Document:

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

  	
   

  	
  InitialsExhibit 10.10

 

EMPLOYMENT AGREEMENT

 

This Agreement
is made this 2nd day of March, 2005 (the “Effective Date”), by and between VITACUBE SYSTEMS HOLDINGS, INC., a Nevada
corporation (“Employer” or the “Company”), and
EARNEST MATHIS, JR. (“Employee”). 
This Agreement supersedes and replaces all prior employment agreements
between the parties whether written or oral.

 

BACKGROUND

 

A.                                   The
Company desires to employ Employee as the Chief Executive Officer and
President.

 

B.                                     Employee
desires employment with the Company as the Chief Executive Officer and
President.

 

THEREFORE, in
consideration of the Background, the mutual promises contained herein, and
other good and valuable consideration, the parties agree as follows:

 

1.                                       Employment Duties.

 

1.1.                              Employment.  Company agrees to employ Employee as Chief
Executive Officer and President until terminated as herein provided.  The Company’s board of directors may amend
Employee’s job title and description from time to time.  Employee hereby accepts employment by the
Company and agrees diligently and faithfully to perform his duties pursuant to
this Agreement. 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 EMPLOYEE.

 

1.2.                              Time
Devoted. Employee will devote approximately 80% of his time and energies to
the business of the Company to accomplish all duties reasonably assigned, and
will devote his best efforts to advance the interests of the Company.  During the term of this Agreement, Employee
may be engaged in other business activity provided that, without the prior
approval of the Company’s board of directors, Employee shall not be engaged in
any Competitive Business (as defined in Section 8.6).

 

1.3.                              Duties.  Employee’s duties shall include: management
of the day-to-day operations of the Company, general administration of the
Company’s business including

 

 

1

 

sales,
marketing, and strategic planning for the Company, supervision and direction of
employees and other corporate officers, and all other duties necessary to
perform the foregoing responsibilities or assigned to Employee by the board of
directors.  Employee will have the
authority to perform and execute the necessary actions to implement the
operational initiatives set by the Company acting through its board of
directors.

 

2.                                       Term. 
The term of Employee’s employment hereunder shall commence on the
Effective Date and shall continue for a period of two years (the “Initial Term”).  Employee’s employment shall terminate at the
end of the Initial Term unless extended by mutual agreement of the parties
unless earlier terminated as provided below.

 

3.                                       Compensation.

 

3.1.                              Salary.  Employee will receive as compensation for all
responsibilities a base salary (“Base Salary”) of $150,000 per year, payable
according to the salary schedule of Employer. 
In addition to the Base Salary and the Plan Bonus described below,
Employee may receive a bonus in such amount as the board of directors in its
sole discretion shall determine.

 

3.2.                              Stock
Options. Employee also shall receive nonqualified stock options (the “Options”)
to purchase, at a price of $3.00 per share, an aggregate of 275,000 shares of
Employer’s common stock.  The Options
will be in the form of Option Agreement attached to this Agreement as Annex 2.

 

3.3.                              Bonuses.  Employer intends to initiate an
incentive executive bonus plan (the “Plan Bonus”) for all executives of the
Company.  Employee will be eligible for
inclusion for the Plan Bonus if and when it is instituted by the Company, but
only on the same basis as other executives may participate and as approved by
the compensation committee of the Board of Directors, or such equivalent Board
body.

 

3.4.                              Withholding/Deductions.  All
compensation the Company pays Employee, including commissions, is subject to
all 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 Employee authorizes for insurance, 401(k) contributions,
and other similar purposes.

 

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

 

4.                                       Benefits.

 

4.1.                              Voluntary Benefits. 
Employee shall receive all benefits generally available to senior
executive employees of the Company from time to time.  The Company does not promise to provide any
fringe benefits but agrees that, if provided, Employee shall have the

 

2

 

right to participate.  Such
participation shall be subject to all qualification, vesting and other
requirements of the plans.

 

4.2.                              Additional Benefits.  In
addition to the benefits set forth in Section 4.1,

 

4.2.1.                     Employer
shall provide Employee with an auto allowance of $1,000 per month.

 

4.2.2.                     Employee
shall be entitled to four 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.

 

4.2.3.                     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.

