CONSULTING AGREEMENT
THIS
CONSULTING AGREEMENT
(this
“Agreement”) is entered into as of December 19, 2007 by and between Xxxx Xxxxx
(the “Consultant”) 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.”
WHEREAS,
the
Corporation believes that the Consultant’s service, experience, contacts and
knowledge are valuable to the Corporation in connection with its business;
and
WHEREAS,
the
Corporation desires to engage the Consultant on a non-exclusive basis, and
the
Consultant desires to be engaged by the Corporation, to provide the consulting
services described herein.
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. Engagement.
The
Corporation hereby agrees to engage the Consultant and the Consultant hereby
accepts such engagement, on a non-exclusive basis, upon the terms and subject
to
the conditions hereinafter set forth. The Consultant agrees to be available
as
needed up to two (2) business days per week to the performance of his duties
and
responsibilities hereunder. Subject to Section 8 hereof the Consultant shall
not
be prohibited from engaging in any other business or endeavor , including,
without limitation, as an officer, director, manager, member, partner or
stockholder of any other entities.
2. Term
of Engagement.
Subject
to Section 7, the term of the Consultant’s engagement pursuant to this Agreement
shall commence on and as of the date hereof (the “Effective Date”), and shall
terminate on December 19, 2008 (the “Initial Term”). This Agreement shall
automatically renew for an additional one (1) year period (the “Successive
Term”), unless either Party shall notify the other in writing of its intent not
to renew at least sixty (60) days prior to the expiration of the Initial Term.
In
this
Agreement the word “Term” shall refer to the Initial Term and the Successive
Term, if any.
3. Authority;
Services.
During
the Term, the Consultant will have the title “Special Adviser” and report
directly to the Chief Executive Officer of the Corporation, except as otherwise
provided herein, and shall provide
strategic advisory services, including (a) the preparation of a strategic plan
for the Corporation and the evaluation of its strategic alternatives, which
alternatives may include joint ventures or other strategic partnerships and
alliances, licensing agreements, leasing agreements or the sale of all or part
of the Corporation, and (b) the selection of any advisors or financiers in
connection with any strategic transaction,
(c)
identifying and preparing analyses of businesses that are competitive with
the
Corporation, and (d) such other services as the Consultant and the Chief
Executive Officer shall mutually determine.
4. Independent
Contractor Status.
Consultant is an independent contractor and not an employee of Corporation
for
any purpose whatsoever, including state and federal taxes and workers'
compensation insurance, but is an independent contractor. Neither this
Agreement, the relationship created between the parties hereto pursuant to
this
Agreement, nor any course of dealing between the parties hereto is intended
to
create, or shall create, an employment relationship, a joint venture,
partnership or any similar relationship. Consultant does not have, nor shall
Consultant hold out Consultant as having, any right, power, or authority to
create any contract or obligation, either express or implied, on behalf of,
in
the name of, or binding upon Company, or to pledge Company's credit, or to
extend credits in the name of Company.
5. Nature
of Consultant's Relationship to Company.
Consultant is engaged in Consultant's own business independent of the Company,
and the nature of Consultant's independent contractor relationship with the
Company shall be further defined as follows:
(a) State
and Federal Taxes.
Company
will not withhold any monies for any state, local or federal taxing authorities
from compensation earned by Consultant pursuant to this Agreement. Company
shall
prepare and file a Form 1099 with the Internal Revenue Service ("IRS") reporting
the compensation paid to Consultant.
(b) Fringe
Benefits.
Consultant shall receive no fringe benefits under this Agreement whatsoever,
and
accordingly, shall receive no insurance benefits, disability income, vacation,
holiday pay, sick pay, expense reimbursement, or any other benefits.
(c) Workers'
Compensation.
Company
shall not provide workers' compensation coverage for Consultant or Consultant's
Agents. Any and all workers' compensation coverage shall be the sole
responsibility of Consultant.
(d) Hours.
Consultant shall not be required to work any specified hours or specified
days.
(e) Licensing/Insurance.
Consultant shall obtain and maintain at Consultant's sole expense any licenses
or insurance required by federal, state or local law.
(f) Location.
During
the Term, the Consultant may perform his duties from his home office or at
the
Corporation's offices in Irvine, California, at the discretion of the
Consultant.
6. Remuneration.
(a) Option.
