THIS NOTE IS SUBORDINATE TO CERTAIN OBLIGATIONS OF THE COMPANY AS DESCRIBED IN
THE BFI LOAN DOCUMENTS (DEFINED HEREIN) AND SUBJECT TO THAT CERTAIN DEBT
SUBORDINATION AGREEMENT DATED MARCH 19, 2010, AS AMENDED OR MODIFIED FROM TIME
TO TIME, AMONG BFI BUSINESS FINANCE AND THE HOLDER.

THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. THIS NOTE
MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
QUALIFICATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.

THIS NOTE HAS BEEN ISSUED WITH "ORIGINAL ISSUE DISCOUNT" WITHIN THE MEANING OF
SECTION 1273 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. UPON WRITTEN
REQUEST, THE COMPANY WILL PROMPTLY MAKE AVAILABLE TO ANY HOLDER OF THIS NOTE THE
FOLLOWING INFORMATION: (1) THE ISSUE PRICE AND DATE OF THIS NOTE, (2) THE AMOUNT
OF ORIGINAL ISSUE DISCOUNT ON THIS NOTE AND (3) THE YIELD TO MATURITY OF THIS
NOTE. TO OBTAIN THIS INFORMATION, A HOLDER SHOULD CONTACT THE CHIEF FINANCIAL
OFFICER AT 2070 LAS PALMAS DRIVE, CARLSBAD, CA 92011.

SECOND AMENDED AND RESTATED PROMISSORY NOTE

$7,000,000 August 2, 2012
San Diego, California

FOR VALUE RECEIVED

, Spy Optic Inc., a California corporation, formerly known as Orange 21 North
America Inc. (the "Company"), promises to pay to the order of Costa Brava
Partnership III, L.P., a Delaware limited partnership, or its registered assigns
("Holder"), the principal sum of Seven Million Dollars ($7,000,000) on April 1,
2014 (the "Maturity Date"), together with fees and interest thereon as provided
in Section 2 of this Second Amended and Restated Promissory Note (this "Note").

      1.  Definitions
     
          . For purposes of this Note, the following terms shall have the
          following meanings:
     
          "Affiliate" means with respect to any Person, any other Person which
          directly or indirectly through one or more intermediaries Controls, or
          is Controlled by, or is under common Control with, such first Person.
     
          "BFI Loan Documents" means the Loan and Security Agreement, dated as
          of February 26, 2007, between the Company and BFI Business Finance, as
          modified by the First Modification to Loan and Security Agreement,
          dated as of December 7, 2007, as further modified by the Second
          Modification to Loan and Security Agreement dated as of February 12,
          2008, and as further modified by the Third Modification to Loan and
          Security Agreement dated as of June 23, 2008, and the other Loan
          Documents as defined therein, and, in each case, as may be further
          amended, restated, extended, supplemented, or otherwise modified from
          time to time.
     
          "Business" means the business of the Company or its Subsidiaries of
          designing, developing, manufacturing and marketing products for the
          action sports, motorsports and youth lifestyle markets, and related
          activities, as conducted or proposed to be conducted by the Company or
          its Subsidiaries on the date hereof and reasonable extensions thereof.
     
          "Business Day" means any day which is not a Saturday or Sunday or a
          legal holiday on which national banks are authorized or required to be
          closed.
     
          "Common Stock" means the common stock of the Company.
     
          "Common Stock Equivalents" means any securities of the Company which
          would entitle the holder thereof to acquire at any time Common Stock,
          including any debt, preferred stock, rights, options, warrants or
          other instrument that is at any time convertible into or exercisable
          or exchangeable for, or otherwise entitles the holder thereof to
          receive, Common Stock.
     
          "Conversion Shares" means, collectively, the shares of Common Stock
          issuable upon conversion of this Note in accordance with the terms
          hereof.
     
          "Control" means the possession, directly or indirectly, of the power
          to direct or cause the direction of the management or policies of a
          person, whether through the ownership of voting securities, by
          contract or otherwise, and the terms "Controlling" and "Controlled"
          (and the lower-case versions of the same) shall have meanings
          correlative thereto.
     
          "Debt" means all liabilities, obligations and indebtedness of every
          kind and nature of any Person, including, without limitation: (i) all
          obligations for borrowed money, including, without limitation, all
          obligations of such Person evidenced by bonds, debentures, notes, loan
          agreements or other similar instruments or deferred purchase price of
          property; (ii) obligations as lessee under any leases (including under
          any capital leases); (iii) any reimbursement or other obligations
          under any performance or surety bonds, any letters of credit and
          similar instruments issued for the account of such Person; (iv) all
          net obligations in respect of any derivative products; (v) all
          guaranties, endorsements (other than for collection or deposit in the
          ordinary course of business), and other contingent obligations to
          purchase, to provide funds for payment, to supply funds to invest in
          any other Person, or otherwise to assure a creditor against loss; and
          (vi) obligations secured by any Lien on property owned by such Person,
          whether or not the obligations have been assumed or are limited in
          recourse.
     
          "GAAP" means generally accepted principles of good accounting practice
          in the United States, consistently applied.
     
          "Governmental Authority" means any federal, state, local or other
          governmental department, commission, board, bureau, agency or other
          instrumentality or authority, domestic or foreign, exercising
          executive, legislative, judicial, regulatory or administrative
          authority or functions of or pertaining to government.
     
          "Investment" means, with respect to any Person, any direct or indirect
          acquisition or investment by such Person, whether by means of any
          loan, advance to, guarantee or assumption of Debt of, or purchase or
          other acquisition or any other debt participation or interest in such
          Person, any purchase or other acquisition of any capital stock, debt
          or other securities of such Person, any capital contribution to such
          Person in, or any other investment in, or acquisition (in one
          transaction or a series of transactions) of, any interest or all or
          substantially all of the property and assets or business of another
          Person or assets constituting a business unit, line of business or
          division of, such Person.
     
          "Legal Requirement" means any present or future requirement imposed
          upon the Company or any of its Subsidiaries by any law, statute, rule,
          regulation, directive, order, decree or guideline (or any
          interpretation thereof by courts or of administrative bodies) of the
          United States of America, or any state, or other political subdivision
          thereof, or by any board, governmental or administrative agency,
          central bank or monetary authority of the United States of America or
          any other jurisdiction in which the Company owns property or conducts
          its business, or any political subdivision of any of the foregoing.
     
          "Lien" means any security interest, mortgage, pledge, hypothecation,
          assignment, deposit arrangement, encumbrance, lien (statutory,
          judgment or other), claim or other priority or preferential
          arrangement of any kind or nature whatsoever, including any
          conditional sale or other title retention agreement, any easement,
          right of way or other encumbrance on title to real property, and any
          capital lease having substantially the same economic effect as any of
          the foregoing (other than a financing statement filed by a lessor in
          respect of an operating lease not intended as security).
     
          "Line of Credit Note" means the Third Amended and Restated Promissory
          Note of even date herewith by the Company in favor of Holder in the
          original principal amount of $10,000,000 (without giving effect to any
          accrued PIK Interest), as may be amended, restated, extended,
          supplemented, or otherwise modified from time to time.
     
          "Material Adverse Effect" means any event, matter, condition or
          circumstance which (i) has or would reasonably be expected to have a
          material adverse effect on the business, properties, operations,
          condition (financial or otherwise) or prospects of the Company and its
          Subsidiaries, taken as a whole; (ii) would materially impair the
          ability of the Company or any other Person to perform or observe their
          respective obligations under or in respect of this Note; (iii) would
          materially impair the rights and remedies of Holder under this Note,
          or (iv) affects the legality, validity, binding effect or
          enforceability of this Note.
     
