Exhibit 10.1

 

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433 California Street, Suite 210

San Francisco. CA 94104

(415) 391-3500

Fax (415) 391-8539

April 10, 2011

Seth Hamot, Chairman

Orange 21 Inc.

2070 Las Palmas Dr.

Carlsbad, CA 92009

Dear Seth:

 

RE: Retainer Agreement between Regent Pacific Management Corporation and Orange
21 Inc.

This letter sets forth the terms and conditions upon which Orange 21 Inc., a
Delaware corporation (the “Company”), will engage Regent Pacific Management
Corporation, a California corporation (“Regent Pacific”), to perform certain
management services for the Company.

Services: The services provided hereunder will include the following work
product, which Regent Pacific will supply to the Company in accordance with the
terms of this letter and for the agreed-upon consideration required by this
letter:

 

1. Regent Pacific agrees to provide the services of Michael D. Angel, to assume
the interim chief financial officer responsibilities of the Company and to serve
as the Company’s principal financial officer. It is contemplated that Mr. Angel
may regularly consult with other members of Regent Pacific in the ordinary
course of his engagement. Both Regent Pacific and Mr. Angel shall report to the
Chief Executive Officer and Board of Directors of the Company (the “Board”) and
shall be accountable to the Chief Executive Officer and the Board for fulfilling
the obligations of this engagement.

Deliverables: Regent Pacific is prepared to begin our services by April 12,
2011, contingent upon the transfer to and receipt by Regent Pacific of the
required initial payments of this retainer agreement;

Fees: The fee for the services provided hereunder shall be $50,000 per four
(4) week increment, each to be paid in advance of each four-week billing period.
The payments of such cash fees are to be made immediately preceding the start of
each four-week billing period, and that failure to pay such periodic payments
when due shall constitute a breach of this agreement by the Company. It is
further understood that Regent Pacific’s fees are to be paid in advance of the
work to be performed, and that the initial payment is to be paid on or before
April 12, 2011. It is further agreed that such cash payments are earned in full
upon receipt by Regent Pacific, by virtue of our accepting this agreement and
the responsibilities it entails, and are nonrefundable.

In addition to the four week fee described above, the Company shall also pay
Regent Pacific certain success fees based upon the attainment of mutually agreed
milestones. It is currently contemplated that such milestones shall relate to
(1) the establishment of a revised forecast and budget for 2011, and (2) the
development and implementation, of a management information dashboard and
monthly operating report for the Board. It is currently contemplated that the
attainment of each milestone shall result in the payment of a success fee of
approximately $25,000. The Company and Regent Pacific shall define the specific
milestones and finalize the amount of the success fees within four (4) weeks of
the date of this agreement.

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Mr. Seth Hamot

Orange 21 Inc.

April 10, 2011

Page 2

 

The Company shall issue to Regent Pacific a warrant to purchase unregistered
shares of the Company’s common stock representing 1.5% of the fully-diluted
stock of the Company as of the date hereof. The exercise price of such warrant
shall be the closing price of the Company’s common stock at the date hereof. The
warrant shall be issued within 30 days of the date of this agreement and shall
have a term often (10) years. Notwithstanding any of the above, should Regent
Pacific fail to provide services during the initial three months of the six
month term of this agreement, said warrant shall be cancelled by the company and
all other cash compensation shall be Regent Pacific’s sole fees.

Expense reimbursement: In addition to the fees agreed to hereunder, the Company
will also be responsible for certain charges for costs and expenses of Regent
Pacific and/or its principals. Such costs and expenses will include, among
others, charges for messenger services, air couriers, word processing services,
photocopying, airfare, travel and reasonable living expenses, postage, long
distance telephone, legal advice, and other charges customarily invoiced by
professional firms for reimbursement of out-of-pocket expenses. Regent Pacific
will periodically present invoices to the Company for reimbursement of such
charges, and the Company agrees to pay such invoices within five (5) working
days of presentation. It is agreed that such expenses shall include the cost of
Mr. Angel’s weekly roundtrip economy class airfare from Northern California to
San Diego, a rental car, airport parking, weekly hotel accommodations
(anticipated to be an extended stay corporate residence hotel), and reasonable
meals. Additional out-of-pocket expenses in excess of $1,000 per month shall
only be reimbursed with the Company’s prior written consent.

Term of agreement: The term of this agreement shall be for a period of six
(6) months, unless earlier terminated in accordance with this paragraph;
provided, however, that in no event may this agreement be terminated during the
first three (3) months. The Company may discharge Regent Pacific at any time
after the non-cancelable period provided that the Company has delivered 60-day
prior written notice of intent to cancel this agreement. Regent Pacific may
withdraw from this assignment and cancel this agreement at any time with the
Company’s consent or for good cause without the Company’s consent. Good cause
includes, among others, the Company’s breach of this agreement (including the
Company’s failure to timely pay any amount under this agreement), or any fact or
circumstance that would render our continuing participation in the assignment
unethical or unlawful.

