Execution Copy: 11/13/07

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT, made as of November 12, 2007 (this “Agreement”), by
and between Castle Brands Inc., a Delaware corporation (the “Company”), and
Donald Marsh (the “Executive”).

In consideration of the mutual covenants set forth in this Agreement, the
parties hereto agree as follows:

AGREEMENT:

1. Employment and Duties. Subject to the terms of this Agreement, the Company
has agreed to employ Executive, and Executive has accepted such employment,
commencing as of November 12, 2007. Effective as of November 15, 2007 (the
“Effective Date”), Executive shall become President and Chief Operating Officer
of the Company. At all times on and after the Effective Date and during the term
of his employment, Executive shall be the Company’s most senior executive
officer, and all corporate officers shall report to Executive. If and for so
long as requested or required by the Board of Directors of the Company (the
“Board”), Executive will also serve as the Company’s principal executive
officer. From and after the Effective Date, Executive shall have all
responsibilities and authorities as are customary for a president and chief
operating officer and as are customary for the most senior executive officer of
an enterprise similar to the Company including, without limitation,
responsibility for strategic planning, corporate finance, sales and marketing,
agency relationships, and internal administration. Executive will have
responsibility for such other job-related duties as may be assigned to Executive
from time to time by the Board, and will report directly to the Board.

2. Performance of Services. Executive agrees that throughout the term of his
employment hereunder he will devote his full business time, attention, knowledge
and skills, faithfully, diligently and to the best of his ability, in
furtherance of the business of the Company and its direct or indirect
subsidiaries and will perform the duties assigned to him from time to time
pursuant to Section 1, subject, at all times, to the direction of the Board, and
to the written policies of the Company generally applicable to its executives.
During the term of his employment hereunder, Executive will not accept other
employment or permit his personal business interests to materially interfere
with his duties hereunder.

3. Term. Executive will be employed for a term commencing on November 12, 2007
and ending on October 31, 2009 (the “Term”), unless his employment is terminated
prior to the expiration of the Term pursuant to Section 6. The Term shall
automatically be extended for an additional two (2) year period on substantially
the same terms as are in effect on the last day of the Term, unless either party
gives notice of nonrenewal at least ninety (90) days prior to the expiration of
the then effective Term, in which case Executive’s employment hereunder shall
terminate at the end of such Term.

4. Compensation. During the Term of this Agreement the Company agrees to pay to
Executive:

(a) Salary. A salary at the rate of $320,000 per year the “Base Salary”),
payable in accordance with the Company’s standard payroll practices for
executives as

 

 

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in effect from time to time. Such Base Salary may be increased (but not
decreased), in the sole discretion of the Compensation Committee of the Board
(“Compensation Committee”), on the basis of periodic reviews, which shall occur
no less frequently than on an annual basis, commencing with the annual reviews
for the Company’s other executive officers for 2008.

(b) Bonus. In recognition of the services provided by Executive in his prior
capacity as a consultant to the Corporation, $100,000 shall be paid to Executive
upon the execution and delivery of this Agreement.

(c) Stock Option Grants. Concurrently with the execution of this Agreement, the
Compensation Committee approved the grant to Executive of an option to purchase
Common Stock of the Company having the terms set forth in the form of grant
agreement attached hereto as Exhibit A (“the “Option”).

(d) Incentive Bonus. In each fiscal year, Executive shall be eligible to receive
an annual cash performance bonus equal to up to 110% of the initial Base Salary
provided for in Section 4(a) above (the “Maximum Bonus”), subject to successful
achievement of goals and objectives that have been agreed upon by the Executive
and the Compensation Committee of the Board in connection with the approval of
this Agreement, payable at such time or times as the Compensation Committee has
specifically authorized, and otherwise in accordance with the Company’s standard
practices for executives as in effect from time to time; provided, however, that
in no event shall Executive receive a bonus for either fiscal year 2008 or 2009
(ending on March 31, 2008 and March 31, 2009, respectively) which is less than
$192,000 (the “Minimum Bonus”). In addition to the annual incentive bonus
opportunity described in the preceding sentence, Executive shall also be
eligible for a threshold supplemental performance bonus in the amount of 50% of
initial Base Salary (“Threshold Supplemental Performance Bonus”), and for a
maximum supplemental performance bonus in the amount of 150% of initial Base
Salary (“Maximum Supplemental Performance Bonus”) based on the level of
achievement of strategic objectives identified by the Compensation Committee in
connection with its approval of this Agreement (each also referred to as a
“Supplemental Performance Bonus”). In the event of any termination of
employment, other than for Cause or by Executive without Good Reason, that
occurs after all conditions for payment of any annual incentive bonus or any
Supplemental Performance Bonus have been satisfied, other than any condition
that Executive be employed on the date for payment (“Employment Condition”),
such bonus shall be treated as earned for all purposes of this Agreement and
payment shall be made to the extent provided in Section 6 without regard to any
Employment Condition.

(e) Vacation. Executive shall be entitled to twenty (20) paid vacation days in
each calendar year, plus paid Company holidays.

(f) Other Benefits. Executive will be entitled to participate, to the extent he
is eligible under the terms and conditions thereof, in all profit-sharing,
hospitalization, insurance, medical, disability, or other fringe benefit or
executive perquisite plans generally available to other senior executives of the
Company. Executive shall at all times during the Term, and thereafter in respect
of actions taken, or not taken, by Executive during the Term, be entitled to (i)
indemnification and fee advancement to the maximum extent permitted by law, and
(ii) coverage as a named insured under policies of directors and officers
liability insurance that are not less favorable than those in effect on the
Effective Date. Notwithstanding any other

 

 

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provision of this Agreement, the obligations set forth in the preceding sentence
shall survive and remain in full force and effect following any termination of
employment for any reason.

