Document:

Exhibit 10.1

 

480 S. Holly Street .  Suite 5

Denver, Colorado  80246

Main:  303-316-8577

Toll Free:  800-313-2234

Fax:  303-316-9004

www.v3s.com

 

 

EMPLOYMENT AGREEMENT BETWEEN

VITACUBE SYSTEMS HOLDINGS, INC. AND DAVID LITT

 

This Employment Agreement (“the
Agreement”) between VitaCube Systems Holdings, Inc. and David Litt (“Employee”)
entered effective as of the 1st day of October 2004 (“Effective Date”), sets
forth the terms that shall govern the employment of Employee with VitaCube
Systems Holdings, Inc. (“Employer” or the “Company”).

 

1.                                       EMPLOYMENT.

 

(a)            Employer agrees to
employ Employee, and Employee agrees to be employed by Employer, as Vice
President of Sales and Marketing with the additional title of “Chief Sales and
Marketing Officer” for the term hereafter described.  Employee shall report directly and only to
the Company’s President (CEO).  Employee’s
job title and duties may be changed from time to time by the Company’s
President.  Employee hereby accepts
employment by the Company and agrees diligently and faithfully to perform his
duties pursuant to this Agreement on a full time basis.

 

(b)           Employee will devote
his full business hours and energies to the business of the Employer to
accomplish all duties reasonably assigned, and will devote his best efforts to
advance the interests of the Employer.

 

(c)            Employee hereby
represents and warrants that as of the Effective Date, Employee will not be a
party to any agreement, contract, or understanding, and that no facts or
circumstances will exist which would in any way restrict or prohibit him from
undertaking or performing any of Employee’s obligations under this Agreement.
Furthermore, Employee understands and acknowledges that Employee may have
confidentiality obligations to prior employers under common law, statute, or
contract. Employee will not use or otherwise disclose any confidential or
proprietary information obtained by him in connection with any prior
employment. Employee shall indemnify and hold the Corporation harmless from any
claims, demands, costs, or liabilities (including attorneys’ fees and
disbursements) incurred by the Company in connection with or resulting from
Employee’s breach of his representations set forth herein.

 

(d)           Employee’s duties
shall include: management of the Company’s multi-level sales and

 

1

 

marketing programs, strategic planning for the Company’s sales and
marketing programs, and supervision and direction of employees and all other
duties necessary to perform the foregoing responsibilities. Employee will have
the authority to perform and execute the necessary actions to implement the
Company’s multi-level marketing programs and such other actions as directed by
the Company’s President and it Board of Directors.

 

(e)            EMPLOYEE
ACKNOWLEDGES AND THE PARTIES AGREE THAT EMPLOYEE IS ONE OF THE COMPANY’S
EXECUTIVE AND MANAGEMENT PERSONNEL AND THAT ALL CONFIDENTIALITY, NON-COMPETE
AND NON-SOLICITATION COVENANTS AND PROVISIONS CONTAINED IN THIS AGREEMENT ARE
FULLY ENFORCEABLE AGAINST HIM.

 

2.             COMPENSATION.

 

(a)            Employee
will receive as compensation for all responsibilities a base salary (“Base
Salary”) of $12,500 per month ($150,000.00 per year), payable according to the
salary schedule of Employer for its executive officers.  In addition, Employee shall receive
additional salary based on performance (“Performance Salary”) of up to a
maximum of $150,000 each calendar year. 
Performance Salary shall be based on the monthly net sales (gross sales,
less returns and allowances) of the Company’s multi-level marketing subsidiary,
less sales of  “sales aides” (the “Monthly
Performance Sales”).  The Company shall
prepare a written report on Monthly Performance Sales each month and submit it
and the Performance Salary payment to Employee on or before the 15th of the
month following the subject month, and shall be calculated as follows:

 

i.         For
the first $800,000 of Monthly Performance Sales in excess of $200,000, Employee
shall be entitled to .75% of such sales for that month.  For example, if there were $1,000,000 of
Monthly Performance Sales in a month, Employee would be entitled to Performance
Salary for that month of $6,000 ($1,000,000 less $200,000, times .75%).

 

ii.        For
the next $2,000,000 of Monthly Performance Sales in a month, Employee shall be
entitled to .60% of such sales for that month. 
For example, if there were $2,000,000 of Monthly Performance Sales for a
month, in addition to the $6,000 of Performance Salary for that month as
described in the preceding paragraph, Employee would be entitled to an
additional $6,000 of Performance Salary for that month ($1,000,000 times .60%),
and if there were $3,000,000 of Monthly Performance Sales in that month,
Employee would be entitled to $12,000 of Performance Salary for that month, in
addition to the $6,000 of Performance Salary described in the preceding
paragraph ($2,000,000 times .60%).

