UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): | August 7, 2015 |
Castle Brands Inc.
__________________________________________
(Exact name of registrant as specified in its charter)
Florida | 001-32849 | 41-2103550 |
_____________________
(State or other jurisdiction |
_____________
(Commission |
______________
(I.R.S. Employer |
of incorporation) | File Number) | Identification No.) |
122 East 42nd Street, Suite 4700, New York, New York | 10168 | |
_________________________________
(Address of principal executive offices) |
___________
(Zip Code) |
Registrants telephone number, including area code: | (646) 356-0200 |
Not Applicable
______________________________________________
Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
On August 7, 2015 (the "Effective Date"), Castle Brands Inc. (the "Company"), and its wholly-owned subsidiary, Castle Brands (USA) Corp. ("CB-USA"), entered into a First Amendment (the "Amendment") to that certain Amended and Restated Loan and Security Agreement (as amended, the "Loan Agreement"), dated as of September 22, 2014, with ACF FinCo I LP ("ACF"), to amend certain terms of the Company’s existing $12,000,000 revolving facility (the "Facility") and the $4,000,000 term loan used to finance the purchase of aged whiskies (the "Bourbon Term Loan") with ACF.
Among other changes, the Amendment increases the maximum amount of the Facility from $12,000,000 to $19,000,000, including a sublimit in the maximum principal amount of $7,000,000 to permit the Company to acquire aged whiskey inventory (the "Purchased Inventory Sublimit") subject to certain conditions set forth in the Loan Agreement. Pursuant to the Amendment, the Company and CB-USA may borrow up to the lesser of (x) $19,000,000 and (y) the sum of the borrowing base calculated in accordance with the Loan Agreement and the Purchased Inventory Sublimit. The Company and CB-USA are permitted to prepay the Facility in whole or the Purchased Inventory Sublimit, in whole or in part, subject to certain prepayment penalties as set forth in the Amendment. The Purchased Inventory Sublimit replaces the Bourbon Term Loan, which was paid in full in the normal course of business. The monthly facility fee remains 0.75% per annum of the maximum principal amount of the Facility (excluding the Purchased Inventory Sublimit). Also, the Company must pay a monthly facility fee of $2,000 with respect to the Purchased Inventory Sublimit until all obligations with respect thereof are fully paid and performed. The Company and CB-USA paid ACF an aggregate $45,000 commitment fee in connection with the Amendment.
In connection with the Amendment, the Company and CB-USA entered into the following ancillary agreements: (i) a Reaffirmation Agreement (the "Reaffirmation Agreement") with (a) certain officers of the Company and CB-USA, including John Glover, the Company’s Chief Operating Officer, T. Kelley Spillane, the Company’s Senior Vice President - Global Sales, and Alfred J. Small, the Company’s Senior Vice President, Chief Financial Officer, Treasurer & Secretary and (b) certain junior lenders to the Company, including Frost Gamma Investments Trust, an entity affiliated with Phillip Frost, M.D., a director and principal shareholder of the Company, Mark E. Andrews, III, a director of the Company and the Company’s Chairman, an affiliate of Richard J. Lampen, a director of the Company and the Company’s President and Chief Executive Officer, an affiliate of Glenn Halpryn, a director of the Company, Dennis Scholl, a former director of the Company, and Vector Group Ltd., a more than 5% shareholder of the Company, of which Richard Lampen is an executive officer, Henry Beinstein, a director of the Company, is a director and Phillip Frost, M.D. is a principal shareholder, which, among other things, reaffirms the existing Validity and Support Agreements by and among each officer, the Company, CB-USA and ACF and (ii) an Amended and Restated Revolving Credit Note ("Revolving Note").
ACF also required as a condition to entering into the Amendment that ACF enter into a participation agreement with certain related parties of the Company, including Frost Gamma Investments Trust, Mark E. Andrews, III, Richard J. Lampen, and Alfred J. Small, to allow for the sale of participation interests in the Purchased Inventory Sublimit and the inventory purchased with the proceeds thereof. The participation agreement provides that ACF's commitment to fund each advance of the Purchased Inventory Sublimit shall be limited to seventy percent (70%), up to an aggregate maximum principal amount for all such advances equal to $4,900,000. Neither the Company nor CB-USA is a party to the participation agreement. However, the Company and CB-USA are party to a fee letter with the junior participants (including the related party junior participants) pursuant to which the Company and CB-USA were obligated to pay the junior participants a closing fee of $18,000 on the Effective Date and are obligated to pay a commitment fee of $18,000 on each anniversary of the Effective Date until the junior participants' obligations are terminated pursuant to the participation agreement.
The foregoing summary is qualified in its entirety by reference to the text of the Amendment, Revolving Note and Reaffirmation Agreement attached hereto as exhibits and incorporated by reference herein.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information in Item 1.01 of this Current Report on Form 8-K is incorporated by reference herein.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
The following exhibits are filed as exhibits to this Report on Form 8-K:
4.1 First Amendment to the Amended and Restated Loan and Security Agreement, dated as of August 7, 2015, by and among ACF FinCo I LP, the Company and Castle Brands (USA) Corp.
4.2 Amended and Restated Revolving Credit Note, dated as of August 7, 2015, in favor of ACF FinCo I LP.
10.1 Reaffirmation Agreement, dated as of August 7, 2015, by and among the Company, Castle Brands (USA) Corp., the officers signatory thereto and certain junior lenders to the Company.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Castle Brands Inc. | ||||
August 10, 2015 | By: |
/s/ Alfred J. Small
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Name: Alfred J. Small | ||||
Title: SVP, CFO, Treas. & Secretary |
Exhibit Index
Exhibit No.
