EXHIBIT 10.4


 


ORANGE 21 INC.


EXECUTIVE EMPLOYMENT
AGREEMENT


 


This Executive Employment
Agreement (the “Agreement”) is entered effective October 20th,
2005 by and between Orange 21 Inc., a Delaware corporation (“Employer”), and Grant Guenther (“Employee”),
with respect to the following facts:


 


A.                                   Whereas,
Employee serves as Vice President, Marketing
of Employer;


 


B.                                     Whereas,
Employer is a Delaware corporation engaged in the business of the design,
manufacture, sale, and distribution of sunglasses and related products bearing
Employer’s trade name; and


 


C.                                     Whereas,
Employer wishes to secure and Employee wishes to provide ongoing services  on the terms and conditions set forth herein;


 


NOW, THEREFORE, in
consideration of the mutual covenants hereinafter set forth, the parties agree
as follows:


 


1.                                       Employment.  Employer hereby agrees to employ Employee as
its Vice President of Marketing, and Employee hereby agrees to be employed by
Employer in such capacity, subject to the terms and conditions in this
Agreement.


 


2.                                       At
Will Employment.  The parties
acknowledge and agree that: (a) Employee’s employment is not for a
specified term and may be terminated by Employer or Employee at any time with
or without cause; (b) this provision is intended to be the complete and final
expression of the parties’ understanding regarding the terms and conditions
under which Employee’s employment may be terminated; (c) no representation
contrary to this provision is valid; and (d) this provision may not be
augmented, contradicted, or modified in any way, except by a writing signed by Employee
and by Employer’s Chief Executive Officer.


 


3.                                       Compensation.  Employer shall pay Employee the following
forms of compensation:


 


a.                                       Base
Salary.  Employee shall be paid a
gross annual salary of $ 120,000 (“Base Salary”),
payable on a pro-rated basis according to Employer’s payroll schedule and
subject to applicable withholdings and other payroll deductions.  The Base Salary is subject to adjustment at
the end of each calendar year by the Board of Directors of Orange 21 Inc. (the “Board”) in its sole and absolute discretion.


 


b.                                      Commissions,
Profit Sharing and Bonuses.  Each
year, in the sole and absolute discretion of the Board, Employee may be
entitled to participate in commission programs, profit sharing programs and
bonuses programs.  The terms and
conditions of any such programs will be established by the Board each year and Employee
will be notified of such terms and conditions for such year.  For 2005, the terms and conditions of such
programs as such programs apply to Employee are outlined on Exhibit A,
attached hereto.


 


e.                                       Stock
Options.  From time to time, in the
sole and absolute discretion of the Board, Employee may be granted an option to
purchase shares of Common Stock of Orange 21 Inc. on terms and conditions
established by the Board.


 


4.                                       Duties.  As an employee of the Company, Employee agrees:  (a)  to devote Employee’s utmost
knowledge and best skill to the performance of Employee’s duties under this
Agreement; (b) to devote Employee’s full business time to the rendition of
such services, subject to absences for customary vacations and for temporary
illness; and (c) not to engage in any other gainful occupation, business,
or activity that requires Employee’s personal attention or creates a conflict
of interest with Employee’s


 





















 


responsibilities under
this Agreement without the prior approval of the Chief Executive Officer.  Notwithstanding the foregoing, Employee shall
be permitted, to the extent such activities do not interfere with his/her
performance of his/her duties and responsibilities and do not violate Section 11
of this Agreement, to serve on civic or charitable boards or committees and
serve on the boards of other companies.


 


5.                                       Personnel
Policies and Procedures.  Employer
shall have the authority to establish from time to time personnel policies and
procedures to be followed by its employees. 
Employee agrees to comply with the policies and procedures of Employer.  To the extent any provisions in Employer’s
personnel policies and procedures differ from the terms of this Agreement, the
terms of this Agreement shall control.


 


6.                                       Expenses.  Employee is authorized to incur ordinary and
necessary expenses in connection with the performance of his/her duties that
are consistent with the policies of Employer as outlined in the Employer’s
Travel and Expense Guidelines, which may from time to time be modified or amended
by the Chief Executive Officer.  Employer
will reimburse Employee for all such expenses upon the presentation by Employee
of an itemized account of such expenditures with supporting documentation.  Employee agrees to submit expense
reimbursement requests within thirty (30) days after he/she incurs such
expenses.  In the event that Employee
fails to submit expense reimbursement requests within the thirty (30)-day
period, Employer shall have no obligation to reimburse Employee for such
expenses.