5. Expenses. The Company will reimburse Executive for all expenses reasonably
incurred by him in connection with the performance of his duties hereunder and
the business of the Company upon the submission to the Company of appropriate
invoices therefor, all in accordance with the Company’s policies and procedures
as in effect from time to time for senior executives of the Company. The Company
acknowledges and agrees that (i) Executive will not be required to relocate at
any time during the Term, (ii) to the maximum extent practicable, Executive will
be free to arrange his business travel to locations other than the Company’s
principal executive offices in New York City (“Business Travel”) so that it can
be initiated from, and provide for direct return to, Kentucky or other temporary
living location, without first traveling to New York City, and (iii) it will be
necessary for Executive to spend at least a majority of his business time when
not engaged in Business Travel in New York City, and (iv) all reasonable meals,
lodging and travel to New York City shall be reimbursed on the same basis as
they have been reimbursed prior to the Effective Date.

6. Termination. The following provisions describe the compensation and benefits
that will be payable to Executive upon his termination of employment according
to the applicable circumstances set forth below.

(a) Termination by the Company Without Cause. The Company may terminate the
employment of Executive hereunder at any time without Cause (as hereinafter
defined). Notice of any such termination must be in writing and will be
effective upon receipt by Executive. In the event that the employment of
Executive is terminated pursuant to this Section 6(a) then, unless there has
been a judicial determination or arbitrator’s decision that Executive has
breached one or more of Sections 7, 9, 10 and 22 of this Agreement (an “Adverse
Determination”), the Company will continue to pay to Executive the Base Salary
as in effect on the date of such termination, in accordance with the standard
payroll practices of the Company as in effect from time to time, for a term of
twelve (12) months immediately following the date of such termination. In
addition, in the event the employment of Executive is terminated pursuant to
this clause (a), any unpaid annual incentive or unpaid Supplemental Performance
Bonus described in Section 4(d) that in either case has been earned prior to the
date of termination shall be paid to Executive when due and in all events not
later than 75 days from the end of such fiscal year to which such bonus relates.
Executive shall also receive a prorated annual incentive bonus for the year of
termination based on the portion of the fiscal year to which such incentive
bonus relates that Executive was employed; provided, however, that the Minimum
Bonus for the first year of employment shall in no event be subject to
pro-ration. In addition, unless there is an Adverse Determination (i) during the
twelve (12) month period (eighteen (18) month period with respect to
participation in the Company’s medical plans; provided that such benefits may be
immediately terminated by the Company upon Executive’s qualification for
coverage under the medical plans of another employer) immediately following
termination of Executive pursuant to this Section 6(a), to the extent
permissible under any relevant benefit plans of the Company, the Company shall
continue to provide participation to Executive in all other benefits provided
for under Section 4(e), at the Company’s expense, (ii) on the date of
termination pursuant to this Section 6(a), the vesting and exercisability of any
unvested options then held by Executive shall accelerate with respect to the
number of shares of the Company’s common stock that equals (x) the number of
shares that would have vested and become exercisable during the 12 months

 

 

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following termination of Executive multiplied by (y) a fraction, the numerator
of which is the number of full calendar months that have elapsed since the last
vesting date or since March 1, 2007 (if a vesting date has not occurred) and the
denominator of which is the number of full calendar months from the last vesting
date or from March 1, 2007 (if a vesting date has not occurred) to the vesting
date occurring during the 12 months following termination, and (iii) any stock
option held by Executive that is vested at the time of Executive’s termination
pursuant to this Section 6(a) (including any portion of such option for which
vesting was accelerated pursuant to the preceding sentence) will be exercisable
until the earlier to occur of (i) the expiration date of such option pursuant to
its terms and (ii) twelve (12) months following the date of termination pursuant
to this Section 6(a).

(b) Termination by the Company for Cause. The Company may terminate the
employment of Executive hereunder for Cause (as hereinafter defined). Executive
shall be entitled to thirty (30) days prior written notice of the Company’s
intent to terminate Executive hereunder and the right to appear before the Board
(with counsel) to address and, if curable, cure such Cause during such thirty
(30) day notice period. Any notice of intent to terminate for Cause must specify
the particular grounds therefor in reasonable detail. In the event that the
employment of Executive is terminated pursuant to this clause (b), the Company
will pay to Executive the amount of all accrued but unpaid Base Salary to the
date of such termination, but no annual incentive bonus will be paid with
respect to (x) the year in which termination occurs, or (y) the immediately
prior year if Executive is terminated under this clause (b) prior to payment of
the bonus applicable to such prior year. As used herein, “Cause” means
Executive’s (i) willful misconduct which is demonstrably and materially
injurious to the Company, (ii) breach of fiduciary duty, (iii) substantial and
continuing willful refusal by the Executive to perform the duties required of
the Executive hereunder (other than any such refusal resulting from incapacity
due to physical or mental illness) after a written demand for substantial
performance is delivered to the Executive by the Board which specifically
identifies the manner in which it is believed that the Executive has
substantially and continually refused to perform his duties hereunder; (v)
conviction of, or the entry by the Executive of any plea of guilty or nolo
contendere to, any felony or other lesser crime that would require removal from
his position at the Company (e.g. any alcohol or drug related misdemeanor);
provided, however, that in any of the foregoing circumstances, (a) with respect
to Cause pursuant to (ii) or (iii) of this Section 6(b), Executive has failed to
cure such Cause within the thirty (30) day period referenced in the second
sentence of this Section 6(b), and (b) failure to achieve performance objectives
shall not, in and of itself, be a basis for termination for Cause. In the event
Executive is terminated for Cause, any stock option held by Executive shall be
treated as provided in Exhibit A.

