CASTLE BRANDS INC. CREDIT AGREEMENT October 22, 2007
Exhibit
10.74
October
22, 2007
This
Credit Agreement (this "Agreement")
is made
as of the 22nd day of October, 2007 by and among Castle Brands Inc., a Delaware
corporation (the "Company")
and the
Frost Nevada Investments Trust, a Nevada business trust (the "Lender").
RECITAL
The
Company desires to borrow from the Lender, and the Lender desires to loan to
the
Company up to an aggregate principal amount of $5,000,000 (the "Commitment"),
pursuant to the terms set forth in this Agreement.
AGREEMENT
In
consideration of the mutual promises contained herein and other good and
valuable consideration, receipt of which is hereby acknowledged, the parties
to
this Agreement agree as follows:
1. Definitions.
As
used
in this Agreement, the following capitalized terms have the following
meanings:
"Advance"
means
the amount of US Dollars advanced pursuant to this Agreement and as evidenced
by
the Note.
"Affiliate"
means,
with respect to any Person, a Person that owns or controls directly or
indirectly such Person, any Person that controls or is controlled by or is
under
common control with such Person, and each of that Person's senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person's managers and members;
"Agreement"
means
this Credit Agreement, as amended from time to time;
"Business
Day"
means
any
day
other than a day on which commercial banks in New York are required or permitted
by law to be closed;
"Closing"
means
the closing of the issuance of the Note;
"Common
Stock"
means
the
shares of common stock, $.01 par value, per share, of the Company;
"Company"
has the
meaning set forth in the introductory paragraph above;
"Event
of Default"
has the
meaning set forth in Section 7
below;
“Exchange
Act”
has
the
meaning set forth in Section
3.5
below;
"Material
Adverse Effect"
means a
change or effect that is materially adverse to the financial condition, assets,
or operations of the Company, or will prevent the transactions contemplated
by
this Agreement;
"Maturity
Date"
shall
have the meaning set forth in the Note;
"Note"
means
the promissory note issued pursuant to this Agreement at the Closing, in
substantially the form attached to this Agreement as Exhibit A;
"Person" shall
mean and include any individual, partnership, corporation (including a business
trust), joint stock company, limited liability company, unincorporated
association, joint venture, governmental entity or other entity;
"Lender"
has the
meaning set forth in the introductory paragraph above; and
"Securities
Act"
means
the Securities Act of 1933, as amended;
“SEC”
has
the
meaning set forth in Section
3.5
below;
and
“SEC
Documents”
has
the
meaning set forth in Section 3.5 below.
2. Amount
and Terms of Credit
2.1 Closing
and Advances.(a)
Subject
to the terms and conditions of this Agreement and the Note, the Lender agrees
to
make advances (the “Advance(s)”)
to the
Company, from time to time from the date of this Agreement until the Maturity
Date (as such terms are defined in the Note), at such times as the Company
may
request in writing. Each Advance, up to the Commitment, shall be in increments
of $1,000,000. Each Advance to the Company shall be made on ten days prior
written notice by the Company to the Lender at its address as set forth on
the
signature page herein. Subject to the terms and conditions of this Agreement
and
the Note, the Lender agrees to make any requested Advance to the Company on
the
date specified in the Advance Notice.
(b) The
Company shall execute and deliver to the Lender the Note to evidence the
Commitment and the Advances, dated the date hereof, and substantially in the
form of Exhibit
A
hereto
(the “Note”).
The
Note shall represent the obligation of the Company to pay the amount of the
Commitment or, if less, the aggregate unpaid principal amount of all Advances
made by the Lender to the Company. The date and amount of each Advance and
any
payment of principal with respect thereto shall be recorded by the Company
on
its books and records, and by the Lender on the grid portion of the
Note.
(c) At
the
Closing, the Lender shall deliver to the Company a validly executed IRS Form
W-9
or, if applicable, Form W-8 BEN.
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(d) At
the
Closing, the Company shall pay the Lender a facility fee of US $175,000. Upon
receipt by the Company of its first Advance under this Credit Agreement, the
Company shall promptly pay the Lender an additional facility fee of US
$200,000.