 


7.                                       Insurance.  Employee shall be entitled to participate in
any insurance or other employee benefit program maintained by Employer for the
benefit of similarly situated employees.


 


8.                                       Vacation.  Employee shall be entitled to two (2) weeks
of vacation in each calendar year during the first year of employment; three (3) weeks
of vacation in each calendar year during the second through seventh year of
employment; and four (4) weeks of vacation in each calendar year during each
subsequent years.  Vacation shall be
earned on a monthly basis at a rate calculated by dividing the number of days
of vacation per year by twelve (12).  For
example – if the Employee is entitled to 15 days of vacation per year, the
Employee will accrue 1.25 days of vacation for each month worked during the
year.  Vacation not taken during the
applicable fiscal year shall be carried over to the following fiscal year, for a
maximum vacation accrual of six (6) weeks vacation time.  Vacation shall be taken at times consistent
with the reasonable needs of the business of Employer.  Accrued but unused vacation days shall be
paid in a cash lump sum promptly after Employee’s Termination Date, as defined
in Section 11 below.


 


9.                                       Termination.  Employee’s employment may be terminated upon
occurrence of one of the following events:


 


a.             By Death.  This Agreement shall automatically terminate
upon Employee’s death.  Employer and
Employee shall treat termination under this Section 9(a) as
termination by Employer without cause under Section 9(e) below
with payments made to Employee’s beneficiaries or estate, as appropriate.


 


b.             By Mutual
Agreement.  This Agreement may be
terminated at any time by mutual agreement of the parties hereto.  Termination under this Section 9(b) shall
be treated as terminated without cause under Section 9(e) below.


 


c.             Disability.  If Employee is prevented from fully
performing the essential functions of Employee’s duties under this Agreement
because of any illness or physical or mental disability, with or without
reasonable accommodation, for a period or periods of more than ninety (90) days
in the aggregate during any calendar year or thirty (30) consecutive days in
any twelve (12)-month period, Employer may terminate Employee’s employment in its
sole discretion in accordance with state and federal law.  Employer and Employee shall treat termination
under this Section 9(c) as termination by Employer without
cause under Section 9(e) hereof.


 


d.             By Employer For
Cause.  This Agreement may be
terminated by Employer at any time for Cause. 
For purposes of this Agreement, “Cause” shall mean, as determined by the Chief Executive Officer in his/her
sole discretion:


 





















 


(i)                                     Commission of a felony or any lesser
crime or offense involving fraud, embezzlement, dishonesty, breach of trust, or
breach of fiduciary duty; or


 


(ii)                                  Conduct that has caused demonstrable and
serious injury to Employer or any of its affiliates, monetary or otherwise; or


 


(iii)                               The order of a regulatory agency that
Employee be removed from any office, authority, or employment with Employer; or


 


(iv)                              Willful misconduct, refusal to perform,
or substantial disregard of duties properly assigned to Employee by Employer;
or


 


(v)                                 Breach of duty of loyalty to Employer or
any of its affiliates or other act of fraud or dishonesty with respect to
Employer or any of its affiliates; or


 


(vi)                              Breach by Employee of the terms of any
agreement between or among Employee and Employer.


 


For the avoidance of
doubt, (i) termination for death as described in Section 9(a),
(ii) termination by mutual consent as described in Section 9(b) or
(iii) termination for disability as described in Section 9(c) shall
not be considered termination for Cause. 
“Termination Date” shall mean the date
Employee’s employment relationship with Employer terminates.  This Agreement terminates effective the
Termination Date.


 


e.                                       By Employer Without Cause. 
Employer may, at any time, terminate Employee’s employment without Cause
and for reasons not specified above.


 


10.                                 Effect
of Termination.  Upon termination of the
employment relationship, all rights of Employee under this Agreement shall
cease (but not obligations) and Employee shall cease to be an employee of
Employer.  Employee shall have no right
to receive any payments or benefits hereunder except for the following, where
applicable:


 


a.                                       Employee’s
Base Salary payable pursuant to Section 3(a) hereof up to the
Termination Date, including any accrued and unused vacation;


 


b.                                      Any
commissions, profit sharing or bonuses, in accordance with the terms
established by the Board from time to time, as provided by Section 3(b) above
(provided that any such commissions, profit sharing or bonuses shall, where
applicable and to the extent earned in accordance with the criteria established
by the Board, be pro-rated through the date of termination).


