Exhibit 10.49
16 December 2004
PRIVATE AND CONFIDENTIAL College Green Business Centre
------------------------ X.X. Xxx 000
The Directors 33 College Green
Castle Brands Spirits Company Limited Xxxxxx 0
0xx Xxxxx
Xxxxxxxx House Telephone: 00 0000000
Haddington Rd Facsimile: 01 7025235
Xxxxxx 0
xxx.xxxxxxxxxx.xxx
Dear Sirs,
Further to our recent discussions, I am pleased to advise the following
facilities have been approved for your Company. The agreement is between Ulster
Bank Ireland Limited ("UBIL") and Ulster Bank Ltd ("UB"), (together, the "bank")
and the Borrower specified below whereby the Bank agrees to make available to
the Borrower the following facility/ies on the terms and subject to the
conditions herein contained:
BORROWER: CASTLE BRANDS SPIRITS CO LTD. LENDER
-------- ----------------------------- ------
FACILITY A: OVERDRAFT UBIL
FACILITY B: LOAN UBIL
FACILITY C: C & E GUARANTEE UBIL
FACILITY D: FORWARD CURRENCY DEALING RISK FACILITY UBIL
BORROWER: THE ROARING WATER BAY SPIRITS COMPANY (GB) LTD
-------- ----------------------------------------------
FACILITY E: OVERDRAFT UBL
FACILITY F: LOAN UBL
FACILITY G: C & E GUARANTEE UBL
CASTLE BRANDS SPIRITS CO LTD
FACILITY A OVERDRAFT
---------- ---------
AMOUNT: EUR E400,000 (Four Hundred Thousand Euro)
NATURE & PURPOSE: Working capital.
INTEREST: Interest is payable on all Bank accounts at regular intervals to be
decided upon by the Bank. The present charging period is quarterly in
August, November, February and May at a rate subject to variation at
the discretion of the
2
Bank. The present rate applicable for this facility is the Bank's AA2
rate less .5%, currently 7.25% per annum variable.
REPAYMENT: This Facility is repayable on demand. However, in the absence of
demand this facility is available until the review date 14th December
2005. Renewal of overdraft status will be conditional upon the
current account showing regular fluctuations to credit during the
period of sanction subject to a minimum of 30 days in any 12-month
period. An account which operates in debit at or near the sanctioned
limit for the greater part of the year and then turns to credit for a
short period does not comply with Bank's concept of overdraft.
Accounts which exceed an agreed overdraft facility without prior
arrangement with the Bank incur surcharge interest of 0.75% per
month (minimum E1 per month on the excess).
FACILITY B LOAN
---------- ----
AMOUNT: EUR E190,000 (One Hundred and Ninety Thousand Euro).
NATURE & PURPOSE: Continuation of existing Loan account at reduced level, repayable on
demand
INTEREST: Interest is payable on all Bank accounts at regular intervals to be
decided upon by the Bank. The present charging period is quarterly in
August, November, February and May at a rate subject to variation at
the discretion of the Bank. The present rate applicable to this
facility is the Bank's Prime 5 rate, minus 0.125% equating to a rate
of 4.835% per annum variable as at today's date.
The under mentioned repayment includes an allowance for interest and
in the event of a large upward movement in the interest rate the Bank,
at its discretion will alter the repayments or alternatively make any
adjustment necessary at the end of the term.
REPAYMENT: In the absence of demand and assuming full drawdown, repayments will
continue at E6,377 per month for five years from original draw down in
September 2002.
You have the option of repaying the outstanding balance at any time
during the term of the loan. Also, this facility is subject to formal
review in line with the annual review of your overdraft facility.
3
FACILITY C CUSTOMS & EXCISE GUARANTEE
---------
AMOUNT: While the nominal amount of the Guarantee is for E35,000 it is
understood that the Banks risk is double this amount i.e., E70,000.
----
NATURE & PURPOSE: Continuation of existing Guarantee facility in respect of the
deferment of duties, taxes, levies and charges or any amounts due the
Revenue Commissioners.
REVIEW/EXPIRY: This facility may be withdrawn on the demand being made by the Bank
subject to 7 days written notice being given by the Bank to The
Revenue Commissioners.
FEE: A fee of 1% per annum on the nominal amount of the Guarantee is
applicable. This charge will continue to be debited to your account
in four quarterly tranches of E87.5 with the next payment falling due
28.02.05.