(c) Termination by Executive. Executive may terminate his employment hereunder
(x) at any time without Good Reason or (y) with Good Reason (as hereinafter
defined). Notice of any such termination must be in writing and will be
effective sixty (60) days after receipt by the Company or such earlier date as
may be specified by the Company after receipt of such notice. In the event that
Executive terminates employment pursuant to subclause (x) of this clause (c),
the Company will pay to Executive the amount of all accrued but unpaid Base
Salary to the date of such termination, and any unpaid annual incentive bonus
and any unpaid Supplemental Performance Bonus described in section 4(d) that in
either case that has been earned prior to the date of termination shall be paid
to Executive, on the same basis as is provided in Section 6(a), not later than
75 days from the end of the fiscal year to which such bonus relates, but no
annual incentive bonus will be paid with respect to the year in

 

 

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which termination occurs. In the event that Executive terminates employment
hereunder pursuant to subclause (y) of this clause (c) unless there has been an
Adverse Determination, Executive will be entitled to receive the same salary,
benefits and bonus payments, at the same time and in the same form, as would be
provided were he to be terminated by the Company without Cause pursuant to
Section 6(a) above. Further, in the event Executive terminates his employment
hereunder with or without Good Reason, unless there has been an Adverse
Determination, any stock option held by Executive that is vested at the time of
Executive’s termination will be exercisable until the earlier to occur of (A)
the expiration date of such option pursuant to its terms and (B) one year
following the termination of Executive’s employment. As used herein, “Good
Reason” means a termination by Executive of Executive’s employment hereunder
within ninety (90) days after (i) any material diminution in the nature, title
or scope of Executive’s job responsibilities from those set forth in Section 1,
including for the avoidance of doubt, the appointment after November 14, 2007,
of any person other than Executive to be Chief Executive Officer of the Company,
or to any other position more senior to Executive’s, in terms of
responsibilities or reporting relationships, without Executive’s prior written
consent, (ii) dissolution or divestiture of all or a significant portion of the
Company or other material change in the Company, which in each case would
materially adversely diminish the nature, title or scope of Executive’s job
responsibilities from those set forth in Section 1, or (iii) the Company’s
material breach of any provision of this Agreement which is not cured within
fifteen (15) business days after written notice thereof from Executive to the
Company.

(d) Termination Upon Death. This Agreement will terminate automatically on the
death of Executive. In the event that the employment of Executive is terminated
pursuant to this clause (d), the Company will promptly pay to the representative
of Executive, in one cash lump sum, not later than 30 business days from the
date of such termination, the amount of all accrued but unpaid Base Salary to
the date of such termination and an amount equal to one year’s Base Salary. The
Company shall also pay, not later than 75 days from the end of the applicable
fiscal year, any unpaid annual incentive bonus described in section 4(d) with
respect to any fiscal year that has been completed prior to the date of
termination and any unpaid Supplemental Performance Bonus, that in either case
has been earned prior to the date of termination, on the same basis as is
provided in Section 6(a), and the annual incentive bonus, if any, described in
Section 4(d) with respect to the year in which termination occurs (pro rated for
the portion of the fiscal year in which Executive was so employed). Further, any
stock option held by Executive that is vested at the time of death will be
exercisable by Executive’s personal representative or estate for a period of two
(2) years from date of death and all unvested stock options held by Executive
shall fully vest and be exercisable by Executive’s personal representative or
estate for a period of six months from date of death.

(e) Termination by the Company by Reason of Disability. The Company may
terminate the employment of Executive hereunder after Executive becomes
Disabled. Notice of any such termination must be in writing and will be
effective thirty (30) days after receipt by Executive. In the event that the
employment of Executive is terminated pursuant to this clause (e), the Company
will continue to pay to Executive the Base Salary per annum as in effect on the
date of such termination, in accordance with the standard payroll practices of
the Company as in effect from time to time, for a term of twelve (12) months
immediately following the date of such termination (less the amount, if any,
received by Executive from any disability insurance maintained by the Company),
and an amount equal to The Company shall also pay, not later than 75 days from
the end of the applicable fiscal year,

 

 

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any unpaid annual incentive bonus described in section 4(d) with respect to any
fiscal year that has been completed prior to the date of termination and any
unpaid Supplemental Performance Bonus, that in either case has been earned prior
to the date of termination, on the same basis as is provided in Section 6(a),
and the annual incentive bonus, if any, described in Section 4(d) with respect
to the year in which termination occurs (pro rated for the portion of the fiscal
year in which Executive was so employed). Further, any stock option held by
Executive that is vested at the time of termination for disability will be
exercisable for a period of six (6) months from date of such termination for
disability and all unvested stock options held by Executive shall fully vest and
be exercisable for a period of six (6) months from date of termination for
disability. As used herein, the term “Disabled” means Executive becoming
physically or mentally disabled or incapacitated to the extent that he has been
or will be unable to perform his duties hereunder on account of such
disabilities or incapacitation for a continuous period of six (6) months as
determined by a qualified independent physician or group of physicians selected
by the Company and approved by Executive or his representative, such approval
not to be unreasonably withheld.

