<PAGE>   1
                                                                    EXHIBIT 10.1



                              EMPLOYMENT AGREEMENT

        THIS EMPLOYMENT AGREEMENT ("Agreement") made effective as of the 1st day
of January, 1998 by and between SIONIX CORPORATION, a Utah corporation,
hereinafter referred to as "Employer", and JAMES HOUTZ, hereinafter referred to
as "Employee." Employer desires to be assured of the continued association and
services of Employee in order to take advantage of his experience, knowledge and
abilities in Employer's business and is willing to employ Employee, and Employee
desires to be so employed, on the terms and conditions set forth in this
Agreement.

        ACCORDINGLY, in consideration of the foregoing and the mutual covenants
set forth below, the parties agree as follows:

               ARTICLE I

               TERM OF CONTRACT

        1.1 The term of this Agreement shall commence effective on the date of
this Agreement, as first above written, and shall continue until September 30,
2003, and monthly thereafter, unless sooner terminated as hereinafter provided.

        1.2 This employment may be terminated immediately, without advance
notice, if, during the term of employment (a) Employee shall be convicted of a
crime involving dishonesty in connection with Employer's business; (b) an
uncured material breach of any term of this Agreement, provided that any breach
which can be cured is not promptly corrected after reasonable notice thereof;
or (c) Employee is convicted of any felony involving moral turpitude.



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               ARTICLE II

               SERVICES TO BE PERFORMED BY EMPLOYEE

        2.1 Employee shall serve as President of Employer and shall perform the
duties and responsibilities specified for said position in the By-Laws of the
Employer, and such other duties and responsibilities as are usually and
customarily performed by the President and Chief Executive Officer of a
corporation. Employee shall work at the direction of and under the supervision
of Employer's Board of Directors. Employee shall perform such duties and acts
commensurate with his position, skills and experience as may be reasonably
required by Employer's Board of Directors in connection with any aspect of
Employer's business.

               ARTICLE III

               COMPENSATION

        3.1 Employee, during the term of employment pursuant to this Agreement,
shall be compensated pursuant to the Schedule attached hereto as Exhibit "A" and
by reference made a part hereof.

        3.2 Employee shall receive an automobile allowance of $800.00 per month
during the term of this Agreement, and any extensions and renewals hereof.
Employee's automobile allowance shall be increased ten percent (10%) per year.


        3.3 Employee shall be entitled to all fringe benefits offered generally
to employees of Employer, including without limitation, participation in any
qualified pension, profit-sharing, salary continuation, disability insurance,
hospitalization insurance, major medical insurance, medical reimbursement or
life insurance plan or any other benefit plan established by Employee subject to
the rules and regulations in effect regarding participation in such benefit
plans.



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In the event Employer does not, at any time during the term of this employment,
maintain full coverage medical insurance for its employees, Employee shall be
entitled to obtain, at the expense of Employer, full coverage medical insurance,
from a bona fide medical insurance company or health plan, as selected by
Employee.

        3.4 Employee shall be entitled to such business days of vacation and
such business days of sick leave each year without, reduction in compensation,
as shall be reasonably determined from time to time by the Employer's Board of
Directors; provided, however, that Employee shall be entitled to at least 30
business days of vacation and up to two (2) weeks of sick leave each year.

               ARTICLE IV

               OBLIGATIONS OF EMPLOYEE

        4.1 Employee agrees to devote so much of his business time, attention,
knowledge and skill as necessary to carry out the purposes and intent of this
Employment Agreement. Notwithstanding the foregoing, Employee shall not be
deemed to be in violation of this Section 4.1, if he engages in passive
investment in any corporation, sole proprietorship, partnership or other entity
not involved in a competing business with Employer.

        4.2 Employee agrees to perform the above described services at
Employer's place of business and at such other job locations as may be necessary
to satisfactorily perform Employee's duties and obligations hereunder.


        4.3 Employee shall not assign this Agreement nor any duties or
obligations under this Agreement to any other person or entity.



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        4.4 Employee shall maintain, in good and legible condition, all
materials, supplies and other property provided to Employee by Employer. These
materials shall, however, remain the property of Employer.

               ARTICLE V

               OBLIGATIONS OF EMPLOYER

        5.1 Employer agrees to make the payments due Employee as hereinabove
specified, in a timely fashion, and without offset or deduction (or other than
employee withholding).

        5.2 Employer agrees to provide Employee with adequate space,
administrative support, personnel, and equipment to perform Employee's duties.

        5.3 With the exception of injuries, losses, and damages attributed
solely to the gross negligence or willful misconduct of Employee, Employer shall
fully indemnify, defend (with counsel reasonably acceptable to Employee) and
hold harmless Employee, his heirs, successors and assigns from and against all
claims, loss, liability, damage or expense (including, without limitation,
attorneys fees, court costs, investigative fees and expert witness fees) arising
from or relating, either directly or indirectly, to the Employer and/or its
business, whether occurring or accruing prior to or after the effective date
hereof. Employer's obligation to indemnify, defend and hold Employee harmless
shall survive the termination of this Agreement. Employer's obligation to
indemnify, defend and hold harmless Employee, includes, without limitation, the
indemnification, defense and hold harmless of Employee on all debts and
obligations of Employer which may be due, either directly, or indirectly, to the
negligent, gross negligent, wrongful act or omission, or willful misconduct of
the current and past officers, directors and shareholders of the Employer.



