Item 1.01 Entry into a Material Definitive Agreement.
Stock Purchase Agreement
On March 29, 2017, Castle Brands Inc. (the Company), entered into a Stock Purchase Agreement
(Purchase Agreement) with Goslings Limited (GL) and E. Malcolm B. Gosling (Gosling, and
together with GL, the Sellers). Pursuant to the terms of the Purchase Agreement, the Company
acquired 201,000 shares (the GCP Share Acquisition) of the common stock of Gosling-Castle
Partners Inc. (GCP), representing a 20.1% equity interest in GCP. GCP is a strategic global
export venture between the Company and the Gosling family. As a result of the completion of the GCP
Share Acquisition, the Companys total equity interest in GCP increased to 80.1%. The consideration
for the GCP Share Acquisition was (i) $20,000,000 in cash and (ii) 1,800,000 shares of common stock
of the Company (the Castle Brands Shares). Under the Purchase Agreement, the Sellers agreed to a
lockup covenant such that the Castle Brands Shares may not be offered, sold, pledged, or otherwise
transferred for a period of 18 months following the closing date of the GCP Share Acquisition. The
Purchase Agreement contains customary representations, warranties, covenants and closing
conditions.
The foregoing description of the Purchase Agreement in this Current Report on Form 8-K is
qualified in its entirety by reference to the full text of such Purchase Agreement filed as exhibit
2.1 hereto.
Ancillary Agreements
In connection with the GCP Share Acquisition, the Company and Sellers executed or caused to be
executed, certain ancillary agreements, including an Amended and Restated Distribution Agreement
and an Export Agreement Amendment, both as defined herein.
Amended and Restated National Distribution Agreement
On March 29, 2017, Castle Brands (USA) Corp., a wholly-owned subsidiary of the Company
(Castle Brands USA), entered into an Amended and Restated National Distribution Agreement (the
Amended and Restated Distribution Agreement) with GCP, which amends and restates the National
Distribution Agreement, dated September 3, 2004, by and between Castle Brands USA and Goslings
Export (Bermuda) Limited (GXB). Pursuant to the Export Agreement (as defined below), GXB, among
other things, assigned its rights, title and interest in and to the National Distribution
Agreement, to GCP. Pursuant to the Amended and Restated Distribution Agreement, Castle Brands USA
continues as the exclusive long-term importer and distributor of certain beverage products as
defined in the Amended and Restated Distribution Agreement, including Goslings Rum and Goslings
Stormy Ginger Beer (collectively, the Distribution Products) throughout the United States, and
such other markets as may be added by mutual consent of the parties (the Distribution Territory).
The initial term of the Amended and Restated Distribution Agreement extends through March 31, 2030,
with automatic ten-year renewal terms thereafter, subject to specific termination rights held by
each party. The Amended and Restated Distribution Agreement automatically terminates upon the
termination, for any reason, of the Export Agreement. Castle Brands USA will purchase Distribution
Products from GCP for distribution in the Distribution Territory at prices set forth in the Amended
and Restated Distribution Agreement, as may be mutually changed by the parties from time to time.
Castle Brands USA is entitled to receive a net margin amount, certain reimbursement costs, and a
specified fee to defray normal overhead costs, all as specified in the Amended and Restated
Distribution Agreement. GCP will maintain primary responsibility and bear the costs for the overall
marketing, advertising, and promotion of the Distribution Products. Also, Castle Brands USA has a
right of first refusal regarding the distribution of any other current or future rum or ginger beer
products GCP currently maintains in, or adds to, its product line for sale in the Distribution
Territory. The Amended and Restated Distribution Agreement includes customary representations,
warranties, and provisions regarding liability and insurance.
Export Agreement Amendment
On March 29, 2017, GCP entered into Amendment No. 4 to Export Agreement (the Export Agreement
Amendment) with GXB, which further amends the Export Agreement made as of February 14, 2005, by
and between GCP and GXB (as amended from time to time, the Export Agreement). Pursuant to the
Export Agreement Amendment, GCP maintains all global distribution rights (with the exception of
Bermuda) during the term of the Export Agreement and continues as the exclusive authorized global
exporter of certain beverage products as defined in the Export Agreement (the Export Products) in
all national or international markets, with the exception of Bermuda (the Export Territory). The
Export Agreement Amendment, among other things, assigns to GCP global distribution and exporting
rights to Goslings Stormy Ginger Beer and all other Goslings Ginger Beer products and extends the
initial term of the Export Agreement from 15 to 25 years, through March 31, 2030, with ten-year
renewal terms thereafter, subject to specific termination rights held by each party. Under the
Export Agreement Amendment, in the event GXB decides to sell any or all of its trademarks (or other
intellectual property rights) relating to the Export Products (other than Goslings Stormy Ginger
Beer) during the term of the Export Agreement, GCP shall have a right of first refusal to purchase
said trademark(s) (and intellectual property rights, if applicable) at the same price being offered
by a bona fide third-party offerer. If GCP does not exercise its right of first refusal, then the
Company shall acquire an identical right of first refusal. In the event GXB should decide to sell
any or all of its Export Products (other than Goslings Stormy Ginger Beer) and/or trademark(s)
(other than Goslings Stormy Ginger Beer), whether sold to an affiliate, a third party, GCP or the
Company, GCP is entitled to share in the proceeds of such sale, according to a schedule specified
in the Export Agreement Amendment. Also, in the event GXB should decide to sell the Export Products
or trademarks relating to Goslings Stormy Ginger Beer, whether sold to an affiliate, a third party,
GCP or the Company, then, GXB agrees to share with GCP an amount equal to a certain percentage of
the proceeds of any such sale as specified in the Export Agreement Amendment.