TERMINATION, SEPARATION AND RELEASE AGREEMENT
This
Termination, Separation and Release Agreement (“Agreement”) is entered into by
and between Sionix Corporation (the “Company”) and Xxxxxxx X. Xxxxxxxx, an
individual (“Papalian”), this 11th day of November, 2008 based upon the
following:
RECITALS
Whereas,
Papalian
was employed by the Company as its Chief Executive Officer from December 19,
2007 until his resignation on August 14, 2008;
Whereas,
the
Company and Papalian have agreed to terminate the Employment Agreement, dated
December 19, 2007, between the Company and Papalian (the “Employment
Agreement”), on the terms and subject to the conditions of this
Agreement;
Now,
therefore,
in
consideration of the mutual covenants and promises contained herein and for
other valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Papalian agree as follows:
AGREEMENT
1. Incorporation
of Recitals.
The
recitals to this Agreement are an integral part of this Agreement and are hereby
incorporated as a part of this Agreement as if set forth in it. Papalian and
the
Company may be referred to hereafter as the “Parties.”
2. Termination
of Employment Agreement; Forfeiture of Stock Option.
(a)
Papalian
and the Company agree that the Employment Agreement is hereby terminated and
that such termination shall not be deemed to be a termination for “Cause” by the
Company or a termination for “Good Reason” by Papalian, as such terms are
defined in the Employment Agreement. Papalian shall not perform further services
as an officer of the Company. Papalian also hereby resigns from the Board of
Directors of the Company, effective as of the date of this Agreement. Papalian
understands and agrees that from and after the date hereof, he shall not be
included as an insured person or as a Company employee under the Company’s
health plan or other insurance policies. Notwithstanding the foregoing,
Papalian’s obligations under Section 8 of the Employment Agreement and the
Company’s obligations under Section 9 of the Employment Agreement shall survive
the termination of the Employment Agreement.
(b) Papalian
agrees that all unvested stock options set forth in that certain Notice of
Grant
of Stock Option, dated December 19, 2007 the (“Grant Notice”), are forfeited as
of the date of this Agreement. Accordingly, Papalian acknowledges and agrees
that from and after the date of this Agreement, except as set forth in Section
3
below, he shall hold a fully vested option to purchase only 2,933,526 shares
of
the Company’s common stock (the “Remaining Option”), representing the initially
vested 30% portion of the option shares set forth in the Grant Notice plus
30%
of the additional option shares resulting from the anti-dilution protection
set
forth in Section 8(a) of the Stock Option Agreement attached to the Grant
Notice. The Remaining Option shall be subject to the terms and conditions set
forth in the Grant Notice and the Stock Option Agreement, dated December 19,
2007, between the Company and Papalian.
3. Separation
Payment.
On the
effective date hereof (taking into account section 8(b) hereof), in exchange
for
Papalian’s release of the Company from any past and future obligations as set
forth in this Agreement, the Company shall xxxxx Xxxxxxxx
a fully vested 5-year option to purchase 3,500,000 shares of common stock at
an
exercise price of $0.15 per share (the “Additional Option”), pursuant to the
form of Notice of Grant of Stock Option attached hereto as Exhibit
A
and the
form of Stock Option Agreement attached hereto as Exhibit
B.
Except
as set forth in this Section 3, Papalian acknowledges and agrees that the
Company does not owe him any other sums or payments, including, but not limited
to unpaid wages or accrued vacation pay, expense reimbursements or stock
issuances arising out of or related to his employment and Employment Agreement
with the Company. Papalian further acknowledges and agrees that he shall be
solely responsible for any federal or state tax consequences arising out of
or
related to any payments or options made or issued pursuant to Sections 2 and
3
herein, and hereby agrees to defend, indemnify and hold harmless the Company
and
its officers, directors and employees from and against all claims, losses,
and
expenses (including reasonable attorneys’ fees) related to such tax
consequences.
4. Mutual
General Release.
Subject
to and effective upon the full execution of this Agreement, Papalian for himself
as well as his spouse, and his past, present and future heirs, representatives,
administrators, executors, agents, representatives, attorneys, partners, joint
venturers, predecessors, successors, assigns, and each of them (individually
and
collectively, “Papalian’s Related Persons”) on the one hand, and the Company for
itself and its respective past, present and future agents, representatives,
employees, agents, consultants, principals, attorneys, partners, joint
venturers, officers, directors, shareholders, affiliates, subsidiaries,
predecessors, successors, assigns, and each of them (individually and
collectively, the “the Company’s Related Persons”) on the other hand, hereby
fully and irrevocably release, acquit and discharge each other from any and
all
Claims as defined in subdivision (b) below which the Parties and their
respective Related Persons or any of them had, now have, or may hereafter claim
to have against each other, that relate to Papalian’s relationship with the
Company and any other claims Papalian may assert which relate, directly or
indirectly to Papalian’s association with or employment by any the Company
and/or any matters set forth in the Recitals including but not limited to,
any
fact, cause, matter or thing which was, or could have been stated, asserted,
claimed or alleged in connection with Papalian’s relationship with the
Company.
