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As filed with the Securities and Exchange Commission on September 29, 2005
Registration No.        
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
 
Castle Brands Inc.
(Exact Name of Registrant as Specified in Its Charter)
         
Delaware   2080   41-2103550
(State or Other Jurisdiction of
Incorporation or Organization)
  (Primary Standard Industrial Classification Code Number)   (I.R.S. Employer Identification Number)
570 Lexington Avenue, 29th Floor
New York, NY 10022
(646) 356-0200
 
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant’s Principal Executive Offices)
Mark Andrews
Chief Executive Officer
Castle Brands Inc.
570 Lexington Avenue, 29th Floor
New York, NY 10022
(646) 356-0200
 
(Name, Address Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
Copies to:
 
     
John E. Schmeltzer, III, Esq.
Andrew P. Beame, Esq.
Patterson Belknap Webb & Tyler LLP
1133 Avenue of the Americas
New York, NY 10036
Telephone: (212) 336-2000
Facsimile: (212) 336-2222
  Elise M. Adams, Esq.
Christin R. Cerullo, Esq.
Blank Rome LLP
405 Lexington Avenue
New York, NY 10174
Telephone: (212) 885-5000
Facsimile: (212) 885-5001
          Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.
          If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.      o
          If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.      o
          If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.      o
          If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.      o
          If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box.      o


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CALCULATION OF REGISTRATION FEE
         
 
 
    Proposed Maximum Aggregate   Amount of
Title of Each Class of Securities to Be Registered   Offering Price(1)(2)   Registration Fee
 
Common Stock, $.01 par value per share
  $31,625,000   $3,722.26
 
(1) Includes shares of common stock issuable upon exercise of underwriters’ over-allotment option.
 
(2) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.
          The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine.
 
 


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The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED SEPTEMBER 29, 2005.
2,500,000 Shares
(CASTLE BRANDS LOGO)
Common Stock
 
          This is an initial public offering of shares of our common stock. All of the shares to be sold in the offering are being sold by us.
          Prior to this offering, there has been no public market for our common stock. It is currently estimated that the initial public offering price per share will be between $           and $           . We have applied to have our common stock quoted on the American Stock Exchange under the symbol “ROX.”
          Investing in our common stock involves risks. See “Risk Factors” beginning on page 8 to read about factors you should consider before buying shares of our common stock.
          Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
                 
    Per Share   Total
         
Initial public offering price
  $       $    
Underwriting discounts and commissions (1)
  $       $    
Proceeds to us (before the non-accountable expense allowance and other offering expenses)
  $       $    
 
(1) Does not include a non-accountable expense allowance payable to the underwriters in the amount of $125,000.
          We have granted the underwriters a 30-day option to purchase up to an additional 375,000 shares of common stock from us at the initial public offering price less the underwriting discount, solely to cover over-allotments.
          The underwriters expect to deliver the shares to investors in this offering in New York, New York on or about                       , 2005.
 
Oppenheimer & Co.
  ThinkEquity Partners LLC
  Ladenburg Thalmann & Co. Inc.
                    , 2005.


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[Artwork to be filed by amendment]


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    F-1  
  EX-3.1: FORM OF AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
  EX-3.2: FORM OF AMENDED AND RESTATED BYLAWS
  EX-4.2: SHAREHOLDERS AGREEMENT
  EX-10.1: EXPORT AGREEMENT
  EX-10.2: AMENDMENT NO. 1 TO EXPORT AGREEMENT
  EX-10.3: NATIONAL DISTRIBUTION AGREEMENT
  EX-10.4: SUBSCRIPTION AGREEMENT
  EX-10.5: STOCKHOLDERS AGREEMENT
  EX-10.6: PROMISSORY NOTE
  EX-10.7: AGREEMENT
  EX-10.8: SUPPLY AGREEMENT
  EX-10.9: AMENDMENT NO. 1 TO SUPPLY AGREEMENT
  EX-10.10: AMENDED AND RESTATED WORLDWIDE DISTRIBUTION AGREEMENT
  EX-10.11: BOTTLING AND SERVICES AGREEMENT
  EX-10.12: AMENDMENT TO BOTTLING AND SERVICES AGREEMENT
  EX-10.13: AMENDED AND RESTATED CONVERTIBLE NOTE PURCHASE AGREEMENT
  EX-10.14: AMENDED AND RESTATED CONVERTIBLE PROMISSORY NOTE
  EX-10.15: AMENDED AND RESTATED CONVERTIBLE PROMISSORY NOTE
  EX-10.16: CONVERTIBLE PROMISSORY NOTE
  EX-10.17: LICENSE AGREEMENT
  EX-10.20: EMPLOYMENT AGREEMENT WITH KEITH A. BELLINGER
  EX-10.21: SUMMARY OF EMPLOYMENT AGREEMENT WITH MATTHEW F. MACFARLANE
  EX-10.22: NON-COMPETITION DEED
  EX-10.23: LETTER AGREEMENT
  EX-10.24: LETTER AGREEMENT
  EX-10.25: LETTER CONSULTING AGREEMENT
  EX-10.26: LETTER CONSULTING AGREEMENT
  EX-10.27: SUPPLY AGREEMENT
  EX-10.28: AMENDMENT AND CONSENT TO SUPPLY AGREEMENT
  EX-10.29: 2003 STOCK INCENTIVE PLAN, AS AMENDED
  EX-10.30: AMENDMENT TO CASTLE BRANDS INC. 2003 STOCK INCENTIVE PLAN
  EX-10.31: LETTER AGREEMENT
  EX-10.32: SUBLEASE
  EX-10.33: INDENTURE OF SUBLEASE
  EX-10.34: OFFICE LEASE
  EX-10.35: FIRST AMENDMENT TO OFFICE LEASE
  EX-10.36: SECOND AMENDMENT TO OFFICE LEASE
  EX-10.37: THIRD AMENDMENT TO OFFICE LEASE
  EX-10.38: FOURTH AMENDMENT TO OFFICE LEASE
  EX-10.39: FIFTH AMENDMENT TO OFFICE LEASE
  EX-10.40: FIRST SUPPLEMENTAL TRUST INDENTURE
  EX-10.41: FIRST AMENDED AND RESTATED TRUST INDENTURE
  EX-10.42: 9% SECURED NOTE
  EX-10.43: GENERAL SECURITY AGREEMENT
  EX-10.44: FIRST AMENDMENT TO GENERAL SECURITY AGREEMENT
  EX-10.45: GUARANTY PAYMENT AND PERFORMANCE
  EX-10.46: FIRST AMENDMENT TO GUARANTEE OF PAYMENT AND PERFORMACE
  EX-10.47: COLLATERAL AGREEMENT
  EX-10.48: FIRST AMENDMENT TO COLLATERAL AGREEMENT
  EX-10.49: CREDIT FACILITY AGREEMENT
  EX-10.50: ACCOUNTS RECEIVABLE CREDIT FACILITY AGREEMENT
  EX-10.51: CONTRACT
  EX-16.1: LETTER FROM GRODSKY CAPORRINO & KAUFMAN, PC
  EX-21.1: LIST OF SUBSIDIARIES OF THE REGISTRANT
  EX-23.1: CONSENT OF EISNER LLP
  EX-23.2: CONSENT OF BDO SIMPSON XAVIER
  EX-23.3: CONSENT OF BDO SIMPSON XAVIER
 
          You should rely only on the information contained in this prospectus. No dealer, salesperson or other person is authorized to give information that is not contained in this prospectus. This prospectus is not an offer to sell nor is it seeking an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. The information contained in this prospectus is correct only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of these securities.
Trademarks
          This prospectus includes the names of our brands, which constitute trademarks or trade names which are proprietary to and/or registered in our name or in the name of one of our subsidiaries or related companies, including, but not limited to, Castle Brands tm , Boru®, Crazzberry®, Brady’s®, Knappogue Castle Whiskey®, Clontarf tm , Sea Wynde®, Celtic Crossing® and British Royal Navy Imperial Rum tm ; and trademarks with respect to brands for which we have certain exclusive distribution rights and which are proprietary to and/or registered in the names of third parties, such as Pallini®, which is owned by I.L.A.R. S.p.A., and Gosling’s tm , Gosling’s tm Black Seal®, Gosling’s tm Gold Bermuda Rum tm , Gosling’s tm Old Rum tm which are owned by Gosling Brothers Limited. This prospectus also contains other brand names, trade names, trademarks or service marks of other companies and these brand names, trade names, trademarks or service marks are the property of those other companies.


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PROSPECTUS SUMMARY
        This summary highlights information contained elsewhere in this prospectus and does not contain all the information that you should consider before investing in our common stock. You should read this entire prospectus carefully, including “Risk Factors” and our consolidated financial statements and related notes, before making an investment decision. All references to “we,” “us,” “our,” or “our company” refer to Castle Brands Inc. and, where appropriate, our consolidated direct and indirect subsidiaries.
Our company
        We are an emerging developer and global marketer of premium branded spirits within four growing categories of the spirits industry: vodka, rum, Irish whiskey and liqueurs/cordials. Since our formation in 1998, we have invested over $60 million in capital to develop our operating platform, acquire and grow our branded portfolio of distinctive premium spirits and establish U.S. and international sales and distribution. Our premium spirits brands include, among others, Boru vodka, Gosling’s rum, Knappogue Castle Whiskey and Pallini Limoncello.
        For our fiscal year ended March 31, 2005 and the three months ended June 30, 2005, we recorded sales of approximately 170,000 cases and 61,000 cases, respectively, which are measured based on the industry standard of nine-liter equivalent cases, and revenues of approximately $12.6 million and $4.5 million, which represented increases of 161% and 108% from revenues recorded for the prior comparable fiscal periods. These increases reflect both organic growth and growth from additions to our brand portfolio. We intend to continue our current growth through further market penetration of our brands, as well as through strategic relationships and acquisitions of both established and emerging spirits brands with global growth potential.
        We have incurred losses since inception and had an accumulated loss of $33.2 million as of June 30, 2005. We believe that we will continue to incur sizeable net losses for the foreseeable future as we expect to make significant investment in product development and sales and marketing and to incur significant administrative expenses as we seek to grow our current and future brands.
        Since December 2003, we have acquired The Roaring Water Bay Spirits Group Limited and its affiliated companies (adding Boru vodka, Brady’s Irish cream and the Clontarf Irish whiskeys to our portfolio); entered into an exclusive marketing agreement with I.L.A.R. S.p.A., a family-owned Italian spirits company founded in 1875 (adding Pallini Limoncello to our portfolio); and established a strategic export venture, of which we own 60%, with the Gosling family in Bermuda (adding the Gosling’s rums to our portfolio). We believe that these recent brand additions, together with our already existing brands, provide us with a strong base from which we can grow our business.
Our brands
  Boru vodka , our leading brand, was the first, and continues to be the largest selling, premium vodka produced in Ireland. Boru vodka is an ultra-pure, quadruple distilled and specially filtered premium vodka with three flavor extensions (citrus, orange and crazzberry).
 
  Gosling’s rums , a family of premium rums with a 150-year history, for which we are, through our export venture, the exclusive marketer outside of Bermuda, including the award-winning Gosling’s Black Seal rum; and Sea Wynde , a premium rum developed and introduced by us in 2001.
 
  Knappogue Castle Whiskey , a vintage-dated premium single-malt Irish whiskey;
Knappogue Castle 1951 , one of the oldest and rarest commercially available Irish whiskeys; and the Clontarf Irish whiskeys , a family of premium Irish whiskeys, available in single malt, reserve and classic pure grain versions.


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  Brady’s Irish cream , a premium Irish cream liqueur; Celtic Crossing , a premium Irish liqueur; and, pursuant to an exclusive U.S. marketing arrangement, Pallini Limoncello , a premium Italian liqueur.
Our competitive strengths
        We believe that our competitive strengths include the following:
  our portfolio of high quality, premium branded spirits with significant potential in the higher growth categories of the distilled spirits industry;
 
  our extensive and already established U.S. distribution network within all 50 states and our growing distribution network in Europe and elsewhere;
 
  our substantial sales and marketing infrastructure, including an experienced sales force of 28 people and focused advertising, marketing and promotional programs;
 
  our highly qualified and experienced management team with successful track records in brand development, the distilled spirits industry and mergers and acquisitions;
 
  our flexible and efficient supply chain, which enables us to operate without owning or investing in distilleries, bottling plants or other similar facilities; and
 
  our ability to forge strategic relationships with owners of both emerging and established spirits brands seeking opportunities to expand beyond their home markets.
Our growth strategy
        Our objective is to continue building a distinctive portfolio of global premium spirits brands, with a primary focus on increasing both our total and individual brand case sales. To achieve this, we intend to continue:
  increasing market penetration of our existing spirits brands . We intend to utilize our existing distribution relationships and sales expertise to achieve growth and gain additional market share within retail stores, bars and restaurants, both domestically and internationally; add experienced salespeople in selected markets; increase sales to national chain accounts; and expand our international distribution relationships;
 
  building brand awareness through innovative marketing, advertising and promotional activities . We intend to continue developing compelling campaigns to establish and reinforce the image of our brands through the coordinated efforts of our experienced internal marketing personnel and leading third-party design and advertising firms; and
 
  selectively adding new premium brands to our spirits portfolio . We intend to continue developing new brands and pursuing strategic relationships, joint ventures and acquisitions to selectively expand our portfolio of premium spirits brands, particularly by capitalizing on and expanding our already demonstrated partnering capabilities.
Our corporate information
        We are a Delaware corporation formed in July 2003 by our predecessor company, Great Spirits Company LLC, which was formed in 1998. We maintain our principal executive offices at 570 Lexington Avenue, 29th Floor, New York, NY 10022. Our telephone number is (646) 356-0200. We also have offices in Dublin, Ireland and Houston, Texas. Our website is located at www.castlebrandsinc.com. The information contained on our website or that can be accessed through our website does not constitute part of this prospectus.

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The Offering
Common stock offered 2,500,000 shares
 
Common stock to be outstanding after this offering 10,950,493 shares
 
Use of proceeds We estimate that our net proceeds from this offering will be approximately $            million, assuming an initial offering price of $            per share of common stock, the midpoint of the range set forth on the cover page of this prospectus, after deducting the underwriting discounts and commissions and estimated offering expenses. We intend to use the proceeds from this offering for working capital and general corporate purposes and to:
 
•   increase our sales and marketing activities;
 
•   fulfill our capital commitments to our Gosling-Castle Partners Inc. strategic export venture;
 
•   hire additional employees; and
 
•   repay a portion of our indebtedness.
 
Although we have no present commitments or agreements to do so, we may also use a portion of the net proceeds of this offering to invest in or acquire additional brands through mergers, stock or asset purchases, joint ventures, long-term exclusive distribution arrangements and/or other strategic relationships. See “Use of Proceeds.”
 
Proposed American Stock Exchange symbol “ROX”
 
Risk factors See “Risk Factors” immediately following this prospectus summary to read about factors you should consider before buying shares of our common stock.
          Except where otherwise indicated, the information in this prospectus assumes that the following events, each of which will occur upon the consummation of this offering, have already occurred:
  the conversion of all of our Series A convertible preferred stock into 535,715 shares of our common stock;
 
  the conversion of all of our Series B convertible preferred stock into 200,000 shares of our common stock;
 
  the conversion of all of our Series C convertible preferred stock into 3,353,750 shares of our common stock;
 
  our issuance of 133,857 shares of common stock in payment of all of the dividends accrued on our preferred stock through the estimated closing of this offering, including 112,244 shares issued in payment of the $752,707 in accrued dividends outstanding as of June 30, 2005;
 
  the conversion of all 1,374,750 ($1,658,773) principal amount of our 5% euro denominated convertible subordinated notes into 263,362 shares of our common stock; and

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  the conversion of $6.0 million of the $15.0 million principal amount of our 6% convertible notes into 857,143 shares of our common stock.
          The number of shares of common stock to be outstanding after this offering excludes the following:
  2,000,000 shares of common stock reserved for issuance upon the exercise of stock options granted or that may be granted under our stock incentive plan, including 878,500 shares of common stock reserved for issuance upon the exercise of currently outstanding stock options, with a weighted average exercise price of $6.83 per share;
 
  10,000 shares of common stock reserved for issuance upon the exercise of stock options granted outside of our stock incentive plan, with an exercise price of $6.00 per share;
 
  598,618 shares of common stock reserved for issuance upon the exercise of outstanding warrants, with a weighted average exercise price of $7.67 per share; and
 
  1,125,000 shares of common stock reserved for issuance upon the conversion of $9.0 million principal amount of our 6% convertible notes, with a conversion price of $8.00 per share.
          Unless otherwise indicated, the information in this prospectus also assumes that the underwriters do not exercise their over-allotment option to purchase up to 375,000 additional shares of common stock from us.
Currency Translation
          The functional currency for our foreign operations is the euro in Ireland and the British pound in the United Kingdom. With respect to our consolidated financial statements, the translation from the applicable foreign currencies to U.S. dollars is performed for balance sheet accounts using exchange rates in effect at the balance sheet date and for revenue and expense accounts using a weighted average exchange rate during the period. The resulting translation adjustments are recorded as a component of other comprehensive income. Gains or losses resulting from foreign currency transactions are included in other income/expenses.
          Where in this prospectus we refer to amounts in euros or British pounds, we have for your convenience also in certain cases provided a translation of those amounts to U.S. dollars in parenthesis. Where the numbers refer to a specific balance sheet date account or financial statement period account, we have used the exchange rate that was used to perform the translations in connection with the applicable financial statement. In all other instances, unless otherwise indicated, the translations have been made using the exchange rates as of June 30, 2005, each as calculated from the Interbank exchange rates as reported by Oanda.com. On June 30, 2005, the exchange rate of the euro dollar in exchange for U.S. dollars and the exchange rate of the British pound in exchange for U.S. dollars were 1.00 = U.S. $1.2066 (equivalent to U.S. $1.00 = 0.8288) for euros and £1.00 = U.S. $1.8048 (equivalent to U.S. $1.00 = £0.5541) for British pounds.
          These translations should not be construed as representations that the euro and British pound amounts actually represent U.S. dollar amounts or could be converted into U.S. dollars at the rates indicated.

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Summary Consolidated Financial Information
          The following tables set forth summary consolidated financial data and other data for the periods ended and as of the dates indicated. The summary financial data for the fiscal years ended March 31, 2003, 2004 and 2005 have been derived from our historical audited consolidated financial statements. The summary consolidated financial data presented as of and for the three months ended June 30, 2004 and 2005 have been derived from our unaudited interim consolidated financial statements, which in the opinion of our management include all adjustments, consisting of only normal recurring adjustments, that we considered necessary for a fair presentation of our financial position and results of operations as of and for such unaudited periods. The historical results are not necessarily indicative of results to be expected for future periods, and results for the three month period ended June 30, 2005 are not necessarily indicative of results that may be expected for the entire year ending March 31, 2006. You should read the following summary financial data and other data in conjunction with our consolidated financial statements, including the related notes, and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.
          In December 2003, we acquired The Roaring Water Bay Spirits Group Limited and The Roaring Water Bay Spirits Marketing and Sales Company Limited, together, with their subsidiaries, referred to as Roaring Water Bay. The summary financial and other data presented in the tables below includes the results of operations of Roaring Water Bay commencing as of the December 1, 2003 closing date of the acquisition. If we assume, for comparative purposes only, that the acquisition occurred as of April 1, 2003, the beginning of our fiscal year ended March 31, 2004, our unaudited pro forma results of operations for our fiscal year ended March 31, 2004 would have been: sales, net $8.6 million; gross profit $3.5 million; net loss $(6.5) million; and net loss per common share – basic and diluted $(2.92). These pro forma results are not necessarily indicative, however, of the results of operations that actually would have resulted had the acquisition occurred on April 1, 2003 or of future results.
          In January 2005, we entered into a distribution agreement with Gosling’s Export (Bermuda) Limited, referred to as Gosling’s Export, giving us the exclusive distribution rights with respect to the Gosling’s rum products in the United States and, subsequently, in the United Kingdom. Thereafter, we expanded this relationship in February 2005, when we purchased a 60% controlling interest in a newly formed entity now named Gosling-Castle Partners Inc., a strategic venture that was formed to acquire, through an export agreement with Gosling’s Export, the global (excluding Bermuda) distribution rights with respect to the Gosling’s rums, including an assignment by Gosling’s Export to Gosling-Castle Partners of its rights under our January 2005 distribution agreement. This export agreement was entered into with Gosling’s Export in February 2005, prior to our investment in Gosling-Castle Partners, and became effective on April 1, 2005. The summary financial and other data presented in the tables below include our sales of Gosling’s products in the United States and the United Kingdom under our distribution agreement commencing as of its January 1, 2005 effective date and include the results of operations of Gosling-Castle Partners commencing as of the February 18, 2005 closing date of our investment in such entity, with adjustments for minority interest. Gosling-Castle Partners had no operations prior to its February 2005 formation and no meaningful operations prior to the April 1, 2005 commencement of its export agreement.
          The “other data” presented below relates to our case sales, which are measured based on the industry standard of nine-liter equivalent cases, an important measure in our industry that we use to evaluate the effectiveness of our operations and overall financial performance. We believe that by providing this information investors can better assess trends in our business. Net sales per case is total net sales for the applicable period presented, divided by the total number of cases sold during the period. Gross profit per case and selling expense per case are derived by dividing our gross profit and selling expense, respectively, for the applicable period presented by the number of cases sold for such period.

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        Three months ended
    Year ended March 31,   June 30,
         
    2003   2004   2005   2004   2005
                     
                (unaudited)
Consolidated statement of operations data (in thousands, except per share data):                                        
 
Sales, net
  $ 2,419     $ 4,827     $ 12,618     $ 2,163     $ 4,498  
 
Cost of sales
    1,427       3,285       8,745       1,482       2,647  
                               
 
Gross profit
    992       1,542       3,873       681       1,851  
                               
 
Selling expense
    3,348       5,398       11,569       2,978       3,225  
 
General and administrative expense
    818       1,960       3,637       795       1,138  
 
Depreciation and amortization
    73       173       167       26       182  
 
Other (income)/expense, net
    11       166       (199 )     23       322  
                               
 
Operating loss
    (3,258 )     (6,155 )     (11,301 )     (3,142 )     (3,016 )
                               
 
Interest expense, net
    (182 )     (304 )     (998 )     (466 )     (259 )
 
Income tax benefit
                            37  
 
Minority interests
          35       5       2       129  
                               
 
Net loss
  $ (3,440 )   $ (6,424 )   $ (12,294 )   $ (3,605 )   $ (3,109 )
                               
 
Less: preferred stock dividends
    15       558       526       86       71  
                               
 
Net loss attributable to common stockholders
  $ (3,455 )   $ (6,982 )   $ (12,820 )   $ (3,691 )   $ (3,180 )
                               
 
Net loss per common share — basic and diluted
  $ (1.88 )   $ (3.12 )   $ (4.13 )   $ (1.19 )   $ (1.02 )
                               
 
Weighted average common shares outstanding — basic and diluted
    1,841       2,237       3,107       3,107       3,107  
 
Pro forma net loss per common share — basic and diluted(1)
                  $ (1.65 )   $ (0.47 )   $ (0.41 )
                               
 
Pro forma weighted average common shares outstanding — basic and diluted(1)
                    7,781       7,781       7,781  
                               
Other data (unaudited):
                                       
 
Number of case sales
    21,708       64,013       170,060       32,377       60,628  
 
Net sales per case
  $ 111.43     $ 75.41     $ 74.20     $ 66.81     $ 74.19  
 
Gross profit per case
  $ 45.70     $ 24.09     $ 22.77     $ 21.03     $ 30.53  
 
Selling expense per case
  $ 154.23     $ 84.33     $ 68.03     $ 91.98     $ 53.19  
 
  (1)  Assumes the conversion as of April 1, 2004 of: all shares of preferred stock outstanding as of June 30, 2005, including 535,715 shares of Series A convertible preferred stock, 200,000 shares of Series B convertible preferred stock and 2,991,250 shares of Series C convertible preferred stock, into an aggregate of 3,726,965 shares of common stock; the accrued and unpaid preferred stock dividends of $752,707 outstanding as of June 30, 2005 into 112,244 shares of common stock; the $1.7 million principal amount of our 5% euro denominated convertible notes outstanding as of June 30, 2005 into 263,362 shares of common stock; and $4.0 million of the $10.0 million principal amount of our 6% convertible notes that was outstanding as of June 30, 2005 into 571,429 shares of common stock; for an aggregate of 4,674,000 shares of common stock.

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Summary balance sheet data
(in thousands):
                         
    As of June 30, 2005
     
        Pro forma
    Actual   Pro forma   as adjusted
             
        (unaudited)    
Cash and cash equivalents
  $ 5,031     $ 12,547     $    
Working capital
    8,020       15,535          
Total assets
    43,955       51,470          
Total debt
    20,133       17,474          
Total liabilities
    29,912       27,253          
Total stockholders’ equity (deficiency)
    (15,084 )     21,016          
          The “pro forma” information included in the summary balance sheet data as of June 30, 2005 gives effect at that date to the following subsequent events:
  our issuances in August 2005 of an additional 362,500 shares of our Series C convertible preferred stock and an additional $5.0 million principal amount of our 6% convertible notes, for aggregate net proceeds to us of approximately $7.5 million;
 
  our accrual of additional preferred stock dividends on our convertible preferred stock from July 1, 2005 through the estimated closing date of this offering in the aggregate amount of $145,246; and
 
  our issuance of an additional 5,343,827 shares of our common stock upon (a) the conversion of all of our preferred stock, including the additional shares of Series C convertible preferred stock issued in August 2005, into 4,089,465 shares, (b) our payment of all of the preferred stock dividends accrued on our convertible preferred stock as of the estimated closing date of this offering, including those accrued since June 30, 2005, with 133,857 shares of our common stock, and (c) the conversion of $7.7 million of our indebtedness into 1,120,505 shares of our common stock, including $2.0 million of the additional notes issued in August 2005 for 285,714 shares; all of which issuances will occur upon the consummation of this offering.
          The “pro forma as adjusted” information as of June 30, 2005 gives effect at that date to the foregoing pro forma adjustments as well as to the following additional events:
  our sale of the 2,500,000 shares of common stock in this offering at an assumed initial public offering price of $           per share, the midpoint of the range set forth on the cover page of this prospectus; and
 
  our receipt of the estimated net proceeds therefrom, after deducting the underwriting discounts and commissions and other expenses of this offering and giving effect to our repayment from such proceeds of $629,418 of our outstanding indebtedness as of June 30, 2005.

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RISK FACTORS
          You should carefully consider the following risks and all other information set forth in this prospectus before deciding to invest in shares of our common stock. If any of the events or developments described below actually occurs, our business, financial condition and results of operations may suffer. In that case, the trading price of our common stock may decline and you could lose all or part of your investment.
Risks related to our business
Our future success is highly uncertain and cannot be predicted based upon our limited operating history.
          Although our predecessor was formed in 1998, most of our brands, including Boru vodka, our leading brand, have only been acquired or introduced by us since our formation in July 2003. As a result, compared to most of our current and potential competitors, we have a relatively short operating history and our brands are early in their growth cycle. Additionally, we anticipate acquiring brands in the future that are unlikely to have established global brand recognition. Accordingly, it is difficult to predict when or whether we will be financially and operationally successful, making our business and future prospects difficult to evaluate. In making your evaluation of our prospects, you should consider that we are an emerging company with products that, as yet, have limited brand recognition and unproven global or broad-based market acceptance. As a result, we may encounter many expenses, delays, problems and difficulties that we have not anticipated and for which we have not planned. If we are unable to address these issues, if and when they arise, we may never be financially or operationally successful.
We have a history of losses, we expect to experience continuing losses for the foreseeable future, and we may never achieve profitability.
          We have incurred losses since inception and had an accumulated loss of $33.2 million as of June 30, 2005. We believe that we will continue to incur sizeable net losses for the foreseeable future as we expect to make continued and significant investment in product development, and sales and marketing and to incur significant administrative expenses as we seek to grow our current and future brands. We also anticipate that our cash allocations will exceed our income from sales for the foreseeable future. Despite our anticipated aggressive marketing expenditures, our products may never achieve widespread market acceptance and may not generate sales and profits to justify our investment. In addition, we may find that our expansion plans are more costly than we currently anticipate and that they do not ultimately result in commensurate increases in our sales, which would further increase our losses. If we continue to incur expenses at a greater rate than our revenues, we may never achieve profitability.
Our growth may be limited if we do not generate sufficient cash to fund our operations. We may in the future need additional financing to execute our business and continue our growth, which may not be available on satisfactory terms or when needed.
          While the proceeds of this offering are expected to last us for at least the next 12 months, we may require additional capital in the future on an accelerated basis to fund our business or our growth strategy (including potential acquisitions), due to changes in our operations, acceleration of our growth strategy, lower than anticipated product sales, increased marketing, advertising and other costs or other events. If, at such time, we have not generated sufficient cash from operations to finance those additional capital needs, we will need to raise additional funds through private or public equity and/or debt financing. We cannot assure you that, if and when needed, additional financing will be available to us on acceptable terms or at all. If additional capital is needed and either unavailable or cost prohibitive, our growth may be limited as we may need to change our business strategy to slow the rate of, or eliminate, our expansion or reduce or curtail our operations. In addition, any additional financing we undertake could impose covenants upon us that restrict our operating flexibility, and, if we issue

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equity securities to raise capital, our existing stockholders may experience dilution or the new securities may have rights senior to those of our common stock.
We are dependent on a limited number of suppliers. Failure to obtain satisfactory performance from our suppliers or loss of our existing suppliers could cause us to lose sales, incur additional costs and lose credibility in the marketplace. We also have annual purchase obligations with certain suppliers.
          We depend on a limited number of third-party suppliers for the sourcing of all of our products, including both our own proprietary brands and those we distribute for others. These suppliers consist of third-party distillers, bottlers and producers in the United States, Bermuda, the Caribbean and Europe. We rely on the owners of Gosling’s rum and Pallini Limoncello to produce their brands for us. With respect to our proprietary products, we, in several instances, rely on a single supplier to fulfill one or all of the manufacturing functions for one or more of our brands. For instance, The Carbery Group is the sole distillery for Boru vodka, our leading brand; Irish Distillers Limited is the sole provider of our single malt, blended and grain Irish whiskey; Gaelic Heritage Corporation Limited is the sole producer of our Celtic Crossing Irish liqueur; and Terra Limited is not only the sole producer of our Brady’s Irish cream liqueur but also the only bottler of both our Boru vodka and our Irish whiskeys. We do not have long-term written agreements with all of our suppliers. In addition, if we fail to complete purchases of products ordered annually, certain suppliers have the right to bill us for product not purchased during the period. The termination of our written or oral agreements, or an adverse change in the terms of these agreements could have a negative impact on our business. If our suppliers increase their prices, we may not have alternative sources of supply and may not be able to raise the prices of our products to cover all or even a portion of the increased costs. Our suppliers’ failure to perform satisfactorily or the loss of our existing suppliers, especially our key suppliers, could cause us to fail to meet orders for our products, lose sales, incur additional costs and/or expose us to product quality issues. In turn, this could cause us to lose credibility in the marketplace and damage our relationships with distributors, ultimately leading to a decline in our business and results of operations.
We cannot yet act as our own importer of record in the United States and rely entirely on MHW Ltd. to perform this function for us. The loss of its services could thus significantly interrupt our U.S. sales and harm our reputation, our business and our results of operations.
          In the United States, there is a three-tier distribution system for imported spirits: the imported brand is sold to a licensed importer; the importer sells the imported brand to a wholesale distributor; and the distributor sells the imported brand to retail liquor stores, bars, restaurants and other outlets in the states in which it is licensed to sell alcohol. While we own most of our brands, we cannot yet act as our own importer as we do not currently have any of the state licenses necessary to sell our products to the distributors. We have, as a result, historically depended on MHW Ltd. to serve in this capacity for us. In addition to acting as importer of record for us, MHW also provides and supervises storage and transportation of our products to local wholesale distributors and provides several accounting and payment related services to us. Until we are licensed in a majority of the states and bring these services in-house, the loss of MHW’s services or its poor performance, either nationally or at a state level, could significantly interrupt or decrease our U.S. sales and harm our reputation, our business and our results of operations. In addition, while MHW purchases product from us to fill wholesale orders, MHW is not liable to us for any unpaid balances due from the distributors on these orders. Accordingly, the inability or failure of MHW to collect accounts receivable from our distributors could also cause a decline in our results of operations.
          In addition, until recently, it was much more cost effective for us to use MHW as our U.S. importer and to rely on its state licenses rather than expend the resources necessary to set up the required licensing infrastructure internally. At this stage of our growth, however, our fees to MHW, which are based in part on our case sale volumes, are now reaching the point where it may be more economical for us to assume the role of importer ourselves. While we have commenced this process,