In
consideration of the services to be rendered hereunder, the Consultant shall
be
granted a non-qualified stock option (the “Option”), upon the Effective Date, to
purchase up to an aggregate of 5% of the Corporation’s outstanding common stock,
par value $0.001 per share (the “Common Stock”), on a fully diluted basis
calculated as of the Effective Date (the “Option Shares”), and exercisable for a
period of 5 years at an exercise price of $0.25 per share (the “Exercise
Price”), which Option Shares shall be subject to vesting and certain adjustments
as provided in the Notice of Grant of Stock Option substantially in the form
attached hereto as Exhibit
A
(the
“Grant Notice”) and the form of Option Agreement attached thereto as Exhibit A
(the “Option Agreement”). The Corporation agrees to register the Option Shares
with the Securities and Exchange Commission on Form S-8 within 30 days of the
Effective Date. In addition, in the event the Corporation’s Market
Capitalization (as defined in the Grant Notice) is $175 million or more for
15
consecutive trading days, no later than the first year anniversary of the
expiration of the Term, then the Corporation will issue to Consultant upon
the
conclusion of such 15 trading day period a five-year option to purchase an
additional 1.5% of the Corporation’s outstanding Common Stock on a fully diluted
basis calculated as of the date of this Agreement, at an exercise price equal
to
the closing price on the 15th
day of
such 15 trading day period.
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(b) Expenses.
The
Corporation shall reimburse the Consultant for all reasonable business expenses
incurred during Consultant’s engagement hereunder (the “Expenses”), with any
individual Expenses in excess of two thousand five hundred dollars ($2,500)
or
aggregate Expenses in excess of five thousand dollars ($5,000) in any 30-day
period commencing as of the Effective Date to be submitted to the Corporation’s
board of directors (the “Board”) for pre-approval by the Board.
(c) Additional
Remuneration.
During
the Successive Term, if any, the Consultant shall be entitled to only such
remuneration as may be negotiated and mutually agreed upon in writing by the
Parties. The parties agree that prior to the end of the Initial Term they shall
use good faith efforts to negotiate renumeration for the Successive Term;
provided that nothing herein shall require either party to renew the term of
this Agreement for the Successive Term.
7. Termination
and Termination Benefits.
Notwithstanding the provisions of Section 2, the Consultant’s engagement under
this Agreement shall terminate under the following circumstances:
(a) Termination
for Cause.
Subject
to Section 7(d), the Corporation may terminate Consultant's engagement under
this Agreement for Cause at any time prior to expiration of the Term. As used
herein, "Cause" shall mean only:
(i)if
Consultant is convicted of (or pleads nolo contendere to) any felony;
(ii)acts
of
fraud, misappropriation or embezzlement committed by Consultant at the expense
of the Corporation;
(iii)
a
determination by the Corporation that Consultant has engaged in willful
misconduct, gross negligence or gross or habitual neglect in the performance
of
his duties under this Agreement; or
(iv) a
material breach by the Consultant of any of the covenants, terms or provisions
of this Agreement that remains uncured for a period of 30 days after written
notice by the Corporation to the Consultant.
Consultant
shall not be deemed to have been terminated for Cause unless and until there
shall have been delivered to him a copy of a resolution duly adopted by the
affirmative vote of a majority of the Board (not counting the Consultant) at
a
meeting of the Board (after reasonable notice to Consultant and opportunity
for
Consultant, together with his counsel, to be heard before the Board and to
cure
such conduct within thirty (30) days thereof to the extent curable), finding
that in the good faith opinion of the Board, Consultant engaged in the conduct
described herein, and specifying the particulars thereof.
(b) Termination
for Good Reason.
Subject
to Section 7(d), the Consultant’s engagement under this Agreement may be
terminated by the Consultant for Good Reason by written notice to the Board.
The
occurrence of one or more of the following events shall constitute “Good
Reason”:
(i) the
Corporation’s material breach of any of the provisions of this Agreement, which
breach is not cured by the Corporation within fifteen (15) days following
written notice thereof from Consultant; provided, that the Corporation can
only
cure such breach on two (2) occasions;
(ii) any
adverse alteration in Consultant's duties hereunder;
3
(iii) any
reduction in Consultant's compensation;
(iv) the
Board
or the Chief Executive Officer requests the Consultant to engage in any unlawful
activity; or
(v) a
Change
in Control shall occur.