          "Obligations" means all debts, liabilities, obligations, covenants and
          duties of the Company howsoever created, arising or evidenced, whether
          direct or indirect, joint or several, absolute or contingent, or now
          or hereafter existing, or due or to become due, which arise out of or
          in connection with this Note, including, without limitation, all costs
          and expenses incurred by Holder in connection with the enforcement of
          this Note and any interest and fees that accrue to Holder after the
          commencement by or against the Company of any proceeding under any
          laws naming the Company as a debtor in such proceeding, regardless of
          whether such interest and fees are allowed claims in such proceeding.
     
          "Organic Document" means, relative to any Person, its articles or
          certificate of incorporation, or certificate of limited partnership or
          formation, its bylaws, partnership or operating agreement or other
          organizational documents, and all stockholders agreements, voting
          trusts and similar arrangements applicable to any of its capital
          stock, partnership interests or other ownership interests.
     
          "Original Term Note" means the Amended and Restated Promissory Note,
          dated as of December 19, 2011, by the Company in favor Holder in the
          original principal amount of $7,000,000 (without giving effect to any
          accrued PIK Interest).
     
          "Permitted Debt" means (i) Obligations of the Company to Holder
          hereunder or under any other document related to or in connection with
          this Note; (ii) Debt of the Company under the BFI Loan Documents not
          to exceed a principal amount of $7,000,0000 at any one time
          outstanding, or amendments, extensions, renewals, refinancings, or
          replacements of such Debt with (A) BFI Business Finance or (B) with
          any other lender, provided that (x) the maximum available principal
          amount of such Debt being extended, renewed, refinanced, or replaced
          under this clause (ii) does not increase, (y) in no case shall the
          Company be permitted to draw in excess of $7,000,000 of principal at
          any one time outstanding and (z) any refinancing or replacement of the
          BFI Loan Documents with loans from any other lender shall be on terms
          and in the form reasonably acceptable to Holder; (iii) Debt of the
          Company under the Line of Credit Note; (iv) Debt of the Company and
          any Subsidiary of the Company existing on the date hereof and
          disclosed to Holder on Schedule A hereto and extensions, renewals and
          refinancings of such Debt, provided that the principal amount of such
          Debt being extended, renewed or refinanced does not increase and the
          terms thereof are not modified to impose more burdensome terms upon
          Company or the relevant Subsidiary; (v) Debt of Spy Optic Europe
          S.r.l.S.U. (formerly known as Orange 21 Europe, S.r.l. and Spy Optic,
          S.r.l.) and extensions, renewals and refinancings of such Debt;
          (vi) accounts payable to trade creditors for goods and services and
          current operating liabilities (not the result of the borrowing of
          money) incurred in the ordinary course of business of Company or any
          Subsidiary of the Company in accordance with customary terms;
          (vii) Debt consisting of guarantees resulting from endorsement of
          negotiable instruments for collection by the Company or a Subsidiary
          of the Company in the ordinary course of business; (viii) interest
          rate swaps, currency swaps and similar financial products entered into
          or obtained in the ordinary course of business; and (ix) capital
          leases or other Debt incurred solely to acquire equipment, computers,
          software or implement tenant improvements which is secured in
          accordance with clause (viii) of the definition of "Permitted Liens"
          and is not in excess of the lesser of the purchase price or the fair
          market value of such equipment, computers, software or tenant
          improvements on the date of acquisition.
     
          "Permitted Investments" means debt obligations maturing within twelve
          months of the time of acquisition thereof which are accorded a rating
          of AA- or better by S&P (or an equivalent rating by another recognized
          credit rating agency of similar standing), commercial paper with a
          maturity of 270 calendar days or less which is accorded a rating of A4
          or better by S&P (or an equivalent rating by another recognized credit
          rating agency of similar standing), certificates of deposit maturing
          within twelve months of the time of acquisition thereof issued by
          commercial banks that are accorded a rating by a recognized rating
          service then in the business of rating commercial banks which is in
          the first quartile of the rating categories used by such service,
          obligations maturing within twelve months of the time of acquisition
          thereof of any Governmental Authority which obligations from time to
          time are accorded a rating of BBB or better by S&P (or an equivalent
          rating by another recognized credit rating agency of similar
          standing), and demand deposits, certificates of deposit, bankers
          acceptance and time deposits (having a tenor of less than one year) of
          United States banks having total assets in excess of $1,000,000,000.
     
          "Permitted Liens" means (i) the existing Liens as of the date hereof
          disclosed to Holder on Schedule B hereto, or incurred in connection
          with the extension, renewal or refinancing of the Debt secured by such
          existing Liens, provided that any extension, renewal or replacement
          Lien shall be limited to the property encumbered by the existing Lien
          and the principal amount of the Debt being extended, renewed or
          refinanced does not increase; (ii) Liens on the assets of Spy Optic
          Europe S.r.l.S.U. (formerly known as Orange 21 Europe, S.r.l. and Spy
          Optic, S.r.l.) securing Debt permitted by clause (v) of the definition
          of Permitted Debt; (iii) Liens for taxes, fees, assessments or other
          governmental charges or levies, either not delinquent or being
          contested in good faith by appropriate proceedings and which are
          adequately reserved for in accordance with GAAP; (iv) Liens of
          materialmen, mechanics, warehousemen, carriers or employees or other
          like Liens arising in the ordinary course of business and securing
          obligations either not delinquent or being contested in good faith by
          appropriate proceedings which are adequately reserved for in
          accordance with GAAP and which do not in the aggregate materially
          impair the use or value of the property or risk the loss or forfeiture
          of title thereto; (v) Liens consisting of deposits or pledges to
          secure the payment of worker's compensation, unemployment insurance or
          other social security benefits or obligations, or to secure the
          performance of bids, trade contracts, leases, public or statutory
          obligations, surety or appeal bonds or other obligations of a like
          nature incurred in the ordinary course of business (other than for
          Debt or any Liens arising under ERISA); (vi) easements, rights of way,
          servitudes or zoning or building restrictions and other minor
          encumbrances on real property and irregularities in the title to such
          property which do not in the aggregate materially impair the use or
          value of such property or risk the loss or forfeiture of title
          thereto; (vii) statutory landlord's Liens under leases to which
          Company or any of its Subsidiaries is a party; and (viii) Liens (A)
          upon or in any equipment, computers or software acquired or held by
          Company or any of its Subsidiaries or tenant improvements implemented
          by Company or any of its Subsidiaries to secure the purchase price of
          such equipment, computers or software or Debt incurred solely for the
          purpose of financing the acquisition of such equipment, computers or
          software or the implementation of such tenant improvements, or (B)
          existing on such equipment, computers or software at the time of its
          acquisition, provided that the Lien is confined solely to the property
          so acquired and improvements thereon, or the proceeds of such
          equipment, computers, software or tenant improvements.
     
          "Person" means an individual, a partnership, a corporation, a limited
          liability company, an association, a joint stock company, a trust, a
          joint venture, an unincorporated organization and a governmental
          entity or any department, agency or political subdivision thereof.
     
          "PIK Interest" means, with respect to any Debt, accrued interest on
          such Debt to the extent such interest is not paid in cash but is added
          to the principal balance and due on the Maturity Date.
     
          "SEC Reports" means reports, schedules, forms and registration
          statements, and any amendments thereto, filed with the Securities and
          Exchange Commission (the "Commission") pursuant to the Securities Act
          of 1933 or Securities Exchange Act of 1934 and the rules and
          regulations of the Commission promulgated thereunder.
     
          "Securities" means, collectively, this Note and the Conversion Shares.
     
          "Subsidiary" means, with respect to any Person (herein referred to as
          the "parent"), any corporation, limited liability company,
          partnership, association or other business entity (i) of which
          securities or other ownership interests representing more than 50% of
          the equity or more than 50% of the ordinary voting power or more than
          50% of the general partnership interests are, at the time any
          determination is being made, owned, controlled or held by the parent,
          or (ii) that is, at any time any determination is made, otherwise
          Controlled by, the parent or one or more Subsidiaries of the parent
          and one or more Subsidiaries of the parent.
     
