Document:

sinx_ex104.htm

EXHIBIT 10.4

 

PLEDGE AND ESCROW AGREEMENT

THIS PLEDGE AND ESCROW AGREEMENT (“Agreement”) is made and entered into as of the 31st day of October, 2011, by and between SIONIX CORPORATION, a Nevada corporation (the “Pledgor”) and TCA GLOBAL CREDIT MASTER FUND, LP, a Cayman Islands limited partnership (the “Secured Party”), with the joinder of DAVID KAHAN, P.A. (“Escrow Agent”).

RECITALS

WHEREAS, the Secured Party has purchased certain debentures from the Pledgor (the “Debentures”) in the amount of Three Hundred Thousand and No/100 Dollars ($300,000.00), all pursuant to a Securities Purchase Agreement between the Pledgor and the Secured Party dated of even date herewith (the “SPA”); and

WHEREAS, in order to secure the full and prompt payment when due (whether at the stated maturity, by acceleration or otherwise) of all of the Pledgor’s obligations to the Secured Party, or any successor to the Secured Party, under this Agreement, the Debentures or the SPA (this Agreement, the Debentures, the SPA and all other documents and instruments executed in connection therewith hereinafter collectively referred to as the “Transaction Documents”), the Pledgor has agreed to irrevocably pledge to the Secured Party 16,981,132 shares of the common stock, $0.001 par value per share, of the Company (such shares, as same may be further increased from time to time pursuant to the terms of the SPA, hereinafter referred to as the “Pledged Shares”);

 

  

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NOW, THEREFORE, in consideration of the mutual covenants, agreements, warranties, and representations herein contained, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

1.   Recitals.  The recitations set forth in the preamble of this Agreement are true and correct and incorporated herein by this reference.

2.   Pledge.  In order to secure the full and timely payment and performance of all of the Company’s obligations to the Secured Party under the Transaction Documents (the “Obligations”), the Pledgor hereby transfers, pledges, assigns, sets over, delivers and grants to the Secured Party a continuing lien and security interest in and to all of the following property of the Pledgor, both now owned and existing and hereafter created, acquired and arising (all being collectively hereinafter referred to as the “Collateral”) and all right, title and interest of the Pledgor in and to the Collateral, to-wit:

(a) the Pledged Shares;

(b) any certificates representing or evidencing the Pledged Shares;

(c) any and all distributions thereon, and cash and non-cash proceeds and products thereof, including, but not limited to, all dividends, cash, income, profits, instruments, securities, stock dividends, distributions of capital stock of the Pledgor and all other property from time to time received, receivable or otherwise distributed in respect of, in exchange for or upon conversion of the Pledged Shares, whether in connection with stock splits, recapitalizations, merger, conversions, combinations, reclassifications, exchanges of securities or otherwise; and

(d) any and all voting and other rights, powers and privileges accruing or incidental to an owner of the Pledged Shares and the other property referred to in subsections 2(a) through 2(c) above.

3.   Transfer of Pledged Shares.  Simultaneously with the execution of this Agreement, the Pledgor shall, or shall cause its transfer agent to, deliver to the Escrow Agent: (i) the Pledged Shares and all certificates representing or evidencing the Pledged Shares in the name of the Secured Party, or otherwise together with undated, irrevocable and duly executed stock powers executed in blank by the Pledgor (including medallion guaranteed signatures, if required to duly and properly transfer the Pledged Shares); and (ii) all other property, instruments, documents and papers comprising, representing or evidencing the Collateral, or any part thereof, together with proper instruments of assignment or endorsement, as Secured Party may request or require, duly executed by the Pledgor (collectively, the “Transfer Documents”).  The Pledged Shares and other Transfer Documents (collectively, the “Pledged Materials”) shall be held by the Escrow Agent pursuant to this Agreement until the full payment and performance of all of the Obligations, the termination or expiration of this Agreement, or delivery of the Pledged Materials in accordance with this Agreement.  In addition, Pledgor acknowledges that pursuant to the terms of the SPA, the Pledgor may be required to pledge additional shares of its common stock as additional Pledged Shares under this Agreement in order to insure that the value of the Pledged Shares hereunder shall at all times be no less than the “Pledged Share Value” (as such term is defined in the SPA).  In that regard, whenever such additional Pledged Shares are required to be delivered and pledged under this Agreement pursuant to the terms of the SPA, the Pledgor shall, or shall cause its transfer agent to, deliver to Escrow Agent the Pledged Materials for such additional shares within five (5) business days from the date that Secured Party notifies Pledgor of the requirement for such additional Pledged Shares under the terms of the SPA. In addition, all non-cash dividends, dividends paid or payable in cash or otherwise in connection with a partial or total liquidation or dissolution of the Pledgor, instruments, securities and any other distributions, whether paid or payable in cash or otherwise, made on or in respect of the Pledged Shares, whether resulting from a subdivision, combination, or reclassification of the outstanding capital stock of the Pledgor, or received in exchange for the Pledged Shares or any part thereof, or in redemption thereof, as a result of any merger, consolidation, acquisition, or other exchange of assets to which Pledgor may be a party or otherwise, or any other property that constitutes part of the Collateral from time to time, shall be immediately delivered or cause to be delivered by Pledgor to the Escrow Agent in the same form as so received, including, without limitation, any additional certificates representing any portion of the Collateral hereafter acquired by Pledgor, together with proper instruments of assignment or endorsement duly executed by the Pledgor.

  

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4.   Security Interest Only.  The security interests in the Collateral granted to Secured Party hereunder are granted as security only and shall not subject the Secured Party to, or transfer or in any way affect or modify, any obligation or liability of the Pledgor with respect to any of the Collateral or any transaction in connection therewith.

5.   Record Owner of Collateral.  Secured Party shall have the right, in its sole and absolute discretion, to hold any stock certificates, notes, instruments or securities now or hereafter included in the Collateral in its own name or the name of its nominee.  In addition, the parties agree that the Pledged Shares, when issued in the name of the Secured Party and delivered to Escrow Agent, shall be deemed issued and held in the name of Secured Party as of the date of issuance in the name of Secured Party.  The Pledgor will promptly give to the Secured Party copies of any notices or other communications received by and with respect to Collateral registered in the name of the Pledgor.

6.   Rights Related to Pledged Shares.  Subject to the terms of this Agreement, unless and until an “Event of Default” (as hereinafter defined) under this Agreement shall occur, the Secured Party shall not have the right to exercise any rights, powers and privileges accruing to an owner of the Pledged Shares, or any part thereof.

Upon the occurrence of an Event of Default, all rights of the Pledgor in and to the Pledged Shares and all other Collateral shall cease and all such rights shall immediately vest in Secured Party, as may be determined by Secured Party, although Secured Party shall not have any duty to exercise such rights or be required to sell or to otherwise realize upon the Collateral, as hereinafter authorized, or to preserve the same, and Secured Party shall not be responsible for any failure to do so or delay in doing so.  To effectuate the foregoing, Pledgor hereby grants to Secured Party a proxy to vote the Pledged Shares for and on behalf of Pledgor, which proxy is irrevocable and coupled with an interest and which proxy shall be effective upon any Event of Default.  Such proxy shall remain in effect so long as the Obligations remain outstanding.  Pledgor hereby agrees that any vote by Pledgor in violation of this Section 6 shall be null, void and of no force or effect.  Furthermore, all dividends or other distributions received by the Pledgor shall be subject to delivery to Escrow Agent in accordance with Section 3 above, and until such delivery, any of such dividends and other distributions shall be received in trust for the benefit of the Secured Party, shall be segregated from other property or funds of the Pledgor and shall be forthwith delivered to Escrow Agent in accordance with Section 3 above.

