Amended And Restated Warrant Agreement

EXHIBIT 10.52


THE SECURITIES REPRESENTED BY THIS AMENDED AND RESTATED WARRANT AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, OFFERED FOR SALE OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL IN FORM AND FROM COUNSEL REASONABLY ACCEPTABLE TO CASTLE BRANDS THAT THE TRANSACTION SHALL NOT RESULT IN A VIOLATION OF STATE OR FEDERAL SECURITIES LAWS.


AMENDED AND RESTATED WARRANT AGREEMENT


ORIGINAL ISSUANCE DATE: December 1, 2003


PARTIES: Keltic Financial Partners, LP ("Keltic")
555 Theodore Fremd Avenue
Suite C-209
Rye, New York 10580


Castle Brands Inc. ("Castle Brands")
570 Lexington Avenue
29th Floor
New York, New York 10022


RECITALS:


1. This Warrant Agreement was entered into on December 1, 2003 (the "Original Warrant Agreement") in connection with that certain Revolving Loan Agreement between GSRWB, Inc. (the predecessor to Castle Brands) and Keltic dated as of August 27, 2002, as amended from time to time through the date hereof, and related loan and security documents (collectively, the "Loan Agreement").


2. This Amended and Restated Warrant Agreement, dated September 27, 2005 (this "Warrant Agreement") amends and restates the Original Warrant Agreement, which shall be surrendered, cancelled and terminated and be null and void as of the date of this Warrant Agreement, and supersedes all other prior warrants, agreements, representations and warranties of any person in connection herewith.


NOW, THEREFORE, in consideration of the Loan Agreement and the mutual agreements contained herein, the parties agree as follows:


SECTION 1 GRANT AND ACCEPTANCE OF WARRANT AGREEMENT


Castle Brands grants and delivers this Warrant Agreement to Keltic entitling it and its permitted transferees under Section 4.3 below (collectively, "Holder") subject to the terms and conditions set forth in this Warrant Agreement, to purchase from the date of this Warrant Agreement to September 1, 2014 (the "Expiration Date"), One Hundred Thousand (100,000) shares of common stock, $.01 par value per share ("Common Stock"), of Castle Brands from Castle Brands at the purchase price of Six Dollars ($6.00) per share (subject to adjustment as hereafter provided), upon presentation of this Warrant Agreement and payment of the purchase price in cash, certified check or bank draft payable to Castle Brands or other form of payment acceptable to Castle Brands at the office of Castle Brands at the address indicated above. Keltic accepts and agrees to the terms and conditions of this Warrant Agreement.


SECTION 2 DURATION AND EXERCISE OF WARRANT AGREEMENT


2.1 Term. This Warrant Agreement shall become void unless it is exercised and payment of the purchase price made prior to the Expiration Date.


2.2 Exercise of Warrant Agreement. This Warrant Agreement may be exercised during its exercise period by Holder, and at its or their option, as to the whole at any time or in part from time to time. If this Warrant Agreement is exercised at one time for less than the maximum number of shares of Common Stock purchasable upon the exercise hereof, Castle Brands shall issue to Holder a new warrant agreement of like tenor and date representing the number of shares of Common Stock equal to the difference between the number of shares purchasable upon full exercise of this Warrant Agreement and the number of shares that were purchased upon the exercise of this Warrant Agreement. To be exercised, this Warrant Agreement must be surrendered by Holder for cancellation at the office of Castle Brands accompanied with written instructions as to the number of shares to be purchased and the payment of the purchase price. If Castle Brands, in its sole discretion, elects to allow payment of all or a portion of the purchase price in installments, Holder exercising this Warrant Agreement shall also deliver a promissory note, in form satisfactory to Castle Brands, for the deferred portion of the price secured by a pledge, also in a form satisfactory to Castle Brands, of the shares of stock purchased by such exercise of this Warrant Agreement.