Description
First Amendment to the Amended and Restated Loan and Security Agreement, dated as of August 7, 2015, by and among ACF FinCo I LP, the Company and Castle Brands (USA) Corp.
Amended and Restated Revolving Credit Note, dated as of August 7, 2015, in favor of ACF FinCo I LP.
Reaffirmation Agreement, dated as of August 7, 2015, by and among the Company, Castle Brands (USA) Corp., the officers signatory thereto and certain junior lenders to the Company.
_________________________________________________________________
FIRST AMENDMENT
TO THE
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
BETWEEN
CASTLE BRANDS INC.,
CASTLE BRANDS (USA) CORP.
AND
ACF FINCO I LP
DATED AS OF SEPTEMBER 22, 2014
Effective Date: August 7, 2015
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This First Amendment to Amended and Restated Loan and Security Agreement (this Agreement ) is dated as of August 7, 2015 and is by and among CASTLE BRANDS INC. , a corporation organized under the laws of the State of Florida ( CBI ), and CASTLE BRANDS (USA) CORP. a corporation organized under the laws of the State of Delaware ( CBUSA ) (individually and collectively, Borrower ), and ACF FINCO I LP , a Delaware limited partnership and successor-in-interest to KELTIC FINANCIAL PARTNERS II, LP ( Lender ).
RECITALS :
Borrower and Lender are parties to an Amended and Restated Loan and Security Agreement dated as of September 22, 2014 (the Credit Agreement ), in connection with which Borrower delivered an Amended and Restated Revolving Credit Note dated September 22, 2014 in a maximum principal amount of $12,000,000 (the Revolving Credit Note ), an Amended and Restated Term Note dated September 22, 2014 in the original principal amount of $4,000,000 (the 2014 Term Note ) and other agreements, documents and instruments in connection therewith (all of the foregoing, as the same may be amended, restated, or otherwise modified from time to time to be collectively referred to as the Loan Documents ).
The proceeds of the 2014 Term Note were used to acquire certain bourbon inventory. Certain Persons participated in the 2014 Term Note (the 2014 Term Note Participants ) pursuant to the terms of an Amended and Restated Participation Agreement dated August 7, 2013.
The 2014 Term Note has been repaid in full and Borrower has requested that Lender formally waive Borrowers obligation to pay liquidated damages in connection with the repayment of the 2014 Term Note, increase the maximum principal amount of the Revolving Credit Note by an amount equal to $7,000,000 and provide Borrower a sublimit under the Revolving Credit to permit Borrower to acquire certain inventory (the Purchased Inventory Sublimit ). Borrower has also indicated that certain Persons desire to participate in the Purchased Inventory Sublimit. Upon the terms and conditions contained in this Amendment Lender has agreed to amend the Credit Agreement as provided below.
AGREEMENT :
1. Defined Terms . Unless otherwise defined in the Recitals or in the body of this Amendment, all capitalized terms shall have the meanings ascribed to such terms in the Loan Documents.
2. Borrower Representations . Borrower hereby represents to Lender, that:
(a) All Loan Documents executed by Borrower, including without limitation the Credit Agreement, constitute valid and legally binding obligations of Borrower, enforceable against Borrower in accordance with the terms thereof;
(b) Borrower has no claims, offsets, counterclaims, or defenses with respect to the payment or performance of any Obligations owing to Lender under any of the Loan Documents;
(c) After giving effect to this Agreement, no Default or Event of Default has occurred and is continuing under the terms of the Loan Documents; and
(d) As a material inducement to Lender entering into this Agreement, Borrower acknowledges and agrees that Lender is relying on the accuracy and veracity of each of the representations, above.
3. Waiver . Subject to the terms, conditions, representations and warranties contained herein, Lender hereby confirms its agreement to waive the provisions of Section 3.7 of the Credit Agreement requiring the payment of Liquidated Damages by Borrower in connection with the repayment in full of the 2014 Term Note.
4. Revolving Credit . The first sentence of Section 2.1 of the Credit Agreement is hereby deleted in its entirety and replaced with the following:
Subject to the terms and conditions of this Agreement and as long as no Default or Event of Default then exists, on Borrowers request prior to the Revolving Credit Termination Date Lender shall lend to Borrower under a revolving credit facility (the Revolving Credit ) a principal sum (the Borrowing Capacity ) equal to the lesser of (a) NINETEEN MILLION AND 00/100 DOLLARS ($19,000,000.00) (the Revolving Credit Limit ), or (b) the sum of (i) the Borrowing Base, plus (ii) the Purchased Inventory Sublimit Cap.
5. Term Loan . Section 2.1.A of the Credit Agreement is hereby deleted in its entirety.
6. Overadvances . The last sentence of Section 2.3 of the Credit Agreement is hereby deleted in its entirety and replaced with the following:
Notwithstanding anything to the contrary contained herein, in no event shall Advances outstanding under the Revolving Credit, including Advances made under the Purchased Inventory Sublimit, exceed the Revolving Credit Limit.