7.   Release of Pledged Shares.  Upon the timely payment in full of all of the Obligations in accordance with the terms thereof, Secured Party shall notify the Escrow Agent in writing to such effect. Upon receipt of such written notice, the Escrow Agent shall return all of the Pledged Materials in Escrow Agent’s possession to the Pledgor, whereupon any and all rights of Secured Party in and to the Pledged Materials and all other Collateral shall be terminated.

  

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8.   Representations, Warranties, and Covenants of the Pledgor.  The Pledgor hereby covenants, warrants and represents, for the benefit of the Secured Party, as follows (the following representations and warranties shall be made as of the date of this Agreement and as of each date when Pledged Shares are delivered to Escrow Agent hereunder, as applicable):

(a) The Pledged Shares, when issued hereunder, shall be free and clear of any liens, claims, charges or encumbrances of any nature whatsoever, other than as created by this Agreement.

(b) The Pledged Shares have been duly authorized and are validly issued, fully paid and non-assessable, and are subject to no options to purchase, or any similar rights or to any restrictions on transferability.

(c) Each certificate or document of title constituting the Pledged Shares is genuine in all respects and represents what it purports to be.

(d) By virtue of the execution and delivery of this Agreement and upon delivery to Escrow Agent of the Pledged Shares in accordance with this Agreement, Secured Party will have a valid and perfected security interest in the Collateral, subject to no prior or other lien, claim, charge, pledge, security interest or encumbrance of any nature whatsoever.

(e) Pledgor covenants, that for so long as this Agreement is in effect, Pledgor will defend the Collateral and the priority of Secured Party’s security interests therein, at its sole cost and expense, against the claims and demands of all persons at anytime claiming the same or any interest therein.

(f) At its option, Secured Party may pay, for Pledgor’s account, any taxes (including documentary stamp taxes), liens, security interests, or other encumbrances at any time levied or placed on the Collateral.  Pledgor agrees to reimburse Secured Party on demand for any payment made or expense incurred by Secured Party pursuant to the foregoing authorization.  Any such amount, if not promptly paid upon demand therefor, shall accrue interest at the highest non-usurious rate permitted by applicable law from the date of outlay, until paid, and shall constitute an Obligation secured hereby.

(g) The Pledgor acknowledges, represents and warrants that Secured Party is not an “affiliate” of Pledgor, as such terms is used and defined under Rule 144 of the federal securities laws.

  

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9.   Events of Default.  The occurrence of any one or more of the following events shall constitute an “Event of Default” hereunder:

(a) Default.  The occurrence of any breach, default or “Event of Default” (as such term may be defined in any Transaction Documents) under any of the Transaction Documents.

(b) Covenants and Agreements.  The failure of Pledgor to perform, observe or comply with any and all of the covenants, promises and agreements of the Pledgor in any of the Transaction Documents.

(c) Information, Representations and Warranties.  If any representation or warranty made herein or in any other Transaction Documents, or if any information contained in any financial statement, application, schedule, report or any other document given by the Pledgor in connection with the Obligations, with the Collateral, or with the Transaction Documents, is not in all respects true, accurate and complete, or if the Pledgor omitted to state any material fact or any fact necessary to make such information not misleading.

10. Rights and Remedies.

(a) Upon and anytime after the occurrence of an Event of Default that is continuing beyond any applicable cure period, the Secured Party shall have the right acquire the Pledged Shares and all other Collateral in accordance with the following procedure: (i) the Secured Party shall provide written notice of such Event of Default (the “Default Notice”) to the Escrow Agent, with a copy to the Pledgor; (ii) as soon as practicable after receipt of a Default Notice, the Escrow Agent shall deliver the Pledged Shares and all other Collateral, along with the applicable Transfer Documents to the Secured Party.

(b) Upon receipt of the Pledged Shares and other Collateral issued to the Secured Party, the Secured Party shall have the right to, without notice or demand to Pledgor: (i) sell the Collateral and to apply the proceeds of such sales, net of any selling commissions, to the Obligations owed to the Secured Party by the Pledgor under the Transaction Documents, including, without limitation, outstanding principal, interest, legal fees, and any other amounts owed to the Secured Party; and (ii) exercise in any jurisdiction in which enforcement hereof is sought, any rights and remedies available to Secured Party under the provisions of any of the Transaction Documents, the rights and remedies of a secured party under the Uniform Commercial Code as then in effect in the State of Florida, and all other rights and remedies available to the Secured Party, under equity or applicable law, all such rights and remedies being cumulative and enforceable alternatively, successively or concurrently.  In furtherance of the foregoing rights and remedies:

(i) Secured Party may sell the Pledged Shares, or any part thereof, or any other portion of the Collateral, in one or more sales, at public or private sale, conducted by any agent of, or auctioneer or attorney for Secured Party, at Secured Party’s place of business or elsewhere, or at any broker’s board or on any securities exchange, for cash, upon credit or for future delivery, and at such price or prices, all as Secured Party may deem appropriate.  Secured Party may be a purchaser at any such sale of any or all of the Collateral so sold.  In the event Secured Party is a purchaser at any such sale, Secured Party may apply to such purchase all or any portion of the sums then due and owing by the Pledgor to Secured Party under any of the Transaction Documents or otherwise, and the Secured Party may, upon compliance with the terms of the sale, hold, retain and dispose of such property without further accountability to the Pledgor therefore.  Secured Party is authorized, in its absolute discretion, to restrict the prospective bidders or purchasers of any of the Collateral at any public or private sale as to their number, nature of business and investment intention, including, but not limited to, the restricting of bidders or purchasers to one or more persons who represent and agree, to the satisfaction of Secured Party, that they are purchasing the Collateral, or any part thereof, for their own account, for investment, and not with a view to the distribution or resale of any of such Collateral.

  

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(ii) Upon any such sale, Secured Party shall have the right to deliver, assign and transfer to each purchaser thereof the Collateral so sold to such purchaser.  Each purchaser (including Secured Party) at any such sale shall, to the full extent permitted by law, hold the Collateral so purchased absolutely free from any claim or right whatsoever, including, without limitation, any equity or right of redemption of the Pledgor, who, to the full extent that it may lawfully do so, hereby specifically waives all rights of redemption, stay, valuation or appraisal which they now have or may have under any rule of law or statute now existing or hereafter adopted.

(iii) At any such sale, the Collateral may be sold in one lot as an entirety, in separate blocks or individually as Secured Party may determine, in its sole and absolute discretion.  Secured Party shall not be obligated to make any sale of any Collateral if it shall determine in its sole and absolute discretion, not to do so, regardless of the fact that notice of sale of such Collateral shall have been given.  Secured Party may, without notice or publication, adjourn any public or private sale from time to time by announcement at the time and place fixed for such sale, or any adjournment thereof, and any such sale may be made at any time or place to which the same may be so adjourned without further notice or publication.

(iv) The Pledgor acknowledges that compliance with applicable federal and state securities laws (including, without limitation, the Securities Act of 1933, as amended, blue sky or other state securities laws or similar laws now or hereafter existing analogous in purpose or effect) might very strictly limit or restrict the course of conduct of Secured Party if Secured Party were to attempt to sell or otherwise dispose of all or any part of the Collateral, and might also limit or restrict the extent to which or the manner in which any subsequent transferee of any such securities could sell or dispose of the same.  The Pledgor further acknowledges that under applicable laws, Secured Party may be held to have certain general duties and obligations to the Pledgor, as pledgor of the Collateral, to make some effort toward obtaining a fair price for the Collateral even though the obligations of the Pledgor may be discharged or reduced by the proceeds of sale at a lesser price.  The Pledgor understands and agrees that Secured Party is not to have any such general duty or obligation to the Pledgor, and the Pledgor will not attempt to hold Secured Party responsible for selling all or any part of the Collateral at an inadequate price even if Secured Party shall accept the first offer received or does not approach more than one possible purchaser.  Without limiting their generality, the foregoing provisions would apply if, for example, Secured Party were to place all or any part of such securities for private placement by an investment banking firm, or if such investment banking firm purchased all or any part of such securities for its own account, or if Secured Party placed all or any part of such securities privately with a purchaser or purchasers.