(a) Unknown
Claims.
The
Parties understand that Section 1542 of the California Civil Code
provides:
“A
general release does not extend to claims which the creditor does not know
or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the
debtor.”
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In
connection with the release set forth in this paragraph 4, each Party hereby
expressly waives and relinquishes every present or future right or benefit
he,
they or it has, or may have, under Section 1542 of the California Civil Code
and/or any similar law, statute, provision or policy to the fullest extent
permitted by law. The matters referenced in paragraph 4 and paragraph 4.1
constitute the “Released Matters” under this Agreement.
(b) Claims
Defined.
For
purposes of this Agreement, the term “Claim” means
any
fixed or contingent, matured or unmatured, liquidated or unliquidated,
known or
unknown, suspected or unsuspected, disclosed or undisclosed, anticipated
or
unanticipated claims, controversies, disputes, causes of actions, cross-claims,
liabilities, rights, remedies, debts, rights of setoff, obligations, demands
(including letter demands or notices), penalties, assessments, damages,
requests, suits, lawsuits, expenses, costs (including attorney fees and
expenses), actions, administrative proceedings, or orders, of whatever
nature,
kind, character, type or description, whether at law or in equity, and
whether
sounding in tort, intentional or negligent, contract, equity, nuisance,
trespass, strict liability or any other statutory, regulatory, administrative
or
common law cause of action or source of law.
(c) Claims
For Indemnification.
Notwithstanding anything herein to the contrary, the Company acknowledges and
agrees that the rights and protections afforded to Papalian in that certain
Indemnification Agreement, dated December 19, 2007, between the Company and
Papalian (the “Indemnification Agreement”), and the Company’s obligations
thereunder, shall in no way be diminished or otherwise adversely affected by
the
foregoing release, and that the Indemnification Agreement shall remain in full
force and effect in accordance with its terms from and after the date hereof.
5. Papalian’s
Promises.
In
addition to the release of claims provided for in section 4, Papalian agrees
to
the following:
(a) No
Pursuit of Released Claims.
Papalian
promises never to file or prosecute a lawsuit, administrative complaint or
charge, or other complaint or charge asserting any claims that are released
by
this Agreement. Papalian represents that Papalian has not filed or caused to
be
filed any lawsuit, complaint or charge with respect to any claim this Agreement
releases. Papalian further agrees to request any government agency or other
body
assuming jurisdiction of any complaint or charge relating to a released claim
to
withdraw from the matter or dismiss the matter with prejudice.
(b) Agreement
to Not Seek Future Employment with the Company.
Papalian further acknowledges and agrees that he shall not seek or apply for
any
positions with the Company in the future. Papalian acknowledges and agrees
that
any failure by the Company to hire or retain Papalian in the future shall give
rise to no claims on his part.
6. Consequences
of Papalian’s Violation of Promises.
If
Papalian breaks any of the promises in this Agreement, such as, by way of
example and not by way of limitation, by filing or prosecuting a lawsuit or
charge based on claims that Papalian has released, Papalian will: (i)
immediately forfeit any unexercised portion of the Additional Option and the
Remaining Option and return to the Company any shares of common stock issued
upon exercise of the Additional Option or the Remaining Option that are then
still held by Papalian; and (ii) pay reasonable attorneys’ fees and all other
costs incurred as a result of such breach, such as, by way of example and not
by
way of limitation, the Company’s cost of defending any suit brought with respect
to a claim released by him.
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7. Mutual
Non-Disparagement:
Papalian
and the Company agree not to intentionally disclose, publish, or otherwise
disseminate (or cause or permit to be disclosed, published or otherwise
disseminated, whether themselves or through one or more third parties), either
orally or in writing, to any third party, any information, thoughts,
suppositions, opinions, or other statements or comments which may be derogatory,
disparaging or defamatory to the other in any manner whatsoever. Papalian and
the Company agree that damages from the violation of this provision would be
difficult to ascertain and therefore that, among other relief, injunctive relief
is appropriate to enforce the terms hereof, in addition to whatever other
remedies the non-breaching party would be entitled to in the event of breach.
