REGISTRATION RIGHTS AGREEMENT
 
This Registration Rights Agreement (this “Agreement”) is made and entered into
as of June 8, 2011, between Castle Brands Inc., a Florida corporation (the
“Company”), and each of the several purchasers signatory hereto (each such
purchaser, a “Purchaser” and, collectively, the “Purchasers”).
 
WHEREAS, in connection with those certain Securities Purchase Agreements, dated
as of June 8, 2011, by and among the Company and certain Purchasers (including
Affiliates of the Company), pursuant to which such Purchasers agreed to purchase
shares of Preferred Stock and Warrants and, in the case of purchasers who are
Affiliates of the Company, promissory notes of the Company convertible into such
Preferred Stock and Warrants immediately following Shareholder Approval, and
that certain Exchange Agreement, dated as of June 8, 2011, by and among the
Company and certain Purchasers who hold debt issued by the Company, pursuant to
which such debtholders agreed to exchange, subject to Shareholder Approval, debt
issued by the Company, plus all accrued but unpaid interest thereon, for shares
of Preferred Stock and Warrants, as such Securities Purchase Agreements or
Exchange Agreement may be amended, modified or supplemented from time to time in
accordance with their terms; provided, however, that if the terms of any
Securities Purchase Agreements shall differ, the terms of the Securities
Purchase Agreement to which a given Purchaser is a party shall apply to such
Purchaser (collectively, the “Purchase Agreement”), the Company has agreed, upon
the terms and subject to the conditions of the Purchase Agreement, to issue and
sell to each Purchaser shares of the Company’s Preferred Stock and Warrants; and
 
WHEREAS, to induce the Purchasers to execute and deliver the Purchase Agreement,
the Company has agreed to provide certain registration rights under the
Securities Act and applicable state securities laws.
 
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and each of the
Purchasers hereby agree as follows:
 
1.           Definitions.
 
Capitalized terms used and not otherwise defined herein that are defined in the
Purchase Agreement shall have the meanings given such terms in the Purchase
Agreement. As used in this Agreement, the following terms shall have the
following meanings:
 
“Advice” shall have the meaning set forth in Section ‎6(d).
 
“Conversion Shares” shall have the meaning ascribed to such term in the Articles
of Designation.
 
“Effectiveness Date” means, with respect to the Initial Registration Statement
required to be filed hereunder, the 150th calendar day following the date hereof
and with respect to any additional Registration Statements which may be required
pursuant to Section ‎2(c) or Section ‎3(c), the 90th calendar day following the
date on which an additional Registration Statement is required to be filed
hereunder; provided, however, that in the event the Company is notified by the
Commission that one or more of the above Registration Statements will not be
reviewed or is no longer subject to further review and comments, the
Effectiveness Date as to such Registration Statement shall be the fifth Trading
Day following the date on which the Company is so notified if such date precedes
the dates otherwise required above, provided, further, if such Effectiveness
Date falls on a day that is not a Trading Day, then the Effectiveness Date shall
be the next succeeding Trading Day.

 
 

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“Effectiveness Period” shall have the meaning set forth in Section ‎2(a).
 
“Event” shall have the meaning set forth in Section ‎2(d).
 
“Event Date” shall have the meaning set forth in Section ‎2(d).
 
“Filing Date” means, with respect to the Initial Registration Statement required
hereunder, the 60th calendar day following the date hereof and, with respect to
any additional Registration Statements which may be required pursuant to Section
‎2(c) or Section ‎3(c), the earliest practical date on which the Company is
permitted by SEC Guidance to file such additional Registration Statement related
to the Registrable Securities.
 
“Grace Period” shall have the meaning set forth in Section ‎3(k).
 
“Holder” or “Holders” means the holder or holders, as the case may be, from time
to time of Registrable Securities.
 
“Holding Information” shall have the meaning set forth in Section ‎3(n)
 
“Indemnified Party” shall have the meaning set forth in Section ‎5(c).
 
“Indemnifying Party” shall have the meaning set forth in Section ‎5(c).
 
“Initial Registration Statement” means the initial Registration Statement filed
pursuant to this Agreement.
 
“Losses” shall have the meaning set forth in Section ‎5(a).
 
“Plan of Distribution” shall have the meaning set forth in Section ‎2(a).
 
“Prospectus” means the prospectus included in a Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated by the Commission pursuant to
the Securities Act), as amended or supplemented by any prospectus supplement,
with respect to the terms of the offering of any portion of the Registrable
Securities covered by a Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.

 
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“Registrable Securities” means, as of any date of determination, (a) all of the
shares of Common Stock then issuable upon conversion in full of the Preferred
Stock (assuming on such date the shares of Preferred Stock are converted in full
without regard to any conversion limitations therein), (b) all shares of Common
Stock issuable as dividends on the Preferred Stock assuming the Preferred Stock
is held for at least three years, (c) all Warrant Shares then issuable upon
exercise of the Warrants (assuming on such date the Warrants are exercised in
full without regard to any exercise limitations therein), (d) any additional
shares of Common Stock issuable in connection with anti-dilution provisions in
the Preferred Stock or the Warrants, if any (in each case, without giving effect
to any limitations on conversion set forth in the Articles of Designation or
limitations on exercise set forth in the Warrants) and (e) any securities issued
or then issuable upon any stock split, dividend or other distribution,
recapitalization or similar event with respect to the foregoing; provided,
however, that any such Registrable Securities shall cease to be Registrable
Securities (and the Company shall not be required to maintain the effectiveness
of any, or file another, Registration Statement hereunder with respect thereto)
upon the earliest to occur of the following: (i) such Registrable Securities
have been sold or disposed of by the Holder in accordance with an effective
Registration Statement or in accordance with Rule 144, or (ii) such securities
become eligible for resale without volume or manner-of-sale restrictions and
without current public information pursuant to Rule 144 as set forth in a
written opinion letter to such effect, addressed, delivered and acceptable to
the Transfer Agent (assuming that such securities and any securities issuable
upon exercise, conversion or exchange of which, or as a dividend upon which,
such securities were issued or are issuable, were at no time held by any
Affiliate of the Company), as reasonably determined by the Company, upon the
advice of counsel to the Company.
 
“Registration Statement” means any registration statement required to be filed
hereunder pursuant to Section ‎2(a) and any additional registration statements
contemplated by Section ‎2(c) or Section ‎3(c), including (in each case) the
Prospectus, amendments and supplements to any such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto.
 
“Rule 415” means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted by the Commission
from time to time, or any similar rule or regulation hereafter adopted by the
Commission having substantially the same purpose and effect as such Rule.
 