7. Crediting of Funds . The following amendments are hereby made to Section 2.7 of the Credit Agreement:
(a) | Paragraph (d) of Section 2.7 of the Credit Agreement is deleted in its entirety; |
(b) | Paragraph (e) of Section 2.7 of the Credit Agreement is hereby renamed as paragraph (d); |
(c) | All references in the Credit Agreement to paragraph (e) of Section 2.7 shall hereafter refer to paragraph (d) of Section 2.7; |
(d) | Paragraph (f) of Section 2.7 of the Credit Agreement is hereby renamed as paragraph (e); and |
(e) | All references in the Credit Agreement to paragraph (f) of Section 2.7 shall hereafter refer to paragraph (e) of Section 2.7. |
8. Interest . The second (2 nd ) paragraph contained in Section 3.1 of the Credit Agreement is hereby deleted in its entirety.
9. Facility Fee . Section 3.2 of the Credit Agreement is hereby deleted in its entirety and replaced with the following:
3.2 Facility Fee . Borrower shall pay to Lender a fee (the Facility Fee ) equal to the sum of:
(a) Subject to paragraph (b) immediately below, annually with respect to the Revolving Credit, three quarters of one percent (0.75%) of the maximum principal amount of the Revolving Credit (exluding therefrom the maximum principal amount of the Purchased Inventory Sublimit) until all Obligations with respect to the Revolving Credit are finally and indefeasibly paid in cash to Lender and performed in full; plus
(b) Monthly with respect to the Purchased Inventory Sublimit, an amount equal to Two Thousand and 00/100 Dollars ($2,000.00) until all Obligations with respect to the Purchased Inventory Sublimit are finally and indefeasibly paid in cash to Lender and performed in full.
The portion of the Facility Fee payable in connection with the Purchased Inventory Sublimit referred to in paragraph (b) , above, shall be paid in advance on the first day of each calendar month. Borrower acknowledges and agrees that the portion of the Facility Fee payable in connection with the Revolving Credit referred to paragraph (a) , above, shall be earned in full on the Effective Date and on first (1st) day of each subsequent Contract Year. In the absence of the occurrence and continuation of an Event of Default the portion of the Facility Fee payable in connection with the Revolving Credit referred to in paragraph (a) , above, shall be paid in twelve (12) equal monthly installments, in advance, on the first day of each calendar month. Upon the occurrence of any Event of Default and written notice by Lender, or on the Revolving Credit Termination Date, Borrower shall immediately pay to Lender the portion of the Facility Fee payable annually in connection with the Revolving Credit remaining unpaid for the then-current Contract Year. The Facility Fee shall be appropriately adjusted during any Contract Year in which the maximum principal amount of any Loan is increased.
10. Liquidated Damages . Section 3.7 of the Credit Agreement is hereby deleted in its entirety and replaced with the following:
3.7 Liquidated Damages. Subject to the terms and conditions of this Agreement, Borrower shall have the right (a) prior to July 31, 2019 to prepay the outstanding principal amount of the Purchased Inventory Sublimit in whole or in part, or (b) prior to July 31, 2019 to prepay in full the entire outstanding principal balance of the Revolving Credit, all accrued and unpaid interest thereon, all fees, costs, expenses and other amounts payable to Lender in connection with the Revolving Credit, and all other Obligations payable to Lender under this Agreement and the other Loan Documents. Borrowers election to prepay the Purchased Inventory Sublimit in whole or in part, or election to prepay the Obligations relating to the Revolving Credit in full shall be delivered to Lender in writing (a Principal Reduction Notice ) at least sixty (60) calendar days prior to the date of such prepayment. A Principal Reduction Notice shall be irrevocable when delivered to Lender, and if all Obligations relating to the Revolving Credit are finally and indefeasibly paid to Lender in connection with such Principal Reduction Notice, the Revolving Credit shall be terminated and all obligations of Lender to extend credit to Borrower under the Revolving Credit shall terminate.
If (w) prior to July 31, 2019 Borrower prepays the principal amount of the Purchased Inventory Sublimit in whole or in part pursuant to the foregoing paragraph (other than any payments made by Borrower in accordance with the Revolving Credit Sublimit Schedule attached as Exhibit C hereto, which, for the avoidance of doubt, should not be considered to be a prepayment), or (x) prior to July 31, 2019 Borrower prepays in full the entire outstanding principal balance of the Revolving Credit, all accrued and unpaid interest thereon, all fees, costs, expenses and other amounts payable to Lender in connection with the Revolving Credit, and all other Obligations payable to Lender under this Agreement and the other Loan Documents pursuant to the foregoing paragraph, or (y) pursuant to the terms of this Agreement or any other Loan Document, and prior to July 31, 2019, either (I) Lender demands repayment of the outstanding Obligations in whole or in part, or (II) repayment of the outstanding Obligations are otherwise accelerated in whole or in part, then (z) at the time of such repayment, prepayment, demand or acceleration, and in addition to the principal balance(s) of the Loan(s) being prepaid, all accrued and unpaid interest thereon, all fees, costs, expenses and other amounts payable to Lender in connection with the Loans, and all other Obligations paid to Lender under this Agreement and the other Loan Documents required to be paid at such time, Borrower shall pay liquidated damages to Lender in an amount equal to the product of (i) and (ii) below:
(i) (A) if prepayment, repayment, demand or acceleration of the Purchased Inventory Sublimit in whole or in part, the outstanding principal amount of the Purchased Inventory Sublimit being prepaid, repaid or subject to demand or acceleration, (B) if prepayment, repayment, demand or acceleration of the Revolving Credit, the Revolving Credit Limit;
multiplied by
(ii) (A) five percent (5.00%) if such prepayment, repayment, demand or acceleration occurs on or prior to December 31, 2015, (B) three percent (3.00%) if such prepayment, repayment, demand or acceleration occurs after December 31, 2015 but on or prior to December 31, 2016, (C) two percent (2.00%) if such prepayment, repayment, demand or acceleration occurs after December 31, 2016 but on or prior to December 31, 2017, and (D) one percent (1.00%) if such prepayment, repayment, demand or acceleration occurs after December 31, 2017.