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we currently hold only the federal importer and wholesaler license required by the Alcohol and Tobacco Tax and Trade Bureau. Until we have obtained the requisite licenses in a majority of the states, a process that could take as long as a year, we must continue to rely on MHW to perform the importing function for us and, if we continue to grow, pay increasing fees to it for these services.
We are substantially dependent upon our independent wholesale distributors. The failure or inability of even a few of our distributors to adequately distribute our products within their territories could harm our sales and result in a decline in our results of operations.
          We are required by law to use state licensed distributors or, in 18 states known as “control states,” state-owned agencies performing this function, to sell our products to retail outlets, including liquor stores, bars, restaurants and national chains in the United States. We have established relationships for our brands with wholesale distributors in each state; however, failure to maintain those relationships could significantly and adversely affect our business, sales and growth. Over the past decade there has been increasing consolidation, both intrastate and interstate, among distributors. As a result, many states now have only two or three significant distributors. In addition, there are several distributors that now control distribution for not just one state but several states. As a result, if we fail to maintain good relations with a distributor, our products could in some instances be frozen out of one or more markets entirely. The ultimate success of our products also depends in large part on our distributors’ ability and desire to distribute our products to the desired U.S. target markets, as we rely significantly on them for product placement and retail store penetration. We have no distribution agreements or minimum sales requirements with any of our distributors and they are under no obligation to place our products or market our brands. Moreover, all of them also distribute competitive brands and product lines. We cannot assure you that our distributors will continue to purchase our products, commit sufficient time and resources to promote and market our brands and product lines or that they can or will sell them to our desired or targeted markets. If they do not, our sales will be harmed, resulting in a decline in our results of operations.
          While most of our international markets do not require the use of independent distributors by law, we have chosen to conduct our sales through distributors in all of our markets and, accordingly, we face similar risks to those set forth above with respect to our international distribution. In the Republic of Ireland, one of our larger international markets, our distributor has not historically carried all of our products, and there are only a limited number of viable distributors.
The sales of our products could decrease significantly if we cannot secure and maintain listings in the control states.
          In the control states, the state liquor commissions act in place of distributors and decide which products are to be purchased and offered for sale in their respective states. Products selected for listing must generally reach certain volumes and/or profit levels to maintain their listings. Products are selected for purchase and sale through listing procedures which are generally made available to new products only at periodically scheduled listing interviews. Products not selected for listings can only be purchased by consumers through special orders, if at all. If, in the future, we are unable to maintain our current listings in the 18 control states, or secure and maintain listings in those states for any additional products we may acquire, sales of our products could decrease significantly.
If we are unable to identify and successfully acquire additional premium brands that are complementary to our existing portfolio, our growth will be limited, and, even if they are acquired, we may not realize planned benefits due to integration difficulties or other operating issues.
          A key component of our growth strategy is the acquisition of additional premium spirits brands that are complementary to our existing portfolio through acquisitions of such brands or their corporate owners, either directly or through mergers, joint ventures, long-term exclusive distribution arrangements and/or other strategic relationships. If we are unable to identify suitable brand candidates and

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successfully execute our acquisition strategy our growth will be limited. In addition, even if we are successful in acquiring additional brands, we may not be able to achieve or maintain profitability levels that justify our investment in, or realize operating and economic efficiencies or other planned benefits with respect to, those additional brands. The addition of new products or businesses entails numerous risks with respect to integration and other operating issues, any of which could have a detrimental effect on our results of operations and/or the value of our equity. These risks include:
  difficulties in assimilating acquired operations or products;
 
  unanticipated costs that could materially adversely affect our results of operations;
 
  negative effects on reported results of operations from acquisition related charges and amortization of acquired intangibles;
 
  diversion of management’s attention from other business concerns;
 
  adverse effects on existing business relationships with suppliers, distributors and retail customers;
 
  risks of entering new markets or markets in which we have limited prior experience; and
 
  the potential inability to retain and motivate key employees of acquired businesses.
In addition, there are special risks associated with the acquisition of additional brands through joint venture arrangements. While we own a controlling interest in our Gosling-Castle Partners Inc. strategic export venture, we may not have the majority interest in, or control of, future joint ventures that we may enter into. There is, therefore, risk that our joint venture partners may at any time have economic, business or legal interests or goals that are inconsistent with our interests or goals or those of the joint venture. There is also risk that our current or future joint venture partners may be unable to meet their economic or other obligations and that we may be required to fulfill those obligations alone.
          Our ability to grow through the acquisition of additional brands will also be dependent upon the availability of capital to complete the necessary acquisition arrangements. We intend to finance our brand acquisitions through a combination of the proceeds of this offering, our available cash resources, bank borrowings and, in appropriate circumstances, the further issuance of equity and/or debt securities. Acquiring additional brands could have a significant effect on our financial position, and could cause substantial fluctuations in our quarterly and yearly operating results. Also, acquisitions could result in the recording of significant goodwill and intangible assets on our financial statements, the amortization or impairment of which would reduce reported earnings in subsequent years.
Our quarterly operating results have fluctuated in the past and may fluctuate significantly in the future rendering quarter-to-quarter comparisons unreliable as indicators of performance.
          Our industry is subject to seasonality, with peak sales in each major category generally occurring in the fourth calendar quarter, which is our third fiscal quarter. As a result, our third fiscal quarter revenues (those for the quarter ending December 31) are generally significantly higher than other quarters and, for the fiscal year ended March 31, 2005, accounted for over 36% of our revenues for that year. Our quarterly revenues and operating results have also varied in the past for other reasons and are likely to continue to vary significantly from quarter to quarter in the future. As a result, we believe that quarter-to-quarter comparisons of our revenues and operating results are not meaningful, rendering them unreliable as indicators of performance.
          Factors that could cause quarterly fluctuations include, but are not limited to:
  seasonal purchasing patterns of distributors, retailers and consumers;
 
  our and our suppliers’ ability to handle increased orders;
 
  delays in shipments of product from international suppliers;

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  our ability to procure adequate shipping containers and ships to transport our products;
 
  our commencement or completion of a major marketing campaign;
 
  delays in obtaining raw materials such as bottles and packaging materials;
 
  changes in the U.S. or international economies;
 
  fluctuations in discretionary consumer spending;
 
  changes in consumer preferences;
 
  increases or decreases in U.S. or other federal excise taxes, or the aggregate effect of such tax changes in a number of U.S. states;
 
  changes in interest rates and terms of borrowing;
 
  significant fluctuations in the value of the U.S. dollar against other foreign currencies, which would affect the cost of product purchases and our cost of raw materials;
 
  fluctuations in commodity prices;
 
  new or revised regulatory requirements and accounting pronouncements;
 
  delays in the launch of new products, including the timing of government approvals;
 
  alcohol advertising restrictions, limitations on hours or places of sale or other measures adopted to restrict beverage sales (whether in the United States or abroad); and
 
  the loss or addition of a brand.
The international nature of our business adds operating risks, which could negatively impact our business.
          While we focus on approximately seven primary geographic markets, including the United States, we also sell our products in over 10 other countries. We also purchase spirits and other materials from entities in Ireland, the United Kingdom, Bermuda, Italy, Guyana, the Caribbean and other foreign countries. The risks and challenges associated with conducting business internationally can include, among others:
  the need to develop new distributor relationships;
 
  fluctuations in currency exchange rates and currency devaluations;
 
  differences and unexpected changes in the regulatory environment;
 
  varying tax regimes;
 
  exposure to different legal standards and enforcement mechanisms and associated compliance costs;
 
  tariffs, duties, import/export controls and other trade barriers;
 
  longer accounts receivable payment cycles and difficulties in collecting accounts receivable;
 
  limited legal protection and enforcement of intellectual property rights;
 
  difficulties in staffing and managing foreign operations;
 
  potentially higher incidences of fraud; and
 
  political instability and the possibility of wars and terrorist acts.
          For the fiscal year ended March 31, 2005 and the three months ended June 30, 2005, non-U.S. operations accounted for approximately 47% and 37%, respectively, of our revenues. Consequently, any negative impact from our international business efforts could negatively impact the operating results and financial condition of our business as a whole.

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          In addition, gains and losses on the conversion of foreign payments into U.S. dollars may contribute to fluctuations in our results of operations, and fluctuating exchange rates could cause reduced revenues and/or gross margins from non-U.S. dollar-denominated international sales. Also, for the fiscal year ended March 31, 2005 and the three months ended June 30, 2005, euro denominated sales accounted for approximately 34% and 26%, respectively, of our total sales volumes and British pound denominated sales accounted for approximately 13% and 11%, respectively, of our total sales volume, so a substantial change in the rate of exchange between the U.S. dollar and the euro or British pound could have a significant adverse affect on our financial results. In addition, our ability to acquire spirits, and produce and sell our products at favorable prices, will depend in part on the relative strength of the U.S. dollar. We may not be able to insure or hedge against these risks and we may not be able to comply with all the applicable regulations, even if we expend substantial additional resources to do so.
Our growth strategy may strain our resources. If we fail to manage our growth, our ability to operate our business may be harmed and we may be prevented from generating the revenue and operating margins we expect.
          Since December 2003, our business has grown significantly in size and complexity. This growth has placed, and is expected to continue to place, significant demands on our management, systems, internal controls and financial and physical resources. In addition, our planned growth strategy, including the expansion of our product lines and the addition of agency brands, will continue to require increased development efforts and increased sales, marketing and promotion expenditures. We also expect that the future growth of our operations will require us to further develop our financial and managerial controls and reporting systems. This expansion will place significant demands on our management and may strain our operational and financial resources, as well as our infrastructure. The international nature of our expansion and our multiple markets could put further strain on those resources. Our failure to effectively manage our growth could disrupt our operations and ultimately prevent us from generating the revenue and operating margins we expect.
Consumer preferences are constantly changing. If we fail to anticipate these changes and adjust our inventory, portfolio and markets accordingly, we could experience lower sales and decreased margins.
          Our long-term success is dependent upon acceptance of our products in the United States and various international markets. Market acceptance is dependent on many complicated, interrelated factors, many of which are not within our control, including factors such as public perceptions and personal tastes. Strengthening and maintaining our competitive position will depend on our ability to offer products that have a strong appeal to consumers. Even if we are successful in establishing consumer awareness and acceptability for a brand, consumer preferences may shift due to a variety of factors, including changes in demographic and social trends, changes in dining, recreational or leisure activity patterns and changes in the economic climate. In order to be successful, we must accurately anticipate consumer preferences and monitor and select the appropriate markets for our brands. If we fail to anticipate changes in consumer preferences and adjust our inventory, portfolio and markets accordingly, we could experience lower sales and decreased margins. In addition, any failure to keep pace with changes in consumers’ tastes could result in lost opportunities, which could also reduce our sales.
Adverse public opinion about alcohol could reduce demand for our products.
          Anti-alcohol groups have, in the past, successfully advocated more stringent labeling requirements, higher taxes and other regulations designed to discourage consumption of beverage alcohol. More restrictive regulations, negative publicity regarding alcohol consumption and/or changes in consumer perceptions of the relative healthfulness or safety of beverage alcohol could decrease sales and consumption of alcohol and thus the demand for our products. This could, in turn, significantly decrease both our revenues and our revenue growth, causing a decline in our results of operations.

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Class action or other litigation relating to alcohol abuse or the misuse of alcohol could deplete our cash and divert our personnel resources and, if successful, significantly harm our business.
          Our industry faces the possibility of class action or other similar litigation alleging that the continued excessive use or abuse of beverage alcohol has caused death or serious health problems. It is also possible that federal, state or foreign governments could assert that the use of alcohol has significantly increased government funded health care costs. Litigation or assertions of this type have adversely affected companies in the tobacco industry, and it is possible that we, as well as our suppliers, could be named in litigation of this type.
          In addition, lawsuits have been brought recently in nine states alleging that beer and spirits manufacturers have improperly targeted underage consumers in their advertising. The plaintiffs in these actions claim that the defendants’ advertising “disproportionately” targeted underage consumers, by using youthful themes, humor and other subjects that are attractive to young persons. Plaintiffs in these cases allege that the defendants’ advertisements, marketing and promotions violate the consumer protection or deceptive trade practices statutes in each of these states and seek repayment of the family funds expended by the underage consumers. While we have not been named in these lawsuits, it is possible we could be named in similar lawsuits in the future. Any class action or other litigation asserted against us could be expensive and time consuming to defend against, depleting our cash and diverting our personnel resources and, if the plaintiffs in such actions were to prevail, our business could be harmed significantly.
Our and our strategic partners’ failure to protect our respective trademarks, service marks and trade secrets could compromise our competitive position and decrease the value of our brand portfolio.
          Our business and prospects depend in part on our, and with respect to our agency or joint venture brands, our strategic partners’, ability to develop favorable consumer recognition of our brands and trademarks. Although both we and our strategic partners actively apply for registration of our brands and trademarks, they could be imitated in ways that we cannot prevent. In addition, we rely on trade secrets and proprietary know-how, concepts and formulas. Our methods of protecting this information may not be adequate. Moreover, we may face claims of misappropriation or infringement of third parties’ rights that could interfere with our use of this information. Defending these claims may be costly and, if unsuccessful, may prevent us from continuing to use this proprietary information in the future and result in a judgment or monetary damages being levied against us. We do not maintain non-competition agreements with all of our executives and key personnel or with some of our key suppliers. If competitors independently develop or otherwise obtain access to our or our strategic partners’ trade secrets, proprietary know-how or recipes, the appeal, and thus the value, of our brand portfolio could be reduced, negatively impacting our sales and growth potential.
Failure to maintain and/or strengthen our competitive position in the spirits industry could decrease our sales and/or growth potential.
          The beverage alcohol industry is highly competitive. We compete on the basis of quality, price, brand recognition and distribution strength. Our products compete with other beverage alcohol products, in general, and premium brands, in particular, for consumer purchases, as well as for distributor attention and support, shelf space in retail stores, restaurant presence and wholesaler attention. We compete with numerous national and multinational developers and marketers of beverage alcohol, many of which have far greater resources than we have. If we fail to maintain and/or strengthen our competitive position in the spirits industry, our sales and/or growth potential could be harmed.

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We depend on our key personnel. If we lose the services of any of these individuals or fail to hire and retain additional management personnel as we grow, we may not be able to implement our business strategy or operate our business effectively.
          We rely on a small number of key individuals to implement our plans and operations, including Mark Andrews, our chairman, president and chief executive officer, Keith A. Bellinger, our executive vice president and chief operating officer, and T. Kelley Spillane, our senior vice president — U.S. sales, as well as our other executive officers and our regional and foreign sales managers. While we currently maintain key person life insurance coverage on the lives of Messrs. Andrews and Spillane, that insurance may not be available to us in the future or the proceeds therefrom may not be adequate to replace the services of these managers. To the extent that the services of any of these individuals become unavailable, we will be required to hire other qualified personnel, and we may not be successful in finding or hiring adequate replacements. As a result, if we lose the services of any of these individuals, we may not be able to implement our business strategy or operate our business effectively. Further, our management of future growth and our successful integration of any acquired brands or companies will require substantial additional attention from our senior management team and require us to retain additional qualified management personnel and to attract and train new personnel. Failure to successfully retain and hire needed personnel to manage our growth and development would harm our ability to implement our business plan and grow our business.
If the recent change in status of the former managing directors of our Irish subsidiaries, from full-time employees to part time consultants, were to harm any of our foreign distribution and supplier relationships, our international sales could decline and our production activities could be interrupted.
          We and the founders of our Irish subsidiaries, David Phelan and Patrick Rigney, have recently modified Messrs. Phelan’s and Rigney’s relationships with our company from that of full-time employees of our Irish subsidiaries and members of our board of directors to part-time consultants, pursuant to consulting agreements with them expiring in March 2007 and June 2006, respectively. Messrs. Phelan and Rigney were instrumental in creating, developing and marketing Boru vodka in Ireland, the United Kingdom and a number of European countries, both while with Roaring Water Bay and, following our merger in 2003, while with us. Messrs. Phelan and Rigney were also responsible for developing the brand and obtaining its production and bottling from The Carbery Group and Terra Limited, both of which companies continue to be significant suppliers of ours. If we were to lose any of our key distributors or suppliers as a result of the change in status of Messrs. Phelan or Rigney, or as a result of the loss of their services upon the expiration of their consulting agreements, we would need to engage other key distributors and suppliers. If in such circumstances we were unable to engage adequate replacement firms, our international sales could decline and our production activities could be interrupted.
Regulatory decisions and changes in the legal, regulatory and tax environment in the countries in which we operate could limit our business activities or increase our operating costs and reduce our margins.
          Our business is subject to extensive regulation regarding production, distribution, marketing, advertising and labeling of beverage alcohol products in all of the countries in which we operate. We are required to comply with these regulations and to maintain various permits and licenses. We are also required to conduct business only with holders of licenses to import, warehouse, transport, distribute and sell spirits. We cannot assure you that these and other governmental regulations applicable to our industry will not change or become more stringent. Moreover, because these laws and regulations are subject to interpretation, we may not be able to predict when and to what extent liability may arise. Additionally, due to increasing public concern over alcohol-related societal problems, including driving while intoxicated, underage drinking, alcoholism and health consequences from the abuse of alcohol, various levels of government may seek to impose additional restrictions or limits on advertising or other marketing activities promoting beverage alcohol products. Failure to comply with any of the current or

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future regulations and requirements relating to our industry and products could result in monetary penalties, suspension or even revocation of our licenses and permits, or those of MHW on whom we are currently dependent to import and distribute our products in the United States. Costs of compliance with changes in regulations could be significant and could harm our business, as we could find it necessary to raise our prices in order to maintain profit margins, which could lower the demand for our products and reduce our sales and profit potential.
          In addition, the distribution of beverage alcohol products is subject to extensive taxation both in the United States and internationally (and, in the United States, at both the federal and state government levels), and beverage alcohol products themselves are the subject of national import and excise duties in most countries around the world. An increase in taxation or in import or excise duties could also significantly harm our sales revenue and margins, both through the reduction of overall consumption and by encouraging consumers to switch to lower-taxed categories of beverage alcohol.
We could face product liability or other related liabilities that increase our costs of operations and harm our reputation.
          Although we maintain liability insurance and will attempt to limit contractually our liability for damages arising from our products, these measures may not be sufficient for us to successfully avoid or limit liability. Our product liability insurance coverage is limited to $1.0 million per occurrence and $2.0 million in the aggregate and our general liability umbrella policy is capped at $10.0 million. Further, any contractual indemnification and insurance coverage we have from parties supplying our products is limited, as a practical matter, to the creditworthiness of the indemnifying party and the insured limits of any insurance provided by these suppliers. In any event, extensive product liability claims could be costly to defend and/or costly to resolve and could harm our reputation.
Contamination of our products and/or counterfeit or confusingly similar products could harm the image and integrity of, or decrease customer support for, our brands and decrease our sales.
          The success of our brands depends upon the positive image that consumers have of them. Contamination, whether arising accidentally or through deliberate third-party action, or other events that harm the integrity or consumer support for our brands, could affect the demand for our products. Contaminants in raw materials purchased from third parties and used in the production of our products or defects in the distillation process could lead to low beverage quality as well as illness among, or injury to, consumers of our products and could result in reduced sales of the affected brand or all of our brands. Also, to the extent that third parties sell products that are either counterfeit versions of our brands or brands that look like our brands, consumers of our brands could confuse our products with products that they consider inferior. This could cause them to refrain from purchasing our brands in the future and in turn could impair our brand equity and adversely affect our sales and operations.
We must maintain a relatively large inventory of our products to support customer delivery requirements, and if this inventory is lost due to theft, fire or other damage or becomes obsolete, our results of operations would be negatively impacted.
          We must maintain relatively large inventories to meet customer delivery requirements for our products. We are always at risk of loss of that inventory due to theft, fire or other damage, and any such loss, whether insured against or not, could cause us to fail to meet our orders and harm our sales and operating results. In addition, our inventory may become obsolete as we introduce new products, cease to produce old products or modify the design of our products’ packaging, which would increase our operating losses and negatively impact our results of operations.

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We have a material amount of goodwill and other intangible assets. If, as a result of newly adopted accounting standards, we are in the future required to write down a portion of this goodwill and other intangible assets, it would increase our net loss.
          As of June 30, 2005, goodwill represented approximately $11.8 million, or 27% of our total assets and other intangible assets represented approximately $14.4 million, or 33% of our total assets. Goodwill is the amount by which the costs of an acquisition accounted for using the purchase method exceed the fair value of the net assets acquired. We adopted Statement of Financial Accounting Standard No. 142, or SFAS No. 142, entitled “Goodwill and Other Intangible Assets” in its entirety, on April 1, 2004. Under SFAS No. 142, goodwill and indefinite lived intangible assets are no longer amortized, but instead are subject to a periodic impairment evaluation based on the fair value of the reporting unit. Any write-down of goodwill or intangible assets resulting from future periodic evaluations would increase our net loss and those increases could be material.
Our existing and future debt obligations could impair our liquidity and financial condition.
          As of June 30, 2005, we had consolidated senior and subordinated notes payable of approximately $20.1 million (or approximately $17.5 million after giving pro forma effect to our issuance of an additional $5.0 million principal amount of our 6% convertible notes in August 2005 and our conversion in connection with this offering of approximately $7.7 million principal amount of our outstanding indebtedness into shares of our common stock). We are also currently negotiating for a global credit facility and we may incur additional debt in the future, under such credit line or otherwise, to fund all or part of our capital requirements. Our outstanding debt and future debt obligations could impair our liquidity and could:
  make it more difficult for us to satisfy our other obligations;
 
  require us to dedicate a substantial portion of any cash flow we may generate to payments on our debt obligations, which would reduce the availability of our cash flow to fund working capital, capital expenditures and other corporate requirements;
 
  impede us from obtaining additional financing in the future for working capital, capital expenditures, acquisitions and general corporate purposes; and
 
  make us more vulnerable in the event of a downturn in our business prospects and limit our flexibility to plan for, or react to, changes in our industry.
          If we were to fail in the future to make any required payment under agreements governing our indebtedness or fail to comply with the financial and operating covenants contained in those agreements, we would be in default as regards to that indebtedness. A debt default could significantly diminish the market value and marketability of our common stock. If the lenders were to require immediate payment, we might not have sufficient assets to satisfy our obligations under our credit facility, our subordinated notes or our other indebtedness. Our lenders would have the ability to require that we immediately pay all outstanding indebtedness, and we might not have sufficient assets to satisfy their demands. In such event, we could be forced to seek protection under bankruptcy laws, which could significantly harm our reputation and sales and significantly reduce the price of our common stock.
Risks related to this offering
The market price for our common stock may be volatile, and you may not be able to sell our stock at a favorable price or at all.
          There has been no public market for our common stock prior to this offering, and an active and liquid public market for our common stock may not develop or be sustained after this offering. The securities markets have recently experienced extreme price and volume fluctuations. This market

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volatility, as well as general economic or political conditions, could reduce the market price of our common stock regardless of our operating performance. Additional factors that could cause the market price of our common stock to rise and fall after this offering, include the following:
  variations in our actual or anticipated operating results;
 
  our introduction of new brands or brand extensions and our ability to maintain existing brands;
 
  performance of our suppliers and distributors of our brands;
 
  increases in the amount and timing of operating costs and capital expenditures relating to expansion of operations;
 
  recruitment or departure of key operating personnel;
 
  changes in the estimates of our operating performance;
 
  changes in recommendations by securities analysts of our common stock;
 
  announcements of regulatory investigations of our operations or those of our suppliers;
 
  competition;
 
  changes in accounting principles; and
 
  changes in federal, state or foreign regulations and taxes that may affect our industry.
          In the past, companies that have experienced volatility in the market price of their stock have been the subjects of securities class action litigation. If we were the subject of securities class action litigation, it could result in substantial costs, liabilities and a diversion of management’s attention and resources, which could have a material adverse effect upon our business and operating results. Finally, after completion of the offering, given our relatively small market capitalization and public float, we could experience low daily trading volumes in our stock, which could give even a single large volume sale of our common stock the potential to negatively impact the market price of our common stock.
We may not be able to maintain our listing on the American Stock Exchange, which may limit the ability of purchasers in this offering to resell their common stock in the secondary market.
          Although we have applied, and expect that as of the date of this prospectus we will be approved, to list our common stock on the American Stock Exchange, we might not meet the criteria for continued listing on the American Stock Exchange in the future. If we are unable to meet the continued listing criteria of the American Stock Exchange and became delisted, trading of our common stock could be conducted in the Over-the-Counter Bulletin Board. In such case, an investor would likely find it more difficult to dispose of our common stock or to obtain accurate market quotations for it. If our common stock is delisted from the American Stock Exchange, it will become subject to the Securities and Exchange Commission’s “penny stock rules,” which impose sales practice requirements on broker-dealers that sell that common stock to persons other than established customers and “accredited investors.” Application of this rule could make broker-dealers unable or unwilling to sell our common stock and limit the ability of purchasers in this offering to resell their common stock in the secondary market.
If you purchase shares of our common stock in this offering, you will suffer immediate and substantial dilution in the net tangible book value of your shares and may be subject to additional future dilution.
          Prior investors have paid less per share for our common stock than the price in this offering. The initial public offering price is substantially higher than the per share net tangible book value of our

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common stock immediately after this offering. Therefore, based on an assumed offering price of $            per share, the midpoint of the price range set forth on the cover page of this prospectus, if you purchase our common stock in this offering, you will suffer immediate and substantial dilution of approximately $            per share. If the underwriters exercise their over-allotment option, or if outstanding options and warrants to purchase our common stock are exercised, you will experience additional dilution. Any future equity issuances will result in even further dilution to holders of our common stock.
Our executive officers, directors and principal stockholders will continue to own a substantial percentage of our voting stock after this offering, which will likely allow them to control matters requiring stockholder approval. They could make business decisions for us with which you disagree and that cause our stock price to decline.
          Upon the closing of this offering, our executive officers, directors and principal stockholders will beneficially own approximately 50% of our common stock. As a result, if they act in concert, they could control matters requiring approval by our stockholders, including the election of directors, and could have the ability to prevent or cause a corporate transaction, even if other stockholders, including those who purchase shares in this offering, oppose such action. This concentration of voting power could also have the effect of delaying, deterring, or preventing a change of control or other business combination, which could cause our stock price to decline.
Future sales of our common stock may cause the prevailing market price to decrease and impair our capital raising abilities.
          Immediately following this offering, we will have 10,950,493 shares of common stock outstanding (assuming the underwriters do not exercise their over-allotment option), derivative securities, consisting of stock options, warrants and convertible notes outstanding, that are exercisable or convertible for the purchase of an additional 2,612,118 shares of our common stock and an additional 1,121,500 shares of common stock reserved for issuance upon the exercise of options that may be granted under our stock incentive plan. We will also have an additional 30,315,889 shares of our common stock, and 5,000,000 shares of blank check preferred stock, authorized and available for issuance, which we may, in general, issue without any action or approval by our stockholders, including in connection with acquisitions or otherwise.
          The 2,500,000 shares sold in this offering will be freely tradable, except for any shares purchased by our “affiliates” as defined in Rule 144 under the Securities Act of 1933. Holders of the other 8,450,493 shares that will be outstanding and holders of our derivative securities have agreed with the underwriters, subject to certain exceptions, not to dispose of any of their securities for a period of 180 days following the date of this prospectus, except with the prior written consent of the underwriters. After the expiration of this 180-day lock-up period, these shares may be sold in the public market, subject to prior registration or qualification for an exemption from registration, including, in the case of shares held by our affiliates, compliance with the volume restrictions of Rule 144. The holders of substantially all of the 8,450,493 shares, as well as the holders of warrants exercisable for the purchase of 598,618 shares, are also entitled to certain piggy back registration rights with respect to the public resale of their shares. In addition, following this offering, we intend to file a registration statement covering the shares issuable under our stock incentive plan.
          The market price for our common stock could decline as a result of sales of a large number of shares of our common stock in the market after this offering, and even the perception that these sales could occur may depress the market price. The sale of shares issued upon the exercise or conversion of our derivative securities could also further dilute your investment in our common stock. Further, the sale of any of the foregoing shares could impair our ability to raise capital through the sale of additional equity securities.

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We will have broad discretion over the use of proceeds from this offering and may not apply them effectively or in the manner currently contemplated.
          While we currently expect to use the net proceeds from this offering for brand development, debt retirement and working capital and general corporate purposes, we will have broad discretion to adjust the application and allocation of the net proceeds should our expectations regarding future sales or cash flow prove to be inaccurate or our anticipated business needs change. As a result, we may use the proceeds in a manner significantly different from our current plans and in ways with which you do not approve. The success of our operations that are influenced by capital expenditures and working capital allocations will substantially depend upon our discretion and judgment with respect to the application and allocation of the net proceeds from this offering. The failure of our management to apply these funds effectively could materially harm our business and prospects.
We will incur increased costs as a result of being a public company, which may divert management attention from our business and impair our financial results.
          As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act of 2002, as well as new rules subsequently implemented by the Securities and Exchange Commission and the American Stock Exchange, has required changes in corporate governance practices of public companies. We expect these new rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly. In addition, we will incur additional costs associated with our public company reporting requirements. We also expect these new rules and regulations to make it more difficult and more expensive for us to obtain directors’ and officers’ liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect to these rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.
Failure to achieve and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our ability to produce accurate financial statements and on our stock price.
          Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, we will be required to furnish a report by our management on our internal control over financial reporting. We have not been subject to these requirements in the past. The internal control report must contain (a) a statement of management’s responsibility for establishing and maintaining adequate internal control over financial reporting, (b) a statement identifying the framework used by management to conduct the required evaluation of the effectiveness of our internal control over financial reporting, (c) management’s assessment of the effectiveness of our internal control over financial reporting as of the end of our most recent fiscal year, including a statement as to whether or not internal control over financial reporting is effective, and (d) a statement that our independent registered public accounting firm has issued an attestation report on management’s assessment of internal control over financial reporting.
          To achieve compliance with Section 404 within the prescribed period, we will be engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to dedicate internal resources, engage outside consultants and adopt a detailed work plan to (a) assess and document the adequacy of internal control over financial reporting, (b) take steps to improve control processes where appropriate, (c) validate through testing that controls are functioning as documented, and (d) implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, we can provide no assurance as to our, or our independent registered public accounting firm’s, conclusions with respect to the effectiveness of our internal control over financial reporting under Section 404. There is a risk

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that neither we nor our independent registered public accounting firm will be able to conclude within the prescribed timeframe that our internal controls over financial reporting are effective as required by Section 404. This could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.
Provisions in our amended and restated certificate of incorporation, our amended and restated bylaws and Delaware law could make it more difficult for a third party to acquire us, discourage a takeover and adversely affect existing stockholders.
          Our amended and restated certificate of incorporation, our amended and restated bylaws and the Delaware General Corporation Law contain provisions that may have the effect of making more difficult, delaying, or deterring attempts by others to obtain control of our company, even when these attempts may be in the best interests of our stockholders. These include provisions limiting the stockholders’ powers to remove directors or take action by written consent instead of at a stockholders’ meeting. Our amended and restated certificate of incorporation also authorizes our board of directors, without stockholder approval, to issue one or more series of preferred stock, which could have voting and conversion rights that adversely affect or dilute the voting power of the holders of our common stock. Delaware law also imposes conditions on the voting of “control shares” and on certain business combination transactions with “interested stockholders.”
          These provisions and others that could be adopted in the future could deter unsolicited takeovers or delay or prevent changes in our control or management, including transactions in which stockholders might otherwise receive a premium for their shares over then current market prices. These provisions may also limit the ability of stockholders to approve transactions that they may deem to be in their best interests.
We do not expect to pay any dividends for the foreseeable future. Investors in this offering may never obtain a return on their investment.
          You should not rely on an investment in our common stock to provide dividend income. We do not anticipate that we will pay any dividends to holders of our common stock in the foreseeable future. Instead, we plan to retain any earnings to maintain and expand our existing operations, further develop our brands and finance the acquisition of additional brands. In addition, our ability to pay dividends is prohibited by the terms of our 6% convertible notes and we expect that any future credit facility will contain terms prohibiting or limiting the amount of dividends that may be declared or paid on our common stock. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any return on their investment. As a result, investors seeking cash dividends should not purchase our common stock.
Our determination of the public offering price for our common stock is arbitrary.
          The public offering price for our common stock has been determined by negotiation between us and the underwriters and does not necessarily bear any direct relationship to our assets, results of operations, financial condition, book value or any other recognized criterion of value and, therefore, might not be indicative of prices that will prevail in the trading market.

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FORWARD-LOOKING STATEMENTS
          This prospectus contains forward-looking statements. These statements relate to future
events, or our future financial performance. We have attempted to identify forward-looking statements by terminology including “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should,” or “will” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors, including those discussed under “Risk Factors.” The following factors, among others, could cause our actual results and performance to differ materially from the results and performance projected in, or implied by, the forward-looking statements:
  our history of losses and expectation of further losses;
 
  the effect of poor operating results on our company;
 
  the effect of growth on our infrastructure, resources, and existing sales;
 
  our ability to expand our operations in both new and existing markets and our ability to develop or acquire new brands;
 
  the impact of supply shortages and alcohol and packaging costs in general;
 
  our ability to raise capital;
 
  our ability to fully utilize and retain new executives;
 
  negative publicity surrounding our products or the consumption of beverage alcohol products in general;
 
  our ability to acquire and/or maintain brand recognition and acceptance;
 
  trends in consumer tastes;
 
  our ability to protect trademarks and other proprietary information;
 
  the impact of litigation;
 
  the impact of federal, state, local or foreign government regulations;
 
  the effect of competition in our industry; and
 
  economic and political conditions generally.
          We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in, or implied by, these forward-looking statements, even if new information becomes available in the future.
MARKET DATA AND FORECASTS
          Unless otherwise indicated, information in this prospectus concerning economic conditions and our industry is based on information from independent industry analysts and publications, including the IMPACT Databank Review and Forecast, Adams Handbook, as well as our estimates. Our estimates are derived from publicly available information released by third-party sources, as well as data from our internal research, and are based on such data and our knowledge of our industry, which we believe to be reasonable. None of the independent industry publications used in this prospectus was prepared on our or our affiliates’ behalf and none of the sources cited in this prospectus has consented to the inclusion of any data from its reports, nor have we sought their consent.