“Rule 424” means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted by the Commission
from time to time, or any similar rule or regulation hereafter adopted by the
Commission having substantially the same purpose and effect as such Rule.
 
“Selling Shareholder Questionnaire” shall have the meaning set forth in Section
‎3(a).
 
“SEC Guidance” means (i) any publicly-available written or oral guidance of the
Commission staff, or any comments, requirements or requests of the Commission
staff and (ii) the Securities Act.
 
“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

 
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2.           Shelf Registration.
 
(a)           On or prior to each Filing Date, the Company shall prepare and
file with the Commission a Registration Statement covering the resale of all of
the Registrable Securities that are not then registered on an effective
Registration Statement for an offering to be made on a continuous basis pursuant
to Rule 415.  Each Registration Statement filed hereunder shall be on Form S-3
(except if the Company is not then eligible to register for resale the
Registrable Securities on Form S-3, in which case such registration shall be on
another appropriate form in accordance herewith, subject to the provisions of
Section ‎2(e)) and shall contain (unless otherwise directed by the Holders of at
least 85% in interest of the Registrable Securities) substantially the “Plan of
Distribution” attached hereto as Annex A.  Subject to the terms of this
Agreement, the Company shall use its commercially reasonable efforts to cause a
Registration Statement filed under this Agreement (including, without
limitation, under Section ‎3(c)) to be declared effective under the Securities
Act as promptly as possible after the filing thereof, but in any event no later
than the applicable Effectiveness Date, and shall use its commercially
reasonable efforts to keep such Registration Statement continuously effective
under the Securities Act until all Registrable Securities covered by such
Registration Statement (i) have been sold, thereunder or pursuant to Rule 144,
or (ii) may be sold without volume or manner-of-sale restrictions pursuant to
Rule 144 and without the requirement for the Company to be in compliance with
the current public information requirement under Rule 144 as set forth in a
written opinion letter to such effect, addressed, delivered and acceptable to
the Transfer Agent, as reasonably determined by the Company, upon the advice of
counsel to the Company (the “Effectiveness Period”).  The Company shall
telephonically request effectiveness of a Registration Statement as of 5:00 p.m.
Eastern Time on a Trading Day.  The Company shall as soon as reasonably
practicable notify the Holders via facsimile or by e-mail of the effectiveness
of a Registration Statement on the same Trading Day that the Company
telephonically confirms effectiveness with the Commission.  The Company shall,
by 9:30 a.m. Eastern Time on the Trading Day after the effective date of such
Registration Statement, file a final Prospectus with the Commission as required
by Rule 424.  Failure to so notify the Holder within one Trading Day of such
notification of effectiveness or failure to file a final Prospectus as foresaid
shall be deemed an Event under Section ‎2(d).
 
(b)           Notwithstanding the registration obligations set forth in Section
‎2(a), if the Commission informs the Company that all of the Registrable
Securities cannot, as a result of the application of Rule 415, be registered for
resale as a secondary offering on a single registration statement, the Company
agrees to promptly inform each of the Holders thereof and use its commercially
reasonable efforts to file amendments to the Initial Registration Statement as
required by the Commission, covering the maximum number of Registrable
Securities permitted to be registered by the Commission, on Form S-3 or such
other form available to register for resale the Registrable Securities as a
secondary offering, subject to the provisions of Section ‎2(e); provided,
however, that prior to filing such amendment, the Company shall be obligated to
use diligent efforts to advocate with the Commission for the registration of all
of the Registrable Securities in accordance with the SEC Guidance, including
without limitation, Compliance and Disclosure Interpretation 612.09.

 
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(c)           Notwithstanding any other provision of this Agreement and subject
to the payment of liquidated damages pursuant to Section ‎2(d), if the
Commission or any SEC Guidance sets forth a limitation on the number of
Registrable Securities permitted to be registered on a particular Registration
Statement as a secondary offering (and notwithstanding that the Company used
diligent efforts to advocate with the Commission for the registration of all or
a greater portion of Registrable Securities), unless otherwise directed in
writing by a Holder as to its Registrable Securities, the number of Registrable
Securities to be registered on such Registration Statement will be reduced as
follows:
 
 
a.
First, the Company shall reduce or eliminate any securities to be included by
any Person other than a Holder;

 
 
b.
Second, the Company shall reduce Registrable Securities represented by Warrant
Shares (applied, in the case that some Warrant Shares may be registered, to the
Holders on a pro rata basis based on the total number of unregistered Warrant
Shares held by such Holders); and

 
 
c.
Third, the Company shall reduce Registrable Securities represented by Conversion
Shares (applied, in the case that some Conversion Shares may be registered, to
the Holders on a pro rata basis based on the total number of unregistered
Conversion Shares held by such Holders).

 
In the event of a cutback hereunder, the Company shall give the Holder at least
five (5) Trading Days prior written notice along with the calculations as to
such Holder’s allotment.  In the event the Company amends the Initial
Registration Statement in accordance with the foregoing, the Company will use
its commercially reasonable efforts to file with the Commission, as promptly as
allowed by the Commission or SEC Guidance provided to the Company or to
registrants of securities in general, one or more registration statements on
Form S-3 or such other form available to register for resale those Registrable
Securities that were not registered for resale on the Initial Registration
Statement, as amended.