(f) Change of Control. A “Change of Control” shall have occurred if: (i) any
person (as such term is used in Section 13(d) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”)) becomes the “beneficial owner” (as
determined pursuant to Rule 13d-3 of the Exchange Act), directly or indirectly,
of securities of the Company representing more than thirty-five percent (35%) of
the aggregate voting power of the Company’s then outstanding securities, other
than by acquisition directly from the Company; (ii) there has been a merger or
equivalent combination involving the Company after which forty-nine percent
(49%) or more of the voting stock of the surviving corporation is held by
persons other than former shareholders of the Company; or (iii) the Company
sells or disposes of all or substantially all of its assets. In the event that
the employment of Executive is terminated following or in connection with a
Change in Control, then the Company or its successor, as applicable, will pay to
Executive an amount equivalent to two hundred percent (200%) of Executive’s Base
Salary per annum as in effect on the date of such termination. Unless there has
been an Adverse Determination, the Company shall during the twenty-four (24)
month period immediately following termination of Executive following or in
connection with a Change in Control pursuant to this Section 6(f), to the extent
permissible under any relevant benefit plans of the Company, continue to provide
participation to Executive in all other benefits provided for under Section
4(e), at the Company’s expense. In addition, in the event that the employment of
Executive is terminated following or in connection with a Change in Control
pursuant to this Section 6(f), the Company shall also pay, not later than 75
days from the end of the applicable fiscal year, any earned but unpaid annual
incentive described in section 4(d) with respect to any fiscal year that has
been completed prior to the date of termination, and any earned but unpaid
Supplemental Performance Bonus, and a pro-rated annual incentive bonus with
respect to the year in which termination occurs, all on the same basis as is
provided in Section 6(a), but without duplication thereof. Further, all unvested
stock options will vest without further action on the date of termination and
all stock options shall be exercisable during the remainder of their original
terms. Further, in the event that any amount otherwise payable hereunder would
be deemed to constitute a parachute payment (a “Parachute Payment”) within the
meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the
“Code”), and if any such Parachute Payment, when added to any other payments
which are deemed to constitute Parachute Payments, would otherwise result in the
imposition of an excise tax under Section 4999 of the

 

 

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Code, the amounts payable hereunder shall be reduced by the smallest amount
necessary to avoid the imposition of such excise tax. Any such limitation shall
be applied to such compensation and benefit amounts, and in such order, as the
Company shall determine in its sole discretion; provided, however, that the
Company shall utilize commercially reasonable efforts in the event of a Change
of Control pursuant to clauses (ii) or (iii) above to cause an acquirer in such
Change of Control to engage Executive as a consultant in a manner that would
permit Executive to earn an amount at least equal to any reductions to the
amounts to be paid to the Consultant pursuant to this Section 6(f) resulting
from the immediately preceding sentence. For purposes of this Agreement, (i) any
termination of Executive’s employment from the Company without Cause or for Good
Reason, that occurs within three months prior to the occurrence of a Change in
Control will be conclusively presumed to be in connection with such Change in
Control, and (ii) any such termination that is following or in connection with a
Change in Control shall entitle Executive to the benefits set forth in this
Section 6(f), unless it is occurs less than three months after the occurrence of
a supplemental performance objective that entitles Executive to be paid a
Maximum Supplemental Performance Bonus, in which event Executive shall be
entitled to the same benefits as are set forth in Section 6(a).

(g) Termination as a Result of Company Non-Renewal. If the Company delivers a
notice of nonrenewal pursuant to Section 3 at the end of the initial Term of
employment, and Executive’s employment terminates at the end of such term then
following the end of the Term, the Company shall pay to Executive his Base
Salary and benefits for a period of six (6) months (but eighteen (18) months
with respect to the Company’s medical plans; provided that such benefits may be
immediately terminated by the Company upon Executive’s qualification for
coverage under the medical plans of another employer) in accordance with its
payroll policies. In addition to the foregoing payments due under this Section
6(g), if, within 12 months of Executive’s termination of employment, (i) a
supplemental performance objective occurs that would have entitled Executive to
payment of a Maximum Supplemental Performance Bonus had his employment
continued, then Executive shall be paid such Maximum Supplemental Performance
Bonus upon the occurrence of such event, and (ii) a transaction is consummated
that meets the definition of a Change of Control for purposes of this Agreement
and in which Executive was significantly involved prior to termination of his
employment, then Executive shall be paid a Threshold Supplemental Performance
Bonus upon the occurrence of such event. If the initial Term is extended, any
termination of employment that results from the Company’s delivery of a notice
of non-renewal at the end of that or any later Term will be treated for all
purposes as a termination by the Company without Cause. For this purpose, any
offer to renew that is not on terms at least substantially equivalent to those
set forth in this Agreement shall be treated as a notice of non-renewal.

(h) Release and Further Obligations. As a condition to the payments and other
consideration provided to Executive under each clause of this Section 6,
Executive or his representative shall have executed and delivered to the Company
the form of general release attached hereto as Exhibit B. Except as otherwise
expressly provided in this Agreement, in the Option, or in the terms of the
release, from and after the effective date of any termination of Executive’s
employment hereunder pursuant to this Section 6, the Company will have no
further obligations (for the payment of money or otherwise) to Executive or his
representative, as applicable, and Executive shall have no further obligations
to the Company or any of its subsidiaries or affiliates.

 

 

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7. Confidentiality.

(a) Executive will not, at any time following the Effective Date, regardless of
whether Executive continues to be employed by the Company and, if Executive’s
employment has been terminated, regardless of the manner, reason, time or cause
thereof, directly or indirectly reveal, report, publish, disclose, transfer or
furnish to any person not entitled to receive the same for the immediate benefit
of the Company any Proprietary Information (as hereinafter defined). The term
“Proprietary Information” means all information of any nature whatsoever, and in
any form, which at the time or times concerns or relates to any aspect of any
business that the Company, or its direct or indirect subsidiaries are involved
in or actively contemplating (the “Business”) and which is confidential or
proprietary to the Company. Proprietary Information includes, but is not limited
to, items, materials and information concerning the following: marketing plans
or strategies; budgets; designs; promotional strategies; client preferences and
policies; creative activities for clients; concepts; intellectual property and
trade secrets; product plans; financial information and all documentation,
reports and data (recorded in any form) relating to the foregoing.
Notwithstanding the foregoing, “Proprietary Information” does not include any
information to the extent it becomes publicly known through no fault of
Executive or any information which Executive is required to disclose as a result
of a subpoena or other legal process.