  

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(c) To the extent that the net proceeds received by the Secured Party are insufficient to satisfy the Obligations in full, the Secured Party shall be entitled to a deficiency judgment against the Pledgor for such deficiency amount.  The Secured Party shall have the absolute right to sell or dispose of the Collateral, or any part thereof, in any manner it sees fit and shall have no liability to the Pledgor or any other party for selling or disposing of such Collateral even if other methods of sales or dispositions would or allegedly would result in greater proceeds than the method actually used. The Pledgor shall remain liable for all deficiencies and shortfalls, if any, that may exist after the Secured Party has exhausted all remedies hereunder.

(d) Each right, power and remedy of the Secured Party provided for in this Agreement or any other Transaction Document shall be cumulative and concurrent and shall be in addition to every other such right, power or remedy. The exercise or beginning of the exercise by the Secured Party of any one or more of the rights, powers or remedies provided for in this Agreement or any other Transaction Document, or now or hereafter existing at law or in equity or by statute or otherwise, shall not preclude the simultaneous or later exercise by the Secured Party of all such other rights, powers or remedies, and no failure or delay on the part of the Secured Party to exercise any such right, power or remedy shall operate as a waiver thereof. No notice to or demand on the Pledgor in any case shall entitle it to any other or further notice or demand in similar or other circumstances or constitute a waiver of any of the rights of the Secured Party to any other further action in any circumstances without demand or notice. The Secured Party shall have the full power to enforce or to assign or contract its rights under this Agreement to a third party.

(e) In addition to all other remedies available to the Secured Party, upon the issuance of the Pledged Shares to the Secured Party after an Event of Default, Pledgor agrees to: (i) take such action and prepare, distribute and/or file such documents and papers, as are required or advisable in the opinion of Secured Party and/or its counsel, to permit the sale of the Pledged Shares, whether at public sale, private sale or otherwise, including, without limitation, issuing, or causing its counsel to issue, any opinion of counsel for Pledgor required to allow the Secured Party to sell the Pledged Shares or any other Collateral under Rule 144; (ii) to bear all costs and expenses of carrying out its obligations under this Section 8(e), which shall be a part of the Obligations secured hereby; and (iv) that there is no adequate remedy at law for the failure by the Pledgor to comply with the provisions of this Section 8(e) and that such failure would not be adequately compensable in damages, and therefore agrees that its agreements contained in this subsection may be specifically enforced.

(f) The Pledgor acknowledges that there is no adequate remedy at law for the failure by the Pledgor to comply with Pledgor’s obligation to deliver additional Pledged Shares to Escrow Agent hereunder from time to time pursuant to the terms of the SPA and this Agreement and that such failure would not be adequately compensable in damages, and therefore agrees that such obligation may be specifically enforced.

  

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11.  Concerning the Escrow Agent.

(a) The Escrow Agent undertakes to perform only such duties as are expressly set forth herein and no implied duties or obligations shall be read into this Agreement against the Escrow Agent.  Escrow Agent agrees to release any property held by it hereunder (the “Escrowed Property”) in accordance with the terms and conditions set forth in this Agreement.

(b) The Escrow Agent may act in reliance upon any writing or instrument or signature which it, in good faith, believes to be genuine, may assume the validity and accuracy of any statement or assertion contained in such a writing or instrument, and may assume that any person purporting to give any writing, notice, advice or instructions in connection with the provisions hereof has been duly authorized to do so. The Escrow Agent shall not be liable in any manner for the sufficiency or correctness as to form, manner, and execution, or validity of any instrument deposited in this escrow, nor as to the identity, authority, or right of any person executing the same; and its duties hereunder shall be limited to the safekeeping of the Escrowed Property, and for the disposition of the same in accordance with this Agreement.  Escrow Agent shall not be deemed to have knowledge of any matter or thing unless and until Escrow Agent has actually received written notice of such matter or thing and Escrow Agent shall not be charged with any constructive notice whatsoever.

(c) Escrow Agent shall hold in escrow, pursuant to this Agreement, the Escrowed Property actually delivered and received by Escrow Agent hereunder, but Escrow Agent shall not be obligated to ascertain the existence of (or initiate recovery of) any other property that may be part or portion of the Collateral, or to become or remain informed with respect to the possibility or probability of additional Collateral being realized upon or collected at any time in the future, or to inform any parties to this Agreement or any third party with respect to the nature and extent of any Collateral realized and received by Escrow Agent (except upon the written request of such party), or to monitor current market values of the Collateral.  Further, Escrow Agent shall not be obligated to proceed with any action or inaction based on information with respect to market values of the Collateral which Escrow Agent may in any manner learn, nor shall Escrow Agent be obligated to inform the parties hereto or any third party with respect to market values of any of the Collateral at any time, Escrow Agent having no duties with respect to investment management or information, all parties hereto understanding and intending that Escrow Agent’s responsibilities are purely ministerial in nature.  Any reduction in the market value or other value of the Collateral while deposited with Escrow Agent shall be at the sole risk of Pledgor and Secured Party.  If all or any portion of the Escrowed Property is in the form of a check or in any other form other than cash, Escrow Agent shall deposit same as required but shall not be liable for the nonpayment thereof, nor responsible to enforce collection thereof.

(d) In the event instructions from Secured Party, Pledgor, or any other party would require Escrow Agent to expend any monies or to incur any cost, Escrow Agent shall be entitled to refrain from taking any action until it receives payment for such costs.  It is agreed that the duties of Escrow Agent are purely ministerial in nature and shall be expressly limited to the safekeeping of the Escrowed Property and for the disposition of same in accordance with this Agreement.  Secured Party and Pledgor, jointly and severally, each hereby indemnifies Escrow Agent and holds it harmless from and against any and all claims, liabilities, damages, costs, penalties, losses, actions, suits or proceedings at law or in equity, or any other expenses, fees or charges of any character or nature (collectively, the “Claims”), which it may incur or with which it may be threatened, directly or indirectly, arising from or in any way connected with this Agreement or which may result from Escrow Agent’s following of instructions from Secured Party or Pledgor, and in connection therewith, indemnifies Escrow Agent against any and all expenses, including attorneys’ fees and the cost of defending any action, suit, or proceeding or resisting any Claim, whether or not litigation is instituted, unless any such Claims arise as a result of Escrow Agent’s gross negligence or willful misconduct.  Escrow Agent shall be vested with a lien on all Escrowed Property under the terms of this Agreement, for indemnification, attorneys’ fees, court costs and all other costs and expenses arising from any suit, interpleader or otherwise, or other expenses, fees or charges of any character or nature, which may be incurred by Escrow Agent by reason of disputes arising between Pledgor, Secured Party, or any third party as to the correct interpretation of this Agreement, and instructions given to Escrow Agent hereunder, or otherwise, with the right of Escrow Agent, regardless of the instruments aforesaid and without the necessity of instituting any action, suit or proceeding, to hold any property hereunder until and unless said additional expenses, fees and charges shall be fully paid. Any fees and costs charged by the Escrow Agent for serving hereunder shall be paid by the Pledgor.