 

4.2.4.                     The
Company shall maintain director and officer liability insurance at all times
during the term of Employee’s employment and for a period of three years after
Employee’s termination of employment.

 

4.2.5.                     The
Company shall reimburse the Employee for the cost of health insurance for the
Employee and his family.

 

4.3.                              Expense Reimbursement. 
Employee shall be entitled to reimbursement from the Company of all
expenses incurred in performing duties hereunder, including without limitation,
meals, lodging, travel, and business entertainment, subject to the rules and
regulations adopted by the Company for handling of such business expenses.

 

5.                                       Best Efforts of Employee. 
Employee shall at all times faithfully, with diligence and to the best
of Employee’s ability, experience and talents, perform all duties required of
and from Employee pursuant to the express and implicit terms hereof to the
reasonable satisfaction of the Company.

 

6.                                       Termination.  Employee’s employment hereunder may be
terminated under the circumstances set forth below.

 

6.1.                              Death.  Employee’s employment hereunder shall
terminate immediately upon his death.

 

6.2.                              Disability.  Employee’s
employment hereunder shall terminate if Employee becomes physically or mentally
disabled so as to become unable, for a period of more than 90 consecutive
working days, or for more than 90 working days in the aggregate during any

 

3

 

12-month
period, to perform his duties hereunder, to the same extent he performed them
prior to the onset of such disability.

 

6.3.                              Cause.  The Company may terminate Employee’s
employment immediately for “just cause.” 
“Just cause” shall mean the occurrence of any of the following:

 

6.3.1.                     Employee
materially breaches or fails to perform his obligations in accordance with the
terms and conditions of this Agreement, provided that the Company shall have
delivered to Employee written notice setting forth Employee’s deficiencies and
Employee shall have not taken reasonable steps to cure such deficiency within
five business days of such notice.

 

6.3.2.                     Employee
commits a felony or any other act abhorrent to the community which a reasonable
person would consider materially damaging to the reputation of the Company or
its successors or assigns.

 

6.3.3.                     Employee
commits an act of fraud, misappropriation, or personal dishonesty in connection
with his employment hereunder.

 

6.3.4.                     Employee
commits a material and willful violation of a federal or state law or
regulation applicable to the business of the Company or its status as a public
company.

 

6.4.                              Good
Reason.  Employee may terminate his
employment for “good reason” after giving the Company detailed written notice
thereof, if the Company shall have failed to cure the event or circumstances
constituting “good reason” within five business days after receiving such
notice.  Good reason shall mean the
occurrence of any of the following without the written consent of Employee:

 

6.4.1.                     Any
material breach by the Company of this Agreement.

 

6.4.2.                     Any
material reduction in Employee’s duties or responsibilities.

 

6.4.3.                     The
Company relocates its offices outside the Denver metropolitan area.

 

6.4.4.                     The
Company is the subject of a regulatory action brought by the Securities and
Exchange Commission or a state securities administrator that results in a
finding that the Company committed a material violation of a securities law
arising out of actions by the Company prior to the date of this Agreement.

 

6.4.5.                     A
change in control.  A “change in control”
means (a) the acquisition, directly or indirectly by any person or group
(within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934, as amended) other than a trustee or other fiduciary holding
securities under an employee benefit plan of the

 

4

 

Company, of
beneficial ownership (within the meaning of Rule 13d-3 of the Securities
Exchange Act of 1934, as amended) of securities possessing more than 30% of the
total combined voting power in the election of directors of the Company’s
then-outstanding securities or (b) a change in a majority of the board of
directors in a period of less than one year.

 

6.5.                              Without
Cause.  The Company shall have the
right to terminate Employee’s employment hereunder without cause by providing
Employee with at least 30 days prior written notice of such termination.

 

6.6.                              Without
Good Reason.  Employee shall have the
right to terminate his employment without good reason by providing the Company
with at least 30 days advance written notice of such termination.

 

7.                                       Compensation Upon Termination.

 

7.1.                              If
Employee’s employment is terminated because of disability, for cause by the
Company, or without good reason by Employee, the Company shall only be obligated
to pay Employee the salary and bonuses earned as of the date of termination,
and reimbursement of all outstanding business expenses for which reimbursement
is due.

