Exhibit
10.9


 


	
  No. Q–15

  	
   

  	
  Number of Shares: 150,000

  	
   

  	
  Date of Grant: October 1, 2004

  



 


VITACUBE SYSTEMS HOLDINGS, INC.


INCENTIVE STOCK OPTION AGREEMENT


 


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


 


1.                                       Grant
of Option.  The Company, pursuant to
the VitaCube Systems Holdings, Inc. 2003 Stock Incentive Plan (“Plan”), a copy
of 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 Common
Shares, as such Common Shares are now constituted, at the purchase price of
$1.00 per share (the “Option Price”), contingent upon the Company meeting the
performance criteria set forth in Section 3. 
Such Option is intended to be an Incentive Stock Option as defined in
the Plan.  The provisions of the Plan
governing the terms and conditions of Incentive Stock Options are incorporated
in full by this reference.  Certain capitalized
terms used in this Agreement and not defined herein will have the meaning set
forth in the Plan.


 


2.                                       Termination.  Unless terminated earlier as provided herein
or in the Plan, the Option will terminate and be of no force or effect after
5:00 p.m. Mountain Time on September 30, 2009 (the “Expiration Date”).


 


3.                                       Performance
Criteria.


 


3.1.                              For
purposes of this section:


 


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


 


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


 


3.2.                              The
Option is contingent upon the Company meeting the performance criteria set
forth below.  The Option will become
non-contingent, as follows:


 


3.2.1.                     The Option
will become non-contingent with respect to 50,000 Common Shares on the first
day of the month following the month in which the Company has Monthly
Performance Sales of $1 million.


 


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


 





















 


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


 


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


 


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


 


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


 


4.                                       Exercise
of Option.


 


4.1.                              Subject
to the provisions of the Plan and as provided herein regarding termination of
the Option, with respect to each installment of 50,000 Common Shares that
become non-contingent pursuant to Section 3, this Option will vest and be
exercisable 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 date
the Common Shares become non-contingent, the Option shall be vested with
respect to those Common Shares on the date the Common Shares become
non-contingent.  For example, if the
Company first has Monthly


 


2





















 


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


 


4.2.                              Notwithstanding
the above, in the event of a Change in Control, to the extent the Option is
non-contingent, the Option will earlier vest and be
exercisable as provided in the Plan.


 


4.3.                              Optionee
may exercise this Option only with respect to whole shares.


 


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


 


6.                                       Payment
of Purchase Price.  The Option Price
is payable in cash or certified check payable to the order of the Company.  Upon the prior written consent of the
Committee, the Option Price may be paid by a recourse promissory note in favor
of the Company.


 


7.                                       Early
Termination.  The right to exercise
this Option is subject to the following additional limitations:


 


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


 


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


 


7.1.2.                     A breach by Optionee of any
confidentiality, noncompetition, or nonsolicitation covenant contained in any
employment agreement or any other agreement executed by the Optionee for the
benefit of the Company.


 


7.1.3.                     The consummation of a Change in
Control, unless the agreement governing the Change in Control provides
otherwise.


 


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


 


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


 


3





















 


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


 


8.                                       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 Date, the Option, to the extent
exercisable on the date of Optionee’s death or to the extent it becomes
noncontingent and exercisable pursuant to Section 3 of this Agreement, 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.


 


9.                                       Restrictions
on Option Shares.  Optionee may not
sell, pledge, or otherwise transfer any interest in any Common Shares (the “Option
Shares”) acquired pursuant to exercise of the Option except pursuant to an effective
registration under the Securities Act of 1933, as amended (the “Act”) and the
applicable state securities laws (“State Acts”) or if exemptions from such
registration are available.  Optionee
understands that the Company may require an opinion of Optionee’s counsel or
other evidence satisfactory to the Company that any such transfer is not in
violation of the Act or State Acts. 
Unless the Option Shares are subject to an effective registration, the
certificates representing the Option Shares will bear a legend substantially as
follows:


 


THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) OR UNDER ANY
STATE SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS UNLESS EXEMPTIONS FROM REGISTRATION THEREUNDER ARE AVAILABLE, THE
AVAILABILITY OF WHICH MUST BE ESTABLISHED TO THE SATISFACTION OF VITACUBE
SYSTEMS HOLDINGS, INC. (THE “COMPANY”).