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               ARTICLE VI

               TERMINATION OF AGREEMENT

        6.1 After September 30, 2003, the employment provided in this Agreement
shall terminate at the will of Employer or Employee, without cause, upon thirty
(30) days written notice by the terminating party to the other party. This
Agreement may be terminated immediately, upon written or oral notice by the
terminating party, for cause, as provided in this Agreement.

        6.2 This Agreement shall terminate automatically on the occurrence of
any of the following events:

               A. Mutual agreement of both parties.

               B. At the election of either party, upon the bankruptcy or
insolvency of either party.

               C. Death of Employee.

               D. At the election of either party, upon the disability of
Employee, which renders Employee, in the opinion of Employee's treating medical
practitioner, unable to substantially perform Employee's duties under this
Agreement, for a period of six consecutive months. The right to terminate the
employment pursuant to this Paragraph 6.2, shall accrue only after Employee has
been disabled for such six consecutive months.

               ARTICLE VII

               GENERAL CONDITIONS

        7.1 Counterparts. This Agreement may be executed in any number of
counterparts and each such counterpart shall be deemed an original instrument.



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        7.2 Cooperation. Each of the parties hereto agree to execute any and all
additional documents, and take all additional actions, deemed reasonably
necessary to give full force and effect to the intent of this Agreement.

        7.3 Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors, assigns,
heirs, executors and administrators. 

        7.4 Interpretation. This Agreement shall be interpreted under and
pursuant to the Laws of the State of California.

        7.5 Entire Agreement. This Agreement, and any other documents executed
pursuant hereto, contains the entire agreement of the parties hereto, and
supersedes all prior agreements, whether written or oral, with respect to the
subject matters covered hereby. No oral representation, agreement, statement or
promise made by any party hereto or by any employee or agent of any party
hereto, which is not contained herein, shall be binding or valid.

        7.6 No Continuing Waiver. No waiver of any breach of any of the terms,
conditions and covenants of this Agreement shall be construed as a waiver of any
succeeding breach of the same or other terms, covenants and conditions hereof.

        7.7 Notices. Any notices required or permitted to be given hereunder
shall be in writing and may be given by personal delivery or by certified mail,
return receipt requested, addressed to each party at the address appearing with
that party's signature at the end of this Agreement. If any such notice is given
by personal delivery, said notice shall be deemed given upon receipt. If any
such notice is given by certified mail, return receipt requested, said notice
shall be deemed given on the third day following the date of mailing, as
indicated on the return receipt, regardless of whether the return receipt shows
actual delivery, provided, however, that if the return receipt 



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of any mailed notice indicates non-delivery, the party serving said notice shall
forthwith mail another, exact duplicate copy of said notice, to the recipient by
regular first class mail, postage prepaid. Any party may, by written notice to
another party, specify a different address for notice purposes.

        7.8 Remedies Cumulative. No remedy or election hereunder shall be deemed
exclusive but shall, whenever possible, be cumulative with all other remedies
provided by agreement, at law, or in equity.

        7.9 Invalidity in Part. In the event any provision of this Agreement
shall be held to be illegal, unenforceable or inoperative as a matter of law,
the remaining provisions shall remain in full force and effect unless such
construction shall substantially frustrate the purpose and intent of this
Agreement.

        7.10 Covenants and Conditions. Each provision of this Agreement
performable by a party shall be deemed both a covenant and a condition.

        7.11 Time of the Essence. Time is of the essence as to each and every
term, covenant and condition of this Agreement in which time is a factor.

        7.12 Survival. All covenants, conditions, warranties and representations
made by any party in this Agreement shall survive the execution and delivery of
this Agreement.

        7.13 Gender. The use herein of the neuter gender includes the masculine
and the feminine and the singular number includes the plural, whenever the
context so requires.

        7.14 Captions. Captions in this Agreement are inserted for convenience
or reference only and do not define, describe or limit the scope or the intent
of this Agreement or any of the terms hereof.



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        7.15 Exhibits. All exhibits referred to herein and attached hereto are
incorporated as a part hereof.

        7.16 Assignment. This Agreement shall not be assigned, either directly
or indirectly, by any of the parties without the prior written consent of the
other party. Each party agrees to reasonably consent to any request for transfer
or assignment by another party to a revocable "estate planning" type trust in
which the transferring party is a trustor and a principal beneficiary.