          "Trading Day" means a day on which the principal Trading Market is
          open for trading.
     
          "Trading Market" means any of the following markets or exchanges on
          which the Common Stock is listed or quoted for trading on the date in
          question: the NYSE Amex, the Nasdaq Capital Market, the Nasdaq Global
          Market, the Nasdaq Global Select Market, the New York Stock Exchange
          or the OTC Bulletin Board (or any successors to any of the foregoing);
          provided, however, if on the date in question the Common Stock is not
          listed or quoted for trading on any of the foregoing markets or
          exchanges, "Trading Market" means the New York Stock Exchange.
     
      2.  Payment of Interest and Fees.
           a. Interest Generally. Interest shall accrue on the outstanding
              principal amount of this Note (including all previously
              capitalized PIK Interest thereon) at a rate equal to 12% per annum
              (computed on the basis of actual calendar days elapsed and a year
              of 365 days) payable in kind, as an addition to the outstanding
              principal amount due hereunder, monthly in arrears on the last day
              of each calendar month (each such date, an "Interest Payment
              Date"). The Company may elect to pay interest in cash on the
              outstanding principal balance of this Note on any Interest Payment
              Date by providing notice to the Holder at least two days prior to
              such Interest Payment Date.
           b. Default Interest. Upon the occurrence and during the continuance
              of any Event of Default, this Note shall bear interest at a rate
              per annum equal to 2% plus the rate otherwise applicable to this
              Note. Such incremental interest (i.e., the additional 2% added
              during the continuance of an Event of Default) shall be payable in
              cash.
           c. Fees. On the Maturity Date, the Company shall pay in cash to
              Holder a facility fee of 1.00% of the original principal amount of
              this Note.
     
      3.  Payments.
              Form of Payment
              . All payments of cash interest, principal and fees shall be in
              lawful money of the United States of America by a check drawn on
              the account of the Company and sent via overnight courier service
              to Holder at such address as previously provided to the Company in
              writing (which address, in the case of Holder as of the date of
              issuance hereof, shall initially be the address for Holder as set
              forth in this Note); provided that Holder may elect to receive a
              payment of cash via wire transfer of immediately available funds
              by providing the Company with prior written notice setting out
              such request and Holder's wire transfer instructions. Whenever any
              payment to be made shall otherwise be due on a day which is not a
              Business Day, such payment shall be made on the immediately
              succeeding Business Day and such extension of time shall be
              included in the computation of accrued interest. All payments
              shall be applied first to outstanding fees, then to accrued
              interest, and thereafter to principal.
           a. No Set-Off. The Company agrees to make all payments under this
              Note without set-off or deduction and regardless of any
              counterclaim or defense.
           b. Prepayment. The Company shall have the right to prepay all amounts
              owed under this Note in whole or in part at any time upon five (5)
              Business Days prior written notice to Holder.
     
      4.  Conversion.
           a. Voluntary Conversion. Subject to the provisions of this Section 4,
              at any time after the date hereof until this Note is no longer
              outstanding, up to $2,250,000 of the outstanding principal amount
              of this Note shall be convertible, in whole or in part, into
              shares of Common Stock at the option of Holder, at any time and
              from time to time. Holder shall effect conversions by delivering
              to the Company a notice of conversion (each, a "Notice of
              Conversion"), specifying therein the principal amount of this Note
              to be converted, which amount shall be no less than $100,000
              (unless the aggregate principal amount that has not been converted
              is less than $100,000, in which case the amount to be converted
              shall be no less than remaining aggregate principal amount that
              has not been converted), and the date on which such conversion
              shall be effected, which date shall be no earlier than the tenth
              (10th) Business Day after such Notice of Conversion is deemed
              delivered hereunder (such date, the "Conversion Date"). If no
              Conversion Date is specified in a Notice of Conversion, the
              Conversion Date shall be the date that is the tenth (10th)
              Business Day after such Notice of Conversion is deemed delivered
              hereunder. Conversions hereunder shall have the effect of lowering
              the outstanding principal amount of this Note in an amount equal
              to the applicable amount being converted. Holder and the Company
              shall maintain records showing the principal amount(s) converted
              and the date of such conversion(s). Holder, and any assignee by
              acceptance of this Note, acknowledge and agree that, by reason of
              the provisions of this paragraph, following conversion of a
              portion of the principal amount of this Note, the unpaid and
              unconverted principal amount of this Note may be less than the
              amount stated on the face hereof.
           b. Conversion Price. The conversion price in effect on any Conversion
              Date shall be equal to $2.25, subject to adjustment herein (the
              "Conversion Price").
           c. Mechanics of Conversion.
               i.   Conversion Shares Issuable Upon Conversion. The number of
                    Conversion Shares issuable upon a conversion hereunder shall
                    be determined by the quotient obtained by dividing (x) the
                    outstanding principal amount of this Note to be converted by
                    (y) the Conversion Price.
               ii.  Delivery of Certificate Upon Conversion. Not later than five
                    (5) Trading Days after each Conversion Date, the Company
                    shall deliver, or cause to be delivered, to Holder a
                    certificate or certificates representing the number of
                    Conversion Shares being acquired upon the conversion of this
                    Note.
               iii. Reservation of Shares Issuable Upon Conversion. The Company
                    covenants that it will at all times reserve and keep
                    available out of its authorized and unissued shares of
                    Common Stock for the sole purpose of issuance upon
                    conversion of this Note as herein provided, free from
                    preemptive rights or any other actual contingent purchase
                    rights of Persons other than Holder, not less than such
                    aggregate number of shares of the Common Stock as shall be
                    issuable upon the conversion of the then outstanding
                    principal amount of this Note. The Company covenants that
                    all shares of Common Stock that shall be so issuable shall,
                    upon issue, be duly authorized, validly issued, fully paid
                    and nonassessable.
               iv.  Fractional Shares. No fractional shares or scrip
                    representing fractional shares shall be issued upon the
                    conversion of this Note. As to any fraction of a share which
                    Holder would otherwise be entitled to acquire upon such
                    conversion, the Company shall at its election, either pay a
                    cash adjustment in respect of such final fraction in an
                    amount equal to such fraction multiplied by the Conversion
                    Price or round up to the next whole share.
               v.   Stock Dividends and Stock Splits. If the Company, at any
                    time while this Note is outstanding: (A) pays a stock
                    dividend or otherwise makes a distribution or distributions
                    payable in shares of Common Stock on shares of Common Stock
                    or any Common Stock Equivalents (which, for avoidance of
                    doubt, shall not include any shares of Common Stock issued
                    by the Company upon conversion of, or payment of interest
                    on, this Note); (B) subdivides outstanding shares of Common
                    Stock into a larger number of shares; (C) combines
                    (including by way of a reverse stock split) outstanding
                    shares of Common Stock into a smaller number of shares; or
                    (D) issues, in the event of a reclassification of shares of
                    the Common Stock, any shares of capital stock of the
                    Company, then the Conversion Price shall be multiplied by a
                    fraction of which the numerator shall be the number of
                    shares of Common Stock (excluding any treasury shares of the
                    Company) outstanding immediately before such event and of
                    which the denominator shall be the number of shares of
                    Common Stock outstanding immediately after such event. Any
                    adjustment made pursuant to this Section shall become
                    effective immediately after the record date for the
                    determination of stockholders entitled to receive such
                    dividend or distribution and shall become effective
                    immediately after the effective date in the case of a
                    subdivision, combination or re-classification.
               vi.  Transfer Taxes. The issuance of certificates for shares of
                    the Common Stock on conversion of this Note shall be made
                    without charge to Holder hereof for any documentary stamp or
                    similar taxes that may be payable in respect of the issue or
                    delivery of such certificates; provided, however, that, the
                    Company shall not be required to pay any tax that may be
                    payable in respect of any transfer involved in the issuance
                    and delivery of any such certificate upon conversion in a
                    name other than that of Holder and the Company shall not be
                    required to issue or deliver such certificates unless or
                    until the Person or Persons requesting the issuance thereof
                    shall have paid to the Company the amount of such tax or
                    shall have established to the satisfaction of the Company
                    that such tax has been paid.
     
