Document:

EX-10.58

 

Exhibit 10.58

EXECUTION COPY

EMPLOYMENT AGREEMENT

          THIS EMPLOYMENT AGREEMENT, made as of February 24, 2006 (this “Agreement”), by and
between Castle Brands Inc., a Delaware corporation (the “Company”), and John Soden (the
“Executive”), an individual residing at Welbeck, Kiltimon, Ashford, Co.Wicklow, Ireland.

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

AGREEMENT:

          1. Employment. Subject to the terms of this Agreement, the Company agrees to employ
Executive, and Executive agrees to accept such employment, as Senior Vice President and Managing
Director – International Operations of the Company. As such, Executive will have responsibility
for such job-related duties as will be assigned to Executive from time to time by the Chief
Executive Officer and/or President of the Company.

          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 hereof, subject, at all times, to the direction and control of
the Chief Executive Officer and/or President of the Company, and to the 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 March 29, 2006 (the
“Effective Date”) and ending on March 28, 2010 (the “Term”), unless his employment
is terminated prior to the expiration of the Term pursuant to Section 6 hereof. At the end of the
term, if the Company does not offer to renew Executive’s employment hereunder for an additional
three years, on substantially the same terms, the Company shall continue to pay to Executive his
Base Salary, benefits and a pro rata share of the annual incentive bonus described in Section 4(c)
for a period of six (6) months after expiration of the Term.

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

               (a) Salary.
A salary (the “Base Salary”) at the rate of  €175,000 per year,
payable in accordance with the Company’s standard payroll practices for executives as 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 of Directors of the Company, on the basis of periodic
reviews, which shall occur no less frequently than on an annual basis.

               (b) Stock Option Grants. Executive shall be entitled to options to purchase Common
Stock of the Company to the extent granted by the Compensation Committee of the Board of Directors
of the Company.

 

 

               (c) Incentive Bonus. In each calendar year, the Executive shall be eligible to
receive an annual performance bonus equal to up to 80% of the Base Salary in effect on December 31
of such calendar year, subject to successful achievement of goals and objectives to be agreed upon
by the Executive and the Compensation Committee of the Board of Directors of the Company, payable
in accordance with the Company’s standard practices for executives as in effect from time to time.

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

               (e) 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.

          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 (including, without limitation, reasonable bar membership expenses and continuing legal
education programs), 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.

          6. Termination.

               (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) and if Executive
fully complies with Sections 7, 9, 10 and 22 of this Agreement, 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. In addition, in the event
that the employment of Executive is terminated pursuant to this clause (a), the annual incentive
bonus described in Section 4(c) will be paid, if any, to Executive with respect to the year in
which termination occurs (pro rated for the portion of the year in which Executive was so
employed). If Executive fully complies with Sections 7, 9, 10 and 22 of this Agreement, the
Company shall during the twelve (12) month period immediately following termination of Executive
pursuant to this clause (a), 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) hereof, at the Company’s expense. If Executive fully complies with Sections 7, 9, 10
and 22 of this Agreement, on the date of termination pursuant to this Section 6(a), the vesting of
any options 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 during the 12
months following termination of Executive pursuant to this Section 6(a) 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 the original issue date (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 the
original issue date (if a vesting date has not occurred) to the vesting date occurring during the
12 months following termination. Further, if Executive

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fully complies with Sections 7, 9, 10 and
22 of this Agreement, 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
address and/or 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) personal dishonesty, (ii) willful misconduct, (iii) breach of fiduciary duty, (iv)
failure to substantially perform assigned duties relating to Executive’s performance hereunder
(other than any such failure owing to Executive becoming Disabled (as hereinafter defined) as
reasonably determined by a majority of the entire Board of Directors of the Company, (v) conviction
of, or the entry by the Executive of any plea of guilty or nolo contendre 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) or (vi) material breach of any provision of this Agreement as reasonably
determined by a majority of the entire Board of Directors of the Company; provided, however, that
in any of the foregoing circumstances, Executive has failed to cure such Cause within the fifteen
(15) day period referenced in the second sentence of this Section 6(b). In the event Executive is
terminated for Cause solely pursuant to (iv) or (vi) above, any stock option held by Executive that
is vested at the time of such termination may be exercised until the earlier to occur of (i) the
expiration date of such option pursuant to its terms and (ii) one year after such termination. In
the event Executive is terminated for Cause other than solely pursuant to (iv) or (vi) above, any
stock option held by Executive shall immediately expire and no longer be exercisable upon such
termination.

