EXHIBIT 10.3


 


ORANGE 21 INC.


 


2004 Stock Incentive Plan


 


 


Notice of Stock Option Grant


 


You have been
granted the following Option to purchase Common Stock of Orange 21 Inc. (the “Company”) under the Company’s 2004 Stock Incentive Plan (the
“Plan”):


 


	
  Name of Optionee:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Total Number of Option Shares Granted:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Type of Option:

  	
   

  	
  [Incentive/Non-Qualified] Stock Option

  
	
   

  	
   

  	
   

  
	
  Exercise Price Per Share:

  	
   

  	
  $

  
	
   

  	
   

  	
   

  
	
  Grant Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Vesting Commencement Date:

  	
   

  	
  See vesting schedule below

  
	
   

  	
   

  	
   

  
	
  Vesting Schedule:

  	
   

  	
                                                        .

  
	
   

  	
   

  	
   

  
	
  Expiration Date:

  	
   

  	
                                           .
  This Option expires earlier if your Service (as defined in the Plan)
  terminates earlier, as described in the Stock Option Agreement.

  



 


 


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By your signature
and the signature of the Company’s representative below, you and the Company
agree that this Option is granted under and governed by the term and conditions
of the Plan and the Stock Option Agreement, both of which are attached to and
made a part of this document.


 


	
  OPTIONEE:

  	
  ORANGE 21 INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Optionee’s
  Signature

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
  Optionee’s
  Printed Name

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
								



 


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ORANGE 21 INC.


 


2004 STOCK INCENTIVE PLAN


 


 


STOCK OPTION AGREEMENT


 


	
  Tax Treatment

  	
   

  	
  This Option is intended to be an incentive stock
  option under Section 422 of the Internal Revenue Code or a nonstatutory
  option, as provided in the Notice of Stock Option Grant. Even if this Option
  is designated as an incentive stock option, it shall be deemed to be a
  nonstatutory option to the extent required by the $100,000 annual limitation
  under Section 422(d) of the Internal Revenue Code.

  
	
   

  	
   

  	
   

  
	
  Vesting

  	
   

  	
                                                                            .

  
	
   

  	
   

  	
   

  
	
  Term

  	
   

  	
  This Option expires in any event at the close of
  business at Company headquarters on                                  .
  This Option may expire earlier if your Service terminates, as described
  below.

  
	
   

  	
   

  	
   

  
	
  Regular Termination

  	
   

  	
  If your Service terminates for any reason except
  death or “Total and Permanent Disability” (as defined in the Plan), then this
  Option will expire at the close of business at Company headquarters on the
  date three (3) months after the date your Service terminates (or, if earlier,
  the Expiration Date). The Company has discretion to determine when your
  Service terminates for all purposes of the Plan and its determinations are conclusive
  and binding on all persons.

  
	
   

  	
   

  	
   

  
	
  Death

  	
   

  	
  If you die, then this Option will expire at the
  close of business at Company headquarters on the date twelve (12) months
  after the date your Service terminates (or, if earlier, the Expiration Date).
  During that period of up to twelve (12) months, your estate or heirs may
  exercise the Option.

  
	
   

  	
   

  	
   

  
	
  Disability

  	
   

  	
  If your Service terminates because of your Total and
  Permanent Disability, then this Option will expire at the close of business
  at Company headquarters on the date twelve (12) months after the date your
  Service terminates (or, if earlier, the Expiration Date).

  



 


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  Leaves of Absence

  	
   

  	
  For purposes of this Option, your Service does not
  terminate when you go on a military leave, a sick leave or another bona fide leave of absence, if the leave was approved by
  the Company in writing and if continued crediting of Service is required by
  the terms of the leave or by applicable law. But your Service terminates when
  the approved leave ends, unless you immediately return to active work. 

   

  If you go on a leave of absence, then the vesting
  schedule specified in the Notice of Stock Option Grant may be adjusted in
  accordance with the Company’s leave of absence policy or the terms of your
  leave. If you commence working on a part-time basis, then the vesting
  schedule specified in the Notice of Stock Option Grant may be adjusted in
  accordance with the Company’s part-time work policy or the terms of an
  agreement between you and the Company pertaining to your part-time schedule.

  
	
   

  	
   

  	
   

  
	
  Restrictions on Exercise

  	
   

  	
  The Company will not permit you to exercise this
  Option if the issuance of shares at that time would violate any law or
  regulation. The inability of the Company to obtain approval from any
  regulatory body having authority deemed by the Company to be necessary to the
  lawful issuance and sale of the Company stock pursuant to this Option shall
  relieve the Company of any liability with respect to the non-issuance or sale
  of the Company stock as to which such approval shall not have been obtained.
  However, the Company shall use its best efforts to obtain such approval.

  
	
   

  	
   

  	
   

  
	
  Notice of Exercise

  	
   

  	
  When you wish to exercise this Option you must
  notify the Company by completing the attached “Notice of Exercise of Stock
  Option” form and filing it with the Option Administrator. You notice must
  specify how many shares you wish to purchase. Your notice must also specify
  how your shares should be registered. The notice will be effective when it is
  received by the Company. If someone else wants to exercise this Option after
  your death, that person must prove to the Company’s satisfaction that he or
  she is entitled to do so.