 
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(d)           If: (i) the Initial Registration Statement is not filed on or
prior to its Filing Date (if the Company files the Initial Registration
Statement without affording the Holders the opportunity to review and comment on
the same as required by Section ‎3(a) herein, the Company shall be deemed to
have not satisfied this clause (i)), or (ii) the Company fails to file with the
Commission a request for acceleration of a Registration Statement in accordance
with Rule 461 promulgated by the Commission pursuant to the Securities Act,
within five Trading Days of the date that the Company is notified (orally or in
writing, whichever is earlier) by the Commission that such Registration
Statement will not be “reviewed” or will not be subject to further review, or
(iii) prior to the effective date of a Registration Statement, the Company fails
to file a pre-effective amendment and otherwise respond in writing to comments
made by the Commission in respect of such Registration Statement within 45
calendar days after the receipt of comments by or notice from the Commission
that such amendment is required in order for such Registration Statement to be
declared effective, or (iv) a Registration Statement registering for resale all
of the Registrable Securities is not declared effective by the Commission by the
Effectiveness Date of the Initial Registration Statement, or (v) subject to the
Grace Period, after the effective date of a Registration Statement, such
Registration Statement ceases for any reason to remain continuously effective as
to all Registrable Securities included in such Registration Statement, or the
Holders are otherwise not permitted to utilize the Prospectus therein to resell
such Registrable Securities, for more than ten consecutive calendar days or more
than an aggregate of 20 calendar days (which need not be consecutive calendar
days) during any 12-month period (any such failure or breach being referred to
as an “Event”, and for purposes of clauses (i) and (iv), the date on which such
Event occurs, and for purpose of clause (ii) the date on which such five Trading
Day period is exceeded, and for purpose of clause (iii) the date which such 45
calendar day period is exceeded, and for purpose of clause (v) the date on which
such ten or 15 calendar day period, as applicable, is exceeded being referred to
as “Event Date”), then, in addition to any other rights the Holders may have
hereunder or under applicable law, on each such Event Date and on each monthly
anniversary of each such Event Date (if the applicable Event shall not have been
cured by such date) until the applicable Event is cured, the Company shall pay
to each Holder an amount in cash, as partial liquidated damages and not as a
penalty, equal to 1.0% of the Subscription Amount paid by such Holder pursuant
to the Purchase Agreement. The parties agree that the maximum aggregate
liquidated damages payable to a Holder under this Agreement shall be 3.0% of the
aggregate Subscription Amount paid by such Holder pursuant to the Purchase
Agreement.  If the Company fails to pay any partial liquidated damages pursuant
to this Section in full within seven days after the date payable, the Company
shall pay interest thereon at a rate of 10% per annum (or such lesser maximum
amount that is permitted to be paid by applicable law) to the Holder, accruing
daily from the date such partial liquidated damages are due until such amounts,
plus all such interest thereon, are paid in full. The partial liquidated damages
pursuant to the terms hereof shall apply on a daily pro-rata basis for any
portion of a month prior to the cure of an Event.
 
(e)           If Form S-3 is not available for the registration of the resale of
Registrable Securities hereunder, the Company shall (i) register the resale of
the Registrable Securities on another appropriate form and (ii) undertake to
register the Registrable Securities on Form S-3 as soon as such form is
available, provided that the Company shall maintain the effectiveness of the
Registration Statement then in effect until such time as a Registration
Statement on Form S-3 covering the Registrable Securities has been declared
effective by the Commission.
 
3.           Registration Procedures.
 
In connection with the Company’s registration obligations hereunder, the Company
shall:
 
(a)           Not less than five Trading Days prior to the filing of each
Registration Statement and not less than one Trading Day prior to the filing of
any related Prospectus or any amendment or supplement thereto (other than any
document that would be incorporated or deemed to be incorporated therein by
reference), the Company shall (i) furnish to each Holder copies of all such
documents proposed to be filed (other than those incorporated or deemed to be
incorporated by reference), which documents will be subject to the review of
such Holders, and (ii) cause its officers and directors, counsel and independent
registered public accountants to respond to such inquiries as shall be
necessary, in the reasonable opinion of respective counsel to each Holder, to
conduct a reasonable investigation within the meaning of the Securities Act.
Notwithstanding the above, the Company shall not be obligated to provide the
Holders advance copies of any universal shelf registration statement registering
securities in addition to those required hereunder, or any Prospectus prepared
thereto.  The Company shall not file a Registration Statement or any such
Prospectus or any amendments or supplements thereto (other than documents
incorporated or deemed to be incorporated by reference) to which the Holders of
a majority in interest of the Registrable Securities shall reasonably object in
good faith, provided that the Company is notified of such objection in writing
no later than four Trading Days after the Holders have been so furnished copies
of a Registration Statement or one Trading Day after the Holders have been so
furnished copies of any related Prospectus or amendments or supplements thereto.
Each Holder agrees to furnish to the Company a completed questionnaire
substantially in the form attached to this Agreement as Annex B (a “Selling
Shareholder Questionnaire”) on a date that is not less than two Trading Days
prior to the Filing Date or by the end of the fourth Trading Day following the
date on which such Holder receives draft materials in accordance with this
Section.

 
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(b)           (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to a Registration Statement and the
Prospectus used in connection therewith as may be necessary to keep a
Registration Statement continuously effective as to the applicable Registrable
Securities for the Effectiveness Period and prepare and file with the Commission
such additional Registration Statements in order to register for resale under
the Securities Act all of the Registrable Securities, (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus supplement
(subject to the terms of this Agreement), and, as so supplemented or amended, to
be filed pursuant to Rule 424, (iii) respond as promptly as reasonably possible
to any comments received from the Commission with respect to a Registration
Statement or any amendment thereto and provide as promptly as reasonably
possible to the Holders true and complete copies of all correspondence from and
to the Commission relating to a Registration Statement (provided that, the
Company shall excise any information contained therein which would constitute
material non-public information regarding the Company or any of its
Subsidiaries), and (iv) comply in all material respects with the applicable
provisions of the Securities Act and the Exchange Act with respect to the
disposition of all Registrable Securities covered by a Registration Statement
during the applicable period in accordance (subject to the terms of this
Agreement) with the intended methods of disposition by the Holders thereof set
forth in such Registration Statement as so amended or in such Prospectus as so
supplemented.
 
(c)           If during the Effectiveness Period, the number of Registrable
Securities at any time exceeds 100% of the number of shares of Common Stock then
registered in a Registration Statement, then the Company shall file as soon as
reasonably practicable, but in any case prior to the applicable Filing Date, an
additional Registration Statement covering the resale by the Holders of not less
than the number of such Registrable Securities.

 
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(d)           Notify the Holders of Registrable Securities to be sold (which
notice shall, pursuant to clauses (iii) through (vi) hereof, be accompanied by
an instruction to suspend the use of the Prospectus until the requisite changes
have been made) as promptly as reasonably possible and (if requested by any such
Person) confirm such notice in writing no later than one Trading Day following
the day (i) when the Commission notifies the Company whether there will be a
“review” of such Registration Statement and whenever the Commission comments in
writing on such Registration Statement, (ii) of any request by the Commission or
any other federal or state governmental authority for amendments or supplements
to a Registration Statement or Prospectus or for additional information, (iii)
of the issuance by the Commission or any other federal or state governmental
authority of any stop order suspending the effectiveness of a Registration
Statement covering any or all of the Registrable Securities or the initiation of
any Proceedings for that purpose, (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose, (v) of the occurrence of any event or passage of time that makes the
financial statements included in a Registration Statement ineligible for
inclusion therein or any statement made in a Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to a
Registration Statement, Prospectus or other documents so that, in the case of a
Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, and
(vi) of the occurrence or existence of any pending corporate development with
respect to the Company that the Company believes may be material and that, in
the determination of the Company, makes it not in the best interest of the
Company to allow continued availability of a Registration Statement or
Prospectus, provided, however, in no event shall any such notice contain any
information which would constitute material, non-public information regarding
the Company or any of its Subsidiaries.
 