               (c) Termination by Executive. Executive may terminate his employment hereunder (x) at
any time without cause or (y) for 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,
but no annual incentive bonus will be paid with respect to the year in which termination occurs.
In the event that Executive terminates employment hereunder pursuant to subclause (y) of this
clause (c) and Executive fully complies with

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Sections 7, 9, 10 and 22 of this Agreement, Executive
will be entitled to the same salary, benefits and bonus payments 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 for Good Reason or without cause and Executive fully
complies with Sections 7, 9, 10 and 22 of the Agreement, 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 thirty (30) days after (i) any material diminution in
the nature, title or status of Executive’s job responsibilities from those in effect on the
Effective Date or the most recent anniversary thereof, (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 status of Executive’s job
responsibilities, (iii) relocation by the Company of the Executive’s office to any location not
within twenty-five (25) miles from Executive’s principal place of employment as of the Effective
Date or (iv) 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 the amount of all accrued but
unpaid Base Salary to the date of such termination, the annual incentive bonus, if any, described
in Section 4(c) with respect to the year in which termination occurs (pro rated for the portion of
the year in which Executive was so employed), and an amount equal to six (6) months Base Salary.
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 two years 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 pay to
Executive or his representative the amount of all accrued but unpaid Base Salary to the date of
such termination less the amount, if any, received by Executive from any disability insurance
maintained by the Company, the annual incentive bonus described in Section 4(c), if any, with
respect to the year in which termination occurs (pro rated for the portion of the year in which
Executive was so employed) and an amount equal to one year’s Base Salary to be paid as a lump sum
on termination. Further, any stock option held by Executive that is vested at the time of
termination for disability will be exercisable for a period of two (2) years 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 two (2) years 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

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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; (iii) during any period of two consecutive years, individuals who at the beginning of such
period were members of the Board of Directors of the Company cease for any reason to constitute at
least a majority thereof (unless the appointment, election, or the nomination for election by the
Company’s stockholders, of each director elected during such consecutive two-year period was
approved by a vote of at least two-thirds of the directors then still in office who were directors
at the beginning of such period); or (iv) 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, 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 twenty-four (24) months
following the date of such termination. During such twenty-four (24) month period, the Company
shall continue to provide participation to the Executive in all other benefits provided for under
Section 4(e) hereof. In addition, in the event that the employment of Executive is terminated
pursuant to this clause (f), the annual incentive bonus described in Section 4(c) will be paid to
Executive with respect to the year in which termination occurs (pro rated for the portion of the
year in which Executive was so employed). 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.

               (g) Release and No Further Obligations. As a condition to the payments and other
consideration provided to Executive under each clause of this Section 6, the Executive shall have
executed and delivered to the Company the form of general release attached hereto as Exhibit A.
Except as otherwise expressly provided in this Agreement and that certain Stock Option Agreement,
dated as of even date hereof, by and between the Company and Executive, 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.

          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

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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. Representation and Warranty. 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.

          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 Chief Executive Officer (or such
other officer as the Chief Executive Officer 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.

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          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 hereof
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 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. All notices hereunder must be in writing and addressed to the Secretary
of the Company at 570 Lexington Avenue, 29th Floor, New York, NY, 10022 and to

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Executive at the
address listed above. Each such address for notice may be changed by notice of such change given
to the other party hereto. All such notices will be effective upon receipt.

          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 of any such court.

          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,

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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 Duty to Mitigate. 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, nor shall any payments to Executive be
reduced by any other payments Executive may receive.

          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
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 6, 7, 9, 10, 11, 14, 15, 17, 20, 21, 22 and
this Section 23 will survive the termination or expiration of this Agreement.

          24. Failure to Utilize. The Company will have no obligation to use Executive’s
services or the rights granted hereunder in connection therewith or otherwise, and the Company will
be deemed to have fully satisfied its obligations hereunder by paying to Executive the compensation
due Executive in accordance with the terms 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/ Keith A. Bellinger	 	By:	 	/s/ John Soden	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	Name: Keith A. Bellinger
	 	 	 	Name: John Soden	 	 
	 

	 	Title: President and Chief
Operating Officer	 	 	 	Title: Senior Vice President

Managing Director Int’l Operations		 

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EXHIBIT A

Form of General Release

GENERAL RELEASE

     1. (a) As a condition to and in consideration of the payments and benefits described in
Section 6 of the Employment Agreement, dated February 17, 2006, 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 its subsidiaries
and affiliates, 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. Nothing in
this General Release shall deprive me 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 may have
under the Employment Agreement dated February 17, 2006.