  

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(e) In the event Escrow Agent shall be uncertain as to its duties or rights hereunder or shall receive instructions, claims or demands from Secured Party, Pledgor or from third persons with respect to the Escrowed Property, which, in Escrow Agent’s sole opinion, are in conflict with each other or with any provision of this Agreement, Escrow Agent shall be entitled to refrain from taking any action until it shall be directed otherwise in writing by Pledgor and Secured Party and said third persons, if any, or by a final order or judgment of a court of competent jurisdiction.  If any of the parties shall be in disagreement about the interpretation of this Agreement, or about the rights and obligations, or the propriety of any action contemplated by the Escrow Agent hereunder, the Escrow Agent may, at its sole discretion, deposit the Escrowed Property with a court having jurisdiction over this Agreement, and, upon notifying all parties concerned of such action, all liability on the part of the Escrow Agent shall fully cease and terminate. The Escrow Agent shall be indemnified by the Pledgor and Secured Party for all costs, including reasonable attorneys’ fees, in connection with the aforesaid proceeding, and shall be fully protected in suspending all or a part of its activities under this Agreement until a final decision or other settlement in the proceeding is received.  In the event Escrow Agent is joined as a party to a lawsuit by virtue of the fact that it is holding the Escrowed Property, Escrow Agent shall, at its sole option, either: (i) tender the Collateral in its possession to the registry of the appropriate court; or (ii) disburse the Collateral in its possession in accordance with the court’s ultimate disposition of the case, and Secured Party and Pledgor hereby, jointly and severally, indemnify and hold Escrow Agent harmless from and against any damages or losses in connection therewith including, but not limited to, reasonable attorneys’ fees and court costs at all trial and appellate levels.

(f) The Escrow Agent may consult with counsel of its own choice (and the costs of such counsel shall be paid by the Pledgor and Secured Party) and shall have full and complete authorization and protection for any action taken or suffered by it hereunder in good faith and in accordance with the opinion of such counsel. The Escrow Agent shall not be liable for any mistakes of fact or error of judgment, or for any actions or omissions of any kind, unless caused by its willful misconduct or gross negligence.

(g) The Escrow Agent may resign upon ten (10) days’ written notice to the parties in this Agreement.  If a successor Escrow Agent is not appointed by Secured Party and Pledgor within this ten (10) day period, the Escrow Agent may petition a court of competent jurisdiction to name a successor.

(h) Conflict Waiver. The Pledgor hereby acknowledges that the Escrow Agent is counsel to the Secured Party in connection with the transactions contemplated and referred herein. The Pledgor agrees that in the event of any dispute arising in connection with this Agreement or otherwise in connection with any transaction or agreement contemplated and referred herein, the Escrow Agent shall be permitted to continue to represent the Secured Party and the Pledgor will not seek to disqualify such counsel and waives any objection Pledgor might have with respect to the Escrow Agent acting as the Escrow Agent pursuant to this Agreement.  Pledgor and Secured Party acknowledge and agree that nothing in this Agreement shall prohibit Escrow Agent from: (i) serving in a similar capacity on behalf of others; or (ii) acting in the capacity of attorneys for one or more of the parties hereto in connection with any matter.

  

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12.  Increase in Obligations.  It is the intent of the parties to secure payment of the Obligations, as the amount of such Obligations may increase from time to time in accordance with the terms and provisions of the Transaction Documents, and all of the Obligations, as so increased from time to time, shall be and are secured hereby.  Upon the execution hereof, Pledgor shall pay any and all documentary stamp taxes and/or other charges required to be paid in connection with the execution and enforcement of the Debentures and the Transaction Documents, and if, as and to the extent the Obligations are increased from time to time in accordance with the terms and provisions of the Transaction Documents, then Pledgor shall immediately pay any additional documentary stamp taxes or other charges in connection therewith.

13.  Irrevocable Authorization and Instruction.  Pledgor hereby authorizes and instructs its transfer agent to comply with any instruction received by it from Secured Party in writing that: (i) states that an Event of Default hereunder exists or has occurred; and (b) is otherwise in accordance with the terms of this Agreement, without any other or further instructions from Pledgor, and Pledgor agrees that its transfer agent shall be fully protected in so complying with any such instruction from Secured Party.

14.  Appointment as Attorney-in-Fact. Pledgor hereby irrevocably constitutes and appoints Secured Party and any officer or agent of Secured Party, with full power of substitution, as its true and lawful attorney-in-fact, with full irrevocable power and authority in the place and stead of Pledgor and in the name of Pledgor or in the name of Secured Party, from time to time in the discretion of Secured Party, so long as an Event of Default hereunder exists, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Agreement, including, without limitation, any financing statements, endorsements, assignments or other instruments of transfer. Pledgor hereby ratifies all that said attorneys shall lawfully do or cause to be done pursuant to the power of attorney granted in this Section 14. All powers, authorizations and agencies contained in this Agreement are coupled with an interest and are irrevocable until the Obligations are paid and performed in full.

  

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15.  Continuing Obligation of Pledgor.  The obligations, covenants, agreements and duties of the Pledgor under this Agreement shall in no way be affected or impaired by: (i) the modification or amendment (whether material or otherwise) of any of the obligations of the Pledgor or any other person or entity, as applicable; (ii) the voluntary or involuntary bankruptcy, assignment for the benefit of creditors, reorganization, or other similar proceedings affecting the Pledgor or any other person or entity, as applicable; (iii) the release of the Pledgor or any other person or entity from the performance or observance of any of the agreements, covenants, terms or conditions contained in any Transaction Documents, by the operation of law or otherwise, including, but not limited to, the release of the Pledgor’s obligation to pay interest or attorney's fees.

Pledgor further agrees that Secured Party may take other guaranties or collateral or security to further secure the Obligations, and consents that any of the terms, covenants and conditions contained in any of the Transaction Documents may be, without Pledgor’s consent, renewed, altered, extended, changed or modified by Secured Party or may be released by Secured Party, without in any manner affecting this Agreement or releasing Pledgor herefrom, and without further consent of or notice to Pledgor, and Pledgor shall continue to be liable hereunder to pay and perform pursuant hereto, notwithstanding any such release or the taking of such other guaranties, collateral or security.  This Agreement is additional and supplemental to any and all other guarantees, security agreements or collateral heretofore and hereafter executed by Pledgor for the benefit of Secured Party, whether relating to the indebtedness evidenced by any of the Transaction Documents or not, and shall not supersede or be superseded by any other document or guaranty executed by Pledgor or any other person, firm or entity for any purpose.  Pledgor hereby agrees that Pledgor and any additional parties who may become liable for repayment of the sums due under the Transaction Documents, may hereafter be released from their liability hereunder and thereunder; and Secured Party may take, or delay in taking or refuse to take, any and all action with reference to any of the Transaction Documents (regardless of whether same might vary the risk or alter the rights, remedies or recourses of Pledgor), including specifically the settlement or compromise of any amount allegedly due thereunder, all without notice to, consideration to or the consent of the Pledgor, and without in any way releasing, diminishing or affecting in any way the absolute nature of Pledgor’s obligations and liabilities hereunder.

