Exhibit 10.11


 


THE SECURITIES
REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “ACT”), OR APPLICABLE STATE SECURITIES ACTS (THE “STATE
ACTS”), AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, DONATED, OR OTHERWISE
TRANSFERRED (WHETHER OR NOT FOR CONSIDERATION) BY THE HOLDER, EXCEPT UPON THE
ISSUANCE TO VITACUBE SYSTEMS HOLDINGS, INC. (THE “CORPORATION”) OF A FAVORABLE
OPINION OF THE HOLDER’S COUNSEL, OR SUBMISSION TO THE CORPORATION OF SUCH OTHER
EVIDENCE AS MAY BE REASONABLY SATISFACTORY TO COUNSEL FOR THE CORPORATION, TO
THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE ACT AND THE
STATE ACTS.


 


STOCK OPTION AGREEMENT


 


This Stock Option Agreement is made effective as of the 2nd day of
March 2005, between VITACUBE SYSTEMS
HOLDINGS, INC., a Nevada corporation (the “Corporation”) and Earnest
Mathis, Jr. (“Optionee”).


 


BACKGROUND:


 


A.                                   Optionee
is employed by the Corporation as its chief executive officer and president.


 


B.                                     Pursuant
to the terms of Optionee’s employment agreement with the Corporation, the
Corporation agreed to issue an option to purchase common stock of the
Corporation to Optionee.


 


IN CONSIDERATION of Optionee’s employment with the Corporation and the
mutual promises and undertakings described below, the parties agree as follows:


 


1.                                       Grant of Option.  The Corporation hereby grants to Optionee an
option (“Option”) to acquire from the Corporation, at an initial purchase price
of $3.00 per share, 275,000 fully paid and nonassessable shares of common
stock, par value $.001 per share (the “Common Stock”) of the Corporation.  The Option shall vest and be exercisable as
provided below.  The purchase price per
share of the Common Stock, as adjusted from time to time as provided herein, is
referred to as the “Purchase Price.”


 


2.                                       Exercise of Option.


 


2.1.                              This Option is vested and
exercisable with respect to 137,500 shares of Common Stock as of the date of
this Agreement and will vest and be exercisable with respect to the balance of
the Common Stock on the one-year anniversary of this Agreement.  Each increment of Common Stock that has
vested hereinafter referred to as the “Vested Options.”  Except as provided in Section 2.2, upon
termination of Optionee’s


 





















 


employment with the Corporation, this Option will be exercisable only
with respect to Vested Options as of the date of termination of
employment.  Except as provided in
Section 2.3, Vested Options will be exercisable for a period of five years following
their vesting date.  The Option will
terminate and cease to be outstanding for any Vested Options for which the
Option has not been exercised on the 5-year anniversary of the respective
vesting dates unless earlier terminated as provided in Section 2.3.


 


2.2.                              If the Corporation
terminates Optionee’s employment with the Corporation without “just cause” or
Optionee terminates for “good reason” as defined in the Employment Agreement
dated March 2, 2005, between the Optionee and the Corporation (the “Employment
Agreement”), all unvested options will immediately vest and become
exercisable.  Options that vest under
this section will be exercisable for a period of five years following the date
of Optionee’s termination of employment. 
The Option will terminate and cease to be outstanding for any Options
which vest under this Section 2.2 on the 5-year anniversary of Optionee’s
termination of employment


 


2.3.                              If the Corporation
terminates Optionee’s employment with the Corporation for “just cause” as
defined in the Employment Agreement, this Option will immediately terminate and
cease to be outstanding for any Common Shares that have not been exercised as
of the date of Optionee’s termination of employment.


 


3.                                       Manner of Exercise.


 


3.1.                              The Optionee may exercise
this Option, in whole or in part, upon surrender of this Option, with the
exercise form annexed hereto duly executed, at the office of the Corporation,
480 S. Holly Street, Denver, Colorado 80246, or such other office of which the
Corporation shall notify the Optionee in writing, together with a certified or
bank cashier’s check payable to the order of the Corporation in the amount of
the Purchase Price times the number of shares of Common Stock being purchased.


 


3.2.                              As soon as practical
after the exercise date and in compliance by the Optionee with any request
pursuant to Section 6.2 of this Agreement, the Corporation will issue to or on
behalf of the Optionee a certificate representing the shares of Common Stock
purchased pursuant to this Option.


 


3.3.                              In no event shall any
fractional share of Common Stock of the Corporation be issued upon any exercise
of this Option.  If, upon exercise of
this Option as an entirety, the Optionee would, except as provided in this
section, be entitled to receive a fractional share of Common Stock, then the
Corporation shall issue the next higher number of full shares of Common Stock,
issuing a full share with respect to such fractional share.


