amount of  $400,000  issued by the
Debtor in favor of the Secured Party of even date herewith (the "Note").

         B. The Debtor  currently  owns or will  acquire an  interest in certain
personal  property more  particularly  described on the attached  Exhibit A (the
"Collateral").

         C. The Debtor desires to grant the Secured Party a security interest in
the Collateral in accordance with the terms of this Agreement.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the premises,  mutual covenants and
conditions  contained  herein,  and other good and valuable  consideration,  the
receipt and  sufficiency  of which is hereby  acknowledged,  the parties  hereto
hereby agree as follows:

1.  Security  Interest.  As security for the Secured  Obligations  (described in
Section 2 of this  Agreement),  the Debtor  hereby grants to the Secured Party a
security interest (as that term is defined in the Uniform  Commercial Code) (the
"Security  Interest")  in  the  Collateral.  As  used  in  this  Agreement,  the
Collateral shall include the personal property described in the attached Exhibit
A, whether now or hereafter acquired,  whether now existing or hereafter arising
and wherever located,  together with all accessions,  parts, or additions to and
all replacements of and substitution for any of the Collateral, and all proceeds
(including insurance proceeds), from the sale or other disposition of any of the
foregoing.

         2. Secured Obligations.  The Security Interest in the Collateral hereby
granted  shall  secure  the due and  punctual  payment  and  performance  of the
following liabilities, duties and obligations of the Debtor: (a) all obligations
under the Note and all renewals,  extensions and modifications  thereof; (b) all
duties and  obligations  of the Debtor  contained in this  Agreement  and in all
renewals,  extensions  and  modifications  hereof;  and (c) all sums that may be
expended by the Secured Party during the existence of a default hereunder in the
performance  of any duty or  obligation  of the Debtor,  or to cure any default,
under this Agreement (collectively, the "Secured Obligations").



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<PAGE>

         3. Covenants of Debtor.  Unless and until the Secured Party consents in
writing to another  course of action,  which consent  shall not be  unreasonably
delayed or withheld, the Debtor covenants and agrees as follows:

                  a.  Debtor will  execute  financing  statements  and take such
         further actions as may be reasonably necessary or convenient to perfect
         the Secured Party's Security Interest in the Collateral.

                  b. Debtor will keep the Collateral  free of liens and security
         interests other than Permitted Liens.  "Permitted Liens" shall mean and
         include:   (i)  liens  or  security   interests   for  taxes  or  other
         governmental  charges not at the time delinquent or thereafter  payable
         without  penalty  or  being  contested  in good  faith;  (ii)  liens or
         security interests of mechanics, vendors, and landlords incurred in the
         ordinary  course of business;  (iii) deposits to secure the performance
         of bids,  tenders,  contracts (other than for the repayment of borrowed
         money) or leases; or (iv) liens or security interests upon any property
         acquired  or held by  Debtor  to  secure  the  purchase  price  of such
         property or  indebtedness  incurred  for the purpose of  financing  the
         acquisition  of  such  property,  and  any  accessions,   replacements,
         substitutions and proceeds  (including  insurance  proceeds) thereof or
         thereto.

                  c. Debtor will  promptly pay and  discharge any and all taxes,
         levies and other  impositions  on or with  respect  to the  Collateral,
         except  those  being  contested  in good  faith,  and shall do all acts
         necessary to preserve and maintain the value thereof.

                  d. Debtor will comply in all material  respects with all laws,
         ordinances and regulations of all governmental  authorities  applicable
         to the use or ownership of the Collateral.

                  e. Debtor will  procure and  maintain a policy of insurance as
         may be required by law or regulation  and as is commonly  maintained by
         owners of Collateral of like kind and nature. Such policy shall contain
         a stipulation that coverage will not be cancelled or diminished without
         a  minimum  of ten (10)  days'  written  notice to the  Secured  Party.
         Following the  occurrence of a default  hereunder,  all proceeds of any
         insurance  on the  Collateral,  at the  election of the Secured  Party,
         shall be delivered to the Secured Party.

         4.  Debtor's  Right to Use and  Possession.  Until  default (as defined
under Section 6), the Debtor may maintain use and possession of the Collateral.

