Exhibit 10.3

 

ORANGE 21 INC.

CHANGE IN CONTROL SEVERANCE PLAN

AND

SUMMARY PLAN DESCRIPTION

 

Plan Effective Date: December 8, 2010

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ORANGE 21 INC.

CHANGE IN CONTROL SEVERANCE PLAN

AND

SUMMARY PLAN DESCRIPTION

The ORANGE 21 Inc. Change in Control Severance Plan (the “Plan”) provides
severance benefits to a select group of management or highly compensated
employees (the “Covered Employees”) of ORANGE 21 Inc., a Delaware corporation,
or certain of its subsidiaries. The Plan is effective for eligible employees who
receive a Change in Control Severance Agreement (“Agreement”) and who otherwise
satisfy the conditions set forth in such Agreement and the provisions of this
Plan.

This Plan is designed to be an “employee welfare benefit plan,” as defined in
Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”). This Plan is governed by ERISA and, to the extent applicable, the
laws of the State of California, without reference to the conflict of law
provisions thereof.

This document and your Agreement constitute both the official plan document and
the required summary plan description under ERISA.

 

I. ELIGIBILITY.

You will become a Covered Employee in the Plan only: (i) if you are selected by
ORANGE 21 Inc. (the “Company”) to be eligible to participate in this Plan and
(ii) if you receive an Agreement (the provisions of which are incorporated by
reference). Additionally, you must sign the Agreement indicating your agreement
to be bound by the terms of this Plan and you must return such signed Agreement
to the Company.

 

II. BENEFITS.

If you are a Covered Employee, you shall be eligible for severance benefits at
such times and in such amounts as may be specified in your Agreement.

 

III. OTHER IMPORTANT INFORMATION.

 

  A. Plan Administration. As the Plan Administrator, the Company has full and
sole discretionary authority to administer and interpret the Plan, including
discretionary authority to determine eligibility for participation in and for
benefits under the Plan, to determine the amount of benefits (if any) payable
per participant, and to any terms of this document. All determinations by the
Plan Administrator will be final and conclusive upon all persons and be given
the maximum possible deference allowed by law. The Plan Administrator is the
“named fiduciary” of the Plan for purposes of ERISA and will be subject to the
applicable fiduciary standards of ERISA when acting in such capacity. The
Company may delegate in writing to any other person all or a portion of its
authority or responsibility with respect to the Plan.

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  B. Source of Benefits. The Plan is unfunded, and all severance benefits will
be paid from the general assets of the Company or its successor. No
contributions are required under the Plan.

 

  C. Claims Procedure. If you believe you are incorrectly denied a benefit or
are entitled to a greater benefit than the benefit you received under the Plan
you may submit a signed, written application to the Company’s Human Resources
Manager (the “Claims Administrator”). You will be notified in writing of the
approval or denial of this claim within ninety (90) days of the date that the
Claims Administrator receives the claim, unless special circumstances require an
extension of time for processing the claim. In the event an extension is
necessary, you will be provided written notice prior to the end of the initial
ninety (90) day period indicating the special circumstances requiring the
extension and the date by which the Claims Administrator expects to notify you
of approval or denial of the claim. In no event will an extension extend beyond
ninety (90) days after the end of the initial ninety (90) day period. If your
claim is denied, the written notification will state specific reasons for the
denial, make specific reference to the Plan provision(s) on which the denial is
based, and provide a description of any material or information necessary for
you to perfect the claim and why such material or information is necessary. The
written notification will also provide a description of the Plan’s review
procedures and the applicable time limits, including a statement of your right
to bring a civil suit under Section 502(a) of ERISA following denial of your
claim on review.

 

       You will have sixty (60) days from receipt of the written notification of
the denial of your claim to file a signed, written request for a full and fair
review of the denial by a review panel which will be a named fiduciary of the
Plan for purposes of such review. This request should include the reasons you
are requesting a review and may include facts supporting your request and any
other relevant comments, documents, records and other information relating to
your claim. Upon request and free of charge, you will be provided with
reasonable access to, and copies of, all documents, records and other
information relevant to your claim, including any document, record or other
information that was relied upon in, or submitted, considered or generated in
the course of, denying your claim. A final, written determination of your
eligibility for benefits shall be made within sixty (60) days of receipt of your
request for review, unless special circumstances require an extension of time
for processing the claim, in which case you will be provided written notice of
the reasons for the delay within the initial sixty (60) day period and the date
by which you should expect notification of approval or denial of your claim.
This review will take into account all comments, documents, records and other
information submitted by you relating to your claim, whether or not submitted or
considered in the initial review of your claim. In no event will an extension
extend beyond sixty (60) days after the end of the initial sixty (60) day
period. If an extension is required because you fail to submit

