EXHIBIT
10.38
 
 EMPLOYMENT
AGREEMENT
 
 This Employment Agreement (“Agreement”)
is entered into between David R. Wells (“Executive”), an individual, and Sionix,
Inc. (“Sionix”), a Nevada corporation, effective December 15, 2009 (“Effective
Date”).  Sionix and Executive wish to memorialize the terms on which
Executive is employed by Sionix, as described in this Agreement.
 
 1.           Title
and Duties.
 
 1.1           Title. Executive
shall be employed as the President and Chief Financial Officer.
 
 1.2           Duties.  Subject
to the direction and supervision of the Chairman, Executive shall have the
general powers and duties of supervision and management usually vested in the
President and Chief Financial Officer of a corporation.
 
 2.           Compensation
 
 2.1           Salary.  Executive’s
salary will be $180,000 per year, less applicable tax and other customary
payroll withholdings and deductions. Executive’s salary will be payable every
two (2) weeks or twice per month, on such basis as Sionix’ other salaried
personnel generally are paid.
 
 2.2           Performance Bonus.
Executive will be eligible to participate in a senior executive bonus plan,
providing an opportunity for Executive to earn up to an additional 50% of his
salary amount as a bonus, to be adopted by the Board and for which other senior
executives are similarly eligible. Such bonuses will be paid 50% in cash and 50%
in common stock using a Volume Weighted Average Price (“VWAP”) for the period of
service under which the task was accomplished, upon the achievement of the
following objectives for the 2010 fiscal year:
 
 Ø
              Filing
      of Restatements for all prior periods
(20%)
 Ø
              All
      Form 10-Qs and Form 10-K in 2010 filed timely
  (20%)
 Ø
              Proxy
      – filed and approved (20%)
 Ø
              Company
      achieving booked revenue of $5m in 2010
(20%)
 Ø
              Executive
      completing Calendar 2010 in the position defined in this agreement
      (20%)
  
  2.3           Benefits.  Subject
to the satisfaction of any general eligibility criteria, Executive will be
permitted to participate in such benefits as Sionix offers to other senior
executive officers, subject to the terms of the applicable benefit
plan.  Such benefits may include, for example, life, health, dental,
accident, disability, or other insurance programs; pension, profit-sharing,
401(k), savings, or other retirement programs; but Sionix is not obligated by
this Agreement to adopt or maintain any particular benefit
programs.  Executive shall be entitled to four (4) weeks of vacation
per year, exclusive of Sionix holidays.
 
 2.4           Expense
Reimbursement. Sionix will pay directly or advance funds to or reimburse
Executive for reasonable travel and other business expenses incurred by him in
connection with the performance of services under this Agreement in accordance
with Sionix’ general policies applicable to its other senior executives, as
those policies may be amended from time to time, upon presentation of expense
statements or vouchers or such other supporting information as Sionix may
reasonably request.
 
 2.5           Audit Committee
Review.  Executive agrees that if
the  Company’s  cash or cash equivalents fall below $50,000
at any time, then the Audit Committee of the Board of Directors may, at its
discretion, exercise its right to pre-approve cash disbursements of the
Company.
 
 2.6      Equity
Compensation: Sionix shall grant to Executive as compensation for his services
an
 option to
purchase 400,000 shares of its Common Stock, at a price of $0.15 per share (the
“Signing Option”), and for the first year will grant an additional option to
purchase 400,000
 shares at
the beginning of each fiscal quarter at a price equal to the trailing VWAP of
the Company’s common stock as quoted on the OTCBB market, but in any event no
less than $0.15 per share (“Quarterly Options”, and collectively the “Options”).
All shares with respect to the Options will vest immediately upon receipt.
Thereafter, the Board will review the Equity
 compensation
to the Executive. The detailed items and provisions of the Options shall be
governed by a definitive stock option agreement which will include all of the
terms outlined in
 this
Section 4, along with additional terms that are in the Company’s standard stock
option agreement. Once that stock option agreement has been executed by both
Sionix and Executive, its terms and those of the Sionix’ stock option plan under
which the Option is granted, shall control in place of this Section
4.
 
 2.7      Ordinary
Vesting Schedule. The Options described in Section 2.2 will vest immediately
upon their receipt by the Executive.
 
 3.           Term
and Termination of Employment
  
  3.1           Term.  The
initial term of Executive’s employment will be for one year from the Effective
Date.  Unless Sionix gives written notice to Executive not less than
six (6) months prior to the expiration of the employment term, commencing on the
date six months prior to such scheduled expiration, the duration of the
employment term shall be extended an additional day for each day that passes, so
that at any time, unless Sionix has given written notice of termination, there
will be not less than six months remaining in the employment term.
 
 3.2           Early Termination Without
Cause.  Notwithstanding Section 3.1, Sionix may terminate
employment under this Agreement at any time, without Cause, provided that it
continues nonetheless to compensate Executive for a period of six months
following such termination, with salary and benefits under Sections 2.1 and
2.3.  Executive shall also be entitled to reimbursement of otherwise
allowable expenses incurred or committed prior to the date of
termination.
 