(b) Executive agrees that all memoranda, notes, records, papers or other
documents, computer disks, computer software programs and the like and all
copies thereof, relating to the Business (the “Business Records”) are and will
be the sole and exclusive property of the Company or its direct or indirect
subsidiaries, as the case may be. Except for use for the benefit of the Company
or its direct or indirect subsidiaries, as the case may be. Executive will not
copy or duplicate any of the Business Records, nor remove them from the
facilities of the Company or its direct or indirect subsidiaries, as the case
may be. Executive must comply with any and all procedures which the Company or
its direct or indirect subsidiaries may adopt from time to time to preserve the
confidentiality of Proprietary Information and the confidentiality of property
of the types described immediately above, whether or not such property contains
a legend indicating its confidential nature.

(c) Upon termination of Executive’s employment with the Company for any reason
whatsoever and at any other time upon the Company’s request, Executive (or his
personal representative) must deliver to the Company all property described in
this Section 7 which is in his possession or control.

8. Representations and Warranties. Executive represents and warrants to the
Company that he is not a party to any employment agreement or other agreement
which restricts, interferes with or impairs, or which might be claimed to
restrict, interfere with or impair, in any way, Executive’s use of any
information or Executive’s execution or performance of this Agreement. The
Company represents and warrants to Executive that, on or prior to the execution
of this Agreement, (i) it has obtained all requisite Board and Compensation
Committee approvals necessary to enable it to enter into this Agreement, and to
pay the cash and incentive compensation, grant the Option and provide the other
benefits referenced herein, (ii) adequate shares have been and will at all times
be reserved for issuance upon exercise of the Option, and (iii) it shall, at all
times when the Company’s common stock is publicly traded, maintain and keep in
effect a registration statement on Form S-8 covering the sale of the shares to
Executive upon exercise of the Option.

 

 

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9. Discoveries and Improvements. Executive acknowledges and agrees that all
inventions, discoveries, and improvements, whether patentable or unpatentable,
made, devised, or discovered by Executive, whether by himself, or jointly with
others, from the date hereof until the expiration of the Term hereof, reasonably
deemed to be directly related to or pertaining in any way to the Business, will
be promptly disclosed in writing to the CEO (or such other officer as the CEO
may designate) of the Company and will be the sole and exclusive property of the
Company. Executive agrees to execute any assignments to the Company or its
nominee of his entire right, title, and interest in and to any such inventions,
discoveries, and improvements and to execute and deliver at the cost of the
Company any other instruments and documents that may be requested by the Company
that are requisite or desirable in applying for and obtaining patents,
copyrights or trademarks, with respect thereto in the United States and in all
foreign countries. Executive further agrees, whether or not in the employ of the
Company, to cooperate, to the extent and in the manner requested by the Company,
in the prosecution or defense of any patent, trademark or copyright claims or
any litigation or other proceeding involving any inventions, trade secrets,
processes, discoveries, or improvements covered by this Agreement, provided that
all expenses thereof shall be paid by the Company.

10. Restrictive Covenants.

(a) Executive acknowledges and agrees that his position with the Company places
him in a position of confidence and trust with respect to Proprietary
Information. Executive consequently agrees that it is reasonable and necessary
for the protection of the goodwill of the Business that Executive make the
covenants contained herein. Accordingly, Executive agrees that, during the Term
of this Agreement and for a period of twelve (12) months after the date of
expiration or termination of Executive’s employment hereunder for any reason
whatsoever, Executive will not, without the prior written consent of the Company
and provided that the Company has not failed to make any payments to the
Executive when due in accordance with the provisions of Section 6 and otherwise
comply with the terms and conditions of this Agreement, (i) employ, solicit or
encourage to leave the employ of the Company, or to become employed by any
person other than the Company, any employee of the Company, or any individual
who was an employee of the Company during the one year prior to the termination
or expiration of Executive’s employment, (ii) persuade or attempt to persuade
any customer of the Company as of the date of the termination or expiration of
Executive’s employment or during the one year prior to the termination or
expiration of Executive’s employment to cease doing business with, or to reduce
the amount of business it does with, the Company, or solicit the business of any
of the Company’s customers as of the date of the termination or expiration
during the one year prior to the termination or expiration of Executive’s
employment hereunder with respect to any product or service which competes with
the products and services of the Company as of the date of termination of
Executive’s employment or (iii) compete with the Company as a consultant to,
employee of, or equity participant in, any venture which competes with the
Business within the United States of America. No provision of this Section 10
shall prohibit Executive from merely owning (i.e., having no participation or
involvement in the management) no more than three percent (3%) of the
outstanding equity securities of any actively traded public entity.

(b) Executive has carefully considered the nature and extent of the restrictions
upon him and the rights and remedies conferred upon the Company under Sections
10 and 11 of this Agreement and hereby acknowledges and agrees that the same are
reasonable

 

 

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in time and territory, are designed to avoid competition which otherwise would
be unfair to the Company, do not stifle the inherent skill and experience of
Executive, would not operate as a bar to Executive’s sole means of support, are
required to protect the legitimate interests of the Company and do not confer a
benefit upon the Company disproportionate to the benefit otherwise afforded
Executive by this Agreement.

11. Certain Remedies. The parties hereto acknowledge that in the event of a
breach or a threatened breach by Executive of any of his obligations under
Sections 7, 9 or 10 of this Agreement the Company will not have an adequate
remedy at law. Accordingly, in the event of any such breach or threatened breach
by Executive, the Company will be entitled to such equitable and injunctive
relief as may be available to restrain Executive and any business, firm,
partnership, individual, corporation or entity participating in such breach or
threatened breach from the violation of the provisions hereof, and nothing
herein will be construed as prohibiting the Company from pursuing any other
remedies available at law or in equity for such breach or threatened breach,
including the recovery of damages.