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USE OF PROCEEDS
          We estimate that our net proceeds from the sale of the 2,500,000 shares of our common stock in this offering will be $           million. “Net proceeds” is what we expect to receive after paying the underwriters’ discounts and commissions and other expenses of the offering. For purposes of estimating net proceeds, we are assuming that the public offering price will be the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus, which is $            per share.
          We intend to use net proceeds from this offering for general corporate purposes, including for:
  sales and marketing activities;
 
  capital commitments to our Gosling-Castle Partners Inc. strategic export venture (of the remaining $3.9 million of funding that we owe to Gosling-Castle Partners by April 2007, we will fund approximately $1.1 million in October 2005, an additional $1.0 million in each of April 2006 and October 2006 and $750,000 in April 2007), see “Business – Strategic brand-partner relationships”;
 
  hiring of additional employees;
 
  repayment of 521,646 ($629,418) of the principal amount of indebtedness owed by us to former stockholders of our Irish subsidiaries; and
 
  working capital needs.
          We may also use a portion of the net proceeds of this offering to invest in or acquire new brands through mergers, stock or asset purchases, joint ventures, long-term exclusive distributor arrangements and/or other strategic relationships, although we have no present commitments or agreements with respect to any such material acquisition or investment.
          In addition, if we receive a commitment for a new credit facility, we intend to use:
  approximately $4.6 million of the net proceeds of this offering to repay the senior notes of Castle Brands (USA) Corp., our wholly owned subsidiary, which are held by 27 holders, including approximately $2.6 million held by six of our officers, directors and principal stockholders. This indebtedness bears interest at a rate of 9% per annum and is due May 31, 2009; and
 
  up to approximately $2.0 million of the net proceeds of this offering to repay the notes and other obligations held by Ulster Bank Ireland Limited and Ulster Bank Ltd. under various facilities extended to our Irish subsidiaries. This indebtedness consists of several facilities which bear interest at various rates ranging from 4.8% to 7.8% per annum. Each facility is payable on demand by the bank.
          The amounts actually expended for each of the purposes listed above (other than the repayment of indebtedness) and the timing of our actual expenditures will depend on numerous factors, including growth in our net sales, sales and marketing activities, the terms of any brand acquisitions, amount of cash generated or used by our operations and the other factors described in “Risk Factors.” We have not determined the amount or timing of expenditures for the corporate purposes listed above and will retain broad discretion in the allocation and use of the net proceeds. Pending the uses described above, we intend to invest the net proceeds in short-term, interest-bearing, investment-grade securities.

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DIVIDEND POLICY
          We have never paid or declared dividends on our capital stock other than the preferred stock dividends to be paid upon the consummation of this offering in shares of our common stock. We do not anticipate that we will pay any dividends to holders of our common stock in the foreseeable future, as we currently plan to retain any earnings to maintain and expand our existing operations, further develop our brands and finance the acquisition of additional brands. In addition, our ability to pay dividends is subject to the consent of the holders of our 6% convertible notes and we expect that any future credit facility will contain terms prohibiting or limiting the amount of dividends that may be declared or paid on our common stock. Payments of any cash dividends in the future, however, is within the discretion of our board of directors and will depend on our financial condition, results of operations and capital and legal requirements as well as other factors deemed relevant by our board of directors.

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CAPITALIZATION
          Please read the following capitalization table together with the sections of this prospectus entitled “Selected Consolidated Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included elsewhere in this prospectus.
          The following table sets forth our consolidated cash position and capitalization as of June 30, 2005:
  on an actual, historical basis, without any adjustments to reflect subsequent or anticipated events;
 
  on a “pro forma” basis, with adjustments to reflect the following subsequent events:
  our issuances in August 2005 of an additional 362,500 shares of our Series C convertible preferred stock and an additional $5.0 million principal amount of our 6% convertible notes, for aggregate net proceeds to us of approximately $7.5 million;
 
  our accrual of additional preferred stock dividends on our convertible preferred stock from July 1, 2005 through the estimated closing date of this offering in the aggregate amount of $145,246; and
 
  our issuance of an additional 5,343,827 shares of our common stock upon a the conversion of all of our preferred stock, including the additional shares of Series C convertible preferred stock issued in August 2005, into 4,089,465 shares of common stock, (b) our payment of all of the dividends accrued on our convertible preferred stock as of the estimated closing date of this offering, including those accrued since June 30, 2005, with 133,857 shares of common stock, and (c) the conversion of $7.7 million of our indebtedness, including all of our 5% euro denominated convertible notes and $6.0 million principal amount, including $2.0 million of the additional notes issued in August 2005 for 285,714 shares, of our 6% convertible notes, into an aggregate of 1,120,505 shares of common stock, all of which issuances will occur upon the consummation of this offering; and
  on a “pro forma as adjusted” basis, reflecting the foregoing pro forma adjustments as well as the following additional events:
  our adoption of an amendment to our certificate of incorporation that authorizes 45,000,000 shares of common stock and 5,000,000 shares of preferred stock upon the consummation of this offering;
 
  the sale of the 2,500,000 shares of common stock offered by us in this offering at an assumed public offering price of $            per share, the midpoint of the range set forth on the cover page of this prospectus; and
 
  our receipt of the estimated net proceeds from such sale, after deducting the estimated underwriting discounts and commissions and other expenses of this offering and giving effect to our repayment from such proceeds of $629,418 of our outstanding indebtedness as of June 30, 2005.

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    As of June 30, 2005
     
        Pro forma
    Actual   Pro forma   as adjusted
             
    (in thousands, except number of shares)
Cash and cash equivalents
  $ 5,031     $ 12,547     $    
                   
Indebtedness:
                       
 
Current, and current maturities of, notes payable:
                       
   
Ulster Bank facilities
  $ 114     $ 114     $    
   
Gosling’s Export agreement
    565       565          
   
Roaring Water Bay stockholder loans(1)
    147       147          
 
Long-term notes payable, less current maturities:
                       
   
9% senior notes
    4,571       4,571          
   
Ulster Bank facilities
    1,397       1,397          
   
6% convertible subordinated notes
    10,000       9,000          
   
Gosling’s Export agreement
    1,210       1,210          
   
5% euro denominated convertible
                       
     
subordinated notes
    1,659                
   
Roaring Water Bay stockholder loans(1)
    455       455          
 
Obligations under capital leases
    15       15          
                   
     
Total indebtedness
  $ 20,133     $ 17,474     $    
                   
Redeemable convertible preferred stock(2):
                       
 
Series A convertible preferred stock, $1.00 par value, 550,000 shares authorized and 535,715 shares issued and outstanding (actual); no shares authorized, issued or outstanding (pro forma and pro forma as adjusted)
    3,541                
 
Series B convertible preferred stock, $1.00 par value, 200,000 shares authorized and 200,000 shares issued and outstanding (actual); no shares authorized, issued or outstanding (pro forma and pro forma as adjusted)
    1,086                
 
Series C convertible preferred stock, $1.00 par value, 3,375,000 shares authorized and 2,991,250 shares issued and outstanding (actual); no shares authorized, issued or outstanding (pro forma and pro forma as adjusted)
    21,299                
                   
     
Total preferred stock
  $ 25,926     $     $    
                   
Preferred stock dividends payable
  $ 753     $     $    
                   
Stockholders’ equity:
                       
 
Common stock, $0.01 par value, 20,500,000 shares authorized and 3,106,666 shares issued and outstanding (actual); 20,500,000 shares authorized and 8,450,493 shares issued and outstanding (pro forma); and 45,000,000 shares authorized and 10,950,493 shares issued and outstanding (pro forma as adjusted)
    31       85          
 
Additional paid-in capital
    17,965       54,011          
 
Accumulated deficit
    (33,180 )     (33,180 )        
 
Accumulated other comprehensive loss
    100       100          
                   
     
Total stockholders’ equity (deficiency)
  $ (15,084 )   $ 21,016     $    
                   
       
Total capitalization
  $ 31,728     $ 38,490     $    
                   
 
(1)  Does not give effect to an aggregate of $50,000 in imputed interest ascribed to these non-interest bearing notes.
 
(2)  Amounts shown are net of transaction costs, including the value attributed to placement agent warrants.

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DILUTION
          If you invest in our common stock, your interest will be immediately and substantially diluted to the extent of the difference between the public offering price per share of our common stock and the pro forma net tangible book value per share of our common stock after giving effect to this offering.
          Our pro forma net tangible book value as of June 30, 2005 was approximately $(1.9) million or $(0.23) per share of common stock after giving effect to:
  our issuances in August 2005 of an additional $5.0 million principal amount of our 6% convertible notes and an additional 362,500 shares of our Series C convertible preferred stock, and our receipt of approximately $7.5 million in aggregate net proceeds therefrom;
 
  accrual of additional dividends on our preferred stock from July 1, 2005 through the estimated closing date of this offering in the amount of $145,246; and
 
  the conversion in connection with this offering of all of our preferred stock, $897,953 of preferred stock dividends accrued through the estimated closing of this offering and $7.7 million principal amount of our indebtedness, into an aggregate of 5,343,827 shares of our common stock.
          Pro forma net tangible book value per share is determined by dividing net tangible book value, which is our tangible assets (total assets less intangible assets and goodwill) less total liabilities, by the pro forma number of shares of common stock outstanding.
          After giving effect to the sale of 2,500,000 shares of common stock in this offering at an assumed initial public offering price of $            per share, the midpoint of the range set forth on the cover page of this prospectus, and our receipt of the estimated net proceeds therefrom, after deducting the estimated underwriting discounts and commissions and other offering expenses payable by us and giving effect to our repayment from such proceeds of $629,418 of the indebtedness outstanding as of June 30, 2005, our pro forma as adjusted net tangible book value as of June 30, 2005, would have been $            million or $            per share of common stock. This represents an immediate increase in the pro forma net tangible book value of $            per share to our existing stockholders and an immediate dilution in the pro forma as adjusted net tangible book value of $            per share to you and the other investors in this offering.
          Dilution in pro forma net tangible book value per share represents the difference between the amount per share paid by purchasers of our common stock in this offering and the pro forma net tangible book value per share of our common stock immediately after this offering.
                   
Assumed initial public offering price per share
          $    
  Pro forma net tangible book value per share as of June 30, 2005   $            
  Increase in net tangible book value per share attributable to this offering                
             
Pro forma as adjusted net tangible book value per share after this offering
               
             
Dilution in pro forma as adjusted net tangible book value per share to investors in this offering
          $    
             

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          The following table sets forth the total consideration, and the average price per share, paid to us for our common stock by our existing stockholders, on a pro forma basis as of June 30, 2005, and the total consideration, and price per share, to be paid to us by investors in this offering for the shares offered in this offering, assuming an initial public offering price of $            per share, the midpoint of the range set forth on the cover page of this prospectus, and before deducting the underwriting discounts and commissions and other estimated offering expenses:
                                           
    Shares purchased   Total consideration   Average
            price per
    Amount   Percent   Amount   Percent   share
                     
Existing stockholders
    8,450,493       77.2%     $ 58,204,126       %     $ 6.89  
Investors in this offering
    2,500,000       22.8                       $    
                               
 
Total
    10,950,493       100.0%     $         100.0%          
                               
          The discussion and tables above exclude the options, warrants and notes exercisable or convertible into shares of our common stock that will remain outstanding after we close this offering. As of September 27, 2005, we had outstanding options under our stock incentive plan exercisable for the purchase of 878,500 shares, outstanding non-plan options exercisable for the purchase of 10,000 shares, outstanding warrants exercisable for the purchase of 598,618 shares and outstanding notes convertible into 1,125,000 shares, all of which will remain outstanding upon the completion of this offering. All of these securities will be exercisable or convertible into common stock at a price per share ($7.52 on a weighted average basis) that is less than the initial public offering price, resulting in further dilution to you and the other investors in this offering.

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SELECTED CONSOLIDATED FINANCIAL DATA
          The following tables set forth selected consolidated financial data and other data for the periods ended and as of the dates indicated. The selected consolidated financial data for the fiscal years ended March 31, 2003, 2004 and 2005 have been derived from our historical audited consolidated financial statements. The statement of operations data for the fiscal years ended March 31, 2001 and 2002 is unaudited. The selected consolidated financial data presented as of and for the three months ended June 30, 2004 and 2005 have been derived from our unaudited interim consolidated financial statements. In the opinion of our management, our unaudited financial statements for the fiscal years ended March 31, 2001 and 2002 and our interim consolidated financial statements for the three months ended June 30, 2004 and 2005 include all adjustments, consisting of only normal recurring adjustments, that we considered necessary for a fair presentation of our financial position and results of operations as of and for such unaudited periods. The historical results are not necessarily indicative of results to be expected for future periods, and results for the three month period ended June 30, 2005 are not necessarily indicative of results that may be expected for the entire year ending March 31, 2006. You should read the following selected consolidated financial data and other data in conjunction with our consolidated financial statements, including the related notes, and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.
          In December 2003, we acquired The Roaring Water Bay Spirits Group Limited and The Roaring Water Bay Spirits Marketing and Sales Company Limited, together, with their subsidiaries, referred to as Roaring Water Bay. The summary financial and other data presented in the tables below includes the results of operations of Roaring Water Bay commencing as of the December 1, 2003 closing date of the acquisition. If we assume, for comparative purposes only, that the acquisition occurred as of April 1, 2003, the beginning of our fiscal year ended March 31, 2004, our unaudited pro forma results of operations for our fiscal year ended March 31, 2004 would have been: sales, net $8.6 million; gross profit $3.5 million; net loss $(6.5) million; and net loss per common share – basic and diluted $(2.92). These pro forma results are not necessarily indicative, however, of the results of operations that actually would have resulted had the acquisition occurred on April 1, 2003 or of future results.
          In January 2005, we entered into a distribution agreement with Gosling’s Export (Bermuda) Limited, referred to as Gosling’s Export, giving us the exclusive distribution rights with respect to the Gosling’s rum products in the United States and, subsequently, in the United Kingdom. Thereafter, we expanded this relationship in February 2005, when we purchased a 60% controlling interest in a newly formed entity now named Gosling-Castle Partners Inc., a strategic venture that was formed to acquire, through an export agreement with Gosling’s Export, the global (excluding Bermuda) distribution rights with respect to the Gosling’s rums, including an assignment by Gosling’s Export to Gosling-Castle Partners of its rights under our January 2005 distribution agreement. This export agreement was entered into with Gosling’s Export in February 2005, prior to our investment in Gosling-Castle Partners, and became effective on April 1, 2005. The summary financial and other data presented in the tables below include our sales of Gosling’s products in the United States and the United Kingdom under our distribution agreement commencing as of its January 1, 2005 effective date and include the results of operations of Gosling-Castle Partners commencing as of the February 18, 2005 closing date of our investment in such entity, with adjustments for minority interest. Gosling-Castle Partners had no operations prior to its February 2005 formation and no meaningful operations prior to the April 1, 2005 commencement of its export agreement.
          The “other data” presented below relates to our case sales, which are measured based on the industry standard of nine-liter equivalent cases, an important measure in our industry that we use to evaluate the effectiveness of our operational strategies and overall financial performance. We believe that by providing this information investors can better assess trends in our business. Net sales per case is total net sales for the applicable period presented, divided by the total number of cases sold during

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the period. Gross profit per case and selling expense per case are derived by dividing our gross profit and selling expense, respectively, for the applicable period presented by the number of cases sold for such period.
                                                           
        Three months ended
    Year ended March 31,   June 30,
         
    2001   2002   2003   2004   2005   2004   2005
                             
    (unaudited)               (unaudited)
Consolidated statement
of operations data
(in thousands, except per share data):
                                                       
 
Sales, net
  $ 799     $ 1,731     $ 2,419     $ 4,827     $ 12,618     $ 2,163     $ 4,498  
 
Cost of sales
    393       1,074       1,427       3,285       8,745       1,482       2,647  
                                           
 
Gross profit
    406       657       992       1,542       3,873       681       1,851  
                                           
 
Selling expense
    1,399       2,497       3,348       5,398       11,569       2,978       3,225  
 
General and administrative expense
    657       1,013       818       1,960       3,637       795       1,138  
 
Depreciation and amortization
    20       59       73       173       167       26       182  
 
Other (income)/expense, net
    (11 )     3       11       166       (199 )     23       322  
                                           
 
Operating loss
    (1,659 )     (2,915 )     (3,258 )     (6,155 )     (11,301 )     (3,142 )     (3,016 )
                                           
 
Interest expense, net
    (118 )     (92 )     (182 )     (304 )     (998 )     (466 )     (259 )
 
Income tax benefit
                                        37  
 
Minority interests
                      35       5       2       129  
                                           
 
Net loss
  $ (1,777 )   $ (3,007 )   $ (3,440 )   $ (6,424 )   $ (12,294 )   $ (3,605 )   $ (3,109 )
                                           
 
Less: preferred stock dividends
                15       558       526       86       71  
                                           
 
Net loss attributable to common stockholders
  $ (1,777 )   $ (3,007 )   $ (3,455 )   $ (6,982 )   $ (12,820 )   $ (3,691 )   $ (3,180 )
                                           
 
Net loss per common share — basic and diluted
  $ (2.60 )   $ (2.05 )   $ (1.88 )   $ (3.12 )   $ (4.13 )   $ (1.19 )   $ (1.02 )
                                           
 
Weighted average common shares outstanding — basic and diluted
    683       1,469       1,841       2,237       3,107       3,107       3,107  
                                           
 
Pro forma net loss per common share — basic and diluted(1)
                                    $(1.65 )   $ (0.47 )   $ (0.41 )
                                           
 
Pro forma weighted average common shares outstanding-basic and diluted(1)
                                    7,781       7,781       7,781  
                                           
Other data (unaudited):
                                                       
 
Number of case sales
    3,844       9,053       21,708       64,013       170,060       32,377       60,628  
 
Net sales per case
    $207.86     $ 191.21     $ 111.43     $ 75.41     $ 74.20     $ 66.81     $ 74.19  
 
Gross profit per case
    $105.62     $ 72.57     $ 45.70     $ 24.09     $ 22.77     $ 21.03     $ 30.53  
 
Selling expense per case
    $363.94     $ 275.82     $ 154.23     $ 84.33     $ 68.03     $ 91.98     $ 53.19  
 
(1) Assumes the conversion as of April 1, 2004 of: all shares of preferred stock outstanding as of June 30, 2005, including 535,715 shares of Series A convertible preferred stock, 200,000 shares of Series B convertible preferred stock and 2,991,250 shares of Series C convertible preferred stock, into an aggregate of 3,726,965 shares of common stock; the accrued and unpaid preferred stock dividends of $752,707 outstanding as of June 30, 2005 into 112,244 shares of common stock; the $1.7 million principal amount of our 5% euro denominated convertible notes outstanding as of June 30, 2005 into 263,362 shares of common stock; and $4.0 million of the $10.0 million principal amount of our 6% convertible notes that was outstanding as of June 30, 2005 into 571,429 shares of common stock; for an aggregate of 4,674,000 shares of common stock.

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Selected balance sheet data
(in thousands):
                                                                         
                            As of June 30, 2005
             
    As of March 31,   As of    
        June 30,       Pro forma
    2001   2002   2003   2004   2005   2004   Actual   Pro forma   as adjusted
                                     
    (unaudited)               (unaudited)       (unaudited)    
Cash and cash equivalents
  $ 71     $ 170     $ 236     $ 3,461     $ 5,676     $ 3,482     $ 5,031     $ 12,547     $    
Working capital (deficit)
    (804 )     281       44       4,787       5,988       4,412       8,020       15,535          
Total assets
    2,045       3,822       4,528       27,759       43,255       29,035       43,955       51,470          
Total debt
    2,150       1,666       2,158       3,898       16,362       7,077       20,133       17,474          
Total liabilities
    2,588       2,835       3,674       8,259       26,173       13,143       29,912       27,253          
Total stockholders’ equity (deficiency).
    (543 )     988       (1,445 )     169       (12,207 )     (3,943 )     (15,084 )     21,016          
          The “pro forma” information included in the summary balance sheet data as of June 30, 2005 gives effect at that date to the following subsequent events:
  our issuances in August 2005 of 362,500 shares of our Series C convertible preferred stock and $5.0 million principal amount of our 6% convertible notes, for aggregate net proceeds to us of approximately $7.5 million;
 
  our accrual of additional preferred stock dividends on our convertible preferred stock from July 1, 2005 through the estimated closing date of this offering in the aggregate amount of $145,246; and
 
  our issuance of an additional 5,343,827 shares of our common stock upon the (a) conversion of all of our preferred stock, including the additional shares of Series C convertible preferred stock issued in August 2005, into 4,089,465 shares of common stock, (b) the payment of all of the preferred stock dividends accrued on our convertible preferred stock as of the estimated closing date of this offering, including those accrued since June 30, 2005, with 133,857 shares of our common stock, and (c) the conversion of $7.7 million of our indebtedness into 1,120,505 shares of our common stock; including $2.0 million of the additional notes issued in August 2005 for 285,714 shares; all of which issuances will occur upon the consummation of this offering.
          The “pro forma as adjusted” information as of June 30, 2005 gives effect at that date to the foregoing pro forma adjustments as well as to the following additional events:
  our sale of the 2,500,000 shares of common stock in this offering at an assumed initial public offering price of $           per share, the midpoint of the range set forth on the cover page of this prospectus; and
 
  our receipt of the estimated net proceeds therefrom, after deducting the underwriting discounts and commissions and other expenses of this offering and giving effect to our repayment from such proceeds of $629,418 of our outstanding indebtedness as of June 30, 2005.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
          You should read the following discussion and analysis in conjunction with our financial statements and related notes contained elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those set forth under “Risk Factors” and elsewhere in this prospectus.
Overview
          We develop and market premium branded spirits in several growing market categories, including vodka, rum, Irish whiskey and liqueurs/cordials, and we distribute these spirits in all 50 U.S. states, in six key European markets and certain other international markets. Our brands include, among others, Boru vodka, Gosling’s rums, Knappogue Castle Whiskey and Pallini Limoncello.
          Our current growth strategy focuses on: (a) aggressive brand development to encourage case sale and revenue growth of our existing portfolio of brands through significant investment in sales and marketing activities, including advertising, promotion and direct sales personnel expense; and (b) the selective addition of complementary premium brands through a combination of strategic initiatives, including acquisitions, joint ventures and long-term exclusive distribution arrangements.
     Strategic transactions
          A review and understanding of the components of our historical growth during the past three fiscal years and for the most recent interim period should consider the timing of our most significant strategic transactions, which are also referenced in our comparative fiscal and interim analyses contained in “ – Results of operations.” These transactions for our company and our predecessor companies are outlined below. In addition to the impact of these transactions, we have had significant growth in our own brands and will continue to focus on developing those brands.
          Boru distribution agreement. During the fiscal year ended March 31, 2002, Great Spirits Company LLC, our predecessor company, signed an exclusive distribution agreement for the U.S. distribution of Boru vodka, which added a key spirit category to our portfolio, expanded our U.S. market presence and accelerated our growth. This agreement contributed U.S. sales of Boru vodka in fiscal 2003 and 2004, although, in the last four months of fiscal 2004, these sales were included as a component of the overall sales contribution of Roaring Water Bay, outlined below.
          Roaring Water Bay acquisition. On December 1, 2003, we acquired The Roaring Water Bay Spirits Group Limited and its affiliated companies, referred to as Roaring Water Bay, which added the Boru vodka, Clontarf Irish whiskey and Brady’s Irish cream brands to our portfolio. While we were already selling Boru vodka in the United States pursuant to the 2002 distribution agreement, the acquisition added significant Boru vodka sales internationally, principally in the Republic of Ireland and the United Kingdom. This acquisition is reflected in our financial results for the last four months of our fiscal year ended March 31, 2004 and in all subsequent periods.
          Pallini Limoncello distribution agreement. On August 17, 2004, we signed an exclusive U.S. marketing and distribution agreement for Pallini Limoncello. Sales of that product are reflected in our results for the fiscal year ended March 31, 2005 commencing as of August 2005, and in all subsequent periods.
          Gosling’s rum distribution agreement. On January 1, 2005, we signed an exclusive U.S. distribution agreement for Gosling’s rum. Gosling’s rum sales are reflected in our financial results for the last three months of the fiscal year ended March 31, 2005 and for subsequent periods.
          Gosling-Castle Partners export venture. On February 18, 2005, we reached agreement to expand our Gosling’s relationship by acquiring a 60% interest in a newly formed global export venture with the Gosling family, now named Gosling-Castle Partners, Inc., that was previously formed to acquire, through an export agreement, the exclusive distribution rights for Gosling’s rums worldwide

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except for the Gosling’s home market of Bermuda, including an assignment to such venture of the Gosling’s rights under our January 2005 distribution agreement. This export agreement became effective on April 1, 2005. Because we own 60% of Gosling-Castle Partners, its financial results are included in our consolidated financial statements commencing as of our February 2005 purchase of such interest, with adjustments for minority interest; however, it had no meaningful operations prior to the April 1, 2005 commencement of the export agreement.
  Operations overview
          We generate revenue through the sale of our premium spirits to our network of wholesale distributors or, in control states, state-owned agencies, which, in turn, distribute our premium brands to retail outlets. A number of factors affect our overall level of sales, including the number of cases sold, price per case, relative contribution by brand and geographic mix. Changes in any of these factors may have a material impact on our overall sales. In the United States, our sales price per case includes excise tax and import duties, which are also reflected in a corresponding increase in our cost of sales. Most of our international sales are sold “in bond,” with the excise taxes paid by our customers upon shipment, thereby resulting in lower relative revenue as well as a lower relative cost of sales, although some of our United Kingdom sales are sold “tax paid,” as in the United States. Our sales typically peak during our third fiscal quarter (October through December) in anticipation of, and during, the holiday season. See “Risk Factors – Our quarterly operating results have fluctuated in the past and may fluctuate significantly in the future, rendering sequential quarter-to-quarter comparisons of our financial results unreliable as indicators of performance.” The difference between sales and net sales principally reflects adjustments for various distributor incentives.
          Our gross profit margin is determined by the price at which we are able to sell our products, our ability to control our cost of sales, the relative mix of our case sales by brand and geography and the impact of foreign currency fluctuations. Our gross profit and cost of sales are principally driven by our cost of procurement, bottling and packaging, which differ by brand, as well as freight and warehousing costs. We purchase certain of our products, such as Gosling’s rums and Pallini Limoncello, as finished products. For other products, we purchase the components of our products, including the distilled spirits, bottles and packaging materials, and have arrangements with third parties for bottling and packaging. Our U.S. sales typically have a higher absolute gross margin than in other markets, as sales prices per case are generally higher in the United States than elsewhere.
          Selling expense principally includes advertising and marketing expenditures and compensation paid to our marketing and sales personnel. Our selling expense, as a percentage of sales and per case, is presently high as compared to our competitors because of our brand development, level of marketing spend and our established sales force versus our relatively small base of case sales and sales levels. We expect the absolute level of selling expense to continue to increase in the coming years, but we expect selling expense as a percentage of revenues and on a per case basis to continue to decline, as our volumes expand and we leverage our direct sales team over a larger number of brands.
          General and administrative expenses include all corporate and administrative functions that support our operations. These expenses consist primarily of administrative payroll, occupancy and related expenses and professional services. While we expect these expenses to increase on an absolute basis as our sales volumes continue to increase, we expect our general and administrative expenses as a percentage of sales to continue to decline due to economies of scale.

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Financial performance overview
          The following table sets forth certain information regarding our case sales for fiscal 2003, 2004 and 2005 and the three months ended June 30, 2004 and 2005. The data in the following table is based on nine-liter equivalent cases, which is a standard spirits industry metric.
                       
        Three months ended
    Year ended March 31,   June 30,
         
Case sales   2003   2004   2005   2004   2005
                     
Cases
                   
United States
  18,482   29,116   74,190   10,181   32,684
International
  3,226   34,897   95,870   22,196   27,944
                     
 
Total
  21,708   64,013   170,060   32,377   60,628
                     
Percentage of Cases
                   
United States
  85.1%   45.5%   43.6%   31.4%   53.9%
International
  14.9     54.5     56.4     68.6     46.1  
                     
 
Total
  100.0%   100.0%   100.0%   100.0%   100.0%
                     
Critical accounting policies and estimates
          The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires us to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Such estimates and assumptions affect the reported amounts of sales and expenses during the reporting period. On an ongoing basis, we will evaluate these estimates and assumptions based upon historical experience and various other factors and circumstances. We believe our estimates and assumptions are reasonable in the circumstances; however, actual results may differ from these estimates under different future conditions.
          We believe that the estimates and assumptions discussed below are most important to the portrayal of our financial condition and results of operations, in that they require our most difficult, subjective or complex judgments and form the basis for the accounting policies deemed to be most critical to our operations.
     Revenue recognition
          We recognize revenue from product sales when the product is shipped to a customer (generally upon shipment to a distributor or to a control state entity), title and risk of loss has passed to the customer in accordance with the terms of sale (FOB shipping point or FOB destination) and collection is reasonably assured. We do not offer a right of return but will accept returns if we shipped the wrong product or wrong quantity.
     Trade accounts receivable
          We record trade accounts receivable at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts to reflect any loss anticipated on the trade accounts receivable balances and charged to the provision for doubtful accounts. We calculate this allowance based on our history of write-offs, level of past due accounts based on contractual terms of the receivables and our relationships with and economic status of our bottlers and customers.

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     Inventory
          Our inventory, which consists of distilled spirits, packaging and finished goods, is valued at the lower of cost or market, using the weighted average cost method. We assess the valuation of our inventories and reduce the carrying value of those inventories that are obsolete or in excess of our forecasted usage to their estimated realizable value. We estimate the net realizable value of such inventories based on analyses and assumptions including, but not limited to, historical usage, future demand and market requirements. Reduction to the carrying value of inventories are recorded in cost of goods sold.
     Goodwill and other intangible assets
          Goodwill represents the excess of purchase price and related costs over the value assigned to the net tangible and identifiable intangible assets of businesses acquired. As of March 31, 2004 and 2005, goodwill and other indefinite lived intangible assets that arose from acquisitions was $11.3 million and $11.8 million, respectively. On April 1, 2004, we adopted SFAS No. 142, “Goodwill and Other Intangible Assets.” Under SFAS No. 142, goodwill and other intangible assets with indefinite lives are not amortized, but instead are tested for impairment annually, or, if certain circumstances indicate a possible impairment may exist, in accordance with the provisions of SFAS No. 142.
          We evaluate the recoverability of goodwill and indefinite lived intangible assets using a two-step impairment test approach at the reporting unit level. In the first step the fair value for the reporting unit is compared to its book value including goodwill. In the case that the fair value of the reporting unit is less than the book value, a second step is performed which compares the implied fair value of the reporting unit’s goodwill to the book value of the goodwill. The fair value for the goodwill is determined based on the difference between the fair values of the reporting units and the net fair values of the identifiable assets and liabilities of such reporting units. If the fair value of the goodwill is less than the book value, the difference is recognized as an impairment.
          SFAS No. 142 also requires that intangible assets with estimable useful lives be amortized over their respective estimated useful lives to the estimated residual values and reviewed for impairment in accordance with SFAS No. 144.
     Stock-based awards
          We account for stock-based compensation for our employees, officers and directors using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees.” Under the intrinsic value method, compensation costs for stock options, if any, are measured as the excess of our estimated value of our stock at the date of grant over the amount an employee must pay to acquire the stock. This method, which is permitted by SFAS No. 123 “Accounting for Stock Based Compensation,” has not resulted in employee compensation costs for stock options. We account for stock-based awards to non-employees using a fair value method in accordance with SFAS No. 123.
          FASB Statement 123 (Revision 2004), Share-Based Payment, was issued in December 2004 and is effective as of the beginning of the first quarter of the fiscal annual reporting period that begins after June 15, 2005. We will adopt this new statement beginning April 1, 2006. The new statement requires all share-based payments to employees to be recognized in the financial statements based on their fair values on the grant date. Such cost is to be recognized over the period during which an employee is required to provide service in exchange for the award, which is usually the vesting period.
          The pro forma disclosures previously permitted under FAS 123 no longer will be an alternative to financial statement recognition. The Company is required to adopt FAS 123R beginning April 1, 2006. The Company expects that the adoption of FAS 123R will have a material impact on its

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consolidated results of operations and earnings per share. The Company has not yet determined the method of adoption or the effect of adopting FAS 123R, and it has not determined whether the adoption will result in amounts that are similar to the current pro forma disclosures required under FAS 123. The Company has also not yet determined the impact of FAS 123R on its compensation policies or plans, if any.
          Disclosure of pro forma net loss, as if all stock options were accounted for at fair value, is required by SFAS No. 123, under which compensation expense is based upon the fair value of each option at the date of grant using the Black-Scholes or a similar pricing model. Had compensation expense for employee, officer and director options granted been determined based upon the fair value of the options at the grant date, the results would have been as follows as of the following dates:
                                   
    As of March 31,   As of June 30,
         
    2004   2005   2004   2005
                 
    (in thousands, except per share data)
Net loss attributable to common stockholders
  $ (6,982 )   $ (12,820 )   $ (3,691 )   $ (3,180 )
Stock-based compensation expense determined under fair value method
          (370 )            
                         
Pro forma net loss
  $ (6,982 )   $ (13,190 )   $ (3,691 )   $ (3,180 )
                         
Loss per share:
                               
 
Basic and diluted – as reported
  $ (3.12 )   $ (4.13 )   $ (1.19 )   $ (1.02 )
                         
 
Basic and diluted – pro forma
  $ (3.12 )   $ (4.25 )   $ (1.19 )   $ (1.02 )
                         
          The fair value of the stock options granted is estimated at the grant date using the Black Scholes option pricing model with the following weighted average assumptions: expected dividend yield 0.0%; risk free interest rate 4.4%; expected volatility 25%; and expected life of 7.2 years. The weighted average fair value of options granted in the fiscal years ended March 31, 2004 and 2005 was $2.17 and $2.69, respectively.
     Fair value of financial instruments
          SFAS No. 107, Disclosures About Fair Value of Financial Instruments, defines the fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties and requires disclosure of the fair value of certain financial instruments. We believe that there is no material difference between the fair value and the reported amounts of financial instruments in the balance sheets due to the short-term maturity of these instruments, or with respect to the debt, as compared to the current borrowing rates available to us.