 


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


 


11.                                 Governing
Law.  This Agreement will be governed
by and construed under the laws of the state of Colorado.


 


4





















 


12.                                 Notices.  Any and all notices, designations, consents,
offers, acceptances, or any other communication provided for herein must be
given in writing and will be deemed to have been duly given, (a) if delivered
by personal delivery or confirmed facsimile, (b) one business day after being
deposited with a nationally recognized overnight courier, or (c) five days after
being mailed, registered or certified mail, postage prepaid.  Such communications will be addressed, in the
case 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’s
residence, or at such other address as may be designed by Optionee.


 


13.                                 Entire
Agreement.  This Agreement together
with the Plan contains the entire agreement and the understanding by and
between the parties with respect to the subject matter hereof.


 


14.                                 Succession.  Except as otherwise
provided herein or in the Plan, this Agreement will be binding upon and will
enure to the benefit of the parties, their heirs, successors, assigns, and
legal representatives.


 


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


 


16.                                 Paragraph
Headings.  The paragraph headings are
inserted in this Agreement for convenience only and are not intended to affect
the terms of this Agreement.


 


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


 


18.                                 Execution
By Optionee Required.  For this
Agreement to be effective, the Optionee must sign the following page (the “Acceptance
Page”) and return it to the Company. 
THIS AGREEMENT WILL BE DEEMED WITHDRAWN AND THE OPTION WILL BE OF NO
FORCE OR EFFECT UNLESS THE OPTIONEE HAS SIGNED AND RETURNED THE ACCEPTANCE PAGE
TO THE COMPANY WITHIN 60 DAYS FROM THE DATE THIS AGREEMENT IS SIGNED ON BEHALF
OF THE COMPANY.


 


	
   

  	
  VITACUBE SYSTEMS HOLDINGS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
  March 1, 2005

  	
   

  	
  By:

  	
  /s/ Sanford D.
  Greenberg

  
	
   

  	
   

  	
   

  	
  Sanford D. Greenberg,
  President

  
					



 


5





















 


ACCEPTANCE
BY OPTIONEE


 


The
undersigned, by his or her signature below, hereby accepts the Option,
acknowledges having read this Agreement and the Plan, agrees to be bound by all
provision set forth herein and in the Plan, and represents and warrants to
Corporation as follows:


 


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.


 


 


	
   

  	
  OPTIONEE

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated:

  	
  March 3, 2005

  	
   

  	
  /s/  David Litt

  
	
   

  	
  David Litt

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Social Security Number:

  	
   

  
						



 


6





















 


Attachment A


 


(Copy of VitaCube Systems
Holdings, Inc.

2003 Stock Incentive Plan)


 


A-1





















 


Attachment
B


 


(Suggested form of
Exercise 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. 2003
Stock Incentive Plan, I hereby elect to exercise the option to the extent of           
Common Shares (the “Shares”).  In
connection with this exercise, enclosed is the original Agreement for
endorsement by the Company as to exercise on Schedule I thereof.


 


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


 


       A.                                                              I
enclose a check or money order payable to the order of “VitaCube Systems
Holdings, Inc.” in the amount of $              .


 


       B.                                                                Promissory
Note (prior approval of the Committee required).


 


In the event I hereafter sell any of the Shares within one year from
the 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 compensation
realized by me by reason of such event for federal income tax purposes.


 


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


 


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


 


 


	
   

  	
   

  	
   

  
	
  [Signature]

  	
  [Address]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  [Print Name]

  	
   

  
	
   

  	
   

  
	
   

  	
  [Social Security Number]

  



 


B-1





















 


	
  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