Lender and Borrower each hereby acknowledges and agrees that it would be impractical and extremely difficult to ascertain Lenders actual damages from early termination of the Purchased Inventory Sublimit and/or Revolving Credit, as applicable, and that the above liquidated damages have been arrived at by mutual agreement of Lender and Borrower as to a reasonable calculation of Lenders lost profits as a result of early termination of the Purchased Inventory Sublimit and/or Revolving Credit, as applicable. Lender and Borrower each further hereby acknowledges and agrees that the liquidated damages provided above are intended to be fair and reasonable approximations of Lenders actual damages from early termination of the Purchased Inventory Sublimit and/or Revolving Credit, as applicable, are presumed to be the amount of damages sustained by Lender as a result of such early termination, are reasonable under the circumstances currently existing, and that the liquidated damages are not intended to be penalties.
11. Use of Loan Proceeds . Section 7.1 of the Credit Agreement is hereby deleted in its entirety and replaced with the following:
7.1 Use of Loan Proceeds . All proceeds of Advances shall be used by Borrower for Borrowers working capital purposes and for such other purposes as specifically permitted pursuant to the terms of this Agreement,. Notwithstanding the foregoing, the Loans and Advances shall also represent part or all of the sales price of merchandise, insurance or services, and Borrower shall not, directly or indirectly, use the proceeds of the Loans or Advances, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Person, (i) to fund any activities or business of or with any Person, or in any country or territory, that, at the time of such funding, is, or whose government is, the subject of sanctions pursuant to any Anti-Terrorism Laws, or (ii) in any other manner that would result in a violation of sanctions under any Anti-Terrorism Laws by any Person (including any Person participating in the Loans or Advances, whether as underwriter, advisor, investor, or otherwise).
12. Definitions Schedule . The Definitions Schedule attached to and made a part of the Credit Agreement is hereby amended as follows:
(a) Eligible Inventory . Paragraph (a) of the term Eligible Inventory contained in the Definitions Schedule is hereby deleted in its entirety and replaced with the following:
(a) the Inventory consists of saleable (i) non-obsolete raw materials used for Borrowers Jefferson brands stored in barrels and located in the warehouse used by Borrower in Lawrenceburg, Indiana as described in the Disclosure Schedule or in the warehouse operated by Luxco, Inc. located at 6301 N. Broadway Ave., St. Louis, Missouri, and (ii) finished goods manufactured or acquired by Borrower in the ordinary course of Borrowers business as conducted on the Effective Date and located in (A) the warehouse used by Borrower in Lawrenceburg, Indiana and operated by Lawrenceburg Distillers Indiana, LLC pursuant to a Warehouse Service Agreement dated January 20, 2010 between CBI and Lawrenceburg Distillers Indiana, LLC, (B) in the warehouses utilized by USA Wine West LLC on behalf of Borrower pursuant to a Distribution Agreement between USA Wine West LLC and CBUSA, (C) the warehouse used by Borrower in Saint Louis, Missouri and operated by Luxco, Inc. pursuant to a Supplier Agreement dated September 25, 2012 between CBUSA and Luxco, Inc. or in the warehouse operated by Luxco, Inc. located at 6301 N. Broadway Ave., St. Louis, Missouri, or (D) in the warehouse used by Borrower located in Lawrenceburg, Kentucky and operated by a bourbon supplier of Borrower pursuant to one or more agreements between Borrower and such bourbon supplier, as such locations are described in the Disclosure Schedule. For purposes of clarification, prior to the date of a Bourbon Inventory Release of Sublimit Inventory (as such terms are defined in the Purchased Inventory Sublimit portion of the Revolving Credit Sublimit Schedule) described in a Tranche Schedule (as such term is defined in the Purchased Inventory Sublimit portion of the Revolving Credit Sublimit Schedule), all Sublimit Inventory contained in such Tranche (as such term is defined in the Purchased Inventory Sublimit portion of the Revolving Credit Sublimit Schedule) of the Purchased Inventory Sublimit shall not be considered Eligible Inventory; provided, however , such Sublimit Inventory shall be Collateral, and shall subject to all other terms and conditions of this Agreement; and
(b) Maturity Date . The term Maturity Date contained in the Definitions Schedule is hereby deleted in its entirety.
(b) Purchased Inventory Sublimit . The following defined term is hereby added to the Definitions Schedule:
Purchased Inventory Sublimit means a sublimit of the Revolving Credit described as the Purchased Inventory Sublimit in the Revolving Credit Sublimit Schedule.
(c) Termination Date . The term Termination Date contained in Definitions Schedule is hereby deleted in its entirety and replaced with the following:
Termination Date means (i) with respect to the Revolving Credit, the Revolving Credit Termination Date, and (ii) with respect to any Sublimit of the Revolving Credit, the termination date of such Sublimit as described in the Revolving Credit Sublimit Schedule.
13. Deletion of References . To the extent not deleted by the above amendments, all references in the Credit Agreement to the terms Maturity Date and Term Loan are hereby deleted in their entirety.
14. Notice of Borrowing . The Notice of Borrowing attached to the Credit Agreement as Exhibit A thereto is hereby deleted in its entirety and replaced with the Notice of Borrowing attached hereto as Exhibit A .
