EMPLOYMENT AGREEMENT
THIS
EMPLOYMENT AGREEMENT
(this
“Agreement”) is entered into as of December 19, 2007 by and between Xxxxxxx
Xxxxxxxx (the “Executive”) 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 Executive’s service, experience, contacts and
knowledge are valuable to the Corporation in connection with its business;
and
WHEREAS,
the
Corporation desires to employ the Executive, and the Executive desires to be
employed by the Corporation, as the Chief Executive Officer of the
Corporation.
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. Employment.
The
Corporation hereby agrees to employ the Executive and the Executive hereby
accepts such employment upon the terms and subject to the conditions hereinafter
set forth. The Executive agrees to devote at least two (2) business days per
week to the performance of his duties and responsibilities hereunder. The
Executive shall not be prohibited from engaging in any other business or
endeavor so long as such other business or endeavor is not competitive with
the
Corporation’s actual or prospective business and, subject to the foregoing,
nothing herein shall prohibit Executive from engaging in any other business
or
activity, including, without limitation, as an officer, director, manager,
member, partner or stockholder of any other entities.
2. Term
of Employment.
Subject
to Section 7, the term of the Executive’s employment 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;
Extent of Service.
During
the Term, the Executive shall serve as Chief Executive Officer of the
Corporation. The Executive shall report directly to the board of directors
of
the Corporation (the “Board”), and shall have powers and duties consistent with
the position of Chief Executive Officer, including, but not limited to: (a)
hiring personnel, subject to Board approval (except with respect to hiring
administrative support staff, which shall not require Board approval); (b)
terminating personnel, upon Board approval; (c) establishing and executing
a
strategic plan for the Corporation, which plan shall be approved by the Board;
(d) overseeing of all of the Corporation’s day-to-day operations; (e)
recommending to the Board auditing, financial and legal advisors for engagement
by the Corporation; (f) negotiating and managing strategic transactions for
the
Corporation, including, without limitation, corporate financing, sale and
acquisition transactions; and (g) such other duties as are reasonably and
lawfully delegated to him from time to time by the Board.
4. Appointment
to Board.
On the
Effective Date, the Board shall appoint the Executive to serve as a member
of
the Board. Thereafter, the Executive shall be a director of the Corporation
and
shall hold such office so long as Employee continues to serve as the Chief
Executive Officer of the Corporation.
5. Location.
During
the Term, the Executive may perform his duties from his home office or at the
Corporation's offices in Irvine, California, at the discretion of the Executive.
6. Remuneration;
Benefits.
In
consideration of the services to be rendered hereunder, the Executive shall
be
entitled to the following remuneration:
(a) Equity
Compensation.
Upon
the Effective Date, the Executive shall be granted a non-qualified stock option
(the “Option”) 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 the Executive 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.
(b) Annual
Salary.
The
Executive shall not be entitled to receive an annual salary during the Initial
Term.
(c) Benefits.
The
Executive shall not be entitled to receive any paid vacation or other benefits
during the Initial Term, including, without limitation, medical, pension,
dental, life insurance, disability income, retirement or other employment
benefits as may be in effect from time to time for other executive officers
of
the Corporation generally.
(d) Expenses.
The
Corporation shall reimburse the Executive for all reasonable business expenses
incurred during Executive’s employment 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 Board for
pre-approval by the Board.
(e) Directors’
and Officers’ Liability Insurance.
The
Corporation shall maintain directors’ and officers’ liability insurance in an
amount of not less than $5,000,000 million in coverage and with a carrier as
determined in the Board’s discretion and consented to by the
Executive.
(f) Additional
Remuneration.
During
the Successive Term, if any, the Executive shall be entitled to only such
remuneration and benefits 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 Executive’s employment under
this Agreement shall terminate under the following circumstances:
2
(a) Termination
for Cause.
Subject
to Section 7(d), the Corporation may terminate Executive's employment under
this
Agreement for Cause at any time prior to expiration of the Term. As used herein,
"Cause" shall mean only:
(i)if
Executive is convicted of (or pleads nolo contendere to) any felony;
(ii)acts
of
fraud, misappropriation or embezzlement committed by Executive at the expense
of
the Corporation;
(iii)
a
determination by the Corporation that Executive 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 Executive 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 Executive.