 3.3           Early Termination With
Cause.  Notwithstanding Section 3.1 and Section 3.2, Sionix may
terminate employment under this Agreement at any time, for Cause, in which case
Executive shall be entitled to no additional cash compensation other than salary
and vacation pay accrued through the date of termination, and reimbursement of
otherwise allowable expenses incurred or committed prior to the date of
termination.
 
 3.4           Death.  The
term of employment created by this Agreement shall automatically terminate upon
the death of Executive. Upon termination due to death, Sionix shall pay to
Executive’s devisee, legatee, or if there is no such designee, to his estate,
the salary, vacation pay and expense reimbursement accrued prior to death and
the base pay and (to the extent eligible)  benefits under Sections 2.1
and 2.3 that would have been payable for a period of six months following
death.  The devisee, legatee, or estate shall also be entitled to
reimbursement of otherwise allowable expenses incurred or committed prior to the
date of death.
 
 3.5           Resignation Without Good
Reason.  Executive may resign at any time, but will use
reasonable efforts to give not less than 30 days prior notice of such
resignation to Sionix.  Upon resignation, Executive shall be entitled
to no cash compensation other than salary and vacation pay accrued through the
effective date of resignation, and reimbursement of otherwise allowable expenses
incurred prior to the effective date of the resignation, or committed prior to
the date that such resignation is tendered.
 
 
 3.6           Resignation from Board Upon
Dismissal.  If a majority of the Board of Directors votes to
terminate the Executive’s employment for any reason, the Executive agrees to
simultaneously tender his resignation from the Board of Directors.
 
 
 4.           Company
Location.
  
  Sionix'
current headquarters is located in Anaheim, California.  From time to
time it is understood that the headquarters location might change. The executive
team will be expected to spend significant amounts of time meeting at that
headquarters, regardless of place of residence.  Executive will not be
required to relocate his residence as a condition of
employment.  Should Sionix relocate further than 50 miles from
Executive’s residence, business travel for attendance at Sionix meetings will be
at the expense of Sionix.
 
 5.           Indemnification
and Insurance.
 
 5.1           Indemnification.
Sionix will enter into a customary form of Officer Indemnification Agreement
with Executive.
 
 5.2           Insurance. Sionix
will use commercially reasonable efforts to procure and maintain prudent level
of Officer Liability Insurance coverage for Executive.
 
 6.           Definitions
 
 6.1           Cause. “Cause” will
exist if Sionix terminates Executive’s employment for any of the following
reasons, as determined by unanimous decision of those members of the Board other
than Executive:
 
 (a)           Executive
willfully fails to substantially perform his duties or willfully acts in a
manner contrary to direction from the Chief Executive Officer or Board of
Directors, and such willful failure or action is not remedied within ten (10)
business days after written notice from the CEO or the Board, which written
notice shall state that failure to remedy such conduct may result in an
involuntary termination for Cause;
 
 (b)           Executive
engages in willful and serious misconduct that causes material injury to Sionix;
or
 
 (c)           Executive
is convicted of or enters a plea of guilty or nolo contendere to a
felony.6.2Good Reason. “Good
Reason” means: (a) a decrease in Executive’s base salary (other than as part of
a cost-cutting effort that proportionately affects other senior executive
officers and is unanimously approved by the Board of Directors, including
Executive); or (b) loss of the title of Chief Administration
Officer.
 
 7.           Miscellaneous
 
 7.1           Notices.All notices, requests,
and other communications to any party provided for, under, or made in connection
with this Agreement must be in writing and will be effective on the sooner of
delivery to, if by personal delivery, or actual receipt by, if by prepaid
registered mail, return receipt requested, each of the appropriate
recipients.
 
 If to
Executive:
  
  David R.
Wells
 2673
34th
Street
 Santa
Monica, CA 90405
 (866)
212-6489 Fax
 
 If to
Sionix:
 Board of
Directors
 Sionix,
Inc.
 3886
Eagle Drive
 Anaheim,
CA 92807
 
 8.2           Governing Law. This
Agreement shall be governed by and construed in accordance with the laws of the
State of California, without regard to any conflict of law principle that might
permit or require the application of some other law.
 
 8.3           Integrated Agreement.
This Agreement, along with the definitive stock option agreement referred to in
Section 4.1, if and when executed by the parties hereafter,constitutes the entire
agreement between the parties with respect to their subject matter and merges
and supersedes all prior discussions, agreements, and understandings of every
kind and nature between the parties.
 
 8.4           Amendments and
Waivers. This Agreement may not be modified, amended, or terminated,
except in writing, signed by both parties. Either party may waive compliance by
the other party with any provision of this Agreement only by an instrument in
writing similarly executed, provided, however that such waiver shall not operate
as a waiver of, or estoppel with respect to, any other or subsequent
failure.
 
 
 [Signature
Page Follows]
  
  
 
 IN
WITNESS HEREOF, Executive has signed this Agreement, and Sionix has caused this
Agreement to be signed by its authorized officer to take effect as of the
Effective Date.
 
 
  DAVID R.
WELLS
 
 
 
 SIONIX,
INC.
 
 
 By: _______________________________
 
 Name:  ____________________________
 
 Title:  _____________________________