15. Borrowing Base Certificate . The Borrowing Base Certificate attached to the Credit Agreement as Exhibit B thereto is hereby deleted in its entirety and replaced with the Borrowing Base Certificate attached hereto as Exhibit B .
16. Revolving Credit Sublimit Schedule . The Revolving Credit Sublimit Schedule attached to and made a part of the Credit Agreement is hereby amended by adding to the end thereof the contents of the Purchased Inventory Sublimit Schedule attached hereto as Exhibit C .
17. Amended and Restated Revolving Credit Note . As a condition precedent to the effectiveness of this Agreement and specifically Lenders making advances under the Purchased Inventory Sublimit, on or before the date of this Agreement Borrower shall execute and deliver to Lender an Amended and Restated Revolving Credit Note in form and content acceptable to Lender in Lenders sole discretion.
18. Bourbon Supplier Waiver . Within thirty (30) calendar days of the date of this Agreement Borrower shall deliver to Lender a waiver of security interests executed by a bourbon supplier of Borrower relating to the Inventory and other products of Borrower stored by such bourbon supplier at its facility located in Lawrenceburg, Kentucky in form and content acceptable to Lender in Lenders reasonable discretion.
19. Luxco St. Louis Warehouse Waiver . Within thirty (30) calendar days of the date of this Agreement Borrower shall deliver to Lender a Warehouse Waiver executed by Luxco, Inc. relating to the warehouse operated by Luxco, Inc. and located at 6301 N. Broadway Avenue, St. Louis, Missouri in form and content acceptable to Lender in Lenders reasonable discretion.
20. 2015 Purchased Inventory Sublimit Participation Agreement . As a condition precedent to the effectiveness of this Amendment and specifically Lenders making advances under the Purchased Inventory Sublimit, the participants in the Purchased Inventory Sublimit as indicated by their signatures to a participation agreement shall execute and deliver to Lender on or before the date of this Agreement such participation agreement in form and content acceptable to Lender in Lenders sole discretion setting forth the terms and conditions applicable to such parties participation in the Purchased Inventory Sublimit.
21. Reimbursement of Lender . As consideration for Lenders increase of the Revolving Credit and amendment of the Credit Agreement described above, and pursuant to Sections 3.4 and 10.10 of the Credit Agreement, Borrower shall (a) pay to Lender on the date hereof a commitment fee for the increase of the Revolving Credit in the amount of Forty Five Thousand and 00/100 Dollars ($45,000.00), and (b) reimburse, indemnify and hold Lender harmless for the reasonable fees and costs and expenses incurred by Lender for the services of legal professionals engaged by Lender in connection with the negotiation and preparation of this Agreement. With respect to any amount required to be paid or reimbursed by Borrower pursuant to the foregoing provisions of this paragraph 21, it is hereby agreed that Lender may charge any such amount to the Revolving Credit on the dates such payment is due or such reimbursement is made. Borrower acknowledges and agrees that on and after the Effective Date of this Amendment the Facility Fee shall be calculated based on the Revolving Credit Limit as amended by the terms hereof.
22. Effective Date . This Amendment shall be effective as of August 7, 2015 (the Effective Date ).
23. Specificity of Provisions . The amendments set forth herein are limited precisely as written and shall not be deemed to (a) be a consent to or a waiver of any other term or condition of the Credit Agreement or any other Loan Document, or (b) prejudice any right or rights which Lender may now have or may have in the future under or in connection with the Credit Agreement or any other Loan Document. From and after the Effective Date of this Agreement, whenever the Credit Agreement is referred to in the Credit Agreement or in any other Loan Document, it shall be deemed to mean the Credit Agreement as modified by this Agreement.
24. Binding Effect of Loan Documents . Borrower hereby acknowledges and agrees that upon giving effect to this Agreement, the Credit Agreement, the Revolving Credit Note and each other Loan Document (other than the 2014 Term Note) shall continue to be binding upon such Borrower and shall continue in full force and effect.
25. Choice of Law . This Agreement and the legal relations among the parties hereto shall be governed by and construed in accordance with the internal laws of the State of New York without regard to conflicts of law principles.
26. Counterparts . This Agreement may be executed by one or more the parties to this Amendment on any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument.
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[SIGNATURE PAGE IMMEDIATELY FOLLOWS]
1
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective duly authorized officers.
LENDER:
ACF FINCO I LP
By: /s/ Oleh Szczupak
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Name:
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Oleh Szczupak |
Its: Vice President
Date: August 7, 2015
BORROWER:
CASTLE BRANDS INC.
By: /s/ Alfred J. Small
Name:Alfred J. Small Its: CFO |
Date: August 7, 2015
CASTLE BRANDS (USA) CORP.
By: /s/ Alfred J. Small
Name: Alfred J. Small
Its: CFO
Date: August 7, 2015
2
EXHIBIT A: NOTICE OF BORROWING
ACF FinCo I LP
580 White Plains Road
Suite 610
Tarrytown, NY 10591
Re: Request for Advance
The undersigned requests the following Advance(s) of the Revolving Credit pursuant to Section 2.1 of the Amended and Restated Loan and Security Agreement dated as of September 22, 2014 between ACF FinCo I LP (as successor-in-interest to Keltic Financial Partners II, LP) and the undersigned, as the same may be amended, supplemented or otherwise modified ( Loan Agreement ). Capitalized terms used herein and not otherwise defined herein shall have the meanings given to them in the Loan Agreement.