This Agreement does not preclude, prohibit or restrict either party (or their
respective attorneys) from responding to any inquiry, or providing testimony
to
or before, the Securities and Exchange Commission (SEC), the Financial Industry
Regulatory Authority (FINRA), any other self-regulatory organization, or any
other federal or state regulatory authority. Papalian and the Company
acknowledge and agree that the foregoing provisions of this Section 7 explicitly
prohibit Papalian and the Company, except as compelled by law or judicial
process, from supplying testimony, information, oral or written statements,
or
documents to, or assisting or otherwise cooperating with any other party who
has
asserted or intends to assert any claims against Papalian or the Company.
8. Consulting
with Attorney; Review Period.
(a) Consulation
with Counsel.
Papalian
acknowledges that the Company strongly encouraged Papalian to discuss this
Agreement with an attorney of Papalian’s own choosing (at Papalian’s own
expense) before signing this Agreement. Papalian acknowledges that he has had
ample opportunity to consult with an attorney. Papalian further acknowledges
that he has met with an attorney or knowingly and willingly declined to do
so.
(b) Review
Period. The
Company advises Papalian that:
(a)
Papalian has twenty-one (21) days in which to consider this Agreement and
whether he will enter into it; (b) this Agreement does not waive rights or
claims which may arise after it is executed by Papalian; and (c) at any time
within seven (7) days after executing this Agreement, Papalian may revoke this
Agreement (the “Revocation
Period”).
This
Agreement shall not become effective or enforceable until the seven day
Revocation Period has passed. To be effective, the revocation must be in writing
and signed by Papalian and must be delivered to and received by the Company
before 5 p.m. of the 7th day. This Agreement shall become effective on the
eighth (8th) day.
9. Severability.
The
provisions of this Agreement are severable. If any part of it is found to be
unenforceable, all other provisions shall remain fully valid and
enforceable.
10. Choice
of Laws.
This
Agreement shall be governed by the laws of the State of California.
11. Nature,
Effect and Interpretation of this Agreement.
(a) Entire
Agreement.
This is
the entire Agreement between Papalian and the Company; it may not be modified
or
cancelled in any manner except by a writing signed by both the Company and
Papalian. The Company has made no promises or representations to Papalian other
than those in this Agreement.
(b) Successors
and Assigns.
This
Agreement shall bind both the Company’s and Papalian’s heirs, administrators,
representatives, executors, successors and assigns, and shall inure to the
benefit of all Releasees and their respective heirs, administrators,
representatives, executors, successors and assigns.
(c) Interpretation.
This
Agreement shall be construed as a whole according to its fair meaning, and
not
strictly for or against any of the parties. Unless the context indicates
otherwise, the term “or” shall be deemed to include the term “and” and the
singular or plural number shall be deemed to include the other. Paragraph
headings used in this Agreement are intended solely for convenience of reference
and shall not be used in the interpretation of any of this Agreement. It is
acknowledged that neither party shall be construed to be solely responsible
for
the drafting hereof, and therefore any ambiguity shall not be construed against
either party as the alleged draftsman of this Agreement.
(d) Counterparts
and Facsimiles.
For the
convenience of the parties to this Agreement, this document may be executed
by
facsimile signatures and in counterparts which shall together constitute the
agreement of the parties as one and the same instrument.
(e) Implementation.
The
Company and Papalian both agree that, without the receipt of further
consideration, they will sign and deliver any documents and do anything else
that is necessary in the future to make the provisions of this Agreement
effective.
12. Exclusive
Venue. The
Company and Papalian agree that the exclusive venue for any and all
controversies or claims arising out of, in connection with, or relating to
this
Agreement, or a breach hereof, shall be in the County of Orange in either:
(i)
the Superior Court of California, County of Orange; or (ii) the United States
District Court, Central District of California. The parties hereto expressly
consent and submit to the jurisdiction of either such court, and agree to accept
service of process inside or outside the State of California in any matter
that
is to be submitted to either such court pursuant hereto.
/
/ / SIGNATURE
PAGE FOLLOWS /
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PLEASE
READ THIS AGREEMENT CAREFULLY. IT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN
CLAIMS.
XXXXXXX
XXXXXXXX:
/s/
Xxxxxxx Xxxxxxxx
Date:
______________________________
Address:
___________________________
___________________________
SIONIX
CORPORATION:
By:
/s/
Xxxxx
Xxxxx
Xxxxx
Xxxxx, CEO
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