A
"Change
in Control" shall be deemed to have occurred if the conditions set forth in
any
one of the following paragraphs shall have been satisfied:
(i)
any
"person," as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (other than the
Corporation or any Affiliate thereof, is or becomes after the Effective Date
the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Corporation (not including in
the
securities beneficially owned by such person any securities acquired directly
from the Corporation or Executive) representing fifty percent (50%) or more
of
the combined voting power of the Corporation's then outstanding securities;
or
(ii) in
the
event that the individuals who at the beginning of the Initial Term constitute
the Board, and any new director whose election by the Board or nomination for
election by the Corporation's shareholders was approved by a vote of at least
a
majority of the Board then still in office who either were members of the Board
at the beginning of the Initial Term or whose election or nomination for
election was previously so approved, cease for any reason to constitute at
least
a majority thereof during the Initial Term; or
(iii) the
shareholders of the Corporation approve a merger or consolidation of the
Corporation with or the sale of the Corporation to any other entity and, in
connection with such merger, consolidation or sale, individuals who constitute
the Board immediately prior to the time any agreement to effect such merger
or
consolidation is entered into fail for any reason to constitute at least a
majority of the Board of the surviving corporation following the consummation
of
such merger or consolidation; or
(iv) the
shareholders of the Corporation approve a plan of
complete liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of the Corporation's
assets to an entity not controlled by the Corporation.
(c)Termination
Without Cause or Good Reason.
Subject
to Section 7(d), the Consultant’s engagement under this Agreement may be
terminated by the Corporation without Cause, or by the Consultant without Good
Reason, immediately upon written notice to the other Party.
(d) Effects
of Termination.
If
during the Term (i) the Consultant’s engagement is terminated by the Corporation
for Cause, or by the Consultant without Good Reason, then any as yet unvested
Option Shares shall be immediately forfeited upon the date of such termination
(the “Termination Date”), as provided in the Option Agreement; or (ii) the
Consultant’s engagement is terminated by the Corporation without Cause, or by
the Consultant for Good Reason, then any as yet unvested Option Shares shall
immediately vest and become exercisable upon the Termination Date, for the
entire life of the Option, as provided in the Option Agreement. Notwithstanding
anything herein to the contrary, the Consultant’s obligations under Sections 8
of this Agreement and the Corporation’s obligations under Section 9 of this
Agreement shall survive any termination of the Consultant’s engagement with the
Corporation at any time and for any reason.
4
(e) Death;
Disability.
Upon
the death or Disability of the Consultant, all obligations of the Corporation
under this Agreement shall immediately terminate other than with respect to
vested but unexercised Option Shares to the extent accrued or vested through
the
Termination Date, as provided in the Option Agreement. As used in this Section
7, the term “Disability” means the good faith determination of the Board that
the Consultant has become so physically or mentally incapacitated or disabled
as
to be unable to satisfactorily perform his duties hereunder for a period of
one
hundred twenty (120) consecutive calendar days or for one-hundred eighty (180)
days in any three-hundred sixty (360) day period, such determination based
upon
a certificate as to such physical or mental disability issued by a licensed
physician and/or psychiatrist (as the case may be) mutually agreed upon by
Consultant and the Corporation.
(f) No
Mitigation; No Offset.
The
Parties hereto agree that Consultant shall not be required to mitigate damages
in respect of any termination benefit or payment due under this Agreement or
in
respect of any damage award as a result of the Corporation's breach of this
Agreement, nor shall any such benefit or award be offset by any future
compensation or income received by Consultant from any other source. The
Corporation shall not have the right to offset against its obligations hereunder
or against any such damage award any amounts payable by Consultant to
Corporation for any reason.
8. Non
Competition; Non Solicitation; Confidentiality;
Proprietary Rights
(a) Non-Competition.
The
Consultant agrees that he shall not during the Term:
(i) directly
or indirectly own, engage in, manage, operate, join, control, or participate
in
the ownership, management, operation, or control of, or be connected as a
stockholder, partner, member, joint venturer, director, officer, employee,
consultant or agent with, any corporation, limited liability company,
partnership, sole proprietorship, association, business, trust, or other
organization, entity or individual which develops, manufactures or markets
products or performs services which are competitive with products or services
of
the Corporation or its subsidiaries; provided,
however,
that
the Consultant may own, directly or indirectly, securities of any entity traded
on a national securities exchange or listed or quoted on an interdealer
quotation system; and provided,
further,
that
the Consultant does not, directly or indirectly, own more than 5% of any class
of equity securities, or securities convertible into or exercisable or
exchangeable for more than 5% of any class of equity securities, of such
entity;
(ii) call
upon, solicit, direct, take away, provide products or services to, or accept
any
orders of business from, any customers or clients of the Corporation for
products or services which are competitive with the products or services of
the
Corporation or its subsidiaries; or
(iii) solicit
any employee of the Corporation to terminate such employee’s employment with the
Corporation.
