NOTE 9- COMMITMENTS AND CONTINGENCIES

Employment Agreement

On August 10, 2012, the Company and Andrew Dahl entered into a new employment agreement. Under the terms of the Employment Agreement (“Employment Agreement”), he will continue to be CEO from the effective date of the agreement until December 16, 2013, with automatic renewal for successive one year terms, unless either party terminates the Employment Agreement on sixty days’ notice prior to the expiration of the initial term or any renewal term of the agreement.  Pursuant to the employment agreement, Mr. Dahl will receive an annual base salary of $240,000.  In addition, Mr. Dahl is entitled to monthly bonus compensation equal to 2% of our revenue, but only to the extent that such bonus amount exceeds his base salary for the month in question.  Finally, upon the effective date of the Employment Agreement, the Company will grant Mr. Dahl warrants with an exercise price of $.25 per share which shall vest and become exercisable, upon the attainment of specified milestones as follows: (1) warrants to purchase 500,000 shares shall vest upon identification of bio-active agents in our product and filing of a patent with respect thereto, (2) warrants to purchase 500,000 shares shall vest upon the Company entering into a contract under which we receive at least $500,000 in cash payments, (3) warrants to purchase 1,000,000 shares shall vest upon us entering into a co-development agreement with a research company to develop  medicinal or pharmaceutical applications (where the partner provides at least $2 million in cash or in-kind outlays), (4) warrants to purchase 1,000,000 shares shall vest upon us entering into a co-development agreement for nutraceutical or dietary supplement applications (where the partner provides at least $2 million in cash or in-kind outlays), and (5) warrants to purchase 1,000,000 shares shall vest upon our entering into a pharmaceutical development agreement.  Additionally, upon the effective date of the Employment Agreement, the Company will grant Mr. Dahl warrants to purchase 1,000,000 shares at an exercise price of $.25 per share, which shall only vest and become exercisable if the Company terminates Mr. Dahl without Cause on or before December 16, 2012. If Mr. Dahl remains employed with the Company after December 16, 2012, such warrants will be immediately forfeited.

In the event there is a “Company Sale”, all of Mr. Dahl’s outstanding warrants that were granted under the Employment Agreement would become immediately vested, and Mr. Dahl would be entitled to a sale bonus equal to 2% of the total proceeds received by the Company and/or its shareholders. Solely for the purposes of determining vesting of the warrants, “Company Sale” means the first to occur of the following: (1) the sale or disposition of all or substantially all of the Company’s assets; (2) a merger or consolidation of the Company with any other corporation, at least 50% of the combined voting power of the voting securities of the Company outstanding immediately after such merger or consolidation, or (3) any person acquiring (directly or indirectly) securities of the Company representing 30% or more of the combined voting power of the Company’s then outstanding securities. Solely for the purposes of determining Mr. Dahl’s entitlement to the 2% cash sale bonus, “Company Sale” shall only occur if any person acquires (directly or indirectly) securities of the Company representing 30% or more of the combined voting power of the Company’s then outstanding securities.

In the event the Company terminates Mr. Dahl’s employment for Cause, he will immediately forfeit any entitlement to the monthly bonus, any warrants granted under the Employment Agreement, and the 2% sale bonus.