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Results of operations
          The following table sets forth, for the periods indicated, the percentage of net sales of certain items in our financial statements.
                                           
        Three months
    Year ended March 31,   ended June 30,
         
    2003   2004   2005   2004   2005
                     
                (unaudited)
Sales, net
    100.0 %     100.0 %     100.0 %     100.0 %     100.0 %
Cost of sales
    59.0       68.1       69.3       68.5       58.8  
                               
Gross profit
    41.0       31.9       30.7       31.5       41.2  
                               
Selling expense
    138.4       111.8       91.7       137.7       71.7  
General and administrative expense
    33.8       40.6       28.8       36.8       25.3  
Depreciation and amortization
    3.0       3.6       1.3       0.9       4.1  
Other (income)/expense, net
    0.5       3.4       (1.6 )     1.1       7.2  
                               
Operating loss
    (134.7 )     (127.5 )     (89.5 )     (145.0 )     (67.1 )
                               
Interest expense, net
    (7.5 )     (6.3 )     (7.9 )     (21.5 )     (5.8 )
Income tax benefit
                            0.8  
Minority interests
    0.0       0.7       0.0       0.1       2.8  
                               
Net loss
    (142.2 )     (133.1 )     (97.4 )     (166.4 )     (69.3 )
                               
Less:
                                       
 
Preferred stock dividends
    0.6       11.6       4.2       4.0       1.6  
                               
Net loss attributable to common stockholders
    (142.8 )%     (144.7 )%     (101.6 )%     (170.4 )%     (70.9 )%
                               
Three months ended June 30, 2005 compared with three months ended June 30, 2004
          Net sales. Net sales increased $2.3 million, or 108.0%, to $4.5 million in the three months ended June 30, 2005 from $2.2 million in the comparable prior period. Our cases sales, measured in nine-liter case equivalents, increased 87.3% from 32,377 cases to 60,628 cases between the periods. This increase primarily reflects the January 2005 commencement of our U.S. distribution relationship, and the April 1, 2005 commencement of Gosling-Castle Partner’s global export agreement, with respect to the Gosling’s rums; the addition of Pallini Limoncello; and a continuation of increased case sales within our portfolio. Our U.S. case sales as a percentage of total case sales increased from 31.4% to 53.9% between these periods, which reflected the effects of the Gosling’s rums and Limoncello agreements, and increased U.S. sales of other brands, particularly Boru vodka and Clontarf Irish whiskey, which were introduced into the U.S. market during the later period.
          Gross profit. Gross profit increased 171.8% to $1.9 million during the three months ended June 30, 2005 from $0.7 million in the comparable prior period. Our gross profit as a percent of net sales increased to 41.2% for the three months ended June 30, 2005 compared to 31.5% for the comparable prior year period. The greater increase in gross profit, compared to net sales, primarily resulted from the commencement of our Gosling-Castle Partners venture, which contributed increased gross profit.
          Selling expense. Selling expense increased 8.3%, to $3.2 million in the three months ended June 30, 2005 from $3.0 million in the comparable prior period. The increase in the absolute amount of selling expense in the more recent period is primarily attributable to Gosling-Castle Partners, which initiated a significant consumer advertising campaign. As a percentage of net sales, selling expense decreased to 71.7%, compared to 137.7% for the comparable prior period. This decrease is principally due to the leveraging of our sales force and marketing expenditures across increased sales volumes. We

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believe that this general trend should continue over the next few years, although it may vary from quarter to quarter.
          General and administrative expense. General and administrative expense increased 43.0% to $1.1 million in the three months ended June 30, 2005 from $0.8 million in the comparable prior year period. This increase was primarily due to the hiring of additional corporate personnel and increased occupancy expense. As a percentage of net sales, general and administrative expenses decreased to 25.3% for the three months ended June 30, 2005 compared to 36.8% for the comparable prior year period, due to economies of scales with higher sales volumes.
Fiscal year ended March 31, 2005 compared with fiscal year ended March 31, 2004
          Net sales. Net sales increased $7.8 million, or 161.4%, to $12.6 million for the fiscal year ended March 31, 2005 from $4.8 million for fiscal 2004. Our equivalent case sales increased 165.6% from 64,013 to 170,060 cases between fiscal 2004 and 2005. This increase particularly reflects our acquisition of Roaring Water Bay, which had a full year effect in fiscal 2005 versus four months inclusion in fiscal 2004. The sales increase was also affected by the addition of our Pallini Limoncello and Gosling’s rums distribution agreements, and continued increased organic case sales of our other brands. For fiscal 2005, case sales in the United States accounted for 43.6% of total case sales, down modestly from the prior fiscal year. While we experienced significant growth in our U.S. sales in fiscal 2005, the full year impact of Roaring Water Bay also significantly increased our international sales.
          Gross profit. Gross profit increased 151.3% to $3.9 million for the fiscal year ended March 31, 2005 from $1.5 million for fiscal 2004. As a percent of net sales, gross margins decreased slightly to 30.7% for fiscal 2005 compared to 31.9% in the prior year, which reflected the acquisition and distribution relationships outlined in net sales, changes in the brand and geographic mix of our sales and higher import costs due to a decline in the relative value of the U.S. dollar.
          Selling expense. Selling expense increased 114.3%, to $11.6 million for the fiscal year ended March 31, 2005 from $5.4 million for fiscal 2004. This increase was primarily the result of our increased U.S. advertising expenditures for Boru vodka, distributor sales incentives and significant additions of sales personnel in the United States. As a percent of net sales, selling expense for fiscal 2005 decreased to 91.7% compared to 111.8% in the prior year, based on increasing economies of scale with higher sales volumes.
          General and administrative expense. General and administrative expense increased 85.5% to $3.6 million for the fiscal year ended March 31, 2005 from $2.0 million for fiscal 2004. This primarily resulted from the full year impact of the Roaring Water Bay acquisition, an increase in occupancy expense due to office relocations in New York and Dublin, and an investment in our administrative and systems platforms. As a percentage of sales, general and administrative expense decreased from 40.6% in fiscal 2004 to 28.8% for fiscal 2005 based on leveraging overhead costs with higher sales volumes.
Fiscal year ended March 31, 2004 compared with fiscal year ended March 31, 2003
          Net sales. Net sales increased $2.4 million, or 99.5%, to $4.8 million for the fiscal year ended March 31, 2004 from $2.4 million for fiscal 2003. This increase resulted primarily from the impact of the Roaring Water Bay acquisition, which was included for four months in fiscal 2004, but not in the prior fiscal year. Our case sales increased 194.9% from 21,708 cases to 64,013 cases between fiscal 2003 and 2004. While U.S. sales increased on an absolute basis from period to period, as a percentage of total sales, net case sales in the United States accounted for 45.5% of total case sales in fiscal 2004, down significantly from 85.1% in fiscal 2003. The overall increase in sales and case sales principally reflected the effects of our Roaring Water Bay acquisition and the decrease in U.S. sales relative to total sales reflected the significant increase in international sales as a result of the same acquisition.
          Gross profit. Gross profit increased 55.5% to $1.5 million for the fiscal year ended March 31, 2004 from $1.0 million for fiscal 2003. Our gross profit as a percent of net sales decreased to 31.9%

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for fiscal 2004 compared to 41.0% for fiscal 2003. This absolute increase and percentage decrease were primarily due to the inclusion of the results of Roaring Water Bay.
          Selling expense. Selling expense increased 61.2%, to $5.4 million for the fiscal year ended March 31, 2004 from $3.3 million for fiscal 2003. This increase was primarily the result of our acquisition of Roaring Water Bay and increased advertising and promotion costs. As a percent of net sales, selling expense for fiscal 2004 decreased to 111.8% compared to 138.4% for fiscal 2003, reflecting growth in sales volumes at a rate that was higher than our sales expense.
          General and administrative expense. General and administrative expense increased 139.6% to $2.0 million for the fiscal year ended March 31, 2004 from $0.8 million for fiscal 2003. As a percentage of sales, general and administrative expense increased from 33.8% in fiscal 2003 to 40.6% for fiscal 2004. These increases primarily reflected increased overhead and personnel costs related to our Roaring Water Bay acquisition.
Potential fluctuations in quarterly results and seasonality
          See “Risk Factors — Our quarterly operating results have fluctuated in the past and may fluctuate significantly in the future, rendering sequential quarter-to-quarter comparisons of our financial results unreliable as indicators of performance.”
Quarterly results of operations
          The following table presents unaudited consolidated statements of operations data for each of the thirteen quarters concluding with the quarter ended June 30, 2005. We believe that all necessary adjustments have been included to present fairly the quarterly information when read in conjunction with our annual financial statements and related notes. The operating results for any quarter are not necessarily indicative of the results for any subsequent quarter.
                                                                   
    Quarter ended
     
    June 30,   September 30,   December 31,   March 31,   June 30,   September 30,   December 31,   March 31,
    2002   2002   2002   2003   2003   2003   2003   2004
                                 
Consolidated Statement of Operations Data
(in thousands, except per share data):
                                                               
Sales, net
  $ 484     $ 485     $ 724     $ 726     $ 604     $ 542     $ 2,132     $ 1,549  
Cost of sales
    270       272       434       452       396       364       1,446       1,081  
                                                 
Gross profit
    214       213       290       274       208       178       686       468  
                                                 
Selling expense
    673       735       972       968       755       809       1,729       2,105  
General and administrative expense
    149       130       234       305       348       406       536       670  
Depreciation and amortization
    11       11       24       26       38       43       51       41  
Other (income)/expense, net
    (2 )     (1 )     8       6       15       (4 )     372       (218 )
                                                 
Operating loss
    (617 )     (662 )     (948 )     (1,031 )     (948 )     (1,076 )     (2,002 )     (2,130 )
                                                 
Interest expense, net
    (30 )     (40 )     (56 )     (56 )     (57 )     (57 )     (97 )     (93 )
Income tax benefit
                                               
Minority interests
                                        5       31  
                                                 
Net loss
    (647 )     (702 )     (1,004 )     (1,087 )     (1,005 )     (1,133 )     (2,094 )     (2,192 )
                                                 
Less: Preferred stock dividends
                      15       45       87       87       339  
                                                 
Net loss attributable to common stockholders
  $ (647 )   $ (702 )   $ (1,004 )   $ (1,102 )   $ (1,050 )   $ (1,220 )   $ (2,181 )   $ (2,531 )
                                                 
Net loss per common share:
                                                               
 
Basic
  $ (0.38 )   $ (0.38 )   $ (0.50 )   $ (0.61 )   $ (0.58 )   $ (0.68 )   $ (0.97 )   $ (0.81 )
                                                 
 
Diluted
  $ (0.38 )   $ (0.38 )   $ (0.50 )   $ (0.61 )   $ (0.58 )   $ (0.68 )   $ (0.97 )   $ (0.81 )
                                                 
Weighted average shares used in computation:
                                                               
 
Basic
    1,710       1,852       2,000       1,800       1,800       1,800       2,240       3,107  
                                                 
 
Diluted
    1,710       1,852       2,000       1,800       1,800       1,800       2,240       3,107  
                                                 

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    Quarter ended
     
    June 30,   September 30,   December 31,   March 31,   June 30,
    2004   2004   2004   2005   2005
                     
Consolidated Statement of Operations Data
(in thousands, except per share data):
                                       
Sales, net
  $ 2,163     $ 2,997     $ 4,496     $ 2,962     $ 4,498  
Cost of sales
    1,483       1,996       3,087       2,178       2,647  
                               
Gross profit
    680       1,001       1,409       784       1,851  
                               
Selling expense
    2,978       2,974       3,480       2,137       3,225  
General and administrative expense
    795       977       965       900       1,138  
Depreciation and amortization
    26       24       29       88       182  
Other (income)/expense, net
    8       104       (149 )     (161 )     322  
                               
Operating loss
    (3,127 )     (3,078 )     (2,916 )     (2,180 )     (3,016 )
                               
Interest expense, net
    (466 )     (175 )     (196 )     (161 )     (259 )
Income tax benefit
                            37  
Minority interests
    2                   3       129  
                               
Net loss
    (3,591 )     (3,253 )     (3,112 )     (2,338 )     (3,109 )
                               
Less: Preferred stock dividends
    86       87       177       176       71  
                               
Net loss attributable to common stockholders
  $ (3,677 )   $ (3,340 )   $ (3,289 )   $ (2,514 )   $ (3,180 )
                               
Net loss per common share:
                                       
 
Basic
  $ (1.18 )   $ (1.07 )   $ (1.06 )   $ (0.81 )   $ (1.02 )
                               
 
Diluted
  $ (1.18 )   $ (1.07 )   $ (1.06 )   $ (0.81 )   $ (1.02 )
                               
Weighted average shares used in computation:
                                       
 
Basic
    3,107       3,107       3,107       3,107       3,107  
                               
 
Diluted
    3,107       3,107       3,107       3,107       3,107  
                               

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Liquidity and capital resources
          Our primary uses of cash have been for new product development, selling and marketing expense, employee compensation and working capital. Our main sources of cash have been from the sale of common and preferred stock, the sale of convertible and senior notes and borrowings under bank credit facilities.
          Our balance of cash and cash equivalents was $5.0 million at June 30, 2005 as compared to $5.7 million at March 31, 2005. In August 2005, we completed additional financings, including the placement of $5.0 million of additional 6% convertible notes and the sale of $2.9 million of additional Series C convertible preferred stock for aggregate net proceeds of $7.5 million.
     Cash flows
          The following table summarizes our primary sources and uses of cash during the periods presented (in thousands):
                                         
                Three months
        ended
    Year ended March 31,   June 30,
         
    2003   2004   2005   2004   2005
                     
Net cash provided by (used in):
                                       
 Operating activities
  $ (3,833 )   $ (5,373 )   $ (13,198 )   $ (2,474 )   $ (4,524 )
 Investing activities
    (21 )     (6,723 )     (598 )     (457 )     (82 )
 Financing activities
    3,920       15,313       16,009       2,952       3,973  
                               
Net increase (decrease) in cash and cash equivalents
  $ 66     $ 3,217     $ 2,213     $ 21     $ (633 )
                               
          Operating activities. A substantial portion of our available cash has been used to fund our operating activities. In general, these cash funding requirements are based on operating losses, driven chiefly by our sizable allocations to selling and marketing expense. With increases in our overall sales volumes, we have also utilized cash to fund our receivables and inventories. In general, these increases are only partially offset by increases in our accounts payable to our suppliers and accrued expenses. Our business has incurred significant losses since inception.
          On average, the production cycle for our owned brands can take as long as three months from the time we obtain the distilled spirits and other materials needed to bottle and package our products to the time we receive products available for sale, which is impacted by the international nature of our business. With respect to Gosling’s rums and Pallini Limoncello, we do not produce the finished product and, instead, receive the finished product directly from the owners of such brands. From the time we have products available for sale, an additional three to four months may be required before we sell our inventory and collect payment from our customers.
          In the three months ended June 30, 2005, net cash used in operating activities was $4.5 million, consisting primarily of losses from our operations of $3.1 million, a $1.0 million increase in accounts receivable and a $0.5 million reduction in accounts payable and accrued expenses. In the three months ended June 30, 2004, net cash used in operating activities was $2.5 million, consisting primarily of losses from our operations of $3.6 million, which was offset by a $1.3 million increase in accounts payable and accrued expenses.
          Net cash from operations used in the fiscal year ended March 31, 2005 was $13.2 million, consisting primarily of losses from operations of $12.3 million, an increase in accounts receivable of $1.8 million, an increase in inventory of $1.6 million and an increase in other assets of $0.9 million, partially offset by an increase in accounts payable and accrued expenses of $1.7 million. Net cash from

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operations used in the fiscal year ended March 31, 2004 was $5.4 million and was attributable to our operating losses of $6.4 million and a decrease of $0.3 million in our accounts payable and accrued expenses. Net cash used in the fiscal year ended March 31, 2003 was $3.8 million, consisting primarily of losses from operations of $3.4 million and an increase of $0.4 million in inventory.
          Investing activities. Since April 1, 2002, the single largest use of cash in investing activities was $6.7 million in the year ending March 31, 2004, which was used as a part of the $17.0 million total consideration used to acquire the controlling interest of Roaring Water Bay, with a subsequent purchase of minority interest for $0.4 million.
          Financing activities. During the three years ending March 31, 2005, in order to fund the above operating and investing activities, our total net cash from financing activities was approximately $35.0 million, which came primarily from our issuances of convertible preferred stock, senior notes and convertible subordinated debt.
          Net cash provided by financing activities during the three months ended June 30, 2005 was $4.0 million and consisted primarily of funds raised from the second tranche of our 6% convertible note financing. A portion of these funds was used during that period to fund our initial capital investment of $1.1 million in Gosling-Castle Partners.
          Upon consummation of this offering, we believe that we will be able to fund our operations from the proceeds of this offering, our projected cash flow from operations and current cash and cash equivalents for at least twelve months succeeding the closing of this offering. Beyond that, additional financing may be needed to fund working capital and other requirements. Changes in our operating plans, acquisitions or other additions of brands, lower than anticipated sales, increased expenses, or other events, including those described in “Risk Factors,” may require us to seek additional debt or equity financing on an accelerated basis. Financing may not be available on acceptable terms, or at all, and our failure to raise capital when needed could impact negatively our growth plans, financial condition and results of operations. Additional equity financing may be dilutive to the holders of our common stock, and debt financing, if available, may involve significant cash payment obligations or financial covenants and ratios that restrict our ability to operate our business.
     Obligations and commitments
          We are in preliminary discussions relating to the establishment of a credit line with one or more financial institutions. If such a facility is established, we intend to retire our current secured credit facilities and repay our 9% senior notes and may do so without penalty.
     Credit facilities
          We have credit facilities with availability aggregating approximately 1.7 million ($2.1 million) with two affiliated Irish banks, including overdraft, customs and excise guaranty, forward currency dealing, revolving credit and accounts receivable facilities. These facilities, which are payable on demand and renew annually and have interest rates ranging from prime plus 3% to 7.85%. We also arranged revolving credit facilities aggregating approximately £242,000 ($436,762) with the same lender for working capital purposes. These other banking facilities are also payable on demand and renew annually subject to certain provisions, have interest rates ranging from prime plus 2% to prime plus 2.25%. We also secured a  295,000 ($355,947) term note with the same lender. We have deposited 300,000 with the banks to secure these borrowings. The term note carries an interest rate of 5.2% and calls for monthly payments of principal and interest of  6,377 through 2006.
          As of March 31, 2004, we established a revolving credit facility with an Irish bank of which the outstanding balance was repaid, together with a loan termination fee of $60,000 and accrued interest and fees of $4,176. This line of credit was terminated simultaneously with the issuance of the senior notes in June 2004.
          9% Senior notes. On June 9, September 28 and October 13, 2004, our wholly owned subsidiary Castle Brands (USA), issued to 27 individuals $4.6 million of senior notes secured by

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accounts receivable and inventories of Castle Brands (USA). As issued, these senior notes bore an interest rate of 8%, payable semi-annually on November 30th and May 31st, and were to mature on May 31, 2007. The senior notes are guaranteed as to payment by us. Effective August 15, 2005, the terms of these notes were modified with the consent of the note holders to mature on May 31, 2009 in exchange for an interest rate adjustment to 9%.
          In addition, these notes were accompanied by warrants to purchase 25 shares of our common stock at $8.00 a share for every $1,000 principal amount of such notes for an aggregate of 116,500 shares.
          The senior notes are subject to customary restrictive covenants. In addition, the consent of holders of a requisite majority of the aggregate principal amount of these notes is required for Castle Brands (USA) to take any of the following actions: merge or consolidate or sell all or substantially all of its assets other than with an entity formed in the United States or to a person or entity that assumes all of our obligations under the senior notes, engage in a transaction with an affiliate unless the transaction is on fair and reasonable terms, or change our jurisdiction of incorporation without giving 60 days prior notice.
          If we or Castle Brands (USA) were to default on the payment of principal or interest on our senior notes and the default continues for 20 business days, breach any representation, warranty or certification made in the senior note documents, default in the performance of the material obligations under the senior note documents, which default is unremedied for a period of 60 days after we receive notice of such default, enter into any arrangement for the benefit of creditors or otherwise wind-up or dissolve, then the holders of our senior notes could declare all principal and interest to be immediately payable.
          6% subordinated convertible notes. On March 1, 2005, we entered into a convertible note purchase agreement for up to $10.0 million, with the principal amount convertible, at the option of the holder, at a conversion price of $8.00 per share. The convertible note agreement was amended on August 16, 2005 to (a) increase the amount of loans under such agreement to $15.0 million and (b) provide for 40% of the outstanding principal amount of the notes to convert automatically into common stock upon an initial public offering of our common stock at a conversion price of $7.00 per share. Currently, there are three 6% convertible promissory notes outstanding for $5.0 million each. These notes were issued on March 1, 2005, June 27, 2005 and August 16, 2005 and mature on March 1, 2010. They bear interest at the rate of 6% per annum, payable quarterly, at our option for a period of two years from the date of the note, in cash or in additional notes bearing an interest rate of 7.5% per annum. We may not prepay our 6% convertible notes without the consent of the holders.
          In accordance with the amended terms, $6.0 million of our 6% convertible notes will automatically convert into shares of our common stock at a price of $7.00 per share upon an initial public offering of our common stock. The outstanding balance of our 6% convertible notes may be converted into common stock at any time at the option of the holders at a conversion rate of $8.00 per share and will automatically convert at such time as the closing price of our common stock is $20.00 per share or more for thirty consecutive days at any time after March 1, 2008. The 6% convertible notes are unsecured.
          These 6% convertible notes are subject to a number of customary restrictive covenants and certain potential limits on future indebtedness, excluding qualified brand acquisition indebtedness, and which are impacted by our aggregate equity market capitalization. As long as there is at least $1.5 million aggregate principal amount outstanding under these notes: (a) the approval of holders of at least a majority of the aggregate principal amount of the 6% convertible notes outstanding is required before we may pay dividends or make a distribution or payment on our equity securities or redeem or repurchase our equity securities (other than repurchases from employees upon termination of their employment) and (b) the approval of holders of at least 70% of the aggregate principal amount of the 6% convertible notes outstanding is required before we may engage in a transaction with an affiliate or incur indebtedness in excess of $30.0 million; provided, however, that the indebtedness covenant will no

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longer be applicable if the product of our fully diluted securities multiplied by the average of the highest bid and lowest asked prices on the exchange or over-the-counter quotation system on which our common stock is listed is at least $100.0 million for a period of at least 90 days. The limit on indebtedness does not include indebtedness that is incurred in connection with the acquisition of a brand related to, or an entity doing business in or related to, the beverage alcohol market, to the extent such indebtedness (including costs and fees associated with incurring such debt) does not exceed an amount equal to three times the target’s earnings before interest, taxes, depreciation and amortization.
          If we were to default on the payment of principal or interest on our 6% convertible notes, fail to pay any other debt for borrowed money in excess of $250,000 when it is due and payable, fail to perform the affirmative covenants contained in the convertible note purchase agreement, and fail to cure such failure within 10 business days or fail to perform, keep or observe any material term, provision, covenant or agreement contained in the convertible note purchase agreement or any of the notes issued under the agreement and fail to cure within 20 days, then the holders of our 6% convertible notes could declare all principal and interest to be immediately payable.
          Upon the consummation of this offering, $6.0 million principal amount of our 6% convertible notes will automatically convert into 857,143 shares of our common stock.
          Gosling’s export venture. On February 18, 2005, in connection with our investment in the Gosling-Castle Partners Inc. strategic export venture with the Gosling’s family, we issued a promissory note to Gosling-Castle Partners (now our 60% owned subsidiary) in the amount of $4.9 million. This promissory note is due in installments as follows:
  $1,025,000 was due April 1, 2005 and was paid;
  $1,125,000 is due October 1, 2005;
  $1,000,000 is due April 1, 2006;
  $1,000,000 is due October 1, 2006; and
  $750,000 is due April 1, 2007.
          This note bears interest at the rate of 4% per annum beginning October 1, 2005. There are no restrictive covenants.
          Under Gosling-Castle Partners’ exclusive export agreement with Gosling’s Export (Bermuda) Limited, Gosling-Castle Partners is required to pay $2.5 million to Gosling’s Export (Bermuda) Limited in exchange for the distribution rights set forth in such agreement in four equal installments on April 1, 2005, October 1, 2005, April 1, 2006 and October 1, 2006. As of June 30, 2005, Gosling-Castle Partners has remaining aggregate payments of approximately $1.9 million.
          5% Euro denominated convertible subordinated notes. In connection with the acquisition of Roaring Water Bay on December 1, 2003, we issued an aggregate principal amount of  1,374,750 (recorded as $1,658,773 in our convertible financial statements as of June 30, 2005) of our 5% euro denominated convertible subordinated notes due December 1, 2006. These notes bear interest at the rate of 5% per annum and are convertible into shares of our common stock at a conversion price of 5.22 per share.
          These 5% euro denominated convertible subordinated notes are subject to customary restrictive covenants. In addition, the consent of holders of a majority of the aggregate principal amount of these notes was required for, and obtained by, us to file the registration statement of which this prospectus forms a part.
          If we were to default on the payment of principal or interest on our 5% euro denominated convertible subordinated notes and such default were to continue for 30 days after we receive notice of such default, fail to pay any other debt for borrowed money in excess of $250,000 when it is due and payable and such default continues for 30 days after we receive notice of such default, fail to comply with any agreements contained in such note and such failure continues for 30 days after we receive

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notice or we enter into any arrangement for the benefit of creditors or otherwise wind-up, dissolve or commence a bankruptcy proceeding, then the holders of our 5% euro denominated convertible subordinated notes could declare all principal and interest to be immediately payable.
          Upon the consummation of this offering, all of our 5% euro denominated convertible subordinated notes will automatically convert into 263,492 shares of our common stock, and all of the interest accrued on these notes through the closing date of this offering will be paid out of the proceeds of this offering.
          The Roaring Water Bay related notes. In December 2003, in connection with our acquisition of Roaring Water Bay, we issued to the stockholders of Roaring Water Bay subordinated notes in the principal amount of 444,389 ($536,200). These notes are non-interest bearing and the principal is due in installments of 177,743, 133,323 and  133,323 on December 1, 2004, 2005 and 2006, respectively. A total of  177,743 of the principal amount of these notes has been repaid.
          If we were to default on the payment of principal on our non-interest bearing notes and such default continues for 25 days after we receive notice of such default, then the holders of the non-interest bearing notes could declare all principal to be immediately payable.
          In connection with the acquisition, we also issued 5.7% subordinated notes due July 11, 2007, in the principal amount of  255,000 ($307,683) in exchange for the elimination of certain common share rights of the Roaring Water Bay stockholders. These notes accrue interest at a rate of 5.7% per annum with the aggregate interest payable being limited to 51,000. The total principal and interest on the notes are due at maturity. These notes do not contain any restrictive covenants.
          If we were to default on the payment of principal or interest on our 5.7% subordinated notes and such default continues for 30 days after we receive notice of the default, the holders of our 5.7% convertible notes could declare all principal and interest due at any time after 90 days from the default. If, among other things, any meeting of our creditors is held or we make any arrangement for the benefit of creditors or we otherwise wind-up or dissolve, fail to pay any other material indebtedness when due, or undertake to sell all or substantially all of our assets, then the holders of our 5.7% convertible notes could declare all principal and interest to be immediately payable.
          We intend to use approximately $629,418 from the proceeds of this offering to prepay all of the remaining principal balance outstanding under both these non-interest bearing notes and the 5.7% subordinated notes. We will also pay from such proceeds all accrued and unpaid interest on these notes through the closing date of this offering.
          Office equipment leases. We financed the purchase of certain office equipment totaling $17,821. The equipment leases call for monthly payments of principal and interest at the rate of 5% per annum, to be paid through July 2009. As of March 31, 2005, we owed $15,998 under this lease.

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          Future commitments of notes and capital lease. Principal payments due over the next five years for the above listed notes payable and capital lease are due as follows (as translated at the exchange rate in effect on March 31, 2005):
         
For the years ending    
March 31,   Amount
     
    (in thousands)
2006
  $ 3,032  
2007
    1,225  
2008
    30  
2009
    341  
2010
    9,662  
       
Total
  $ 14,290  
       
Less current portion
    3,032  
       
Non-current portion
  $ 11,258  
       
          Convertible preferred stock. Pursuant to a series of private offerings, we have issued and currently have outstanding 535,715 shares of our Series A convertible preferred stock, 200,000 shares of our Series B convertible preferred stock and 3,353,750 shares of our Series C convertible preferred stock, for which we obtained gross proceeds of $31.8 million, including $10.4 million since March 31, 2004.
          Holders of our Series A preferred stock and Series B preferred stock are entitled to cumulative dividends beginning on December 1, 2003, at a current rate of 7.0% per annum. Holders of our Series C preferred stock are entitled to cumulative dividends beginning on December 1, 2005 at a rate of 4.0% per annum.
          We are required to redeem 20% of our Series A preferred stock, Series B preferred stock and Series C preferred stock at the original issue price, plus all accrued and unpaid dividends, if any, on February 20, 2009 and each February 20 thereafter with respect to our Series A preferred stock and Series B preferred stock and December 1, 2009 and each December 1 thereafter with respect to our Series C preferred stock.
          All of our Series A preferred stock, Series B preferred stock and Series C preferred stock will automatically convert into an aggregate of 4,089,465 shares of our common stock, and all of the dividends accrued on our preferred stock through the closing date of this offering will be converted into shares of our common stock, upon the consummation of this offering (an estimated 133,857 additional shares based on estimated dividends of $897,953 through the closing date).
Contractual obligations
          The following table sets forth our contractual commitments as of March 31, 2005:
                                                           
    Payments due by year
     
    2006   2007   2008   2009   2010   Thereafter   Total
                             
    (in thousands)
Long-term notes payable, including current portion
  $ 3,032     $ 1,225     $ 30     $ 341     $ 9,662     $     $ 14,290  
Stockholder notes payable     172       172                               344  
Operating leases
    293       303       303       143       5             1,047  
                                           
 
Total
  $ 3,497     $ 1,700     $ 333     $ 484     $ 9,667     $     $ 15,681  
                                           

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Impact of inflation
          We believe that our results of operations are not materially impacted by moderate changes in the inflation rate. Inflation and changing prices did not have a material impact on our operations during fiscal 2003, 2004 or 2005. Severe increases in inflation, however, could affect the global and U.S. economies and could have an adverse impact on our business, financial condition and results of operations.
Quantitative and qualitative disclosures about market risk
          As of June 30, 2005, we did not participate in any derivative financial instruments, or other financial or commodity instruments for which fair value disclosure would be required under SFAS No. 107, “Disclosure About Fair Value of Financial Investments.” We hold no investment securities that would require disclosure of market risk.
          We do participate in certain foreign exchange currency future contracts programs to limit our risk and the potential impact of currency fluctuations on our product costs. When placing a product order, we attempt to lock in its cost by buying forward contracts on euros coinciding with the projected payment dates for such purchases. Individual forward contracts rarely extend for more than six months or exceed  300,000 ($361,980). Total forward contracts outstanding do not exceed 1,250,000 ($1,508,250). Depending upon the term of the contract, the cost of these transactions can vary between approximately 50 to 100 basis points.
Changes in and disagreements with accountants on accounting and financial disclosure
          On September 28, 2004, the audit committee of our board of directors and our entire board of directors approved the engagement of Eisner LLP to audit our financial statements for the fiscal years ended March 31, 2003, 2004 and 2005, replacing Grodsky Caporrino & Kaufman, PC as our principal accountants effective September 28, 2004. Grodsky Caporrino & Kaufman, PC was replaced in order to engage accountants authorized to practice before the Securities and Exchange Commission.
          Grodsky Caporrino & Kaufman’s reports on our financial statements for the years ended December 31, 2002 and 2003 did not contain an adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. During those two years, there were no disagreements with Grodsky Caporrino & Kaufman on any matter of accounting principle or practice, financial statement disclosure or auditing scope or procedure, which, if not resolved to Grodsky Caporrino & Kaufman’s satisfaction, would have caused Grodsky Caporrino & Kaufman to make reference to the subject matter of the disagreement in connection with its report on our consolidated financial statements for such years.
          During the fiscal years ended March 31, 2003 and 2004 and through September 28, 2004, we have not consulted with Eisner LLP with respect to any of the matters or reportable events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-K.

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BUSINESS
Overview
          We are an emerging developer and global marketer of premium branded spirits within four growing categories of the spirits industry: vodka, rum, Irish whiskey and liqueurs/cordials. Since our formation in 1998, we have invested over $60 million in capital to develop our operating platform, acquire and grow our branded portfolio of distinctive premium spirits and establish U.S. and international sales and distribution. Our premium spirits brands include, among others, Boru vodka, Gosling’s rum, Knappogue Castle Whiskey and Pallini Limoncello.
          For our fiscal year ended March 31, 2005 and the three months ended June 30, 2005, we recorded sales of approximately 170,000 cases and 61,000 cases, respectively, which are measured based on the industry standard of nine-liter equivalent cases, and revenues of approximately $12.6 million and $4.5 million, which represented increases of 161% and 108% from revenues recorded for the prior comparable fiscal periods. These increases reflect both organic growth and growth from additions to our brand portfolio. We intend to continue our current growth through further market penetration of our brands, as well as through strategic relationships and acquisitions of both established and emerging spirits brands with global growth potential.
Background
Predecessor operations
          We were formed in July 2003, as a Delaware corporation, by our predecessor company, Great Spirits Company LLC, a Delaware limited liability company. Great Spirits Company was formed in February 1998 by our chief executive officer, Mark Andrews, through one of his affiliated entities, Knappogue Corp. Mr. Andrews originally formed Great Spirits Company for the purpose of importing and selling the Knappogue Castle 1951 Irish whiskey developed by his father, and he contributed 2,000 bottles of this whiskey to Great Spirits Company in connection with its formation.
          During its first year of operations, Great Spirits Company:
  •  obtained a federal license to import and wholesale liquor in the United States from the Alcohol and Tobacco Tax and Trade Bureau, a division of the U.S. Department of the Treasury;
 
  •  engaged MHW Ltd. to act as importer of record for it in the United States;
 
  •  created our premium Knappogue Castle single malt Irish whiskey to complement Knappogue Castle 1951 and entered into various agreements with respect to its production;
 
  •  established bottling arrangements with Terra Limited, which continues to act as one of our primary bottlers today;
 
  •  hired our first sales manager;
 
  •  acquired the last known existing stock of British Royal Navy Imperial Rum, one of the rarest and most historically significant commercially available rums today, upon which the flavor profile of our Sea Wynde rum was subsequently patterned; and
 
  •  raised $2.0 million of private equity financing, including $1.8 million of the approximately $7.2 million that has been invested in our company by Mr. Andrews and his affiliates as of the date of this prospectus.