12. Notices. Any notice provided for in this Agreement must be in writing and
must be either personally delivered, mailed by first class mail (postage prepaid
and return receipt requested) or sent by reputable overnight courier service
(charges prepaid) to the recipient at the address below indicated or at such
other address or to the attention of such other person as the recipient party
has specified by prior written notice to the sending party. Notices will be
deemed to have been given hereunder and received when delivered personally, five
days after deposit in the U.S. mail and one day after deposit for overnight
delivery with a reputable overnight courier service. All notices hereunder to
the Company shall be addressed to the Secretary of the Company at 570 Lexington
Avenue, 29th Floor, New York, NY, 10022, and to Executive at 2407 Cave Spring
Place, Louisville, KY. Each such address for notice may be changed by notice of
such change given to the other party hereto.

13. Entire Agreement. This Agreement constitutes the entire agreement of the
parties hereto with respect to the subject matter hereof and supersedes all
prior or contemporaneous agreements, whether written or oral, of the parties or
affiliates hereto relating to the subject matter hereof. No amendment, waiver or
modification hereof will be valid or binding unless made in writing and signed
by the parties hereto (in the case of an amendment or modification) or by the
party against whom enforcement is sought (in the case of a waiver).

14. Governing Law/Arbitration. This Agreement will be governed, interpreted and
construed according to the internal laws of the State of New York without regard
to conflict of laws principles. Any controversy or claim arising out of, or
relating to, this Agreement or the breach thereof, must be promptly settled by
arbitration by a panel of three (3) arbitrators in New York, New York, in
accordance with the Commercial Rules of the American Arbitration Association
then in effect, and judgment upon the award rendered may be entered in any court
having jurisdiction thereof. It is expressly understood that the arbitrators
will have the authority to grant legal and equitable relief, including both
temporary restraints and preliminary injunctive relief to the same extent as
could a court of competent jurisdiction, and that the arbitrators are empowered
to order either side to fully cooperate in promptly resolving any controversies
or claims under this Agreement. Notwithstanding the foregoing, in the event of a
breach or threatened breach by Executive of any provision of Section 7, 9 or 10
of this Agreement, the Company will be entitled to seek an injunction from any
court of competent jurisdiction in the State of New York and Executive hereby
submits to the personal jurisdiction

 

 

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of any such court. The Company shall bear all reasonable costs and expenses
(including, but not limited to, Executive’s reasonable attorneys’ fees and costs
and expenses) in connection with enforcement of his rights and any reasonable
costs associated with the enforcement of any arbitration award in court; unless
Executive fails to prevail on any material issue in such dispute. The Company
shall also pay Executive’s reasonable legal fees and expenses (at standard
hourly rates) in connection with the drafting and negotiation of this Agreement
and related documents, which fees and expenses shall not exceed $25,000 in the
aggregate.

15. Severability. Should any part of this Agreement be held or declared to be
void or illegal for any reason by an arbitrator or court of competent
jurisdiction, such provision will be ineffective, but all other parts of this
Agreement which can be effected without such illegal part will nevertheless
remain in full force and effect. In such a case, the parties shall, and the
court of competent jurisdiction may, replace the invalid provision with a
legally permissible arrangement, which comes nearest to the intended purpose of
the invalid provision.

16. Headings. The Section headings contained in this Agreement are for reference
purposes only and will not affect the meaning or interpretation of this
Agreement.

17. Withholding. Anything to the contrary notwithstanding, all payments required
to be made by the Company hereunder to Executive will be subject to withholding
of such amounts relating to taxes (whether or not related to payments required
to be made by the Company hereunder) as the Company may reasonably determine it
should withhold pursuant to any applicable law or regulation.

18. Counterparts. This Agreement may be executed in one or more counterparts,
each of which will be deemed to be an original, but all of which will
collectively constitute a single original.

19. No Reliance; Opportunity to Consult with Counsel. The parties hereto each
represent to the other that in executing this Agreement each does not rely upon,
and has not relied upon, any representation or statement not set forth herein
with regard to the subject matter, basis or effect of this Agreement or
otherwise. Executive acknowledges that he has had an opportunity to consult with
an attorney of his choice prior to executing this Agreement.

20. No Assignment. Neither this Agreement nor the right to receive any payments
hereunder may be assigned by Executive except as provided for herein. This
Agreement will be binding upon Executive, his heirs, executors and
administrators and upon the Company, its successors and assigns.

21. No Mitigation or Setoff. Executive shall not be required to mitigate the
amount of any damages that Executive may incur or other payments to be made to
Executive hereunder as a result of any termination or expiration of this
Agreement. Neither the Company, nor any of its subsidiaries or affiliates shall
be entitled to set-off against the amounts payable to Executive under this
Agreement any amounts earned by or owed to Executive, in other employment after
termination of his employment, or for any other reason.

22. Non-Disparagement. Executive agrees not to publicly criticize, denigrate or
disparage the Company, its past and present direct and indirect subsidiaries,
affiliates, successors, assigns and all of their past and present employees,
officers and directors. The Company agrees not to, and to use commercially
reasonable efforts to cause its past and present

 

 

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direct and indirect subsidiaries, affiliates, successors, assigns and all of
their past and present employees, officers and directors not to, publicly
criticize, denigrate or disparage Executive.

23. Survival. The provisions of Sections 4(f), 5, 6, 7, 9, 10, 11, 14, 15, 17,
20, 21, 22 and this Section 23 will survive the termination or expiration of
this Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.

 

 

Castle Brands Inc.

 

Executive

By: 

/s/ Seth Weinberg

 

By: 

/s/ Donald Marsh

 

Name: Seth Weinberg
Title: Senior Vice President, General Counsel and Secretary

 

 

Name: Donald Marsh

 

 

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EXHIBIT A

FORM OF OPTION AGREEMENT

CASTLE BRANDS INC.