CLAIMS ON THE BANK: In the event of any claim being made by The Revenue Commissioners on
the Bank in respect of this Guarantee, Ulster Bank Ireland Ltd shall
debit your account the full amount of such a claim in accordance with
the counter indemnity held. There will be no obligation on the Bank
to verify the validity of such a claim.
FACILITY D FORWARD CURRENCY DEALING RISK FACILITY
----------
AMOUNT: The equivalent of E25,000 (Twenty five thousand Euro) on the basis
that the Bank assesses the risk on Forward Currency Dealing contracts
for administration purposes at 10% of the maximum permitted level of
outstanding contracts. On this basis your company will be in a
position to undertake Forward Currency Dealing Contracts subject to an
aggregate value of such contracts at any given time not exceeding the
equivalent of E250,000
AVAILABILITY: This facility is available at the discretion of the Bank and is
subject to annual review as outlined at General Condition No. 1
overleaf.
LOSSES: Any losses incurred by the Bank under Forward Currency Dealing
Contracts undertaken on your behalf will be charged to the company's
working account.
4
THE ROARING WATER BAY SPIRITS COMPANY (GB) LTD
----------------------------------------------
FACILITY E OVERDRAFT ON CURRENT ACCOUNT
----------
AMOUNT: Stg L20,000 (Twenty thousand pounds sterling)
NATURE/PURPOSE: Overdraft on current account to meet working capital requirements.
INTEREST: Interest accrues on the daily cleared debit balance at the Bank's base
rate + 2.25% per annum and is calculated on a 365-day basis. Interest
is compoundable and is payable at the Bank's normal interest rests now
quarterly in February, May, August and November at a rate subject to
variation at the discretion of the Bank.
In the event of any change in rate, the Bank may notify the Borrower
of the change by way of narrative in a statement relating to the
account.
REPAYMENTS: The facility, including any implied overdraft facility, is at the
pleasure of the Bank and the Bank may at any time demand repayment or
reduce or restrict the overdraft facility as it sees fit without prior
notice. It is a condition of agreement that the balance of the
account fluctuates regularly to credit, in the normal course of
trading and that such credit periods total a minimum of 30 days in
aggregate in any one-year period.
SUBCHARGES: Overdrafts must operate within the authorised limit. Unauthorised
borrowings or excesses on agreed facilities, which occur or continue
without formal arrangements carry an interest surcharge on the amount
of the excess and for the duration thereof. This excess will be
charged in addition to normal interest charges. The current interest
surcharge rate on such excesses is 1% per month (12% per annum) for
the period of such excesses, subject to a minimum charge of L1 per
month.
FACILITY F LOAN
---------- ----
AMOUNT: EUR E11,900 (Eleven thousand nine hundred pounds sterling)
5
NATURE & PURPOSE: Continuation of existing Loan account at reduced level, repayable on
demand
INTEREST: Interest is payable on all Bank accounts at regular intervals to be
decided upon by the Bank. The present charging period is quarterly in
August, November, February and May at a rate subject to variation at
the discretion of the Bank. The present rate applicable to this
facility is the Bank's Base rate, plus 2.25% equating to a rate of
7.15% per annum variable as at today's date.
The under mentioned repayment includes an allowance for interest and
in the event of a large upward movement in the interest rate the Bank,
at its discretion will alter the repayments or alternatively make any
adjustment necessary at the end of the term.
REPAYMENT: In the absence of demand and assuming full drawdown, repayments will
continue at L607.74 per month.
You have the option of repaying the outstanding balance at any time
during the term of the loan. Also, this facility is subject to formal
review in line with the annual review of your overdraft facility.
FACILITY G CUSTOMS & EXCISE GUARANTEE
----------
AMOUNT: While the nominal amount of the Guarantee is for L45,000 it is
understood that the Bank's risk is double this amount i.e., L90,000.
NATURE & PURPOSE: Continuation of existing Guarantee facility in respect of the
deferment of duties, taxes, levies and charges or any amounts due to
HM Customs & Excise.
REVIEW/EXPIRY: This facility may be withdrawn on the demand being made by the Bank
subject to 7 days written notice being given by the Bank to HM Customs
& Excise.
