STOCK OPTION AGREEMENT
THIS
STOCK OPTION AGREEMENT
(this
“Agreement”) is entered into as of November 11, 2008 by and between XXXXXXX X.
XXXXXXXX (the “Optionee”) and Sionix Corporation, a Nevada corporation (the
“Corporation”). The foregoing parties are sometimes referred to hereinafter
individually as a “Party” or collectively as the “Parties.” All capitalized
terms not otherwise defined herein shall have the definitions ascribed to them
in the Grant Notice.
WHEREAS,
in
connection with the Termination, Separation and Release Agreement between the
Corporation and the Optionee, dated the date hereof, the Corporation has agreed
to issue to the Optionee a new option to purchase shares of its common stock
pursuant to the Notice of Grant of Stock Option dated the date hereof (the
“Option”).
WHEREAS,
the
Optionee and the Corporation wish to memorialize in writing the terms and
conditions applicable to the Option, as provided herein and in the Grant
Notice.
NOW,
THEREFORE,
in
consideration of the mutual covenants and agreements hereinafter set forth,
and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Parties do hereby covenant and agree as
follows:
1. Grant
of Option.
The
Corporation hereby grants to the Optionee, as of the Grant Date, an Option
to
purchase up to the aggregate number of Option Shares specified in the Grant
Notice. The Option Shares shall be purchasable from time to time during the
Option term specified in Paragraph 2 below at the Exercise Price.
2. Option
Term.
The
Option shall have a term of five (5) years measured from the Grant Date and
shall accordingly expire at the close of business on the Expiration Date, unless
sooner terminated pursuant to Paragraph 4 or 7 of this Agreement.
3. Limited
Transferability.
(a) During
the Optionee’s lifetime, the Option shall be exercisable only by the Optionee
and shall not be assignable or transferable other than by will or by the laws
of
descent and distribution following the Optionee’s death. However, Optionee may
designate one or more persons as the beneficiary or beneficiaries of this
Option, so that, if Optionee is holding this Option at the time of his or her
death, this Option shall, in accordance with such designation, automatically
be
transferred to such beneficiary or beneficiaries upon Optionee’s death. Such
beneficiary or beneficiaries shall take the transferred Option subject to all
the terms and conditions of this Agreement, including (without limitation)
the
limited time period during which this option may, pursuant to Paragraph 6(c),
be
exercised following Optionee’s death.
(b) If
this
option is designated a Non-Statutory Option in the Grant Notice, then this
Option may be assigned in whole or in part during Optionee’s lifetime to one or
more members of Optionee’s family (as defined in Rule 701 promulgated by the
Securities and Exchange Commission) or to a trust established for the benefit
of
one or more such family members or to Optionee’s former spouse, to the extent
such assignment is in connection with Optionee’s estate plan or pursuant to a
domestic relations order. The assigned portion shall be exercisable only by
the
person or persons who acquire a proprietary interest in the Option pursuant
to
such assignment. The terms applicable to the assigned portion shall be the
same
as those in effect for this Option immediately prior to such assignment.
(c) Anything
herein to the contrary notwithstanding, in no event shall the Optionee sell
prior to January 1, 2009 (the “Lock-Up Period”) any shares of Common Stock
acquired upon exercise of the Option. The Optionee consents to the placement
of
a legend to that effect on any Common Stock certificates issued to the Optionee
during the Lock-Up Period upon exercise of the Option.
4. Vesting
Schedule.
The
Option shall vest according to the vesting schedule provided in the Grant
Notice.
5. Representations
of the Optionee.
The
Optionee hereby represents as follows:
(a)
The
Optionee either has a preexisting personal or business relationship with the
Corporation or any of its officers, directors or controlling persons, or by
reason of his business or financial experience or the business or financial
experience of his professional advisors who are unaffiliated with and who are
not compensated by the Corporation or any affiliate or selling agent of the
Corporation, directly or indirectly, could be reasonably assumed to have the
capacity to protect his own interests in connection with the transaction.
(b)
The
Optionee is acquiring the Option and, upon exercise, the Option Shares, for
his
own account and not with a view to or for sale in connection with any
distribution thereof.
(c)
The
Optionee did not learn of the offer and sale of the Option through the
publication of any advertisement.
6. [Intentionally
Omitted]
7. Corporate
Transactions.
(a) In
the
event of (i)
a
dissolution or liquidation of the Corporation, (ii) a merger or consolidation
in
which the Corporation is not the surviving corporation (other than a merger
or
consolidation with a wholly-owned subsidiary, a reincorporation of the
Corporation in a different jurisdiction, or other transaction in which there
is
no substantial change in the stockholders of the Corporation or their relative
stock holdings), (iii) a merger in which the Corporation is the surviving
corporation but after which the stockholders of the Corporation immediately
prior to such merger (other than any stockholder that merges, or which owns
or
controls another corporation that merges, with the Corporation in such merger)
cease to own their shares or other equity interest in the Corporation, (iv)
the
sale of substantially all of the assets of the Corporation, or (v) the
acquisition, sale, or transfer of more than 50% of the outstanding shares or
the
Corporation by tender offer or similar transaction (each, a “Corporate
Transaction”), the Corporation shall provide written notice to the Optionee of
such Corporate Transaction no less than 15 business days prior to the
consummation thereof.
(b) Immediately
following the consummation of the Corporate Transaction, the Option shall
terminate and cease to be outstanding.
(c) This
Agreement shall not in any way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure
or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.