(e)           Use its commercially reasonable efforts to avoid the issuance of,
or, if issued, obtain the withdrawal of (i) any order stopping or suspending the
effectiveness of a Registration Statement, or (ii) any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest practicable moment.
 
(f)           Furnish to each Holder, without charge, at least one conformed
copy of each such Registration Statement and each amendment thereto, including
financial statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference to the extent requested by such Person, and
all exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the Commission; provided, that any such item which is available
on the EDGAR system (or successor thereto) need not be so furnished.
 
(g)           Subject to the terms of this Agreement, the Company hereby
consents to the use of such Prospectus and each amendment or supplement thereto
by each of the selling Holders in connection with the offering and sale of the
Registrable Securities covered by such Prospectus and any amendment or
supplement thereto in conformity therewith, except after the giving of any
notice pursuant to Section ‎3(d).
 
(h)          The Company shall reasonably cooperate with any broker-dealer
through which a Holder proposes to resell its Registrable Securities in
effecting a filing with the FINRA Corporate Financing Department pursuant to
FINRA Rule 5110, as reasonably requested by any such Holder.

 
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(i)           Prior to any resale of Registrable Securities by a Holder, use its
commercially reasonable efforts to register or qualify or cooperate with the
selling Holders in connection with the registration or qualification (or
exemption from the registration or qualification) of such Registrable Securities
for the resale by the Holder under the securities or Blue Sky laws of such
jurisdictions within the United States as any Holder reasonably requests in
writing, to keep each registration or qualification (or exemption therefrom)
effective during the Effectiveness Period and to do any and all other acts or
things reasonably necessary to enable the disposition in such jurisdictions of
the Registrable Securities covered by each Registration Statement; provided,
that, the Company shall not be required to qualify generally to do business in
any jurisdiction where it is not then so qualified, subject the Company to any
material tax in any such jurisdiction where it is not then so subject or file a
general consent to service of process in any such jurisdiction.
 
(j)           If requested by a Holder, cooperate with such Holder to facilitate
the timely preparation and delivery of certificates representing Registrable
Securities to be delivered to a transferee pursuant to a Registration Statement,
which certificates shall be free, to the extent permitted by the Purchase
Agreement, of all restrictive legends, and to enable such Registrable Securities
to be in such denominations and registered in such names as any such Holder may
reasonably request.
 
(k)          Upon the occurrence of any event contemplated by Section ‎3(d), as
promptly as reasonably possible under the circumstances taking into account the
Company’s good faith assessment of any adverse consequences to the Company and
its shareholders of the premature disclosure of such event, prepare a supplement
or amendment, including a post-effective amendment, to a Registration Statement
or a supplement to the related Prospectus or any document incorporated or deemed
to be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither a Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.  If the Company notifies the Holders in accordance with clauses
(iii) through (vi) of Section ‎3(d) above to suspend the use of any Prospectus
until the requisite changes to such Prospectus have been made, then the Holders
shall suspend use of such Prospectus.  The Company will use its commercially
reasonably efforts to ensure that the use of the Prospectus may be resumed as
promptly as is practicable.  Notwithstanding anything to the contrary contained
herein, the Company shall be entitled under this Section ‎3(k) to suspend the
availability of a Registration Statement and Prospectus, without the payment of
damages otherwise required pursuant to Section ‎2(d), for a period not to exceed
120 calendar days (which need not be consecutive days) in any 12-month period
(the “Grace Period”).
 
(l)           Comply with all applicable rules and regulations of the
Commission.
 
(m)         The Company shall use its commercially reasonably efforts to
maintain eligibility for use of Form S-3 (or any successor form thereto) for the
registration of the resale of Registrable Securities.

 
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(n)           The Company may require each selling Holder to furnish to the
Company a certified statement as to the number of shares of Common Stock
beneficially owned by such Holder and, if required by the Commission, the
natural persons thereof that have voting and dispositive control over such
shares (collectively, “Holding Information”). During any periods that the
Company is unable to meet its obligations under this Agreement with respect to
the registration of the Registrable Securities because any Holder fails to
furnish either (i) Holding Information within three Trading Days of the
Company’s request, or (ii) a Shareholder Questionnaire within the time period
specified in Section ‎3(a), any liquidated damages that are accruing at such
time as to such Holder shall be tolled and any Event that may otherwise occur
because of such delay shall be suspended, as to such Holder only, until the
first Filing Date following the date that such Holding Information or
Shareholder Questionnaire, as applicable, is delivered to the Company; provided
that if the date of such delivery is less than three Trading Days prior to such
Filing Date, such damages shall continue to be tolled and any Event that may
otherwise occur because of such delay shall continue to be suspended, in each
case until the following Filing Date.
 
4.           Registration Expenses. All fees and expenses incident to the
performance of or compliance with, this Agreement by the Company shall be borne
by the Company whether or not any Registrable Securities are sold pursuant to a
Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses of the Company’s counsel and
independent registered public accountants) (A) with respect to filings made with
the Commission, (B) with respect to filings required to be made with any Trading
Market on which the Common Stock is then listed for trading, and (C) in
compliance with applicable state securities or Blue Sky laws reasonably agreed
to by the Company in writing (including, without limitation, fees and
disbursements of counsel for the Company in connection with Blue Sky
qualifications or exemptions of the Registrable Securities), (ii) printing
expenses (including, without limitation, expenses of printing certificates for
Registrable Securities), (iii) fees and disbursements of counsel for the
Company, (iv) Securities Act liability insurance, if the Company so desires such
insurance, and (vi fees and expenses of all other Persons retained by the
Company in connection with the consummation of the transactions contemplated by
this Agreement.  In addition, the Company shall be responsible for all of its
internal expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder.  In no event shall the Company be
responsible for any broker or similar commissions of any Holder or, except to
the extent provided for in the Transaction Documents, any legal fees or other
costs of the Holders.

 
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5.           Indemnification.
 