          (b) 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.

     2. 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 2, this Section 2 shall not effect
the other provisions of this General Release

     3. (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:

                                                            

2EX-10.59

 

Exhibit
10.59
Credit Agreement

CASTLE BRANDS INC.

CREDIT AGREEMENT

     This Credit Agreement (this “Agreement”) is made as of the 17th day
of February, 2006 by and among Castle Brands Inc., a Delaware corporation (the
“Company”) and the Frost Nevada Investments Trust, a Nevada business trust (the
“Lender”).

RECITAL

     The Company desires to borrow from the Lender, and the Lender desires to loan
to the Company up to an aggregate principal amount of $5,000,000 (the
“Commitment”), pursuant to the terms set forth in this Agreement.

AGREEMENT

     In consideration of the mutual promises contained herein and other good and
valuable consideration, receipt of which is hereby acknowledged, the parties to this
Agreement agree as follows:

     1. Definitions.

     As used in this Agreement, the following capitalized terms have the
following meanings:

     “Advance” means the amount of US Dollars advanced pursuant to this
Agreement and as evidenced by the Note.

     “Affiliate” means, with respect to any Person, a Person that owns or controls
directly or indirectly such Person, any Person that controls or is controlled by or is under
common control with such Person, and each of that Person’s senior executive
officers, directors, partners and, for any Person that is a limited liability company, that
Person’s managers and members;

     “Agreement”
means this Credit Agreement, as amended from time to time;

     “Business
Day” means any day other than a day on which commercial
banks in New York are required or permitted by law to be closed;

     “Closing” means the closing of the issuance of the Note and the initial Advance;

     “Common Stock” means the shares of common stock, $.01 par value, per
share, of the Company;

     “Company” has the meaning set forth in the introductory paragraph above;

     “Event of Default” has the meaning set forth in Section 7 below;

 

 

     “Excess Amount Maturity Date” shall have the meaning set forth in the
Note;

     “Financial Statements” has the meaning set forth in the Section 3.5
below;

     “Initial Advance” has the meaning set forth in Section 2.1 below;

     “Material Adverse Effect” means a change or effect that is materially adverse
to the financial condition, assets, or operations of the Company, or will prevent the
transactions contemplated by this Agreement;

     “Maturity Date” shall have the meaning set forth in the Note;

     “Note” means the promissory note issued pursuant to this Agreement at the
Closing, in substantially the form attached to this Agreement as Exhibit A;

     “Person” shall mean and include any individual, partnership, corporation
(including a business trust), joint stock company, limited liability company,
unincorporated association, joint venture, governmental entity or other entity;

     “Lender” has the meaning set forth in the introductory paragraph above; and

     “Securities Act” means the Securities Act of 1933, as amended.

     2. Amount and Terms of Credit

          2.1 Closing and Advances. (a) Subject to the terms and conditions
of this Agreement and the Note, the Lender agrees to make advances (the
“Advance(s)”) to the Company, from time to time from the date of this
Agreement until
the Maturity Date (as such terms are defined in the Note), at such times as the
Company may request in writing. The initial Advance on the date hereof
shall be $2,000,000 (the “Initial Advance”) and any additional Advances, up to the
Commitment, shall be in increments of $1,000,000. Each Advance to the Company shall be
made on ten days prior written notice by the Company to the Lender at its address
as set forth on the signature page herein. Subject to the terms and conditions of this
Agreement and the Note, the Lender agrees to make any requested Advance to the Company on
the date specified in the Advance Notice.

               (b) The Company shall execute
and deliver to the lender the Note to evidence the Commitment and the
Advances, dated the date hereof, and
substantially in the form of Exhibit A hereto (the
“Note”). The Note shall represent the
obligation of the Company to pay the amount of the Commitment or, if
less the aggregate unpaid principal amount of all Advances made by
the Lender to the Company. The date and amount of each Advance and
any payment of principal with respect thereto shall be recorded by the Company on its
books and records, and by the Lender on the grid portion of the Note.

               (c) At
the Closing, the Lender shall deliver to the Company a validly executed IRS Form W-9 or, if applicable, Form W-8 BEN.

2

 

               (d) At
the Closing and upon the receipt of the Initial Advance, the Company shall pay the Lender a facility fee of US $100,000. If the Company
receives aggregate Advances that total $5,000,000, the Company shall promptly pay
the Lender an additional facility fee of US $100,000.