 


4.                                       Reservation of Shares.  The Corporation covenants that it will at all
times reserve and keep available a number of its authorized shares of Common
Stock, free from all preemptive rights, which will be sufficient to permit the
exercise of this Option.  The Corporation
further covenants that such shares as may be issued pursuant to the exercise of
this


 


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Option will, upon issuance, be
duly and validly issued, fully paid and nonassessable and free from all taxes,
liens, and charges.


 


5.                                       Adjustments to Purchase Price.


 


5.1.                              If the Corporation shall
at any time prior to the expiration of this Option subdivide its outstanding
shares of Common Stock, by split-up or otherwise, or combine its outstanding
shares of Common Stock, or issue additional shares of Common Stock in payment
of a stock dividend in respect of its shares of Common Stock, the Purchase
Price then applicable to shares covered by this Option shall forthwith be
proportionately decreased in the case of a subdivision or stock dividend, or
proportionately increased in the case of a combination.


 


5.2.                              In the case of any
reclassification, capital reorganization, or change of the outstanding shares
of Common Stock of the Corporation (other than as a result of a subdivision,
combination or stock dividend), or in the case of any consolidation of the
Corporation with, or merger of the Corporation into, another corporation or
other business organization (other than a consolidation or merger in which the
Corporation is the continuing corporation and which does not result in any
reclassification or change of the outstanding shares of Common Stock of the
Corporation), or in the case of any sale or conveyance to another corporation
or other business organization of the property of the Corporation as an
entirety or substantially as an entirety, at any time prior to the expiration of
this Option, then, as a condition of such reclassification, reorganization,
change, consolidation, merger, sale or conveyance, lawful provision shall be
made, and duly executed documents evidencing the same from the Corporation or
its successor shall be delivered to the Optionee of this Option, so that the
Optionee shall have the right prior to the expiration of this Option to
purchase, at a total price not to exceed that payable upon the exercise of the
unexercised portion of this Option, the kind and amount of shares of stock and
other securities and property receivable upon such reclassification,
reorganization, change, consolidation, merger, sale or conveyance, by an
Optionee of the number of shares of Common Stock of the Corporation which might
have been purchased by the Optionee immediately prior to such reclassification,
reorganization, change, consolidation, merger, sale, or conveyance, and in any
such case appropriate provisions shall be made with respect to the rights and
interest of the Optionee to the end that the provisions hereof (including,
without limitation, provisions for the adjustment of the Purchase Price and of
the number of shares purchasable upon exercise of this Option) shall thereafter
be applicable in relation to any shares of stock and other securities and
property thereafter deliverable upon exercise hereof.


 


5.3.                              Whenever the Purchase
Price is adjusted, as herein provided, the Corporation shall promptly deliver
to the Optionee a certificate setting forth the Purchase Price after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment.


 


5.4.                              If at any time prior to
the expiration or exercise of this Option, the Corporation shall pay any
dividend or make any distribution upon its shares of Common Stock or shall make
any subdivision or combination of, or other change in its shares of


 


3





















 


Common Stock, the Corporation shall cause notice thereof to be mailed,
first class, postage prepaid, to the Optionee at least ten full business days
prior to the record date set for determining the holders of Common Stock who
shall participate in such dividend, distribution, subdivision, combination or
other change.  Such notice shall also
specify the record date as of which holders of Common Stock who shall
participate in such dividend or distribution are to be determined.  Failure to give such notice, or any defect
therein, shall not affect the legality or validity of any dividend or
distribution.


 


6.                                       Restricted Shares.


 


6.1.                              Neither this Option nor
the shares of Common Stock issuable upon exercise of this Option have been
registered under the Securities Act of 1933, as amended (the “Act”), or any
state acts.  Optionee understands and
agrees that any shares of Common Stock purchased by Optionee pursuant to this
Option will be “restricted shares”, as such term is defined under the Act, and
that such shares must be held indefinitely unless and until subsequently
registered under the Act and the state acts, unless an exemption from such
registration is available.


 


6.2.                              Unless a current
registration statement under the Securities Act, shall be in effect with
respect to the securities to be issued upon exercise of this Option, the
Optionee, by accepting this Option, covenants and agrees that, at the time of
exercise hereof, the Corporation may require the Optionee to make such
representations, and may place such legends on certificates representing the
shares of Common Stock issuable upon exercise of this Option, as may be reasonably
required in the opinion of counsel to the Corporation to permit such shares of
Common Stock to be issued without such registration.


