**Exhibit10.9**

 
| No. Q–15 |   | Number of Shares: 150,000 |   | Date of Grant: October 1, 2004 |
|---------------|--------|---------------------------|--------|--------------------------------|

 

**VITACUBE SYSTEMS HOLDINGS, INC.**

**INCENTIVE STOCK OPTION AGREEMENT**

** **

THIS AGREEMENT ismade effective as of October 1, 2004, between David Litt (the “Optionee”) andVITACUBE SYSTEMS HOLDINGS, INC., a Nevada corporation (the “Company”).

 

1.                                       Grantof Option.  The Company, pursuant tothe VitaCube Systems Holdings, Inc. 2003 Stock Incentive Plan (“Plan”), a copyof which is attached as Attachment A, hereby grants to the Optionee an option(the “Option”) to purchase from the Company an aggregate of 150,000 CommonShares, as such Common Shares are now constituted, at the purchase price of$1.00 per share (the “Option Price”), contingent upon the Company meeting theperformance criteria set forth in Section 3. Such Option is intended to be an Incentive Stock Option as defined inthe Plan.  The provisions of the Plangoverning the terms and conditions of Incentive Stock Options are incorporatedin full by this reference.  Certain capitalizedterms used in this Agreement and not defined herein will have the meaning setforth in the Plan.

 

2.                                       Termination.  Unless terminated earlier as provided hereinor in the Plan, the Option will terminate and be of no force or effect after5:00 p.m. Mountain Time on September 30, 2009 (the “Expiration Date”).

 

3.                                       PerformanceCriteria.

 

3.1.                              Forpurposes of this section:

 

“Employment Agreement”means the employment agreement between the Company and Optionee, effectiveOctober 1, 2004.

 

“Monthly PerformanceSales” means the monthly net sales (gross sales less returns and allowances) ofthe Company’s multi-level marketing subsidiary, less sales of sales aids.

 

3.2.                              TheOption is contingent upon the Company meeting the performance criteria setforth below.  The Option will becomenon-contingent, as follows:

 

3.2.1.                     The Optionwill become non-contingent with respect to 50,000 Common Shares on the firstday of the month following the month in which the Company has MonthlyPerformance Sales of $1 million.

 

3.2.2.                     The Optionwill become non-contingent with respect to an additional 50,000 Common Shares(bringing the cumulative number of non-contingent

 

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Common Shares to 100,000)on the first day of the month following the month in which the Company hasMonthly Performance Sales of $2 million.

 

3.2.3.                     The Optionwill become non-contingent with respect to an additional 50,000 Common Shares(bringing the cumulative number of non-contingent Common Shares to 150,000) onthe first day of the month following the month in which the Company has MonthlyPerformance Sales of $3 million.

 

3.3.                              Exceptas otherwise provided in Section 7.1 of this Agreement, if Optionee’semployment with the Company is terminated by the Company other than for “justcause” as defined in the Employment Agreement or if Optionee terminates hisemployment with the Company after September 30, 2006, provided that Optioneedoes not violate the noncompetition provision set forth in Section 9(c) of hisEmployment Agreement, this Option will become non-contingent and vesting shalloccur as provided in Section 4 of this Agreement with respect to those CommonShares for which the performance criterion is met in the calendar month inwhich Optionee’s termination of employment becomes effective.  If Optionee’s employment with the Company isterminated for “just cause” as defined in the Employment Agreement, Optioneeterminates his employment with the Company on or before September 30, 2006, orOptionee violates the noncompetition provision set forth in Section 9(c) of hisEmployment Agreement, this Option will terminate immediately with respect toany Common Shares for which the performance criteria have not been met as ofeffective date of Optionee’s termination of employment.

 

3.4.                              ThisOption will terminate immediately with respect to any Common Shares for whichthe performance criteria have not been met as of October 1, 2008.

 

4.                                       Exerciseof Option.

 

4.1.                              Subjectto the provisions of the Plan and as provided herein regarding termination ofthe Option, with respect to each installment of 50,000 Common Shares thatbecome non-contingent pursuant to Section 3, this Option will vest and beexercisable in increments as follows:

 
| ** **       | ** ** | **Number of**            | ** ** |
|------------------|------------|--------------------------|------------|
| **Vesting Date** | ** ** | **Common Shares Vested** | ** ** |
|             |       |                     |       |
| October 1, 2004  |       | 10,000                   |       |
| October 1, 2005  |       | 10,000                   |       |
| October 1, 2006  |       | 10,000                   |       |
| October 1, 2007  |       | 10,000                   |       |
| October 1, 2008  |       | 10,000                   |       |

 

To the extent any vesting date has passed on the datethe Common Shares become non-contingent, the Option shall be vested withrespect to those Common Shares on the date the Common Shares becomenon-contingent.  For example, if theCompany first has Monthly

 

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Net Sales of $1 million in November 2005, on December1, 2005, this Option would be non-contingent with respect of 50,000 CommonShares of which 20,000 Common Shares would be vested, and an additional 10,000shares would vest on each of October 1 2006, 2007, and 2008.