 

iii.       The
Performance Salary shall be capped at a maximum of $150,000 for each calendar
year, notwithstanding the provisions of the preceding two paragraphs.

 

2

 

(b)          
Employee also shall receive, pursuant to the terms of Employer’s 2003 Stock
Incentive Plan (the “ISOP”), options (the “Options”) to purchase, at a price of
$1.00 per share, an aggregate of 400,000 shares of Employer’s common
stock.  Pursuant to the ISOP, the grant
of the Options shall be effective the Effective Date, but 150,000 of such
options shall be contingent (the “Contingent Options”) on satisfaction of the
criteria below described.  In each case
the Options shall expire, if not duly exercised five years after the Effective
Date.  The non-contingent Options shall
vest, in equal amounts over a four year period following the Effective Date,
with the first 50,000 non-contingent Options vesting on October 1, 2004, with
an additional 50,000 Options vesting each October 1 thereafter (so long as
Employee remains employed by Employer as hereafter provided), until the entire
250,000 non-contingent Options shall be vested. 
The Contingent Options shall become non-contingent based on Monthly
Performance Sales as follows:  50,000 of
such Options shall become non-contingent on the first day of the month
following the first month in which the Company has Monthly Performance Sales of
$1,000,000; a second 50,000 of such Options shall become non-contingent on the
first day of the first month following the month in which the Company has
Monthly Performance Sales of $2,000,000; and the final 50,000 of such Options
shall become non- contingent on the first day of the month following the first
month following the month in which the Company has Monthly Performance Sales of
$3,000,000.  Notwithstanding the
foregoing, to the extent the Contingent Options have not become non-contingent
within four (4) years of the Effective Date, such Options shall terminate and
be of no further effect.  If and when
each of the 50,000 Options no longer is contingent, those Options shall be
deemed vested as if they had not been contingent on October 1, 2004, so that
10,000 of such Options shall be deemed to have vested on October 1, 2004, and
10,000 more of such Options shall be deemed to have vested on each October 1
thereafter, until all 50,000 of such Options shall have vested.

 

(c)            In addition to the forgoing,
Employee shall receive a $20,000 bonus (the “Financing Bonus”) when the Company
has successfully completed new equity financing of at least $5,000,000.  In addition to the forgoing, Employee shall
also receive a $20,000 bonus (the “Break even Bonus”) when the Company has a
calendar quarter in which it reports a profit for that quarter (per GAAP).

 

3.  DEDUCTIONS. 
To the extent required by law, all compensation the Company pays
Employee is subject to federal, state, and municipal withholding requirements,
any applicable occupational privilege tax and any court ordered deductions such
as garnishments.  Compensation may also
be reduced by deductions the Employee authorizes for insurance, 401(k)
contributions, and other similar purposes.

 

The
Employee’s final paycheck will be reduced by the amount of any lawful charge or
indebtedness the Employee owes the Company.

 

4.  BONUS PLAN. 
Employer intends to initiate an incentive executive bonus plan (“Bonus
Plan”) that will provide compensation to key executives in addition to their
salaries.  The Company has advised that
it intends for the Bonus Plan to be based on between 5% and 10% of the Company’s
net profits before income taxes (per GAAP), calculated on a calendar quarter

 

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basis,
with payouts to be made quarterly.  Once
the Bonus Plan has been adopted, Employee will be included as a 20% beneficiary
of the Bonus Plan.  Employee acknowledges
that the final form of Bonus Plan is subject to approval by the Company’s Board
of Directors.  If Employer has not
initiated the Bonus Plan for all key executives (including Employee) within six
months of the Effective Date, the Company shall from the Effective Date forward
pay Employee an additional bonus equal to 1% of the Company’s net profits
before income taxes (per GAAP), calculated on a calendar quarter basis, with
payouts to be made quarterly, until such time as the Bonus Plan is initiated
for all key executives (including Employee).

 

5.  BENEFITS.  Employee will be entitled to
participate in any and all benefit plans, including health insurance, provided
to other senior executive employees.

 

(a)           Employer
shall provide Employee with a $500 per month car allowance commencing with the
month following the first month in which Monthly Performance Sales reach
$150,000.00.

 

(b)           Company
will maintain director/officer liability insurance at all times during the term
of Employee’s employment and Employee will be notified of any change to the
insurance policy prior to the change being made.

