Exhibit 10.46
EXECUTIVE EMPLOYMENT
AGREEMENT
This Executive Employment Agreement
(“Agreement”), dated January 19, 2009
(“Effective Date”), is between Orange 21 Inc. (the
“Company”) and A. Stone Douglass
(“Executive”).
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1.
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POSITION,
RESPONSIBILITIES, AND TERM
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a. Position . Executive is employed by the
Company to render services to the Company in the position of Chief
Executive Officer. Executive shall perform such duties and
responsibilities as are normally related to such position in
accordance with the standards of the industry and any additional
duties now or hereafter assigned to Executive
(“Services”) by Executive’s supervisor and/or the
Company’s Board of Directors (“Board”). Executive
shall abide by the rules, regulations, and practices as adopted or
modified from time to time in the Company’s sole discretion.
Executive will devote Executive’s best efforts to the
provision of Services under this Agreement.
b. Other Activities . Except upon the prior
written consent of the Company, Executive will not, during the term
of this Agreement: (i) engage, directly or indirectly, in any
other business activity (whether or not pursued for pecuniary
advantage) that might interfere with Executive’s duties and
responsibilities hereunder or create a conflict of interest with
the Company; or (ii) acquire any interest of any type in any
other business which is in competition with the Company,
provided , however , that the foregoing shall not be
deemed to prohibit the Executive from acquiring solely as an
investment up to five percent (5%) of the outstanding equity
interests of any publicly-held company.
c. No Conflict . Executive represents and
warrants that Executive’s execution of this Agreement and
performance of Services under this Agreement will not violate any
obligations Executive may have to any other employer, person or
entity, including any obligations to keep in confidence proprietary
information, knowledge, or data acquired by Executive in confidence
or in trust prior to becoming an employee of the
Company.
d. Term of Employment . The term of this
Agreement shall be for a period of (i) four (4) years
after the Effective Date of this Agreement; or (ii) the date
upon which Executive’s employment is terminated in accordance
with Section 3 (the “Term”). Where the Agreement
is terminated upon notice and the expiration of the Term, the
Company shall pay to Executive all compensation to which Executive
is entitled up through the effective date of termination according
to its normal payroll practices, and the Company shall not have any
further obligations under this Agreement.
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2.
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COMPENSATION
AND BENEFITS
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a. Base Salary
. In consideration of the Services
to be rendered under this Agreement, the Company shall pay
Executive a gross salary at the rate of Three Hundred Thousand
Dollars ($300,000.00) per year, less applicable withholdings
(“Base Salary”). The Base Salary shall be paid in
accordance with the Company’s normal payroll practices.
Executive’s Base Salary will be reviewed from time to time in
accordance with the established procedures of the Company for
adjusting salaries for similarly situated employees and may be
increased in the sole discretion of the Company.
b. Annual Bonus
. In further consideration of the
Services to be rendered under this Agreement, Executive shall be
eligible to receive an annual bonus of up to fifty percent
(50%) of Executive’s annual Base Salary based on the
sole discretion of the Board (“Annual Bonus”). Any
Annual Bonus earned by Executive will be paid within
two-and-one-half months of the end of the year in which it was
earned. Executive must remain employed with the Company through the
end of the calendar year at issue in order to be eligible to
receive the Annual Bonus.
c. Stock Option
. In further consideration of the
Services to be rendered under this Agreement, the Company granted
Executive an option to purchase 250,000 shares of the
Company’s Common Stock vesting over a period of four
(4) years (“Stock Option”) in October 2008.
Executive’s entitlement to the Stock Option is conditioned
upon Executive’s signing of the Company’s Stock Option
Agreement and is subject to its terms and the terms of the
applicable Employee Stock Option Plan and related documents adopted
by the Board, except as expressly provided herein. The Stock Option
shall become immediately vested upon a Change in Control. For
purposes of this Agreement, “Change in Control” shall
mean the occurrence of any of the following events: (a) any
“person” (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) becomes the “beneficial
owner” (as defined in Rule 13d-3 of the Securities and
Exchange Act of 1934, as amended (the “Exchange Act”),
directly or indirectly, of securities of the Company representing
fifty-one percent (51%) or more of the total voting power
represented by the Company’s then outstanding voting
securities and at any time thereafter prior to the termination of
this Agreement, Executive’s employment is terminated without
Cause or for Good Reason; or (b) the consummation of the sale,
liquidation or disposition by the Company of all or substantially
all of the Company’s assets; or (c) the consummation of
a merger, consolidation, reorganization or other corporate
transaction involving the Company (“Transaction”) in
each case, in which the voting securities of the Company
outstanding immediately prior thereto do not continue to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity or its parent) at least
fifty-one percent (51%) of the total voting power represented
by the voting securities of the Company or such surviving entity or
its parent outstanding immediately after such
Transaction.
d. Employment Benefits Plans . In further
consideration of the Services to be rendered under this Agreement,
Executive will be entitled to participate in pension, profit
sharing and other retirement plans, incentive compensation plans,
group health, hospitalization and disability or other insurance
plans, and other employee welfare benefit plans generally made
available to other similarly-situated employees of the Company, in
accordance with the benefit plans established by the Company, and
as may be amended from time to time in the Company’s sole
discretion.
