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 William P. Spencer (“Executive”).
 
WHEREAS, Executive is presently serving as the President, Chairman of the Board
and Chief Executive Officer of the Company without a written employment
agreement, and
 
WHEREAS, the Company wishes to ensure the continued service of Executive 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 Executive
will be employed by the Company on a full-time basis as its President and Chief
Executive Officer. The Executive shall be a member of the Board of Directors of
the Company and Chairman of the Board. In addition, the Executive 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 Executive agrees to perform the duties of his position and such other
duties consistent with those of a chief executive officer as may reasonably be
assigned to the Executive from time to time by the Board of Directors. The
Executive also agrees that, while employed by the Company, the Executive will
devote a significant portion of his business time and efforts to the advancement
of the business and interests of the Company and its subsidiaries and to the
discharge of his duties and responsibilities for them. Notwithstanding the
above, the Executive shall be permitted to manage his 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 the County of San
Diego, 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 Executive’s employment, as compensation
for all services performed by the Executive for the Company and its
subsidiaries, the Company will provide the Executive the following pay and
benefits:
 
(a) Base Salary. The Company will pay the Executive a base salary at the rate of
Two Hundred Thousand Dollars ($200,000) 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 Executive 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. Executive 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 Executive
will be entitled to participate in all employee benefit plans and vacation
policies in effect for employees and senior executives of the Company. The
Executive’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 Executive for all
reasonable business expenses incurred or paid by the Executive 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 Executive’s employment under this Agreement
shall continue   until terminated pursuant to this Section 3.
 
(a) The Company may terminate the Executive’s employment for Cause with at least
thirty (30) days advance written notice to the Executive setting forth in
reasonable detail the nature of the Cause. For purposes of this Agreement,
“Cause” means any of the following: (i) the Executive’s continued and
substantial violations of his employment duties or willful and material
disregard of reasonable directives from the Board, after Executive has received
a written demand for performance from the Board that sets forth the factual
basis for the Company’s belief that Executive has not substantially performed
his duties or willfully disregarded directives from the Board; (ii) the
Executive’s moral turpitude, material dishonesty or gross misconduct in the
performance of his 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 Executive’s material breach of this Agreement; or, (iv) the
Executive’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 Executive may terminate his 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. For purposes of this Agreement,
“Good Reason” means implementation of any of the following directives by the
Board without Executive’s prior written consent: (i) the assignment to the
Executive of duties inconsistent with the Executive’s status as the Chief
Executive Officer or a materially adverse alteration in the nature of the
Executive’s duties and/or responsibilities, reporting obligations or authority
with respect to the Company; (ii) the removal of the Executive from the Board;
(iii) the non-renewal of this Agreement for any Renewal Term; or (iv)  the
failure of the Company to maintain a corporate office in the County of San
Diego, CA; provided, however, that no act or event under (i) – (iii) shall
constitute Good Reason hereunder if the Company has fully cured such act or
event during the applicable thirty (30) day notice period.
 
 
 

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4. Severance Payments and Other Matters Related to Termination.
 
(a) In the event of termination of the Executive’s employment by the Company
other than for Cause or the Executive’s termination of employment for Good
Reason, (i) the Executive shall be entitled to receive a lump sum cash severance
amount equal to two hundred (200%) percent of Executive’s then current annual
salary, (ii) any earned but unpaid bonus payment, (iii) reimbursement of the
health and dental care continuation premiums for Executive and his dependents
incurred by Executive to effect continuation of health and dental insurance
coverage for Executive and his dependents 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 Executive 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).
 
(b) In the event of termination of the Executive’s employment by the Company for
Cause or the Executive’s unilateral termination other than for Good Reason, the
Company will pay the Executive 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. The Company shall have no obligation to the
Executive for bonus or severance payments, which shall be the sole remedy of the
Company in the event of such termination.
 
(c) Except for any right the Executive 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 Executive’s employment, without regard to any continuation of
base salary or other payment to the Executive 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 Executive pursuant to
Sections 4(a) or 5 or otherwise on or within the six-month period following the
Executive’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 Executive 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 thereunder 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 Executive 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 Executive shall
automatically become fully vested in all of his then-outstanding equity awards,
any accrued but unpaid salary, vacation or bonus payment, and the Executive
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
$200,000.
 
 
 

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6. Indemnification and Insurance.
 
(a) The Company agrees that (i) if the Executive is made a party, or is
threatened to be made a party to any proceeding by reason of the fact that he 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 Executive’s
service in any of the foregoing capacities, then the Executive 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 Executive in connection herewith and
such indemnification shall continue as to the Executive 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 Executive’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 Executive’s rights to indemnification, or advancement of costs and
expenses, under this Section 6.
 
(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
Executive.
 
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 Executive 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 Executive 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
Executive 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 Executive’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 Executive 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.
 
 
 

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

 
 

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