        7.17 Disclosure of Representation. The parties hereto acknowledge that
Employee is being represented in this transaction by COOKSEY, HOWARD, MARTIN &
TOOLEN, who are representing the interest of Employee only and not the interest
of Employer. Employer has been advised to seek independent legal counsel to
represent Employer's interest in this transaction, and to the extent Employer
has chosen not be to be represented by legal counsel, Employer agrees that this
Agreement shall be interpreted fully and fairly, without application of the
general rule of construction wherein an Agreement is interpreted against the
party that prepared it, and this Agreement shall not be avoidable due to
Employer's lack of legal representation.

        7.18 Attorneys Fees. In the event of litigation concerning this
Agreement, the prevailing party shall be entitled to recover reasonable
attorneys fees from the losing party.



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        Executed at Orange County, California, effective on the date and year
first above written.



EMPLOYER:

SIONIX CORPORATION, A UTAH CORPORATION

9272 JERONIMO ROAD SUITE 108, IRVINE, CALIFORNIA 92618




BY: /s/ ROBERT E. MCCRAY
    -------------------------------------
        Robert E. McCray, Director



BY: /s/ JOAN C. HOROWITZ
    -------------------------------------
        Joan C. Horowitz, Director



EMPLOYEE:


/s/ JAMES HOUTZ
-----------------------------------------
JAMES HOUTZ



ADDRESS:________________________________________________________________________



SOCIAL SECURITY NO.:_______________________



DATE:____________________________________



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                                    * * * *





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                                   EXHIBIT "A"



                            SCHEDULE OF COMPENSATION


        Employee shall receive compensation, during the term of this Agreement,
and during any extensions or renewals of this Agreement, as follows, or as
hereafter mutually agreed between the parties, in writing:


1.   BASE COMPENSATION. $7,083.33 per month, payable one-half on the 15th and
     one-half on the last day of each month during the term of employment.
     Commencing at the start of year two (2), and continuing through year five
     (5), and further continuing during any extensions or renewals of this
     Agreement. In addition, for each one quarter (1/4) year of service,
     Employee shall be, and hereby is granted, from Employer 255,000 shares of
     Employer's common stock, ($.001) par value, to be exercised at any time
     during the term of employment, and upon termination of Employee's
     employment, at any time within three (3) years thereafter. Employee's
     compensation package (Schedule "A", A) shall be increased ten percent (10%)
     per year.

2.   STOCK OPTION AT SIGNING. As a signing bonus, Employee shall be, and hereby
     is granted, Two Million Two Hundred Thousand (2,200,000) shares of
     Employer's common stock valued at One Tenth of a Cent ($.001) per share, to
     be exercised at any time during the term of employment, and upon
     termination of Employee's employment, at any time within three (3) years
     thereafter.

3.   STOCK OPTION UPON FUNDING OF ADDITIONAL SHARE ISSUANCE. Upon Employee
     negotiating and funding the sale of at least $800,000.00 of additional
     common shares of Employer common stock, Employee shall be, and hereby is,
     granted One Million Six Hundred Fifty Thousand (1,650,000) shares of
     Employer's common stock, valued at One Tenth of a Cent ($.001) per share,
     to be exercised at any time during the term of employment, and upon
     termination of Employee's employment, at any time within three (3) years
     thereafter.

4.   PERFORMANCE STOCK OPTIONS. Employee shall be, and hereby is granted, common
     shares of Employer stock contingent for each respective year upon
     Employer's gross sales achieving the levels indicated below.



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<TABLE>
<CAPTION>
FISCAL YEAR ENDING                  GROSS SALES OF AT LEAST           # OF SHARES
------------------                  -----------------------           -----------
<S>                                 <C>                               <C>      
FYE 12/31/99                            $ 2,500,000                    2,000,000
FYE 12/31/00                            $ 5,000,000                    2,250,000
FYE 12/31/01                            $10,000,000                    2,500,000
FYE 12/31/02                            $20,000,000                    2,750,000
FYE 12/31/03                            $40,000,000                    3,500,000
</TABLE>

The options granted in this Section D, may be exercised by Employee at any time
during the term of employment, and, upon termination of employment, at any time
within Five (5) years thereafter.

1.   TRADEABLE SHARES. Employer agrees to use its best efforts to issue shares
     to Employee, at the time the option(s) is executed, that are freely
     tradeable on the Exchange in which Employer's shares are traded. In the
     event Employer is unable to obtain freely tradeable shares for Employee, at
     the time the option or options are exercised, Employee shall have the right
     to obtain restricted shares conditioned upon Employee complying with all
     applicable securities, regulations and restrictions. The option(s) granted
     to Employee under this Agreement are non-revocable, and may be exercised by
     Employee in any amounts, from time to time, as Employee desires.

2.   LIFE Insurance. Life insurance on the life of Employee in the amount of
     $500,000.00.

3.   DISABILITY INSURANCE. Disability insurance providing disability benefits to
     Employee in an amount equal to 50% of Employee's base salary for a period
     until Employee reaches age 65 years.



EMPLOYER:__________________________          EMPLOYEE:__________________________




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