     3. Representations and Warranties of the Company.

     The Company hereby represents and warrants to the Lender that:

          3.1 Organization, Good Standing and Qualification.

     The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite corporate power
and authority to carry on its business as presently conducted or proposed to be
conducted. The Company or its representatives are duly qualified to transact business
and is in good standing in each jurisdiction in which the failure so to qualify would have
a Material Adverse Effect.

          3.2 Authorization.

     All corporate actions on the part of the Company, its officers, directors and
holders of Equity Securities necessary for (i) the authorization, execution and
delivery of this Agreement and the Note, (ii) the performance of all obligations of the
Company under this Agreement and the Note and (iii) the authorization, issuance and
delivery of the Note have been taken or will be taken prior to the Closing, and this
Agreement and the Note, when executed and delivered by the Company, shall constitute valid and
legally binding obligations of the Company, enforceable against the Company in
accordance with their respective terms except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other laws of
general application relating to or affecting the enforcement of creditors’ rights
generally, or (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies.

          3.3 Compliance with Other Instruments; No Events of Default.

     The Company is not in violation or default of any provisions of its Certificate
of Incorporation, as amended, or Bylaws, as amended, or of any instrument,
judgment, order, writ, or decree, or under any note, indenture, mortgage, lease,
agreement, contract or purchase order to which it is a party or by which it is bound or of
any provision of state or federal statute, rule or regulation applicable to the
Company, the violation of which would have a Material Adverse Effect. The execution, delivery
and performance of this Agreement, the issuance of the Note and the consummation of
the transactions contemplated hereby or thereby will not result in any such
violation or be in conflict with or constitute, with or without the passage of time and giving of
notice, either a default under any such provision, instrument, judgment, order, writ, decree or
contract or an event which results in the creation of any lien, charge or encumbrance
upon any assets of the Company in either case which would have a Material Adverse Effect.
No

3

 

Event of Default shall have occurred or occur as a result of the Company’s execution of
this Agreement or the Note.

          3.4 Disclosure.

     The Company has made available to the Lender such information as the Lender
has requested for deciding whether to acquire the Note.

          3.5 Financial Statements.

     The Company has made available to the Lender its unaudited financial
statements (including balance sheet, income statement and statement of cash
flows) as of September 30, 2005 and its audited financial statements (including balance
sheet, income statement and statement of cash flows) for the fiscal year ended March
31, 2005 (collectively, the “Financial Statements”). The Financial Statements have
been prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods indicated, except that the unaudited
Financial Statements may not contain all footnotes required by generally accepted
accounting principles. The Financial Statements fairly present in all material respects the
financial condition of the Company as of the dates, and for the periods, indicated
therein, subject to normal year-end audit adjustments. Except as set forth in the Financial
Statements, the Company has no material liabilities or obligations, contingent or otherwise,
other than (a) liabilities incurred in the ordinary course of business subsequent to
September 30, 2005 and (b) obligations under contracts and commitments incurred
in the ordinary course of business and not required under generally accepted
accounting principles to be reflected in the Financial Statements, which, in both cases,
individually or in the aggregate are not material to the financial condition or operating
results of the
Company.

     4. Representations and Warranties of the Lender.

     The Lender hereby represents and warrants to the Company that:

          4.1 Authorization.

     The Lender has full power and authority to enter into this Agreement. This
Agreement, when executed and delivered by the Lender, will constitute a valid and
legally binding obligation of the Lender, enforceable in accordance with its
terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, and any other laws of general application affecting enforcement of
creditors’ rights generally, and as limited by laws relating to the availability
of a specific performance, injunctive relief, or other equitable remedies.

          4.2 Purchase Entirely for Own Account.

     This Agreement is made with the Lender in reliance upon the Lender’s
representation to the Company, which by the Lender’s execution of this
Agreement, the Lender hereby confirms, that the Note to be acquired by the Lender will be
acquired for

4

 

investment for the Lender’s own account, not as a nominee or agent, and not with a
view to the resale or distribution of any part thereof, and that the Lender has no present
intention of selling, granting any participation in, or otherwise distributing the same. By
executing this Agreement, the Lender further represents that the Lender does not
presently have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participations to such person or to any third person, with respect to
any of the Note. The Lender has not been formed for the specific purpose of acquiring
the Note.

          4.3 Knowledge.

     The Lender is aware of the Company’s business affairs and financial condition
and has acquired sufficient information about the Company to reach an informed and
knowledgeable decision to acquire the Note.

