Exhibit 10.4
EXECUTION COPY
SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT dated as of February 18, 2005 by and between
Castle Brands Inc., a Delaware corporation (the "Investor") and Gosling Partners
Inc., a Delaware corporation ("Company").
WHEREAS, the Company desires to issue shares of its common stock and
Investor wishes to purchase said shares of common stock.
It is therefore agreed as follows:
1. Acquisition of Shares. The Company hereby conveys to the Investor and
the Investor hereby receives from Company 600,000 shares of common stock, $0.01
par value per share (the "Common Stock") of Company (the "Shares"). The
aggregate consideration for the Shares is $5,000,000 (approximately $8.33 per
share), receipt of which is hereby acknowledged by Company in cash and a
promissory note issued by the Investor in favor of the Company with interest to
accrue on the unpaid principal amount at a rate equal to four percent (4.0%) per
annum (the "Promissory Note"), as more specifically set forth on Schedule I.
Simultaneously herewith, and as a condition hereof, the Investor is entering
into a Stockholders Agreement, dated as of the date hereof, with the existing
stockholders of the Company and the Investor is delivering to Company the
Promissory Note.
2. Representations and Warranties of the Investor
The Investor represents and warrants to Company as follows:
(a) The Investor is purchasing the Shares for investment, and has not
previously solicited the transfer, resale or disposal of the Shares and
presently does not have a view to, or the purpose of, engaging in a distribution
thereof or of any interest therein in any transaction that would be in violation
of the securities laws of the United States or any state thereof.
(b) The Investor understands that the Shares have not been registered
under the Securities Act of 1933, as amended (the "Act") and will be "restricted
securities" within the meaning of the regulations under the Act, and by reason
of the foregoing the Shares may not be resold in the absence of an effective
registration statement under, or applicable exemption from, the Act, and that a
restrictive legend will be affixed to the Shares upon issuance to the Investor,
as detailed in the Stockholders Agreement.
(c) The Investor understands that there are substantial restrictions
on the transferability of the Shares, including without limitation those
referred to in Section 2(b) hereof and those contained in the Stockholders
Agreement and in this Agreement. Accordingly, the Investor may have to hold the
Shares indefinitely and it may not be possible for the Investor to liquidate its
investment in the Shares.
(d) The Investor has had an opportunity to ask questions and receive
answers concerning Company or the terms and conditions of the offering and to
obtain any additional relevant information to the extent the Company possessed
such information or was able to obtain
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it without unreasonable effort or expense. The Investor is knowledgeable,
sophisticated and experienced in business and financial matters and with respect
to securities similar to the Shares, and is capable of evaluating the merits and
risks of purchasing the Shares. The Investor is able to bear the economic risk
of its investment in the Shares and is able to afford the complete loss of such
investment. The Investor has relied solely on the representations and warranties
contained herein and Investor's own knowledge about the Company in making
Investor's decision to acquire the Shares. If the box relating to "Accredited
Investor" status on Schedule I has been checked, the "Investor" is an
"Accredited Investor" within the meaning of Rule 501(a) of Regulation D under
the Act.
3. Representations and Warranties of Company
Company represents and warrants to the Investor as follows:
(a) Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware; and has
all requisite corporate power and authority to carry on its business as
presently conducted and proposed to be conducted.
(b) Company has all requisite corporate power and authority to enter
into, deliver and perform its obligations under this Agreement. This Agreement
has been duly authorized, executed and delivered by Company, and all legally
required corporate proceedings by Company in connection with the execution and
delivery thereof have been taken.
(c) The authorized capital stock of Company consists of 1,000,000
shares of Common Stock of which 1,000,000 shares will be issued and outstanding
after giving effect to the transactions contemplated by this Agreement and
otherwise to occur on the date hereof. Except as disclosed on Schedule II (and
any agreements related thereto, as the same may be amended from time to time),
there are no outstanding subscriptions, options, rights, warrants, convertible
securities or other agreements, or calls, demands or commitments of any kind
relating to the issuance, sale or transfer of any capital stock or other equity
securities of Company, whether directly or upon exercise or conversion of other
securities or pursuant to the terms and conditions of any instrument evidencing
indebtedness of Company. The Shares, when issued and delivered to the Investor,
will be duly authorized, validly issued, fully paid and nonassessable and the
issuance of the Shares will not be subject to any preemptive or similar rights.
(d) The execution, delivery and performance by Company of this
Agreement, including the issuance and delivery of the Shares to the Investor,
will not (i) require Company to obtain any consent, approval, authorization or
other order of, or to make any filing, registration or qualification with any
court, regulatory body, administrative agency or other governmental body (except
such as may have previously been obtained, filed or made or are permitted to be,
and will be, filed or made promptly following the date hereof), or (ii) conflict
with or constitute a violation of any provision of the certificate of
incorporation or bylaws of Company, or (iii) breach, constitute a default under,
or result in the imposition of a lien or encumbrance on any material properties
of Company pursuant to any bond, debenture, note or other evidence of
indebtedness of Company or any indenture or other material agreement to which it
is a party or by which it is bound or to which any material property of Company
may be subject; provided that the representations in clause (i) of this
paragraph are made in reliance upon the representations and warranties of the
Investor in Section 2 of this Agreement.
