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.









(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.









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.




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.









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