Exhibit 10.1
FORM OF RETENTION AGREEMENT
     This retention agreement (this “Retention Agreement”) is made as of
July 15, 2008, by and between Castle Brands Inc., a Delaware corporation (the
“Company”), and ____________, a natural person and employee of the Company (the
“Employee”)
     WHEREAS, the Employee is an executive officer of the Company;
     WHEREAS, the Compensation Committee of the Board of Directors of the
Company has determined that it is in the best interest of the Company for the
Employee to remain in the employment of the Company following any Control Event
(as defined herein);
     WHEREAS, the Company and the Employee have determined that it is advisable
and in their respective best interests to enter into this Retention Agreement;
     NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and intending to be legally bound hereby, the Company and the
Employee hereby agree as follows:
     1. RETENTION PAYMENT. If, on the sixtieth (60th) calendar day following the
first Control Event following the date hereof, the Employee continues to be
employed by the Company in any capacity, then the Company shall pay to the
Employee an amount in cash by check or wire transfer of                     
(the “Retention Payment”). The Retention Payment shall be paid without deduction
by reason of any set-off, defense or counterclaim of the Company. If any payment
due hereunder shall become due on a Saturday, Sunday or legal holiday under the
laws of the State of New York, such payment shall be made on the preceding
business day in New York.
     2. DEFINITION OF CONTROL EVENT. For the purposes of this Agreement, the
term “Control Event” shall mean any of:

  (i)   Any Change of Control with respect to the Company or the execution by
the Company of any agreement for a transaction that could result in a Change of
Control;     (ii)   Any Sale of the Company or the execution by the Company of
any agreement for a transaction that could result in a Sale of the Company;    
(iii)   Any Company Financing with gross proceeds to the Company of at least
$10,000,000; or     (iv)   The Company (together with its subsidiaries) sells
assets, except for its products sold in the ordinary course of business, with an
aggregate value of at least $10,000,000.

Furthermore, the following definitions shall apply for all purposes in this
agreement:

 

--------------------------------------------------------------------------------

 

     (b) “Change of Control” means (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; (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; (iii) individuals who
were members of the Board of Directors of the Company as of the date hereof
cease for any reason to constitute at least a majority thereof; or (iv) the
Company sells or disposes of all or substantially all of its assets.
     (c) “Company Financing” means an issuance, sale or placement, through a
rights offer or otherwise, of the equity, equity-linked or debt securities,
instruments or obligations of the Company or any loan or other financing with
one or more lenders and/or investors, but excluding extensions, renewals,
increases or amendments of existing financing.
     (d) “Sale of the Company” means the disposition of the Company or any
significant portion of its equity securities, assets or businesses to one or
more third parties and/or a combination of the business(es) of the Company with
the business(es) of one or more third parties, in either case, in one
transaction or a series or combination of transactions, other than in the
ordinary course of business, including, without limitation, through a sale,
purchase or exchange of capital stock, assets, brands (including, without
limitation, brands which account for twenty percent (20%) or more of the
Company’s volume or revenue, either globally or in the United States, during the
twelve calendar months preceding such sale, purchase or exchange, or a merger,
consolidation or other business combination, an exchange or tender offer, a
recapitalization, a reorganization partnership or similar entity, or any similar
transaction.
     3. PAYMENT CONDITIONS. The Retention Payment shall be made in immediately
available funds denominated in US Dollars at the address of Holder, or such
other place as Holder shall designate in writing to Company.
     4. NO WAIVER. The acceptance by Employee of any partial Retention Payment
or any other amount under this Agreement which is less than the payment in full
of all amounts due and payable shall not (i) constitute a waiver of or impair,
reduce, release or extinguish any right, remedy or recourse of Employee, or
nullify any prior exercise of any such right, remedy or recourse, or (ii)
impair, reduce, release or extinguish the obligations of any party as originally
provided herein.
     5. CUMULATIVE REMEDIES. The rights, remedies and recourses of Holder, as
provided in this Note, shall be cumulative and concurrent and may be pursued
separately, successively or together as often as occasion therefore shall arise,
at the sole discretion of Holder.
     6. GOVERNING LAW. This Note and the rights and obligations of Company and
the Employee hereunder shall be governed, construed and interpreted in
accordance with the laws of the State of New York, without giving effect to
principles of conflicts of law.

2

--------------------------------------------------------------------------------

 

     7. SEVERABILITY. If one or more provisions of this Retention Agreement are
held to be unenforceable under applicable law, Employee and Company agree to
renegotiate such provision in good faith, in order to maintain the economic
position enjoyed by each party as close as possible to that under the provision
rendered unenforceable. In the event that the parties cannot reach a mutually
agreeable and enforceable replacement for such provision, then (i) such
provision shall be excluded from this Retention Agreement, (ii) the balance of
this Retention Agreement shall be interpreted as if such provision were so
excluded and (iii) the balance of this Retention Agreement shall be enforceable
in accordance with its terms.
     8. INTERPRETATION. The headings in this Retention Agreement are included
only for convenience and shall not affect the meaning or interpretation of this
Retention Agreement. The words “herein” and “hereof” and other words of similar
import refer to this Retention Agreement as a whole and not to any particular
part of this Note.
     9. NOTICES. Any notice required or permitted by this Retention Agreement
shall be in writing and shall be deemed sufficient upon receipt, when delivered
personally or by courier, overnight delivery service or confirmed facsimile, or
48 hours after being deposited in the U.S. mail as certified or registered mail
with postage prepaid, if such notice is addressed to the party to be notified at
such party’s address or facsimile number as set forth below or as subsequently
modified by written notice.
     10. ENFORCEABILITY. This Retention Agreement shall be binding upon and
inure to the benefit of both parties hereto and their respective successors and
assigns. If any provision of this Retention Agreement shall be held to be
invalid or unenforceable, in whole or in part, neither the validity nor the
enforceability of the remainder hereof shall in any way be affected.
     11. AMENDMENT AND WAIVERS. Any term of this Retention Agreement may be
amended or waived only with the written consent of the Employee and the Company.
[Remainder of Page Intentionally Left Blank]

3

--------------------------------------------------------------------------------

 

     IN WITNESS WHEREOF, the undersigned has executed this Retention Agreement
as of the date first written above.

            CASTLE BRANDS INC.
      By:   /s/         Name:           Title:           Address:  Castle Brands
Inc.
570 Lexington Avenue, 29th Floor
New York, NY 10022     

ACKNOWLEDGED AND AGREED TO BY:
 

4