No Conflict: Because of the breadth and nature of our practice, from time to
time our firm may work for one client whose interest may be opposed to that of
another client, for which we work in an unrelated matter. Please be assured
that, despite any potential difference in the interests of our clients, we
strictly preserve all client confidences and zealously pursue the interests of
each of our clients. The Company agrees that it does not consider such
concurrent work in unrelated

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Mr. Seth Hamot

Orange 21 Inc.

April 10, 2011

Page 3

 

matters of the Company and any other client of Regent Pacific to be
inappropriate, and therefore waives any objections to any such present or future
concurrent assignments provided, however, that such waiver shall not apply to
any willful misconduct or breach of confidentiality obligations of Regent
Pacific hereunder.

Indemnification: Except in the case of willful misconduct or gross negligence of
Regent Pacific, the Company shall indemnify, defend, and hold Regent Pacific,
its officers, directors, principals, associates, affiliates, employees, agents,
and counsel, harmless against any damages, costs, fines, penalties, liabilities,
attorneys’ and other professional fees and disbursements, suffered, incurred by,
or asserted against, Regent Pacific, its officers, directors, principals,
associates, affiliates, employees, agents, and/or counsel, including any amounts
incurred or paid in settlement or any judgment of any action, suit, or
proceeding brought under any statute, at common law, or otherwise, which arises
under or in connection with the performance by Regent Pacific of services
pursuant to and in accordance with the terms of this this agreement and any
amendment or modification thereto. The obligations of the Company under this
paragraph are hereinafter collectively referred to as “Indemnity Obligations.”
The Indemnity Obligations shall survive for a period of two years after any
termination of Regent Pacific’s services under this agreement and any amendment
or modification thereto. In the event the Company shall be obligated hereunder
to provide indemnification, the Company shall be entitled to assume the defense
of any loss, claim, damage, liability, or action (collectively, “Claim”) with
counsel approved by Regent Pacific (which approval shall not be unreasonably
withheld) upon the delivery to Regent Pacific of written notice of the Company’s
election to do so. After delivery of such notice, approval of such counsel by
Regent Pacific and the retention of such counsel by the Company, the Company
will not be liable to Regent Pacific under this Agreement for any fees or
expenses of separate counsel subsequently employed by or on behalf of Regent
Pacific; provided, however, that (i) Regent Pacific shall have the right to
employ Regent Pacific’s separate counsel in any such Claim at Regent Pacific’s
expense and (ii) if (A) the employment of separate counsel by Regent Pacific has
been previously authorized by the Company, (B) Regent Pacific shall have
reasonably concluded that there may be a conflict of interest between the
Company and Regent Pacific in the conduct of any such defense, or (C) the
Company shall not continue to retain such counsel to defend such Claim, then the
fees and expenses of Regent Pacific’s separate counsel shall be expenses for
which Regent Pacific may receive indemnification hereunder. The Company shall
not be liable under this agreement to make any payment in connection with any
Claim made against Regent Pacific to the extent Regent Pacific has otherwise
actually received payment (under any insurance policy or otherwise) of the
amounts otherwise payable hereunder. The Company agrees to promptly tender any
payments due to Regent Pacific, its officers, directors, principals, associates,
affiliates, employees, agents, and/or counsel, under or in respect of the
Indemnity Obligations, within ten (10) business days following written demand by
Regent Pacific, its officers, directors, principals, associates, affiliates,
employees, agents, and/or counsel. The Company’s Indemnity Obligations shall not
apply to amounts paid in settlement of any Claim, or action if such settlement
is effected without the consent of the Company, which consent shall not be
unreasonably withheld.

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Mr. Seth Hamot

Orange 21 Inc.

April 10, 2011

Page 4

 

Confidential information: Regent Pacific and its team of managers shall have
access under this agreement to certain proprietary and/or confidential
information with respect to the Company’s business. Regent Pacific hereby agrees
to protect such confidential information as though it were Regent Pacific’s own
confidential information, in accordance with the following terms and conditions:

 

1. the Company shall permit Regent Pacific to review financial and proprietary
information necessary to Regent Pacific’s participation in the Company’s
management.

 

2. the Company shall permit, and Regent Pacific shall require, review of all the
Company Board of Directors minutes and all executive actions taken within the
three months prior to the execution of this agreement.

 

3. Regent Pacific shall maintain the confidentiality of all such information and
prevent the unauthorized disclosure thereof. No such information shall be made
available for the use of any other party or be divulged to others unless it:

 

  a. is independently developed by Regent Pacific, provided that the person or
persons developing same have had no access to confidential information received
from the Company;

 

  b. is or becomes publicly available; or

 

  c. is rightfully and lawfully received by Regent Pacific from an independent
third party.

