Orange 21 Inc., the owner of the Spy Optic eyewear brand, said that effective Nov. 1, its wholly owned subsidiary Orange 21 North America Inc. (O21NA), entered into a $1.0 million promissory note with one of Orange 21 Inc.'s shareholders, Costa Brava Partnership III, L.P.
The promissory note is an enlargement of the $3.0 million and $1.0 million promissory notes entered into with Costa Brava in March 2010 and October 2010, respectively, to a total of $5.0 million and has similar terms and conditions. Each of the Promissory Notes are subordinated to O21NA's Loan and Security Agreement with BFI Business Finance (“BFI”), pursuant to the terms of a debt subordination agreement, dated March 23, 2010 and amended on October 4, 2010 and October 29, 2010, by and between Costa Brava and BFI. The proceeds from the new Promissory Note are expected to be used for working capital purposes and other corporate expenses.
Interest under the Promissory Note accrues daily at the following rates from the date of receipt of funds under the promissory note at (i) 9% per annum on the last day of each calendar month and (ii) 3% per annum payable on the maturity date. In addition, the promissory note requires that O21NA pays a facility fee of .55% of the original principal amount on December 31, 2010 and the maturity date. The promissory note matures on July 29, 2011. The terms of the promissory note include customary representations and warranties, as well as reporting and financial covenants, customary for financings of this type.
Seth Hamot, Orange 21 Inc.'s chairman of the board of directors, is the President and sole member of Roark, Rearden & Hamot, LLC, which is the sole general partner of Costa Brava. Hamot commented, “We are quite pleased to help our company grow. We believe Orange 21 and its portfolio of brands have lots of opportunity in front of them, and we look forward to being a part of that growth for a long time.”
Orange 21 designs, develops, markets and produces premium products for the action sports, motorsports, snowsports and lifestyle markets under the brands Spy Optic, O'Neil, Margaritaville and Melodies by MJB.