          4.4 Restricted Securities.

     The Lender understands that the Note has not been, and will not be, registered
under the Securities Act, by reason of a specific exemption from the registration
provisions of the Securities Act which depends upon, among other things, the bona fide
nature of the investment intent and the accuracy of the Lender’s representations as
expressed herein. The Lender understands that the Note is “restricted security” under
applicable U.S. federal and state securities laws and that, pursuant to these laws, the
Lender must hold the Note indefinitely unless it is registered with the Securities and
Exchange Commission and qualified by state authorities, or an
exemption from such
registration and qualification requirements is available. The Lender acknowledges that
the Company has no obligation to register or qualify the Note for resale. The Lender
further acknowledges that if an exemption from registration or
qualification is available,
it may be conditioned on various requirements including, but not limited to, the time and
manner of sale, the holding period for the Note, and on requirements relating to the
Company which are outside of the Lender’s control, and which the Company is under no
obligation and may not be able to satisfy.

          4.5 No Public Market.

     The Lender understands that no public market now exists for any of the
securities issued by the Company, that the Company has made no assurances that a
public market will ever exist for any of the Company’s securities.

          4.6 Accredited Investor.

     The Lender is an accredited investor as defined in paragraphs (a)(1), (a)(2),
(a)(3), (a)(7) or (a)(8) of Rule 501 (a) of Regulation D promulgated under the Securities
Act and is a business trust having a net asset value of at least $5,000,000 and was not
formed to invest in the Company.

     5. Conditions to the Lender’s Obligations to make any Advance.

5

 

     The obligation of the Lender to make an Advance under the Note is subject to the
fulfillment of each of the following conditions, unless otherwise waived by the
Lender:

          5.1 Representations and Warranties.

     The representations and warranties of the Company contained in Section 3
shall be true on and as of each applicable Advance with the same effect as though
such representations and warranties had been made on and as of the date of such
Advance;

          5.2 Compliance with Agreements.

     The Company shall have performed under and complied in all material respects
with each agreement, covenant and obligation required by this Agreement to be so
performed by or complied with by the Company on or before any Advance;

          5.3 Consents.

     The obtaining of all third party consents, approvals and waivers required for the
Company to consummate the transactions contemplated by this Agreement;

          5.4 Compliance with Laws.

     Compliance by the Company with all applicable federal and state securities laws
with respect to the issuance of the Note.

     6. Affirmative Covenants of the Company.

     The
Company will do all of the following for so long as the Note is outstanding:

          6.1 Financial Statements; Reports; Certificates.

               (a) Deliver to the Lender: (i) as soon as possible, but no later
than sixty (60) days after the last day of each month, the monthly financial
statements and (ii) as soon as available, but no later than 180 days after the last day of
the Company’s fiscal year, audited financial statements, together with an opinion on
the financial statements from an independent certified public accounting firm
reasonably acceptable to the Lenders.

               (b) Allow the Lender to audit the Company at the Lender’s
expense, provided that such audits will be conducted only at such times as an
Event of Default has occurred and is continuing.

          6.2 Taxes.

     Make timely payment of all material federal, state, and local taxes or
assessments other than any taxes or assessments that the Company is contesting
in good faith and deliver to the Lenders, on demand, appropriate certificates
attesting to such payment.

6

 

          6.3 Corporate Existence and Compliance with Laws.

     Maintain its and its operating subsidiaries corporate existence and good
standing under the laws of their state of incorporation and remain in good standing in
each jurisdiction in which the failure to do so would have a Material Adverse Effect.

     7. Events of Default.

     Any one of the following is an “Event of Default”:

          7.1 Payment Default.

     If the Company fails to pay (i) any of the principal amount of and
accrued interest
on the Note on the Maturity Date or, if applicable, the Excess Amount Maturity
Date, of
the Note or (ii) any fees or interest related to the Note when due, and such
failure to pay
such fees or interest remains unremedied after the Company has received ten (10)
Business Days prior written notice.

          7.2 Covenant Default.

     If the Company fails to perform any obligation under Section 6
and as to any
default that can be cured, has failed to cure such default within thirty (30)
days after the
occurrence thereof; provided, however, that if the default cannot by its nature
be cured
within the thirty (30) day period or cannot after diligent attempts by the
Company be
cured within such thirty (30) day period, and such default is likely to be cured
within a
reasonable time, then the Company shall have an additional reasonable period
(which
shall not in any case exceed sixty (60) additional days) to attempt to cure such
default,
and within such reasonable time period the failure to have cured such default
shall not
be deemed an Event of Default;

          7.3 Insolvency.

     If the Company becomes insolvent or if the Company begins an insolvency
proceeding or an insolvency proceeding is begun against the Company and not
dismissed or stayed within ninety (90) days;

     8. Miscellaneous.

          8.1 Successors and Assigns.

     Subject to the limitations set forth herein, the Lender may assign this
Agreement
and the rights and obligations conferred hereby, in whole or in part, only to
eligible
financial institutions and only upon the written consent of the
Company. Any
assignment made in violation of this Section 8.1 is null and void. The
terms and
conditions of this Agreement shall be binding upon and inure to the benefit of
and be
binding upon the respective successors and assigns of the parties. Nothing in
this
Agreement, express or implied, is intended to confer upon any party other than
the
parties hereto or their respective successors and assigns any rights, remedies,

7

 

obligations, or liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement.