 


7.                                       Transferability of Option.   During the lifetime of the Optionee, the
Option is exercisable only by the Optionee and is not assignable or
transferable.  If the Optionee dies prior
to the expiration of this Option, the Option to the extent exercisable on the
date of Optionee’s death may be exercised by the personal representative of the
Optionee’s estate, or by the persons to whom the Option is transferred pursuant
to the Optionee’s will or in accordance with the laws of descent and
distribution.


 


8.                                       No Employment Rights.  Nothing in this Agreement will confer
upon Optionee any right to continue in the employment of the Corporation for
any period or specific duration or interfere with or otherwise restrict in any
way the rights of the Corporation or of the Optionee, to terminate his
employment as provided in the Employment Agreement.


 


9.                                       Compliance with Laws and Regulations.


 


9.1.                              The exercise of this
Option and the issuance of the shares of Common Stock issuable upon exercise of
this Option shall be subject to compliance by the Corporation and Optionee with
all applicable requirements of law.


 


9.2.                              The inability of the Corporation
to obtain approval from any regulatory body having authority deemed by the
Corporation to be necessary to the lawful issuance and sale of any shares of
Common Stock issuable upon exercise of this Option shall


 


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relieve the Corporation of any liability with respect to the
non-issuance or sale of the shares of Common Stock issuable upon exercise of
this Option as to which such approval shall not have been obtained.  The Corporation, however, shall use its best
efforts to obtain all such approvals.


 


9.3.                              The Corporation’s
obligation to deliver shares of common stock pursuant to the exercise of this
Option is subject to the Optionee’s payment to the Corporation in cash of the
amount necessary to satisfy all applicable federal, state, and local income and
employment tax withholding requirements.


 


10.                                 Representations and Warranties by Optionee.  Optionee represents and warrants to
Corporation as follows:


 


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


 


10.2.                        This Option is not being
purchased for subdivision or fractionalization thereof; Optionee has no
contract, undertaking, agreement or arrangement with any person or entity to
sell, hypothecate, pledge, donate, or otherwise transfer (with or without
consideration) to any such person or entity the Option; and Optionee has no
present plans or intentions to enter into any such contract, undertaking,
agreement or arrangement.


 


11.                                 Governing Law.  THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF COLORADO WITHOUT
REFERENCE TO ANY CONFLICTS OF LAW PROVISION THAT WOULD REQUIRE APPLICATION OF
THE LAW OF ANY OTHER JURISDICTION.  VENUE
FOR ANY PROCEEDING BROUGHT TO ENFORCE THE TERMS OF THIS AGREEMENT SHALL BE
PROPER ONLY IN THE STATE OR FEDERAL COURTS LOCATED IN THE CITY AND COUNTY OF
DENVER, STATE OF COLORADO.


 


12.                                 Severability.  If any provision of this Option is determined
to be invalid or unenforceable for any reason, the remainder of the Option
shall remain in full force and effect.


 


13.                                 Succession.  This Option shall be binding upon the
parties, their respective heirs, successors, assigns, and legal
representatives.


 


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IN WITNESS
WHEREOF, the parties have executed this Option effective as of the day and year
first above written.


 


 


	
  VITACUBE SYSTEMS HOLDINGS, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Mary Pat O’Halloran

  	
   

  	
   

  
	
   

  	
  Mary Pat O’Halloran,

  	
   

  
	
   

  	
  Chief Financial Officer

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  March 2, 2005

  	
   

  	
   

  
	
   

  	
   

  
	
  OPTIONEE

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Earnest Mathis, Jr.

  	
   

  	
   

  
	
  Earnest Mathis, Jr.

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  March 2, 2005

  	
   

  	
   

  
					



 


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Form of Exercise


 


	
   

  	
   

  	
   

  	
  Date:            

  
	
   

  	
   

  	
   

  	
   

  
	
  To:

  	
   

  	
  VitaCube Systems Holdings, Inc.

  
	
   

  	
   

  	
  480 S. Holly Street

  
	
   

  	
   

  	
  Denver, CO 80246

  



 


The undersigned hereby subscribes for         
shares of Common Stock of VitaCube Systems Holdings, Inc. covered by this Option
and hereby makes payment of $              
in payment of the purchase price therefor.


 


I understand that the Corporation’s obligation to deliver the Common
Stock is subject to all applicable federal and state securities laws.  I agree to execute such additional documents
as the Corporation may reasonably request with respect to my acquisition of the
Common Stock.


 


The certificate(s) for such shares should be issued in the name of the
undersigned or as otherwise indicated below:


 


 


	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Print Name

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name for Registration, if different

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Mailing Address

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Social Security Number or

  
	
   

  	
  Employee Identification Number