 

4.2.                              Notwithstandingthe above, in the event of a Change in Control, to the extent the Option isnon-contingent, the Option will earlier vest and beexercisable as provided in the Plan.

 

4.3.                              Optioneemay exercise this Option only with respect to whole shares.

 

5.                                       Methodof Exercise.  The Option evidencedhereby is exercisable by delivery to and receipt by the Company of (a) awritten notice of election to exercise (“Exercise Notice”), substantially inthe form set forth in Attachment B hereto, specifying the number of CommonShares to be purchased; (b) payment of the Option Price in full for the numberof Common Shares specified in the Exercise Notice; and (c) this Agreement forendorsement of exercise by the Company on Schedule I hereof.

 

6.                                       Paymentof Purchase Price.  The Option Priceis payable in cash or certified check payable to the order of the Company.  Upon the prior written consent of theCommittee, the Option Price may be paid by a recourse promissory note in favorof the Company.

 

7.                                       EarlyTermination.  The right to exercisethis Option is subject to the following additional limitations:

 

7.1.                              ThisOption will terminate immediately with respect to any Common Shares for whichthe performance criteria have not been met or for which this Option has notbeen exercised upon the occurrence of the following events:

 

7.1.1.                     The termination of Optionee’semployment with the Company by the Company For Cause.

 

7.1.2.                     A breach by Optionee of anyconfidentiality, noncompetition, or nonsolicitation covenant contained in anyemployment agreement or any other agreement executed by the Optionee for thebenefit of the Company.

 

7.1.3.                     The consummation of a Change inControl, unless the agreement governing the Change in Control providesotherwise.

 

7.1.4.                     The dissolution or liquidation ofthe Company other than in connection with a Change in Control.

 

7.2.                              Ifthe Optionee’s employment with the Company is terminated other than For Cause,including termination because of Optionee’s death or disability, this Optionwill be exercisable, to the extent it was exercisable on the date the Optionee’semployment terminated or to the extent it became non-contingent and exercisablepursuant to Section 3 of

 

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this Agreement, for a period ofthree months following such termination of employment.  Upon the expiration of the three-monthexercise period, or, if earlier, upon the Expiration Date of this Option, theOption will terminate and cease to be outstanding for any Common Shares forwhich this Option has not been exercised.

 

8.                                       Transferabilityof Option.  During the lifetime ofthe Optionee, the Option is exercisable only by the Optionee and is notassignable or transferable.  If theOptionee dies prior to the Expiration Date, the Option, to the extentexercisable on the date of Optionee’s death or to the extent it becomesnoncontingent and exercisable pursuant to Section 3 of this Agreement, may beexercised by the personal representative of the Optionee’s estate, or by thepersons to whom the Option is transferred pursuant to the Optionee’s will or inaccordance with the laws of descent and distribution.

 

9.                                       Restrictionson Option Shares.  Optionee may notsell, pledge, or otherwise transfer any interest in any Common Shares (the “OptionShares”) acquired pursuant to exercise of the Option except pursuant to an effectiveregistration under the Securities Act of 1933, as amended (the “Act”) and theapplicable state securities laws (“State Acts”) or if exemptions from suchregistration are available.  Optioneeunderstands that the Company may require an opinion of Optionee’s counsel orother evidence satisfactory to the Company that any such transfer is not inviolation of the Act or State Acts. Unless the Option Shares are subject to an effective registration, thecertificates representing the Option Shares will bear a legend substantially asfollows:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVENOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) OR UNDER ANYSTATE SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF ANEFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIESLAWS UNLESS EXEMPTIONS FROM REGISTRATION THEREUNDER ARE AVAILABLE, THEAVAILABILITY OF WHICH MUST BE ESTABLISHED TO THE SATISFACTION OF VITACUBESYSTEMS HOLDINGS, INC. (THE “COMPANY”).

 

10.                                 Noticeof Disqualifying Disposition.  IfOptionee sells or otherwise disposes of any of the Option Shares on or beforethe later of (a) the date two years after the Date of Grant, or (b) the dateone year after the date of exercise, Optionee will immediately notify theCompany in writing of such disposition. Optionee acknowledges and agrees that Optionee may be subject to incometax withholding by the Company on the compensation income recognized byOptionee from such disposition.

 

11.                                 GoverningLaw.  This Agreement will be governedby and construed under the laws of the state of Colorado.

 

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12.                                 Notices.  Any and all notices, designations, consents,offers, acceptances, or any other communication provided for herein must begiven in writing and will be deemed to have been duly given, (a) if deliveredby personal delivery or confirmed facsimile, (b) one business day after beingdeposited with a nationally recognized overnight courier, or (c) five days afterbeing mailed, registered or certified mail, postage prepaid.  Such communications will be addressed, in thecase of the Company, to its principal office, and in the case of the Optionee,to Optionee’s address appearing on the record books of the Company or Optionee’sresidence, or at such other address as may be designed by Optionee.

 

13.                                 EntireAgreement.  This Agreement togetherwith the Plan contains the entire agreement and the understanding by andbetween the parties with respect to the subject matter hereof.

 

14.                                 Succession.  Except as otherwiseprovided herein or in the Plan, this Agreement will be binding upon and willenure to the benefit of the parties, their heirs, successors, assigns, andlegal representatives.