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          During 1998, Great Spirits Company also entered into a strategic venture with Gaelic Heritage Corporation Limited, an affiliate of Terra, pursuant to which we obtained the exclusive distribution rights with respect to, and a 60% ownership interest in, Celtic Crossing, a premium brand of Irish liqueur, in the United States, Canada, Mexico, Puerto Rico and the islands between North and South America. As part of this strategic venture arrangement, Gaelic Heritage retained the exclusive rights to produce and supply us with Celtic Crossing. See “—Strategic brand-partner relationship.”
          Thereafter, prior to our formation in July 2003, Great Spirits Company introduced our award winning Sea Wynde rum to the market, entered into an exclusive distribution agreement with The Roaring Water Bay Spirits Group Limited to distribute Boru vodka in the United States and obtained an additional $13.0 million of private equity financing.
Our formation and the acquisition of the Roaring Water Bay entities
          In early 2003, Great Spirits Company entered into negotiations with The Roaring Water Bay Spirits Group Limited to acquire the Boru vodka brand and, in July 2003, we were formed as a holding company to effectuate the merger of Great Spirits Company and the Roaring Water Bay entities. This merger was accomplished on December 1, 2003, with the simultaneous (a) merger of Great Spirits Company into a wholly owned subsidiary established by us for such purpose, now known as Castle Brands (USA) Corp., and (b) acquisition by us of The Roaring Water Bay Spirits Group Limited and its affiliated companies, referred to by us as Roaring Water Bay, making them our wholly owned Irish subsidiaries, now known as Castle Brands Spirits Group Limited and Castle Brands Spirits Marketing and Sales Company Limited. As a result of this acquisition, we acquired ownership of Boru vodka, which is now our leading brand, and also added the Clontarf family of Irish whiskeys and Brady’s Irish cream to our brand portfolio. During the merger process, we raised approximately $21.7 million of additional private equity financing.
Recent developments
          Subsequent to our formation and acquisition of Roaring Water Bay, we have obtained approximately $34.0 million of additional private equity and convertible debt financing, increased our global sales staff to 28 people, including six regional U.S. sales managers and two foreign sales managers, and established an extensive distribution network throughout the United States, as well as a growing distribution network in the European market and elsewhere. We have also recently added two additional and significant brands to our portfolio, as discussed below:
  •  in August 2004, we entered into an exclusive marketing agreement with I.L.A.R. S.p.A., a family owned Italian spirits company founded in 1875, pursuant to which we obtained the long-term exclusive U.S. distribution rights (excluding duty free sales) with respect to its Pallini Limoncello, a premium Italian liqueur, and related brand extensions;
 
  •  in January 2005, we became the exclusive U.S. distributor for Gosling’s rums, including Gosling’s Black Seal dark rum and related brands, all of which are produced by the Gosling family in Bermuda, where Gosling’s rums have been under continuous production for over 150 years. In February 2005, we expanded this relationship by acquiring a 60% controlling interest in Gosling-Castle Partners Inc., a global export venture owned by us and the Gosling family; and
 
  •  effective April 1, 2005, Gosling-Castle Partners secured the exclusive long-term export and distribution rights for the Gosling’s rum products for all countries other than Bermuda, including an assignment of the Gosling’s rights under our January 2005 distribution agreement with them. See “—Strategic brand-partner relationships.”

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          Our recent brand additions, together with those we acquired from Roaring Water Bay and from our merger with Great Spirits Company, have provided us with a strong base from which we can continue expanding our portfolio and market presence. In addition, we believe they have helped foster our reputation as a strategic partner for smaller companies with established and emerging spirits brands seeking increased brand recognition and global expansion.
Our brands
          We market our premium spirits brands in the following distilled spirit categories: vodka, rum, Irish whiskey and liqueurs/cordials.
          Boru vodka. Boru vodka is our leading brand and accounted for approximately 63% and 52% of our sales for the fiscal year ended March 31, 2005 and the three months ended June 30, 2005. We expect Boru to also represent a significant portion of our growth over the next several years.
          Boru vodka was the first, and continues to be the largest selling, premium vodka produced in Ireland. It was developed in 1998 and named after the first High King of Ireland, an Irish national hero known for uniting the Irish clans and driving foreign invaders out of Ireland in 1014 A.D. The Boru brand is meant to reflect the strength, power and purity of spirit associated with the image of this King Brian Boru. It is quadruple distilled using pure spring water for smoothness and filtered through ten feet of charcoal made from Irish oak for increased purity. In addition, flavor extensions are and will remain an important source of growth for us, and we have three flavor extensions of Boru vodka: Boru Citrus, Boru Orange and Boru Crazzberry (a cranberry/raspberry flavor fusion).
          Gosling’s rum. Gosling’s rums are distilled in Bermuda where the Gosling brand has a distinguished heritage, having been under continual ownership by the Gosling family for over 150 years. The Gosling’s rum brands are internationally known, particularly with consumers who have traveled to Bermuda.
          Gosling’s offers three distinct premium rums:
  •  Gosling’s Black Seal  – Gosling’s Black Seal is a premium dark rum, which is best known as an ingredient in the Gosling’s trademarked cocktail Dark ‘n Stormy – known as the “national drink of Bermuda.” To foster the promotion of the Dark ‘n Stormy, we also distribute its recommended mixture counterpart, Barritt’s Ginger Beer, a well known non-alcoholic ginger beer from Bermuda. Gosling’s Black Seal was awarded a Platinum Medal (the highest offered) in the World Spirits Competition, conducted by the Beverage Tasting Institute in 2000. In that competition, as part of a blind taste test conducted with respect to a selection of world class rums, Gosling’s Black Seal was rated “96” out of a possible “100” and a “Best Buy”;
 
  •  Gosling’s Gold Bermuda Rum  – Gosling’s Gold Bermuda Rum, lighter in color than Gosling’s Black Seal, was introduced in 2004. It is often combined with Gosling’s Black Seal and fruit juices in the Rum Swizzle cocktail, a popular drink in Bermuda; and
 
  •  Gosling’s Old Rum  – Gosling’s Old Rum is a premium “family reserve” rum that is produced in limited quantities. Gosling’s Old Rum was created based on the Gosling’s Black Seal formula and then further aged in oak barrels.
          Sea Wynde. In 2001, we introduced Sea Wynde, a premium rum. For centuries, some of the world’s finest rums were made in pot stills and produced in small batches. Today, pot stills have largely been replaced by the faster and more economically efficient column stills, which do not produce the robust character and flavor of pot stills. Sea Wynde is distinctive in that it is made entirely from aged,

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pure pot still rums from the Caribbean and South America. Sea Wynde won a five-star award (the highest offered) from Spirit Journal in 2003.
          Knappogue Castle Whiskey. We developed our Knappogue Castle Whiskey, a single malt Irish whiskey, in 1998, taking advantage of an opportunity to build both on the popularity of single malt Scotch whisky and the growth in the Irish whiskey category. Knappogue Castle Whiskey is distilled in pot stills using malted barley and is distinctive in that it is vintage-dated based on the year of distillation. Our Knappogue Castle Whiskey won the “Spirit of the Year” award from Food & Wine in 1999.
          Knappogue Castle 1951. Knappogue Castle 1951 is a pure pot-still whiskey that was distilled in 1951 and then aged for 36 years in sherry casks. Knappogue Castle 1951 is one of the oldest and rarest commercially available Irish whiskeys in the world, with only 300 bottles available for sale each year. The name comes from a castle in Ireland, formerly owned by Mark Edwin Andrews, the originator of the brand and the father of Mark Andrews, our chairman, president and chief executive officer.
          Clontarf Irish whiskey. Our family of Clontarf Irish whiskeys currently represents a majority of our case sales of Irish whiskey. Clontarf was launched in 2000 to meet the growing demand for an accessible and smooth premium Irish whiskey. Clontarf is distilled using quality grains and pure Irish spring water and is then aged in bourbon barrels and mellowed through Irish oak charcoal. Clontarf is available in single malt, reserve and classic pure grain versions.
          Brady’s Irish cream liqueur. We launched Brady’s Irish cream in late 2003 to capitalize on the demand for high quality Irish creams. Brady’s Irish cream is made in small batches using single malt Irish whiskey, dairy fresh cream and natural flavors.
          Celtic Crossing liqueur. Celtic Crossing was developed in the mid 1990s by Gaelic Heritage, and is a unique combination of Irish spirits, cognac and a taste of honey. Celtic Crossing is one of the few liqueurs that are honey-flavored, and it is enjoyed as an after dinner drink and as a flavor enhancer in unique cocktails.
          Pallini Limoncello. Pallini Limoncello is a premium lemon liqueur, which is served on the rocks or as an ingredient in a wide variety of drinks, ranging from martinis to iced tea. It is also used in cooking, particularly for pastries and cakes. Pallini Limoncello is crafted from an authentic family recipe created more than 100 years ago by the Pallini family. It is made with Italy’s finest Sfusato Amalfitano lemons that are hand-selected for optimal freshness and flavor. There are also two other flavor extensions of this Italian liqueur: Pallini Peachcello, made with white peaches, and Pallini Raspicello, made from a combination of raspberries and other berries.
Industry overview
          The overall beverage alcohol industry includes three major segments: distilled spirits, wine and beer. We currently only participate in the distilled spirits segment and, more specifically, in the premium end of this market. Within distilled spirits, sales of which reached nearly $47 billion in the United States alone during 2003, there are three primary categories: white goods (vodka, rum, gin and tequila), whiskey and specialties (including liqueurs and cordials). In 2004, these three categories, excluding what are referred to in the industry as local traditional liquors such as unbranded Chinese spirits and Indian arracki, represented approximately 936 million global case sales, of which approximately 161.7 million case sales were made in the United States. White goods are the largest category within the distilled spirits market, representing 53% of the foregoing global distilled spirits sales made in 2004, and vodka is the largest sub-category of white goods, representing approximately 34% of such global distilled spirits sales made in 2004. Our two leading brands, Boru vodka and Gosling’s rum, are emerging products within the white spirits category. We expect that each of the premium spirits segments in which we compete will continue to demonstrate favorable growth in the foreseeable future, particularly as compared to the overall distilled spirits market.

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          We believe the following are key industry trends:
  •  increasing consumer preference for liquor and cocktails across various age groups and demographics, as compared to wine and beer;
 
  •  increasing consumption of imported premium spirits; viewed as affordable luxury products, consumers appear willing to trade up and pay more for high-end quality spirits; and
 
  •  increasing consumer identification with a particular liquor brand to convey status and self image; consumers are more likely to have a preference for establishing a unique brand or drink to call their own and to be aspirational in their drinking behavior.
          Within the United States, our products are included in the imported segments of their distilled spirits categories, as all of our products are produced outside of the United States. Within the imported segments, the vast majority of the brands are, like ours, premium brands. As the following case sales tables indicate, there is significant historical and projected growth in the imported portions of the distilled spirits categories in which our products compete, and growth in these imported segments is expected to outpace that of their overall categories over the next five years.
U.S. Overall Distilled Spirits Consumption
Nine-liter case sales (in millions, except percentages)
                           
 
    Number of       Number of   Projected
    case sales   5-year   case sales   5-year
Spirits category (each includes both the   for 2004   growth   for 2010   growth
domestic and imported segments)   (estimated)   1999-2004   (projected)   2005-2010
                 
Vodka
  44.8     28.0%     55.0     18.3%  
Rum
  19.8     33.8%     22.6     10.8%  
Liqueurs/cordials
  20.3     21.6%     24.5     15.6%  
Whiskey
  42.0     (1.9%)     42.3     0.7%  
 
Other categories
  34.8     8.1%     39.5     10.3%  
                     
 
 
Total U.S. distilled spirits
  161.7     14.3%     183.9     10.8%  
                     
 
Source: IMPACT Database Review and Forecast.
          The U.S. consumption of distilled spirits reached 161.7 million cases in 2004, representing a 14.3% growth over the preceding five-year period, and case sales are expected to reach 183.9 million by 2010, reflecting a 10.8% growth over the next five years. Within distilled spirits, vodka is the largest category with approximately 44.8 million cases sold in 2004 and is expected to be the highest growth category with an 18.3% growth rate over the next five years. Rum and liqueurs/cordials are also expected to experience double-digit growth with five-year growth estimates of 10.8% and 15.6%, respectively.

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U.S. Imported Distilled Spirits Consumption
Nine-liter case sales (in millions, except percentages)
                             
 
    Number of       Number of   Projected
    case sales   5-year   case sales   5-year
    for 2004   growth   for 2010   growth
Imported spirits segment   (estimated)   1999-2004   (projected)   2005-2010
                 
Imported vodka
  12.5     81.2%     17.5     29.6%  
Imported rum
  2.3     64.3%     2.6     8.3%  
Imported liqueurs/cordials
  10.5     38.2%     14.0     23.9%  
Irish whiskey
  0.5     66.7%     0.6     20.0%  
                     
 
Total for our segments
  25.8     59.3%     34.7     25.3%  
 
Other imported whiskey
  22.8     (5.5%)     22.5     (5.3%)  
Other imported spirits
  16.0     15.1%     19.3     16.3%  
                     
 
   
Total imported U.S. distilled spirits
  64.6     20.5%     76.5     14.2%  
                     
 
Source: IMPACT Database Review and Forecast.
          As the foregoing tables indicate, the imported segments of the U.S. distilled spirits market categories in which we compete together represent a significantly greater historical and projected growth than that of the U.S. distilled spirits market as a whole. The U.S. consumption of distilled spirits in the imported segments in which we compete are estimated to have reached 25.8 million cases in 2004, representing a 59.3% growth over the proceeding five-year period, as compared to a 14.3% growth over such period for U.S. distilled spirits as a whole. In addition, case sales within our imported segments are expected to reach 34.7 million by 2010, reflecting a 25.3% growth over the next five years, as compared to a five year projected growth of 10.8% for U.S. distilled spirits as a whole. In addition, the individual segments in which our premium brands compete, i.e., imported vodka, imported rum, imported liqueurs/cordials and Irish whiskey, demonstrated growth of 81.2%, 64.3%, 38.2% and 66.7%, respectively, over the last five years and each such segment is expected to achieve sizable additional growth over the next five years, particularly imported vodka with a projected 29.6% five-year growth rate. The growth in vodka is attributable to its overall popularity, the recent trend in flavor extensions and flexibility with different mixers. Rum growth is also correlated to its mixability and new flavor introductions. Liqueurs and cordials are increasingly popular due to new innovative flavors tailored to individual taste preferences, and Irish whiskey is one of the smaller yet faster growing distilled spirits categories.
          With our diverse portfolio of premium branded spirits and other competitive strengths and our long-term strategy we believe that we are well positioned to take advantage of recent consumer trends in favor of high-end branded premium spirits and the continuing growth projected for the premium segments of the distilled spirits industry in which we have chosen to compete.
Our competitive strengths
          We believe that our competitive strengths include the following:
  •  our diverse portfolio of high quality, premium branded spirits in growing categories of the spirits industry. This portfolio, with brands in four growing spirits categories, appeals to broad consumer tastes and enables us to penetrate various retail outlets and capitalize on varying regional preferences;

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  •  our extensive and established U.S. distribution network and growing international distribution network in Europe and elsewhere. We currently have distribution relationships with third-party distributors or brokers in all 50 states in the United States and in six other primary international markets. We believe that establishing domestic and international distribution such as ours is a significant barrier to entry for smaller spirits producers and that our distribution network is similar to that of our significantly larger competitors. We anticipate that our distribution network will also be a differentiating factor in enabling us to continue to partner with emerging brands seeking greater market penetration;
 
  •  our significant sales and marketing expertise and experience. We have dedicated a significant amount of resources to establish and develop a sales and marketing infrastructure both domestically and internationally. We believe this infrastructure provides us the capacity to accommodate our anticipated future growth. We currently have a total sales force of 28 people, including six regional U.S. sales managers and two international sales managers, with an average of over 15 years of industry experience with premium spirits brands;
 
  •  our highly qualified and experienced management team with successful track records relating to brand development, the spirits industry, mergers and acquisitions and public companies. Mark Andrews, our chairman, president and chief executive officer, founded our predecessor company in 1998. Prior thereto, he served as founder, chairman and chief executive officer of American Exploration Company, a publicly traded oil and gas company, from 1980 until its sale to Louis Dreyfus Natural Gas Corp. in 1997. During his 17-year tenure there, American Exploration completed over 50 acquisitions. Keith Bellinger, our executive vice president, chief operating officer and secretary, was formerly chief financial officer of the spirits division of Allied Domecq USA and served as president of the Northern Business Unit of Allied Domecq USA. T. Kelley Spillane, our senior vice president – U.S. sales, had significant roles while at Carillon Imports in helping that company grow its Absolut Vodka and Bombay Sapphire Gin brands;
 
  •  our flexible and efficient supply chain. We currently coordinate the production and delivery of all of our spirits through long-term arrangements with third-party distillers, producers and transportation companies. These arrangements enable us to operate without the need to own or invest in distilleries, bottling plants, storage or transportation equipment, allowing us to focus a majority of our resources on sales and marketing activities; and
 
  •  our recent track record in establishing strategic partnerships. We have experienced recent successes establishing strategic partnerships with the owners of spirits brands seeking to increase sales beyond their home markets, providing the opportunity for the brands to achieve global growth. We believe this track record will allow us to attract additional brands to our portfolio.
Our growth strategy
          Our objective is to continue building a distinctive portfolio of global premium spirits brands, with a primary focus on increasing both our total and individual brand case sales. To achieve this, we intend to continue:
  •  increasing market penetration of our existing spirits brands. We intend to utilize our existing distribution relationships, sales expertise and targeted marketing activities to achieve growth and gain additional market share for our brands within

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  retail stores, bars and restaurants, and thereby with end consumers, both here and internationally; add experienced salespeople in selected markets; increase sales to national chain accounts; and expand our international distribution relationships;
 
  •  building brand awareness through innovative marketing, advertising and promotional activities. We place a significant emphasis on our bottle design, labeling and packaging, as well as on our advertising and promotional activities, to establish and reinforce the image of our brands and have invested significant capital over the last several years in developing our brands. We intend to continue developing compelling campaigns for our spirits brands through the coordinated efforts of our experienced internal marketing personnel and leading third-party design and advertising firms, principally using billboards, print advertisements and in-store promotional materials, to increase consumer brand awareness. For example, we intend to position Boru vodka as the leading and one of the few premium vodkas produced in Ireland and expand the market awareness of Gosling’s rum in global markets beyond its current loyal customer following in Bermuda and the eastern United States; and
 
  •  selectively adding new premium brands to our spirits portfolio. We intend to continue developing new brands and pursuing strategic relationships, joint ventures and acquisitions to selectively expand our portfolio of premium spirits brands, particularly by capitalizing on and expanding our already demonstrated partnering capabilities. The spirits industry is characterized by a relatively small number of very large companies, as a result of continuing industry consolidation, and a sizable number of smaller brands, many of which are family owned. We believe that by partnering with these smaller and family-owned companies, we provide them with the potential opportunity to achieve global growth and the other benefits of a larger organization while, in many cases, maintaining their local identities and traditional distillation and production businesses. In addition, we will seek to opportunistically acquire brands divested by our larger competitors that have market presence and significant growth potential.

Production and supply
          There are several steps in the production and supply process for spirits products. First, all of our products are distilled. This is a multi-stage process that converts basic ingredients, such as grain or sugar cane, into alcohol. Next, the alcohol is processed and/or aged in various ways depending on the requirements of the specific brand. In the case of our vodka, this processing is designed to remove all other chemicals to the maximum extent possible, so that the resulting liquid will be odorless and colorless, and have a smooth quality with minimal harshness. Achieving a high level of purity is relatively complex and involves a series of distillations and filtration processes.
          In the case of our flavored vodkas and all of our other spirits brands, rather than removing flavor, various complex flavor profiles are achieved through one or more of the following techniques: infusion of fruit, addition of various flavoring substances, and, in the case of our rums and whiskeys, aging of the brands in various types of casks for extended periods of time and the blending of several rums or whiskeys to achieve a unique flavor profile for each brand. After the distillation, purification and flavoring processes are completed, the various liquids are bottled. This involves several important stages, including bottle and label design and procurement, filling of the bottles and packaging the bottles in various configurations for shipment.
          We do not have significant investment in distillation, bottling or other production facilities or equipment. Instead, we have entered into relationships with several companies to provide those services to us for our various brands. We feel that these types of arrangements are beneficial in that we do not have a significant amount of capital committed to fixed assets and we have the flexibility to meet

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growing sales levels by dealing with companies whose capacity significantly exceeds our current needs. These relationships vary on a brand-by-brand basis as discussed below.
Boru vodka
          We have a supply agreement with Carbery Milk Products Limited, a member of the Carbery Group, a large distiller and food producer based in Ballineen, Ireland, to provide us with the distilled alcohol used in our Boru vodka. This supply agreement with Carbery was originally entered into by Roaring Water Bay in 1998 and became ours in 2003, when we acquired Roaring Water Bay and, with it, our Boru vodka brand. The supply agreement provides for Carbery to produce natural spirit for us with specified levels of alcohol content pursuant to specifications set forth in the agreement and at specified prices through its expiration in December 2008, in quantities to be designated by us annually. We believe that Carbery has more than enough distilling capacity to meet our needs for Boru vodka for the foreseeable future. Carbery also produces the flavoring ingredients used in the Boru vodka flavor extensions and in our Brady’s Irish cream.
          From Carbery, the quadruple distilled alcohol is delivered by them to the bottling premises at Terra Limited in Baileyboro, Ireland, where pursuant to our bottling and services agreement with Terra it is filtered in several proprietary ways, pure water is added to achieve the desired proof, and, in the case of the citrus, orange and crazzberry versions of Boru vodka, flavorings (obtained from Carbery) are added. Each of our Boru vodka products is then bottled in various sized bottles. We believe that Terra, which also acts as bottler for all of our Irish whiskeys and as producer and bottler of our Brady’s Irish cream (and as bottler for Celtic Crossing which is supplied to us by one of Terra’s affiliates), has sufficient bottling capacity to meet our current needs, and its facility can be expanded to meet future supply needs, should this be required.
          Pursuant to our bottling and services agreement with Terra, which extends through February 28, 2009, Terra provides intake, storage, sampling, testing, filtering, filling, capping and labeling of bottles, case packing, warehousing and loading and inventory control for our Boru vodka brands and our Knappogue Castle and Clontarf Irish whiskeys at prices that are adjusted annually by mutual agreement based on changes in raw materials and price indexes for consumer price index increases up to 3 1/2%. This agreement also provides for maintenance of product specifications and minimum processing procedures, including compliance with applicable food and alcohol regulations and maintenance, storage and stock control of all raw products and finished products delivered to Terra. All alcohol is held on the premises by Terra under its customs and excise bond. Terra has also agreed in the supply agreement not to engage in any business in Ireland which competes either directly or indirectly with our business as it relates to the development, manufacture or supply of vodka or whiskey.
Gosling’s rums
          The Gosling’s rums have been produced by Gosling’s Brothers Limited in Hamilton, Bermuda for approximately 150 years and, pursuant to our distribution arrangements with the Goslings, they have retained the right to act as the sole supplier to Gosling-Castle Partners Inc. with respect to our Gosling’s rum requirements. They source their rums in the Caribbean and transport them to Bermuda where they are blended according to proprietary recipes. The rums are then sent to the Heaven Hill plant in Bardstown, Kentucky where they are bottled, packaged, stored and shipped to our various distributors. Gosling’s Brothers is in the process of increasing its blending and storage facilities in Bermuda to accommodate our supply needs for the foreseeable future. Heaven Hill has one of the largest bottling facilities in the United States with ample capacity to meet our projected supply needs. See “— Strategic brand–partner relationships.”
Knappogue Castle and Clontarf Irish Whiskeys
          In 2005, we entered into a long-term supply agreement with Irish Distillers, a subsidiary of Pernod Ricard, pursuant to which it has agreed to supply us with the aged single malt and grain

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whiskeys used in our Knappogue Castle Whiskey and a Knappogue Castle Whiskey blend we may produce in the future and all three of our Clontarf Irish whiskey products. The supply agreement provides for Irish Distillers to meet our running ten-year estimate of supply needs for these products, each of which is produced to a flavor profile prescribed by us. At the beginning of each year of the agreement, we must nominate our specific supply needs for each product for that year, which amounts we are then obligated to purchase over the course of that year. These amounts may not exceed the annual amounts set forth in the running ten-year estimate unless approved by Irish Distillers. The agreement provides for fixed prices for the whiskeys used in each product, with escalations based on certain cost increases. The whiskeys for the four products are then sent to Terra Limited where they are bottled in bottles designed by us and packaged for shipment.
Pallini Limoncello
          Pallini Limoncello is produced by I.L.A.R. S.p.A., an Italian company based in Rome and owned since 1875 by the Pallini family. The Pallinis make their Limoncello using Sfusato Amalfitano lemons in a proprietary infusion process. Once made, the Limoncello is then bottled in their plant in Rome and shipped to us pursuant to our long-term exclusive U.S. marketing and distribution agreement. In addition to Pallini Limoncello, I.L.A.R. produces Pallini Raspicello, using a combination of raspberries and other berries and Pallini Peachcello, using white peaches, and we are the exclusive U.S. importer for both of these brands as well. We believe that I.L.A.R. has adequate facilities in Rome to produce and bottle sufficient Limoncello, Raspicello and Peachcello to meet our foreseeable needs. See “— Strategic brand-partner relationships.”
Brady’s Irish cream
          Brady’s Irish cream is produced for us by Terra. Fresh cream is combined with Irish whiskey, grain neutral spirits and various flavorings procured from the Carbery Group, to our specifications and then bottled by Terra in bottles designed for us. We believe that Terra has the capacity to meet our foreseeable supply needs for this brand.
Celtic Crossing liqueur
          We acquired a 60% ownership interest in, and distribution rights to, the Celtic Crossing brand of Irish liqueur in the United States, Canada, Mexico, Puerto Rico and the islands between North and South America, from Gaelic Heritage Corporation Limited, an affiliate of Terra. In connection with these arrangements, Gaelic Heritage retained the right to act as the sole supplier to us of Celtic Crossing. Gaelic Heritage mixes the ingredients comprising Celtic Crossing using a proprietary formula and then Terra bottles it for them in bottles designed for us. We believe that the necessary ingredients are available to Gaelic Heritage in sufficient supply and that Terra’s bottling capacity is currently adequate to meet our projected supply needs. See “— Strategic brand-partner relationships.”
Sea Wynde rum
          With the assistance of a master blender, we source several aged rums from Jamaica and Guyana for our Sea Wynde rum and then send them to a bottling facility near Edinburgh, Scotland where they are married together and bottled for us in bottles designed by us. We are in the process of reevaluating our sourcing, selection and bottling arrangements to provide for increasing supplies of Sea Wynde rum on a cost effective basis.
Distribution network
          We believe that one of our primary strengths is the distribution network that we have developed with our sales team and our independent distributors and brokers. We currently have distribution and brokerage relationships with third-party distributors in all 50 states in the United States, as well as material distribution arrangements in approximately six other countries. We believe that our distribution network is similar to that of our significantly larger competitors, providing a key competitive advantage versus our competitors of similar size.

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U.S. distribution
          Background. Importers of distilled spirits in the United States must sell their products through a three-tier distribution system. Typically, an imported brand is first sold to a U.S. importer, who then sells it to a network of distributors, or wholesalers, covering the Unites States, in either “open” states or “control” states. In the 32 open states, the distributors are generally large, privately held companies. In the 18 control states, the states themselves function as the distributor, and suppliers such as us are regulated by these states. The distributors and wholesalers in turn sell to the individual liquor retailers, such as liquor stores, restaurants, bars, supermarkets and other outlets in the states in which they are licensed to sell beverage alcohol. In larger states such as New York, more than one distributor may handle a brand in separate geographical areas. In control states, where liquor sales are controlled by the state governments, importers must sell their products directly to the state liquor authorities, which also act as the distributors and either maintain control over the retail outlets or license the retail sales function to private companies, while maintaining strict control over pricing and profit.
          The U.S. spirits industry has undergone dramatic consolidation over the last ten years and the number of companies and importers has significantly declined due to merger and acquisition activity. There are currently six major spirits companies, each of which own and operate their own importing business. All companies, including these large companies, are required by law to sell their products through wholesale distributors in the United States, underscoring the importance of that level of the distribution chain. The major companies are increasingly exerting significant influence over the regional distributors and as a result, it has become more difficult for smaller companies to get their products recognized by the distributors. Therefore, with the establishment of our distribution network in all 50 states, we believe we have overcome a significant barrier to entry in the U.S. spirits business and enhanced our attractiveness as a strategic partner for smaller companies lacking comparable distribution.
          For the fiscal year ended March 31, 2005 and the three months ended June 30, 2005, our U.S. sales represented approximately 53% and 63%, respectively, of our revenues, and we expect them to grow as a percentage of our total sales in the future. See Note 21 of Notes to Consolidated Financial Statements.
          Importation. While we own most of our brands or, by contract, have the exclusive right to act as U.S. importer of the brands of our strategic partners, we do not currently act as our own importer in the United States. We currently hold the federal importer and wholesaler license required by the Alcohol and Tobacco Tax and Trade Bureau, a division of the U.S. Department of the Treasury, but we do not yet have the state licenses necessary to sell our products to the distributors in the individual states. Instead, we use the services of a licensed importer to act as importer of record on our behalf in the United States, both with respect to our proprietary brands and those of our strategic partners.
          In 1998, we engaged MHW Ltd., a New York-based nationally recognized and licensed importer, to coordinate the importing and industry compliance required for the sales of our products across the United States. Through the utilization of MHW’s national expertise and licenses, our inventory is strategically maintained in one of the largest bonded warehouses on both coasts (Western Carriers and Western Wine Services) and shipped nationally by an extensive network of licensed and bonded carriers. Pursuant to an agreement established on April 15, 1998, as amended on December 1, 2004, MHW also provides us with certain logistical services as well as accounting, inventory, insurance and disbursement services for our brands. In addition, MHW provides an online tracking software, which provides daily reports on sales of our products to our distributors, receivables, inventory and cash receipts.
          Under the terms of our agreement with MHW, which extends until March 31, 2006, we pay MHW a monthly service fee of $4,900, plus $1.00 per case on all cases sold during the month.
          Until recently, it was much more cost effective for us to use MHW as our U.S. importer and to rely on its state licenses rather than expend the resources necessary to set up the required licensing

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infrastructure internally. At this stage of our growth, however, our revenue-based fees to MHW are reaching the point where it begins to be more economical for us to assume the role of importer ourselves. While we have commenced this process and will begin to bring a number of the services provided by MHW in-house during the next 12 months, until we have obtained the requisite licenses in a majority of the states, a process that could take as long as a year, we will continue to rely on MHW to perform the importing function for us.
          Wholesalers and distributors. In the United States, we are required by law to use state licensed distributors or, in the control states, state-owned agencies performing this function, to sell our brands to the various retail outlets. As a result, we are dependent on them not only for sales but also for product placement and retail store penetration. We have no distribution agreements or minimum sales requirements with any of our distributors and they are under no obligation to place our products or market our brands. In addition, all of them also distribute the products and brands of competitors of ours. As a result, the fostering and maintaining of our relationships with our distributors is of paramount importance to us. Through our internal sales team, we have established relationships for our brands with wholesale distributors in each state, and our products are currently sold in the United States by approximately 80 wholesale distributors, as well as by various state beverage alcohol control agencies.
International distribution
          Unlike the United States, the majority of the other countries in which we sell our brands allow for sales to be made directly from the brand owner to the various retail establishments, including liquor stores, chain stores, restaurants and pubs, without requiring that sales go through an importer or through a distributor or wholesaler tier. In our international markets, we do not use the services of an importer, although we use Terra Limited to handle the billing, inventory and shipping for us with respect to our non-U.S. markets, similar to that aspect of our arrangement with MHW in the United States. We do, however, rely primarily on established spirits distributors and wholesalers in most of our non-U.S. markets in much the same way as we do in the United States.
          As in the United States, the spirits industry has undergone consolidation internationally, with considerable realignment of brands and brand ownership. The number of major spirits companies internationally has been reduced significantly due to mergers and brand ownership consolidation. While there are still a substantial number of companies owning one or more brands, most business is now done by six major companies each of whom owns and operates its own distribution company in the major international markets. These captive distribution companies focus primarily on the brands of the companies that own them.
          Even though we do not utilize the direct route to market in our international operations, we do not believe that we are at a significant disadvantage, because typically the local wholesalers have significant and established relationships with the retail accounts and are able to provide extensive customer service, in store merchandising and on premise promotions. In addition, even though we must compensate our wholesalers and distributors in each market in which we sell our brands, we are, as a result of using these distributors, still able to benefit from substantially lower infrastructure costs and centralized billing and collection.
          Our primary international markets are the Republic of Ireland, the United Kingdom, Germany, France, Italy and Canada. In addition, we have sales in a number of other countries in Continental Europe and the Caribbean. For the fiscal year ended March 31, 2005 and the three months ended June 30, 2005, our non-U.S. sales represented 47% and 37%, respectively, of our revenues. See Note 21 of Notes to Consolidated Financial Statements.