No delay on the part of the Secured Party in exercising any rights hereunder or failure to exercise the same shall operate as a waiver of such rights.  Pledgor hereby waives any and all legal requirements, statutory or otherwise, that Secured Party shall institute any action or proceeding at law or in equity or exhaust its rights, remedies and recourses against Pledgor or anyone else with respect to the Debentures or any other Transaction Documents, as a condition precedent to bringing an action against Pledgor upon this Agreement or as a condition precedent to Secured Party’s rights to sell the Pledged Shares or any other Collateral.  Pledgor agrees that Secured Party may simultaneously maintain an action upon this Agreement and an action or proceeding upon the Debentures or any other Transaction Documents.  All remedies afforded by reason of this Agreement are separate and cumulative remedies and may be exercised serially, simultaneously and in any order, and the exercise of any of such remedies shall not be deemed an exclusion of the other remedies and shall in no way limit or prejudice any other contractual, legal, equitable or statutory remedies which Secured Party may have in the Pledged Shares, any other Collateral, or under the Transaction Documents.  Until the Obligations, and all extensions, renewals and modifications thereof, are paid in full, and until each and all of the terms, covenants and conditions of this Agreement are fully performed, Pledgor shall not be released by any act or thing which might, but for this provision of this Agreement, be deemed a legal or equitable discharge of a surety, or by reason of any waiver, extension, modification, forbearance or delay of Secured Party or any obligation or agreement between Pledgor or its successors or assigns, and the then holder of the Debentures, relating to the payment of any sums evidenced or secured thereby or to any of the other terms, covenants and conditions contained therein, and Pledgor hereby expressly waives and surrenders any defense to liability hereunder based upon any of the foregoing acts, things, agreements or waivers, or any of them.  Pledgor also waives any defense arising by virtue of any disability, insolvency, bankruptcy, lack of authority or power or dissolution of Pledgor, even though rendering the Debentures or any of the other Transaction Documents void, unenforceable or otherwise uncollectible, it being agreed that Pledgor shall remain liable hereunder, regardless of any claim which Pledgor might otherwise have against Secured Party by virtue of Secured Party's invocation of any right, remedy or recourse given to it hereunder, under the Debentures or any other Transaction Documents.  In addition, Pledgor waives and renounces any right of subrogation, reimbursement or indemnity whatsoever, and any right of recourse to security for the Obligations of Pledgor to Secured Party, unless and until all of said Obligations have been paid in full to Secured Party.

  

11

  

 

16.  Miscellaneous.

(a) Performance for Pledgor.  The Pledgor agrees and hereby acknowledges that Secured Party may, in Secured Party’s sole discretion, but Secured Party shall not be obligated to, whether or not an Event of Default shall have occurred, advance funds on behalf of the Pledgor, without prior notice to the Pledgor, in order to insure the Pledgor’s compliance with any covenant, warranty, representation or agreement of the Pledgor made in or pursuant to this Agreement or the other Transaction Documents, to continue or complete, or cause to be continued or completed, performance of the Pledgor’s obligations under any contracts of the Pledgor, or to preserve or protect any right or interest of Secured Party in the Collateral or under or pursuant to this Agreement or the other Transaction Documents; provided, however, that the making of any such advance by Secured Party shall not constitute a waiver by Secured Party of any Event of Default with respect to which such advance is made, nor relieve the Pledgor of any such Event of Default. The Pledgor shall pay to Secured Party upon demand all such advances made by Secured Party with interest thereon at the highest rate set forth in the Debentures, or if none is so stated, the highest rate allowed by law.  All such advances shall be deemed to be included in the Obligations and secured by the security interest granted Secured Party hereunder; provided, however, that the provisions of this Subsection shall survive the termination of this Agreement and Secured Party’s security interest hereunder and the payment of all other Obligations.

(b) Applications of Payments and Collateral.  Except as may be otherwise specifically provided in this Agreement or the other Transaction Documents, all Collateral and proceeds of Collateral coming into Secured Party’s possession may be applied by Secured Party (after payment of any costs, fees and other amounts incurred by Secured Party in connection therewith) to any of the Obligations, whether matured or unmatured, as Secured Party shall determine in its sole discretion.  Any surplus held by the Secured Party and remaining after the indefeasible payment in full in cash of all of the Obligations shall be paid over to whomsoever shall be lawfully entitled to receive the same or as a court of competent jurisdiction shall direct.  In the event that the proceeds of any such sale, collection or realization are insufficient to pay all amounts to which the Secured Party is legally entitled, the Pledgor shall be liable for the deficiency, together with interest thereon at the highest rate specified in the Debentures for interest on overdue principal thereof or such other rate as shall be fixed by applicable law, together with the costs of collection and the reasonable fees, costs, expenses and other client charges of any attorneys employed by the Secured Party to collect such deficiency.

  

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(c) Waivers by Pledgor.  The Pledgor hereby waives, to the extent the same may be waived under applicable law: (i) notice of acceptance of this Agreement; (ii) all claims and rights of the Pledgor against Secured Party on account of actions taken or not taken by Secured Party in the exercise of Secured Party’s rights or remedies hereunder, under any other Transaction Documents or under applicable law; (iii) all claims of the Pledgor for failure of Secured Party to comply with any requirement of applicable law relating to enforcement of Secured Party’s rights or remedies hereunder, under the other Transaction Documents or under applicable law; (iv) all rights of redemption of the Pledgor with respect to the Collateral; (v) in the event Secured Party seeks to repossess any or all of the Collateral by judicial proceedings, any bond(s) or demand(s) for possession which otherwise may be necessary or required; (vi) presentment, demand for payment, protest and notice of non-payment and all exemptions applicable to any of the Collateral or the Pledgor; (vii) any and all other notices or demands which by applicable law must be given to or made upon the Pledgor by Secured Party; (viii) settlement, compromise or release of the obligations of any person or entity primarily or secondarily liable upon any of the Obligations; (ix) all rights of the Pledgor to demand that Secured Party release account debtors or other persons or entities liable on any of the Collateral from further obligation to Secured Party; and (x) substitution, impairment, exchange or release of any Collateral for any of the Obligations. The Pledgor agrees that Secured Party may exercise any or all of its rights and/or remedies hereunder and under any other Transaction Documents and under applicable law without resorting to and without regard to any Collateral or sources of liability with respect to any of the Obligations.

 

(d) Waivers by Secured Party.  No failure or any delay on the part of Secured Party in exercising any right, power or remedy hereunder or under any other Transaction Documents or under applicable law, shall operate as a waiver thereof.

(e) Secured Party’s Setoff.  Secured Party shall have the right, in addition to all other rights and remedies available to it, following an Event of Default, to set off against any Obligations due Secured Party, any debt owing to the Pledgor by Secured Party.

(f) Modifications, Waivers and Consents.  No modifications or waiver of any provision of this Agreement or any other Transaction Documents, and no consent by Secured Party to any departure by the Pledgor therefrom, shall in any event be effective unless the same shall be in writing, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given, and any single or partial written waiver by Secured Party of any term, provision or right of Secured Party hereunder shall only be applicable to the specific instance to which it relates and shall not be deemed to be a continuing or future waiver of any other right, power or remedy.  No notice to or demand upon the Pledgor in any case shall entitle Pledgor to any other or further notice or demand in the same, similar or other circumstances.

  

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(g) Notices.  All notices of request, demand and other communications hereunder shall be addressed to the parties as follows:

If to the Pledgor:                                                   Sionix Corporation

914 Westwood Blvd., Box 801

Los Angeles, CA 90024

Attn: Mr. James Currier, Sr., CEO

Telephone: (704) 971-8404

Facsimile: (704) 971-8401

E-Mail: jcurrier@sionix.com

With a copy to:                                                     Peter Hogan, Esq.

Richardson & Patel, LLP

1100 Glendon Ave., 8th Floor

Los Angeles, CA 90024

Phone: (310) 208-1182

Fax: (310) 208-1154

Email: phogan@richardsonpatel.com

If to the Secured Party:                                        TCA Global Credit Master Fund, LP

1404 Rodman Street

Hollywood, FL 33020

Attn: Robert Press, Director

Telephone: (786) 323-1650

Facsimile: (786) 323-1651

E-Mail: bpress@trafcap.com

With a copy to:                                                     David Kahan, P.A.

3125 W. Commercial Blvd., Suite 100

Ft, Lauderdale, FL 33309

Attn: David Kahan, Esq.

Telephone: (954) 548-3930

Facsimile: (954) 548-3910

E-Mail: david@dkpalaw.com

If to Escrow Agent:                                              David Kahan, P.A.

3125 W. Commercial Blvd., Suite 100

Ft, Lauderdale, FL 33309

Attn: David Kahan, Esq.