 

(c)           Employee
shall be entitled to four (4) weeks of paid vacation each year, with such
vacation to be scheduled and taken in accordance with the Company’s standard
vacation policies applicable to such personnel.  In addition, Employee
shall be entitled to such sick leave and holidays at full pay in accordance
with the Company’s policies established and in effect from time to time.  If the Company has no such policies, such
benefits will be granted to Employee in the reasonable discretion of the
Company’s President

 

6.  EXPENSES. 
Employee shall be promptly reimbursed for all expenses reasonably and
necessarily incurred by him in the performance of his duties under this
Agreement upon prior approval for all such expenses in excess of $250 and
subsequent presentation of proof of such expenses in a form acceptable to the
Company. In addition, the Company shall pay the expenses reasonably incurred by
Employee in connection with a cellular telephone and a home high-speed digital
telephone/internet connection.

 

7.             CONFIDENTIAL
INFORMATION.

 

(a)            Employee recognizes and acknowledges
that he will have access to, become acquainted with, and obtain certain
confidential and proprietary information of the Employer, and that such
information constitutes valuable, special and unique property of the
Employer.  Employee acknowledges and
agrees that such information shall include, but is not limited to, trade
secrets, know-how, formulas, ingredients, inventions, techniques, processes,
computer programs, schematics, data, designs, financial information, studies,
supply contracts, formulations, strategic and marketing plans and data, sales
and marketing plans, nutritional and fitness plans, vendor and customer lists,
and distributor lists and compensation. 
Employee will not disclose any of such

 

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confidential,
proprietary or trade secret information except as is necessary to perform his
duties for the Employer.  Employee
further agrees that he will not at any time use any of such confidential
information in competing with Employer. 
Employee further agrees that he shall maintain, at all times, the
Employer’s confidential, proprietary and trade secret information in a
confidential manner and protect it from disclosure to any person who is not
subject to a Confidentiality Agreement with the Employer.

 

(b)           In the event of a
breach or threatened breach by Employee of this Section, Employee agrees that
irreparable harm would come to Employer under such circumstances, and that, in
such event, Employer’s remedy at law for such a breach or threatened breach
would be inadequate and that Employer shall be entitled at its election, to
injunctive relief, without the necessity of posting bond therefore, against
such breach or threatened breach and to specific performance of this Agreement,
in addition to any other remedies at law or in equity available to Employer for
such breach or threatened breach, including the recovery of damages, court costs,
and attorneys’ fees.

 

(c)            The restrictions
and obligations in the preceding subparagraphs (a) and (b) shall survive for
six (6) years past the termination of this Agreement and the effective date of
the termination of Employee’s employment by the Company.

 

  8. 
OWNERSHIP AND ASSIGNMENT OF PROPRIETARY INFORMATION.  Upon termination of Employee’s
employment with Employer or at Employer’s request, Employee shall promptly
deliver to Employer all documents, material and property in Employee’s
possession or control (such as drawings, notebooks, reports, sketches, records,
fitness and nutritional plans, computer programs, hard drives and the like)
whether delivered to Employee or made by Employee in the performance of
services for Employer, relating in any way to Employee’s employment and the
business activities of Employer, and containing any data or information
whatsoever, whether or not it is confidential. 
Employee further agrees that Employer is the sole owner of any formulas,
information technology, processes, or other property rights created by Employee
in the performance of services for Employer, including but not limited to, the
right to use, sell, license or otherwise transfer to exploit the formulas,
information technology, processes and other property rights and the right to
make such changes in them and the uses thereof as Employer may from time to
time determine.  Employee hereby assigns
to Employer, without further consideration, Employee’s entire right, title, and
interest worldwide, free and clear of all encumbrances, in and to all material,
designs, and other property created for Employer by Employee pursuant to his
employment during the term of this Agreement, all of which property shall be
the sole property of Employer.  Employee
also agrees to cooperate with Employer both during and after the term of
performance of this Agreement, in evidencing, maintaining, defending, obtaining
and enforcing patents, trademarks, copyrights and other protection of Employer’s
right to formulas, processes and other property rights created pursuant to this
Agreement.  In the event Employer is
unable for any reason to secure Employee’s signature to any lawful and
necessary documents required to apply for or execute any patent, trademark,
copyright or other applications with respect to any property for which such an
application may be presented (including improvements, renewals, extensions,
continuations, divisions or continuations

 

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in part thereof), Employee hereby irrevocably
designates and appoints Employer and its duly authorized officers and agents as
his agent and attorney-in-fact to act for and in his behalf and instead of
Employee, to execute and file such application and to do all otherwise lawfully
permitted acts to further the prosecution and issuance of patents, trademarks,
copyrights, and other rights with the same legal force and effect as if
executed by Employee.