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information that is necessary to decide your claim, the period for making the
benefit determination on review will be tolled from the date the notice of
extension is sent to you until the date on which you respond to the request for
additional information. If your claim is denied on review, the written
notification will state specific reasons for the denial, make specific reference
to the Plan provision(s) on which the denial is based and state that you are
entitled to receive upon request, and free of charge, reasonable access to, and
copies of, all documents, records and other information relevant to your claim,
including any document, record or other information that was relied upon in, or
submitted, considered or generated in the course of, denying your claim. The
written notification will also include a statement of your right to bring an
action under Section 502(a) of ERISA.

 

       If your claim is initially denied or is denied upon review, you are
entitled to receive upon request, and free of charge, reasonable access to, and
copies of, any document, record or other information that demonstrates that
(1) your claim was denied in accordance with the terms of the Plan, and (2) the
provisions of the Plan have been consistently applied to similarly situated Plan
participants, if any. In pursuing any of your rights set forth in this section,
your authorized representative may act on your behalf.

 

       If you do not receive notice within the time periods described above,
whether on initial determination or review, you will be deemed to have completed
the Plan’s administrative appeals procedures and you may initiate a lawsuit
under Section 502(a) of ERISA.

 

  D. Prior Plans Superseded. With the exception of any individual employment
agreements and stock option agreements with the Company that are in effect as of
the Plan Effective Date, the Plan supersedes any and all prior separation,
change in control, severance and salary continuation arrangements, programs
and/or similar plans that may previously have been offered (or provided) by the
Company to Covered Employees.

 

  E. Plan Amendment or Termination. The Company reserves the right to amend or
terminate the Plan at any time, in whole or in part, and in any manner, and for
any reason. Notwithstanding the foregoing, unless a Covered Employee provides
written consent to the contrary, any termination or amendment of the Plan will
be effective only after one (1) year advance written notice to a Covered
Employee if such amendment or termination would result in a reduction of
benefits that the Covered Employee would have otherwise been able to receive
under the pre-amended Plan.

 

  F. At-Will Employment. No provision of the Plan is intended to provide you
with any right to continue as an employee with the Company, or in any other
capacity, for any specific period of time, or otherwise affect the right of the
Company to terminate the employment or service of any individual at any time for
any reason, with or without cause.

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  G. Section 409A of the Internal Revenue Code. This Plan is intended to provide
severance benefits pursuant to an employee welfare benefit plan subject to
ERISA. In the event this Plan or any benefit paid to Covered Employees hereunder
is deemed to be subject to Code Section 409A, the Covered Employees consent to
the Company adopting such conforming amendments as the Company deems necessary,
in its reasonable discretion, to comply with Code Section 409A and avoid the
imposition of taxes under Code Section 409A. Each payment made pursuant to any
provision of this Plan shall be considered a separate payment and not one of a
series of payments for purposes of Code Section 409A. While it is intended that
all payments and benefits provided under this Plan to Covered Employees will be
exempt from or comply with Code Section 409A, the Company makes no
representation or covenant to ensure that the payments under this Plan are
exempt from or compliant with Code Section 409A. The Company will have no
liability to Covered Employees or any other party if a payment or benefit under
this Plan is challenged by any taxing authority or is ultimately determined not
to be exempt or compliant. The Covered Employees further understand and agree
that the Covered Employees will be entirely responsible for any and all taxes on
any benefits payable to the Covered Employees as a result of this Plan. In
addition, if a Covered Employee is a “specified employee” (within the meaning of
Code Section 409A) at the time of his/her separation from service, then to the
extent necessary to comply with Code Section 409A and avoid the imposition of
taxes under Code Section 409A, the payment of certain benefits owed to the
Covered Employee under this Plan will be delayed and instead paid (without
interest) to the Covered Employee upon the earlier of the first business day of
the seventh month following the Covered Employee’s separation from service or
ten (10) days after the Company receives written confirmation of the Covered
Employee’s death.