Governing Law: This agreement is made under the laws of the State of California,
without reference to its conflict of laws principles. If any legal action arises
under this agreement or by reason of an asserted breach of it, the prevailing
party shall be entitled to recover all costs and expenses, including reasonable
attorney’s fees, incurred in enforcing or attempting to enforce the terms of
this agreement.

Non-solicitation: The Company agrees that it shall not, except by mutual
agreement between the parties, during the term of this agreement nor for a
period of three (3) years after its termination, solicit for employment nor
employ, whether as employee or independent contractor or agent, any person who
performs services under this agreement. It is agreed that in the event of a
breach of this paragraph by the Company, it would be impractical or extremely
difficult to fix actual damages and, therefore, Regent Pacific and the Company
agree that any party in breach of this paragraph shall pay to Regent Pacific
$487,500 per individual solicited or employed as employee, independent
contractor or agent, as Liquidated Damages and not as a penalty, which is agreed
by Regent Pacific and the Company to represent reasonable compensation for the
foreseeable loss that will, in all likelihood, be incurred because of such
breach.

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Mr. Seth Hamot

Orange 21 Inc.

April 10, 2011

Page 5

 

Limitation of Liability: REGENT PACIFIC’S ENTIRE AGGREGATE LIABILITY PURSUANT
TO, IN CONNECTION WITH AND ARISING OUT OF THIS AGREEMENT, REGARDLESS OF THE FORM
OF ANY LEGAL ACTION OR PROCEEDING, WHETHER IN CONTRACT, STATUTE, TORT
(INCLUDING, WITHOUT LIMITATION, NEGLIGENCE), OR OTHERWISE SHALL NOT EXCEED IN
AGGREGATE THE AMOUNT OF U.S. $1,000,000. REGENT PACIFIC SHALL NOT BE LIABLE
HEREUNDER FOR ANY AMOUNTS REPRESENTING LOSS OF PROFIT, LOSS OF BUSINESS OR ANY
SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES, EVEN IF
COMPANY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THESE LIMITATIONS
SHALL APPLY NOTWITHSTANDING THE FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED
REMEDY. THE PARTIES ACKNOWLEDGE THAT THE LIMITATIONS SET FORTH IN THIS PARAGRAPH
ARE INTEGRAL TO THE AMOUNT OF CONSIDERATION LEVIED UNDER THIS AGREEMENT.

Limited Warranty and Disclaimer: Regent Pacific shall perform all services
hereunder in a professional and workmanlike manner. In the event of a breach of
this warranty, Regent Pacific shall promptly take such action as may be
reasonably required to remedy such failure. The foregoing states Company’s sole
and exclusive remedy, and Regent Pacific’s sole obligation, for a breach of any
express or implied warranty arising from this Agreement. EXCEPT AS SPECIFICALLY
PROVIDED ABOVE, REGENT PACIFIC HEREBY DISCLAIMS ALL REPRESENTATIONS AND
WARRANTIES WITH RESPECT TO THE SERVICES AND DELIVERABLES PROVIDED UNDER THIS
AGREEMENT, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, IMPLIED
WARRANTIES OF RESULT, NON-INFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, DESIGN OR USE.

General terms: This constitutes the entire understanding between Regent Pacific
and the Company regarding our services. Further, this agreement supersedes and
replaces any prior agreements between the parties. By executing this agreement
you acknowledge that you have read it carefully and understand all of its terms.
This agreement cannot be modified except by further written agreement signed by
each party. If any provision of this agreement shall for any reason and to any
extent be found invalid or unenforceable, the remainder of this agreement shall
remain in full force and effect and be interpreted so as best to reasonably
effect the intent of the parties. In such event, both parties recognize their
intent that this agreement shall be deemed amended by modifying such provision
to the extent necessary to make it legal and enforceable while preserving its
intent or, if that is not possible, by substituting therefore another provision
that is legal and enforceable and achieves a similar objective.

If the Company is in agreement with the foregoing, and it accurately represents
your understanding of the agreement between the Company and our firm, please
sign the enclosed copy of this letter, and return to me, along with the first
four (4) week service fee of $50,000. Said payments may be wire-transferred to
the account of Regent Pacific Management Corporation at Comerica Bank, 333 West
Santa Clara Street, San Jose, CA 95113, Account #1890652975, routing number
121137522. Our contact there is Jojo S. Cope at (408) 556-5311. In

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Mr. Seth Hamot

Orange 21 Inc.

April 10, 2011

Page 6

 

order to maintain continuity in scheduling of our resources, we ask that we
receive your affirmative response as soon as possible. Please understand that we
can assume no responsibility in connection with the services to be provided
under this agreement until the signed copy has been returned and the required
funds as agreed to by us have been received.

 

Very truly yours, REGENT PACIFIC MANAGEMENT CORPORATION

/s/ Stephen M. Race

Stephen M. Race

Chief Executive Officer

 

Agreed this 11th day of April, 2011: ORANGE 21 INC. By:  

/s/ Seth Hamot

Seth Hamot

Chairman of the Board