EMPLOYMENT AGREEMENT
 
EMPLOYMENT AGREEMENT (“Agreement”) is entered into effective as of the 7th day
of August, 2009, between IMAGENETIX, INC., a Nevada corporation (the “Company”),
and Debra L. Spencer (“Employee”).
 
WHEREAS, Employee is presently serving as the General Manager of the Company,
Secretary of the Corporation and a Board Director, without a written employment
agreement, and
 
WHEREAS, the Company wishes to ensure the continued service of Employee to the
Company pursuant to the terms of this Agreement;
 
NOW, THEREFORE, in consideration of the promises and the mutual covenants
hereinafter set forth and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
 
1. Position and Duties.
 
(a) Effective as of the date of this Agreement (the “Effective Date”), and until
the second anniversary of the Effective Date (the “Initial Term”), the Employee
will be employed by the Company on a full-time basis as its General Manager .
The Employee shall be a member of the Board of Directors of the Company. In
addition, the Employee may be asked from time to time to serve as a director or
officer of one or more of the Company’s subsidiaries, or as a member of a
committee of the Board of Directors, without further compensation. The Initial
Term shall be automatically renewed for additional periods of two (2) years
(each, a “Renewal Term”) unless written notice to the contrary shall be given by
either party to the other not less than thirty (30) days prior to the end of the
Initial Term or the Renewal Term.  The Initial Term and the Renewal Term are
referred to herein as the “Term”.
 
(b) The Employee agrees to perform the duties of her position and such other
duties consistent with those of a Director and an office manager as may
reasonably be assigned to the Employee from time to time by the Board of
Directors. The Employee also agrees that, while employed by the Company, the
Employee will devote a significant portion of her business time and efforts to
the advancement of the business and interests of the Company and its
subsidiaries and to the discharge of her duties and responsibilities for them.
Notwithstanding the above, the Employee shall be permitted to manage her
personal, financial and legal affairs; and, serve on civic, educational,
philanthropic or charitable boards or committees.
 
(c) The Company agrees to maintain a corporate office in San Diego County,
California sufficient to support senior management, including the incorporation
of related functions (for example, but not to be limited to, administrative,
sales and marketing positions).
 
2. Compensation and Benefits. During the Employee’s employment, as compensation
for all services performed by the Employee for the Company and its subsidiaries,
the Company will provide the Employee the following pay and benefits:
 
(a) Base Salary. The Company will pay the Employee a base salary at the rate of
Seventy Three Thousand, Nine Hundred Eighteen and 78/100 ($73,918.78) per year
(“Base Salary”), payable in accordance with the regular payroll practices of the
Company and subject to increase from time to time by the Board of Directors of
the Company (the “Board”) in their discretion.
 
 
 

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(b) Bonus Compensation. During the Term, the Employee shall receive a bonus
equal to six percent (6%) of the Company’s net income before taxes and research
and development expenses during the prior fiscal year, up to a maximum of fifty
percent (50%) of the Base Salary.
 
(c) Stock Options. Employee shall be eligible to receive options to purchase
shares of common stock of the Company in such amounts and at such exercise
prices as the Board of Directors may determine from time to time.
 
(d) Participation in Employee Benefit Plans and Vacation Policies. The Employee
will be entitled to participate in all employee benefit plans and vacation
policies in effect for employees and senior executives of the Company. The
Employee’s participation will be subject to the terms of the applicable plan
documents and generally applicable Company policies.
 
(e) Business Expenses. The Company will pay or reimburse the Employee for all
reasonable business expenses incurred or paid by the Employee in the performance
of his duties and responsibilities for the Company. Reimbursements shall be
subject to such reasonable substantiation and documentation as the Company may
specify from time to time.
 
3. Termination of Employment. The Employee’s employment under this Agreement
shall continue until terminated pursuant to this Section 3.
 