 


c.                                       Reimbursement
of expenses incurred in accordance with Section 6 hereof prior to
the Termination Date to the extent not previously reimbursed by Employer; and


 


f.                                         Provided
Employee has not been terminated for Cause, a severance payment in the amount
established by the Board from time to time for such Employee (it be understood
and acknowledged that the severance payment for the year 2005 shall be set
forth on Exhibit A, attached hereto, and that the Board shall not
reduce such amounts for future years of service).


 


11.                                 Non-Competition;
Nondisclosure of Proprietary Information.


 


a.                                       Non-Competition.  During Employee’s employment by Employer,
Employee shall not, directly or indirectly, own, manage, operate, control,
invest or acquire an interest in, or otherwise engage or participate (whether
as a proprietor, partner, stockholder, director, officer, employee, joint
venturer, investor, or other participant) in any “Competitive Business” (as
hereinafter defined) in the United States, without regard to: (i) whether
the Competitive Business has its office or other business facilities within the
United States; (ii) whether any of the activities of Employee occur or are
performed within the United States; or (iii) whether Employee resides in,
or reports to an office within, the United States.  For purposes of this Section 11, “Competitive Business” shall mean the business of design, manufacture,
sale, and distribution of sunglasses, motocross or snow goggles, and related
products and accessories.


 





















 


b.                                      Nondisclosure.  During the period that Employee is employed
by Employer, and for an infinite period thereafter, Employee shall not disclose,
directly or indirectly, any confidential proprietary information regarding any
aspect of Employer, including any information relating to its finances,
business, operations, products, procedures, business practices, marketing
plans, trademarks, customer lists, and pricing information, that is not public
knowledge (“Proprietary Information”), to any
third parties or to other employees of Employer except Employees who have a
demonstrable need to know the Proprietary Information for purpose of advancing the
business of Employer.  Employee also
agrees that he/she shall not use any Proprietary Information in his/her
possession for any purpose other than as required to fulfill his/her
responsibilities as a employee of Employer. 
Employee shall promptly notify Employer of any Proprietary Information
prematurely or improperly disclosed. 
Proprietary Information includes not only information belonging to
Employer that existed before the date of this Agreement, but also information
developed by Employee for Employer or its employees during the term of this
Agreement and thereafter.


 


c.                                       Return
of Proprietary Information and Employer’s Property.  Employee will not remove any Proprietary
Information from the offices of Employer or the premises of any facility in
which Employer is performing services, or allow such removal, unless permitted
in writing by the Chief Executive Officer as necessary for the performance of
Employee’s obligations under this Agreement. 
Immediately upon Employer’s request, or Employee’s Termination Date as
defined in Section 9, Employee shall return any documents or other
written materials that contain Proprietary Information, and any property that
belongs to Employer,  including copies of
any computer programs or data owned by Employer.


 


d.                                      Remedies.  The parties to this Agreement hereby agree
that: (i) if Employee breaches this Section 11, the damage to
Employer will be substantial, although difficult to ascertain, and money
damages will not afford Employer an adequate remedy, and (ii) if Employee
is in breach of this Section 11, or threatens a breach of this Section 11,
Employer shall be entitled, in addition to all other rights and remedies as may
be provided by law, to specific performance, injunctive and other equitable
relief to prevent or restrain a breach of this this Section 11.


 


12.                                 Developed Information. 
Employee agrees to promptly disclose to Employer all improvements,
inventions, programs, processes, techniques, or trade secrets, whether or not
patentable or registrable under copyright or similar statutes, and all designs,
trademarks, and copyrightable works that Employee may solely or jointly make or
conceive, reduce to practice, or learn during the period of his or her
employment that: (a) are within the scope of
the services to be provided by Employee to Employer, and are related to or
useful in the business of Employer; or (b) result
from tasks assigned Employee by Employer; or (c) are
funded by Employer; or (d) result from use of
premises, facilities, or equipment owned, leased, or contracted for by Employer
(hereinafter “Developed Information”).


 


a.             Assignment of Developed Information.  Employee agrees that all Developed
Information shall be the sole property of, and assigned to, Employer and its
assigns and Employee agrees, including following the date of termination of
this Agreement, to execute any and all documents reasonably requested by
Employer to effect the foregoing.  In
addition, to the extent permitted by federal copyright law, the parties agree
that any works resulting from Employee’s work under this Agreement shall be “works
for hire” as defined in federal copyright law.