(a)           Indemnification by the Company. The Company shall, notwithstanding
any termination of this Agreement, indemnify and hold harmless each Holder, the
officers, directors, members, partners, agents, brokers (including brokers who
offer and sell Registrable Securities as principal as a result of a pledge or
any failure to perform under a margin call of Common Stock), investment advisors
and employees (and any other Persons with a functionally equivalent role of a
Person holding such titles, notwithstanding a lack of such title or any other
title) of each of them, each Person who controls any such Holder (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
and the officers, directors, members, shareholders, partners, agents and
employees (and any other Persons with a functionally equivalent role of a Person
holding such titles, notwithstanding a lack of such title or any other title) of
each such controlling Person, to the fullest extent permitted by applicable law,
from and against any and all losses, claims, damages, liabilities, costs
(including, without limitation, reasonable attorneys’ fees) and expenses
(collectively, “Losses”), as incurred, arising out of or relating to (1) any
untrue or alleged untrue statement of a material fact contained in a
Registration Statement, any Prospectus or any form of prospectus or in any
amendment or supplement thereto or in any preliminary prospectus, or arising out
of or relating to any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein (in the case of
any Prospectus or supplement thereto, in light of the circumstances under which
they were made) not misleading or (2) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act or any state securities law, or
any rule or regulation thereunder, in connection with the performance of its
obligations under this Agreement, except to the extent, but only to the extent,
that (i) such untrue statements or omissions are based solely upon information
regarding such Holder furnished in writing to the Company by such Holder
expressly for use therein, or to the extent that such information relates to
such Holder or such Holder’s proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such Holder
expressly for use in a Registration Statement, such Prospectus or in any
amendment or supplement thereto (it being understood that the Holder has
approved Annex A hereto for this purpose) or (ii) in the case of an occurrence
of an event of the type specified in Section ‎3(d)(iii)-(vi), the use by such
Holder of an outdated, defective or otherwise unavailable Prospectus after the
Company has notified such Holder in writing that the Prospectus is outdated,
defective or otherwise unavailable for use by such Holder and prior to the
receipt by such Holder of the Advice contemplated in Section ‎6(d), but only if
and to the extent that following the receipt of the Advice the misstatement or
omission giving rise to such Loss would have been corrected.  The Company shall
notify the Holders promptly of the institution, threat or assertion of any
Proceeding arising from or in connection with the transactions contemplated by
this Agreement of which the Company is aware. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
such indemnified person and shall survive the transfer of any Registrable
Securities by any of the Holders in accordance with Section ‎6(h).
 
(b)           Indemnification by Holders. Each Holder shall, severally and not
jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents or employees of such controlling Persons, to the
fullest extent permitted by applicable law, from and against all Losses, as
incurred, to the extent arising out of or based solely upon: (x) such Holder’s
failure to comply with any applicable prospectus delivery requirements of the
Securities Act through no fault of the Company or (y) any untrue or alleged
untrue statement of a material fact contained in any Registration Statement, any
Prospectus, or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or relating to any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or supplement thereto, in
light of the circumstances under which they were made) not misleading (i) to the
extent, but only to the extent, that such untrue statement or omission is
contained in any information so furnished in writing by such Holder to the
Company expressly for inclusion in such Registration Statement or such
Prospectus or (ii) to the extent, but only to the extent, that such information
relates to such Holder’s proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such Holder
expressly for use in a Registration Statement (it being understood that the
Holder has approved Annex A hereto for this purpose), such Prospectus or in any
amendment or supplement thereto or (iii) in the case of an occurrence of an
event of the type specified in Section ‎3(d)‎(iii)-‎(vi), to the extent, but
only to the extent, related to the use by such Holder of an outdated, defective
or otherwise unavailable Prospectus after the Company has notified such Holder
in writing that the Prospectus is outdated, defective or otherwise unavailable
for use by such Holder and prior to the receipt by such Holder of the Advice
contemplated in Section ‎6(d), but only if and to the extent that following the
receipt of the Advice the misstatement or omission giving rise to such Loss
would have been corrected.  In no event shall the liability of any selling
Holder under this Section ‎5(b) be greater in amount than the dollar amount of
the net proceeds received by such Holder upon the sale of the Registrable
Securities giving rise to such indemnification obligation.

 
11

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(c)           Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
“Indemnified Party”), such Indemnified Party shall promptly notify the Person
from whom indemnity is sought (the “Indemnifying Party”) in writing; provided,
that, the failure of any Indemnified Party to give such notice shall not relieve
the Indemnifying Party of its obligations or liabilities pursuant to this
Agreement, except (and only) to the extent that such failure shall have
materially and adversely prejudiced the Indemnifying Party.  The Indemnifying
Party shall have the right to assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all fees and expenses incurred in connection with defense thereof.
 
An Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless:  (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses, (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding, or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified Party
and the Indemnifying Party, and counsel to the Indemnified Party shall
reasonably believe that a material conflict of interest is likely to exist if
the same counsel were to represent such Indemnified Party and the Indemnifying
Party (in which case, if such Indemnified Party notifies the Indemnifying Party
in writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to assume
the defense thereof and the reasonable fees and expenses of no more than one
separate counsel for all Holders shall be at the expense of the Indemnifying
Party).  The Indemnifying Party shall not be liable for any settlement of any
such Proceeding effected without its written consent, which consent shall not be
unreasonably withheld or delayed.  No Indemnifying Party shall, without the
prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.
 
Subject to the terms of this Agreement, all reasonable fees and expenses of the
Indemnified Party (including reasonable fees and expenses to the extent incurred
in connection with investigating or preparing to defend such Proceeding in a
manner not inconsistent with this Section) shall be paid to the Indemnified
Party, as incurred, within 30 Trading Days of written notice thereof to the
Indemnifying Party; provided, that, the Indemnified Party shall promptly
reimburse the Indemnifying Party for that portion of such fees and expenses
applicable to such actions for which such Indemnified Party is finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) not to be entitled to indemnification
hereunder.

 
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(d)           Contribution. If the indemnification under Section ‎5(a) or ‎5(b)
is unavailable to an Indemnified Party or insufficient to hold an Indemnified
Party harmless for any Losses, then each Indemnifying Party shall contribute to
the amount paid or payable by such Indemnified Party, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission.  The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in this Agreement, any reasonable attorneys’ or
other fees or expenses incurred by such party in connection with any Proceeding
to the extent such party would have been indemnified for such fees or expenses
if the indemnification provided for in this Section was available to such party
in accordance with its terms.
 
The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section ‎5(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding
paragraph.  Notwithstanding the provisions of this Section ‎5(d), no Holder
shall be required to contribute pursuant to this Section ‎5(d), in the
aggregate, any amount in excess of the amount by which the net proceeds actually
received by such Holder from the sale of the Registrable Securities subject to
the Proceeding exceeds the amount of any damages that such Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission.
 
