TERMINATION,
      SEPARATION AND RELEASE AGREEMENT

    


    This
      Termination, Separation and Release Agreement (“Agreement”) is entered into by
      and between Sionix Corporation (the “Company”) and Richard H. Papalian, 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 grant Papalian
      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.”

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    


    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.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    


    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 /
      / /

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    


    PLEASE
      READ THIS AGREEMENT CAREFULLY. IT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN
      CLAIMS.

    


    RICHARD
      PAPALIAN:

    


    /s/
      Richard Papalian

    Date:
      ______________________________

    Address:
      ___________________________

                    
      ___________________________

    


    


    SIONIX
      CORPORATION:

    


    


    By:
      /s/
      James
      Houtz                                               

    James
      Houtz, CEO

     

    
      
         

      

      
        5