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Our sales team
          While we currently expect more rapid growth in the United States, international markets hold considerable potential and are an important part of our global strategy. We have begun searching for a senior executive to oversee all of our international operations. In the meantime, we are reevaluating our international strategy on a market-by-market basis to strengthen our distributor relationships, optimize our sales team and effectively focus our financial resources.
          We currently have a total sales force of 28 people, including six regional U.S. sales managers and two international sales managers, with an average of over 15 years of industry experience with premium spirits brands.
          Initially, in the United States, we engaged regional representatives, known as brokers, on a part-time basis to work with our distributors in core U.S. markets. These brokers worked as if they were our internal sales personnel, but were paid a per-case commission instead of a salary and related benefits. Except in the control states where brokers continue to provide valuable liaison services with state liquor commissions, we have replaced these part-time representatives with highly experienced full-time regional managers. Our current U.S. sales regions and their respective managers are as follows:
  •  New England  – William Walsh (joined us in 1999) was previously with Southern Wine & Spirits, the largest wholesaler in the United States.
 
  •  East Coast  – Robert Battipaglia (joined us in 2003) was previously the East Coast Regional Manager for the Advantage Brands division of Allied Domecq.
 
  •  Southeast  – Louis Suffredini (joined us in 2004) was previously a Regional Sales Manager in the Southeast with Allied Domecq.
 
  •  Midwest  – David Wyatt (joined us in 2004) was previously in charge of Control State sales for Pearl Vodka and prior to that was Central Region Manager for Allied Domecq.
 
  •  Southwest  – Janell Eilers (joined us in 2004) was previously Texas State Sales Manager for the wine division of Diageo.
 
  •  West Coast  – Bruce Smith (joined us in 2002) was previously with Southern Wine & Spirits, specializing in chain sales.
          Similar to our U.S. sales structure, working under our two international sales managers, we have area sales managers for the United Kingdom, Ireland, Northern Ireland and Continental Europe.
          Our sales personnel are engaged in the day to day management of our distributors, which includes setting quotas, coordinating promotional plans for our brands, maintaining adequate levels of stock, brand education and training and sales calls with distributor personnel. In addition to distributor management, our sales team also maintains relationships with key retail customers through independent sales calls. They also schedule promotional events, create local brand promotion plans, host our in-store tastings in the jurisdictions where such promotions are legal and provide waitstaff and bartender training and education with respect to our brands.
Advertising, marketing and promotion
          In order to build our brands, we must effectively communicate with three distinct audiences: our distributors, the retail trade and the end consumer. We place significant emphasis on advertising, marketing and promotional activities to establish and reinforce the image of our brands, with the objective of building substantial brand value. We also make a substantial investment in these activities, significantly more on a per case basis than many of our competitors who are seeking to maintain,

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rather than aggressively grow, their case sales. We are committed to continuing aggressive advertising and promotion activities to build our brands and their value and believe that our execution of disciplined and strategic branding and marketing campaigns will continue to drive our sales growth.
          We employ full-time, in-house marketing, sales and customer service personnel who work together with leading third party design and advertising firms to maintain a high degree of focus on each of our product categories and build brand awareness through innovative marketing activities. We use a range of marketing strategies and tactics to build brand equity and increase sales, including market research, consumer and trade advertising, price promotions, point-of-sale materials, event sponsorship, in-store and on-premise promotions and public relations, as well as a variety of other traditional and non-traditional marketing techniques to support the sales of all of our brands.
          With respect to our leading brand, Boru vodka, we engage in a number of promotions and incentive programs with our distributors, advertise our brands in prominent trade publications, and in 2004, initiated a major consumer marketing campaign from Washington D.C. to Boston, with particular emphasis on the New York Metro and Boston markets. In connection with this marketing campaign, we engaged Fathom Communications Inc., an innovative firm whose principals have experience with large advertising agencies, to work with us. The campaign positioned Boru as a clear-thinking, witty brand from Ireland and is centered on a series of “Boruisms,” which highlight the clarity of the product and the clarity of its brand message. These appeared on phone kiosks and bus stops in New York City and Boston, as well as in other high impact locations, including a major presence in the New York City subway. The campaign also utilized radio advertisements, primarily on WEEI, the largest sports radio in Boston.
          We are now also putting substantial emphasis on consumer advertising for Gosling’s rum and, through Gosling-Castle Partners, have engaged Kelly & Co., an innovative firm in Boston which specializes in high-end consumer goods, to assist us in this project. Our Gosling’s campaign is utilizing substantial billboard coverage along the east coast of the United States and selected regional print space in major national publications such as Time, Newsweek and Food & Wine, and it communicates that this famous Bermuda brand is now becoming available in the United States.
          In addition to traditional advertising, we also place heavy emphasis on four other marketing methods to support our brands: public relations, events, tastings and marketing to celebrities. We have an extensive public relations effort in the United States, which has helped gain important editorial coverage for our brands. Event sponsorship is an economical way for us to have our brands tasted by influential consumers, and we actively contribute product to trend setting events where our brand has exclusivity in the brand category. We also conduct hundreds of in-store and on-premise promotions each year. In addition, we provide our products to celebrities appearing on various television programs.
          We support our marketing efforts for our brands with a wide assortment of point-of-sale materials such as mirrors, banners, glassware, table tents, shelf talkers, case cards, napkins and apparel. The combination of trade and consumer programs, supported by attractive point-of-sale materials, also establishes greater credibility for us with our distributors and retailers.
          We also place a significant emphasis on our bottle design, labeling and packaging to establish and reinforce the image of our brands. For instance, we currently offer our Boru vodka and two of its flavor extensions, as well as our three Clontarf Irish whiskeys, in the award-winning Trinity bottle, which consists of three stacked 200 ml. bottles. We are also in the process of significantly redesigning and upgrading the quality of our standard Boru vodka bottle and have engaged Claessens International, a widely respect design firm based in London, to assist us with this project. We believe that this new bottle will be an important contributor to the further building of the Boru vodka brand. We intend to continue trade advertising and promotional events for Boru vodka and to resume more substantial consumer advertising once this new bottle is on the market.

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          While the majority of our advertising, marketing and promotional budget is focused on the U.S. market, we are also active with certain of the same types of activities in Ireland, the United Kingdom, Germany and a growing number of other international markets.
Strategic brand-partner relationships
          A key component of our growth strategy and one of our competitive strengths is our ability to forge strategic relationships with owners of both emerging and established spirits brands seeking opportunities to increase their sales beyond their home markets and achieve global growth. Our original relationship with the Boru vodka brand was as its exclusive U.S. distributor. To date, we have also established strategic relationships with respect to Gosling’s rum, Pallini Limoncello and Celtic Crossing, all of which relationships are described below, and we will endeavor to continue expanding our brand portfolio through similar such arrangements in the future.
Gaelic Heritage Corporation Limited/Celtic Crossing
          In March 1998, we entered into an exclusive national distribution agreement with Gaelic Heritage Corporation Limited, an affiliate of Terra Limited, one of our suppliers, which was subsequently amended in April 2001, pursuant to which we acquired from Gaelic a 60% ownership interest, and our importer, MHW, acquired a 10% ownership interest, in the Celtic Crossing brand in the United States, Canada, Mexico, Puerto Rico and the islands between North and South America. We also have the right to acquire 70% of the ownership of the Celtic Crossing brand in the remainder of the world. We also acquired the exclusive right to distribute Celtic Crossing on a world-wide basis. Under the terms of the agreement with Gaelic, as amended, we have the right to purchase from Gaelic, based upon our forecasts, cases of Celtic Crossing at annually agreed costs and a royalty payment per case sold at various rates depending on the territory and type of case sold. During the term of the agreement, without the prior written consent of Gaelic, we may not distribute any other Irish liqueur/cordial unless it is bottled in Gaelic’s (Terra’s) facilities. Pursuant to the terms of the agreement, Gaelic provides us with 6.3 million ($7.6 million) of product liability insurance. The agreement may be terminated, among other things, upon notification by either party that the other party has materially breached the agreement and such breach is not cured within 60 days of the date such notice is given.
I.L.A.R. S.p.A./Pallini Limoncello
          In August 2004, we entered into an exclusive marketing and distribution agreement with I.L.A.R. S.p.A., a family owned Italian spirits company founded in 1875, pursuant to which we obtained the long-term exclusive U.S. distribution rights with respect to its Pallini Limoncello and a right of first refusal on related brand extensions.
          During the period through December 31, 2007, we have the right to purchase Limoncello at a stipulated price subject to one adjustment in 2006 or 2007 to reflect the inflation rate in the Italian economy and subject to further adjustment for raw material increases of 5% or more during any quarter to the extent the increase is above the rate of inflation and only for the period the increase is maintained. After 2007, I.L.A.R. has the discretion to raise prices as long as the price increases do not exceed those of major competitors for comparable products. I.L.A.R. is required to maintain certain product standards, and we have input into adjustments of the product and packaging. We are required to prepare a preliminary annual strategy plan for advertising and distribution for review and are required to make certain advertising, marketing and promotional expenditures based on volume. The initial term of the agreement expires on December 31, 2009 and is automatically renewed for either three or five years, based on case sales in 2009. I.L.A.R. indemnifies us in the United States for claims arising out of compliance with U.S. laws or regulations or relating to the quality or fitness of products and maintains $5 million of insurance upon which we are named an additional insured. We indemnify I.L.A.R. for claims arising out of claims relating to the marketing, promotion, sale or distribution of the

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products and maintain $5 million of standard product liability insurance upon which I.L.A.R. is the named insured. Additional agreements are pending regarding I.L.A.R.’s distribution of our products.
Gosling-Castle Partners Inc./Gosling’s rums
          Effective as of January 2005, we entered into a national distribution agreement with Gosling’s Export (Bermuda) Limited, referred to as Gosling’s Export, pursuant to which we obtained the exclusive right to distribute the Gosling’s rum products, which have been produced by the Gosling family in Bermuda for over 150 years, and Gosling’s rum-related gourmet food products in the United States. In February 2005, we expanded this relationship by purchasing a 60% controlling interest in a strategic export venture, now named Gosling-Castle Partners Inc., with the Gosling family. Gosling-Castle Partners was formed to enter into an export agreement with Gosling’s Export that gives Gosling-Castle Partners the exclusive right to distribute Gosling’s rum and related products on a world wide basis (other than in Bermuda) and assigns to Gosling-Castle Partners all of Gosling’s Export’s interest in our January 2005 U.S. distribution agreement with them. In exchange for the global distribution rights under the export agreement, Gosling-Castle Partners issued a note to Gosling’s Export in the principal amount of $2.5 million, payable in four equal installments of $625,000 bi-annually through October 1, 2006. The export agreement has an initial term expiring in April 2020, subject to a 15 year extension if certain case sale targets are met. Under the terms of the export agreement, which commenced in April 2005, Gosling-Castle Partners is generally entitled to a stipulated share of the proceeds from the sale, if ever, of the ownership of any of the Gosling’s brands to a third-party, through a sale of the stock of Gosling’s Export or its parent, with the size of such share depending upon the number of case sales made during the twelve months preceding the sale. In addition, prior to selling the ownership of any of their brands that are subject to these agreements, the Goslings family must first offer such brand to Gosling-Castle Partners and then to us. To obtain our interest in Gosling-Castle Partners, we contributed $5.0 million to its capital, which amount consisted of $100,000 in cash and a promissory note in the principal amount of $4.9 million payable bi-annually through April 1, 2007. Pursuant to our arrangement with the Goslings, they have retained the right to act, through Gosling’s Brothers Limited, as the sole supplier to Gosling-Castle Partners with respect to our Gosling’s rum requirements.
Intellectual property
          Trademarks are an important aspect of our business. Our brands are protected by trademark registrations or are the subject of pending applications for trademark registration in the United States, European Community and other countries where we currently distribute the brand or have plans to distribute the brand. In some cases, the trademarks are registered in the names of our various subsidiaries and related companies. Generally, the term of a trademark registration varies from country to country, and, in the United States, trademarks expire and need to be renewed every ten years. We will continue to register our trademarks in additional markets as we expand our distribution territories.
          We have entered into distribution agreements for brands owned by third parties, such as Pallini and the Gosling’s rums. The Pallini and Gosling’s rum brands are registered by their respective owners and we have the exclusive right to distribute the Gosling’s rums on a worldwide basis (other than in Bermuda) and the Pallini brands in the United States. See “—Strategic brand-partner relationships.”
          Our unique “trinity” bottle is the subject of a U.S. Design Patent owned by The Roaring Water Bay (Research & Development Company) Limited. In December 2003, we entered into a license agreement with Roaring Water Bay Research & Development) Company Limited whereby we obtained an exclusive license to use the patent for a five-year term ending in December 2008. We pay a royalty equal to 8% of the net invoice price of all products sold using the trinity bottle or otherwise disposed of by us, subject to a maximum of 30,000 ($36,198) per year. The agreement also includes the right to acquire the patent for the Trinity bottle for  90,000 ($108,594), which we intend to exercise prior to the consummation of this offering.

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Information systems
          We employ Microsoft Great Plains as our financial reporting system worldwide. This system is hosted by a third party in Washington, D.C. and is accessible remotely by our personnel globally via secured Internet connection. We maintain local area networks, referred to as LANS, in both our Dublin and New York offices. These LANS support email communication and Internet connectivity for these offices and, in addition, support such features as automatic data back-up and recovery in the event of a hardware failure at a local terminal. These LANS are maintained by professional third-party service providers at each location.
          We have also entered into a 36-month contract with Dimensional Insight, Inc. for its InterReport service. Among other things, this service provides business intelligence regarding sales of our products held by our distributors, inventory levels at our distributors and shipments of our products from distributors to specific retailers, as well as reporting formats that compare this information against comparable prior year periods. We consider this to be a valuable tool for our sales force and financial planners as it provides the feedback required to improve the accuracy of sales forecasting and inventory management, and the effectiveness of our sales and marketing promotions.
Competition
          Over the past ten years, the U.S. distilled spirits industry has undergone dramatic consolidation and realignment of brands and brand ownership. The number of major spirits importers in the United States has significantly declined due to mergers and brand ownership consolidation. While historically there were a substantial number of companies owning one or more major brands, today there are six major companies: Diageo, Pernod Ricard, Bacardi, Brown-Forman, Fortune Brands and Constellation Brands. These companies are the leading importers of spirits to the U.S. market, but often are not positioned well to partner with small to mid-size brands or in situations in which family members prefer to remain involved longer term, thereby creating an opportunity for us.
          We believe that we compete on the basis of quality, price, brand recognition and distribution strength. Our premium brands compete with other alcoholic and nonalcoholic beverages for consumer purchases, as well as for shelf space in retail stores, restaurant presence and wholesaler attention. In addition to the six major companies discussed above, we compete with numerous multinational producers and distributors of beverage alcohol products, many of which have greater resources than we do.
Seasonality
          Our industry is subject to seasonality with peak sales in each major category generally occurring in the fourth calendar quarter, which is our third fiscal quarter. See “Risk Factors — Our quarterly operating results have fluctuated in the past and may fluctuate significantly in the future rendering quarter-to-quarter comparisons unreliable as indicators of performance.”
Government regulation
          The Alcohol and Tobacco Tax and Trade Bureau of the United States Treasury Department regulates the spirits industry with respect to production, blending, bottling, sales and advertising and transportation of alcohol products. Also, each state regulates its advertising, promotion, transportation, sale and distribution of alcohol products within its jurisdiction. In countries other than the United States in which we operate, we are subject to similar regulations. We are also required to conduct business in the United States only with holders of licenses to import, warehouse, transport, distribute and sell spirits.
          In the 18 U.S. control states, the state liquor commissions act in place of distributors and decide which products are to be purchased and offered for sale in their respective states. Products are

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selected for purchase and sale through listing procedures which are generally made available to new products only at periodically scheduled listing interviews. Products not selected for listings can only be purchased by consumers through special orders, if at all.
          The distribution of alcohol-based beverages is also subject to extensive taxation both in the United States and internationally, and in the United States, at both the federal and state level.
          We believe that we are in material compliance with all applicable federal, state and other regulations. However, we operate in a highly regulated industry which may be subject to more stringent interpretations of existing regulations. Future costs of compliance with changes in regulations could be significant.
Employees
          As of September 27, 2005, we had 49 employees, of which 28 were in sales and 21 were in management, finance, marketing and administration. Of our employees, 33 are full time employees in the United States and 16 are employed outside of the United States in countries including Ireland and Great Britain.
Properties
          Our executive offices are located in New York, New York, where we lease approximately 3,800 square feet of office space under a sublease that expires on March 30, 2008. We also lease approximately 7,500 square feet of office space in Dublin, Ireland under a lease that expires on February 28, 2009 and approximately 1,000 square feet of office space in Houston, Texas under a lease that expires on March 31, 2006.
Legal proceedings
          We believe that neither we nor any of our wholly owned subsidiaries is currently subject to litigation. We may, however, become involved in litigation from time to time relating to claims arising in the ordinary course of our business. These claims, even if not meritorious, could result in the expenditure of significant financial and managerial resources.

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MANAGEMENT
Directors and executive officers
          The following table sets forth certain information regarding our directors and executive officers as of the closing of this offering:
             
Name   Age   Position
         
Mark Andrews
    55     Chairman of the Board, President and Chief Executive Officer
Keith A. Bellinger
    47     Executive Vice President, Chief Operating Officer and Secretary
T. Kelley Spillane
    43     Senior Vice President – U.S. Sales
Matthew F. MacFarlane
    52     Senior Vice President and Chief Financial Officer
John Beaudette
    48     Director(1)(2)
Robert J. Flanagan
    49     Director(2)(3)
Phillip Frost, M.D. 
    68     Director
Colm Leen
    42     Director(3)
Richard C. Morrison
    65     Director(1)
Frederick M. R. Smith
    63     Director(2)(3)
Kevin P. Tighe
    61     Director(1)
 
(1) Member of the nominating and corporate governance committee
(2) Member of the compensation committee
(3) Member of the audit committee
          Mark Andrews, our chairman of the board, president and chief executive officer, founded our predecessor company, Great Spirits Company LLC, in 1998. Mr. Andrews has served as our president, chief executive officer and chairman of the board since December 2003. Mr. Andrews founded American Exploration Company, a company engaged in the exploration and production of oil and natural gas, in 1980. He oversaw that company becoming publicly traded in 1983 and served as its chairman and chief executive officer until its merger with Louis Dreyfus Natural Gas Corp. in October 1997. In addition, Mr. Andrews is a director of IVAX Corporation, a worldwide producer and marketer of generic and proprietary drugs. He also serves as a life trustee of The New York Presbyterian Hospital in New York City. Mr. Andrews received a bachelor of arts from Harvard College in 1972 and a masters of business administration from Harvard Business School in 1975.
          Keith A. Bellinger, our executive vice president, chief operating officer and secretary, joined us in May 2005. He has over 18 years of experience in the spirits industry, including eight years with Allied Domecq PLC, a company in the business of spirits, wines and quick service restaurants. While at Allied Domecq, Mr. Bellinger served as chief financial officer of the U.S. Spirits Division from September 1996 to August 2000. From September 2000 to August 2002, Mr. Bellinger served as the general manager and executive vice president of the ADvantage Brands division of Allied Domecq, a division focused on emerging brands. From September 2002 to December 2004, he served as president of the Northern Business Unit of Allied Domecq U.S., one of the largest divisions of that company, where he oversaw all operations. Mr. Bellinger began his career in public accounting. Mr. Bellinger received a bachelor of business administration from the University of Texas at Austin in 1980.

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          T. Kelley Spillane, our senior vice president — U.S. sales, joined us in April 1, 2000. From April 1, 2000 to December 2003, Mr. Spillane served as vice president-sales of Great Spirits Company, and was appointed executive vice president — U.S. sales in December 2003. Prior to joining us, Mr. Spillane worked at Carillon Importers Limited, a division of Grand Metropolitan PLC. Carillon developed and launched Absolut Vodka and Bombay Sapphire Gin. At Carillon, Mr. Spillane served as assistant manager for its control states and duty free divisions and was promoted to director of special accounts, focusing on expanding sales in national accounts. Mr. Spillane received a bachelor of science in business administration from Ramapo College in 1985.
          Matthew F. MacFarlane, our senior vice president and chief financial officer, joined us in December 2003. From October 2001 to July 2003 Mr. MacFarlane served as corporate controller of Fusion Telecommunications International, Inc., an international communications carrier. In November 1984, Mr. MacFarlane joined Prodigy Communications Corporation, an internet service provider, which went public in February 1999. Mr. MacFarlane served as vice president and corporate controller at Prodigy from April 1998 to May 2001. Prior to Prodigy, Mr. MacFarlane worked at KPMG LLP and PriceWaterhouseCoopers International Limited, working primarily in the audit divisions. In addition to being a certified public accountant, Mr. MacFarlane is a certified management accountant and a certified internal auditor. Mr. MacFarlane received a bachelor of science degree from Fordham University in 1975 and a masters of business degree from Pace University in 1979.
          John F. Beaudette has served as a director of our company since January 2004. Since 1995, Mr. Beaudette has been the president of MHW, Ltd. (formerly named Monsieur Henri Wines Ltd.), a national alcoholic beverage importer, distributor and service company. From 1985 to 1994, Mr. Beaudette worked with PepsiCo Inc. and its affiliate company Monsieur Henri Wines in the distribution of Stolichnaya Vodka and other imported wine and spirit brands. During this period, Mr. Beaudette held positions such as director of planning for PepsiCo Wines & Spirits International and vice president of finance and chief financial officer of Monsieur Henri Wines. Mr. Beaudette currently sits on the board of directors of The National Association of Beverage Importers Inc. (NABI) and serves on its executive committee. Mr. Beaudette received a bachelor of science degree in accounting from Villanova University in 1979.
          Robert J. Flanagan has served as a director of our company since January 2004. Since 1989, Mr. Flanagan has served as the executive vice president of Clark Enterprises Inc., a Bethesda, Maryland-based investment holding company and as the manager of CNF Investments LLC, an affiliate of Clark Enterprises Inc. CNF Investments LLC is one of our principal stockholders. Mr. Flanagan oversees the acquisition, management and development of new investment opportunities for Clark and is a member of the board of directors of Martek BioSciences Corporation. Prior to joining Clark, Mr. Flanagan was the treasurer, secretary and member of the board of directors of the Baltimore Orioles, Inc. and began his career in public accounting. Certified as a public accountant in Washington, D. C., Mr. Flanagan received a bachelor of science in business administration from Georgetown University in 1978 and a master of science degree in taxation from the American University School of Business in 1985.
          Philip Frost, M.D. , has served as a director of our company since September 2005. Since 1987, Dr. Frost has served as chairman of the board of directors and chief executive officer of IVAX Corporation, a worldwide producer and marketer of generic and proprietary drugs. He also served as the president of IVAX Corporation from 1991 until 1995. He is a member of the board of directors of IVAX Diagnostics, Inc., Northrop Grumman Corporation, Continucare Corporation and Cellular Technical Services Company, Inc. He is also a director of Ladenburg Thalmann & Co. Inc., an underwriter in this offering and our placement agent in connection with the sale of our Series C convertible preferred stock in 2004 and 2005. He is a member, and former chairman, of the board of trustees of the University of Miami and a co-vice chairman of the board of governors of the American Stock Exchange. Dr. Frost received a bachelor of arts degree from University of Pennsylvania in 1957 and a doctor of medicine degree from Albert Einstein College of Medicine in 1961.

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          Colm Leen has served as a director of our company since January 2004. Mr. Leen also serves as a director of our subsidiaries, Castle Brands Spirits Group Limited and Castle Brands Marketing and Sales Company Limited. Since 1995, Mr. Leen has been the group finance director and company secretary of the Carbery Group, a supplier to our company. The Carbery Group is involved in the dairy, food ingredients and beverage alcohol industries, with established markets in Ireland, the United Kingdom, mainland Europe, the Far East and North America. Mr. Leen has been with the Carbery Group since 1988, initially joining it as company accountant and subsequently assuming the role of its financial controller in 1992 and his present role of group finance director in 1995. Mr. Leen is also the executive director of Carbery Milk Products Limited. Prior to joining Carbery, Mr. Leen worked with KPMG LLP from 1984 to 1988. He qualified as a chartered accountant in 1987, became an associate of the Institute of Chartered Accountants in Ireland in 1987 and a fellow of the Institute in 1997. Mr. Leen received a bachelor of commerce degree from University College Cork in 1984.
          Richard C. Morrison has served as a director of our company since September 2005. Mr. Morrison worked at Massachusetts Mutual Life Insurance Co. from 1964 until his retirement in 2004. Most recently, Mr. Morrison served as the managing director of Babson Capital Management, the investment subsidiary of Massachusetts Mutual. Massachusetts Mutual is a more than 5% stockholder of our company. He also serves as a director of Reinhold Industries, Inc., Cains Foods, L.P., Nyloncraft, Inc., Tubular Textile Machinery, Inc. and is an advisory director of Hammond, Kennedy, Whitney and Co., Inc. Mr. Morrison received a bachelor of arts from West Virginia Wesleyan College in 1962 and a master of science in finance from the University of Arizona in 1964.
          Frederick M. R. Smith has served as a director of our company since January 2004. Mr. Smith also serves as a director of our subsidiary, Gosling-Castle Partners Inc. Since January 2002, Mr. Smith has been a financial consultant through his wholly owned company, Kirkwood Lane Associates LLC. From 1967 to January 2002, he worked at Credit Suisse First Boston, most recently as co-head of Credit Suisse First Boston’s international private equity activities. Mr. Smith currently acts as a consultant to Credit Suisse First Boston. Mr. Smith, an investor in our company, joined Credit Suisse First Boston’s private equity group in 1995 after playing a senior role in Credit Suisse First Boston’s investment banking division and founding its media and telecom group. He has over 30 years of private equity and investment banking experience with Credit Suisse First Boston. Mr. Smith also serves as a director of Unwired Australia, Teleperformance Brazil and Slager Radio Hungary. Mr. Smith received a bachelor of arts degree from Yale University in 1963 and attended Johns Hopkins’ School of Advanced International Studies in Washington, DC.
          Kevin P. Tighe has served as a director of our company since September 2005. Since 1995, Mr. Tighe has been a partner at, and is a founding partner of, the law firm of Tighe Patton Armstrong Teasdale, PLLC. For over 36 years, Mr. Tighe has represented the automobile industry and its trade associations before the U.S. Congress and other federal agencies. He also maintains a real estate practice at the firm. Mr. Tighe received a bachelor of arts degree from St. Angelm’s College in 1966 and received a doctor of jurisprudence from Catholic University School of Law in 1969. Mr. Tighe is a member of the bar of the District of Columbia and the U.S. Supreme Court.
Other key employees and consultants
          Amelia M. Gary, the vice president – finance and administration of our U.S. subsidiary, Castle Brands (USA) Corp., joined us in October 2002. From October 2002 to December 2003, Ms. Gary served as vice president – finance of Great Spirits Company, our predecessor company, and was appointed vice president – finance and administration of Castle Brands (USA) Corp. as of December 2003. Ms. Gary oversees investor relations and human resources and is involved in our capital raising and banking activities. From August 1995 to September 2002, Ms. Gary was with Brown Brothers Harriman & Co., a private bank, most recently as a vice president in the commodities finance division, specializing in coffee, cocoa and tea. Ms. Gary earned a bachelor of arts degree from Connecticut College in 1995.
          E. Malcolm B. Gosling has served as president and chief executive officer of our export venture, Gosling-Castle Partners Inc., since April 2005. Gosling-Castle Partners is owned 60% by us,

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with the remainder owned by Mr. Gosling and Gosling’s Limited in Bermuda. In his capacity as president of our export venture, he oversees the global exports of the Gosling’s rum brands into the United States and various other markets. Since 2003, Mr. Gosling has served as president of Gosling Export (Bermuda) Limited, a Bermuda based company responsible for the production and shipping of Gosling’s rum, and serves as a director of the Bermuda holding company. Since 1989, Mr. Gosling has also served as the vice president and managing director of Gosling Brothers Limited, the parent company of Gosling Export (Bermuda). Mr. Gosling has been active with the family business for over 20 years, and represents the seventh generation of his family to be active in the business. Mr. Gosling received a bachelor of arts degree from Boston College in 1985.
          Thomas O’Connor, the global procurement and logistics manager of one of our Irish subsidiaries, Castle Brands Spirits Group Limited, joined us in December 2003. Mr. O’Connor served as procurement and planning manager at Roaring Water Bay from November 2002 to December 2003. Prior to joining Roaring Water Bay, Mr. O’Connor worked for over 20 years as the sales and production planning manager with The Irish Glass Bottle Company, a manufacturer of high quality containers for the food and drink industry. Mr. O’Connor received a computer programming diploma from Trinity College Dublin in 1983.
          David Phelan currently serves as one of our consultants. Prior to becoming a consultant, Mr. Phelan served as executive vice president and a director of our company from December 2003 to October 2005. In July 1998, Mr. Phelan co-founded Roaring Water Bay Spirits Co. Ltd., where he served as managing director until its merger with us. Mr. Phelan has over 20 years of international commercial and marketing experience in the liquor industry, including working as a director at R&A Bailey in key European and Asian markets, both domestic and duty free. He has also worked on several new brand development projects, including The Dunhill Cognac brand, which was launched in Asia by Diageo/ Grand Met, and the Baileys Whiskey brand. Mr. Phelan received a bachelor of arts degree from Trinity College Dublin in 1983.
          Patrick Rigney currently serves as one of our consultants. Prior to becoming a consultant, Mr. Rigney served as executive vice president and a director of our company from December 2003 to March 2005. In July 1998, Mr. Rigney co-founded Roaring Water Bay, where he served as managing director until its merger with us. Mr. Rigney has over 20 years of international and commercial marketing experience in the liquor industry, including working as a director at R&A Bailey, with responsibility for the Bailey’s Irish cream brand in the Americas, Australia and Asia. Mr. Rigney received a bachelor of commerce degree from the University College Dublin in 1982.
          Roseann Sessa, the vice president – marketing and public relations of our U.S. subsidiary, Castle Brands (USA) Corp., joined us in February 1998. From February 1998 to December 2003, Ms. Sessa served as vice president – marketing of Great Spirits Company, our predecessor company, and was appointed vice president – marketing and public relations of Castle Brands (USA) Corp. in December 2003. Ms. Sessa is responsible for developing and implementing our marketing plans in the United States. Prior to joining us, Ms. Sessa served for eight years as assistant to Mr. Andrews, our chairman, while he was the chairman of American Exploration Corporation. From 1979 to 1990, Ms. Sessa worked at Lane Bryant, a division of The Limited, Inc., a marketer of women’s apparel. Ms. Sessa attended the Berkley Business School in 1974.

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Board composition and committees
          The amended and restated certificate of incorporation and amended and restated bylaws allow the board of directors to set the number of directors by resolution. Currently, our board of directors consists of eight directors. All of our directors will serve until the annual meeting of stockholders to be held in 2006. Our bylaws authorize our board of directors to appoint one or more committees, each consisting of one or more directors. Our board of directors currently has three standing committees: an audit committee, a compensation committee, and a nominating/corporate governance committee, the composition and responsibilities of each of which are described below:
      Nominating and corporate governance committee
The nominating and corporate governance committee is responsible for, among other things:
  •  selecting the slate of nominees of directors to be proposed for election by the stockholders and recommending to the board of directors individuals to be considered by the board of directors to fill vacancies;
 
  •  developing and implementing policies regarding corporate governance matters and recommending any desirable changes to such policies to the board of directors;
 
  •  establishing criteria for selecting new directors; and
 
  •  reviewing and assessing annually the performance of the nominating and corporate governance committee and the adequacy of the nominating and corporate governance committee charter.
          The members of our nominating and corporate governance committee are Messrs. Morrison, Beaudette and Tighe. Mr. Morrison serves as the chairman of this committee.
      Audit committee
The audit committee is responsible for, among other things:
  •  appointing, overseeing and compensating the work of the registered independent public accounting firm;
 
  •  reviewing our quarterly financial statements and earnings releases;
 
  •  pre-approving all auditing services and permissible non-audit services provided by our registered independent public accounting firm;
 
  •  engaging in a dialogue with the registered independent public accounting firm regarding relationships which may impact the independence of the registered independent public accounting firm and being responsible for oversight of the independence of the registered independent public accounting firm;
 
  •  reviewing and approving the audit committee report to be filed with the SEC;
 
  •  reviewing with the outside auditor the adequacy and effectiveness of the internal controls over our financial reporting;
 
  •  establishing procedures for the submission of complaints, including the submission by our employees of anonymous concerns regarding questionable accounting or auditing matters;
 
  •  reviewing with our chief executive officer and chief financial officer any significant deficiencies in the design or operation of our internal controls and any fraud, whether or not material, that involves our management or other employees who have a significant role in our internal controls; and
 
  •  reviewing and assessing annually the adequacy of the audit committee charter.
          The members of our audit committee are Messrs. Flanagan, Leen and Smith. Mr. Flanagan serves as chairman of the committee.

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      Compensation committee
The principal responsibilities of the compensation committee are, among others:
  •  reviewing and determining annually the compensation of our chief executive officer and other executive officers;
 
  •  preparing an annual report on executive compensation for inclusion in our annual proxy statement for each annual meeting of stockholders in accordance with applicable SEC rules and regulations;
 
  •  approving the form of employment contracts, severance arrangements, change in control provisions and other compensatory arrangements with executive officers;
 
  •  approving compensation programs and grants involving the use of our common stock and other equity securities; and
 
  •  reviewing and assessing annually, the compensation committee’s performance and the adequacy of the compensation committee charter.
          The members of our compensation committee are Messrs. Smith, Beaudette and Flanagan. Mr. Smith serves as the chairman of this committee.
Director compensation and other information
          For service on our board of directors, we annually compensate our non-employee directors with options granted under our stock incentive plan. At the end of each fiscal year, we grant each of our non-employee directors options to purchase 5,000 shares of our common stock. In addition, we grant additional options to purchase 1,000 shares of common stock to each non-employee director who serves on a committee. After the consummation of this offering, we intend to pay our non-employee directors $10,000 per year for serving on our board in addition to the stock options referred to above and increase the options granted annually to directors serving on the audit committee from 1,000 to 2,500.
          We also reimburse each non-employee director for travel and related expenses incurred in connection with attendance at board and committee meetings. Employees who also serve as directors receive no additional compensation for their services as a director.