 

9.  TERMINATION.  The employment relationship
established herein is “at will” and shall continue so until terminated by
fifteen (15) days’ written advance notice from the Employee to the Employer or
from the Employer to the Employee, unless the Employee is terminated by the
Employer for “just cause.”  The
confidentiality provisions of Section 7 shall remain in full force and effect
following termination of Employee’s employment with Employer.

 

(a)             For Cause. If the Employee is
terminated for “just cause,” the Employer will give the Employee one (1) day
written advance notice.  For all purposes
under this Agreement, “just cause” shall mean (i) willful failure or
unjustifiable neglect by the Employee to substantially perform his duties
hereunder after written notice to Employee and subsequent failure to perform
within three days of receipt of such notice, (ii) a willful or grossly
negligent act by the Employee which constitutes gross misconduct, (iii) a
willful breach by the Employee of a material provision of this Agreement, (iv)
Employee committing (or being charged with committing) a felony or any other
act abhorrent to the community which a reasonable person would consider
materially damaging to Employer’s reputation or business name. (v) a willful or
grossly negligent material violation of a federal or state law or regulation
applicable to the business of the Company or its status as a public company. To
the extent provided in this Agreement the obligations and agreements of the
Employee to the Employer shall survive the termination of the employment
relationship as provided by this Agreement. 
If Employee is terminated for just cause, Employee shall not be entitled
to (1) any Base Salary not earned as of the effective date of termination, (2)
any Performance Salary that has not been earned as of the effective date of
termination (so if the effective date of Employee’s termination for just cause
is in the middle of a calendar month, he will not receive any Performance
Salary for that month), (3) the Financing Bonus if the $5,000,000 of new equity
financing has not been successfully obtained by the effective date of
termination, (4) the Break even Bonus if the Company has not had a profitable
calendar quarter prior to the calendar quarter in which the termination of
employment becomes effective, (5) any Contingent Options that remain contingent
as of the effective date of termination, and (6) any Options that have not
vested as of the effective date of termination (with the Options that have
vested being subject to the terms of the ISOP).

 

(b)           Without Cause. In the event that the
Employee is terminated by the Employer without cause, Employee shall be
entitled to (1) two (2) months’ Base Salary (in addition to any accrued but
unpaid Base Salary for the month in which the termination becomes effective),
(2) the entire Performance Salary for the month in which the termination
becomes effective (in addition to any accrued but unpaid Performance Salary for
a month prior to the month in which the termination becomes effective) (3) the
Financing Bonus if the Company completes $5,000,000 of new equity financing
within

 

6

 

 

the
calendar month in which the termination becomes effective, (4) the entire Break
even Bonus if the Company has a profitable calendar quarter in the calendar
quarter in which the termination becomes effective, (5) the Contingent Options
no longer being contingent, but only if and to the extent the Monthly
Performance Sales described in paragraph 2 (b) above are achieved in the
calendar month in which the termination becomes effective, and (6) all vested
Options (which shall terminate in accordance with the provisions of the
Employer’s ISOP).

 

(c)            Resignation.  In the event Employee terminates his
employment with Employer more than two years after the Effective Date, Employee
shall be entitled to receive the benefits described in subparagraph 9 (b)
above. If Employee terminates his employment with Employer in two years or less
from the Effective Date, Employee will be treated as if he was terminated for
just cause, and the provisions of subparagraph 9 (a) shall apply.  Notwithstanding the foregoing, if Employee
terminates his employment with Employer more than two years after the Effective
Date and becomes employed by, consults for, becomes an advisor to, or invests
in any manner in an entity that is not a reporting company under the Securities
and Exchange Act of 1934, within six (6) months of the effective date of the
termination of employment, a business that is a competitor of the Company
(based on the Company’s business as of the effective date of termination),
Employee shall be treated as if he was terminated for just cause, and the provisions
of subparagraph 9 (a) shall apply.

 

10.  SEVERABILITY.  The provisions of this Agreement
are severable.  The invalidity of any
provision shall not affect the validity of any other provision.  A Court or other tribunal is required upon a
finding of invalidity of any provision of this Agreement, including Section 7
or any part thereof, to enforce the remainder of the provisions of this
Agreement or interpret the language in a way so as to comply with applicable
law.

 

11.  WAIVER.  No waiver of any of the provisions
of this Agreement shall be deemed or constitute, a waiver of any other
provision, whether or not similar, nor shall said waiver constitute a
continuing waiver.  No waiver shall be
binding unless executed in writing by the party making the waiver.