(a) The Company may terminate the Employee’s employment for Cause with at least
thirty (30) days advance written notice to the Employee setting forth in
reasonable detail the nature of the Cause. For purposes of this Agreement,
“Cause” means any of the following: (i) the Employee’s continued and substantial
violations of her employment duties or willful and material disregard of
reasonable directives from the Board, after Employee has received a written
demand for performance from the Board that sets forth the factual basis for the
Company’s belief that Employee has not substantially performed his duties or
willfully disregarded directives from the Board; (ii) the Employee’s moral
turpitude, material dishonesty or gross misconduct in the performance of her
duties which has materially and demonstrably injured the finances or future
business of the Company or any of its subsidiaries as a whole; (iii) the
Employee’s material breach of this Agreement; or, (iv) the Employee’s conviction
of, or confession or plea of no contest to, any felony or any other act of
fraud, misappropriation, embezzlement, or the like involving the Company’s
property; provided, however, that no such act or event described in clauses
(i) and (iii) of this paragraph (a) shall constitute Cause hereunder if the
Executive has materially cured such act or event during the applicable thirty
(30) day notice period.

(b) The Employee may terminate her employment for Good Reason with at least
thirty (30) days advance written notice to the Company setting forth in
reasonable detail the nature of the Good Reason.
 
4. Severance Payments and Other Matters Related to Termination.
 
(a) In the event of termination of the Employee’s employment by the Company
other than for Cause or the Employee’s termination of employment for Good
Reason, (i) the Employee shall be entitled to receive a lump sum cash severance
amount equal to two hundred (200%) percent of Employee’s then current annual
salary, (ii) any earned but unpaid bonus payment, (iii) reimbursement of the
health and dental care continuation premiums for Employee  incurred by Employee
to effect continuation of health and dental insurance coverage for Employee on
the same basis as active employees, for a period of twenty-four (24) months from
the date of such termination, to the extent that Employee is eligible for and
elects continuation coverage under COBRA; and (iv) any accrued and unused
vacation pay payable within twenty one (21) calendar days of the termination
date (subject to required withholding).
 
 
 

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(b) In the event of termination of the Employee’s employment by the Company for
Cause or the Employee’s unilateral termination other than for Good Reason, the
Company will pay the Employee any Base Salary earned but not paid through the
date of termination, any earned but unpaid bonus, and pay for any vacation time
accrued but not used to that date.
 
(c) Except for any right the Employee may have under the federal law known as
“COBRA” to continue participation in the Company’s group health and dental
plans, and subject to Section 4(a)(iii) above, benefits shall terminate in
accordance with the terms of the applicable benefit plans based on the date of
termination of the Employee’s employment, without regard to any continuation of
base salary or other payment to the Employee following termination.
 
(d) Provisions of this Agreement shall survive any termination if so provided in
this Agreement or if necessary to accomplish the purposes of other surviving
provisions.
 
(e) Section 409A. Notwithstanding anything to the contrary in this Agreement,
any cash severance payments otherwise due to the Employee pursuant to
Sections 4(a) or 5 or otherwise on or within the six-month period following the
Employee’s termination will accrue during such six-month period and will become
payable in a lump sum payment, with interest at the prime rate, on the date six
(6) months and one (1) day following the date of termination, provided, that
such cash severance payments will be paid earlier, at the times and on the terms
set forth in the applicable provisions of Sections 4(a) or 5, if the Company and
the Employee mutually determine that the imposition of additional tax under
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), will
not apply to an earlier payment of such cash severance payments. In addition,
this Agreement will be deemed amended to the extent necessary to avoid
imposition of any additional tax or income recognition prior to actual payment
to the Executive under Code Section 409A and any temporary or final Treasury
Regulations and guidance promulgated there-under and the parties agree to
cooperate with each other and to take reasonably necessary steps in this regard.

5. Change of Control Benefits. Change of Control shall be defined as a
transaction or series of transactions where the shareholders of the Company
immediately preceding such transaction own, following such transaction, less
than 50% of the voting securities of the Company. If Employee is terminated
without Cause or resigns for Good Reason upon or during the twelve (12) month
period after the effective date of a Change of Control, the Employee shall
automatically become fully vested in all of her then-outstanding equity awards,
any accrued but unpaid salary, vacation or bonus payment, and the Employee shall
be entitled to receive the consideration set forth in section 4(a) hereof and
shall be entitled to receive an additional cash severance amount equal to
$73,918.78.