2.3 Investment Interest. Unless the Underlying Shares (as hereinafter defined) have been registered under the securities laws and a representation for investment intent is not needed to comply with the securities laws, if required by Castle Brands at the time of any exercise of this Warrant Agreement, as a condition to such exercise, Holder shall enter into an agreement with Castle Brands in form reasonably satisfactory to counsel for Castle Brands by which Holder (1) shall represent that the shares are being acquired for Holder's own account for investment and not with a view to, or for sale in connection with, any resale or distribution of such shares, and (2) shall agree that, if Holder should decide to sell, transfer, or otherwise dispose of any of such shares, Holder may do so only in accordance with this Warrant Agreement and applicable securities laws.


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SECTION 3 COVENANTS OF CASTLE BRANDS


3.1 Reservation of Stock. Castle Brands covenants that, while this Warrant Agreement is exercisable, it shall reserve a sufficient number of shares to provide for the delivery of shares pursuant to the exercise of this Warrant Agreement.


3.2 Validly Issued Stock. Castle Brands covenants and agrees that all shares of Common Stock that may be issued upon the exercise of this Warrant Agreement shall, upon issuance, be duly and validly issued, fully paid and nonassessable, and free from all taxes, liens and charges with respect to the purchase and the issuance of the shares.


3.3 Due Authorization. Castle Brands covenants that all acts and things necessary have been done and performed to make this Warrant Agreement when executed on behalf of Castle Brands, the valid, binding and legal obligation of Castle Brands, and to authorize the execution and delivery of this Warrant Agreement and the issuance of the shares upon exercise hereof.


3.4 By-laws. Castle Brands covenants that (i) the copy of the Bylaws provided to Keltic prior to the execution of this Warrant Agreement will be a complete and correct copy of the Bylaws upon the closing of Castle Brands' initial public offering (the "IPO"); (ii) the Bylaws will be in full force and effect upon the closing of the IPO; and (iii) no amendment shall be made to the By-laws which shall adversely affect the Holder unless the rights of holders of other derivative securities are similarly adversely affected or the Holder consents to such amendment in writing.


SECTION 4 RESTRICTIONS ON TRANSFERABILITY


4.1 Transfer Restrictions. Unless and until registered or an exemption is available from such registration, this Warrant Agreement and the shares of Common Stock purchased upon exercise of this Warrant Agreement ("Purchased Shares") or purchasable upon exercise of this Warrant Agreement ("Underlying Shares") shall not be sold, assigned, transferred or pledged except upon the conditions specified in Section 4 of this Warrant Agreement, which conditions are intended to ensure compliance with the provisions of the applicable federal and state securities laws.


4.2 Securities Compliance. Keltic represents that it is acquiring this Warrant Agreement for its own account for investment, and not with the view to, or for resale in connection with, any distribution thereof. Keltic understands that this Warrant Agreement has not been registered under the Securities Act or any applicable state securities laws by reason of specific exemptions from the registration provisions of those securities laws, the availability of which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of Keltic's representation herein. Keltic acknowledges that this Warrant Agreement, the Purchased Shares and the Underlying Shares must be held indefinitely, unless subsequently registered under the Securities Act or unless an exemption from registration is available.


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4.3 Transferees Bound By This Warrant Agreement. Notwithstanding anything else to the contrary stated in this Warrant Agreement, no transfer shall be made unless the transferee executes a counterpart copy of this Warrant Agreement, as amended, pursuant to which the transferee agrees to be bound by the provisions of this Warrant Agreement, as amended; provided, however, that this Section 4.3 shall not apply to the extent the Warrant Agreement or the Purchased Shares are registered or an exemption from registration is available under applicable securities laws.