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Executive compensation
          The following table sets forth the total compensation for services in all capacities to us received by our chief executive officer, our other executive officers whose annual salary and bonus exceeded $100,000 during the fiscal year ended March 31, 2005, and a current executive officer who we believe will be one of our four most highly compensated executive officers for the fiscal year ending March 31, 2006. We refer to these individuals as our “named executive officers.”
Summary compensation table
                                         
                Long-term    
                compensation    
             
    Annual compensation   Awards    
             
        Number of    
        securities    
        Other annual   underlying   All other
Name and principal position   Salary   Bonus   compensation   options   compensation
                     
Mark Andrews
  $ 169,998     $ 50,000             50,000     $  
Chairman, President and Chief Executive Officer                                        
 
Keith Bellinger(1)
                             
Executive Vice President, Chief Operating Officer and Secretary                                        
 
T. Kelley Spillane
  $ 150,000     $ 30,000             5,000     $ 1,415 (2)
Senior Vice President, U.S. Sales                                        
 
David Phelan(3)
  $ 152,875                       $ 27,788 (4)
Executive Vice President, International Sales                                        
 
Matthew F. MacFarlane
  $ 147,177     $ 22,500             10,000     $ 2,369 (5)
Senior Vice President and Chief Financial Officer                                        
 
(1) Mr. Bellinger became our chief operating officer on May 2, 2005. His initial annual base salary is $270,000 and he is eligible to receive an annual incentive performance bonus of up to 100% of his annual base salary. Mr. Bellinger currently holds options to purchase a total of 150,000 shares of our common stock.
 
(2) Represents the amounts of life insurance premiums paid by us for the benefit of Mr. Spillane.
 
(3) As of the date of this prospectus, Mr. Phelan is no longer one of our executive officers, and he is engaged as a consultant to our company through March 31, 2007.
 
(4) Represents $15,288 contributed by us to our pension plan on behalf of Mr. Phelan and patent royalty payments to Mr. Phelan in the amount of $12,500.
 
(5) Represents the amounts of life insurance premiums paid by us for the benefit of Mr. MacFarlane.

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Option grants
          The following table sets forth certain information with respect to stock options we granted during the fiscal year ended March 31, 2005 to each of the named executive officers:
Option grants in last fiscal year
                                                 
            Potential realizable value
    Individual grants       at assumed annual rates
            of stock price
        Percent of total           appreciation for option
    Number of securities   options granted to   Exercise       (1)
    underlying options   employees in fiscal   price per   Expiration    
Name   granted   year   share (2)   Date   5%   10%
                         
Mark Andrews
    50,000       13.61%     $ 8.00       1/27/15                  
Keith Bellinger (3)
                                       
T. Kelley Spillane
    5,000       1.36%     $ 8.00       1/27/15                  
David Phelan
                                       
Matthew F. MacFarlane
    10,000       2.72%     $ 8.00       1/27/15                  
 
(1) Potential gains are net of the exercise price, but before taxes associated with the exercise. Amounts represent hypothetical gains that could be achieved for the respective options if exercised at the end of the option term. The potential realizable value assumes that the stock price appreciates from the midpoint of the proposed range of the initial public offering price of $           per share. The assumed 5% and 10% rates of stock price appreciation are provided in accordance with the rules of the SEC and do not represent our estimate or projection of the future price of our common stock. Actual gains, if any, on stock option exercises will depend upon the future market prices of our common stock.
 
(2) The exercise prices of all stock options granted were at prices believed by our board of directors to be equal to the fair market value of our common stock on the date of grant.
 
(3) Mr. Bellinger became our chief operating officer on May 2, 2005. On that date, Mr. Bellinger received options to purchase a total of 150,000 shares of our common stock at an exercise price per share of $8.00. The option vests at the rate of 25% per year commencing in May 2006 and expires on May 2, 2015.
Option values and holdings
          The following table describes, for each of the named executive officers, the exercisable and unexercisable options held by them as of March 31, 2005. The “Value of unexercised in-the-money options at fiscal year-end” shown in the table represents an amount equal to the difference between the midpoint of the proposed range of the initial public offering price of $            per share and the option exercise price multiplied by the number of unexercised in-the-money options.
Fiscal year-end option values
                                                 
            Number of shares   Value of unexercised
            underlying unexercised   in-the-money options
            options at fiscal year-end   at fiscal year-end
    Shares            
    acquired on            
Name   exercise   Value realized   Exercisable   Unexercisable   Exercisable   Unexercisable
                         
Mark Andrews
                10,000       90,000                  
Keith Bellinger (1)
                                       
T. Kelley Spillane
                15,000       50,000                  
David Phelan
                8,000       32,000                  
Matthew F. MacFarlane
                12,500       47,500                  
 
(1) Mr. Bellinger became our chief operating officer on May 2, 2005. On that date, Mr. Bellinger received options to purchase a total of 150,000 shares of our common stock at an exercise price per share of $8.00, which vest at the rate of 25% per year, commencing May 2006. As of the date hereof, Mr. Bellinger has not exercised any of his options.

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Agreements with named executive officers
          Agreement with Mark Andrews. On December 1, 2003, we entered into a five-year employment agreement with Mark Andrews, our chairman of the board, president and chief executive officer. The employment agreement, as amended effective as of May 2005, provides for a current annual base salary of $275,000, with increases based on periodic reviews in the sole discretion of the compensation committee of our board of directors.
          The employment agreement prohibits Mr. Andrews from competing with us during the term of the employment agreement and for 12 months thereafter; provided that we continue to pay Mr. Andrews’ salary during that period. The employment agreement also prohibits Mr. Andrews from, for the term of the agreement and for 12 months thereafter, soliciting our customers to divert their business away from us or soliciting our employees to leave their employment with us or soliciting individuals who were our employees during the year prior to Mr. Andrews’ termination.
          The employment agreement also granted Mr. Andrews an option to purchase 50,000 shares of our common stock exercisable at $6.00 per share. This stock option is subject to the provisions of our stock incentive plan and a stock option agreement between us and Mr. Andrews. Mr. Andrews’ stock option vests in 20% installments annually over the term of his employment agreement. If Mr. Andrews is terminated without cause or if Mr. Andrews terminates his employment with us for “good reason,” including the termination of employment by Mr. Andrews within 30 days of certain events, including a material diminution in his duties or a material breach by us of the employment agreement, he may exercise any vested stock options within 90 days of termination and for a period of 90 days after the expiration of the 12 month non-compete provision. In addition, any unvested stock options that would have vested within 12 months of the date of his termination will become vested at the end of the 12 month period and will be exercisable for a period of 90 days following the 12 month period.
          Mr. Andrews is entitled to 12-months salary if his employment is terminated by us without cause or if Mr. Andrews terminates his employment with us for good reason. Mr. Andrews may terminate his employment for any reason upon 60 days’ notice to us. We may terminate Mr. Andrews at any time for “cause” such as personal dishonesty, willful misconduct, breach of fiduciary duty or failure to substantially perform his duties (other than due to disability) or any willful violation of any law or material breach of any provision of the employment agreement. No payments, other than payments for salary already earned as of the date of termination will be payable to Mr. Andrews upon termination by us for cause or by Mr. Andrews for no reason.
          If Mr. Andrews’ employment is terminated following a change of control (as described below), he is entitled to his base salary then in effect for a period of 24 months following termination. In addition, provided Mr. Andrews complies with the non-compete and non-solicit provisions, all of his unvested stock options will vest and will be exercisable for 90 days after such termination and for 90 days following the expiration of the 12-month non-compete provision. Under the employment agreement, a “change of control” occurs if (1) 35% or more of our capital stock is acquired by any person other than us, (2) there is a merger or other change in corporate structure after which 49% or more of our capital stock is no longer held by the stockholders who held such shares prior to the change of control or (3) 20% or more of the members of our board elected by stockholders are persons who were not nominated in the then most recent proxy statement of our company.
          Agreement with T. Kelley Spillane. On December 1, 2003, we entered into a five-year employment agreement with T. Kelley Spillane, our senior vice president — U.S. sales. The employment agreement, as amended effective as of July 2005, provides for a current annual base salary of $175,000, with increases based on periodic reviews in the sole discretion of the compensation committee of our board of directors.
          The employment agreement otherwise contains the same terms as Mr. Andrews’ employment agreement, except that Mr. Spillane was granted an option to purchase 60,000 shares of our common

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stock, rather than 50,000 shares. In addition, Mr. Spillane’s stock option vests in 25% installments over four years, rather than 20% installments over 5 years.
          Agreement with Keith Bellinger. On May 2, 2005, we entered into an employment agreement with Keith Bellinger, our executive vice president, chief operating officer and secretary. Pursuant to the employment agreement, Mr. Bellinger’s employment continues until terminated by him or by us. The employment agreement provides for a current annual base salary of $270,000, with increases in the sole discretion of our board of directors. An increase in Mr. Bellinger’s base salary to $300,000 will be considered by the compensation committee of our board of directors in January 2006, based on targeted achievements to be decided upon by Mr. Bellinger and our chairman and chief executive officer. The employment agreement also includes incentive performance bonuses of up to 100% of the base salary based upon performance targets agreed upon by Mr. Bellinger and our chairman and chief executive officer. The employment agreement also provides certain benefits, including a $900 per month car allowance. For 2005, if the performance goals are met, the first $100,000 of incentive bonus is to be paid in January 2006, and the balance, if any, of the bonus shall be paid following March 31, 2006. Bonuses paid for all other years shall be payable after the end of our fiscal year.
          The employment agreement also granted Mr. Bellinger an option to purchase 150,000 shares of our common stock exercisable at $8.00 per share. These stock options are subject to the provisions of our stock incentive plan and a stock option agreement between us and Mr. Bellinger. Mr. Bellinger’s stock options vest in equal annual installments over a four year period.
          The employment agreement prohibits Mr. Bellinger from soliciting our customers to divert their business away from us or soliciting our employees to leave their employment with us during his employment for a period of (1) six months following termination of employment if such termination occurs on or before May 2, 2006 or (2) one year following termination of employment if such termination is after May 2, 2006.
          If Mr. Bellinger’s employment is terminated by us without cause, by reason of disability or if Mr. Bellinger resigns with “good reason,” including a material diminution in his duties, a material breach by us of the employment agreement, a significant relocation of Mr. Bellinger’s principal work location, or a change of control (as described below), he is entitled to a continuation of his salary and certain health benefits for one year (six months if termination of his employment occurs prior to May 2, 2006) and his pro rata performance bonus for the year in which his employment terminates. In addition, Mr. Bellinger may terminate his employment for any reason upon 60 days’ notice to us.
          Under the employment agreement, a “change of control” occurs if there is a merger, consolidation or exchange of securities after which a majority of our capital stock is no longer held by the stockholders who held such shares prior to the change of control, or a sale of substantially all of our assets.
          Agreement with Matthew F. MacFarlane. On December 17, 2003, Mr. MacFarlane, our senior vice president and chief financial officer, agreed to a summary of agreement of the terms of his employment with us. Mr. MacFarlane’s annual base salary is $145,000 per year and he is eligible to receive a discretionary annual bonus of up to 25% of his base salary. Mr. MacFarlane received a $10,000 sign-on bonus. In addition, he receives a car allowance and was provided a term life insurance policy in the amount of $500,000.
          Mr. MacFarlane was granted options to purchase 25,000 shares of our common stock exercisable at $6.00 per share. This option is subject to our stock incentive plan and a stock option agreement between us and Mr. MacFarlane. Mr. MacFarlane’s stock option vests in equal annual installments of 25% over a four-year period. The summary of agreement provides that if we are sold or merged and there is a change of control, all of Mr. MacFarlane’s options will become fully vested and, if he does not receive a comparable position with the new company, we will pay him $75,000.

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          Agreement with David Phelan. On August 4, 2005, we entered into a consulting agreement with David Phelan, our former director and executive vice president. The consulting agreement provides that on October 1, 2005 Mr. Phelan will become a consultant for us for a period of eighteen months and resign as a director and executive vice president of our company.
          Mr. Phelan’s consulting agreement provides for our annual payment to him of 157,500 ($190,040) plus value added tax to the extent he is required to pay it, paid monthly. In addition, options held by Mr. Phelan will remain exercisable until December 1, 2008 and, absent a breach by him, he will accrue three years’ vesting at the end of his eighteen month consulting period. Mr. Phelan will also be reimbursed for expenses in accordance with our reimbursement policy, including up to 5,000 ($6,033) in legal fees.
          The consulting agreement contains certain non-compete and non-solicitation provisions. However, after March 31, 2006, Mr. Phelan may request that we allow him to engage in such activities. If we refuse, Mr. Phelan is no longer subject to such restrictions and we must pay him his consulting fee for the rest of the consulting period, or at his option, a lump sum equal to 10,417 ($12,569) plus value added tax, if applicable, times the number of months left in the consulting period.
          Royalty payments paid by us under the license agreement between us and The Roaring Water Bay (Research & Development) Company Limited with respect to the Trinity bottle shall continue during Mr. Phelan’s consulting period, but under the consulting agreement we have agreed to purchase his interest in such company on or prior to the termination of the consulting relationship, at which time such royalty payments shall stop.
2003 Stock Incentive Plan
          We maintain the Castle Brands Inc. 2003 Stock Incentive Plan, which was adopted by our board of directors on July 10, 2003, became effective on August 8, 2003, and was amended February 17, 2004 to reflect the name change of our company. We refer to the 2003 Stock Incentive Plan, as amended, as the plan. The following description of the plan is qualified by reference to the full text thereof, a copy of which is filed as an exhibit to the registration statement of which this prospectus is a part. We received stockholder approval of our stock incentive plan on August 8, 2003.
Awards
          The plan provides for the grant of incentive stock options, non-qualified stock options, restricted stock, deferred stock, and stock appreciation rights which may be granted to our employees, officers, directors, consultants and advisers of us or any entity in which we own more than a 50% beneficial interest, except that incentive stock options may be granted only to employees.
Administration
          The plan is administered by our compensation committee or such other committee as our board may designate to administer the plan. Subject to the terms of the plan and applicable law, the committee has the authority to (i) designate plan participants; (ii) determine the type or types of awards to be granted to a participant, (ii) determine the number of shares of our common stock to be covered by, or with respect to which payments, rights or other matters are to be calculated in connection with, awards, (iv) determine the terms and conditions of any awards, including vesting schedules (and whether to accelerate such schedules), performance criteria and how and when such awards may be settled and (v) to interpret the plan and any award made thereunder. The compensation committee’s decision will be final, conclusive and binding with respect to the interpretation and administration of the plan, any award or any award agreement under the plan.
Share reserve
          An aggregate of 2,000,000 shares of common stock are reserved for issuance under the plan. As of September 27, 2005, outstanding options to purchase a total of 878,500 shares of our common

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stock were held by participants under the plan, and 1,121,500 shares remained available for grant. If an outstanding grant is surrendered, canceled or terminated without having been exercised, or a related award is surrendered, canceled or terminated without the award holder having received payment, the related shares shall again be available for grant.
          In the event of any corporate event affecting the shares of our common stock, the committee in its sole discretion may make such adjustments and other substitutions to the plan and awards under the plan as it deems equitable.
Term of the plan
          The plan will terminate in August 2013 unless it is terminated earlier in accordance with the terms of the plan.
Stock options
          The compensation committee may grant both incentive stock options, referred to as ISOs, and non-qualified stock options, referred to as NSOs, under the plan. The exercise price for options is set by the committee, but for ISOs, may not be less than the fair market value (as defined in the plan) of our common stock on the grant date. In the case of an ISO granted to an employee who at the time of such grant is a 10% stockholder, the exercise price cannot be less than 110% of fair market value of a share of our common stock on the grant date. The compensation committee has the discretion to determine the vesting schedule of each option grant. Options previously granted under the plan generally have a vesting schedule which vests 20% of the award on each of the first five anniversaries of the grant date. However, options also have been granted that are immediately exercisable. The term of each option is decided by the committee, however no option may be exercisable beyond ten years from the grant date. Upon the exercise of an option, the option holder must make payment of the full exercise price, either: (i) in cash; (ii) to the extent permitted by law and the compensation committee, in shares of common stock (which have been owned by the participant for at least six months or such other period as determined by the committee); (iii) on such other terms (including a combination of the methods described in (i) and (ii) and conditions as may be acceptable to the compensation committee. The committee may provide that any shares paid for upon exercise of a stock option using restricted or deferred stock will be restricted or deferred in the same manner as the stock so used.
Restricted stock
          The compensation committee may award rights to purchase restricted stock under the plan. Purchasers of restricted stock are subject to restrictions on transfer, which will lapse as long as a vesting requirement is met. Restricted stock may vest over time, or may vest based on the attainment of performance criteria or other factors, as determined by the compensation committee at the time of the grant. If permitted by the committee, holders of restricted stock may exercise full voting rights with respect to the restricted stock. The committee may provide that dividends will be paid to a participant holding restricted stock. If dividends on restricted stock are received in stock, they may be subject to the same restrictions as the restricted stock to which they relate.
Deferred stock
          The committee may make an award of deferred stock under the plan, and determine the terms and conditions of such award. A deferred stock award is a grant of a right to received our common stock in the future, if the grant conditions, which may depend on performance goals or other criteria as determined by the committee, are met. Once the deferral period ends (provided applicable criteria have been met), the participant can receive the award in shares of stock, in cash equal to the fair market value of the deferred stock or a combination of shares and cash, as determined by the committee.

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Stock appreciation rights
          The committee may grant stock appreciation rights (SARs) either in tandem with a stock option or independent of a stock option under the plan. Upon the exercise of an SAR, the holder will receive cash, shares of our common stock or a combination thereof as determined by the committee equal to the value excess of the fair market value of one share of our common stock on the date of exercise over the exercise price per share of the SAR, which exercise price is set by the committee when it makes the award. The compensation committee will determine the terms and conditions of SARs at the time of grant.
Transferability of options and stock purchase rights
          The plan generally does not allow for the transfer of awards granted under the plan and only the grantee may exercise option rights or rights to purchase shares granted under the plan during his or her lifetime. The plan does not impose any restrictions on transferability of common stock issued under the plan other than restricted stock pending lapse of restrictions.
Change in control
          The plan provides that, unless otherwise provided at the time of grant by the committee (or by amendment of a grant), in the event of a change of control of us or the publication or dissemination of an announcement of an action intended to result in a change in control of us with respect to individuals in service at the time of the change in control:
  •  all outstanding stock options and SARs will become immediately vested and fully exercisable; and
 
  •  all restrictions and deferral periods applicable to restricted stock awards and deferred stock awards shall lapse and will be fully vested.
          For these purposes, a change in control includes the following events
  •  the reorganization, merger, consolidation of our company through which our stock is exchanged or converted into cash or property or securities not issued by us;
 
  •  the sale or disposition of all or substantially all of our property or assets or of more than 35% of our voting stock to any person or group, unless such person or group had a 10% beneficial ownership of the stock when this plan was established (with certain limited exceptions); or
 
  •  during any period of two consecutive years, a change in the composition of the majority of the board which is not supported by a 2 / 3 majority of the incumbent directors.
          A change in control does not include an initial public offering of our stock or the temporary holding of our securities by an underwriter pursuant to such offering.
Tax withholding
          Subject to the terms and conditions of the awards as provided by the committee, a participant may irrevocably elect to have the withholding tax obligation with respect to any awards satisfied by (i) having us withhold the amount of shares otherwise deliverable equal to such tax; (ii) deliver to us shares of unrestricted stock equal to such tax or (iii) through any combination described in clause (i) and (ii).
Amendment and termination
          The plan may be amended modified or terminated by our board of directors may at any time, in whole or in part, without the approval of the stockholders except that to the extent such approval is required by law, or is otherwise required for ISOs to continue to be treated as such. Our board of

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directors, however, may not impair the rights of a participant with respect to awards granted prior to such amendment, suspension or termination, without the consent of such participant.
          It is intended that the plan will be amended to the extent deemed necessary or appropriate to comply with Internal Revenue Code Section 409A and the rules, regulations and guidance thereunder.
Pension Plan
          We maintain a group defined contribution arrangement which provides retirement benefits for employees who are located in Ireland. Eleven employees currently participate in this pension program. Under the pension program, we contribute a percentage of the participating employee’s salary to the program. All contributions, including our contributions, made to the program are immediately vested. All contributions made to the program are held in trust and we have appointed trustees to manage the funds. Total monthly premiums for the program for the 2005 plan year equal 4,719 ($5,694), 3,625 ($4,374) of which represent our contributions. Benefits under the program are payable upon the participant’s attaining the normal retirement age; early retirement or retirement due to ill health, or upon the death of the participant prior to retirement.
          With respect to Mr. Phelan, each year we contributed to the program an amount equal to 10% of his base salary and he contributed 5% of his base salary as an employee contribution. In addition to this Mr. Phelan is making further additional voluntary contributions of 10.5% of his base salary. The monthly employer additional voluntary contributions for such plan year equals 1,563 ($1,886) and his monthly additional voluntary contributions for such plan year equals 1,094 ($1,320) Mr. Phelan’s normal retirement age under the program is age 60. As of October 1, 2005, Mr. Phelan will become a consultant to us and will no longer be an employee. Pursuant to the rules of the program, only employees and directors may participate in the program and receive and/or make new contributions thereunder. Because Mr. Phelan will be a consultant, he will no longer be eligible to make or receive new contributions under the program. Therefore, after October 1, 2005 we will not be making any further contributions to the program on his behalf, nor will Mr. Phelan be permitted to make any additional contributions on his behalf under the pension program.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
          Since April 1, 2002, there has not been, nor is there any proposed transaction where we were or will be a party in which the amount involved exceeded or will exceed $60,000 and in which any director, executive officer, holder of more than 5% of any class of our voting securities, or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest, other than the employment described in “Management” and the transactions described below. These related party transactions were each negotiated at an arm’s length basis and were on no less favorable terms to us than would have been given to a third party.
Agreement with MHW Ltd.
          Since April 1998, we and our predecessor have had an agreement with MHW Ltd., through which MHW acts as importer of record and distributor for our products in the United States, and provides accounting, inventory, payment, transportation and storage services for us. Mr. Beaudette, one of our directors, is the president and a principal stockholder of MHW and MHW has a 10% ownership interest in our Celtic Crossing brand. For the fiscal years ended March 31, 2003, 2004 and 2005, we incurred fees for services rendered by MHW in the amounts of $61,518, $84,450 and $121,393, respectively.
Agreement with BPW LLC
          In April 2004, we contracted with BPW LLC, for business development services including providing introductions for us to agency brands and assisting us in successfully negotiating agency agreements with targeted brands. BPW is controlled by John Beaudette, one of our directors. The contract provides for a monthly retainer to BPW of $3,500, a bonus payable to BPW in equal quarterly installments upon the finalization of an agency brand agreement based upon estimated annual case sales by us during the first year of operations at the rate of $1.00 per each nine-liter case of volume, less any retainer previously paid, and a commission based upon actual future sales of the agency brand while under our management. This contract is cancelable by either party upon 30 days written notice. For the fiscal year ended March 31, 2005 we paid BPW $41,802.
Agreements with Carbery Group and its affiliates
          Mr. Leen, one of our directors, is the financial director of the Carbery Group, one of our principal stockholders. Since December 1, 2003, we have had a supply agreement with Carbery Milk Products Limited, which is a member of the Carbery Group, pursuant to which it acts as our sole distiller for Boru vodka in Ireland and the supplier of natural flavors for our products. For the fiscal years ended March 31, 2004 and 2005, we purchased approximately 84,572 and 405,359, respectively, (recorded as $105,241 and $510,510, respectively, in our consolidated financial statements for such fiscal years) of goods from Carbery Milk Products. Carbery Milk Products also holds  304,400 ($367,289) principal amount of our 5% euro denominated notes, which were issued to it in connection with our December 2003 acquisition of Roaring Water Bay and will convert into shares of our common stock immediately prior to the closing of this offering. In addition, on December 1, 2004, we repaid subordinated indebtedness to Carbery Milk Products also incurred by us in connection with the Roaring Water Bay acquisition in the amount of  111,102.
Agreements with Ladenburg Thalmann & Co. Inc.
          In November 2004, we entered into a placement agency agreement with Ladenburg Thalmann & Co. Inc., one of the co-managing underwriters of this offering, to act as our placement agent in connection with the offering and sale of our Series C convertible preferred stock. Dr. Frost,

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one of our directors, is a principal stockholder and director of Ladenburg Thalmann. As placement agent for that offering, we paid Ladenburg Thalmann aggregate placement fees of $406,080 and, on various dates from November 2004 to August 2005, issued warrants to Ladenburg Thalmann and its designees exercisable for the purchase of an aggregate of 63,856 shares of our common stock at an exercise price of $8.00 per share. As a co-managing underwriter of this offering, Ladenburg Thalmann will also receive part of the underwriting compensation paid by us in connection with this offering. See “Underwriting.”
Transactions with Knappogue Corp.
          During the fiscal year ended March 31, 2005, we paid rental fees to Knappogue Corp. for the use of Knappogue Castle, located in Clare County, Ireland, for various corporate purposes including meetings and to entertain customers. Knappogue Corp. is one of our principal stockholders and is controlled and owned by Mr. Andrews, our chairman, president and chief executive officer, and members of his family. For the fiscal years ended March 31, 2003, 2004 and 2005, we paid Knappogue Corp. $28,009, $33,000 and $13,000, respectively, in rental fees.
Loans from certain executive officers, directors and stockholders
          On June 9, 2004 our wholly owned subsidiary, Castle Brands (USA) Corp., issued, and we guaranteed, approximately $4.6 million principal amount of senior notes secured by the accounts receivable and inventories of Castle Brands (USA) to 27 investors in a private financing. As issued, these senior notes bore an interest rate of 8% payable semi-annually on November 30 and May 31, and matured on May 31, 2007. Effective August 15, 2005, the terms of these notes were modified, with the consent of the noteholders, to mature on May 31, 2009 in exchange for an interest rate increase to 9%. In addition, each purchaser of senior notes received a warrant to purchase 25 shares of our common stock at an exercise price of $8.00 per share for each $1,000 of senior notes purchased. The following of our directors, executive officers and/or principal stockholders participated in this transaction:
  •  Mr. Andrews, our chairman, president and chief executive officer and one of our principal stockholders, and his wife, Elizabeth Q. Andrews, purchased $250,000 of our senior notes and were issued a warrant to purchase 6,250 shares of our common stock. In addition, their children, Mark Andrews IV and Elizabeth Andrews, each purchased $125,000 of our senior notes and each were issued a warrant to purchase 3,125 shares of our common stock;
 
  •  CNF Investments LLC, one of our principal stockholders, purchased $500,000 of our senior notes and was issued a warrant to purchase 12,500 shares of our common stock. Robert Flanagan, one of our directors, is the manager of CNF Investments LLC. In addition, the Flanagan Family Limited Partnership purchased $100,000 of our senior notes and was issued a warrant to purchase 2,500 shares of our common stock. Mr. Flanagan is the general partner of the Flanagan Family Limited Partnership;
 
  •  Dr. Frost, one of our directors, is the trustee of the Frost Nevada Investment Trust, which purchased $1.0 million of our senior notes and was issued a warrant to purchase 25,000 shares of our common stock;
 
  •  Lafferty Limited, one of our principal stockholders, purchased $500,000 of our senior notes and was issued a warrant to purchase 12,500 shares of our common stock; and

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  •  Matthew MacFarlane, our senior vice president and chief financial officer, purchased $10,000 of our senior notes and was issued a warrant to purchase 250 shares of our common stock.
Options issued to directors and executive officers
          From August 8, 2003 to September 27, 2005, pursuant to our stock incentive plan, we granted to our current directors and executive officers options to purchase an aggregate of 275,000 shares of our common stock with exercise prices ranging from $6.00 to $8.00 per share.
Compensation committee interlocks and insider participation
          None of the members of our compensation committee is, or has been, one of our officers or employees or an officer or employee of any of our subsidiaries. No member of our compensation committee serves as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our board of directors or compensation committee. Mark Andrews, our chairman, president and chief executive officer, is a member of the board of directors of IVAX Corporation and serves on its compensation committee. Dr. Phillip Frost, one of our directors, is the chief executive officer of IVAX.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
          The following table shows information with respect to the beneficial ownership of shares of our common stock by the following persons:
  •  each of our directors;
 
  •  each of our named executive officers (see “Management – Executive compensation”);
 
  •  each person known by us to beneficially own 5% of our common stock; and
 
  •  all of our directors and executive officers as a group.
          Beneficial ownership is determined under the rules of the Securities and Exchange Commission and includes shares of our common stock for which such person has voting or investment power or shares which such person has the right to acquire under existing stock options, warrants or convertible notes within 60 days of September 27, 2005. The same securities may be beneficially owned by more than one person.
          Unless indicated otherwise below, the address for each listed director and officer is Castle Brands Inc., 570 Lexington Avenue, 29th Floor, New York, New York 10022. Except as indicated by footnote, to our knowledge, the persons and entities named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable. In calculating the percentage for each listed person or entity, the number of shares of common stock owned by each listed person or entity includes the shares of common stock underlying options, warrants or convertible notes held by that person or entity that are exercisable within 60 days of September 27, 2005, but excludes shares of common stock underlying options, warrants or convertible notes held by any other person or entity. Percentage of beneficial ownership “before offering” is based on 8,450,493 shares of common stock outstanding as of September 27, 2005 after giving effect to the following issuances that will occur on or prior to the closing of this offering:
  •  the issuance of 4,089,465 shares of common stock upon the conversion of convertible preferred stock;
 
  •  the issuance of 1,120,505 shares of common stock upon conversion of the convertible notes; and
 
  •  the issuance of 136,208 shares of common stock in payment of accrued dividends on our preferred stock through the estimated closing date of this offering.
Percentage of beneficial ownership “after offering” is based on 10,950,493 shares of common stock outstanding after giving effect to the issuances described above and the number of shares of common stock to be issued in this offering.
                           
    Shares of   Percentage beneficially owned
    common stock    
Name and address of   beneficially   Before   After
beneficial owner   owned   offering   offering
             
Mark Andrews (1)
    1,214,012       14.3%       11.1%  
Knappogue Corp. 
    1,183,699       14.0%       10.8%  
Mellon HBV SPV LLC (2)
                       
  200 Park Avenue, Suite 3300                        
  New York, NY 10166     1,321,429       15.6%       12.1%  
Black River Global Credit Fund Ltd. (3)
                       
  623 Fifth Avenue, 27th Floor                        
  New York, NY 10022     660,714       7.8%       6.0%  

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    Shares of   Percentage beneficially owned
    common stock    
Name and address of   beneficially   Before   After
beneficial owner   owned   offering   offering
             
Lafferty Limited (4)
                       
    c/o Mr. Warren Roiter                        
    Roiter Zucker                        
    5-7 Broadhurst Gardens                        
    Swiss Cottage                        
    London NW6 3RZ, England     678,334       8.0%       6.2%  
CNF Investments (5)
                       
    c/o Clark Enterprises, Inc.                        
    7500 Old Georgetown Road                        
    15th Floor                        
    Bethesda, MD 20814     631,639       7.5%       5.8%  
Massachusetts Mutual Life Ins. Company
                       
    1295 State Street                        
    Springfield, MA 10111     500,000       5.9%       4.6%  
Carbery Milk Products Limited
                       
    Ballineen Co. Cork, Ireland      541,975       6.4%       5.0%  
Keith A. Bellinger (6)
    14,062              
Matthew F. MacFarlane (7)
    15,250              
David Phelan (8)
    325,885       3.9%       3.0%  
T. Kelley Spillane (9)
    12,000              
John Beaudette (10)
    19,199              
Robert J. Flanagan (11)
    648,139       7.6%       5.9% *
Phillip Frost, MD (12)
    520,603       6.1%       4.7%  
Colm Leen (13)
    12,000              
Richard C. Morrison
    —        —        —   
Frederick M. R. Smith (14)
    45,397              
Kevin P. Tighe
    125,000       1.5%       1.1%  
All directors and executive officers as
                       
 
a group (11 persons) (15)
    2,594,489       30.2%       23.4%  
 
Less than one percent
(1) Includes 1,183,699 shares held by Knappogue Corp. Knappogue Corp is controlled by Mr. Andrews and his family. Mr. Andrews disclaims beneficial ownership of these shares, except to the extent of his pecuniary interest. Also includes 10,000 shares of common stock issuable upon exercise of options exercisable within 60 days as of September 27, 2005; 12,500 shares held jointly by Mr. Andrews’ with his wife and 6,250 shares issuable upon exercise of warrants held jointly by Mr. Andrews with his wife that are exercisable within 60 days as of September 27, 2005. Does not include 90,000 shares of common stock underlying options that are not exercisable within 60 days as of September 27, 2005.
 
(2) Includes 750,000 shares of common stock issuable upon conversion of $6.0 million principal amount of our 6% convertible notes that are convertible within 60 days of September 27, 2005.
 
(3) Includes 375,000 shares of common stock issuable upon conversion of $3.0 million principal amount of our 6% convertible notes that are convertible within 60 days of September 27, 2005.

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(4) Includes 12,500 shares of common stock issuable upon exercise of warrants exercisable within 60 days as of September 27, 2005.
 
(5) Includes 12,500 shares of common stock issuable upon exercise of warrants exercisable within 60 days as of September 27, 2005.
 
(6) Does not include 150,000 shares of common stock underlying options that are not exercisable within 60 days of September 27, 2005.
 