8. Adjustment
in Option Shares.
Should
any change be made to the Common Stock by reason of any stock split, stock
dividend, recapitalization, combination of shares, exchange of shares or other
change affecting the outstanding Common Stock as a class without the
Corporation’s receipt of consideration, appropriate adjustments shall be made to
(a) the total number and/or class of securities subject to this option and
(b)
the Exercise Price in order to reflect such change and thereby preclude a
dilution or enlargement of benefits hereunder.
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9. Shareholder
Rights.
The
Optionee shall not have any shareholder rights with respect to the Option Shares
until the Optionee shall have exercised the Option in accordance with this
Agreement and become a holder of record of the purchased shares.
10. Manner
of Exercising Option.
(a) In
order
to exercise the Option with respect to all or any part of the Option Shares,
the
Optionee (or any other person or persons exercising the option) must take the
following actions:
(i) Execute
and deliver to the Corporation a written notice setting forth the number of
Option Shares for which the Option is exercised.
(ii) Pay
the
aggregate Exercise Price for the purchased shares in cash or in one or more
of
the following forms:
(A) by
cancellation of indebtedness of the Corporation to the Optionee;
(B) by
surrender of shares of Common Stock that either: (1) have been owned by the
Optionee for more than six (6) months and have been paid for within the meaning
of Rule 144 promulgated under the Securities Act of 1933, as amended (and,
if
such shares were purchased from the Corporation by use of a promissory note,
such note has been fully paid with respect to such shares); or (2) were obtained
by the Optionee in the public market;
(C) with
respect only to purchases upon exercise of an Option, and provided that a public
market for the Corporation’s stock exists:
(1) through
a
“same day sale” commitment from the Optionee and a broker-dealer that is a
member of the Financial Industry Regulatory Authority (an “FINRA Dealer”)
whereby the Optionee irrevocably elects to exercise the Option and to sell
a
portion of the shares so purchased to pay for the Exercise Price, and whereby
the FINRA Dealer irrevocably commits upon receipt of such shares to forward
the
Exercise Price directly to the Corporation; or
(2) through
a
“margin” commitment from the Optionee and a FINRA Dealer whereby the Optionee
irrevocably elects to exercise the Option and to pledge the shares so purchased
to the FINRA Dealer in a margin account as security for a loan from the FINRA
Dealer in the amount of the Exercise Price, and whereby the FINRA Dealer
irrevocably commits upon receipt of such shares to forward the Exercise Price
directly to the Corporation; or
(D) by
any
combination of the foregoing.
Except
to
the extent the sale and remittance procedure is utilized in connection with
the
Option exercise, payment of the Exercise Price in one of the forms provided
above must accompany the written notice delivered to the Corporation in
connection with the Option exercise.
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(iii) Furnish
to the Corporation appropriate documentation that the person or persons
exercising the Option (if other than Optionee) have the right to exercise the
Option.
(iv) Execute
and deliver to the Corporation such written representations as may be requested
by the Corporation in order for it to comply with the applicable requirements
of
federal and state securities laws.
(v) Make
appropriate arrangements with the Corporation for the satisfaction of all
federal, state and local income and employment tax withholding requirements
applicable to the Option exercise.
(b) As
soon
as practical after the exercise date, the Corporation shall issue to or on
behalf of the Optionee (or any other person or persons exercising the Option)
a
certificate for the purchased Option Shares, with the appropriate legends
affixed thereto.
(c) Fractions
of Option Shares will not be issued but will either be replaced by a cash
payment equal to the fair market value of such fraction of an Option Share
(based on the closing price of the Common Stock reported by Bloomberg LP on
the
replacement date) or will be rounded up to the nearest whole share of Common
Stock, as determined by the Corporation.
11. Compliance
with Laws and Regulations.
The
exercise of the Option and the issuance of the Option Shares upon such exercise
shall be subject to compliance by the Corporation and the Optionee with all
applicable requirements of law relating thereto and with all applicable
regulations of any national securities exchange or interdealer quotation system
on which the Corporation’s Common Stock may be listed or quoted at the time of
such exercise and issuance.
12. Successors
and Assigns.
Except
to the extent otherwise provided in Paragraph 3, the provisions of this
Agreement shall inure to the benefit of, and be binding upon, the Corporation
and its successors and assigns and the Optionee, the Optionee’s assigns and the
legal representatives, heirs and legatees of the Optionee’s estate.
13. Notices.
Any
notice required to be given or delivered to the Corporation under the terms
of
this Agreement shall be in writing and addressed to the Corporation at its
principal executive offices. Any notice required to be given or delivered to
the
Optionee shall be in writing and addressed to the Optionee at the last address
the Optionee filed in writing with the Corporation. All notices shall be deemed
effective upon personal delivery or upon deposit in the U.S. mail, postage
prepaid and properly addressed to the Party to be notified.
14. Governing
Law.
The
interpretation, performance and enforcement of this Agreement shall be governed
by the laws of the State of California without resort to that State’s
conflict-of-laws rules.
[SIGNATURE
PAGE FOLLOWS]
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IN
WITNESS WHEREOF,
the
Parties hereto have executed this Stock Option Agreement as of the date first
set forth above.
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CORPORATION:
SIONIX
CORPORATION
By:
/s/
Xxxxx Xxxxx
Name:
Xxxxx Xxxxx
Title:
Chief Executive Officer
OPTIONEE:
/S/
XXXXXXX X. XXXXXXXX
XXXXXXX
X. XXXXXXXX
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