Telephone: (954) 548-3930

Facsimile: (954) 548-3910

E-Mail: david@dkpalaw.com

unless the address is changed by the party by like notice given to the other parties.  Notice shall be in writing and shall be deemed received: (i) if mailed by certified mail, return receipt requested, postage prepaid and properly addressed to the address above, then three (3) business days after deposit of same in a regularly maintained U.S. Mail receptacle; or (ii) if mailed by Federal Express, UPS or other nationally recognized overnight courier service, next business morning delivery, then one (1) business day after deposit of same in a regularly maintained receptacle of such overnight courier; or (iii) if hand delivered, then upon hand delivery thereof to the address indicated on or prior to 5:00 p.m., EST, on a business day.  Any notice hand delivered after 5:00 p.m., EST, shall be deemed delivered on the following business day.  Notwithstanding the foregoing, notice, requests or demands or other communications referred to in this Agreement may be sent by facsimile, by e-mail or other method of delivery, but shall be deemed to have been given only when the sending party has confirmed that the receiving party has received such notice.

  

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(h) Applicable Law and Consent to Jurisdiction.  This Agreement shall be construed in accordance with the laws of the State of Florida, without regard to the principles of conflicts of laws, except to the extent that the validity and perfection or the perfection and the effect of perfection or non-perfection of the security interest created hereby, or remedies hereunder, in respect of any particular Collateral are governed under the UCC or any other set of foreign, federal, state or local laws, rules and regulations, by the law of a jurisdiction other than the State of Florida, in which case such issues shall be governed by the laws of the jurisdiction governing such issues under the UCC or such other set of foreign, federal, state or local laws, rules and regulations.  The parties further agree that any action between them shall be heard in Broward County, Florida and expressly consent to the jurisdiction and venue of the State Court sitting in Broward County, Florida and the United States District Court for the Southern District of Florida for the adjudication of any civil action asserted pursuant to this Agreement. By its execution hereof, the Pledgor hereby irrevocably waives any objection and any right of immunity on the ground of venue, the convenience of the forum or the jurisdiction of such courts or from the execution of judgments resulting therefrom. The Pledgor hereby irrevocably accepts and submits to the jurisdiction of the aforesaid courts in any such suit, action or proceeding.

(i) Survival: Successors and Assigns.  All covenants, agreements, representations and warranties made herein shall survive the execution and delivery hereof, and shall continue in full force and effect until all Obligations have been paid in full, there exists no commitment by Secured Party which could give rise to any Obligations and all appropriate termination statements have been filed terminating the security interest granted Secured Party hereunder.  Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party.  In the event that Secured Party assigns this Agreement and/or its security interest in the Collateral, Secured Party shall give written notice to the Pledgor of any such assignment and such assignment shall be binding upon and recognized by the Pledgor.  All covenants, agreements, representations and warranties by or on behalf of the Pledgor which are contained in this Agreement shall inure to the benefit of Secured Party, its successors and assigns. The Pledgor may not assign this Agreement or delegate any of its rights or obligations hereunder, without the prior written consent of Secured Party, which consent may be withheld in Secured Party’s sole and absolute discretion.

(j) Severability.  If any term, provision or condition, or any part thereof, of this Agreement shall for any reason be found or held invalid or unenforceable by any court or governmental authority of competent jurisdiction, such invalidity or unenforceability shall not affect the remainder of such term, provision or condition nor any other term, provision or condition, and this Agreement shall survive and be construed as if such invalid or unenforceable term, provision or condition had not been contained therein.

  

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(k) Merger and Integration.  This Agreement and the other Transaction Documents contain the entire agreement of the parties hereto with respect to the matters covered and the transactions contemplated hereby, and no other agreement, statement or promise made by any party hereto, or by any employee, officer, agent or attorney of any party hereto, which is not contained herein shall be valid or binding.

(l) WAIVER OF JURY TRIAL. THE PLEDGOR AND SECURED PARTY EACH HEREBY: (i) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY A JURY; AND (ii) WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH THE PLEDGOR AND SECURED PARTY MAY BE PARTIES, ARISING OUT OF, IN CONNECTION WITH OR IN ANY WAY PERTAINING TO THIS AGREEMENT, THE NOTE AND/OR ANY TRANSACTIONS, OCCURRENCES, COMMUNICATIONS, OR UNDERSTANDINGS (OR THE LACK OF ANY OF THE FOREGOING) RELATING IN ANY WAY TO DEBTOR-CREDITOR RELATIONSHIP BETWEEN THE PARTIES.  IT IS UNDERSTOOD AND AGREED THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO THIS AGREEMENT.  THIS WAIVER OF JURY TRIAL IS SEPARATELY GIVEN, KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY THE PLEDGOR AND BY SECURED PARTY, AND THE PLEDGOR AND SECURED PARTY EACH HEREBY AGREES THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT.  EACHOF PLEDGOR AND SECURED PARTY IS HEREBY AUTHORIZED TO SUBMIT THIS AGREEMENT TO ANY COURT HAVING JURISDICTION OVER THE SUBJECT MATTER AND THE PLEDGOR AND SECURED PARTY, SO AS TO SERVE AS CONCLUSIVE EVIDENCE OF SUCH WAIVER OF RIGHT TO TRIAL BY JURY.  THE PLEDGOR AND SECURED PARTY EACH REPRESENTS AND WARRANTS THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF ITS OWN FREE WILL, AND/OR THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.

(m) Execution.  This Agreement may be executed in one or more counterparts, all of which taken together shall be deemed and considered one and the same Agreement, and same shall become effective when counterparts have been signed by each party and each party has delivered its signed counterpart to the other party.  In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format file or other similar format file, such signature shall be deemed an original for all purposes and shall create a valid and binding obligation of the party executing same with the same force and effect as if such facsimile or “.pdf” signature page was an original thereof.

(n) Headings.  The headings and sub-headings contained in the titling of this Agreement are intended to be used for convenience only and shall not be used or deemed to limit or diminish any of the provisions hereof.

  

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(o) Gender and Use of Singular and Plural.  All pronouns shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the party or parties or their personal representatives, successors and assigns may require.

(p) Further Assurances.  The parties hereto will execute and deliver such further instruments and do such further acts and things as may be reasonably required to carry out the intent and purposes of this Agreement, including, but not limited to, the execution and filing of UCC-1 Financing Statements in any jurisdiction as Secured Party may require.

(q) Time is of the Essence. The parties hereby agree that time is of the essence with respect to performance of each of the parties’ obligations under this Agreement.  The parties agree that in the event that any date on which performance is to occur falls on a Saturday, Sunday or state or national holiday, then the time for such performance shall be extended until the next business day thereafter occurring.

(r) Joint Preparation.  The preparation of this Agreement has been a joint effort of the parties and the resulting documents shall not, solely as a matter of judicial construction, be construed more severely against one of the parties than the other.

(s) Prevailing Party.  If any legal action or other proceeding is brought for the enforcement of this Agreement or any other Transaction Documents, or because of an alleged dispute, breach, default or misrepresentation in connection with any provisions of this Agreement or any other Transaction Documents, the successful or prevailing party or parties shall be entitled to recover from the non-prevailing party, reasonable attorneys’ fees, court costs and all expenses, even if not taxable as court costs (including, without limitation, all such fees, costs and expenses incident to appeals), incurred in that action or proceeding, in addition to any other relief to which such party or parties may be entitled.