 

  H. Indemnification. The Company agrees to indemnify its officers and employees
and the members of the Board of Directors of the Company from all liabilities
from their acts or omissions in connection with the administration, amendment or
termination of the Plan, to the maximum extent permitted by applicable law.

 

  I. Severability. If any provision of the Plan is held invalid or
unenforceable, its invalidity or unenforceability will not affect any other
provision of the Plan, and the Plan will be construed and enforced as if such
provision had not been included.

 

  J. Headings. Headings in this Plan document are for purposes of reference only
and will not limit or otherwise affect the meaning hereof.

 

IV. STATEMENT OF ERISA RIGHTS.

As a participant in the Plan you are entitled to certain rights and protections
under ERISA. ERISA provides that all plan participants shall be entitled to:

 

  A. Receive Information About Your Plan and Benefits.

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Examine, without charge, at the Plan Administrator’s office and at other
specified locations, such as work sites, all documents governing the plan.

Obtain, upon written request to the Plan Administrator, copies of documents
governing the operation of the plan. The Plan Administrator may make a
reasonable charge for the copies.

 

  B. Prudent Actions by Plan Fiduciaries.

In addition to creating rights for Plan participants, ERISA imposes duties upon
the people who are responsible for the operation of the employee benefit plan.
The people who operate your plan, called “fiduciaries” of the plan, have a duty
to do so prudently and in the interest of you and other plan participants and
beneficiaries. No one, including your employer or any other person, may fire you
or otherwise discriminate against you in any way to prevent you from obtaining a
welfare benefit or exercising your rights under ERISA.

 

  C. Enforce Your Rights.

If your claim for a welfare benefit is denied or ignored, in whole or in part,
you have a right to know why this was done, to obtain copies of documents
relating to the decision without charge, and to appeal any denial, all within
certain time schedules.

Under ERISA, there are steps you can take to enforce the above rights. For
instance, if you request a copy of plan documents and do not receive it within
30 days, you may file suit in a Federal court. In such a case, the court may
require the Plan Administrator to provide the materials and pay you up to
$110.00 per day until you receive the materials, unless the materials were not
sent because of reasons beyond the control of the Plan Administrator. If you
have a claim for benefits which is denied or ignored, in whole or in part, you
may file suit in a state or Federal court after you have completed the Plan’s
administrative appeals procedures. If you are discriminated against for
asserting your rights, you may seek assistance from the U.S. Department of
Labor, or you may file suit in a Federal court. The court will decide who should
pay court costs and legal fees. If you are successful, the court may order the
person you have sued to pay these costs and fees. If you lose, the court may
order you to pay these costs and fees, for example, if it finds your claim is
frivolous.

 

  D. Assistance With Your Questions.

If you have any questions about your plan, you should contact the plan
administrator. If you have any questions about this statement or about your
rights under ERISA, or if you need assistance in obtaining documents from the
plan administrator, you should contact the nearest office of the Employee
Benefits Security Administration, U.S. Department of Labor, listed in your
telephone directory, or the Division of Technical Assistance and Inquiries,
Employee Benefits Security Administration, U.S. Department of Labor,
200 Constitution Avenue N.W., Washington, D.C. 20210. You may also obtain
certain publications about your rights and responsibilities under ERISA by
calling the publications hotline of the Employee Benefits Security
Administration.

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ADDITIONAL PLAN INFORMATION

 

    Name of Plan:   

ORANGE 21 Inc. Change in Control Severance Plan

 

    Plan Sponsor:   

ORANGE 21 Inc.

2070 Las Palmas Drive

Carlsbad, CA 92011

 

   

Employer Identification Number:

 

   33-0580186    

Plan Number:

 

   505    

Plan Year:

 

   Calendar Year     Plan Administrator:   

ORANGE 21 Inc

c/o Human Resources Manager

2070 Las Palmas Drive

Carlsbad, CA 92011

Telephone: (760) 804-8420

 

   

Agent for Service of Legal Process:

 

   Plan Administrator, at the above address     Type of Plan:   

Employee welfare benefit plan providing for severance benefits

 

    Plan Costs:   

The cost of the Plan is paid by ORANGE 21 Inc.

 

    Type of Administration:   

Self-administered by the Plan Administrator

 

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