EX-4.1






_________________________________________________________________




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
Borrower’s 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 Borrower’s 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 (2nd) 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. Borrower’s 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 Lender’s 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 Lender’s 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 Lender’s 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
Borrower’s 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
Borrower’s “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
Borrower’s 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 Lender’s 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
Lender’s 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 Lender’s 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 Lender’s reasonable discretion.



20. 2015 Purchased Inventory Sublimit Participation Agreement. As a condition precedent to
the effectiveness of this Amendment and specifically Lender’s 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 Lender’s
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 Lender’s 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]





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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

	Name:

	 	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



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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:

	 	 	$	 
	
 
	 	 	 	 
	Letter of Credit Issued to:

	 	Beneficiary:      

Address:      







      



Date of issuance:       



Number of Letter of Credit amended, renewed or extended:       



For Credit to:



	 	 	 	 	 
	CASTLE BRANDS INC.:
	 	$	 	 
	 
	 	 	 	 
	CASTLE BRANDS (USA) CORP.:
	 	$	 	 






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 (      )       .



	 	 	 
	CASTLE BRANDS INC.

	 	CASTLE BRANDS (USA) CORP.
	By:

	 	By:
	 

	 	 
	Name:

	 	Name:
	 

	 	 
	Title:

	 	Title:
	 

	 	 







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