The indemnity and contribution agreements contained in this Section are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.
 
6.           Miscellaneous.
 
(a)           Remedies.  In the event of a breach by the Company or by a Holder
of any of their respective obligations under this Agreement, each Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
shall be entitled to specific performance of its rights under this
Agreement.  Each of the Company and each Holder agrees that monetary damages
would not provide adequate compensation for any losses incurred by reason of a
breach by it of any of the provisions of this Agreement and hereby further
agrees that, in the event of any action for specific performance in respect of
such breach, it shall not assert or shall waive the defense that a remedy at law
would be adequate.

 
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(b)           No Piggyback on Registrations; Prohibition on Filing Other
Registration Statements.  Neither the Company nor any of its security holders
(other than the Holders in such capacity pursuant hereto) may include securities
of the Company in any Registration Statements other than the Registrable
Securities.
 
(c)           Compliance. Each Holder covenants and agrees that it will comply
with the prospectus delivery requirements of the Securities Act as applicable to
it (unless an exemption therefrom is available) in connection with sales of
Registrable Securities pursuant to a Registration Statement.
 
(d)           Discontinued Disposition.  By its acquisition of Registrable
Securities, each Holder agrees that, upon receipt of a notice from the Company
of the occurrence of any event of the kind described in Section
‎3(d)‎(iii)-‎(vi), such Holder will forthwith discontinue disposition of such
Registrable Securities under a Registration Statement until it is advised in
writing (the “Advice”) by the Company that the use of the applicable Prospectus
(as it may have been supplemented or amended) may be resumed.  The Company will
use its commercially reasonable efforts to ensure that the use of the Prospectus
may be resumed as promptly as is practicable.
 
(e)           Piggy-Back Registrations. If, at any time during the Effectiveness
Period, there is not an effective Registration Statement covering all of the
Registrable Securities and the Company shall determine to prepare and file with
the Commission a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with the Company’s stock option or
other employee benefit plans, then the Company shall deliver to each Holder a
written notice of such determination and, if within 15 days after the date of
the delivery of such notice, any such Holder shall so request in writing, the
Company shall include in such registration statement all or any part of such
Registrable Securities such Holder requests to be registered; provided, however,
that the Company shall not be required to register any Registrable Securities
pursuant to this Section ‎6(e) that are eligible for resale pursuant to Rule 144
(without volume restrictions or current public information requirements)
promulgated by the Commission pursuant to the Securities Act or that are the
subject of a then effective Registration Statement.
 
(f)           Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by the Company
and the Holders of 67% or more of the then outstanding Registrable Securities
(for purposes of clarification, this includes any Registrable Securities
issuable upon exercise or conversion of any Security).  If a Registration
Statement does not register all of the Registrable Securities pursuant to a
waiver or amendment done in compliance with the previous sentence, then the
number of Registrable Securities to be registered for each Holder shall be
reduced pro rata among all Holders and each Holder shall have the right to
designate which of its Registrable Securities shall be omitted from such
Registration Statement. Notwithstanding the foregoing, a waiver or consent to
depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of a Holder or some Holders and that does not directly
or indirectly affect the rights of other Holders may be given only by such
Holder or Holders of all of the Registrable Securities to which such waiver or
consent relates; provided, however, that the provisions of this sentence may not
be amended, modified, or supplemented except in accordance with the provisions
of the first  sentence of this Section ‎6(f). No consideration shall be offered
or paid to any Person to amend or consent to a waiver or modification of any
provision of this Agreement unless the same consideration also is offered to all
of the parties to this Agreement.

 
14

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(g)           Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be delivered as set forth
in the Purchase Agreement.
 
(h)           Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of each of the
parties and shall inure to the benefit of each Holder. The Company may not
assign (except by merger) its rights or obligations hereunder without the prior
written consent of all of the Holders of the then outstanding Registrable
Securities.  Each Holder may assign their respective rights hereunder in the
manner and to the Persons as permitted under Section 5.7 of the Purchase
Agreement.
 
(i)           No Inconsistent Agreements. Neither the Company nor any of its
Subsidiaries has entered, as of the date hereof, nor shall the Company or any of
its Subsidiaries, on or after the date of this Agreement, enter into any
agreement with respect to its securities, that would have the effect of
impairing the rights granted to the Holders in this Agreement or otherwise
conflicts with the provisions hereof.  Except as set forth on Schedule 6(i),
neither the Company nor any of its Subsidiaries has previously entered into any
agreement granting any registration rights with respect to any of its securities
to any Person that have not been satisfied in full.
 
(j)           Execution and Counterparts. This Agreement may be executed in two
or more counterparts, all of which when taken together shall be considered one
and the same agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party, it being understood that
both parties need not sign the same counterpart.  In the event that any
signature is delivered by facsimile transmission or by e-mail delivery of a
“.pdf” format data file, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.
 
(k)          Governing Law.  All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be determined
in accordance with the provisions of the Purchase Agreement.
 
(l)           Cumulative Remedies. The remedies provided herein are cumulative
and not exclusive of any other remedies provided by law.
 
(m)         Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.

 
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(n)           Headings. The headings in this Agreement are for convenience only,
do not constitute a part of the Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
 
(o)           Independent Nature of Holders’ Obligations and Rights. The
obligations of each Holder hereunder are several and not joint with the
obligations of any other Holder hereunder, and no Holder shall be responsible in
any way for the performance of the obligations of any other Holder hereunder.
Nothing contained herein or in any other agreement or document delivered at any
closing, and no action taken by any Holder pursuant hereto or thereto, shall be
deemed to constitute the Holders as a partnership, an association, a joint
venture or any other kind of group or entity, or create a presumption that the
Holders are in any way acting in concert or as a group or entity with respect to
such obligations or the transactions contemplated by this Agreement or any other
matters, and the Company acknowledges that the Holders are not acting in concert
or as a group, and the Company shall not asset any such claim, with respect to
such obligations or transactions. Each Holder shall be entitled to protect and
enforce its rights, including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Holder to be joined as an
additional party in any proceeding for such purpose. The use of a single
agreement with respect to the obligations of the Company contained was solely in
the control of the Company, not the action or decision of any Holder, and was
done solely for the convenience of the Company and not because it was required
or requested to do so by any Holder.  It is expressly understood and agreed that
each provision contained in this Agreement is between the Company and a Holder,
solely, and not between the Company and the Holders collectively and not between
and among Holders.
 