          8.2 Governing Law.

     This Agreement and all acts and transactions pursuant hereto and the rights and
obligations of the parties hereto 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.

          8.3 Counterparts.

     This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original and all of which together shall constitute one
instrument.

          8.4 Titles and Subtitles.

     The titles and subtitles used in this Agreement are used for convenience only
and are not to be considered in construing or interpreting this Agreement.

          8.5 Notices.

     Any notice required or permitted by this 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.

          8.6 Amendments and Waivers.

     Any term of this Agreement may be amended or waived only with the written
consent of the Company and the holder of the Note.

          8.7 Severability.

     If one or more provisions of this Agreement are held to be unenforceable under
applicable law, the parties 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 Agreement, (ii) the balance of the
Agreement shall
be interpreted as if such provision were so excluded and (iii) the balance of the
Agreement shall be enforceable in accordance with its terms.

8

 

          8.8 Entire Agreement.

     This Agreement, and the documents referred to herein constitute the entire
agreement between the parties hereto pertaining to the subject matter hereof,
and any and all other written or oral agreements existing between the parties hereto are
expressly canceled.

          8.9 Exculpation By Lender.

     The Lender acknowledges that it is not relying upon any person, firm or
corporation, other than the Company and its officers and directors, in making
its investment or decision to invest in the Company.

[Signature Pages Follow]

9

 

     The parties have executed this Credit Agreement as of the date first
written above.

	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	COMPANY:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	CASTLE BRANDS INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Mark Andrews
	 	 	 	 	 	 	 
	 	 	 	 	Mark Andrews, Chairman & CEO	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Address: 29th Floor	 	 
	 	 	               570 Lexington Avenue	 	 
	 	 	               New York, NY 10022	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Facsimile Number: (646) 356-0222	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	LENDER:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	FROST NEVADA INVESTMENTS TRUST	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Phillip Frost, M.D.
	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 
	 

	 	Name:	 	Phillip Frost, M.D.	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Title:	 	Trustee	 	 
	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Address:	 	4400 Biscayne Blvd.	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	Miami, FL	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	33137	 
	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Facsimile Number:	 	 	 	305-575-6518	 	 
	 

	 	 	 	 	 	 	 	 

 

 

EXHIBIT A

FORM OF NOTE

 

 

EXHIBIT A

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED, OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY
OTHER JURISDICTION. THIS NOTE MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY
TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

Promissory Note

			
	 	 	 
	$5,000,000
	 	Date: February   , 2006

FOR VALUE RECEIVED, the undersigned Castle Brands Inc., a Delaware
corporation (the “Company”), promises to pay to the order of Frost Nevada
Investments Trust (the “Holder”) the lesser of (x) FIVE MILLION US DOLLARS
(US $5,000,000) and (y) the aggregate unpaid principal amount of Advances (as
hereinafter defined) made under this Note to the Company pursuant to the terms
of this Note and the Credit Agreement (as hereinafter defined), together in either
case, with unpaid interest on the unpaid balance of the principal amount
outstanding, on the Maturity Date or, with respect to any Excess Amount, the
Excess Amount Maturity Date, and subject to the following provisions. Unless
otherwise provided herein, accrued interest hereon shall be paid quarterly on the
Interest Payment Dates (as hereinafter defined).

The following is a statement of the rights of the Holder and the conditions to
which this Note is subject, and to which the Holder, by the acceptance of this
Note, agrees:

     1. Definitions.

     The capitalized terms in this Note shall have the meanings ascribed to such
terms in the Note Purchase Agreement unless otherwise defined herein:

     “Advance” and “Advances” shall have the meaning as set forth in Section 2.1
below;

     “Credit Agreement” means that certain Credit Agreement dated as of the first
date set forth above, by and among the Company and the Holder.

     “Borrowing Commitment” means an aggregate of $5,000,000.