STOCK OPTION GRANT AGREEMENT

 

Granted to: Donald L. Marsh

 

Grant Date: November 12, 2007

     

Social Security No.: ______________

 

Option price per share: $3.09

     

Option No.: ___

 

Governing Document: Castle Brands Inc.
2003 Stock Incentive Plan (the “Plan”)

Total Shares: 250,000

 

 

     

Vesting Period: Four Years

 

 

Your Option

This option is granted pursuant to, and is subject to the terms and conditions
of, the Plan and the Employment Agreement between you and the Company to which
this Form of Option Agreement is attached “Employment Agreement”). Except as
otherwise specifically stated herein, any inconsistency between the terms of
this option agreement and the Employment Agreement shall be resolved by
reference to the terms and provisions which are more favorable to you. Any
remaining inconsistency between the terms of this option agreement and the
Employment Agreement and the terms of the Plan, shall be resolved by reference
to the terms and provisions of the Plan.

Your option shall be treated as an option which is not an incentive stock
option.

Vesting

This option shall vest and become exercisable evenly over four years, commencing
on March 1, 2007, at the rate of 25% per year, subject to your continued
employment on the applicable vesting date. This option shall be subject to
acceleration of vesting and exercisability as provided in the Employment
Agreement and you will receive credit for one additional year of service for
determining your vesting and exercisability rights on the first date on which
you have earned a “Threshold Supplemental Performance Bonus” and your right to
exercise the option shall become fully vested and exercisable on the first date
on which you have earned the “Maximum Supplemental Performance Bonus,” as each
such term is defined in the Employment Agreement.

Payment Methods

 

 

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Payment of the option price shall be made in U.S. dollars or in Common Stock of
the Corporation valued at its fair market value, or in a combination of such
Common Stock and cash, or by any other method as may be approved by the
Compensation Committee or otherwise permitted under the Plan. However, payment
may not be made with Common Stock unless stock has been held for at least six
months. Payment shall be made to the Corporation at its corporate office, Castle
Brands Inc., 570 Lexington Avenue, 29th Floor, New York, NY 10022, Attention:
President.

Conditions of Exercisability

The exercise of your option is subject to the following terms and conditions:

As a prerequisite to delivery of any stock certificates upon your exercise of an
option granted hereunder, you shall give an undertaking and agree to the placing
of such legends on your certificates as may be required by the Compensation
Committee to assure compliance with any federal or state securities laws. The
Common Stock purchased pursuant to the exercise of an option granted hereunder
cannot be sold unless it has been registered under the Securities Act of 1933,
as amended (the “Act”), or is subject to an exemption from registration under
such Act.

Except as provided below or in the Employment Agreement, you must be an employee
or director of, or a consultant to the Corporation or one of its subsidiaries at
the date of exercise and that employment, directorship or consultancy must have
been continuous from the date hereof. For the purposes of the Plan, persons on
company-authorized leaves of absence are considered employees; however,
long-term disability is not considered employment.

In the event of a change of control of the Corporation your rights to exercise
this option shall be governed by your employment agreement, or if not
specifically addressed in your employment agreement or if you do not have an
employment agreement, shall be governed by the Plan. In the event of (i) your
death or (ii) the termination of your employment, directorship or consultancy by
the Corporation for cause or without cause, by you or due to long-term
disability while an active employee, director or consultant, your rights to
exercise this option shall be governed by your employment agreement, or if not
specifically addressed in your employment agreement or if you do not have an
employment agreement, shall be as follows:

(a) In the event of your death while an active employee, director or consultant,
your rights to exercise this option which have vested to and including the date
of death may be exercised within one year after death by your estate or by any
person who acquires such option by inheritance or devise. Thereafter, such
rights shall lapse.

(b) In the event of the termination of your employment, directorship or
consultancy due to long-term disability, your rights to exercise this option
which have vested to and including the date of long-term disability may be
exercised within one year after the start of long-term disability by you or,
should you die within said one year period, by your estate or any such person
who acquires this option by inheritance or devise. Thereafter, such rights shall
lapse.

 

 

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(c) In the event of your Retirement (as defined below) from the Corporation, or
one of its subsidiaries, your rights to exercise this option which have vested
to and including the date of your Retirement may be exercised within three
months after Retirement by you or, should you die within said three months
period, by your estate or any person who acquires this option by inheritance or
devise. Thereafter, such rights shall lapse. For purposes of this paragraph (c),
the term “Retirement” shall mean the termination of employment after having
reached age sixty-five (65).

(d) In the event of the termination of your employment by the Company without
Cause or by you for Good Reason (each as defined in the Employment Agreement),
or in the event of your death or disability, your rights to exercise this option
which have vested to date of termination or in connection therewith may be
exercised at any time within twelve months after such termination (the “Post
Termination Exercise Period”) or, should you die within said twelve month
period, by your estate or any person who acquires this option by inheritance or
devise. Thereafter, such rights shall lapse.

(e) If your employment is terminated for Cause, the option granted hereunder
shall provisionally terminate upon the giving of notice of your termination, but
your rights under the Option shall be stayed pending conclusion of any
arbitration proceeding you commence within sixty days of termination to contest
such determination.

This option is not, in any event, exercisable after the expiration of ten years
from the date of grant.

The exercise of this option is subject to all the terms and conditions contained
in the Plan, a copy of which is attached hereto.