 

7.2.                              If
the Company terminates this Agreement without cause, or if Employee resigns for
good reason, Employee shall
receive from the Company, as long as Employee does not violate the provisions
of Section 8 hereof, severance pay equal to one year’s Base Salary, payable in
equal monthly installments, for a period of 12 months from the date of termination
of employment, and all of Employee’s unvested options will vest and will be
exercisable as provided in the Option Agreement.  Employee is also entitled to all salary and
bonuses earned as of the date of termination and reimbursement of all outstanding
business expenses for which reimbursement is due.  At the option of the Company, the payments
due hereunder may be paid in a lump sum rather than in installments.

 

7.3.                              If
Employee’s employment is terminated as a result of his death, the Company shall
pay Employee’s spouse or estate, all salary and bonuses earned as of the date
of termination and reimbursement of all outstanding business expenses for which
reimbursement is due.

 

8.                                       Covenants and Conditions.

 

8.1.                              Confidentiality.  Employee
acknowledges that during the course of Employee’s employment with the Company,
Employee will be exposed to and have access to confidential and proprietary
information including trade secrets concerning the business and affairs of the
Company.  Employee acknowledges that such
confidential and proprietary information has been and will continue to be of
central importance to the Company and that disclosure of it to or its use by
others could cause substantial loss to the Company.  Employee acknowledges that the Company developed
such confidential and proprietary information for

 

5

 

its exclusive
use and benefit and it is an exclusive, confidential, and proprietary asset of
the Company.  Accordingly, Employee
agrees as follows:

 

Employee,
except with the prior written consent of the Company or as may be required by
law or any legal process, will not, at any time during or after employment, use
(except in connection with employment by the Company) or disclose to any person
or entity any confidential or proprietary information of the Company which was
obtained by Employee as a result of Employee’s employment with the Company, and
shall hold all of the same confidential. 
For purposes of this Agreement, “confidential or proprietary information”
means information, whether written or otherwise, which has a business purpose
and is not known or generally available from sources outside the Company,
concerning, among other things, (a) the Company’s business operations, internal
structure, and financial affairs, including, but not limited to, its
distributors, products, services, employees, forecasts, sales and marketing
methods, costs, inventories, and sources of supply; (b) the current,
prospective, or past distributors or customers of the Company, their buying
habits, and the prices at which products 
are offered or sold to them; (c) past, present, or future contracts held
by the Company respecting the business or operations of the Company or distributors
or customers, or suppliers of the Company; (d) the work performed by Employee
for the Company; and (e) all other compilations of information which relate to
the business of the Company.

 

The
restrictions and obligations in this Section 8.1 shall survive in perpetuity
the termination of this Agreement and the termination of Employee’s employment
by the Company.

 

8.2.                              Company Property.  All
contracts, agreements, financial books, records, instruments and documents;
distributor lists, customer lists, memoranda, data, reports, programs, software,
tapes; rolodexes; telephone and address books; research; bids; proposals;
drawings; print-outs; graphs; listings; programming; and any other instruments,
records, or documents relating or pertaining to (a) distributors or customers
of the Company; (b) any employee or independent contractor of the Company; (c)
suppliers of the Company; or (d) the services rendered by Employee to the
Company, or in connection with the Company business (collectively the “Records”),
shall at all times be and remain the property of the Company.  Except as authorized by the Company, Employee
agrees not to retain or carry away from the premises of the Company any
Records, copies of Records, equipment, or any other materials or matter of any
kind which are the property of the Company. 
Upon the termination for any reason of employment with the Company,
Employee shall immediately turnover to the Company all Records, copies of any
Records, equipment, and other materials or matter which are in Employee’s
possession or control and which are the property of the Company.