  
	
   

  	
   

  	
   

  
	
  Form of Payment

  	
   

  	
  When you submit your notice of exercise, you must
  include payment of the Option exercise price for the shares you are
  purchasing. Payment may be made in the following form(s):

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •                       Your
  personal check, a cashier’s check or a money order.

  



 


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  •

  	
  Certificates for shares of Company stock that you
  own, along with any forms needed to effect a transfer of those shares to the
  Company. The value of the shares, determined as of the effective date of the
  Option exercise, will be applied to the Option exercise price. Instead of
  surrendering shares of Company stock, you may attest to the ownership of
  those shares on a form provided by the Company and have the same number of
  shares subtracted from the Option shares issued to you. However, you may not
  surrender, or attest to the ownership of shares of Company stock in payment
  of the exercise price if your action would cause the Company to recognize a
  compensation expense (or additional compensation expense) with respect to
  this Option for financial reporting purposes.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •

  	
  By delivering on a form approved by the Committee of
  an irrevocable direction to a securities broker approved by the Company to
  sell all or part of your Option shares and to deliver to the Company from the
  sale proceeds in an amount sufficient to pay the Option exercise price and
  any withholding taxes. The balance of the sale proceeds, if any, will be
  delivered to you. The directions must be given by signing a special “Notice
  of Exercise” form provided by the Company.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •

  	
  Irrevocable directions to a securities broker or
  lender approved by the Company to pledge Option shares as security for a loan
  and to deliver to the Company from the loan proceeds an amount sufficient to
  pay the Option exercise price and any withholding taxes. The directions must
  be given by signing a special “Notice of Exercise” form provided by the
  Company.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notwithstanding the foregoing, payment may not be
  made in any form that is unlawful, as determined by the Company in its sole
  discretion.

  
	
   

  	
   

  	
   

  
	
  Withholding Taxes and Stock Withholding

  	
   

  	
  You will not be allowed to exercise this Option
  unless you make arrangements acceptable to the Company to pay any withholding
  taxes that may be due as a result of the Option exercise. These arrangements
  may include withholding shares of Company stock that otherwise would be
  issued to you when you exercise this Option. The value of these shares,
  determined as of the effective date of the Option exercise, will be applied
  to the withholding taxes.

  
	
   

  	
   

  	
   

  
	
  Restrictions on Resale

  	
   

  	
  By signing this Agreement, you agree not to sell any
  Option shares at a time when applicable laws, Company policies or an
  agreement between the Company and its underwriters prohibit a sale (e.g., a
  lock-up period after the Company goes public). This restriction will apply as
  long as you are an employee, consultant or director of the Company or a
  subsidiary of the Company.

  



 


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  Transfer of Option

  	
   

  	
  In general, only you can exercise this Option prior
  to your death. You cannot transfer or assign this Option, other than as
  designated by you by will or by the laws of descent and distribution, except
  as provided below. For instance, you may not sell this Option or use it as
  security for a loan. If you attempt to do any of these things, this Option
  will immediately become invalid. You may in any event dispose of this Option
  in your will. Regardless of any marital property settlement agreement, the
  Company is not obligated to honor a notice of exercise from your former
  spouse, nor is the Company obligated to recognize your former spouse’s
  interest in your Option in any other way. 

   

  However, if this Option is designated as a
  nonstatutory stock option in the Notice of Stock Option Grant, then the
  “Committee” (as defined in the Plan) may, in its sole discretion, allow you
  to transfer this Option as a gift to one or more family members. For purposes
  of this Agreement, “family member” means a child, stepchild, grandchild,
  parent, stepparent, grandparent, spouse, former spouse, sibling, niece,
  nephew, mother-in-law, father-in-law or sister-in-law (including adoptive
  relationships), any individual sharing your household (other than a tenant or
  employee), a trust in which one or more of these individuals have more than
  50% of the beneficial interest, a foundation in which you or one or more of
  these persons control the management of assets, and any entity in which you
  or one or more of these persons own more than 50% of the voting interest.

   

  In addition, if this Option is designated as a
  nonstatutory stock option in the Notice of Stock Option Grant, then the
  Committee may, in its sole discretion, allow you to transfer this option to
  your spouse or former spouse pursuant to a domestic relations order in
  settlement of marital property rights.

   

  The Committee will allow you to transfer this Option
  only if both you and the transferee(s) execute the forms prescribed by the
  Committee, which include the consent of the transferee(s) to be bound by this
  Agreement.

  
	
   

  	
   

  	
   

  
	
  Retention Rights

  	
   

  	
  Neither your Option nor this Agreement gives you the
  right to be retained by the Company or a subsidiary of the Company in any
  capacity. The Company and its subsidiaries reserve the right to terminate
  your Service at any time, with or without cause.