      5.  Restricted Securities
     
          . By accepting the benefits of the Securities, Holder hereby
          covenants, agrees, represents and warrants the following:
     
           a. Own Account. The Securities are characterized as "restricted
              securities" under the federal securities laws, inasmuch as they
              are being acquired from the Company in a transaction not involving
              a public offering, and that under such laws and applicable
              regulations such securities may be resold without registration
              under the Securities Act of 1933, as amended (the "1933 Act") only
              in certain limited circumstances. In this connection, Holder is
              familiar with Rule 144, as presently in effect, and understands
              the resale limitations imposed thereby and by the 1933 Act. At the
              time of conversion, Holder agrees to execute and deliver to the
              Company a certificate, in such form reasonably acceptable to the
              Company, affirming that Holder is an accredited investor (as such
              term is defined by the 1933 Act), qualified to receive restricted
              securities as of the date of conversion, and has no intent to
              distribute the same in violation of the 1933 Act.
           b. Investment Risks. The Securities will not be, and Holder does not
              have the right to require that the Securities be, registered under
              the 1933 Act. The Securities may bear one or more of the following
              legends:
               i.  The following legend under the 1933 Act:
              
                   "THESE SECURITIES HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER
                   THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
                   LAWS OF ANY STATE, AND MAY BE OFFERED, SOLD, PLEDGED OR
                   HYPOTHECATED ONLY IF REGISTERED AND QUALIFIED PURSUANT TO THE
                   RELEVANT PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR
                   IF THE COMPANY IS PROVIDED AN OPINION OF COUNSEL REASONABLY
                   SATISFACTORY TO THE COMPANY THAT REGISTRATION AND
                   QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT
                   REQUIRED OR IF THE COMPANY OTHERWISE SATISFIES ITSELF THAT
                   REGISTRATION IS NOT REQUIRED."
              
               ii. Any legend required by state securities laws.
          
              The Company agrees to remove promptly, upon the request of a
              holder of Conversion Shares, said legend from the
              documents/certificates for such shares following the Company's
              receipt of evidence reasonably satisfactory to the Company that
              such shares have been transferred in compliance with the 1933 Act.
              In addition, the Company agrees to reissue certificates
              representing any of such shares, without the legend, at such time
              as the holder of such shares, prior to making any transfer of such
              shares, provides written notice to the Company describing the
              manner and terms of such transfer as the Company shall reasonably
              request to confirm that such transfer will be in compliance with
              the 1933 Act.
          
           c. Purchaser Status. At the time such Holder was offered the
              Securities, it was, and at the date hereof it is, and at the time
              of any conversion of the Note it will be, an "accredited investor"
              as defined in Rule 501(a) under the 1933 Act. Holder is not
              required to be registered as a broker-dealer under Section 15 of
              the Securities Exchange Act of 1934, as amended.
           d. Residency. Holder's principal executive offices are at the
              location set forth in the Section 15 of this Note.
           e. Experience of Holder. Holder, either alone or together with its
              representatives (who are unaffiliated with and who are not
              compensated by the Company or any affiliate of the Company and who
              are not selling agents of the Company), has such knowledge,
              sophistication and experience in business and financial matters so
              as to be capable of evaluating the merits and risks of the
              prospective investment in the Securities, and has so evaluated the
              merits and risks of such investment. Holder is able to bear the
              economic risk of an investment in the Securities and, at the
              present time, is able to afford a complete loss of such
              investment.
           f. General Solicitation. Holder is not purchasing the Securities as a
              result of any advertisement, article, notice or other
              communication regarding the Securities published in any newspaper,
              magazine or similar media or broadcast over television or radio or
              presented at any seminar or meeting or, to its knowledge, in any
              other form of general solicitation or general advertisement.
     
      6.  Representations and Warranties
     
          . The Company hereby makes the following representations and
          warranties to Holder, which are made and given subject to, and
          qualified in their entirety by the schedule of exceptions attached
          hereto as Schedule C:
     
