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:

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.”

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