         5.  Preservation  of  Collateral.  The Secured  Party may, from time to
time,  at its  option,  perform any  obligation  to be  performed  by the Debtor
hereunder which the Debtor shall fail to perform after notice of such failure by
Secured Party and take any other action which the Secured  Party may  reasonably
deem  necessary for the  maintenance  or  preservation  of the perfection of its
security interest in the Collateral. All moneys advanced by the Secured Party in
connection with the foregoing,  together with interest at a rate of five percent
(5%) per annum,  shall be repaid by the Debtor to the  Secured  Party,  upon the
latter's demand,  and shall be secured hereby prior to any other indebtedness or
obligation  secured hereby;  but the making of such advance by the Secured Party
shall not relieve the Debtor of any default  hereunder  until the full amount of

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all moneys so advanced and interest thereon is repaid by Debtor and such default
is otherwise cured. The rights granted under this Section 5 shall be in addition
to any other  rights or remedies  to which the Secured  Party may be entitled on
account of default.

         6. Events of Default.  Debtor shall be in default under this  Agreement
upon:

          a.  failure to make any payment  under the Note to the  Secured  Party
     when due;

          b. the  occurrence of any event of default under this Agreement or the
     Note;

          c. the dissolution,  liquidation or other  termination of the Debtor's
     existence; or

          d. the  commencement of foreclosure,  whether by judicial  proceeding,
     self-help,  repossession, or any other method by any creditor of the Debtor
     against any material  portion of the Collateral;  provided,  however,  such
     proceedings  shall  not be an  event  of  default  if the  Debtor  promptly
     disputes such  proceedings in good faith and provides  adequate reserve for
     the eventuality of any loss of Collateral.

         7.  Remedies.  From and after that date which is thirty  (30)  calendar
days after  written  notice from the Secured Party to the Debtor that the Debtor
is in default  under the terms of this  Agreement or the Note and Debtor has not
cured such  default,  in addition to any other  rights which may be available to
the Secured Party at law or in equity, the Secured Party may, at its option:

          a. declare all indebtedness under the Note immediately due and payable
     without demand or notice;

          b. require the Debtor to deliver to the Secured Party the  Collateral,
     including any and all certificates of title and other documents relating to
     such  Collateral  or to  enter  upon the  property  of the  Debtor  to take
     possession of and remove the Collateral;

          c.  sell,  lease,  transfer  or  otherwise  deal with or  dispose  the
     Collateral  in its own  name or in that of the  Debtor  including,  without
     limitation, sale of the Collateral at public auction or by private sale;

          d. have a receiver appointed as a matter of right; or

          e. exercise any and all rights or remedies  granted secured  creditors
     under the provisions of the Uniform Commercial Code.

         8.  Termination  of  Security  Agreement.  This  Agreement  and Secured
Party's  security  interest in the Collateral  shall terminate upon the Debtor's
payment in full of the Secured  Obligations  or the  occurrence  of an "Event of
Default"  under the  Promissory  Note in the original  principal  amount of $2.6


                                      J-4
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million executed by Secured Party in favor of Debtor on or about the date hereof
or the related Security Agreement. Promptly after the Secured Party's receipt of
payment of the Secured  Obligations,  the Secured  Party shall file  termination
statements  or take such other  actions as may be  reasonably  requested  by the
Debtor  to  evidence  the  release  of its lien  and  Security  Interest  in the
Collateral.

         9.       Miscellaneous.

          a. Except as otherwise  provided in this Agreement,  each right, power
     and remedy  herein  specifically  given to the Secured  Party or  otherwise
     existing shall be cumulative and shall be in addition to every other right,
     power and remedy herein  specifically given or now or hereafter existing at
     law, in equity,  or otherwise;  and each right,  power and remedy,  whether
     specifically herein given or otherwise existing, may be exercised from time
     to time as  often  and in such  order  as may be  deemed  expedient  by the
     Secured  Party and the exercise of any right,  power or remedy shall not be
     construed  to be a waiver  of the  right to  exercise  at the same  time or
     thereafter  any other right,  power or remedy.  No delay or omission by the
     Secured Party in the exercise of any right or power, or in the pursuance of
     any remedy, shall impair any such right, power or remedy or be construed to
     be a waiver of any  default on the part of Debtor or to be an  acquiescence
     therein.  No waiver by the Secured Party of any breach or default by Debtor
     under this Agreement  shall be deemed a waiver of any other previous breach
     or  default  or any other  previous  breach or  default  or any  thereafter
     occurring.

          b. This  Agreement  shall be binding  upon and inure to the benefit of
     the Debtor and the  Secured  Party,  and their  respective  successors  and
     assigns,  except that no party may assign or transfer its rights  hereunder
     without the prior written consent of the other party.