Revolving Credit: | $ | |||
Purchased Inventory Sublimit: | $ | |||
(Tranche Schedule attached) | ||||
Letter of Credit Sublimit:
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$ | |||
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Letter of Credit Issued to:
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Beneficiary:
Address: |
Date of issuance:
Number of Letter of Credit amended, renewed or extended:
For Credit to:
CASTLE BRANDS INC.
:
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$ | |||
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CASTLE BRANDS (USA) CORP.
:
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$ |
Please wire the requested Advance(s) to our operating account number
at
in accordance with the following wire
instructions:
.
Please call the undersigned to confirm receipt of this fax at ( ) .
3
AMENDED AND RESTATED REVOLVING CREDIT NOTE
August 7, 2015
$19,000,000.00 Tarrytown, New York
FOR VALUE RECEIVED, CASTLE BRANDS INC. , a corporation organized under the laws of the State of Florida ( CBI ), and CASTLE BRANDS (USA) CORP. , a corporation organized under the laws of the State of Delaware ( CBUSA ) (collectively, Borrower ), jointly and severally promise to pay to the order of ACF FINCO I LP , a Delaware limited partnership ( Lender ), at 580 White Plains Road, Suite 610, Tarrytown, New York 10591 or at such other place as Lender may from time to time in writing designate, the principal sum of each Advance made by Lender to Borrower under that certain Amended and Restated Loan and Security Agreement dated as of September 22, 2014 between Borrower and Lender, as amended by a First Amendment dated on or about the date of this Note (together with all Exhibits and Schedules thereto, as the same may be subsequently amended, extended, restated or otherwise modified, the Loan Agreement ). The aggregate unpaid principal balance hereof shall not exceed at any time the sum of NINETEEN MILLION AND 00/100 DOLLARS ($19,000,000.00). Unless defined herein, capitalized terms shall have the meanings given such terms in the Loan Agreement.
The entire unpaid principal balance of this Note, all accrued and unpaid interest thereon, all fees, costs and expenses payable in connection with the Revolving Credit, and all other sums due hereunder and under the Loan Documents in connection with the Revolving Credit, shall be due and payable in cash IN FULL on the Termination Date.
Borrower shall pay interest on the outstanding principal amount of this Note to Lender until all Obligations with respect to this Note and the Revolving Credit have been finally and indefeasibly paid to Lender in cash and performed in full. Interest shall accrue daily on the daily unpaid principal amount of this Note, and Borrower shall pay interest to Lender monthly in arrears commencing on the first Banking Day of the calendar month immediately following the Effective Date and on the first Banking Day of each calendar month thereafter. The principal balance of this Note shall bear interest at the rate set forth in Section 3.1 of the Loan Agreement, unless otherwise provided for by the terms of the Loan Agreement.
All repayments or prepayments of principal, all payments of interest and all payments of fees, costs and expenses payable in connection with the Revolving Credit shall be made by Borrower, or credited to the account of Borrower by Lender, pursuant to the terms of the Loan Agreement. Borrower may prepay the indebtedness evidenced by this Note in whole or in part pursuant to, and subject to, the applicable provisions of the Loan Agreement and Loan Documents.
This is the Revolving Credit Note referred to in the Loan Agreement and is entitled to the benefit of all of the terms and conditions and the security of all of the security interests and liens granted by Borrower or any other person to Lender pursuant to the Loan Agreement, all collateral security agreements executed and/or delivered by Borrower, and all of the other Loan Documents including, without limitation, supplemental provisions regarding mandatory and/or optional prepayment rights and premiums. This Note amends and restates in its entirety, and is given in replacement of and in substitution for, but not in repayment of, the Amended and Restated Revolving Credit Note dated as of September 22, 2014 executed and delivered by Borrower to Lender.
The entire unpaid Obligations and Indebtedness evidenced by this Note shall become immediately due and payable, without further notice to or demand of Borrower upon the happening of any Event of Default. After an Event of Default, Lender shall have all of the rights and remedies available to Lender as set forth in the Loan Documents, including but not limited to those relating to the enforcement of this Note and the collection of the Obligations owing in connection with this Note and the Revolving Credit.
The agreements, covenants, Indebtedness, liabilities and Obligations of Borrower set forth in this Note shall continue to be effective, or be reinstated, as the case may be, if at any time any payment in respect of the Revolving Credit is rescinded or must otherwise be restored or returned by Lender by reason of any bankruptcy, reorganization, arrangement, composition or similar proceeding or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, Borrower or any other Person, or any Property of Borrower or any other Person, or otherwise, all as though such payment had not been made.
Whenever any payment to be made under this Note shall be stated to be due on a day other than a Banking Day, such payment shall be made on the next succeeding Banking Day and such extension of time shall be included in the computation of any interest then due and payable hereunder.
The undersigned and all other parties who, at any time, may be liable hereon in any capacity waive presentment, demand for payment, protest and notice of dishonor of this Note. This Note and any provision hereof may not be waived, modified, amended or discharged orally, but only by an agreement in writing which is signed by the holder and the party or parties against whom enforcement of any waiver, change, modification, amendment or discharge is sought.
The agreements, covenants, Indebtedness, liabilities and Obligations of Borrower under this Note are joint and several obligations of each of the undersigned. Each of undersigned expressly represents that it is part of a common enterprise and that any financial accommodations by Lender under this Note and under the other Loan Documents are and will be of direct and indirect interest, benefit and advantage to the undersigned.
