Orange 21 and No Fear CEO Mark Simo have settled their dispute, and released one another from their claims and counter-claims, the companies said today in a joint release.
To settle the claims, Simo’s No Fear agreed to pay Orange 21 subsidiary Spy Optics’s U.S. and Italian companies a total of $736,350 in cash and return credits. And Orange 21 agreed to give No Fear $600,000 in credits toward the purchase of future Spy products by No Fear.
The settlement, which was signed on April 28 and became effective when it was funded on April 30, ends a contentious chapter in which Simo claimed he was owed compensation for his time as Spy CEO, and Spy claimed No Fear owed for product it ordered.
Simo co-founded Spy, and Spy and No Fear previously held at least two rounds of merger discussions. Here’s a link to our previous story about the dispute.
Here’s the joint statement issued by the companies:
On April 30, 2009, Orange 21 Inc. (the “Company”) entered into a Settlement Agreement and Mutual General Release (the “Agreement”), dated as of April 28, 2009, by and among the Company’s three wholly owned subsidiaries, Spy Optic, Inc., Spy S.r.l. (“Spy Italy”) and LEM S.r.l. (collectively, the “Orange 21 Parties”), on the one hand, and Mark Simo, Simo Holdings, Inc. (fka No Fear, Inc.)(“No Fear”), No Fear Retail Stores, Inc. (“No Fear Retail”) and MX No Fear Europe SAS (“MX No Fear,” and together with No Fear, No Fear Retail and Mark Simo, the “No Fear Parties”).
The Agreement relates to various disputes among the parties regarding outstanding accounts receivable owed to the Company by No Fear Retail and MX No Fear and certain claims by Mr. Simo regarding his compensation for services he rendered as Chief Executive Officer of the Company.
Pursuant to the Agreement, No Fear and its subsidiaries agreed to pay all outstanding accounts receivable due to the Company as follows:
- (1) an aggregate of $307,414.81 to Spy Italy on the execution of the Agreement, approximately $46,000 of which is being satisfied by a return of certain goggle products and
- (2) an aggregate of $428,935.92 in the U.S., $71,489.32 of which was paid on the execution of the Agreement with the remainder paid in monthly installments of $71,489.32 over five months (the “Installment Payments”).
In exchange, the Company agreed to provide Mr. Simo, or such other No Fear parties as Mr. Simo may designate, with:
- Product credits in the aggregate amount of $600,000, less applicable payroll tax withholdings, to purchase products from the Company. The product credits accrue as follows: (1) $350,000 on the execution of the Agreement and (2) $50,000 per month for five months thereafter subject to payment of the applicable Installment Payment in full.
Additionally, pursuant to the Agreement, No Fear issued to the Company a promissory note in the amount of $357,446.60 (the “Note”) to memorialize the Installment Payments. Interest of 10%, compounded annually, will accrue if No Fear fails to make timely payment of any of the Installment Payments. The Note is secured by a pledge of 446,808 shares of the Company’s common stock held by No Fear, pursuant to a stock pledge agreement.
Pursuant to the Agreement, the Orange 21 Parties on the one hand and the No Fear Parties on the other hand each released the other with respect to any and all claims arising from or related to past dealings of any kind between the parties.
The Agreement was signed on April 28, 2009, but its effectiveness was conditioned upon receipt of all funds required to be delivered on execution, which did not occur until April 30, 2009.