 

8.3.                              Developments.  Employee acknowledges that all designs,
drawings, graphs, sketches, print-outs, formulas, software, inventions,
discoveries, innovations, new technology, or other developments (collectively
called “Developments”) conceived or developed by Employee during the term of
employment, which Developments are related in

 

6

 

any way to the business of the Company then being conducted or proposed
to be conducted by the Company or to the business of any distributor or
customer or prospective distributor or customer of the Company, are and will be
the exclusive property of the Company, and shall be subject to the provisions
of Section 8.1 of this Agreement.  Employee
will promptly notify the Company of any such Developments.  Employee shall, when appropriate and upon
request of the Company, actively assist the Company in executing all papers and
performing all other lawful acts which the Company deems necessary or advisable
for the securing of legal protection for any such Developments, whether through
patent, copyright, or any other means. 
Employee further agrees that, upon request of the Company, and at no
charge, Employee will assign any rights arising out of such Developments to the
Company.

 

8.4.                              Papers, Drawings, and
Other Documents.  Employee agrees not to make or permit to be
made, except in the pursuance of employment duties under the terms of this
Agreement and for the sole use and account of the Company, any copies,
abstracts, or summaries of any designs, papers, drawings, or any other
documents of any kind which may come into Employee’s possession and which
relate or refer to the Company or its business. 
Employee grants to the Company all rights to possession and all title in
and to any such designs, papers, drawings, or other documents, or copies,
abstracts, or summaries thereof, which come into the possession of Employee
within the period of employment by the Company and which relate or refer to the
Company’s business.  Notwithstanding
anything herein to the contrary, Employee may retain any course materials
Employee obtains from attending private or college courses or seminars.  If the Company desires a copy of such
materials, Employee shall provide it to the Company for copying, at the Company’s
expense, upon reasonable notice to Employee.

 

8.5.                              Security Regulations.  Employee
agrees to abide by the Company’s personnel policies and all security
regulations and rules of employment adopted by the Company from time to time.

 

8.6.                              Covenant Not to
Compete.  Employee agrees that during
the term of this Agreement and for a period of 12 months following termination
of this Agreement, he will not (except through the ownership of not more than
5% of the securities of an entity listed on the NASDAQ Stock Market or a
national securities exchange), directly or indirectly, as a proprietor,
director, officer, employee, partner, stockholder, consultant, owner or
otherwise, render services to or participate in the affairs of any Competitive
Business.  A “Competitive Business” shall
mean any business that engages in the manufacturing, selling, marketing,
developing, packaging, or distributing of vitamins, nutritional supplements or
any other product being manufactured, sold, developed, marketed or distributed
by the Company, in any geographic area in which the Company has business or
distributor operations at the time of Employee’s termination of employment.

 

8.7.                              Nonsolicitation of
Employees.  Employee agrees that
during the term of this Employment and for a period of 12 months following
termination of this Agreement, Employee will not (except on behalf of the
ownership of not more than 5% of the securities

 

7

 

of any entity listed on the NASDAQ Stock Market or a national
securities exchange), directly or indirectly, as proprietor, director, officer,
employee, partner, stockholder, consultant, owner or otherwise, solicit or
attempt to solicit the employment of, hire, or assist or participate in any
manner in the hiring or recruitment of any employee or independent contractor
employed or retained by the Company, or any former employee or independent
contractor whose employment or retention by the Company has ceased within six
months prior to the date of such solicitation, hire or other involvement in the
hiring or recruitment or such persons.

 

8.8.                              Scope and
Reasonableness.  The parties to this Agreement expressly agree
and contract that it is not their intention to violate any policy, statute or
common law.   The parties to this
Agreement agree that the limitations contained in Section 8 with respect to
time, geographical area, and scope of activity are reasonable.  However, if any court shall determine that
the time, geographical area, or scope of activity of any restriction contained
in Section 8 is unenforceable, it is the intention of the parties that such
restrictive covenant set forth herein shall not thereby be terminated but shall
be deemed amended to the extent required to render it valid and enforceable.

 

8.9.                              Remedies for Breach.  The
parties acknowledge that breach of Section 8 of this Agreement by Employee will
result in immediate, substantial, and irreparable harm to the Company.  The parties therefore agree that the Company
shall have, in addition to any remedy available to it at law or in equity, the
right to enforce the terms of Section 8 of this Agreement by the remedy of
specific performance or injunction upon proper application to a court of
competent jurisdiction.  Employee agrees
that the Company does not need to post a bond to obtain an injunction and
waives Employee’s rights to require such a bond.