4.4 Notice of Proposed Transfers. Prior to any proposed sale, assignment, transfer or pledge of this Warrant Agreement or Purchased Shares, unless there is in effect a registration statement under the Securities Act, covering the proposed transfer, Holder shall give written notice to Castle Brands of its intention to effect such transfer, sale, assignment or pledge. Each such notice shall describe the manner and circumstances of the proposed transfer, sale, assignment or pledge in sufficient detail and, if Castle Brands reasonably so requests, shall be accompanied at Holder's expense by either (i) a written opinion of legal counsel in form and from counsel reasonably acceptable to Castle Brands which states that the proposed transfer of this Warrant Agreement or Purchased Shares may be effected without registration under the Securities Act or (ii) a "no action" letter from the Securities and Exchange Commission (the "Commission") to the effect that the transfer of such securities without registration will not result in a recommendation by the staff of the Commission that action be taken with respect thereto, whereupon the holder of such Warrant Agreement or Purchased Shares shall be entitled to transfer such Warrant Agreement or Purchased Shares in accordance with the terms of the notice delivered by Holder to Castle Brands. Castle Brands will not require such a legal opinion or "no action" letter in any transaction in compliance with Rule 144 of the Commission. Each certificate evidencing the Purchased Shares transferred as above provided shall bear, except if such transfer is made pursuant to Rule 144, the appropriate restrictive legends set forth in this Warrant Agreement, except that such certificate shall not bear such restrictive legends if in the opinion of counsel for Castle Brands such legends are not required in order to establish compliance with any provisions of the Securities Act.


4.5 Restrictive Legends. Each certificate representing the Purchased Shares and any other securities issued in respect of the Purchased Shares upon any stock split, stock dividend, recapitalization, merger, consolidation or similar event unless the same are registered prior to exercise of this Warrant Agreement, shall be stamped or otherwise imprinted with a legend in substantially the following form:


THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
ANY STATE. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE
SOLD, OFFERED FOR SALE OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY
APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL IN


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FORM AND FROM COUNSEL REASONABLY ACCEPTABLE TO CASTLE BRANDS THAT THE
TRANSACTION SHALL NOT RESULT IN A VIOLATION OF STATE OR FEDERAL SECURITIES
LAWS.


Holder consents to Castle Brands making a notation on its records and giving instructions to any transfer agent of the Purchased Shares in order to implement the restrictions on transfer established in this Warrant Agreement.


4.6 Modification of this Section. If a registration statement under the Securities Act is hereafter filed with respect to this Warrant Agreement, Purchased Shares or the Underlying Shares, the provisions in this Warrant Agreement that would otherwise be required by this Section 4 shall be appropriately modified or eliminated.


4.7 Otherwise Transferable. Subject to the transfer conditions set forth in this Section 4, this Warrant Agreement and all rights hereunder are transferable, in whole or in part, without charge to Holder, upon surrender of this Warrant at the principal office of Castle Brands.


SECTION 5 CONVERSION RIGHT


5.1 Fair Market Value. For purposes of this Section 5: If the shares are traded regularly in a public market, the fair market value of a share shall be the closing price of the shares (or the closing price of the stock of Castle Brands into which the shares are convertible) reported for the business day immediately before Holder delivers its Conversion Notice to Castle Brands. If the shares are not regularly traded in a public market, the Board of Directors of Castle Brands shall determine fair market value of Castle Brands as a whole (the "Enterprise Value") in its reasonable good faith judgment and the fair market value of a share for purposes of this Warrant Agreement shall be an amount equal to (x) the Enterprise Value divided by (y) the number of outstanding shares of Common Stock. The foregoing notwithstanding, if Holder advises the Board of Directors in writing that Holder disagrees with such determination, then Castle Brands and Holder shall promptly agree upon a reputable investment banking firm to undertake such valuation. All fees and expenses of such investment banking firm shall be paid by Castle Brands. As used in this Section 5 with respect to any share of Common Stock, the term "Fair Market Value" means the value of such share determined as set forth in this Section 5.1.


5.2 Conversion Right. In lieu of exercising this Warrant Agreement as specified in Section 2, Holder may from time to time convert this Warrant Agreement (the "Conversion Right"), in whole or in part, into a number of shares of Common Stock equal to the Spread Value (as defined below) of the shares as to which the Conversion Right is to be e ...