This Note shall be governed by and construed in accordance with the internal laws of the State of New York, as the same may from time to time be in effect, without regard to principles of conflicts of laws thereof. This Note shall be binding upon Borrower, its successors and assigns, and shall inure to the benefit of Lender, its successors and assigns. Lender shall have the right, without the necessity of any further consent of or other action by Borrower, to sell, assign, securitize or grant participations in all or a portion of Lenders interest in this Note to other financial institutions of Lenders choice and on such terms as are acceptable to Lender in Lenders sole discretion. Borrower shall not assign, exchange or otherwise hypothecate any Obligations under this Note or any other rights, liabilities or obligations of Borrower in connection with this Note, in whole or in part, without the prior written consent of the Lender, and any attempted assignment, exchange or hypothecation without such written consent shall be void and be of no effect.
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IN WITNESS WHEREOF, the undersigned has executed this Note on the day and year first above written.
CASTLE BRANDS INC.
By:
/s/ Alfred J. Small
Name: Alfred J. Small
Title: CFO
STATE OF New York )
) SS.:
COUNTY OF New York )
On the 7 day of August in the year 2015, before me, the undersigned, a notary public in and for said state, personally appeared Alfred J. Small, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her capacity, and that by his/her signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.
/s/ Donna M. Hibbert
Notary Public
CASTLE BRANDS (USA) CORP. | ||||||||
By:
/s/ Alfred J. Small
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STATE OF | New York | ) |
Name: Alfred J. Small
Title: CFO |
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) SS.: |
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COUNTY OF | New York | ) |
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On the 7 day of August in the year 2015, before me, the undersigned, a notary public in and for said state, personally appeared Alfred J. Small, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her capacity, and that by his/her signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.
/s/ Donna M. Hibbert
Notary Public
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REAFFIRMATION AGREEMENT
THIS REAFFIRMATION AGREEMENT (this Agreement ) is made as of August 7, 2015, by the undersigned in favor of ACF FINCO I LP ( Lender ).
RECITALS:
Lender, CASTLE BRANDS INC ., a corporation organized under the laws of the State of Florida ( CBI ), and CASTLE BRANDS (USA) CORP ., a corporation organized under the laws of the State of Delaware ( CBUSA ) (individually and collectively, Borrower ), are parties to an Amended and Restated Loan and Security Agreement dated as of September 22, 2014 (the Credit Agreement ), in connection with which Borrower delivered an Amended and Restated Revolving Credit Note dated September 22, 2014 in a maximum principal amount of $12,000,000 (the Revolving Credit Note ), an Amended and Restated Term Note dated September 22, 2014 in the original principal amount of $4,000,000 (the 2014 Term Note ), an Amended and Restated Participation Agreement dated August 7, 2013 between Lender and the parties executing the same as Participants (the Term Loan Participation Agreement ), a Subordination Agreement dated August 7, 2013, as amended by a First Amendment effective as of October 21, 2013 between Lender and the parties executing the same as Junior Creditors thereto (as so amended, the Subordination Agreement ), and other agreements, documents and instruments in connection therewith.
The Credit Agreement, the Revolving Credit Note, the Term Note, the Term Note Participation Agreement, the Subordination Agreement, and all other agreements, documents and instruments executed and/or delivered in connection therewith, as the same may be amended, restated, or otherwise modified from time to time, shall be collectively referred to as the Loan Documents .
The 2014 Term Note has been repaid in full and Borrower has requested that Lender formally waive Borrowers obligation to pay liquidated damages in connection with the repayment of the 2014 Term Note, increase the maximum principal amount of the Revolving Credit Note by an amount equal to $7,000,000 and provide Borrower a sublimit under the Revolving Credit to permit Borrower to acquire certain inventory (the Purchased Inventory Sublimit ). Borrower has also indicated that certain Persons desire to participate in the Purchased Inventory Sublimit pursuant to a participation agreement (the 2015 Participation Agreement ).
Lender has agreed to the above and in connection therewith Borrower is executing and/or delivering to Lender a First Amendment to the Credit Agreement, an Amended and Restated Revolving Credit Note, the 2015 Participation Agreement and other agreements, documents and instruments in connection therewith (collectively, the 1st Amendment Documents ).
Each of the undersigned indicated as a Validity Party has executed and delivered a Validity and Support Agreement dated on or about August 19, 2011 in favor of Lender (each, a Validity Agreement ) pursuant to which such Validity Party has agreed to validate certain information provided by Borrower to Lender and provide support in connection with Lenders efforts to collect collateral to secure Borrowers payment and performance of all obligations and to Lender and such other matters as described in such Validity Agreement.
Each of the undersigned indicated as a
Junior Creditor
has executed and delivered to Lender the
Subordination Agreement pursuant to which such Junior Creditor has agreed to subordinate its rights
to payment of indebtedness due from Borrower to the indebtedness of Borrower to Lender, and such
other matters upon such terms and conditions contained in the Subordination Agreement.
MCLAIN & KYNE, LTD.
, a corporation organized under the laws of the State of Kentucky (the
TM
Assignor
), has executed and delivered to Lender a Trademark Assignment and Security Agreement
dated September 22, 2014 (
McLain TM Assignment Agreement
) pursuant to which the TM Assignor
assigned to Lender, and granted Lender security interests in, certain trademarks and other
intellectual property as described in the McLain TM Assignment Agreement.
Upon the terms and conditions contained in the 1 st Amendment Documents Lender has agreed to enter into the transactions contemplated by the 1 st Amendment Documents, subject to and conditioned on the execution and delivery of this Agreement by the undersigned to Lender.