 

15.                                 Severability.  If any provision of this Agreement is foundto be illegal or unenforceable for any reason whatsoever, the Agreement will beinterpreted and construed without reference to such provision, and the balanceof the Agreement will remain in full force and effect.

 

16.                                 ParagraphHeadings.  The paragraph headings areinserted in this Agreement for convenience only and are not intended to affectthe terms of this Agreement.

 

17.                                 Counterparts.  This Agreement may be executed incounterparts, each of which will be deemed an original and which together willconstitute a single instrument.

 

18.                                 ExecutionBy Optionee Required.  For thisAgreement to be effective, the Optionee must sign the following page (the “AcceptancePage”) and return it to the Company. THIS AGREEMENT WILL BE DEEMED WITHDRAWN AND THE OPTION WILL BE OF NOFORCE OR EFFECT UNLESS THE OPTIONEE HAS SIGNED AND RETURNED THE ACCEPTANCE PAGETO THE COMPANY WITHIN 60 DAYS FROM THE DATE THIS AGREEMENT IS SIGNED ON BEHALFOF THE COMPANY.

 
|   | VITACUBE SYSTEMS HOLDINGS, INC. |
|--------|---------------------------------|
|   |                            |   |
|   |                            |   |   |
| Dated: | March 1, 2005                   |   | By: | /s/ Sanford D.  Greenberg |
|   |                            |   | Sanford D. Greenberg,  President |
|        |                                 |  |  |  |

 

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** **

**ACCEPTANCEBY OPTIONEE**

 

Theundersigned, by his or her signature below, hereby accepts the Option,acknowledges having read this Agreement and the Plan, agrees to be bound by allprovision set forth herein and in the Plan, and represents and warrants toCorporation as follows:

 

This Option is being acquired by Optionee for investment only, forOptionee’s own account, and not with a view to, for offer for sale, or for salein connection with the distribution or transfer thereof.

 

 
|   | OPTIONEE                |
|--------|-------------------------|
|   |                    |
|   |                    |
| Dated: | March 3, 2005           |   | /s/  David Litt |
|   | David Litt              |
|   |                    |
|   | Address:                |   |
|   |                    |
|   |                    |
|   |                    |
|   | Social Security Number: |   |
|        |                         |  |  |  |  |

 

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# ** **

# **Attachment A**

# ** **

(Copy of VitaCube SystemsHoldings, Inc.2003 Stock Incentive Plan)

 

A-1

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**AttachmentB**

 

(Suggested form ofExercise Notice - please retype or make a copy of this letter before using.)

 
| Date:                     |
|-------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                          |
| Treasurer                                                                                                                     |
| VitaCube Systems Holdings, Inc.                                                                                               |
| 480 South Holly Street, Suite 200                                                                                             |
| Denver, CO 80246                                                                                                              |

 

Dear Sir:

 

In accordance with the Incentive Stock Option Agreement (the “Agreement”)evidencing the option granted to me on             ,200    , under the VitaCube Systems Holdings, Inc. 2003Stock Incentive Plan, I hereby elect to exercise the option to the extent of           Common Shares (the “Shares”).  Inconnection with this exercise, enclosed is the original Agreement forendorsement by the Company as to exercise on Schedule I thereof.

 

In payment of the purchase price (initial all that apply):

 

       A.                                                              Ienclose a check or money order payable to the order of “VitaCube SystemsHoldings, Inc.” in the amount of $              .

 

       B.                                                                PromissoryNote (prior approval of the Committee required).

 

In the event I hereafter sell any of the Shares within one year fromthe date of this exercise or within two years after the date of grant of this option,I agree to notify the Company promptly of the amount of taxable compensationrealized by me by reason of such event for federal income tax purposes.

 

I agree to execute and deliver such additional documents reasonablyrequested by the Company with respect to my acquisition of the Shares.

 

When the certificate for the Shares has been issued, please deliver itto me, along with my endorsed Agreement if the option was not exercised infull, at the address set forth below my signature.

 

 
|         |                     |   |
|--------------|--------------------------|--------|
| [Signature]  | [Address]                |
|         |                     |
|         |                     |
|         |                     |   |
| [Print Name] |                     |
|         |                     |
|         | [Social Security Number] |

 

B-1

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| Optionee: David Litt |   | Option No. Q–15 |   | Date of Grant: October 1, 2004 |
|----------------------|--------|----------------------|--------|--------------------------------|

 

Schedule I

 
| ** ** | ** ** | ** **    | ** ** | ** **   | ** ** | **Unexercised** | ** ** | **Issuing**  | ** ** |
|------------|------------|---------------|------------|--------------|------------|-----------------|------------|--------------|------------|
| ** ** | ** ** | **Shares**    | ** ** | **Payment**  | ** ** | **Shares**      | ** ** | **Officer**  | ** ** |
| **Date**   | ** ** | **Purchased** | ** ** | **Received** | ** ** | **Remaining**   | ** ** | **Initials** | ** ** |
|       |       |          |       |         |       |            |       |         |       |
|       |       |          |       |         |       |            |       |         |       |

 

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