 


b.                                      Preexisting
Developments.  Employee must notify
management of any and all inventions, discoveries, developments, improvements,
and trade secrets which have been made or conceived or first reduced to
practice by Employee alone or jointly with others prior to employment with the
Company that Employee desires to remove from the operation of this
Agreement.  If Employee does not so
notify management, Employee represents that he/she has made no inventions,
improvements, developments, or improvements at the time of signing this
Agreement that are to be removed from the operation of this Agreement.


 


13.                                 Solicitation
of Employees Prohibited.   Employee
will be called upon to work closely with employees of Employer in performing
services under this Agreement.  All
information about such employees that becomes known to Employee during the
course of his employment with Employer, and that is not otherwise known to the
public, including compensation or commission structure, is confidential and
shall not be used by Employee in soliciting employees of Employer at any time
during or after


 





















 


termination of his
employment with Employer.  During
Employee’s employment and for two (2) years following the termination of
Employee’s employment, Employee shall not directly or indirectly ask, solicit,
or encourage any employee(s) of Employer to leave their employment with
Employer.  Employee further agrees that
he shall make any subsequent employer aware of this non-solicitation
obligation.


 


14.                                 Representation
Concerning Prior Agreements. 
Employee warrants that he is not bound by any non-competition and/or
non-solicitation or other agreement that would preclude, limit, or in any
manner affect his employment with Employer. 
Employee further represents that he can fully perform the duties of his
employment without violating any obligations he may have to any former
employer, including, but not limited to, misappropriating any proprietary
information acquired from a prior employer. 
Employee agrees that he/she will indemnify and hold Employer harmless
from any and all liability and damage, including attorneys’ fees and costs,
resulting from any breach of this provision.


 


15.                                 Notices.  All notices, demands, requests, consents,
statements, satisfactions, waivers, designations, refusals, confirmations,
denials, and other communications that may be required or otherwise provided
for or contemplated hereunder shall be in writing and shall be deemed to be
properly given and received: (a) upon delivery, if delivered in person or
by facsimile or e-mail transmission with receipt acknowledged; or (b) one
business day after having been deposited for overnight delivery with Federal
Express or another comparable overnight courier service; or (c) three (3) business
days after having been deposited in any post office or mail depository
regularly maintained by the U.S. Postal Service and sent by registered or
certified mail, postage prepaid, addressed to Employee’s residence address (or  such other address as Employee may specify in
a written notice to Employer), or to Employer’s principal office.


 


16.                                 Successors
and Assigns.  The rights and
obligations of Employer under this Agreement shall inure to the benefit of and
shall be binding upon the successors and assigns of Employer.  Employee shall not be entitled to assign any
of his/her rights or obligations under this Agreement.  Employee agrees that his/her obligations
under Sections 11 and 12 of this Agreement shall survive the
termination of this Agreement.


 


17.                                 Entire
Agreement.  Employee acknowledges
receipt of this Agreement and agrees that this Agreement represents the entire
Agreement with Employer concerning the subject matter hereof, and supersedes
any previous oral or written communications, representations, understandings,
or agreements with Employer or any officer or agent thereof, except for the terms
of the Spy Confidentiality Agreement. 
Employee understands that no representative of the Employer has been
authorized to enter into any agreement or commitment with Employee that is
inconsistent in any way with the terms of this Agreement.


 


18.                                 Amendments.  No amendment or modification of the terms or
conditions of this Agreement shall be valid unless in writing and signed by the
parties hereto.


 


19.                                 Severability.
Each term, condition, covenant, or provision of this Agreement shall be viewed
as separate and distinct, and in the event that any such term, covenant, or
provision shall be held by a court of competent jurisdiction to be invalid, the
remaining provisions shall continue in full force and effect.


 


20.                                 Waiver.  A waiver by either party of a breach of any provision(s)
of this Agreement shall not constitute a general waiver or prejudice the other
party’s right to demand strict compliance with that provision or any other
provisions in this Agreement.


 


21.                                 Indemnification.
Employer agrees to provide Employee with a defense and indemnification in
accordance with the provisions of the California Labor Code against any third
party claims related to or arising out of Employee’s employment with or
positions held for Employer; provided, however, that Employer
shall not be liable, and shall not provide a defense or indemnification for any
claim wherein the Employee has not satisfied Employer’s standards of conduct.