AGREEMENT:
1. Notwithstanding the occurrence of any of the events described in the recitals hereto or anything to the contrary contained in any of the 1 st Amendment Documents or the other Loan Documents (a) Borrower hereby reaffirms to Lender and ratifies its obligations under the Credit Agreement, and the other Loan Documents (collectively, the Lender Obligations ), including, specifically, the 1 st Amendment Documents, and each other agreement, document and instrument executed and/or delivered by the Borrower in connection therewith as the same may have been amended, modified and/or restated from time to time and including the amendment, modification or restatement thereof in connection with the matters described in the recitals hereto (collectively, the Borrower Documents ), and (b) further ratifies and confirms that each of the Borrower Documents shall remain in full force and effect, other than the 2014 Term Note.
2. Notwithstanding the occurrence of any of the events described in the recitals hereto or anything to the contrary contained in such partys Validity Agreement, each Validity Party hereby (a) reaffirms to Lender and ratifies its obligations under such Validity Agreement, and each other agreement, document and instrument executed and/or delivered by such Validity Party in connection therewith, as the same may have been amended, modified and/or restated from time to time (collectively, the Validity Documents ), and (b) further ratifies and confirms that each of the Validity Documents executed and/or delivered to Lender shall remain in full force and effect.
3. Notwithstanding the occurrence of any of the events described in the recitals hereto or anything to the contrary contained in the Subordination Agreement, each Junior Creditor hereby (a) reaffirms to Lender and ratifies its obligations under the Subordination Agreement, and each other agreement, document and instrument executed and/or delivered by such Junior Creditor in connection therewith, as the same may have been amended, modified and/or restated from time to time (collectively, the Subordination Documents ), and (b) further ratifies and confirms that each of the Subordination Documents executed and/or delivered to Lender shall remain in full force and effect.
4. Notwithstanding the occurrence of any of the events described in the recitals hereto or anything to the contrary contained in the McLain TM Assignment Agreement, TM Assignor hereby (a) reaffirms to Lender and ratifies its obligations under the McLain TM Assignment Agreement, and each other agreement, document and instrument executed and/or delivered by TM Assignor in connection therewith, as the same may have been amended, modified and/or restated from time to time (collectively, the TM Assignment Documents ), and (b) further ratifies and confirms that each of the TM Assignment Documents executed and/or delivered to Lender shall remain in full force and effect.
5. No change, amendment or modification of this Agreement shall be valid or binding unless such change, amendment or modification shall be in writing and duly executed by all parties hereto and consented to by the Lender in writing.
6. This Agreement shall be governed by and interpreted and construed in accordance with the internal laws of the State of New York, without regard to its principles of conflicts of laws, and any dispute hereunder shall be brought in the appropriate court located in Westchester County, New York or Erie County, New York.
7. This Agreement may not be assigned by any party hereto without the prior written consent of the other parties hereto and the Lender, and no party hereto shall be relieved of its duties, obligations or liabilities under this Agreement without the express written consent of the other parties hereto and the Lender, regardless of assignments, delegations or other agreements with third parties which may provide otherwise.
8. This Agreement shall be binding upon the parties hereto, their successors, permitted assigns, heirs and legal representatives.
9. The invalidity of one or more phrases, sentences, clauses or paragraphs contained in this Agreement shall not affect the validity of the remainder of this Agreement.
10. This Agreement contains the entire understanding of the parties and the Lender with respect to the subject matter hereof and there are no other oral understandings, terms or conditions except as expressly stated herein and none of the parties have relied upon any representation, express or implied, not contained in this Agreement.
11. This Agreement may be executed in two (2) or more counterparts, each of which shall be considered an original, and all of which shall be considered one and the same instrument.
IN WITNESS WHEREOF , the undersigned have duly executed this Agreement as of the date first written above.
BORROWER:
CASTLE BRANDS INC.
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CASTLE BRANDS (USA) CORP. | |
By: /s/ Alfred J. Small
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By: /s/ Alfred J. Small | |
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Name: Alfred J. Small
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Name: Alfred J. Small | |
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Its: CFO
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Its:CFO | |
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VALIDITY PARTIES:
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/s/ Alfred Small
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/s/ John Glover | |
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ALFRED SMALL
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JOHN GLOVER | |
/s/ Michael Becker
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/s/ T. Kelley Spillane | |
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MICHAEL BECKER
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T. KELLEY SPILLANE |
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JUNIOR CREDITORS
:
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FROST GAMMA INVESTMENTS TRUST
|
VECTOR GROUP LTD | |
By: /s/ Phillip Frost, M.D.
|
By: /s/ Marc Bell | |
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Name: Phillip Frost, M.D.
|
Name: Marc Bell | |
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Its: Trustee
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Its: VP | |
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JACQUELINE SIMKIN REVOCABLE TRUST
AS AMENDED AND RESTATED 12/16/2003 |
IVC INVESTMENTS, LLLP |
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By: /s/ Jacqueline Simkin
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By: /s/ Glenn L. Halpryn | |
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Name: Jacqueline Simkin
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Name: Glenn L. Halpryn | |
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Its: Trustee
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Its: President | |
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/s/ Susan M. Lampen
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/s/ Mark E. Andrews, III | |
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SUSAN M. LAMPEN
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MARK E. ANDREWS, III | |
/s/ Subbarao Uppaluri
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/s/ David Farina | |
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SUBBARAO UPPALURI
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DAVID FARINA | |
/s/ Tibor Hollo
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/s/ Elliott Harris | |
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TIBOR HOLLO
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ELLIOTT HARRIS | |
/s/ Fred Johnson
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/s/ Dennis Scholl | |
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FRED JOHNSON
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DENNIS SCHOLL |
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