5
(b) Confidential
Information.
As used
in this Agreement, the term “Confidential Information” shall mean proprietary
and non-public information that is not disclosed by the Corporation in its
public filings. Confidential Information includes information, whether or not
patentable or copyrightable, in written, verbal, electronic or other tangible
or
intangible forms, stored in any medium, including, by way of example and without
limitation, trade secrets, ideas, concepts, designs, configurations,
specifications, drawings, blueprints, diagrams, models, prototypes, samples,
flow charts processes, techniques, formulas, software, improvements, inventions,
domain names, data, know-how, discoveries, copyrightable materials, marketing
plans and strategies, sales and financial reports and forecasts, customer lists,
studies, reports, records, books, contracts, instruments, surveys, computer
disks, diskettes, tapes, computer programs and business plans, prospects and
opportunities (such as possible acquisitions or dispositions of businesses
or
facilities). Confidential Information may include information developed by
the
Consultant in the course of the Consultant’s engagement by the Corporation, as
well as other information to which the Consultant may have access, in connection
with the Consultant’s engagement. Notwithstanding the foregoing, Confidential
Information does not include information (i) that is or becomes generally
available in the public domain through no fault of the Consultant, (ii) was
known by the Consultant prior to his engagement by the Corporation, (iii) is
disclosed pursuant to the lawful requirement or request of a governmental agency
or disclosure is permitted or required by operation of law, court order, civil
process or stock exchange.
(c) Confidentiality.
In the
course of performing services hereunder on behalf of the Corporation and its
affiliates, the Consultant has had, and from time to time will have, access
to
Confidential Information. The Consultant agrees (i) to hold such Confidential
Information in strict confidence, (ii) not to disclose the Confidential
Information to any person (other than in the course of the regular business
of
the Corporation), and (iii) not to use, directly or indirectly, any of the
Confidential Information for any purpose other than on behalf of the
Corporation. All documents, records, data, apparatus, equipment and other
physical property, whether or not pertaining to Confidential Information, that
are furnished to the Consultant by the Corporation or are produced by the
Consultant in connection with the Consultant’s engagement will be and remain the
sole property of the Corporation. Upon the termination of the Consultant’s
engagement with the Corporation at any time and for any reason, and as and
when
otherwise requested by the Corporation, all Confidential Information (including,
without limitation, all data, memoranda, customer lists, notes, programs and
other papers or items, and reproductions thereof relating to the foregoing
matters) in the Consultant’s possession or control, shall be immediately
returned to the Corporation.
(d) Third
Party Agreements and Rights.
The
Consultant represents to the Corporation that the Consultant’s execution of this
Agreement, the Consultant’s engagement with the Corporation and the performance
of the Consultant’s obligations under this Agreement do not violate any existing
obligations the Consultant has to any previous employer or other party. In
the
Consultant’s work for the Corporation, the Consultant will not disclose or make
use of any information in violation of any agreements with or rights of any
previous employer or other party, and the Consultant will not bring to the
premises of the Corporation any copies or other tangible embodiments of
confidential information belonging to or obtained from any previous employment
or other party.
(e) Inventions.
The
Consultant recognizes that the Corporation possesses a proprietary interest
in
all of the Confidential Information and has the exclusive right and privilege
to
use, protect by copyright, patent or trademark, or otherwise exploit the
processes, ideas and concepts described therein to the exclusion of the
Consultant, except as otherwise agreed between the Corporation and the
Consultant in writing. The Consultant expressly agrees that any products,
inventions, discoveries or improvements made by the Consultant in the course
of
the Consultant’s engagement, including any of the foregoing which is based on or
arises out of the Confidential Information, shall be the property of and inure
to the exclusive benefit of the Corporation. The Consultant further agrees
that
any and all products, inventions, discoveries or improvements developed by
the
Consultant (whether or not able to be protected by copyright, patent or
trademark) during the Term, or involving the use of the time, materials or
other
resources of the Corporation, shall be promptly disclosed to the Corporation
and
shall become the exclusive property of the Corporation, and the Consultant
shall
execute and deliver any and all documents necessary or appropriate to implement
the foregoing.
6
(f) Certain
Remedies.