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(e) The Company has entered into an Export Agreement, dated as of
February 14, 2005, between the Company and Gosling's Export (Bermuda) Limited.
4. Name Change
Upon the execution of this Agreement, the Company hereby agrees to
change its name to "Gosling - Castle Partners Inc." and execute and file or
cause to be filed the necessary certificate with the Secretary of State of the
State of Delaware to effectuate such name change.
5. Notices
All notices and other communications provided for or permitted
hereunder shall be in writing and shall be deemed to have been duly given (w)
when delivered if delivered personally, (x) when sent if sent by telecopy, with
a confirmation promptly sent by way of one of the methods permitted in this
Section or by U.S. mail, postage prepaid, (y) the day after deposit with an
overnight courier service marked for overnight delivery, or if deposited with an
overnight courier service marked for non-overnight delivery, the number of days
after delivery as specified to such courier service or (z) five days after
mailing if sent by registered or certified mail (return receipt requested)
postage prepaid, in each case to the parties at the following addresses and/or
telecopier numbers (or such other address or telecopier number for any party as
shall be specified by like notice, provided that notices of a change of address
shall be effective only upon receipt thereof).
If to Company:
Gosling Partners Inc.
c/o E. Xxxxxxx X. Xxxxxxx
00 Xxx Xxxxxx
Xxxxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: President and Chief Executive Officer
If to the Investor:
Castle Brands Inc.
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxxx Xxxxxxx - Chairman and Chief Executive Officer
6. Choice of Law
This Agreement shall be governed by the laws of the State of Delaware
applicable to agreements made and to be performed therein.
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7. Transfer and Assignment
This Agreement shall be binding upon and inure to the benefit of each
Investor and Company and their respective permitted successors and assigns
(subject to the restrictions in the Stockholders Agreement).
8. Arbitration
In the event any disagreement or dispute among the parties arises
under or out of this Agreement, including termination issues, such disagreement
or dispute shall be submitted to Judicial Mediation Services, Inc., a
professional arbitration service consisting of retired Federal and State judges
("JAMS") for binding arbitration unless the parties mutually agree upon an
alternative dispute resolution service. The arbitration shall be conducted in
accordance with the rules of JAMS or such other dispute resolution service as
might be agreed upon and shall be held in New York, New York. Any award made by
JAMS or such other dispute resolution service as might be agreed upon shall be
binding upon the parties. Binding arbitration shall be the exclusive remedy for
breach of this Agreement by any party. The parties shall share equally all costs
of arbitration other than representation by counsel which shall be at each
party's own expense.
9. Miscellaneous
This Agreement is a complete statement of the agreement between the
parties with respect to the matters provided for and there are no agreements,
promises, warranties, covenants or undertakings other than as expressly set
forth in this Agreement. This Agreement supersedes any previous agreements and
understandings between the parties with respect to the matters provided for and
cannot be changed or terminated except in writing signed by both parties. The
headings in this Agreement are for convenience of reference only and shall not
affect the meaning of any provision of this Agreement.
10. Counterparts; Facsimile Signature
This Agreement may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same instrument. This Agreement may be
executed via facsimile transmission, and any executed facsimile copy or
counterpart shall be treated as an original.
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IN WITNESS WHEREOF, each of Company and the Investor has caused this
Agreement to be executed on its behalf by officers thereunto duly authorized, as
of the day and year first above written.
GOSLING PARTNERS INC.
By: /s/ E. Xxxxxxx X. Xxxxxxx
------------------------------------
Name: E. Xxxxxxx X. Xxxxxxx
Title: President and Chief Executive
Officer
CASTLE BRANDS INC.
By: /s/ Xxxx Xxxxxxx
------------------------------------
Name: Xxxx Xxxxxxx
Title: Chairman and Chief Executive
Officer
SCHEDULE I
Date: February 18, 2005
Investor Name & Address: Castle Brands Inc.
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Common Stock:
Number of Shares: 600,000
Total Purchase Price: $5,000,000.00
Portion of Purchase Price Paid in Cash: $100,000.00
Portion of Purchase Price Payable via Promissory Note: $4,900,000.00
- An installment in the amount of $1,025,000 due April 1,
2005;
- An installment in the amount of $1,125,000 due October 1,
2005;
- An installment in the amount of $1,000,000 due April 1, 2006
- An installment in the amount of $1,000,000 due October 1,
2006; and
- An installment in the amount of $750,000 due April 1, 2007.
- Accrued interest to be paid at each installment beginning on
October 1, 2005.
[ ] Check here if the Investor is an "Accredited Investor" within the meaning of
Rule 501(a) of Regulation D under the Act.
SCHEDULE II
None.