 

9.                                       Representations of Employee.  Employee
hereby represents and warrants that as of the date hereof, Employee is not a
party to any agreement, contract, or understanding, and that no facts or
circumstances exist that would in any way restrict or prohibit Employee 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 represents and warrants that in the
course of rendering services to the Company, Employee will not use or otherwise
disclose any confidential or proprietary information obtained by Employee in
connection with any prior employment. 
Employee shall indemnify and hold the Company 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 the representations set forth in this Section 9.

 

10.                                 Assignment.  Employee’s
obligations and duties under this Agreement are personal in nature.  Employee shall not, without the consent of
the Company, assign or transfer this Agreement or any rights or obligations
hereunder.  The Company may assign this
Agreement, or any benefit, duty, or obligation under this Agreement.

 

8

 

11.                                 Construction.  The titles
appearing herein are used for purposes of convenience only and shall in no way
change the meaning of this Agreement.

 

12.                                 Notices.   All notices,
requests, demands, consents, and other communications which are required or may
be given under this Agreement (collectively, the “Notices”) shall be in writing
and shall be deemed received (a) if given by facsimile, when transmitted, and
confirmation received, if transmitted on a business day before 5:00 p.m. local
time and, otherwise, on the next business day following transmission; (b) if
given by email, when transmitted, if transmitted on a business day before 5:00
p.m. local time and, otherwise, on the next business day following
transmission; (c) if given by certified mail, return receipt requested, postage
pre-paid, three business days after being deposited in the United States mail;
(d) if given by a nationally recognized overnight courier service, one business
day after being so deposited; and (e) if personally delivered, when received or
personally delivered.  The mailing
address, facsimile number, and email address of the parties are as follows:

 

If to
Employee, address to:

 

Earnest
Mathis, Jr.

At his home
address, email address or fax number

most recently
on file with the Company

 

If to Company,
address to:

 

Vitacube
Systems Holdings, Inc.

408 S. Holly
Street

Denver,
CO  80246

Facsimile:  303-316-4116

Email:  marypat@v3s.com

 

Any party may, from time to time, specify a different
address or facsimile number by giving Notice in accordance with this section.

 

13.                                 Entire Agreement.  This
Agreement constitutes the full and complete understanding and agreement of the
parties, supersedes all prior understandings and agreements as to the
employment of Employee, and cannot be amended, changed, modified, or terminated
without the consent, in writing, of the parties hereto.

 

14.                                 Non-Waiver.  The waiver by
either party of a breach of any term of this Agreement shall not operate or be
construed as a waiver of any subsequent breach thereof.

 

15.                                 Severability.  If any of the
provisions of this Agreement shall be or become invalid or illegal under any
provision of applicable law or for any other reason, the remainder of the
Agreement shall not be affected and shall remain in full force and effect.

 

9

 

16.                                 Governing Law - Venue.   THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF COLORADO (WITHOUT REGARD TO ITS RULES OF CONFLICTS OF LAWS).

 

17.                                 Arbitration.  Any dispute relating to this Agreement,
or to the breach of this Agreement, except such as may concern Section 8,
arising between 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.
Colorado’s Uniform Arbitration Act of 1975, C.R.S. §13-22-201 et seq. as
amended, shall govern any arbitration under this Agreement.  Employer’s right to equitable relief set
forth in Section 8 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.

 

18.                                 Counterparts; Facsimiles.   This Agreement may be executed in counterparts,
each of which shall be deemed an original and which together shall constitute a
single instrument.  This Agreement may be
executed and delivered by facsimile transmission, all with the same force and
effect as if the same was a fully executed and delivered original manual
counterpart

 

[signatures appear on following page ]

 

10

 

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

 

	
   

  	
  EMPLOYER:

  
	
   

  	
   

  
	
   

  	
  VITACUBE SYSTEMS HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Mary Pat O’Halloran

  
	
   

  	
   

  	
  Mary Pat O’Halloran, Chief Financial
  Officer

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   March 2, 2005

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Sanford D. Greenberg

  
	
   

  	
  Sanford D. Greenberg

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   March 2, 2005

  
				

 

11

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