3. Representations
and Warranties of the Company.
The
Company hereby represents and warrants to the Lender that:
3.1 Organization,
Good Standing and Qualification.
The
Company is a corporation duly organized, validly existing and 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 or proposed to
be
conducted. The Company or its representatives are duly qualified to transact
business and is in good standing in each jurisdiction in which the failure
so to
qualify would have a Material Adverse Effect.
3.2 Authorization.
All
corporate actions on the part of the Company, its officers, directors and
holders of Equity Securities necessary for (i) the authorization, execution
and
delivery of this Agreement and the Note, (ii) the performance of all obligations
of the Company under this Agreement and the Note and (iii) the authorization,
issuance and delivery of the Note have been taken or will be taken prior to
the
Closing, and this Agreement and the Note, when executed and delivered by the
Company, shall constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their respective terms except
(i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance, or other laws of general application relating
to or affecting the enforcement of creditors' rights generally, or (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies.
3.3 Compliance
with Other Instruments;
No Events of Default.
The
Company is not in violation or default of any provisions of its Certificate
of
Incorporation, as amended, or Bylaws, as amended, or of any instrument,
judgment, order, writ, or decree, or under any note, indenture, mortgage, lease,
agreement, contract or purchase order to which it is a party or by which it
is
bound or of any provision of state or federal statute, rule or regulation
applicable to the Company, the violation of which would have a Material Adverse
Effect. The execution, delivery and performance of this Agreement, the issuance
of the Note and the consummation of the transactions contemplated hereby or
thereby will not result in any such violation or be in conflict with or
constitute, with or without the passage of time and giving of notice, either
a
default under any such provision, instrument, judgment, order, writ, decree
or
contract or an event which results in the creation of any lien, charge or
encumbrance upon any assets of the Company in either case which would have
a
Material Adverse Effect. No Event of Default shall have occurred or occur as
a
result of the Company's execution of this Agreement or the Note.
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3.4 Disclosure.
The
Company has made available to the Lender such information as the Lender has
requested for deciding whether to acquire the Note.
3.5 Financial
Statements.
Since
the
date of the initial public offering of its common stock, the Company has filed
all reports required to be filed by it under the Securities Exchange Act of
1934, as amended (the “Exchange
Act”),
including pursuant to Section 13(a) or 15(d) thereof (the foregoing materials,
together with the Company's registration statement on Form S-1, Registration
No.
333-128676 (together with all amendments thereto), being collectively referred
to herein as the “SEC
Documents”))
and
has filed any such SEC Documents in a timely fashion. As of their respective
dates, the SEC Documents complied in all material respects with the requirements
of the Securities Act and the Exchange Act and the rules and regulations of
the
United States Securities and Exchange Commission (the “SEC”)
promulgated thereunder, and none of the SEC Documents, when filed, contained
any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein,
in
light of the circumstances under which they were made, not misleading. All
material agreements to which the Company is a party or to which the property
or
assets of the Company are subject have been appropriately filed as exhibits
to
the SEC Documents as and to the extent required under the Exchange Act. The
financial statements of the Company included in the SEC Documents comply in
all
material respects with applicable accounting requirements and the rules and
regulations of the SEC with respect thereto as in effect at the time of filing,
were prepared in accordance with GAAP applied on a consistent basis during
the
periods involved (except as may be indicated in the notes thereto, or, in the
case of unaudited statements as permitted by Form 10-Q of the SEC), and fairly
present in all material respects (subject in the case of unaudited statements,
to normal, recurring audit adjustments) the financial position of the Company
as
of the dates thereof and the results of its operations and cash flows for the
periods then ended. The Common Stock is traded on the American Stock
Exchange.
4. Representations
and Warranties of the Lender.
The
Lender hereby represents and warrants to the Company that:
4.1 Authorization.
The
Lender has full power and authority to enter into this Agreement. This
Agreement, when executed and delivered by the Lender, will constitute a valid
and legally binding obligation of the Lender, enforceable in accordance with
its
terms, except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance, and any other laws of general application
affecting enforcement of creditors' rights generally, and as limited by laws
relating to the availability of a specific performance, injunctive relief,
or
other equitable remedies.