FEE: A fee of 1% per annum on the nominal amount of the Guarantee is
applicable. This charge will continue to be debited to your account
in four quarterly tranches of L112.50 with the next payment falling
due 28.02.05.
CLAIMS ON THE BANK: In the event of any claim being made by HM Customs & Excise on the
Bank in respect of this Guarantee, Ulster Bank Ireland Ltd shall debit
your account the full amount of such a claim in accordance with the
counter indemnity held. There will be no obligation on the Bank to
verify the validity of such a claim.
6
SECURITY
It is understood that the following securities will be held for all the
Company's liabilities to the Bank whether present or future, direct or
contingent.
HELD AT PRESENT
1. All Monies Debenture dated the 4th February 2000 giving a first Floating
Charge over the assets of the Company including all intellectual property
rights i.e., the brand name, patents etc. A Letter of Waiver over the
trade debtors dated the 31st October 2000 was issued to Ulster Bank
Commercial Services Ltd in respect of facilities maintained with them.
2. Deed of Postponement dated the 19th September 1999 over shareholders loans
in the amount of IEPL 200,000 (E253,947.61)**.
3. Joint Several Letter of Guarantee in the amount of IEP L125,000
(E158,717.25) signed by Xxxxx Xxxxxx and Xxxxxxx Xxxxxx (Company
Directors)**.
4. All Monies general counter indemnity dated the 29th January 2001 together
with supporting resolution from the Roaring Water Bay Spirits Company Ltd.
**AMENDMENT TO SECURITY
It is agreed that security lots 2 and 3 above will be released on completion of
the following replacement security:
2. A Composite inter company guarantee to be completed by the company's
ultimate parent company Castle Brands Inc., Castle Brands Spirits Co Ltd
and Roaring Water Bay Spirits Co (GB) Ltd in the sum of E860,000
3. A letter of Lien to be completed by Castle Brands Spirits Co Ltd in
respect of a separate account containing E300,000, which sum to be held
for the direct and contingent liabilities of Castle Brands Spirits Co Ltd.
INTELLECTUAL PROPERTY RIGHTS
In signing this facility letter the directors undertake on behalf of the company
that it will not charge its Irish intellectual property rights (e.g., brands
such as "Xxxx Vodka, Clontarf Whiskey, Old Head Gin, X'Xxxx'x Irish Cream
Liqueur, etc. or patents), to any other entity without the Bank's prior consent.
FEES & CHARGES
ARRANGEMENT FEE
An arrangement fee of E1,000 will be applied to your account on acceptance of
this facility letter.
7
TRANSMISSION FEES
Bank Charges will apply in accordance with the Bank's standard scale as
published from time to time.
GENERAL CONDITIONS,
1. Financial - Audited Accounts for this company and Castle Brands Inc are to
be made available to the Bank within three months of the Company's
financial year-end together with confirmation from your auditors that the
Company's taxation affairs are up to date.
2. Management Accounts are to be provided quarterly within one-month of the
quarter end.
3. All fees incurred in the taking of the security referred to above will be
payable by the borrower.
4. In the event of the Bank being made aware that there has been a material
adverse change in the financial position of the company so as to prejudice
repayment capacity, the Bank reserves the right to cancel these facilities
and in such events all amounts due plus interest would be payable
immediately.
5. In the event that any or all of these facilities shall become due and
payable to the Bank, whether following formal demand by the Bank or
otherwise, interest shall accrue and be payable on such liabilities on a
compound basis until fully discharged,
I am pleased to have the opportunity to arrange these facilities for you and
hope that the terms and conditions I have outlined are acceptable to the
Company. If so, please confirm this by signing and returning the enclosed copy
of this letter at your earliest convenience. I would like to take this
opportunity to with the company continued success in the development of your
business.
Yours faithfully,
/s/ Xxxxx Xxxx
XXXXX XXXX
SENIOR MANAGER
8
ACCEPTANCE
WE CONFIRM ACCEPTANCE OF THE FACILITIES OUTLINED IN YOUR LETTER DATED THE 16TH
DECEMBER 2004 UNDER THE TERMS AND CONDITIONS STATED THEREIN.
/s/ Xxxx Xxxxxxx 2/7/05
------------------------------ ------
Director Date
/s/ Xxxxxxx X. XxxXxxxxxx, CFO 2/7/05
------------------------------ ------
Director Date