 

 

     “Business Day” shall mean any day that is not a Saturday, a Sunday or a
day on which banks are required or permitted to be closed in the State of New
York.

     “Company” has the meaning set forth in the introductory paragraph to this Note;

     “Default Rate” shall have the meaning set forth in Section 6.1 below;

     “Excess Amount” shall have the meaning set forth in Section 2.5 below;

     “Excess Amount Maturity Date” shall have the meaning set forth in Section
2.5 below;

     “Holder” has the meaning set forth in the introductory paragraph to this Note;

     “Interest Payment Date(s)” means the last Business Day of each March, June,
September and December;

     “Interest Rate” means the rate of 9% per annum, calculated on the basis of a
360 day year based on the number of days elapsed including the first day, but
excluding the day on which such calculation is being made;

     “IPO” means a firm commitment public offering by the Company of shares of its
common stock pursuant to a registration statement on Form S-1 under the
Securities Act of 1993, as amended;

     “Maturity Date” means the earlier to occur of one Business Day after the
closing of an IPO and February      , 2007;

     “Note” means this Promissory Note;

     “Principal Amount” means the total Advances made hereunder; or

     “Rule 2710(a)(4) Holder” shall have the meaning set forth in Section
2.5 below.

     2. Advances and Time of Payment.

          2.1 Advances. On the date first set forth above, Holder will make an
advance of Two Million Dollars (US $ 2,000,000) to the Company. With respect to
each
proposed additional advance to the Company under this Note (any advance, an
“Advance” and, collectively, the “Advances”), the Company shall give at least
10 days
prior written notice to the Holder of its intention to borrow hereunder, which
notice shall
specify the date and the principal amount of the proposed Advance (a “Borrowing
Request”). All Advances shall be in increments of $1,000,000. Following the
receipt of
a Borrowing Request, the Holder shall make the Advance on the date and in the
amount
as outlined in the Borrowing Request and the Borrowing Commitment shall be
reduced
by the amount of such Advance. Anything to the contrary herein notwithstanding,
Holder shall have no obligation to make any Advance to the extent that the
aggregate of

 

 

all Advances made, including the Advance contemplated by the first sentence of this
Section 2.1, exceeds the Borrowing Commitment.

          2.2 Payment at Maturity Date.

          Except with respect to any Excess Amount for which repayment shall be
governed by Section 2.5 below, the Principal Amount together with all
accrued but
unpaid interest under this Note shall be due and payable on the Maturity Date,
in
accordance with the terms of this Note. If the payment of the Principal Amount
and
interest on this Note becomes due on a day which is not a Business Day, such
payment
shall be made on the next succeeding Business Day, and any such extension of
time
shall be included in computing interest in connection with such payment.

          2.3 Interest Payments.

          Except with respect to any Excess Amount for which payment shall be
governed by Section 2.5 below, the Company shall pay accrued interest
to the Holder
on each applicable Interest Payment Date based upon the Principal Amount
outstanding from time to time at the Interest Rate.

          2.4 Prepayment.

          The Company may prepay the Principal Amount and/or the accrued but
unpaid interest on this Note or any part thereof without penalty at any time in
the Company’s sole discretion; provided, however, that the Company may not prepay
any portion of the Excess Amount or interest thereon if the Holder is a Rule 2710
(a)(4) Holder.

          2.5 Excess Amount.

          In the event that (i) the Holder is a “Participating Member,” as defined in
2710(a)(4) of the National Association of Securities Dealers Conduct Rules,
with respect to the IPO (a “Rule 2710(a)(4)Holder”) and (ii) the (x) Principal
Amount, (y)
interest previously paid and (z) future interest payable to such Rule
2710(a)(4) Holder under this Note would exceed 10% of the net proceeds received by the Company
from
such IPO (such excess, the “Excess Amount”), the Maturity Date and Interest
Payment
Dates for such Excess Amount shall be extended until the day after the one year
anniversary of the closing of the IPO (the “Excess Amount
Maturity Date”).

     3. Application of Payments.

     All payments of the indebtedness evidenced by this Note shall be applied first
to any accrued but unpaid interest on this Note then due and payable hereunder,
and then to the Principal Amount of this Note then outstanding.

 

 

     4. Currency.

     All payments of Principal Amount or of interest on this Note shall be made in
US dollars at the address of Holder indicated on the signature page hereof, or
such other place as Holder shall designate in writing to Company.