 

12.  NOTICES.  All notices required or permitted
to be given hereunder shall be in writing and shall be deemed delivered and be
effective (i) when personally delivered (including personally delivered by
email or by other electronic means), (ii) one (1) day following delivery by
overnight currier, or, (iii) three days following the date deposited in the
U.S. Mail, postage prepaid, registered or certified, return receipt
requested.  Unless changed by written
notice given to a party by the other, such notices shall be given to the
Employer at the following address:

 

VitaCube
Systems Holdings, Inc.

480 South Holly Street,
Suite 5

Denver, Colorado 80246

Attention:  Mr. Sanford D. Greenberg

 

 

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and such notices shall be
given to Employee at the following address:

 

David
Litt

1203 S Riverbend Ct

Superior, CO  80027

 

13.  ASSIGNABILITY.  The duties and obligations of Employee under
this Agreement are personal unto him and may not be assigned or otherwise
transferred, in whole or in part, by Employee, but rights and benefits of
Employee under this Agreement shall inure to the benefit of Employee.  Employer may assign this Agreement, or any
benefit, duty or obligation hereunder to any person or third party upon written
notice to Employee.

 

14. APPLICABLE LAW.  The
terms and conditions of this Agreement shall be construed under, governed by
and enforced in accordance with the laws of the State of Colorado.

 

15.  ENTIRE AGREEMENT;
AMENDMENT.  This Agreement
constitutes the entire Agreement between the parties and supersedes any and all
prior agreements, either oral or written, between the parties hereto with
respect thereto.  Any modifications to
this Agreement must be made in writing and signed by both parties in order to
be effective and enforceable.

 

16.  ARBITRATION. 
Any dispute relating to this Agreement, or to the breach of this
Agreement (except for Employer’s rights under Section 7 which may be enforced
in any court of competent jurisdiction), arising between the Employer and
Employee, shall be settled by arbitration in accordance with the commercial
arbitration rules of the American Arbitration Association (“AAA”), which
arbitration may be initiated by any party hereto by written notice to the other
of such party’s desire to arbitrate the dispute.  The arbitration proceedings shall take place
in Denver, Colorado, and shall be administered by AAA. Any arbitration under
this Agreement shall be governed by Colorado’s Uniform Arbitration Act of 1975,
C.R.S. §13-22-201 et seq. as amended.  Employer’s right to equitable relief set
forth in Section 7 may be brought and enforced in any court of competent
jurisdiction.  Employee agrees and
consents to the District Court of the City and County of Denver, State of
Colorado, having jurisdiction over any such dispute.

 

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IN WITNESS WHEREOF, the
parties have executed this Agreement on the day and year written above.

 

	
   

  	
  EMPLOYER:

  
	
   

  	
   

  
	
   

  	
  VITACUBE
  SYSTEMS HOLDINGS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Sanford D. Greenberg

  
	
   

  	
   

  	
  Sanford
  D. Greenberg, President

  
	
   

  	
   

  	
  Date:
  

  	
  09/14/04

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EMPLOYEE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/
  David Litt

  
	
   

  	
   

  	
  David
  Litt

  
	
   

  	
   

  	
  Date:
  

  	
  September
  14, 2004

  
	
   

  	
   

  	
   

  

 

9Exhibit 10.1

 

 

October 29, 2004

 

Mr. Ken Saunders

30862 Steeplechase Drive

San Juan Capistrano, CA 92675

RE: Amendment to Employment Agreement

 

Dear Ken:

 

This letter sets forth the agreement between you and Peregrine Systems,
Inc. (the “Company”) to amend the terms of the letter agreement between you and
the Company, dated July 20, 2004 (the “Employment Agreement”), as set
forth herein.

 

Effective as of October 1, 2004, the Employment Agreement is hereby
amended such that the last sentence of the introductory paragraph of the
Employment Agreement is deleted in its entirety and replaced with the
following:

 

“Additionally, effective on November 1, 2004 you will become the
Executive Vice President and Chief Financial Officer.”

 

Other than as set forth herein, the terms and conditions of your
Employment Agreement shall remain unchanged and in full force and effect.  Please acknowledge your agreement with the
foregoing by executing this letter in the space provided below.

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  /s/ John
  Mutch

  	
   

  
	
   

  	
  John Mutch

  
	
   

  	
  Chief
  Executive Officer

  
	
   

  	
   

  
	
  Acknowledged
  and agreed

  	
   

  
	
  to as of
  October 29, 2004

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Ken
  Saunders

  	
   

  	
   

  
	
  Ken Saunders

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