(t) Costs and Expenses.  The Pledgor agrees to pay to the Secured Party, upon demand, the amount of any and all costs and expenses, including the reasonable fees, costs, expenses and disbursements of counsel for the Secured Party and of any experts and agents, which the Secured Party may incur in connection with: (i) the preparation, negotiation, execution, delivery, recordation, administration, amendment, waiver or other modification or termination of this Agreement; (ii) the custody, preservation, use or operation of, or the sale of, collection from, or other realization upon, any Collateral; (iii) the exercise or enforcement of any of the rights of the Secured Party hereunder; or (iv) the failure by the Pledgor to perform or observe any of the provisions hereof.  Included in the foregoing shall be the amount of all expenses paid or incurred by Secured Party in consulting with counsel concerning any of its rights hereunder, under the Note or any other Transaction Documents or under applicable law, as well as such portion of Secured Party’s overhead as Secured Party shall allocate to collection and enforcement of the Obligations in Secured Party’s sole but reasonable discretion.  All such costs and expenses shall bear interest from the date of outlay until paid, at the highest rate set forth in the Note, or if none is so stated, the highest rate allowed by law.  The provisions of this Subsection shall survive the termination of this Agreement and Secured Party’s security interest hereunder and the payment of all Obligations.

 

[Signatures on the following page]

 

  

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IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as of the day and year first above written.

	  	  
	  	
PLEDGOR:

	  	  
	  	
SIONIX CORPORATION, a Nevada corporation

	  	  
	  	
By: /s/ David R. Wells

	  	
Name: David R. Wells

	  	
Title: President & CFO

	  	  
	  	
SECURED PARTY:

	  	  
	  	
TCA GLOBAL CREDIT MASTER FUND, LP

	  	  
	  	
By: TCA Global Credit Fund GP, Ltd., its general partner

	  	  
	  	  
	  	  
	  	
By: /s/ Robert Press

	  	
Robert Press, Director

 

  

18Unassociated Document

EXHIBIT 10.5

 

SECURITIES PURCHASE AGREEMENT

 

THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”) is made as of November 9, 2011 by and among Sionix Corporation, a Nevada corporation (the “Company”), and the purchaser whose name and address are set forth on the signature page annexed hereto (the “Purchaser”).  The foregoing parties are sometimes referred to hereinafter individually as a “Party” or collectively as the “Parties.”

 

RECITALS

 

WHEREAS, pursuant to the Subscription Application of the Purchaser of even date herewith (each a “Subscription Application”), and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 promulgated thereunder, the Company desires to sell to the Purchaser and the Purchaser desires to acquire from the Company that number of units of the Company’s securities (the “Units”) as are set forth on the Purchaser’s signature page annexed hereto, at a price of $0.06 per Unit, subject to the terms and conditions of this Agreement and the other documents or instruments contemplated hereby; and

 

WHEREAS, each Unit consists of: (i) one share of the Company’s $0.001 par value common stock (the “Common Stock”), and (ii) a three-year warrant, in the form of Exhibit A attached hereto, to purchase the number of shares of Common Stock equal to the number of Units purchased by the Purchaser multiplied by fifty percent (50%), at an exercise price of $0.17 per share (collectively, “Warrants”).

 

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:

 

  

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AGREEMENT

 

Section 1.  Sale and Issuance of Units.

 

1.1           Subject to the terms and conditions of this Agreement, the Company’s board of directors has authorized the sale and issuance of up to 1,666,667 Units (the “Offering”).  At the Closing, the Company shall sell and issue to the Purchaser, and the Purchaser shall purchase from the Company, the number of Units set forth on the Purchaser’s signature page hereto. The Company intends to enter into this same form of purchase agreement with certain other purchasers (collectively, the “Other Purchasers”, and collectively with the Purchaser, the “Purchasers”) and expects to complete sales of Units to them.  The maximum number of Units that the Company may sell to the Purchasers is 1,666,667. The Purchaser’s obligations hereunder are expressly not subject to or conditioned on the purchase of Units by any or all of such Other Purchasers.

 

1.2           The aggregate purchase price for the Units to be purchased by the Purchaser (the “Purchase Price”) shall be the amount set forth on the Purchaser’s signature page hereto.

 

Section 2.  The Closing.

 

2.1 The closing of the sale and issuance to the Purchaser (the “Closing”) shall take place on the date when the Company receives all of the materials required, including, without limitation, immediately available funds via wire transfer or a certified check equal to the subscription amount set forth on the Purchaser’s signature page hereto.

 

2.2 At the Closing, the Company shall instruct its transfer agent to issue and deliver to the Purchaser a certificate representing the Common Stock, against receipt by the Company of a certified bank check or wire transfer in an aggregate amount equal to the Purchase Price for the Units set forth on the Purchaser’s signature page hereto.

 

Section 3.  Representations and Warranties of the Company.

 

The Company hereby represents and warrants to the Purchaser as follows:

 

  

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3.1           Organization.

 

The Company is duly organized, validly existing and in good standing under the laws of the State of Nevada and is qualified to conduct its business as a foreign corporation in each jurisdiction where the failure to be so qualified would have a material adverse effect on the Company.

 

3.2           Authorization of Agreement, Etc.

 

The execution, delivery, and performance by the Company of its obligations under this Agreement, the Escrow Agreement, the Subscription Application, the Warrants and each other document or instrument contemplated hereby or thereby (collectively, the “Transaction Documents”) has been duly authorized by all requisite corporate action on the part of the Company; and this Agreement and the Transaction Documents have been duly executed and delivered by the Company.  Each of the Transaction Documents, when executed and delivered by the Company, constitutes the valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium, or other similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).

 

3.3           Issuance of Common Stock and Warrants.

 

The Units are duly authorized and, when paid for and issued in accordance with the Transaction Documents, will be duly and validly issued, fully paid, and nonassessable, free and clear of all liens.

 

  

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Section 4.  Representations and Warranties of the Purchaser.

 

The Purchaser hereby represents and warrants to the Company as follows:

 

4.1           Authorization of the Documents.

 

The Purchaser has all requisite power and authority (corporate or otherwise) to execute, deliver, and perform its obligations under the Transaction Documents, and the execution, delivery, and performance by the Purchaser of its obligations under the Transaction Documents has been duly authorized by all requisite action on the part of the Purchaser and each such Transaction Document, when executed and delivered by the Purchaser, shall constitute the valid and binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).

 

4.2           Investment Representations.

 

All of the representations, warranties, and information of the Purchaser as set forth in the Purchaser’s Subscription Application are incorporated by reference herein, shall be deemed to be a part hereof, and shall be true and correct at the Closing with the same force and effect as if made by the Purchaser as of the date thereof.

 

4.3          Access to Company Information.

 

The Purchaser acknowledges that it has been afforded access and the opportunity to obtain all financial and other information concerning the Company that such Purchaser desires (including the opportunity to meet with the Company’s executive officers, either in person or telephonically). The Purchaser has reviewed copies of all reports and registration statements filed by the Company (the “Filings”) with the Securities and Exchange Commission (the “Commission”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), since September 30, 2008, all of which are available for review at www.sec.gov.  The Purchaser further acknowledges that it is familiar with the contents of the Filings and that there is no further information about the Company that the Purchaser desires in determining whether to acquire the Units in the Offering.

 

  

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4.4           Risk Factors

 

The Purchaser understands that an investment in the Units entails a substantial risk of loss.  The purchaser has read and understands all of the Risk Factors set forth in the Company’s registration statement on Form S-1, file number 333-172729, declared effective by the Commission on May 5, 2011.

 

Section 5.  Brokers and Finders.

The Company at its discretion will pay Northland Securities, Inc. (“Northland”), a registered broker-dealer engaged by the Company, and other selected dealers accepted by the Company, the cash fees and warrants pursuant to their agreements.  The Purchaser understands that Northland is not serving as placement agent for the Offering and has not performed any due diligence on the Company.  The Purchaser acknowledges and agrees that Northland is not making any recommendation to the Purchaser with respect to the Units, and that any and all due diligence must be performed by the Purchaser prior to making an investment in the Offering.

Section 6.  Indemnification by the Purchaser.

