EMPLOYMENTAGREEMENT

 

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).

 

 

(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.

 

 

(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.

 

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.

 

 

 

 

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.