           a. Organization, Good Standing and Qualification. The Company is duly
              organized, validly existing and in good standing under the laws of
              the jurisdiction of its incorporation, and has all requisite power
              and authority to execute, deliver and perform its obligations
              under this Note. Each of the Company and its Subsidiaries is
              qualified to do business and is in good standing in each
              jurisdiction in which the failure so to qualify or be in good
              standing would have a Material Adverse Effect, and has all
              requisite power and authority to own its assets and carry on its
              business.
           b. Corporate Power and Authorization; Consents. The execution,
              delivery and performance by the Company of this Note have been
              duly authorized by all necessary action of the Company and do not
              and will not (i) contravene the terms of the Company's Organic
              Documents; (ii) result in a breach of, or constitute a default (or
              an event that with notice or lapse of time or both would become a
              default) under, or give to others any rights of termination,
              amendment, acceleration or cancellation (with or without notice,
              lapse of time or both) of, any lease, instrument, contract or
              other agreement to which the Company or any of its Subsidiaries
              are party or by which they or their properties may be bound or
              affected; (iii) necessitate the consent, approval, order or
              authorization of, or registration, qualification, designation,
              declaration or filing with, any Governmental Authority or any
              third party; or (iv) violate any provision of any law, rule,
              regulation, order, judgment, decree or the like binding on or
              affecting the Company, except in the case of each of the
              immediately foregoing clauses (ii), (iii) and (iv), such as would
              not result in a Material Adverse Effect.
           c. Enforceability. This Note constitutes the legal, valid and binding
              obligation of the Company, enforceable against the Company in
              accordance with its terms
           d. Financial Statements and Other Information. SPY Inc., a Delaware
              corporation, formerly known as Orange 21 Inc. and sole owner of
              the Company ("Parent"), has previously furnished to Holder copies
              of (i) its audited consolidated financial statements for the
              fiscal year ended December 31, 2011, including the balance sheet
              as of the close of the fiscal year and the income statement for
              such year, together with a statement of cash flows and
              (ii) unaudited copies of its consolidated balance sheet, income
              statement and statement of cash flows as of and for the nine month
              period ended March 31, 2012 (the "Financial Statements"). The
              Financial Statements fairly present, in all material respects, in
              conformity with GAAP (except as may be indicated in the notes
              thereto), the financial position of the Company taken as a whole
              as of the date thereof for the period specified therein (subject
              to normal year-end adjustments). There are no material liabilities
              required in accordance with GAAP to be set forth in the Financial
              Statements that are not so set forth. Since December 31, 2011,
              there has been no event or circumstance, either individually or in
              the aggregate, that has had or would reasonably be expected to
              have a Material Adverse Effect. All forecasts and projections that
              Parent and/or the Company have provided to Holder have been
              prepared in good faith on the basis of the assumptions stated
              therein, which assumptions were believed to be reasonable at the
              time made, it being understood that projections as to future
              events are not to be viewed as facts and actual results may vary
              materially from such forecasts.
           e. Litigation. There is no action, suit, proceeding or investigation
              pending or, to the knowledge of Company and its Subsidiaries,
              currently threatened against the Company and its Subsidiaries
              which questions the validity of this Note or any related document
              or the right of the Company and its Subsidiaries to enter into
              such agreements, or to consummate the transactions contemplated
              hereby or thereby, or which would reasonably be expected to
              result, either individually or in the aggregate, in any Material
              Adverse Effect, nor, to the knowledge of the Company, is there any
              reasonable basis for the foregoing. The Company and its
              Subsidiaries are not parties or subject to the provisions of any
              order, writ, injunction, judgment or decree of any court or
              government agency or instrumentality which would reasonably be
              expected to have a Material Adverse Effect. There is no material
              action, suit, proceeding or investigation by Company and its
              Subsidiaries currently pending or which Company and its
              Subsidiaries intend to initiate.
           f. Operations in Conformity With Law, etc. The operations of the
              Business as conducted by the Company and its Subsidiaries are not
              in violation of any Legal Requirement presently in effect, except
              for such violations and defaults as do not and will not, in the
              aggregate, result, or create a material risk of resulting, in any
              Material Adverse Effect. The Company and its Subsidiaries have not
              received notice of any such violation or default, and the Company
              and its Subsidiaries have no knowledge of any reasonable basis on
              which the operations of the Business as conducted by the Company
              and its Subsidiaries would reasonably be expected to violate or to
              give rise to any such violation or default.
           g. Intellectual Property. The Company and its Subsidiaries have
              obtained all material patents, trademarks, service marks, trade
              names, copyrights, licenses and other rights, free from materially
              burdensome restrictions, that are necessary for the operation of
              the Business, except for those for which the failure to obtain is
              not reasonably likely to have a Material Adverse Effect. The
              Company and its Subsidiaries have not received or otherwise been
              made aware of any communications alleging that the Company and its
              Subsidiaries have violated or, by conducting the Business, would
              violate, in any material respect, any patents, trademarks, service
              marks, trade names, copyrights, trade secrets, information,
              proprietary rights and processes of any other person or entity
              used in the conduct of its Business.
           h. Title to Property and Assets. The Company and its Subsidiaries
              have good and marketable title to, or valid leasehold interests in
              or rights to use, all of the material assets and properties used
              by the Company and its Subsidiaries in the Business (collectively,
              the "Properties and Facilities"), subject to no Liens except for
              the Permitted Liens. Taken as a whole, the Properties and
              Facilities are in good repair, working order and condition
              (ordinary wear and tear excepted) and all such assets and
              properties are owned or leased by the Company and its Subsidiaries
              free and clear of all Liens, except for the Permitted Liens, or as
              otherwise permitted hereunder. The Properties and Facilities
              constitute all of the material assets, properties and rights of
              any type used in or necessary for the conduct of the Business.
           i. Tax Returns, Payments and Elections. The Company and its
              Subsidiaries have filed all material tax returns and reports (or
              timely extensions) as required by law relating to any material tax
              liability of the Company and its Subsidiaries. Such returns and
              reports are true and correct in all material respects and the
              Company and its Subsidiaries have paid all material taxes and
              other assessments due, except where the validity or amount thereof
              is being contested in good faith by appropriate proceedings and
              adequate reserves have been set aside on the Financial Statements.
              There are no pending, or to the knowledge of the Company and its
              Subsidiaries, contemplated reviews, audits or proceedings with
              respect to any tax return, report or other tax liability of the
              Company or any of its Subsidiaries, which, in either case, relates
              to any material tax liability of the Company or any such
              Subsidiary.
           j. Employment Matters. The Company and its Subsidiaries have complied
              in all material respects with all applicable state and federal
              equal employment opportunity laws and with other laws related to
              employment, including without limitation all laws relating to
              withholding of taxes and other sums. All persons classified by the
              Company and its Subsidiaries as independent contractors for
              employee benefit and state and federal tax purposes are
              appropriately classified, except where the failure to do so would
              not reasonably be expected to have a Material Adverse Effect. The
              Company and its Subsidiaries are not delinquent in material
              payments to any of its employees, consultants or independent
              contractors for any wages, salaries, commissions, bonuses or other
              direct compensation for any services performed for it to the date
              hereof, except where such a delinquency would not reasonably be
              expected to have a Material Adverse Effect.
           k. Affiliate Arrangements. There are no contractual arrangements or
              obligations owed to or by the Company and its Subsidiaries by or
              to any Affiliate other than this Note, the Line of Credit Note,
              and obligations to employees and officers for (i) payment of
              salary and commissions and bonuses for services rendered, (ii)
              reimbursement for reasonable expenses incurred on its behalf and
              (iii) other standard employee benefits made generally available to
              all employees.
           l. Permits and Licenses. The Company and its Subsidiaries have all
              permits, licenses and any similar authority necessary for the
              conduct of their Business, the lack of which could reasonably be
              expected to have a Material Adverse Effect. The Company and its
              Subsidiaries are not in default in any material respect under any
              of such permits, licenses or other similar authority.
     
      7.  Affirmative Covenants
     
          . So long as any indebtedness under this Note remains outstanding, the
          Company shall, and shall cause each of its Subsidiaries to:
     
           a. Compliance with Laws. Comply in all material respects with
              applicable laws, rules, regulations and orders, such compliance to
              include, without limitations, paying before the same become
              delinquent all taxes, assessments, and charges imposed upon it or
              upon its property by any Governmental Authority except for good
              faith contests for which adequate reserves are being maintained.
           b. Insurance. Carry and maintain in full force and effect, at its own
              expense and with financially sound and reputable insurance
              companies, insurance in such amounts, with such deductibles and
              covering such risks as is customarily carried by companies engaged
              in the same or similar businesses and owning similar properties in
              the localities where the Company or any such Subsidiary operates.
           c. Continuance of Business. Maintain its legal existence, licenses
              and privileges in good standing under and in compliance with all
              applicable laws and continue to operate its business as currently
              conducted. Without limiting the generality of the foregoing, the
              Company and its Subsidiaries shall do and cause to be done all
              things necessary to apply for, preserve, maintain and keep in full
              force and effect all of its registrations of trademarks, service
              marks and other marks, trade names and other trade rights,
              patents, copyrights and other intellectual property in accordance
              with prudent business practices.
           d. Maintenance. Conduct its business in a manner consistent with
              relevant industry standards, keep its material assets and
              properties in good working order and condition and make all
              needful and proper repairs, replacements and improvements thereof
              so that such business may be properly and prudently conducted at
              all times.
           e. Leases. Pay when due all rents and other amounts payable under any
              leases to which the Company or any Subsidiary is a party or by
              which the Company or such Subsidiary's properties and assets are
              bound, unless such payments are the subject of a permitted
              protest.
           f. Books and Records. Keep adequate records and books of account, in
              which complete entries will be made in accordance with GAAP,
              reflecting all financial transactions of the Company and any such
              Subsidiary.
           g. Inspection. At any reasonable time and from time to time permit
              Holder or any of its agents or representatives to visit and
              inspect any of the properties of the Company and any such
              Subsidiary and to examine and make copies of and abstracts from
              the records and books of account of the Company and such
              Subsidiary, and to discuss the business affairs, finances and
              accounts of the Company and such Subsidiary with any of the
              officers, employees or accountants of the Company and such
              Subsidiary. The Company hereby irrevocably authorizes all
              accountants and third parties to disclose and deliver to Holder at
              the Company's expense all financial information, books and
              records, work papers, management reports and other information in
              their possession relating to the Company whether verbally, in
              writing (by record or authenticated record) or otherwise.
           h. Notice of Litigation. Provide to Holder promptly after the filing
              or commencement thereof, notice of all actions, suits, and
              proceedings before any court or Governmental Authority affecting
              the Company or any such Subsidiary, and in any event within three
              (3) days after the occurrence thereof, which could have a Material
              Adverse Effect.
           i. Notice of Material Adverse Effect, Etc. So long as any amount
              payable hereunder shall remain unpaid, furnish to Holder: (i)
              prompt written notice, and in any event within three (3) days
              after the occurrence thereof, of any other condition or event,
              which has resulted, or that could reasonably be expected to
              result, in a Material Adverse Effect; and (ii) such other
              statements, lists of property and accounts, budgets, forecasts,
              projections, reports, or other information respecting the
              operations, properties, business or condition (financial or
              otherwise) of the Company or any Subsidiary as Holder may from
              time to time reasonably request; provided that any such
              information shall be kept confidential and will be subject to the
              terms and conditions of a non-disclosure agreement between the
              parties.
           j. Notice of Defaults and Events of Defaults. Provide to Holder, as
              soon as possible and in any event within three (3) days after the
              occurrence thereof, written notice of each event which either (i)
              is an Event of Default, or (ii) with the giving of notice or lapse
              of time or both would constitute an Event of Default, in each case
              setting forth the details of such event and the action which is
              proposed to be taken by the Company and any such Subsidiary with
              respect thereto.
           k. Taxes. Pay and discharge (i) all federal and other material taxes,
              fees, assessments and governmental charges or levies imposed upon
              it or upon its properties or assets prior to the date on which
              penalties attach thereto, and all lawful claims for labor,
              materials and supplies which, if unpaid, might become a Lien upon
              any of its properties or assets, except to the extent such taxes,
              fees, assessments or governmental charges or levies, or such
              claims, are being contested in good faith by appropriate
              proceedings and are adequately reserved against or disclosed in
              accordance with GAAP; and (ii) all other lawful claims which, if
              unpaid, would by law become a Lien upon its property not
              constituting a Permitted Lien.
           l. Governmental Approvals. Promptly obtain and maintain any and all
              authorizations, consents, approvals, licenses, franchises,
              concessions, leases, rulings, permits, certifications, exemptions,
              filings or registrations by or with any Governmental Authority
              material and necessary for the Company and any such Subsidiary to
              conduct its business and own (or lease) its properties or to
              execute, deliver and perform this Note.
           m. Preliminary Annual Financial Statements. If Seth Hamot is no
              longer a member of Parent's board of directors, provide Holder as
              soon as possible after the end of each fiscal year of the Company,
              and in any event within sixty (60) days of the end of the
              Company's fiscal year, preliminary year end financial statements,
              including but not limited to, the balance sheet and income
              statement for such year.
           n. Reviewed Annual Financial Statements. If Seth Hamot is no longer a
              member of Parent's board of directors, provide Holder as soon as
              possible after the end of each fiscal year of the Company, and in
              any event within one hundred twenty (120) days of the end of the
              Company's fiscal year:
               i.   a complete copy of the Company's financial statements,
                    including but not limited to (1) the management letter, if
                    any; (2) the balance sheet as of the close of the fiscal
                    year; and (3) the income statement for such year, together
                    with a statement of cash flows, reviewed by a firm of
                    independent certified public accountants of recognized
                    standing and acceptable to Holder, or if permitted by Holder
                    in writing, by the Company.
               ii.  a statement certified by the chief financial officer of the
                    Company that the Company is in compliance with all the
                    terms, conditions, covenants, and warranties of this Note;
                    and
               iii. a complete copy of all filings required under securities
                    law.
          