In connection with the exercise of this option, the Corporation, or one of its
subsidiaries, shall have the right to withhold from your salary or other amounts
payable to you, or to require you to make arrangements to pay in a manner
satisfactory to the Corporation, the appropriate amount of applicable
withholding taxes, if any. Without limiting the scope of the preceding sentence,
you shall have the right to elect to pay your withholding taxes to the
Corporation in cash or to have such number of shares of Common Stock otherwise
issuable with respect to the exercise of this option reduced by the amount
necessary to satisfy all or part, as you may so elect, of your statutory minimum
withholding obligation, and to transfer to the Corporation unrestricted shares
of Common Stock already held by you to satisfy all or any part, as you may so
elect, of your withholding obligation, provided that no more than the statutory
minimum withholding amount shall be so withheld.

Please retain this copy for your files.

 

CASTLE BRANDS INC.

 

GRANTEE:

 
By: 

 

 

 

Print Name:
Title:

 

Print Name:

 

 

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EXHIBIT B

Form of General Release

GENERAL RELEASE

1. As a condition to and in consideration of the payments and benefits described
in Section 6 of the Employment Agreement, dated as of November 12, 2007, between
Castle Brands Inc. and me relating to my employment with Castle Brands Inc., and
for other good and valuable consideration, I, with the intention of binding
myself and my heirs, beneficiaries, trustees, administrators, executives,
assigns and legal representatives (collectively, the “Releasors”), hereby
irrevocably and unconditionally release, remise, and forever discharge Castle
Brands Inc. and the Releasees (as hereinafter defined) with respect to any and
all agreements, promises, rights, liabilities, claims, and demands of any kind
whatsoever (upon any legal or equitable theory, whether contractual, common law,
or statutory, under federal, state or local law or otherwise), whether known or
unknown, asserted or unasserted, fixed or contingent, apparent or concealed,
that the Releasors ever had, now have or hereafter can, shall or may have for,
upon, or by reason of any matter, cause or thing whatsoever existing, accruing,
arising or occurring at any time on or prior to the date I execute this General
Release, including, without limitation, (i) any and all rights and claims
arising out of or in connection with my employment by Castle Brands Inc., the
terms and conditions of such employment, or the termination of my employment;
(ii) any and all contract claims, claims for bonuses, claims for severance
allowances or entitlements; (iii) fraud claims, defamation, disparagement and
other personal injury and tort claims; and (iv) claims under any federal, state,
or municipal employee benefit, wage payment, discrimination, or fair employment
practices law (e.g., on the basis of sex, religion, age, race, or disability),
statute, or regulation, and claims for costs and expenses (including but not
limited to experts’ fees and attorneys’ fees) with respect thereto. This General
Release includes, without limitation, any and all rights and claims under the
Title VII of the Civil Rights Act of 1964, as amended, the Employee Retirement
Income Security Act of 1974, the Americans with Disabilities Act of 1990, the
U.S. Pregnancy Discrimination Act, the U.S. Family and Medical Leave Act, the
U.S. Fair Labor Standards Act, the U.S. Equal Pay Act, The Workers Adjustment
and Notification Act, the Equal Pay Act of 1963, the Age Discrimination in
Employment Act of 1967, the Older Workers Benefit Protection Act of 1990, the
Civil Rights Act of 1866, the Family and Medical Leave Act of 1993, the Civil
Rights Act of 1991, the New York Conscientious Employee Protection Act, the New
York Equal Pay Act, the New York Smokers’ Rights Law, the New York Family Leave
Act, the New York Genetic Privacy Act, and the New York Constitution, in each
case as such laws have been or may be amended.

2. Notwithstanding any other provision of this Release, nothing in this General
Release shall deprive Releasors of any compensation that was earned but not paid
prior to my termination; accrued benefits to which I have acquired a vested
right under any employee benefit plan or policy, stock plan or deferred
compensation arrangement; any other benefits or any health care continuation
coverage to the extent required by applicable law; or any right that I or my
Releasors may have under the Employment Agreement with the Company dated as of
November 12, 2007.

 

 

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3. For purposes of this General Release, the term “Castle Brands Inc. and the
Releasees” includes Castle Brands Inc., its past and present direct and indirect
subsidiaries, affiliates, successors, assigns, and all of its and their past,
preset, and future employees, officers, directors, attorneys, agents, and legal
representatives, whether acting as agents or in individual capacities, and this
General Release shall inure to the benefit of and shall be binding and
enforceable by all such entities and individuals.

4. Notwithstanding anything to the contrary in this General Release, in the
event that any of the parties released under this General Release initiates a
lawsuit or other claim (each, an “Original Lawsuit or Claim”) against any of the
Releasors, the Releasors may counterclaim or bring any lawsuit or other claim
against such released party and/or Castle Brands Inc. and/or its subsidiaries so
long as such counterclaim, lawsuit or other claim is related to the Original
Lawsuit or Claim. Except as specifically stated in this Section 4, this Section
4 shall not affect the other provisions of this General Release

5. (a) Opportunity to Review. I acknowledge that before signing this General
Release, I was given a period of at least twenty-one (21) days in which to
review and consider it. I acknowledge that I was encouraged by Castle Brands
Inc. to review this General Release, and that to the extent I wish to do so I
have done so. I further acknowledge that I have read this General Release in its
entirety, and that I fully understand the terms and legal effect of this General
Release. I am entering into this General Release voluntarily and of my own free
will. If I executed this General Release before the end of the twenty-one (21)
day period, such early execution was completely voluntary, and I had reasonable
and ample time in which to review this General Release.

(b) Revocability. I agree that, for a period of seven days after I sign this
General Release (the “Revocation Period”), I have the right to revoke it by
providing notice, in writing (delivered by hand or by overnight mail), to Castle
Brands Inc., Attention: Chief Executive Officer. Notwithstanding anything
contained herein to the contrary, this General Release will not become effective
and enforceable until after the expiration of the Revocation Period.

Date signed:

 

 

 

 

 

Name:

 

 

 

 

 

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