********************
 
(Signature Pages Follow)

 
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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as of the date first written above.
 

 
CASTLE BRANDS INC.
       
By:
/s/ Alfred J. Small
 
Name:
Alfred J. Small
 
Title:
Senior Vice President, Chief Financial
Officer, Secretary and Treasurer

[SIGNATURE PAGES OF HOLDERS FOLLOW]

 
 

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[SIGNATURE PAGE OF HOLDERS TO ROX RRA]

Name of Holder:
 

Signature of Authorized Signatory of Holder:
 

Name of Authorized Signatory:
 

Title of Authorized Signatory:
 

 
[SIGNATURE PAGES CONTINUE]

 
 

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Annex A
 
Plan of Distribution
 
Each Selling Shareholder (the “Selling Shareholders”) of the securities and any
of their pledgees, assignees and successors-in-interest may, from time to time,
sell any or all of their securities covered hereby on the NYSE AMEX or any other
stock exchange, market or trading facility on which the securities are traded or
in private transactions.  These sales may be at fixed or negotiated prices.  A
Selling Shareholder may use any one or more of the following methods when
selling securities:
 
 
·
ordinary brokerage transactions and transactions in which the broker dealer
solicits purchasers;

 
 
·
block trades in which the broker dealer will attempt to sell the securities as
agent but may position and resell a portion of the block as principal to
facilitate the transaction;

 
 
·
purchases by a broker dealer as principal and resale by the broker dealer for
its account;

 
 
·
an exchange distribution in accordance with the rules of the applicable
exchange;

 
 
·
privately negotiated transactions;

 
 
·
settlement of short sales entered into after the effective date of the
registration statement of which this prospectus is a part;

 
 
·
in transactions through broker dealers that agree with the Selling Shareholders
to sell a specified number of such securities at a stipulated price per
security;

 
 
·
through the writing or settlement of options or other hedging transactions,
whether through an options exchange or otherwise;

 
 
·
a combination of any such methods of sale; or

 
 
·
any other method permitted pursuant to applicable law.

 
The Selling Shareholders may also sell securities under Rule 144 under the
Securities Act of 1933, as amended (the “Securities Act”), if available, rather
than under this prospectus.
 
Broker dealers engaged by the Selling Shareholders may arrange for other brokers
dealers to participate in sales.  Broker dealers may receive commissions or
discounts from the Selling Shareholders (or, if any broker dealer acts as agent
for the purchaser of securities, from the purchaser) in amounts to be
negotiated, but, except as set forth in a supplement to this Prospectus, in the
case of an agency transaction not in excess of a customary brokerage commission
in compliance with FINRA Rule 2440; and in the case of a principal transaction a
markup or markdown in compliance with FINRA IM-2440.

 
 

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In connection with the sale of the securities or interests therein, the Selling
Shareholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the
securities in the course of hedging the positions they assume.  The Selling
Shareholders may also sell securities short and deliver these securities to
close out their short positions, or loan or pledge the securities to
broker-dealers that in turn may sell these securities.  The Selling Shareholders
may also enter into option or other transactions with broker-dealers or other
financial institutions or create one or more derivative securities which require
the delivery to such broker-dealer or other financial institution of securities
offered by this prospectus, which securities such broker-dealer or other
financial institution may resell pursuant to this prospectus (as supplemented or
amended to reflect such transaction).
 
The Selling Shareholders and any broker-dealers or agents that are involved in
selling the securities may be deemed to be “underwriters” within the meaning of
the Securities Act in connection with such sales.  In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the securities purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.  Each Selling Shareholder has
informed the Company that it does not have any written or oral agreement or
understanding, directly or indirectly, with any person to distribute the
securities. In no event shall any broker-dealer receive fees, commissions and
markups which, in the aggregate, would exceed eight percent (8%).
 
The Company is required to pay certain fees and expenses incurred by the Company
incident to the registration of the securities.  The Company has agreed to
indemnify the Selling Shareholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.
 
Because Selling Shareholders may be deemed to be “underwriters” within the
meaning of the Securities Act, they will be subject to the prospectus delivery
requirements of the Securities Act including Rule 172 thereunder.  In addition,
any securities covered by this prospectus which qualify for sale pursuant to
Rule 144 under the Securities Act may be sold under Rule 144 rather than under
this prospectus. The Selling Shareholders have advised us that there is no
underwriter or coordinating broker acting in connection with the proposed sale
of the resale securities by the Selling Shareholders.
 
We agreed to keep this prospectus effective until the earlier of (i) the date on
which the securities may be resold by the Selling Shareholders without
registration and without regard to any volume or manner-of-sale limitations by
reason of Rule 144, without the requirement for the Company to be in compliance
with the current public information under Rule 144 under the Securities Act or
any other rule of similar effect or (ii) all of the securities have been sold
pursuant to this prospectus or Rule 144 under the Securities Act or any other
rule of similar effect.  The resale securities will be sold only through
registered or licensed brokers or dealers if required under applicable state
securities laws. In addition, in certain states, the resale securities covered
hereby may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.

 
A-2

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Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the resale securities may not simultaneously
engage in market making activities with respect to the common stock for the
applicable restricted period, as defined in Regulation M, prior to the
commencement of the distribution.  In addition, the Selling Shareholders will be
subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including Regulation M, which may limit the timing of
purchases and sales of securities of the common stock by the Selling
Shareholders or any other person.  We will make copies of this prospectus
available to the Selling Shareholders and have informed them of the need to
deliver a copy of this prospectus to each purchaser at or prior to the time of
the sale (including by compliance with Rule 172 under the Securities Act).

 
A-3

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Annex B
 
CASTLE BRANDS INC.
 
Selling Shareholder Notice and Questionnaire
 
The undersigned beneficial owner of common stock (the “Registrable Securities”)
of Castle Brands Inc., a Florida corporation (the “Company”), understands that
the Company has filed or intends to file with the Securities and Exchange
Commission (the “Commission”) a registration statement (the “Registration
Statement”) for the registration and resale under Rule 415 of the Securities Act
of 1933, as amended (the “Securities Act”), of the Registrable Securities, in
accordance with the terms of the Registration Rights Agreement (the
“Registration Rights Agreement”) to which this document is annexed.  A copy of
the Registration Rights Agreement is available from the Company upon request at
the address set forth below.  All capitalized terms not otherwise defined herein
shall have the meanings ascribed thereto in the Registration Rights Agreement.
 