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4.2 Purchase
Entirely for Own Account.
This
Agreement is made with the Lender in reliance upon the Lender's representation
to the Company, which by the Lender's execution of this Agreement, the Lender
hereby confirms, that the Note to be acquired by the Lender will be acquired
for
investment for the Lender's own account, not as a nominee or agent, and not
with
a view to the resale or distribution of any part thereof, and that the Lender
has no present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, the Lender further
represents that the Lender does not presently have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of
the
Note. The Lender has not been formed for the specific purpose of acquiring
the
Note.
4.3 Knowledge.
The
Lender is aware of the Company's business affairs and financial condition and
has acquired sufficient information about the Company to reach an informed
and
knowledgeable decision to acquire the Note.
4.4 Restricted
Securities.
The
Lender understands that the Note has not been, and will not be, registered
under
the Securities Act, by reason of a specific exemption from the registration
provisions of the Securities Act which depends upon, among other things, the
bona fide nature of the investment intent and the accuracy of the Lender's
representations as expressed herein. The Lender understands that the Note is
"restricted security" under applicable U.S. federal and state securities laws
and that, pursuant to these laws, the Lender must hold the Note
indefinitely unless it is registered with the Securities and Exchange Commission
and qualified by state authorities or an exemption from such registration and
qualification requirements is available. The Lender acknowledges that the
Company has no obligation to register or qualify the Note for resale. The Lender
further acknowledges that if an exemption from registration or qualification
is
available, it may be conditioned on various requirements including, but not
limited to, the time and manner of sale, the holding period for the Note, and
on
requirements relating to the Company which are outside of the Lender's control,
and which the Company is under no obligation and may not be able to
satisfy.
4.5 No
Public Market.
The
Lender understands that, except for the Common Stock, no public market now
exists for any of the securities issued by the Company and the Company has
made
no assurances that a public market will ever exist for any of the Company's
securities.
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4.6 Accredited
Investor.
The
Lender is an accredited investor as defined in paragraphs (a)(1), (a)(2),
(a)(3), (a)(7) or (a)(8) of Rule 501(a) of Regulation D promulgated under
the Securities Act and is a business trust having a net asset value of at least
$5,000,000 and was not formed to invest in the Company.
5. Conditions
to the Lender's Obligations to make any Advance.
The
obligation of the Lender to make an Advance under the Note is subject to the
fulfillment of each of the following conditions, unless otherwise waived by
the
Lender:
5.1 Representations
and Warranties.
The
representations and warranties of the Company contained in Section 3
shall be
true on and as of each applicable Advance with the same effect as though such
representations and warranties had been made on and as of the date of such
Advance;
5.2 Compliance
with Agreements.
The
Company shall have performed under and complied in all material respects with
each agreement, covenant and obligation required by this Agreement to be so
performed by or complied with by the Company on or before any
Advance;
5.3 Consents.
The
obtaining of all third party consents, approvals and waivers required for the
Company to consummate the transactions contemplated by this
Agreement;
5.4 Compliance
with Laws.
Compliance
by the Company with all applicable federal and state securities laws with
respect to the issuance of the Note.
6. Affirmative
Covenants of the Company.
The
Company will do all of the following for so long as the Note is
outstanding:
6.1 Taxes.
Make
timely payment of all material federal, state, and local taxes or assessments
other than any taxes or assessments that the Company is contesting in good
faith
and deliver to the Lenders, on demand, appropriate certificates attesting to
such payment.
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6.2 Corporate
Existence and Compliance with Laws.
Maintain
its and its operating subsidiaries corporate existence and good standing under
the laws of their state of incorporation and remain in good standing in each
jurisdiction in which the failure to do so would have a Material Adverse
Effect.
7. Events
of Default.
Any
one
of the following is an "Event
of Default":
7.1 Payment
Default.
If
the
Company fails to pay (i) any of the principal amount of and accrued interest
on
the Note on the Maturity Date of the Note or (ii) any fees or interest related
to the Note when due, and such failure to pay such fees or interest remains
unremedied after the Company has received ten (10) Business Days prior written
notice.