          c. Upon the occurrence  and during the  continuance of a default under
     this Agreement or the Note,  the Debtor does hereby  constitute the Secured
     Party,  its  successors  and assigns,  Debtor's  true and lawful  attorney,
     irrevocably,  with full power (in the name of the Debtor or  otherwise)  to
     ask, require,  demand,  receive,  compound and give acquittance for any and
     all moneys and claims for money due and to become due under to arising  out
     of the Collateral,  to endorse any checks or other instruments or orders in
     connection therewith and to file any claims or take any action or institute
     any  proceedings  which  the  Secured  Party  may deem to be  necessary  or
     advisable to protect the Collateral.

          d. Any consent, notice or other communication required or contemplated
     by this Agreement shall be in writing and shall be delivered  personally or
     mailed by certified or registered mail, return receipt  requested,  postage
     prepaid,  addressed  (a) if to the  Secured  Party at the  address  for the
     Secured  Party set forth in the  heading  of this  Agreement,  or (b) if to
     Debtor  at the  address  for  Debtor  set  forth  in the  heading  of  this
     Agreement,  or in each case at such other  address as such party shall have
     furnished to the other party to this Agreement in writing. Notices shall be


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     deemed to have been given when delivered, if delivered personally,  or five
     (5) days after deposited from mailing, if mailed by certified or registered
     mail.

          e.  Debtor  waives any right that it may have to require  the  Secured
     Party to proceed against any other entity or individual, or proceed against
     or exhaust any other security, or pursue any other remedy the Secured Party
     may have.

          f. In the  event  that any  provision  of this  Agreement  or the Note
     entered into by the parties in connection  with the Note, as applied to any
     party or  circumstances  shall be  adjudged  by a court  to be  invalid  or
     unenforceable, the Debtor acknowledges and agrees that this Agreement shall
     remain valid and enforceable in all respects against the Debtor.

          g. No default  shall be waived by the Secured Party except in writing,
     and the waiver of any one right under this Agreement shall not operative as
     a waiver of any other right.

          h. This Agreement  shall be governed by and construed  pursuant to the
     internal  laws of the State of  Delaware,  without  regard to choice of law
     principles.

          i. This Agreement may be executed in one or more  counterparts,  which
     taken together shall constitute one agreement.

         IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as
of the day and year first above written.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                      [SIGNATURE PAGE FOLLOWS IMMEDIATELY]


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                                     DEBTOR:

                                     AUDIUM CORPORATION
                                     a Delaware corporation


                                     By:
                                        ----------------------------------------
                                        Michael L. Bergelson, President

                                     SECURED PARTY:

                                     Fonix Corporation,
                                     a Delaware corporation


                                     By:
                                        ----------------------------------------
                                    Its:
                                        ----------------------------------------


                                      J-7
<PAGE>


                                    Exhibit A

                            Description of Collateral

"Collateral"  means: (a) all inventions  (whether patentable or unpatentable and
whether or not reduced to practice),  all improvements thereto, and all patents,
patent  applications,  and patent  disclosures,  together with all  reissuances,
continuations, continuations-in-part,  revisions, extensions, and reexaminations
thereof, (b) all copyrights,  patents,  trademarks,  service marks, trade dress,
logos,  trade names,  domain names,  corporate names and IP addresses,  together
with all translations,  adaptations,  derivations,  and combinations thereof and
including   all   goodwill   associated   therewith,   and   all   applications,
registrations,  and  renewals in  connection  therewith,  (c) all  copyrightable
works,  all copyrights,  and all  applications,  registrations,  and renewals in
connection  therewith,  (d) all mask works and all applications,  registrations,
and renewals in connection  therewith,  (e) all trade  secrets and  confidential
business  information  (including  ideas,  research and  development,  know-how,
formulas,  compositions,  manufacturing and production processes and techniques,
technical data, designs, drawings, specifications,  customer and supplier lists,
pricing and cost  information,  and business and marketing plans and proposals),
(f) all computer software  (including data and related  documentation),  (g) all
other proprietary  rights, (h) all copies and tangible  embodiments  thereof (in
whatever  form or medium),  and  goodwill  associated  therewith,  licenses  and
sublicenses  granted and obtained with respect thereto,  and rights  thereunder,
remedies  against  infringement  thereof,  and rights to protection of interests
therein under the laws of all jurisdictions.





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