Executive
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 Executive) at a
meeting of the Board (after reasonable notice to Executive and opportunity
for
Executive, 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, Executive engaged in the conduct
described herein, and specifying the particulars thereof.
(b) Termination
for Good Reason.
Subject
to Section 7(d), the Executive’s employment under this Agreement may be
terminated by the Executive 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 Executive; provided, that the Corporation can only
cure such breach on two (2) occasions;
(ii) any
adverse alteration in Executive's titles, positions, status, duties or authority
with the Corporation;
(iii) the
Executive's ceasing to be a member of the Board for any reason other than
Executive's death, Disability, termination for Cause hereunder, resignation
or
refusal to stand for re-election to the Board;
(iv) any
reduction in Executive's compensation;
(v) any
relocation of the Corporation's principal executive offices outside of the
Orange County or Los Angeles metropolitan areas;
(vi) the
Board
requests the Executive to engage in any unlawful activity; or
3
(vii) 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 Executive’s employment under this Agreement may be
terminated by the Corporation without Cause, or by the Executive without Good
Reason, immediately upon written notice to the other Party.
(d) Effects
of Termination.
If
during the Term (i) the Executive’s employment is terminated by the Corporation
for Cause, or by the Executive 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
Executive’s employment is terminated by the Corporation without Cause, or by the
Executive 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 Executive’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 Executive’s employment with the
Corporation at any time and for any reason.
4
(e) Death;
Disability.
Upon
the death or Disability of the Executive, 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 Executive 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
Executive and the Corporation.
(f) No
Mitigation; No Offset.
The
Parties hereto agree that Executive 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 Executive 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 Executive to Corporation
for any reason.
8. Non-Competition;
Non-Solicitation; Confidentiality; Proprietary Rights.
(a) Non-Competition.
The
Executive 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 Executive 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 Executive 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
Executive in the course of the Executive’s employment by the Corporation, as
well as other information to which the Executive may have access, in connection
with the Executive’s employment. 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 Executive, (ii) was
known
by the Executive prior to his employment 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 Executive has had, and from time to time will have, access
to
Confidential Information. The Executive 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 Executive by the Corporation or are produced by the
Executive in connection with the Executive’s employment will be and remain the
sole property of the Corporation. Upon the termination of the Executive’s
employment 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 Executive’s possession or control, shall be immediately returned
to the Corporation.
(d) Third
Party Agreements and Rights.
The
Executive represents to the Corporation that the Executive’s execution of this
Agreement, the Executive’s employment with the Corporation and the performance
of the Executive’s obligations under this Agreement does not violate any
existing obligations the Executive has to any previous employer or other party.
In the Executive’s work for the Corporation, the Executive 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 Executive 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
Executive 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
Executive, except as otherwise agreed between the Corporation and the Executive
in writing. The Executive expressly agrees that any products, inventions,
discoveries or improvements made by the Executive in the course of the
Executive’s employment, 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 Executive further agrees that
any and all products, inventions, discoveries or improvements developed by
the
Executive (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 Executive 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 Executive 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
Executive agrees that if the Executive 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 Executive 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 Executive 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 Executive 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
Executive, at the last address the Executive 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
Executive 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 Executive 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]
8
IN
WITNESS WHEREOF,
the
Parties hereto have executed this Agreement as of the date first set forth
above.
|
CORPORATION:
|
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|
SIONIX
CORPORATION
|
|||
|
By:
|
/s/ Xxxx Xxxxxx | ||
|
Name:
Xxxx Xxxxxx
|
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|
Title:
Chairman of the Board
|
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|
EXECUTIVE:
|
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| /s/ Xxxxxxx Xxxxxxxx | |||
|
XXXXXXX
XXXXXXXX
|
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9
Exhibit
A
Form
of Stock Option Agreement
Exhibit
B
Form
of Indemnification Agreement