7.2 Covenant
Default.
If
the
Company fails to perform any obligation under Section 6
and as
to any default that can be cured, has failed to cure such default within thirty
(30) days after the occurrence thereof; provided, however, that if the default
cannot by its nature be cured within the thirty (30) day period or cannot after
diligent attempts by the Company be cured within such thirty (30) day period,
and such default is likely to be cured within a reasonable time, then the
Company shall have an additional reasonable period (which shall not in any
case
exceed sixty (60) additional days) to attempt to cure such default, and within
such reasonable time period the failure to have cured such default shall not
be
deemed an Event of Default;
7.3 Insolvency.
If
the
Company becomes insolvent or if the Company begins an insolvency proceeding
or
an insolvency proceeding is begun against the Company and not dismissed or
stayed within ninety (90) days;
8. Miscellaneous.
8.1 Successors
and Assigns.
Subject
to the limitations set forth herein, the Lender may assign this Agreement and
the rights and obligations conferred hereby, in whole or in part, only to
eligible financial institutions and only upon the written consent of the
Company. Any assignment made in violation of this Section
8.1
is null
and void. The terms and conditions of this Agreement shall be binding upon
and
inure to the benefit of and be binding upon the respective successors and
assigns of the parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations,
or liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement.
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8.2 Governing
Law.
This
Agreement and all acts and transactions pursuant hereto and the rights and
obligations of the parties hereto shall be governed, construed and interpreted
in accordance with the laws of the State of New York, without giving effect
to
principles of conflicts of law.
8.3 Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original and all of which together shall constitute one
instrument.
8.4 Titles
and Subtitles.
The
titles and subtitles used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this
Agreement.
8.5 Notices.
Any
notice required or permitted by this Agreement shall be in writing and shall
be
deemed sufficient upon receipt, when delivered personally or by courier,
overnight delivery service or confirmed facsimile, or 48 hours after being
deposited in the U.S. mail as certified or registered mail with postage prepaid,
if such notice is addressed to the party to be notified at such party's address
or facsimile number as set forth below or as subsequently modified by written
notice.
8.6 Amendments
and Waivers.
Any
term
of this Agreement may be amended or waived only with the written consent of
the
Company and the holder of the Note.
8.7 Severability.
If
one or
more provisions of this Agreement are held to be unenforceable under applicable
law, the parties agree to renegotiate such provision in good faith, in order
to
maintain the economic position enjoyed by each party as close as possible to
that under the provision rendered unenforceable. In the event that the parties
cannot reach a mutually agreeable and enforceable replacement for such
provision, then (i) such provision shall be excluded from this Agreement,
(ii) the balance of the Agreement shall be interpreted as if such provision
were so excluded and (iii) the balance of the Agreement shall be
enforceable in accordance with its terms.
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8.8 Entire
Agreement.
This
Agreement, and the documents referred to herein constitute the entire agreement
between the parties hereto pertaining to the subject matter hereof, and any
and
all other written or oral agreements existing between the parties hereto are
expressly canceled.
8.9 Exculpation
By Lender.
The
Lender acknowledges that it is not relying upon any person, firm or corporation,
other than the Company and its officers and directors, in making its investment
or decision to invest in the Company.
[Signature
Pages Follow]
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The
parties have executed this Credit Agreement as of the date first written
above.
| COMPANY: | ||
| CASTLE BRANDS INC. | ||
| |
|
|
| By: | /s/ Xxxx Xxxxxxx | |
| Xxxx Xxxxxxx, Chairman & CEO | ||
| Address: |
29th
Floor
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
|
|
| Facsimile Number: (000) 000-0000 | ||
| LENDER: | ||
| FROST NEVADA INVESTMENTS TRUST | ||
| |
|
|
| By: | /s/ Xxxxxxx Xxxxx | |
| Name: | Xxxxxxx Xxxxx, M.D | |
| Title: | Trustee | |
| Address: |
0000
Xxxxxxxx Xxxx.
|
|
| Xxxxx 0000 | ||
| Xxxxx, Xxxxxxx 00000 | ||
| Facsimile Number: (000) 000-0000 | ||
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