              So long as the Company files its Annual Report on Form 10K with
              the Securities Exchange Commission within the required timelines,
              the Company will not be required to additionally provide the items
              under the above Sections 7(n) (i) through (iii).
          
           o. Other Financial Statements. No later than thirty (30) days after
              the close of each month (each, an "Accounting Period"), if Seth
              Hamot is no longer a member of Parent's board of directors,
              provide Holder with the balance sheet of the Company as of the
              close of such Accounting Period and its income statement for that
              portion of the then current fiscal year through the end of such
              Accounting Period certified by each of the chief executive officer
              and the chief financial officer of the Company as being complete,
              correct, and fairly representing its financial condition and the
              results of operations.
           p. Tax Returns. If Seth Hamot is no longer a member of Parent's board
              of directors, provide Holder copies of each of the Company's
              federal income tax returns, and any amendments thereto, within one
              hundred twenty (120) days after the end of the Company's fiscal
              year or within the extension periods provided by the Internal
              Revenue Service.
           q. Fees and Expenses. Pay the out-of-pocket fees and expenses
              incurred by Holder in connection with the preparation and
              administration of this Note and any amendments, modifications or
              waivers of the provisions hereof, including attorneys' fees. Such
              fees will be indebtedness under this Note, and shall be due and
              payable on the date hereof.
     
      8.  Negative Covenants
     
          . So long as Obligations under this Note remain outstanding, the
          Company shall not, and, with respect to paragraphs (a) through (g)
          below, shall not permit any of its Subsidiaries to:
     
           a. Liens. Create or suffer to exist any Lien on any assets of the
              Company or any such Subsidiary except Permitted Liens.
           b. Debt. Incur any Debt other than Permitted Debt; prepay, redeem,
              purchase, defease or otherwise satisfy in any manner prior to the
              scheduled repayment thereof any Permitted Debt (other than amounts
              due or permitted to be prepaid in respect of this Note and Debt
              permitted by clauses (iii) and (vi) of the definition of Permitted
              Debt); or amend, modify or otherwise change the terms of any
              Permitted Debt (other than this Note and Debt permitted by clauses
              (iii) and (vi) of the definition of Permitted Debt) so as to
              accelerate the scheduled repayment thereof or increase the
              principal amount of such Permitted Debt.
           c. Restrictions on Fundamental Changes. Enter into any acquisition,
              merger, consolidation, reorganization, or recapitalization, or
              reclassify its capital stock, or liquidate, wind up, or dissolve
              itself (or suffer any liquidation or dissolution), become a
              partner in a partnership, a member or equityholder of a joint
              venture, limited liability company or similar entity, or convey,
              sell, assign, lease, license, transfer, or otherwise dispose of,
              in one transaction or a series of transactions, all or any
              substantial part of its business, property, or assets (including
              shares of capital stock of the Company or any of its
              Subsidiaries), whether now owned or hereafter acquired, or acquire
              by purchase or otherwise all or substantially all of the
              properties, assets, stock, or other evidence of beneficial
              ownership of any Person.
           d. Extraordinary Transactions and Disposal of Assets. Enter into any
              transaction not in the ordinary course of the Business, including
              the sale, lease, license, moving, relocation, transfer or other
              disposition, whether by sale or otherwise, of any of the assets of
              the Company or its Subsidiaries except for sales of inventory in
              the ordinary course of business or except as expressly permitted
              by this Note.
           e. Change Name. Change the name of the Company or any of its
              Subsidiaries, Federal Employer Identification Number, business
              structure, or identity, or add any new fictitious name. To that
              effect, the Company shall not do business under any name other
              than the correct legal name of the Company and its Subsidiaries,
              unless the Company has provided to Holder evidence that Company or
              such Subsidiary has taken such legal steps required with respect
              to fictitious or assumed names under the applicable laws of the
              jurisdictions in which the Company or such Subsidiary is located
              and/or does business.
           f. Changes in Business. Enter into or engage in any business other
              than that carried on (or contemplated to be carried on) as of the
              date hereof.
           g. Distributions. Declare or pay any dividends or make any
              distribution of any kind on the Company's or any such Subsidiary's
              capital stock, or purchase, redeem or otherwise acquire, directly
              or indirectly, any shares of the Company's or such Subsidiary's
              capital stock, any rights to acquire shares of capital stock of
              the Company or such Subsidiary, except for the repurchase of such
              securities from former employees of or consultants to the Company
              or such Subsidiary at the original issue price paid therefor
              pursuant to contractual rights of the Company or such Subsidiary
              upon the termination of such employees' or consultants' employment
              by or provision of service to the Company or such Subsidiary.
           h. Amendment of Organic Documents. Amend, supplement, or otherwise
              modify any of the provisions of the Organic Documents of the
              Company.
           i. Investments. Make any Investments except Permitted Investments.
           j. Accounting Changes. Change its fiscal year or make or permit any
              change in accounting policies or reporting practices, except as
              required by GAAP or mandated by the Securities Exchange Commission
              or other regulatory bodies.
           k. Subsidiaries. Organize, create or acquire any Subsidiary.
           l. Transactions with Affiliates. Directly or indirectly enter into or
              permit to exist any material transaction with any of its
              Affiliates except for transactions that are in the ordinary course
              of the business of the Company or unanimously approved by the
              Parent's board of directors, upon fair and reasonable terms, that
              are fully disclosed to Holder prior to the entering of such
              transactions, and that are no less favorable to the Company than
              would be obtained in arm's length transaction with a
              non-Affiliate.
           m. Management. Make any significant change in its management without
              a minimum thirty (30) days' prior written notice to Holder unless
              otherwise inpracticable.
           n. Suspension. Suspend or cease operations with respect to a
              substantial portion of its business except as unanimously approved
              by the Parent's board of directors.
     