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e. Vacation
. Executive shall be eligible to
receive paid vacation of four (4) weeks per year (or such
greater amount as is approved by the Board from time to time) to be
accrued on a pro rata basis during each calendar year, subject to
the policies and procedures in the Company’s Employee
Handbook as may be amended from time to time in the Company’s
sole discretion.
f. Expenses
. The Company will pay or reimburse
Executive for all normal and reasonable travel and entertainment
expenses incurred by Executive in connection with Executive’s
responsibilities to the Company upon submission of proper vouchers
and documentation in accordance with the Company’s expense
reimbursement policy. The Company shall also provide Executive with
a monthly car allowance of $500.00.
The employment of Executive shall be
“at-will” at all times. The Company or Executive may
terminate Executive’s employment with the Company at any
time, without any advance notice, for any reason or no reason at
all, notwithstanding anything to the contrary contained in or
arising from any statements, policies or practices of the Company
relating to the employment, discipline or termination of its
employees. Following the termination of Executive’s
employment, the Company shall pay to Executive all compensation to
which Executive is entitled up through the date of termination.
Thereafter, all obligations of the Company under this Agreement
shall cease other than those set forth in
Section 4.
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4.
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COMPANY
TERMINATION OBLIGATIONS
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a. Termination by Company for Cause . Where
the Company terminates Executive’s employment for Cause, all
obligations of the Company under this Agreement shall cease, other
than those set forth in Section 3. For purposes of this
Agreement, “Cause” shall mean: (i) Executive
engages in a material act of misconduct, including but not limited
to misappropriation of trade secrets, fraud, or embezzlement;
(ii) Executive commits a crime involving dishonesty, breach of
trust, physical harm to any person, or moral turpitude;
(iii) Executive breaches this Agreement; (iv) Executive
refuses to implement or follow a lawful policy or directive of the
Company or engages in other willful misconduct in the performance
of Executive’s duties; (v) Executive engages in
misfeasance or malfeasance demonstrated by Executive’s
failure to perform Executive’s job duties diligently and/or
in a professional manner; or (vi) Executive violates a Company
policy or procedure which is materially injurious to the Company,
including but not limited to violation of the Company’s
policy concerning sexual harassment, discrimination, retaliation,
conflicts of interest, or drugs or alcohol.
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b. Termination by Company without
Cause . Where the Company
terminates Executive’s employment without Cause, and
Executive’s employment is not terminated due to death or
Disability (as defined below), Executive will be eligible to
receive continued payment of Base Salary for twelve
(12) months according to the Company’s normal payroll
practices, less applicable withholdings (“Severance”).
Executive’s eligibility to receive the Severance set forth in
this Section 4(b) is conditioned on Executive having first
signed a release agreement in the form attached as Exhibit A.
All other obligations of the Company under this Agreement shall
cease.
c. Termination Due to Disability .
Executive’s employment shall terminate automatically if
Executive becomes Disabled. Executive shall be deemed Disabled if
Executive is unable for medical reasons to perform
Executive’s essential job duties for either ninety
(90) consecutive calendar days or one hundred twenty
(120) business days in a twelve (12) month period and,
within thirty (30) days after a notice of termination is given
to Executive, Executive has not returned to work. If
Executive’s employment is terminated by the Company due to
Executive’s Disability, all obligations of the Company under
this Agreement shall cease, other than those set forth in
Section 3.
d. Termination Due to
Death . Executive’s
employment shall terminate automatically upon Executive’s
death. If Executive’s employment is terminated due to
Executive’s death, all obligations of the Company under this
Agreement shall cease, other than those set forth in
Section 3.
e. Executive’s Resignation . Executive
may resign Executive’s employment at any time during the Term
of this Agreement pursuant to Section 3, and thereafter, all
obligations of the Company under this Agreement shall cease, other
than those set forth in Section 3.
f. Termination By Executive for
Good Reason following Change In Control . Executive’s termination of
Executive’s employment shall be for “Good Reason”
if Executive provides written notice to the Company of the Good
Reason within thirty (30) days of the event constituting the
Good Reason and provides the Company with a period of thirty
(30) days to cure the event constituting the Good Reason and
the Company fails to cure the Good Reason within that period. For
purposes of this Agreement, “Good Reason” shall mean:
(i) material breach of this Agreement by the Company; or
(ii) a change in Executive’s position under this
Agreement from Chief Executive Officer (other than a result of
termination for Cause). Where Executive terminates
Executive’s employment for Good Reason within twelve
(12) months after a Change In Control, Executive will be
eligible to receive Severance as set forth in Section 4(b)
above. Executive’s eligibility to receive the Severance is
conditioned on Executive having first signed a release agreement in
the form attached as Exhibit A. All other obligations of the
Company under this Agreement shall cease.
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