     5. Events of Default.

     The occurrence of any of the following shall constitute an Event of Default
under
this Note: (a) The Company’s failure to pay the outstanding Principal Amount
and
accrued interest on this Note due on the Maturity Date or, with respect to any
Excess
Amounts, on the Excess Amount Maturity Date; (b) the Company’s failure to pay
any
fees or interest related to this Note when due and any such failure to pay
shall remain
unremedied after the Company has been provided with ten (10) Business Days
prior
written notice or (c) an Event of Default under, and as defined in, the Credit
Agreement.

     6. Remedies.

          6.1 Remedy Upon an Event of Default.

          Upon the occurrence of an Event of Default, (i) this Note shall become due
and payable upon the demand of the Holder, and upon such demand shall
thereafter
become automatically due and payable, without presentment, demand, protest, or
further notice of any kind, all of which are hereby expressly waived by the
Company,
and (ii) the Interest Rate shall increase by 200 basis points above the
Interest Rate (the
“Default Rate”).

     7. Waiver.

     The Company waives presentment for payment, notice of nonpayment, protest,
demand, notice of protest, notice of intent to accelerate, notice of
acceleration and
dishonor, diligence in enforcement and indulgences of every kind.

     8. No Waiver.

     The acceptance by Holder of any payment under this Note which is less than the
payment in full of all amounts due and payable at the time of such payment
shall not (i)
constitute a waiver of or impair, reduce, release or extinguish any right,
remedy or
recourse of Holder, 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.

     9. 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.

 

 

     10. Governing Law.

     This Note shall be governed by, and interpreted in accordance with, the
laws of
the State of New York, without giving effect to the rules respecting conflicts
of law.

     11. Severability.

     If any provision hereof or the application thereof to any Person or
circumstance
shall, for any reason and to any extent, be invalid or unenforceable, neither
the
application of such provision to any other Person or circumstance nor the
remainder of
the instrument in which such provision is contained shall be affected thereby
and shall
be enforced to the greatest extent permitted by law.

     12. Interpretation.

     The headings in this Note are included only for convenience and shall not
affect
the meaning or interpretation of this Note. The words “herein” and “hereof and
other
words of similar import refer to this Note as a whole and not to any
particular part of this Note.

     13. Notices.

     All notices, demands, and other communications hereunder shall be in writing
and shall be deemed given if delivered personally or by commercial delivery
service, or
mailed by registered or certified mail (return receipt requested) or sent via
facsimile
(with acknowledgment of complete transmission), to Holder at its address set
forth
below, or to the Company at its principal executive office (or at such other
address for a
party as shall be specified by like notice).

     14. Exchange or Loss of Note.

     Upon receipt by the Company of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Note, and (in the case of loss,
theft or
destruction) of reasonably satisfactory indemnification, and upon surrender
and cancellation of this Note, if mutilated, the Company will execute and deliver
a new Note of like tenor and date.

     15. Enforceability.

     This Note shall be binding upon and inure to the benefit of both parties
hereto and their respective successors and assigns. If any provision of this Note
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.

     16. Limitation on Interest.

     Nothing contained in this Note shall be deemed to require the payment of
interest
or other charges by the Company or any other Person in excess of the amount
which

 

 

Holder may lawfully charge under the applicable usury laws. In the event that
Holder
shall collect moneys which are deemed to constitute interest which would increase
the
effective Interest Rate to a rate in excess of that permitted to be charged by
applicable
law, all such sums deemed to constitute interest in excess of the legal rate shall
be
credited against the Principal Amount then outstanding and the excess shall be
returned
to the Company.

[Remainder of Page Intentionally Left Blank]

 

 

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

	 	 	 	 	 
	 	 	CASTLE BRANDS
INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	Mark Andrews, Chairman and
	 

	 	 	 	Chief Executive Officer
	 

	 	 	 	Castle Brands Inc.
	 

	 	 	 	570 Lexington Avenue, 29th Floor
	 

	 	 	 	New York, NY 10022

ACKNOWLEDGED AND AGREED TO BY:

FROST NEVADA INVESTMENTS TRUST

	 	 	 	 	 
	 

	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Name:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Title:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Address:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 

	 	 	 	 	 
	 

	 	 	 	 
	Facsimile Number:
	 	 	 	 
	 

	 	 	 	 

 

 

TRANSACTIONS

ON

PROMISSORY NOTE

	 	 	 	 	 	 	 
	 	 	Amount of	 	 	 	 
	 	 	Senior Secured	 	Outstanding	 	 
	 	 	Loan	 	Principal Balance	 	Notation
	Date	 	Made This Date	 	This Date	 	Made By
	February      , 2006
	 	$2,000,000	 	$2,000,000	 	Holder and Company

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