      9.  Use of Proceeds
     
          . The Company shall use the proceeds from the amounts loaned to the
          Company under this Note for general working capital and other lawful
          corporate purposes.
     
      10. Default.
           a. Events of Default. For purposes of this Note, any of the following
              events which shall occur shall constitute an "Event of Default":
               i.    any indebtedness under this Note is not paid when and as
                     the same shall become due and payable, whether at maturity,
                     by acceleration, five (5) days following notice of
                     prepayment or otherwise;
               ii.   default shall occur in the observance or performance of (A)
                     any covenant, obligation or agreement of the Company
                     contained in Sections 7 or 8, or (B) any other provision of
                     this Note, and, in the case of this clause (B), such
                     default shall continue uncured for a period of ten (10)
                     days;
               iii.  any representation, warranty or certification made herein
                     by or on behalf of the Company or any of its Subsidiaries
                     shall prove to have been false or incorrect in any material
                     respect on the date or dates as of which made (any such
                     falsity being a "Representation Default");
               iv.   the Company shall (A) apply for or consent to the
                     appointment of a receiver, trustee, custodian or liquidator
                     of itself or any part of its property, (B) become subject
                     to the appointment of a receiver, trustee, custodian or
                     liquidator for itself or any part of its property, (C) make
                     an assignment for the benefit of creditors, (D) fail
                     generally, become unable or admit in writing to its
                     inability to pay its debts as they become due, (E)
                     institute any proceedings under the United States
                     Bankruptcy Code or any other federal or state bankruptcy,
                     reorganization, receivership, insolvency or other similar
                     law affecting the rights of creditors generally, or file a
                     petition or answer seeking reorganization or an arrangement
                     with creditors to take advantage of any insolvency law, or
                     file an answer admitting the material allegations of a
                     bankruptcy, reorganization or insolvency petition filed
                     against it, or (F) become subject to any involuntary
                     proceedings under the United States Bankruptcy Code or any
                     other federal or state bankruptcy, reorganization,
                     receivership, insolvency or other similar law affecting the
                     rights of creditors generally;
               v.    the Company shall (i) liquidate, wind up or dissolve (or
                     suffer any liquidation, wind-up or dissolution), except to
                     the extent expressly permitted by Section 8, (ii) suspend
                     its operations other than in the ordinary course of
                     business, or (iii) take any action to authorize any of the
                     actions or events set forth above in this Section 10(a)(v);
               vi.   the Company or any Subsidiary (i) fails to make any payment
                     beyond the applicable grace period, if any, whether by
                     scheduled maturity, required prepayment, acceleration,
                     demand, or otherwise, (a) under the BFI Loan Documents, (b)
                     under the Line of Credit Note or (c) in respect of any Debt
                     (other than the Debt hereunder, the Debt under the BFI Loan
                     Documents and the Debt under the Line of Credit Note)
                     having an aggregate outstanding principal amount
                     (individually or in the aggregate with all other Debt as to
                     which such a failure shall exist) of not less than $5,000,
                     (ii) fails to observe or perform any other agreement or
                     condition relating to (a) the BFI Loan Documents, (b) the
                     Line of Credit Note or (c) any such Debt described in
                     clause (i)(c) above, or any other event occurs, the effect
                     of which default or other event is to cause, or to permit
                     the holder or holders of the BFI Loan Documents, the Line
                     of Credit Note or any such Debt described in clause (i)(c)
                     above (or a trustee or agent on behalf of such holder or
                     holders or beneficiary or beneficiaries) to cause, with the
                     giving of notice if required, the Debt under the BFI Loan
                     Documents, the Line of Credit Note or the Debt described in
                     clause (i)(c) above to become due or to be repurchased,
                     prepaid, defeased or redeemed (automatically or otherwise);
               vii.  any final judgment or judgments for the payment of money
                     shall be rendered against the Company in excess of $5,000
                     which judgments are not, within thirty (30) days after the
                     entry thereof, bonded, discharged or stayed pending appeal,
                     or are not discharged within thirty (30) days after the
                     expiration of such stay, other than any judgment which is
                     covered by insurance or an indemnity from a credit worthy
                     party; provided that the Company provides Holder a written
                     statement from such insurer or indemnity provider (which
                     written statement shall be reasonably satisfactory to
                     Holder) to the effect that such judgment is covered by
                     insurance or an indemnity and the Company will receive the
                     proceeds of such insurance or indemnity within 30 days of
                     the issuance of such judgment; or
               viii. this Note shall for any reason cease to be, or shall be
                     asserted by the Company not to be, a legal, valid and
                     binding obligation of the Company.
          
           b. Consequences of Events of Default.
               i.  If any Event of Default shall occur for any reason, whether
                   voluntary or involuntary, and be continuing, Holder may, upon
                   notice or demand, declare the outstanding Obligations under
                   this Note to be due and payable, whereupon the outstanding
                   Obligations under this Note shall be and become immediately
                   due and payable, and the Company shall immediately pay to
                   Holder all such Obligations. Upon the occurrence of an actual
                   or deemed entry of an order for relief with respect to the
                   Company under the United States Bankruptcy Code, then all
                   Obligations under this Note shall automatically be due
                   immediately without notice of any kind. The Company agrees to
                   pay Holder all out-of-pocket costs and expenses incurred by
                   Holder (including attorney's fees) in connection with the
                   enforcement or protection of its rights in relation to this
                   Note, including any suit, action, claim or other activity of
                   Holder to collect or otherwise enforce the Obligations under
                   this Note or any portion thereof, or in connection with the
                   transactions contemplated hereby.
               ii. Holder shall also have any other rights which Holder may have
                   been afforded under any contract or agreement at any time and
                   any other rights which Holder may have pursuant to applicable
                   law.
     
      11. Lost, Stolen, Destroyed or Mutilated Note
     
          . In case this Note shall be mutilated, lost, stolen or destroyed, the
          Company shall issue a new Note of like date, tenor and denomination
          and deliver the same in exchange and substitution for and upon
          surrender and cancellation of such mutilated Note, or in lieu of this
          Note being lost, stolen or destroyed, upon receipt of evidence
          satisfactory to the Company of such loss, theft or destruction.
     
      12. Waiver of Jury Trial
     
          . TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE
          WAIVED, THE COMPANY (BY ITS EXECUTION HEREOF) AND HOLDER (BY ITS
          ACCEPTANCE OF THIS NOTE) WAIVES AND COVENANTS THAT IT WILL NOT ASSERT
          (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY
          JURY IN ANY FORUM IN RESPECT OF ANY ISSUE OR ACTION ARISING OUT OF OR
          BASED UPON OR RELATING TO THIS NOTE OR IN ANY WAY CONNECTED WITH OR
          RELATED OR INCIDENTAL TO THE TRANSACTIONS CONTEMPLATED HEREBY, IN EACH
          CASE WHETHER NOW EXISTING OR HEREAFTER ARISING.
     
      13. Governing Law
     
          . This Note shall be deemed to be a contract made under the laws of
          the State of New York and for all purposes shall be governed by,
          construed under, and enforced in accordance with the laws of the State
          of New York.
     
      14. Amendment and Waiver
     
          . Any term of this Note may be amended and the observance of any term
          of this Note may be waived (either generally or in a particular
          instance and either retroactively or prospectively), only with the
          written consent of the Company and Holder.
     