Certain legal consequences arise from being named as a selling shareholder in
the Registration Statement and the related prospectus.  Accordingly, holders and
beneficial owners of Registrable Securities are advised to consult their own
securities law counsel regarding the consequences of being named or not being
named as a selling shareholder in the Registration Statement and the related
prospectus.
 
NOTICE
 
The undersigned beneficial owner (the “Selling Shareholder”) of Registrable
Securities hereby elects to include the Registrable Securities owned by it in
the Registration Statement.
 
The undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:
 
QUESTIONNAIRE
 
1.           Name.
 
(a)           Full Legal Name of Selling Shareholder
 
_________________________________________________________________________________________
 
(b)           Full Legal Name of Registered Holder (if not the same as (a)
above) through which Registrable Securities are held:
 
_________________________________________________________________________________________
 
(c)           Full Legal Name of Natural Control Person (which means a natural
person who directly or indirectly alone or with others has power to vote or
dispose of the securities covered by this Questionnaire):

 
 

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2.           Address for Notices to Selling Shareholder:
 
_________________________________________________________________________________________
_________________________________________________________________________________________
_________________________________________________________________________________________
Telephone:
____________________________________________________________________________
Fax:
_________________________________________________________________________________
Contact Person:
________________________________________________________________________

 
3.           Broker-Dealer Status:
 
(a)           Are you a broker-dealer?
 
Yes   ¨                                No   ¨
 
(b)           If “yes” to Section ‎3(a), did you receive your Registrable
Securities as compensation for investment banking services to the Company?
 
Yes   ¨                                No   ¨
 
Note:     If “no” to Section ‎3(b), the Commission’s staff has indicated that
you should be identified as an underwriter in the Registration Statement.
 
(c)           Are you an affiliate of a broker-dealer?
 
Yes   ¨                                No   ¨
 
(d)           If you are an affiliate of a broker-dealer, do you certify that
you purchased the Registrable Securities in the ordinary course of business, and
at the time of the purchase of the Registrable Securities to be resold, you had
no agreements or understandings, directly or indirectly, with any person to
distribute the Registrable Securities?
 
Yes   ¨                                No   ¨
 
Note:           If “no” to Section ‎3(d), the Commission’s staff has indicated
that you should be identified as an underwriter in the Registration Statement.
 
4.           Beneficial Ownership of Securities of the Company Owned by the
Selling Shareholder.
 
Except as set forth below in this Item ‎4, the undersigned is not the beneficial
or registered owner of any securities of the Company other than the securities
issuable pursuant to the Purchase Agreement.
 
(a)           Type and Amount of other securities beneficially owned by the
Selling Shareholder:
 
_________________________________________________________________________________________
_________________________________________________________________________________________

 
B-2

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5.           Relationships with the Company:
 
Except as set forth below, neither the undersigned nor any of its affiliates,
officers, directors or principal equity holders (owners of 5% of more of the
equity securities of the undersigned) has held any position or office or has had
any other material relationship with the Company (or its predecessors or
affiliates) during the past three years.
 
State any exceptions here:
 
_________________________________________________________________________________________
_________________________________________________________________________________________
 
6.           Plan of Distribution:
 
The undersigned has reviewed the form of Plan of Distribution attached as
Exhibit B to the Registration Rights Agreement, and hereby confirms that, except
as set forth below, the information contained therein regarding the undersigned
and its plan of distribution is correct and complete.
 
State any exceptions here:
 
_________________________________________________________________________________________
_________________________________________________________________________________________
 
***********
 
The undersigned agrees to promptly notify the Company of any inaccuracies or
changes in the information provided herein that may occur subsequent to the date
hereof and prior to the effective date of any applicable Resale Registration
Statement. All notices to the Company hereunder shall be made in writing, by
hand delivery, confirmed e-mail or facsimile transmission, first-class mail or
air courier guaranteeing overnight delivery at the address set forth below. In
the absence of any such notification, the Company shall be entitled to continue
to rely on the accuracy of the information in this Notice and Questionnaire.
 
The undersigned also agrees to provide the Company and the Company’s counsel any
and all such further information regarding the undersigned promptly upon request
in connection with the preparation, filing, amending or supplementing of any
Registration Statement (or any Prospectus contained therein).  The undersigned
hereby consents to the use of all such information in the Registration
Statement.
 
By signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items (1) through (6) above and the inclusion
of such information in the Resale Registration Statement and the Prospectus. The
undersigned understands that such information will be relied upon by the Company
in connection with the preparation or amendment of any such Registration
Statement and the Prospectus.

 
B-3

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By signing below, the undersigned acknowledges that it understands its
obligation to comply, and agrees that it will comply, with the provisions of the
Exchange Act and the rules and regulations thereunder, particularly Regulation M
in connection with any offering of Registrable Securities pursuant to the Resale
Registration Statement. The undersigned also acknowledges that it understands
that the answers to this Questionnaire are furnished for use in connection with
Registration Statements filed pursuant to the Registration Rights Agreement and
any amendments or supplements thereto filed with the Commission pursuant to the
Securities Act.
 
The undersigned understands that the undersigned may be subject to serious civil
and criminal liabilities if the Registration Statement, when it becomes
effective, either contains an untrue statement of a material fact or omits to
state a material fact required to be stated in the Registration Statement
necessary to make the statements in the Registration Statement not
misleading.  The undersigned represents and warrants that all information it
provides to the Company and the Company’s counsel is currently accurate and
complete and will be accurate and complete at the time the Registration
Statement becomes effective and at all times subsequent thereto, and agrees
during such periods to notify the Company immediately of any misstatement of a
material fact in the Registration Statement, and of the omission of any material
fact necessary to make the statements contained therein not misleading.
 
The undersigned confirms that, to the best of its knowledge and belief, the
foregoing statements (including without limitation the answers to this
Questionnaire) are correct.
 
By signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items 1 through 6 and the inclusion of such
information in the Registration Statement and the related prospectus and any
amendments or supplements thereto.  The undersigned understands that such
information will be relied upon by the Company in connection with the
preparation or amendment of the Registration Statement and the related
prospectus and any amendments or supplements thereto.
 
 
B-4

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IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this
Questionnaire to be executed and delivered either in person or by its duly
authorized agent.
 
Date:
   
Beneficial Owner:
 

 
By:
   
Name:
   
Title:
 

PLEASE FAX A COPY (OR EMAIL A .PDF COPY) OF THE COMPLETED AND EXECUTED NOTICE
AND QUESTIONNAIRE, AND RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:
 
[_____________]
 
[_____________]
 
[_____________]

 
B-5

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