The Purchaser hereby agrees to indemnify and defend (with counsel acceptable to the Company) the Company and its officers, directors, employees, and agents and hold them harmless from and against any and all liability, loss, damage, cost, or expense, including costs and reasonable attorneys’ fees, incurred on account of or arising from:

(a)           any breach of or inaccuracy in any of the Purchaser’s representations, warranties, or agreements made herein, in any of the Transaction Documents, or in any document or instrument contemplated hereby or thereby; and

(b)           any action, suit, or proceeding based on a claim that the Purchaser’s representations, warranties or agreements made herein, in any of the Transaction Documents, or in any document or instrument contemplated hereby or thereby, were inaccurate or misleading, or otherwise cause for obtaining damages or redress from the Company or any current or former officer, director, employee, or agent of the Company under the Securities Act.

  

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Section 7.  Successors and Assigns.

 

This Agreement shall bind and inure to the benefit of the Company, the Purchaser, and their respective successors and assigns.

 

Section 8.  Entire Agreement.

 

This Agreement and the other writings and agreements referred to in this Agreement or delivered pursuant to this Agreement contain the entire understanding of the Parties with respect to the subject matter hereof and supersede all prior agreements and understandings, whether written or verbal, among the Parties with respect thereto.

 

Section 9.  Notices.

 

All notices, demands and requests of any kind to be delivered to any Party in connection with this Agreement shall be in writing and shall be deemed to have been duly given if personally delivered or if sent by internationally-recognized overnight courier or by registered or certified mail, return receipt requested and postage prepaid, addressed as follows:

 

if to the Company, to:

 

Sionix Corporation

914 Westwood Blvd., Box 801

Los Angeles, CA  90024

Attention: David R. Wells, President & CFO

with a copy to:

Richardson & Patel LLP

1100 Glendon Avenue., Suite 850

Los Angeles, CA 90024

Attention: Kevin Friedmann

And if to the Purchaser at the address of the Purchaser set forth on the Purchaser’s signature page hereto;

or to such other address as the Party to whom notice is to be given may have furnished to the other Parties to this Agreement in writing in accordance with the provisions of this Section.  Any such notice or communication shall be deemed to have been received (i) in the case of personal delivery, on the date of such delivery, (ii) in the case of internationally-recognized overnight courier, on the next business day after the date when sent and (iii) in the case of mailing, on the third business day following that on which the piece of mail containing such communication is posted.

 

  

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Section 10.  Amendments.

 

This Agreement may not be modified or amended, nor may any provision of this Agreement be waived, except as evidenced by a written agreement duly executed by Purchasers who hold a majority of the Common Stock and shares of Common Stock underlying Warrants acquired in the Offering.

 

Section 11.   Governing Law; Waiver of Jury Trial.

 

All questions concerning the construction, interpretation, and validity of this Agreement shall be governed by and construed and enforced in accordance with the domestic laws of the State of California without giving effect to any choice or conflict of law provision or rule (whether in the State of California or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of California.  In furtherance of the foregoing, the internal law of the State of California will control the interpretation and construction of this Agreement, even if under such jurisdiction’s choice of law or conflict of law analysis, the substantive law of some other jurisdiction would ordinarily or necessarily apply.

 

Section 12.   Submission to Jurisdiction.

 

Any legal action or proceeding with respect to this Agreement may be brought in the courts of the State of California and the United States of America located in the City of Los Angeles, California, and, by execution and delivery of this Agreement, the Company hereby accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts.  The Purchaser hereby irrevocably waives, in connection with any such action or proceeding, any objection, including, without limitation, any objection to the venue or based on the grounds of forum non conveniens, which it may now or hereafter have to the bringing of any such action or proceeding in such respective jurisdictions.  The Purchaser hereby irrevocably consents to the service of process of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to it at its address as set forth herein.

 

Section 13.   Severability.

 

It is the desire and intent of the Parties that the provisions of this Agreement be enforced to the fullest extent permissible under the law and public policies applied in each jurisdiction in which enforcement is sought.  Accordingly, in the event that any provision of this Agreement would be held in any jurisdiction to be invalid, prohibited, or unenforceable for any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.  Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited, or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

 

  

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Section 14.   Independence of Agreements, Covenants, Representations and Warranties.

 

All agreements and covenants hereunder shall be given independent effect so that if a certain action or condition constitutes a default under a certain agreement or covenant, the fact that such action or condition is permitted by another agreement or covenant shall not affect the occurrence of such default, unless expressly permitted under an exception to such covenant.  In addition, all representations and warranties hereunder shall be given independent effect so that if a particular representation or warranty proves to be incorrect or is breached, the fact that another representation or warranty concerning the same or similar subject matter is correct or is not breached will not affect the incorrectness of or a breach of a representation and warranty hereunder.  The exhibits and any schedules annexed hereto are hereby made part of this Agreement in all respects.

 

Section 15.   Counterparts.

 

This Agreement may be executed in any number of counterparts, and each such counterpart of this Agreement shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement.  Facsimile counterpart signatures to this Agreement shall be acceptable and binding.

 

Section 16.   Headings.

 

The section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

 

Section 17.   Expenses.

 

Each Party shall pay its own fees and expenses incurred in connection with the negotiation, execution, delivery and performance of this Agreement, the Transaction Documents and any document or instrument contemplated hereby or thereby.

 

Section 18.   Preparation of Agreement.

 

The Company prepared this Agreement and the Transaction Documents solely on its behalf.  Each Party to this Agreement acknowledges that: (i) the Party had the advice of, or sufficient opportunity to obtain the advice of, legal counsel separate and independent of legal counsel for any other Party hereto; (ii) the terms of the transactions contemplated by this Agreement are fair and reasonable to such Party; and (iii) such Party has voluntarily entered into the transactions contemplated by this Agreement without duress or coercion.  Each Party further acknowledges that such Party was not represented by the legal counsel of any other Party hereto in connection with the transactions contemplated by this Agreement, nor was he or it under any belief or understanding that such legal counsel was representing his or its interests.  Each Party agrees that no conflict, omission, or ambiguity in this Agreement, or the interpretation thereof, shall be presumed, implied, or otherwise construed against any other Party to this Agreement on the basis that such Party was responsible for drafting this Agreement.

  

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Section 19.   Use of Proceeds.

The Company shall use the net proceeds from the Offering for general working capital purposes.  The term “Company indebtedness” shall not include account and trade payables incurred in the ordinary course of business or accrued but unpaid wages or consulting fees.

 

[SIGNATURE PAGES FOLLOW]

 

  

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IN WITNESS WHEREOF, each of the undersigned has duly executed this Securities Purchase Agreement as of the date first written above.

 

 

	 	COMPANY:	 
	 	SIONIX CORPORATION	 
	 	 	 	 
	
 

	
By: 

	/s/ David R. Wells	 
	 	 	Name: David R. Wells	 
	 	 	Title:  President and CFO	 

 

 

[PURCHASER’S SIGNATURE PAGE FOLLOWS]

 

  

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PURCHASER SIGNATURE PAGE TO SIONIX CORPORATION

SECURITIES PURCHASE AGREEMENT

 

	PURCHASER:	 	 
	 	 	 
	Brian Shanahan	 	 
	Name of Purchaser (Individual or Institution)	 	Name of Individual representing Purchaser (if an Institution)
	 	 	 
	 	 	/s/ Brian Shanahan
	Title of Individual representing Purchaser (if an Institution)	 	
Signature of Individual Purchaser or Individual representing Purchaser

	 	 	 
	 	 	 
	Address:	 	 
	 	 	 
	Telephone:	 	 
	 	 	 
	Facsimile:	 	 
	 	 	 
	Number of Units	 	 
	 	 	 
	Aggregate Purchase Price	 	 

 

  

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EXHIBIT A

Form of Warrant

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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