  
	
   

  	
   

  	
   

  
	
  Stockholder Rights

  	
   

  	
  You, or your estate or heirs, have no rights as a
  stockholder of the Company until you have exercised this Option by giving the
  required notice to the Company and paying the exercise price. No adjustments
  are made for dividends or other rights if the applicable record date occurs
  before you exercise this Option, except as described in the Plan.

  



 


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  Adjustments

  	
   

  	
  In the event of a stock split, a stock dividend or a
  similar change in Company stock, the number of shares covered by this Option
  and the exercise price per share may be adjusted pursuant to the Plan.

  
	
   

  	
   

  	
   

  
	
  Applicable Law

  	
   

  	
  This Agreement will be interpreted and enforced
  under the laws of the State of Delaware (without regard to their
  choice-of-law provisions).

  
	
   

  	
   

  	
   

  
	
  The Plan and Other Agreements

  	
   

  	
  The
  text of the Plan is incorporated in this Agreement by reference. All
  capitalized terms in the Stock Option Agreement shall have the meanings
  assigned to them in the Plan. This Agreement and the Plan constitute the
  entire understanding between you and the Company regarding this Option. Any
  prior agreements, commitments or negotiations concerning this Option are
  superseded. This Agreement may be amended only by another written agreement,
  signed by both parties.

  



 


 


BY SIGNING THE COVER SHEET OF
THIS AGREEMENT,


YOU AGREE TO ALL OF THE TERMS AND
CONDITIONS


DESCRIBED ABOVE AND IN THE PLAN


 


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ORANGE
21 INC.

2004 STOCK INCENTIVE PLAN


 


NOTICE
OF EXERCISE OF STOCK OPTION


 


You must
complete and sign this Notice on the last page before submitting

it to the Company


 


	
  OPTIONEE INFORMATION:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  	
  Social Security Number:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  	
  Employee Number:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
									



 


	
  OPTION INFORMATION:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date of Grant:

  	
   

  	
   

  	
   

  	
  Type of Stock Option:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exercise Price per Share:
  $            

  	
   

  	
   

  	
  Nonstatutory (NSO)

  
	
   

  	
   

  	
   

  	
   

  
	
  Total number of shares of Common Stock of ORANGE 21 INC. (the “Company”) covered by option:
                                   

  	
   

  	
   

  	
  Incentive (ISO)*

  
								



 


 


EXERCISE INFORMATION:


 


Number
of shares of Common Stock of the Company for which option is being exercised
now:                                  .
 (These shares are referred to below as
the “Purchased Shares.”)


 


	
  Total exercise price for the Purchased Shares: $                           

  
	
   

  
	
  Form of payment enclosed:

  
	
   

  
	
  [check all that apply]:

  
	
   

  	
   

  	
   

  
	
  o                                    Check for
  $                     ,
  payable to “ORANGE 21 INC.”

  



 


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  o

  	
   

  	
  Certificate(s) for                             
  shares of Common Stock of the Company that I have owned for at least six
  months or have purchased in the open market. (These shares will be valued as
  of the date when the Company receives this notice.)

  
	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  Attestation Form covering                               
  shares of Common Stock of the Company. (These shares will be valued as of the
  date when the Company receives this notice.)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name(s) in which the Purchased Shares
  should be registered:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [please check one box]:

  
	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  In my name only

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  In the names of
  my spouse and myself as community property

  	
   

  	
  My spouse’s name
  (if applicable):

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  In the names of
  my spouse and myself as joint tenants with the right of survivorship

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  In the name of
  an eligible revocable trust

  	
   

  	
  Full legal name
  of revocable trust:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The certificate for the Purchased Shares
  should be sent to the

  	
   

  	
   

  
	
  following address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 


ACKNOWLEDGMENTS:


 


1.                                       I understand that all sales of Purchased Shares are
subject to compliance with the Company’s policy on securities trades.


 


2.                                       I hereby acknowledge that I received and read a copy
of the prospectus describing the Company’s 2004 Stock Incentive Plan and the
tax consequences of an exercise.


 


3.                                       In the case of a nonstatutory option, I understand
that I must recognize ordinary income equal to the spread between the fair
market value of the Purchased Shares on the date of exercise and the exercise
price.  I further understand that I am
required to pay


 


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withholding taxes at the time of exercising a
nonstatutory option.


 


4.                                       In the case of an incentive stock option, I agree to
notify the Company if I dispose of the Purchased Shares before I have met both
of the tax holding periods applicable to incentive stock options (that is, if I
make a disqualifying disposition).


 


5.                                       I acknowledge that the Company has encouraged me to
consult my own adviser to determine the form of ownership that is appropriate
for me.  In the event that I choose to
transfer my Purchased Shares to a trust that does not satisfy the requirements
of the Internal Revenue Service (i.e., a trust that is not an eligible
revocable trust), I also acknowledge that the transfer will be treated as a
“disposition” for tax purposes.  As a
result, the favorable ISO tax treatment will be unavailable and other
unfavorable tax consequences may occur.


 


	
  SIGNATURE
  AND DATE:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
                  , 200  

  



 


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