It is
specifically understood and agreed that any breach of the provisions of this
Section 8 of this Agreement by the Consultant could result in irreparable injury
to the Corporation and its subsidiaries and affiliates, and that the remedy
at
law alone may be an inadequate remedy for such breach. Accordingly, the
Consultant agrees that if the Consultant breaches any portion of this Agreement,
the Corporation or its subsidiaries and affiliates shall be entitled, in
addition to any other remedy it may have, to seek to enforce the specific
performance of this Agreement by the Consultant through both temporary and
permanent injunctive relief, it being understood that injunctive relief is
in
addition to, and not in lieu of, such other remedies.
9. Indemnification.
The
Corporation shall indemnify the Consultant as provided in an indemnification
agreement in the form attached hereto as Exhibit
B.
10. Integration.
This
Agreement and the attachments hereto constitute the entire agreement between
the
Parties with respect to the subject matter hereof and supersede all prior
agreements between the Parties, whether written or verbal, with respect to
any
related subject matter.
11. Assignment;
Successors and Assigns, etc.
Neither
the Corporation nor the Consultant may make any assignment of this Agreement
or
any interest herein without the prior written consent of the other Party;
provided,
however,
in the
event of a Change in Control, this Agreement shall be binding upon and inure
to
the benefit of such successor and such successor shall discharge and perform
all
the promises, covenants, duties, and obligations of the Corporation
hereunder.
12. Enforceability.
If any
portion or provision of this Agreement (including, without limitation, any
portion or provision of any section of this Agreement) shall to any extent
be
declared illegal or unenforceable by a court of competent jurisdiction, then
the
remainder of this Agreement, or the application of such portion or provision
in
circumstances other than those as to which it is so declared illegal or
unenforceable, shall not be affected thereby, and each portion and provision
of
this Agreement shall be valid and enforceable to the fullest extent permitted
by
law.
13. Waiver.
No
waiver of any provision hereof shall be effective unless made in writing and
signed by the waiving Party. The failure of any Party to require the performance
of any term or obligation of this Agreement, or the waiver by any Party of
any
breach of this Agreement, shall not prevent any subsequent enforcement of such
term or obligation or be deemed a waiver of any subsequent breach.
14. Notices.
Any
notices, requests, demands and other communications provided for by this
Agreement shall be sufficient if in writing and delivered in person or sent
by a
nationally recognized overnight courier service or by registered or certified
mail, postage prepaid, return receipt requested to the Parties as
follows:
if
to the
Consultant, at the last address the Consultant has filed in writing with the
Corporation,
7
with
a
copy to:
Manatt,
Xxxxxx & Xxxxxxxx, LLP
00000
X.
Xxxxxxx Xxxx.
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Attn:
Xxxx X. Xxxxxx, Esq.
if
to the
Corporation, as follows:
Sionix
Corporation
0000
Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx
XX
00000
Attn.:
Chairman of the Board of Directors
with
a
copy to:
Xxxxxxxxxx
& Xxxxx LLP
The
Chrysler Building
000
Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn.:
Xxxxx Xxxxxxxxx, Esq.
15. Amendment.
This
Agreement may be amended or modified only by a written instrument signed by
the
Consultant and by a duly authorized representative of the
Corporation.
16. Governing
Law.
This
Agreement shall be construed under and be governed in all respects by the laws
of the State of California, without giving effect to the conflict of laws
principles thereof.
17. Counterparts.
This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each Party and delivered to the other Party;
provided that a facsimile signature or email delivery of a “.pdf” file
containing such signature shall be considered due execution and shall be binding
upon the signatory thereto with the same force and effect as if the signature
were an original, not a facsimile signature.
18. Attorneys’
Fees and Costs.
If any
action at law or in equity is necessary to enforce or interpret any of the
rights or obligations under this Agreement, the prevailing Party shall be
entitled to reasonable attorneys’ fees, costs, and disbursements in addition to
any other relief to which the prevailing Party may be entitled. In addition,
the
Corporation shall promptly reimburse the Consultant upon presentation of billing
statements for any and all legal fees and expenses incurred by him in the
preparation and negotiation of this Agreement and the other agreements related
hereto.
[SIGNATURE
PAGE TO FOLLOW]
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IN
WITNESS WHEREOF,
the
Parties hereto have executed this Agreement as of the date first set forth
above.
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CORPORATION:
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|
SIONIX
CORPORATION
|
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|
By:
|
/s/ Xxxx Xxxxxx | ||
|
Name:
Xxxx Xxxxxx
|
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|
Title:
Chairman of the Board
|
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|
CONSULTANT:
|
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| /s/ Xxxx Xxxxx | |||
|
XXXX
XXXXX
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9
Exhibit
A
Form
of Stock Option Agreement
Exhibit
B
Form
of Indemnification Agreement