 


22.                                 Arbitration.  Any dispute or claim arising out of this
agreement will be subject to final and binding arbitration.  The arbitration will be conducted by one
arbitrator who is a member of the American Arbitration Association (AAA), or an
arbitrator who is mutually agreed upon, and will be governed by the Model
Employment Arbitration rules of AAA. 
The arbitration will be held in San Diego, California, and the 


 





















 


arbitrator will apply California
substantive law in all respects.  The
arbitrator shall have all authority to determine the arbitrability of any claim
and enter a final, binding judgment at the conclusion of any proceeding.  Any final judgment may only be appealed on
the grounds of improper bias or improper conduct of the arbitrator.  The party prevailing in the resolution of any
claim will be entitled, in addition to such other relief as may be granted, to
an award of all attorneys fees and costs incurred, without regard to any statute,
schedule, or rule of court purporting to restrict such award.


 


23.                                 Construction. 
This Agreement shall not be construed against any party on the grounds
that such party drafted the Agreement or caused it to be drafted.


 


24.                                 Employee
Acknowledgment.  Employee
acknowledges that he has been advised by Employer to consult with independent
counsel of his own choice, at his expense, concerning this Agreement, that he
has had the opportunity to do so, and that he has taken advantage of that
opportunity to the extent that he desires. 
Employee further acknowledges that he has read and understands this
Agreement, is fully aware of its legal effect, and has entered into it freely
based on his own judgment.


 


25.                                 Governing
Law.  This Agreement shall be
governed by and interpreted in accordance with the laws of the State of
California, without regard to conflicts of laws principles.


 


IN WITNESS WHEREOF, the
parties have executed this Agreement as of the date first above written.


 


	
  Orange 21 Inc.

  	
  Employee:

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
  /s/ Barry Buchholtz

  	
   

  	
  /s/ Grant Guenther

  	
   

  
	
  Barry
  Buchholtz

  	
  Name: Grant Guenther

  
	
  Chief
  Executive Officer

  	
  Address:

  	
  2070 Las Palmas Drive

  
	
   

  	
   

  	
  Carlsbad, CA  92009

  
						



 





















 


EXHIBIT A


 


TERMS OF (1) COMMISSION
PROGRAM, (2) PROFIT SHARING, (3) BONUS PROGRAM, (4) STOCK OPTION
AND (5) SEVERANCE PROGRAM APPLICABLE FOR FISCAL YEAR 2005


 


(AS
APPLICABLE)


 


(note: to
be completed, if applicable, or marked “not applicable” otherwise)


 


 


	
  COMMISSION PROGRAM:

  	
   

  	
  Per Attached

  
	
   

  	
   

  	
   

  
	
  PROFIT SHARING:

  	
   

  	
  Per Attached

  
	
   

  	
   

  	
   

  
	
  BONUS PROGRAM:

  	
   

  	
  Per Attached

  
	
   

  	
   

  	
   

  
	
  STOCK OPTIONS:

  	
   

  	
  Per Attached

  
	
   

  	
   

  	
   

  
	
  SEVERANCE PROGRAM:

  	
   

  	
  Per Attached

  



 





















 


Spy Optic, Inc.


Compensation
Package - 2005


Grant Guenther


Vice President
Marketing


 


	
  Proposed 2005

  Salary

  	
   

  	
  Proposed
  2005

  Sales Bonus

  	
   

  	
  Proposed
  2005

  Profit Bonus

  	
   

  	
  Proposed
  2005

  Other Incentive

  	
   

  	
  Severance

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  $

  	
  120,000

  	
   

  	
  $ 6k per quarter if sales goal is achieved - No reserve - Goal paid
  based on % of achievment - No bonus paid if less than 80% of goal achieved

  	
   

  	
  $ 6k per quarter if net profit goal is achieved - No reserve - Goal
  paid based on % of achievment - No bonus paid if less than 80% of goal
  achieved

  	
   

  	
   

  	
   

  	
  1 Month for each year in service. Calculated by taking the past twelve
  months income dividing it by twelve and then multiplying it by the total
  number of years in service. Partial years count as one year - Minimum of 6
  months

  
										



 


NOTE: In case of
termination or resignation bonuses will paid as follows:


 


Any quarters that have
been completed sales bonus will be due and payable in full


Any quarters that have
been completed profit bonus will be paid as indicated above