      15. Notices
     
          . Any notice or other communication in connection with this Note may
          be made and is deemed to be given as follows: (i) if in writing and
          delivered in person or by courier, on the date when it is delivered;
          (ii) if by facsimile, when received at the correct number (proof of
          which shall be an original facsimile transmission confirmation slip or
          equivalent); or (iii) if sent by certified or registered mail or the
          equivalent (return receipt requested), on the date such mail is
          delivered, unless the date of that delivery is not a Business Day or
          that communication is delivered on a Business Day but after the close
          of business on such Business Day in which case such communication
          shall be deemed given and effective on the first following Business
          Day. Any such notice or communication given pursuant to this Note
          shall be addressed to the intended recipient at its address or number
          (which may be changed by either party at any time) specified as
          follows:

     If to the Company:
     
     Spy Optic Inc.
     
     2070 Las Palmas Drive
     
     Carlsbad, CA 92011
     
     Facsimile No.: (760) 804-8420
     
     Telephone No.: (760) 804-8421
     
     Attention: Chief Executive Officer
     
      
     
     With a copy to:
     
     Spy Optic Inc.
     
     2070 Las Palmas Drive
     
     Carlsbad, CA 92011
     
     Facsimile No.: (760) 804-8420
     
     Telephone No.: (760) 804-8421
     
     Attention: Chief Financial Officer
     
      
     
     With an additional copy to:
     
     Sheppard, Mullin, Richter & Hampton LLP
     
     12275 El Camino Real, Suite 200
     
     San Diego, CA 92130-2006
     
     Facsimile No.: (858) 509-3691
     
     Attention: John Hentrich, Esq.
     
      
     
     If to Holder:
     
     Costa Brava Partnership III, L.P.
     
     c/o Roark, Rearden & Hamot, LLC
     
     420 Boylston St, Suite 5-F
     
     Boston, MA 02116
     
     Facsimile No.: (617) 267-6785
     
     Telephone No.: (617) 595-4405
     
     Attention: Seth W. Hamot, President
     
      
     
     With a copy to:
     
     Ropes & Gray LLP
     
     Prudential Tower
     
     800 Boylston Street
     
     Boston, MA 02199
     
     Facsimile No.: (617) 951-7050
     
     Attention: David A. Fine, Esq. and Jeffrey R. Katz, Esq.

 1.  Severability

     . If at any time any provision of this Note shall be held by any court of
     competent jurisdiction to be illegal, void or unenforceable, such provision
     shall be of no force and effect, but the illegality or unenforceability of
     such provision shall have no effect upon the legality or enforceability of
     any other provision of this Note.

 2.  Assignment

     . The provisions of this Note shall be binding upon and inure to the
     benefit of each of the Company and Holder and their respective successors
     and assigns, provided that the Company shall not have the right to assign
     its rights and obligations hereunder or any interest herein. This Note may
     be endorsed, assigned and transferred in whole or in part by Holder to any
     other Person.

 3.  Indemnity

     . The Company agrees to indemnify Holder, and its respective directors,
     officers, employees and agents (each such Person being called an
     "Indemnitee") against, and to hold each Indemnitee harmless from, any and
     all losses, claims, damages, liabilities and related expenses, including
     reasonable counsel fees, charges and disbursements, incurred by or asserted
     against any Indemnitee arising out of in any way connected with, or as a
     result of (i) the execution or delivery of this Note or any agreement or
     instrument contemplated thereby, the performance by the parties thereto of
     their respective obligations thereunder or the consummation of the
     transactions contemplated thereby or (ii) any breach by the Company of its
     obligations under this Note or any agreement or instrument contemplated
     thereby.

 4.  Remedies Cumulative; Failure or Indulgence Not a Waiver

     . The remedies provided in this Note shall be cumulative and in addition to
     all other remedies available under this Note. No failure or delay on the
     part of Holder in the exercise of any power, right or privilege hereunder
     shall operate as a waiver thereof, nor shall any single or partial exercise
     of any such power, right or privilege preclude other or further exercise
     thereof or of any other right, power or privilege.

 5.  Excessive Interest

     . Notwithstanding any other provision herein to the contrary, this Note is
     hereby expressly limited so that the interest rate charged hereunder shall
     at no time exceed the maximum rate permitted by applicable law. If, for any
     circumstance whatsoever, the interest rate charged exceeds the maximum rate
     permitted by applicable law, the interest rate shall be reduced to the
     maximum rate permitted, and if Holder shall have received an amount that
     would cause the interest rate charged to be in excess of the maximum rate
     permitted, such amount that would be excessive interest shall be applied to
     the reduction of the principal amount owing hereunder (without charge for
     prepayment) and not to the payment of interest, or if such excessive
     interest exceeds the unpaid balance of principal, such excess shall be
     refunded to the Company.

     Further, notwithstanding any other provision herein to the contrary, and
     without any further action from the parties to this Note, if the fees
     (except with respect to Section 16) and interest charged hereunder shall be
     determined by a court of competent jurisdiction to be a "financial benefit"
     for purposes of 8 section 203(c)(v) of the General Corporation Law of the
     State of Delaware, this Note shall be deemed amended to eliminate such fees
     and reduce such interest rate to 0%. If Holder shall have received any such
     fees or interest, such amounts shall be applied to the reduction of the
     principal amount owing hereunder (without charge for prepayment), or if
     such fees and interest paid to Holder exceed the unpaid balance of
     principal, such excess shall be refunded to the Company.

 6.  Registered Obligation

     . The Company shall establish and maintain a record of ownership (the
     "Register") in which it will register by book entry the interest of the
     initial Holder and of each subsequent assignee in this Note, and in the
     right to receive any payments of principal and interest or any other
     payments hereunder, and any assignment of any such interest. The Company
     shall make appropriate entries in the Register to reflect any assignment
     promptly following receipt of written notice from the assignor of such
     assignment. Notwithstanding anything herein to the contrary, this Note is
     intended to be treated as a registered obligation for federal income tax
     purposes and the right, title, and interest of Holder and its assignees in
     and to payments under this Note shall be transferable only upon notation of
     such transfer in the Register. This Section shall be construed so that this
     Note is at all times maintained in "registered form" within the meaning of
     Sections 163(f), 871(h)(2) and 881(c)(2) of the Internal Revenue Code and
     any related regulations (or any successor provisions of the Code or such
     regulations).

 7.  Entire Agreement

     . This Note contains the entire understanding of the parties with respect
     to the subject matter hereof and supersedes all prior agreements,
     understandings, discussions and representations, oral or written, with
     respect to such matters, which the parties acknowledge have been merged
     into this Note.

 8.  Waiver of Notice

     . To the extent permitted by law, the Company hereby waives demand, notice,
     protest and all other demands and notices in connection with the delivery,
     acceptance, performance, default or enforcement of this Note.

 9.  Subordination

     . This Note and each of Holder's rights and privileges hereunder is
     expressly subject to the terms of that certain Debt Subordination Agreement
     by and between BFI Business Finance and Holder dated as of March 19, 2010,
     as amended or modified from time to time.

 10. Effect of this Note

. This Note amends and restates in its entirety the Original Term Note.

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, each of the undersigned has caused this Note to be duly
executed by its officers, thereunto duly authorized as of the date first above
written.

 

The Company:

 

Spy Optic Inc.,

formerly known as
Orange 21 North America Inc.

 

By:

Name:

Title:

     

Holder:

 

Costa Brava Partnership III, L.P.

 

By:

Name:

Title:

 

SCHEDULE A

Debt

See attached.

SCHEDULE B

Liens

See attached.

SCHEDULE C

Schedule of Exceptions

1. Building is not in good repair.

2. The Company is late to certain vendors.

3. Maintenance is not in good repair.

4. All risks and facts disclosed in the Company's Form 10-K for the period
ending December 31, 2011 (filed March 20, 2012), Form 10-Q for the period ending
March 31, 2012 (filed May 10, 2012), and Forms 8-K filed subsequent to the
filing date of the aforementioned Form 10-K.