 
6. Indemnification and Insurance.
 
(a) The Company agrees that (i) if the Employee is made a party, or is
threatened to be made a party to any proceeding by reason of the fact that she
is or was a director, officer, employee, agent, manager, consultant or
representative of the Company or any of its Affiliates, or (ii) if any claim is
made, or is threatened to be made, that arises out of or relates the Employee’s
service in any of the foregoing capacities, then the Employee shall be
indemnified and held harmless by the Company to the fullest extent legally
permitted, or authorized, by the certificate of incorporation, bylaws, other
organizational documents, or Board resolutions of the Company, against any and
all costs, expenses, liabilities and losses (including, without limitation,
judgments, interest, expenses of investigation, penalties, fines, ERISA excise
taxes or penalties, reasonable attorneys’ fees, and amounts paid or to be paid
in settlement) incurred or suffered by the Employee in connection herewith and
such indemnification shall continue as to the Employee even if he has ceased to
be a director, officer, member, employee, agent, manager, consultant or
representative of the Company and shall inure to the benefit of the Employee’s
heirs, executors, administrators and legal representatives. No amendment of the
Company’s certificates of incorporation or bylaws shall be effective to reduce
any of the Employee’s rights to indemnification, or advancement of costs and
expenses, under this Section 6.
 
 
 

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(b) During the term of employment and for a period of six years thereafter, the
Company shall procure and keep in place a directors’ and officers’ liability
insurance policy (or policies) providing comprehensive coverage to the Employee.
 
7.  Non-compete.  The Employee shall not engage in a business in any manner
similar to or in competition with the Company or the Company’s Affiliates during
the term of his employment.  Furthermore, the Employee shall not engage in a
business in any manner similar to, or in competition with, the Company’s
business for a period of one year from the date of termination of his employment
for any reason with the Company.
 
8. Definitions. For purposes of this Agreement, the following definitions apply:
 
“Affiliates” means all persons and entities directly or indirectly controlling,
controlled by or under common control with the Company, where control may be by
management authority, equity interest or otherwise.
“Person” means an individual, a corporation, a limited liability company, an
association, a partnership, an estate, a trust or any other entity or
organization, other than the Company or any of its Affiliates.
 
9. Withholding. All payments made by the Company under this Agreement shall be
reduced by any tax or other amounts required to be withheld by the Company under
applicable law.
 
10. Assignment. Neither the Employee nor the Company may make any assignment of
this Agreement or any interest in it, by operation of law or otherwise, without
the prior written consent of the other. This Agreement shall inure to the
benefit of and be binding upon the Employee and the Company, and each of our
respective successors, executors, administrators, heirs and permitted assigns.
 
11. Severability. If any portion or provision of this Agreement shall to any
extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
 
12. Miscellaneous. This Agreement sets forth the entire agreement between the
Employee and the Company and replaces all prior and contemporaneous
communications, agreements and understandings, written or oral, with respect to
the terms and conditions of the Employee’s employment. This Agreement may not be
modified or amended, and no breach shall be deemed to be waived, unless agreed
to in writing by the Employee and an expressly authorized representative of the
Board. The headings and captions in this Agreement are for convenience only and
in no way define or describe the scope or content of any provision of this
Agreement. This Agreement may be executed in two or more counterparts, each of
which shall be an original and all of which together shall constitute one and
the same instrument.
 
13. Governing Law. This Agreement shall be governed and construed in accordance
with the laws of the state of California, without regard to the conflict of laws
principles thereof.
 
14. Notices. Any notices provided for in this Agreement shall be in writing and
shall be effective when delivered in person or deposited in the United States
mail, postage prepaid, and addressed to the Company at its principal place of
business, attention of the Chief Executive Officer, with copy to the Board, or
in the case of the Employee, at the Employee’s last known address on the books
of the Company (or to such other address as either party may specify by notice
to the other actually received).
 
 
 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.
 
IMAGENETIX, INC.
   
By:
   
Name:
 
Title:
     
DEBRA SPENCER

 
 
 

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