(7) Includes 2,500 shares of common stock held jointly by Mr. MacFarlane and his wife. Also includes 12,500 shares of common stock issuable upon exercise of options exercisable with 60 days of September 27, 2005 and 250 shares of common stock issuable upon exercise of warrants exercisable within 60 days as of September 27, 2005. Does not include 47,500 shares of common stock underlying options that are not exercisable within 60 days as of September 27, 2005.
 
(8) Includes 4,800 shares of common stock issuable upon exercise of options exercisable within 60 days as of September 27, 2005. Does not include 19,200 shares of common stock, underlying options that are not exercisable within 60 days as of September 27, 2005.
 
(9) Includes 15,000 shares of common stock issuable upon exercise of options exercisable within 60 days as of September 27, 2005. Does not include 63,000 shares of common stock underlying options that are not exercisable within 60 days as of September 27, 2005.
(10) Includes 7,199 shares held by BPW LLC, an entity of which Mr. Beaudette is a principal stockholder. Mr. Beaudette disclaims beneficial ownership of these shares except to the extent of his pecuniary interest. Also includes 12,000 shares of common stock issuable upon exercise of options exercisable within 60 days as of September 27, 2005.
 
(11) Includes 14,000 shares of common stock issuable upon exercise of options exercisable within 60 days as of September 27, 2005. Also includes 2,500 shares of common stock issuable upon exercise of warrants exercisable within 60 days as of September 27, 2005 that are held by the Flanagan Family Limited Partnership, an entity of which Mr. Flanagan is the general partner. Mr. Flanagan disclaims beneficial ownership of these shares except to the extent of his pecuniary interest. Also includes 619,139 shares held by CNF Investments LLC and 12,500 shares of common stock issuable upon exercise of warrants held by CNF Investments LLC that are exercisable within 60 days as of September 27, 2005. Mr. Flanagan is a manager of CNF Investments LLC. Mr. Flanagan disclaims beneficial ownership of these shares except to the extent of his pecuniary interest.
 
(12) Includes 25,000 shares of common stock issuable upon exercise of warrants exercisable within 60 days as of September 27, 2005 that are held by the Frost Nevada Investment Trust, an entity of which Dr. Frost is the trustee. Dr. Frost disclaims beneficial ownership of these shares except to the extent of his pecuniary interest.
 
(13) Includes 12,000 shares of common stock issuable upon exercise of options exercisable within 60 days of September 27, 2005.
 
(14) Includes 12,000 shares of common stock issuable upon exercise of options exercisable within 60 days of September 27, 2005.
 
(15) Includes 89,300 shares of common stock issuable upon exercise of options, and 46,500 shares of common stock issuable upon exercise of warrants, exercisable within 60 days of September 27, 2005. Does not include 369,700 shares of common stock underlying options that are not exercisable within 60 days of September 27, 2005.

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DESCRIPTION OF SECURITIES
          Our certificate of incorporation and bylaws will be amended and restated on or prior to the closing of this offering. As a result, upon the consummation of this offering, we will be authorized to issue 45,000,000 shares of common stock, $.01 par value, and 5,000,000 shares of undesignated preferred stock, $.01 par value. As of the date of this prospectus, we have 3,106,666 shares of common stock outstanding and 4,089,465 shares of preferred stock outstanding. Upon the consummation of this offering all of our preferred stock and certain of our convertible notes will be converted into common stock and we will issue shares of common stock in payment of all of our accrued and unpaid dividends and, following such conversion and payment of dividends, we will have 8,450,493 shares of common stock outstanding, not including the 2,500,000 shares offered hereby, held of record by 188 stockholders, and no shares of preferred stock outstanding. The following description of our capital stock is intended to be a summary and does not describe all provisions of our amended and restated certificate of incorporation or our amended and restated bylaws or those of the Delaware General Corporation Law, referred to as Delaware law, applicable to us. Throughout this “Description of Securities,” references to our certificate of incorporation and bylaws mean the amended and restated certificate of incorporation and amended and restated by laws, respectively. For a more thorough understanding of the terms of our capital stock, you should refer to our amended and restated certificate of incorporation and amended and restated bylaws, which will be effective upon the closing of this offering, forms of which are included as exhibits to the registration statement of which this prospectus forms a part.
Common stock
          The holders of our common stock are entitled to one vote per share on all matters to be voted upon by stockholders. There is no cumulative voting. Subject to preferences that may be applicable to any outstanding preferred stock, holders of our common stock are entitled to receive ratably such dividends as may be declared by our board of directors out of funds legally available for that purpose. In the event of our liquidation, dissolution or winding up, the holders of our common stock are entitled to share ratably in all assets remaining after payment of liabilities and the liquidation preferences of any outstanding preferred stock. Holders of our common stock have no preemptive or conversion rights or other subscription rights and our common stock has no redemption or sinking fund provisions.
Preferred stock
          Our certificate of incorporation authorizes our board of directors, without any vote or action by the holders of our common stock, to issue preferred stock from time to time in one or more series. Our board of directors is authorized to determine the number of shares and to fix the voting powers, if any, designations, powers and preferences and the relative, participating, optional or other special rights, if any, and the qualifications, limitations or restrictions of any series of preferred stock. Issuances of preferred stock will be subject to the applicable rules of the American Stock Exchange or other organizations on which our securities are then quoted or listed. Depending upon the terms of preferred stock established by our board of directors, any or all series of preferred stock could have preference over our common stock with respect to dividends and other distributions and upon our liquidation. If any shares of preferred stock are issued with voting powers, the voting power of the outstanding common stock would be diluted.
6% convertible notes
          On March 1, 2005, we entered into a convertible note purchase agreement with an institutional investor, whereby we agreed to issue up to $10.0 million principal amount of notes convertible into our common stock at a conversion price of $8.00 per share. We issued two notes each in the amount of $5.0 million to the institutional investor on March 1, 2005 and June 27, 2005. On August 16, 2005, we amended and restated the convertible note purchase agreement to (a) increase the amount of loans under such agreement to $15 million and (b) provide for 40% of the outstanding principal amount of

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the notes to convert automatically into common stock upon an initial public offering of our common stock at a conversion price of $7.00 per share. Upon the consummation of this offering and the conversion of $6.0 million principal amount of our 6% convertible notes, we will have $9.0 million principal amount of our 6% convertible notes outstanding. They bear interest at the rate of 6% per annum, payable quarterly, at our option, in cash or in additional notes bearing an interest rate of 7.5% per annum. We may not prepay our 6% convertible notes without the consent of the holders.
          The outstanding balance of our 6% convertible notes may be converted into common stock at any time at the option of the holders at a conversion rate of $8.00 per share and will automatically convert at such time as the closing price of our common stock is $20.00 per share or more for thirty consecutive days at any time after March 1, 2008.
          These 6% convertible notes are subject to customary restrictive covenants. In addition, for as long as there is at least $1.5 million aggregate principal amount outstanding under our 6% convertible notes (a) the approval of holders of at least a majority of the aggregate principal amount of the 6% convertible notes outstanding is required before we may pay dividends or make a distribution or payment on our equity securities or redeem or repurchase our equity securities (other than repurchases from employees upon termination of their employment) and (b) the approval of holders of at least seventy percent of the aggregate principal amount of the 6% convertible notes outstanding is required before we may engage in a transaction with an affiliate or incur indebtedness in excess of $30.0 million; provided, however, that the indebtedness covenant will no longer be applicable if the product of our fully diluted securities multiplied by the average of the highest bid and lowest asked prices on the exchange or over-the-counter quotation system on which our common stock is listed is at least $100.0 million for a period of at least 90 days. The limit on indebtedness does not include indebtedness that is incurred in connection with the acquisition of a brand related to, or an entity doing business in or related to, the beverage alcohol market, to the extent such indebtedness (including costs and fees associated with incurring such debt) does not exceed an amount equal to three times the target’s earnings before interest, taxes, depreciation and amortization.
          As long as both holders of our 6% convertible notes hold at least 5% of our capital stock (on an as converted basis), each has the right to have a representative attend the meetings of our board of directors as an observer.
Options
          As of September 27, 2005, we had 878,500 shares of common stock reserved for issuance upon the exercise of outstanding stock options granted under our stock incentive plan, with exercise prices ranging from $6.00 to $8.00 per share, and up to 1,121,500 additional shares of common stock reserved for issuance upon the exercise of options that may be granted under our stock incentive plan in the future. As of September 27, 2005, we also had 10,000 shares of common stock reserved for issuance upon the exercise of non-plan stock options, with an exercise price of $6.00 per share. For a more complete discussion of our stock incentive plan, see “Management — 2003 stock incentive plan.”
Warrants
          As of September 27, 2005, we had outstanding warrants exercisable for the purchase of up to 598,618 shares of common stock at exercise prices ranging from $6.00 to $8.00 per share. As of September 27, 2005 all of these warrants were immediately exercisable.
Registration rights
          The holders of all of the 8,450,493 shares of our common stock that will be outstanding upon the consummation of this offering, not including the 2,500,000 shares offered hereby, as well as the holders of warrants to purchase 598,618 shares of our common stock and the holders of our 6% convertible notes due in 2010, will be entitled to “piggyback” registration rights, which entitle the holder to include the holder’s registrable securities in any registration statement filed by us after the

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closing of this offering under the Securities Act of 1933, as amended, covering the sale of our securities. The “piggyback” registration rights are subject to certain standard limitations, including, in the event the registration statement relates to an underwritten public offering, the right of our underwriters to reduce the number of shares proposed to be registered ratably in view of market conditions. We will bear all expenses (exclusive of all underwriting discounts and commissions) of all piggyback registrations. The piggyback registration rights will terminate, with respect to certain of the foregoing holders, on the later of the second anniversary of the effective date of this registration statement and the date on which the holder is no longer an “affiliate” under Rule 144 of the Securities Act, and, with respect to the other holders, on the second anniversary of the effective date of this registration statement. These registration rights may not be used in connection with the registration of our securities in a Rule 145 transaction or relating solely to employee benefit plans.
          In connection with our Amended and Restated Warrant Agreement with Keltic Financial Partners, LP for the purchase of 100,000 shares of our common stock, we have agreed that if on June 1, 2007 or June 1, 2008 (a) there are shares of common stock received or issuable upon the exercise of the warrant that have not been registered and (b) we have not filed a registration statement with respect to which Keltic had the opportunity to register such unregistered shares, we will pay Keltic $100,000 within ten (10) days of such date.
Anti-takeover considerations
          General
          Our certificate of incorporation, our bylaws and the Delaware law contain provisions that could delay or make more difficult an acquisition of control of our company not approved by our board of directors, whether by means of a tender offer, open market purchases, a proxy contest or otherwise. These provisions have been implemented to enable us, particularly, but not exclusively, in the initial years of our existence as a publicly owned company, to develop our business in a manner that will foster our long-term growth without disruption caused by the threat of a takeover not deemed by our board of directors to be in the best interests of our company and our stockholders. These provisions could have the effect of discouraging third parties from making proposals involving an acquisition or change of control of our company even if such a proposal, if made, might be considered desirable by a majority of our stockholders. These provisions may also have the effect of making it more difficult for third parties to cause the replacement of our current management without the concurrence of our board of directors.
          Set forth below is a description of the provisions contained in our certificate of incorporation and bylaws and the Delaware law that could impede or delay an acquisition of control of our company that our board of directors has not approved. This description is intended as a summary only and is qualified in its entirety by reference to our certificate of incorporation and bylaws, forms of each of which are included as exhibits to the registration statement of which this prospectus forms a part, as well as the Delaware law.
          Authorized but unissued preferred stock
          Our certificate of incorporation authorizes our board of directors to issue one or more series of preferred stock and to determine, with respect to any series of preferred stock, the terms and rights of such series without any vote or action by the holders of our common stock. The existence of authorized but unissued shares of preferred stock may enable our board of directors to render more difficult or discourage an attempt to obtain control of our company by means of a proxy contest, tender offer or other extraordinary transaction. Any issuance of preferred stock with voting and conversion rights may adversely affect the voting power of the holders of our common stock, including the loss of voting control to others. The existence of authorized but unissued shares of preferred stock will also enable our board of directors, without stockholder approval, to adopt a “poison pill” takeover defense mechanism. We have no present plans to issue any shares of preferred stock.

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          Number of directors; removal; filling vacancies
          Our certificate of incorporation and bylaws provide that the number of directors shall be fixed only by resolution of our board of directors from time to time. Our bylaws provide that directors may be removed, with or without cause, by stockholders by the affirmative vote of at least a majority of the shares entitled to vote at an annual or a special meeting called for that purpose. Our certificate of incorporation and bylaws provide that vacancies on our board of directors may be filled only by a majority vote of the remaining directors.
          Stockholder action
          Our certificate of incorporation provides that stockholder action may be taken only at an annual or special meeting of stockholders. This provision prohibits stockholder action by written consent in lieu of a meeting. Our bylaws further provide that special meetings of stockholders may be called only by our board of directors, the chairman of our board of directors or our chief executive officer. Stockholders are not permitted to call a special meeting or to require our board of directors to call a special meeting of stockholders.
          The provisions of our certificate of incorporation and bylaws prohibiting stockholder action by written consent may have the effect of delaying consideration of a stockholder proposal until the next annual meeting unless a special meeting is called as provided above. These provisions would also prevent the holders of a majority of the voting power of our stock from unilaterally using the written consent procedure to take stockholder action. Moreover, a stockholder could not force stockholder consideration of a proposal over the opposition of the board of directors by calling a special meeting of stockholders prior to the time our chairman, our board of directors or our chief executive officer believes the consideration to be appropriate.
          Advance notice for stockholder proposals and director nominations
          Our bylaws establish an advance notice procedure for stockholder proposals to be brought before any annual or special meeting of stockholders and for nominations by stockholders of candidates for election as directors at an annual meeting or a special meeting at which directors are to be elected. Subject to any other applicable requirements, including, without limitation, Rule 14a-8 under the Securities Exchange Act of 1934, only such business may be conducted at a meeting of stockholders as has been brought before the meeting by, or at the direction of, our board of directors, or by a stockholder who has given our Secretary timely written notice, in proper form, of the stockholder’s intention to bring that business before the meeting. The chairman of the meeting has the authority to make such determinations. Only persons who are nominated by, or at the direction of, our board of directors, or who are nominated by a stockholder that has given timely written notice, in proper form, to our Secretary prior to a meeting at which directors are to be elected, will be eligible for election as directors.
          Amendments to bylaws
          Our certificate of incorporation provides that only our board of directors has the power to amend or repeal our bylaws.
          Amendments to certificate of incorporation
          Any proposal to amend, alter, change or repeal any provision of our certificate of incorporation requires approval by the affirmative vote of a majority of the voting power of all of the shares of our capital stock entitled to vote on such amendment or repeal, voting together as a single class, at a duly constituted meeting of stockholders called expressly for that purpose.

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          Delaware statutory provisions
          We are subject to the provisions of Section 203 of the Delaware law regulating corporate takeovers. This section prevents Delaware corporations, under certain circumstances, from engaging in a “business combination” with:
  •  a stockholder who owns 15% or more of our outstanding voting stock (otherwise known as an interested stockholder);
 
  •  an affiliate of an interested stockholder; or
 
  •  an associate of an interested stockholder;
for three years following the date that the stockholder became an interested stockholder. A “business combination” includes a merger or sale of more than 10% of our assets.
          However, the above provisions of Section 203 do not apply if:
  •  our board of directors approves the transaction that made the stockholder an interested stockholder, prior to the date of that transaction;
 
  •  after the completion of the transaction that resulted in the stockholder becoming an interested stockholder, that stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, excluding shares owned by our officers and directors; or
 
  •  on or subsequent to the date of the transaction, the business combination is approved by our board of directors and authorized at a meeting of our stockholders by an affirmative vote of at least two-thirds of the outstanding voting stock not owned by the interested stockholder.
          This statute could prohibit or delay mergers or other change in control attempts, and thus may discourage attempts to acquire us.
Limitation of liability and indemnification of officers and directors
          Our certificate of incorporation and bylaws limit the liability of directors to the fullest extent permitted by the Delaware law. In addition, they provide that we will indemnify our directors and officers to the fullest extent permitted by law. In connection with this offering, we are entering into indemnification agreements with our current directors and executive officers and expect to enter into a similar agreement with any new directors or executive officers.
Transfer agent and registrar
          Upon the closing of this offering, the transfer agent and registrar for our common stock will be Continental Stock Transfer & Trust Company, New York, NY.
Listing
          We expect that as of the date of this prospectus our common stock will be approved for quotation on the American Stock Exchange under the symbol “ROX.”

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SHARES ELIGIBLE FOR FUTURE SALE
          Prior to this offering, there has been no public market for our common stock. We cannot predict the effect, if any, that market sales of shares, or the availability of shares for sale, will have on the market price of our common stock prevailing from time to time. Sales of our common stock in the public market after the restrictions described below lapse, or the perception that those sales may occur, could cause the prevailing market price to decline or to be lower than it might be in the absence of those sales or perceptions.
Sale of restricted shares
          Upon completion of this offering, we will have 10,950,493 shares of common stock outstanding, based on the 3,106,666 shares outstanding as of September 27, 2005, the 5,209,970 shares to be issued upon the conversion of our preferred stock and certain of our convertible notes upon the consummation of this offering, the 133,857 shares of our common stock to be issued in payment of accrued and unpaid dividends on our preferred stock and the 2,500,000 shares offered hereby. Of these shares, the shares sold in this offering, plus any shares sold upon exercise of the underwriters’ over-allotment option, will be freely tradable without restriction under the Securities Act, except for any shares purchased by our “affiliates” as that term is defined in Rule 144 under the Securities Act. In general, affiliates include executive officers, directors, and 10% stockholders. Shares purchased by affiliates will remain subject to the resale limitations of Rule 144.
          The other 8,450,493 shares that will be outstanding following this offering are restricted securities within the meaning of Rule 144. Restricted securities may be sold in the public market only if registered or if they qualify for an exemption from registration under Rules 144, 144(k) or 701 promulgated under the Securities Act, which are summarized below.
          Taking into account the lock-up agreements described below, and assuming Oppenheimer & Co. Inc. does not release shares from these agreements, the following shares will be eligible for sale in the public market at the following times:
  •  beginning on the effective date of the registration statement of which this prospectus forms a part, the shares sold in this offering will be immediately available for sale in the public market; and
 
  •  beginning 180 days after the effective date of the registration statement of which this prospectus forms a part, approximately                        shares will be eligible for sale pursuant to Rule 144(k), none of which are held by affiliates, and approximately                        additional shares held by affiliates will be eligible for sale subject to volume, manner of sale, and other limitations under Rule 144.
Lock-up agreements
          Our directors, executive officers and holders of substantially all of our common stock and derivative securities have entered into lock-up agreements in connection with this offering, generally providing that they will not offer, sell, contract to sell, or grant any option to purchase or otherwise dispose of our common stock or any securities exercisable for or convertible into our common stock owned by them for a period of 180 days after the date of this prospectus without the prior written consent of Oppenheimer & Co. Inc., as representative of the underwriters. Despite possible earlier eligibility for sale under the provisions of Rules 144, 144(k) and 701, shares subject to lock-up agreements will not be salable until these agreements expire or are waived by the representative. These agreements are more fully described in “Underwriting.”
          We have been advised by the representative that it may in its discretion waive the lock-up agreements; however, it has no current intention of releasing any shares subject to a lock-up agreement. The release of any lock-up would be considered on a case-by-case basis. In considering any request to release shares covered by a lock-up agreement, the representative would consider circumstances of

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emergency and hardship. No agreement has been made between the underwriters and us or any of our stockholders pursuant to which the representative will waive the lock-up restrictions.
Rule 144
          In general, under Rule 144 as currently in effect, a person who has beneficially owned restricted securities for at least one year would be entitled to sell within any three-month period a number of shares that does not exceed the greater of the following:
  •  1% of the number of shares of common stock then outstanding; or
 
  •  the average weekly trading volume of the common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale.
          Sales under Rule 144 are also subject to requirements with respect to manner of sale, notice, and the availability of current public information about us.
Rule 144(k)
          Under Rule 144(k), a person who is not deemed to have been one of our affiliates at any time during the three months preceding a sale, and who has beneficially owned the shares proposed to be sold for at least two years, is entitled to sell his or her shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144. Therefore, unless otherwise restricted pursuant to the lock-up agreements or otherwise, those shares may be sold immediately upon the completion of this offering.
Rule 701
          Under Rule 701 as currently in effect, each of our employees, officers, directors and consultants who purchased shares pursuant to a written compensatory plan or contract is eligible to resell these shares 90 days after the effective date of this offering in reliance upon Rule 144, but without compliance with specific restrictions. Rule 701 provides that affiliates may sell their Rule 701 shares under Rule 144 without complying with the holding period requirement and that non-affiliates may sell their shares in reliance on Rule 144 without complying with the holding period, public information, volume limitation or notice provisions of Rule 144.
Form S-8 registration statements
          We intend to file one or more registration statements on Form S-8 under the Securities Act as soon as practicable after the completion of this offering for shares issued upon the exercise of options and shares to be issued under our employee benefit plans. As a result, any options or rights exercised under the stock incentive plan or any other benefit plan after the effectiveness of the registration statements will also be freely tradable in the public market. However, such shares held by affiliates will still be subject to the volume limitation, manner of sale, notice and public information requirements of Rule 144 unless otherwise resalable under Rule 701.
Registration rights
          Beginning six months after the consummation of this offering, holders of the 8,450,493 restricted shares of our common stock, warrants to purchase 598,618 shares of common stock and 6% convertible notes convertible into 1,125,000 shares of our common stock will be entitled to piggyback registration rights with respect to these shares for sale in the public market. See “Description of Securities — registration rights.” Registration of these shares under the Securities Act would result in their becoming freely tradable without restriction under the Securities Act immediately upon effectiveness of the applicable registration statement.

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UNDERWRITING
          We have entered into an underwriting agreement with the underwriters listed below with respect to the shares of our common stock being offered in this offering. In accordance with the terms and conditions contained in the underwriting agreement, we have agreed to sell to each of the listed underwriters, and each of the listed underwriters, for which Oppenheimer & Co. Inc. is acting as representative, have severally, and not jointly, agreed to purchase from us on a firm commitment basis, the number of shares offered in this offering set forth opposite their respective names below:
           
Underwriters   Number of Shares
     
Oppenheimer & Co. Inc. 
       
ThinkEquity Partners LLC
       
Ladenburg Thalmann & Co. Inc.
       
 
       
 
Total
    2,500,000  
       
          A copy of the underwriting agreement has been filed as an exhibit to the registration statement of which this prospectus forms a part.
          We have been advised by the representative that the underwriters propose to offer the shares directly to the public at the public offering price set forth on the cover page of this prospectus. Any shares sold by the underwriters to securities dealers will be sold at the public offering price less a selling concession not in excess of $            per share. The underwriters may allow, and these selected dealers may re-allow, a concession of not more than $            per share to other brokers and dealers.
          The underwriting agreement provides that the underwriters’ obligations to purchase shares are subject to conditions contained in the underwriting agreement. The underwriters are obligated to purchase and pay for all of the shares offered by this prospectus, other than those covered by the over-allotment option described below (unless and until that option is exercised), if any of these shares are purchased.
          No action has been taken by us or the underwriters that would permit a public offering of the shares offered hereby in any jurisdiction where action for that purpose is required. None of our shares included in this offering may be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection with the offer and sales of the shares be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons who receive this prospectus are advised to inform themselves about and to observe any restrictions relating to this offering of our shares and the distribution of this prospectus. This prospectus is neither an offer to sell nor a solicitation of any offer to buy any of the securities included in this offering in any jurisdiction where that would not be permitted or legal.
          The underwriters have advised us that they do not expect sales to discretionary accounts to exceed five percent of the total number of shares offered.

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Underwriting discount and expenses
          The following table summarizes the underwriting discount to be paid to the underwriters by us:
                 
    Total, with no   Total, with full
    over-allotment   over-allotment
         
Underwriting discount to be paid to the underwriters by us for the shares offered
  $       $    
          We have agree to pay to the representative, on behalf of the underwriters, a non-accountable expense allowance equal to $125,000, of which $50,000 has been paid by us as of the date of this prospectus. We have also agreed to pay all expenses in connection with qualifying the shares offered hereby under the laws of the states designated by the underwriters, including expenses of counsel retained for this purpose by the underwriters. We have also agreed to pay the fees of counsel retained by the underwriters for purposes of filing this offering with the NASD, with such fees estimated not to exceed $5,000. We estimate the expenses payable by us for this offering to be $           , including the underwriting discount and the underwriters’ non-accountable expense allowance, or $           if the underwriters’ over-allotment option is exercised in full.
Over-allotment option
          We have granted to the underwriters an option, exercisable not later than 30 days after the date of this prospectus, to purchase up to 375,000 additional shares, identical to the shares offered hereby, at the public offering price, less the underwriting discount, set forth on the cover page of this prospectus. The underwriters may exercise the option solely to cover over-allotments, if any, made in connection with this offering. If any shares are purchased pursuant to the over-allotment option, the underwriters will offer these additional shares on the same terms as those on which the other shares ore being offered hereby. If any shares are purchased pursuant to this over-allotment option, the underwriters will severally purchase shares in approximately the same proportion as set forth in the table above.
Lock-ups
          We have agreed that we will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, or file with the Securities and Exchange Commission a registration statement under the Securities Act relating to, any shares or our common stock or securities convertible into or exchangeable or exercisable for any shares of our common stock, or publicly disclose the intention to make any offer, sale, pledge, disposition or filing, without the prior written consent of the representative of the underwriters, for a period of 180 days after the date of this prospectus. This agreement does not apply to the filing of a registration statement on Form S-8 under the Securities Act to register securities issuable under our existing employee benefit plans, our issuance of common stock upon exercise of an existing option or our granting of awards pursuant to our existing employee benefit plans (subject to the lock-up restrictions described below).
          Our officers, directors and holders of substantially all of our common stock and derivative securities have agreed that they will not, other than as contemplated by this prospectus, offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any shares of our common stock or securities convertible into or exchangeable or exercisable for any shares of our common stock, enter into a transaction that would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of our common stock, whether any of these transactions are to be settled by delivery of our common stock or other securities, in cash or otherwise, or publicly disclose, unless required by law, the intention to make any offer, sale, pledge or disposition, or to enter into any transaction, swap, hedge or other arrangement, without, in each case, the prior written consent of the representative for a period of 180 days after the date of this prospectus. These agreements are subject to several exceptions.

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Reserved share program
          At our request, the underwriters have reserved for sale at the initial public offering price up to 5%, or 125,000, of the shares of our common stock offered in this offering for sale to our directors, officers, employees, business associates and related persons who have expressed an interest in purchasing common stock in the offering. The 125,000 reserved shares will be allocated by us among the participants in the reserved share program in such amounts as we may determined in our sole discretion. Individuals who purchase these shares will be subject to a 45-day lock-up period on such shares. The number of shares available for sale to the general public in the offering will be reduced to the extent these persons purchase the reserved shares. Any reserved shares not so purchased will be offered by the underwriters to the general public on the same terms as the other shares.
Determination of offering price
          Prior to the offering, there has been no public market for our common stock. The initial public offering price of the shares offered hereby will be determined by negotiation among us and the representative of the underwriters. The principal factors to be considered in determining the initial public offering price of the shares will include:
  •  the information set forth in this prospectus and otherwise available to the underwriters;
 
  •  our history and the history of the industry in which we compete;
 
  •  our past and present financial performance and an assessment of our management;
 
  •  estimates of our business potential and earnings prospects;
 
  •  the general condition of the securities market at the time of this offering;
 
  •  the recent market prices of, and demand for, publicly traded common stock of generally comparable companies; and
 
  •  other factors deemed relevant by us and the representative.
Stabilization, short positions and penalty bids
          In connection with this offering, the underwriters may engage in over-allotment, syndicate covering transactions, stabilizing transactions and penalty bids or purchases for the purpose of pegging, fixing or maintaining the price of our common stock, as described below:
  •  over-allotment involves sales by the underwriters of shares of our common stock in excess of the number of shares the underwriters are obligated to purchase, which creates a syndicate short position. The short position may be either a “covered” short position or a “naked short” position. In a covered short position, the number of shares over-allotted by an underwriter is not greater than the number of shares that it may purchase in the over-allotment option. In a naked short position, the number of shares involved is greater than the number of shares in the over-allotment option. An underwriter may close out any short position by either exercising its over-allotment option, in whole or in part, or purchasing shares of our common stock in the open market;
 
  •  syndicate covering transactions involve purchases of shares in the open market after the distribution has been completed in order to cover syndicate short positions. In determining the source of shares needed to close out such short position, the representative of the underwriters will consider, among other things, the price of the shares available for purchase in the open market as compared to the price at which it may purchase the shares through the over-allotment option. If the underwriters sell more shares than could be covered by the over-allotment option, a naked short

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  position, the position can only be closed out by buying such shares in the open market. A naked short position is more likely to be created if the representative is concerned that there could be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering;
 
  •  stabilizing transactions consist of various bids for or purchases of common stock made by the underwriters in the open market prior to the completion of the offering, which stabilizing bids may not exceed a specific maximum; and
 
  •  penalty bids permit the representative to reclaim a selling concession from a syndicate member when the shares originally sold by the syndicate member are purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.

          These syndicate covering transactions, stabilizing transactions and penalty bids may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market prices of our common stock. As a result, the prices of our shares may be higher than the price that might otherwise exist for such shares in the open market. These transactions may be effected on the American Stock Exchange, in the over-the-counter market or otherwise and, if commenced, may be discontinued at any time.
          Neither we nor the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the prices of our common stock. In addition, neither we nor the underwriters make any representation that the underwriters will engage in these stabilizing transactions or that any transaction, once commenced, will not be discontinued without notice.
Indemnification
          We have agreed to indemnify the several underwriters against certain liabilities, including liabilities under the Securities Act, and/or to contribute to payments the underwriters may be required to make with respect to any of these liabilities.
Electronic delivery
          A prospectus in electronic format may be made available on the websites maintained by one or more of the underwriters, or selling group members, if any, participating in this offering and one or more of the underwriters participating in this offering may distribute prospectuses electronically. The representative may agree to allocate a number of shares to underwriters and selling group members for sale to their own online brokerage account holders. Internet distributions will be allocated by the underwriters and selling group members that will make internet distributions on the same basis as other allocations.
Other relations with the underwriters
          Certain of the underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for our company and our affiliates, for which they received or will receive customary fees and expenses.

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LEGAL MATTERS
          The validity of the common stock in this offering will be passed upon for us by Patterson Belknap Webb & Tyler LLP, New York, NY. Certain legal matters in connection with this offering will be passed upon for the underwriters by Blank Rome LLP, New York, NY.
EXPERTS
          The financial statements of Castle Brands Inc. as of March 31, 2004 and 2005, and for each of the fiscal years ending March 31, 2003, 2004 and 2005, as set forth in their report, have been included herein and in the Registration Statement in reliance upon the report of Eisner LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.
          The financial statements of the Castle Brands Spirits Company Limited (formerly known as the Roaring Water Bay Spirits Company Limited) and of The Roaring Water Bay Spirits Company (GB) Limited included in this prospectus and in the Registration Statement have been audited by BDO Simpson Xavier, an independent registered public accounting firm, to the extent and for the periods set forth in their reports appearing elsewhere herein and in the Registration Statement, and are included in reliance upon such reports given upon the authority of said firm as experts in accounting and auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
          We have filed a registration statement on Form S-1 with the Securities and Exchange Commission relating to the common stock offered by this prospectus. This prospectus does not contain all of the information set forth in the registration statement and the exhibits and schedules to the registration statement. Statements contained in this prospectus as to the contents of any contract or other document referred to are not necessarily complete and in each instance we refer you to the copy of the contract or other document filed as an exhibit to the registration statement, each such statement being qualified in all respects by such reference. For further information with respect to our company and the common stock offered by this prospectus, we refer you to the registration statement, exhibits, and schedules.
          Anyone may inspect a copy of the registration statement without charge at the public reference facility maintained by the SEC in Room 1580, 100 F Street, N.E., Washington, D.C. 20549. Copies of all or any part of the registration statement may be obtained from that facility upon payment of the prescribed fees. The public may obtain information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330. The SEC maintains a website at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding registrants that file electronically with the SEC.

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INDEX TO FINANCIAL STATEMENTS
         
    Page
Report of Independent Registered Public Accounting Firm
    F-2  
 
    F-3  
 
    F-4  
 
    F-5  
 
    F-6  
 
    F-7  
 
    F-45  
 
    F-49  
 
    F-50  
 
    F-51  
 
    F-52  
 
    F-70  
 
    F-73  
 
    F-74  
 
    F-75  
 
    F-80  
 
Reconciliation of Castle Brands Spirits Company Limited Financial Statements to U.S. GAAP
    F-81  
 
Reconciliation of the Roaring Water Bay Spirits Company (GB) Limited to U.S. GAAP
    F-83  

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
Castle Brands Inc.
We have audited the accompanying consolidated balance sheets of Castle Brands Inc. and subsidiaries as of March 31, 2004 and 2005, and the related consolidated statements of operations, stockholders’ equity (deficiency) and cash flows for each of the years in the three year period ended March 31, 2005. Our audits also included the financial statement schedule listed at Item 16(b). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements enumerated above present fairly, in all material respects, the consolidated financial position of Castle Brands Inc. and subsidiaries as of March 31, 2004 and 2005, and the consolidated results of their operations and their consolidated cash flows for each of the years in the three year period ended March 31, 2005 in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the related consolidated financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
/s/      Eisner LLP
Eisner LLP
New York, New York
September 9, 2005

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CASTLE BRANDS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
                                   
            Pro Forma
    March 31,       Balance Sheet
        June 30,   June 30, 2005
    2004   2005   2005   (Note 1D)
                 
            (Unaudited)   (Unaudited)
ASSETS
                               
CURRENT ASSETS
                               
 
Cash and cash equivalents
  $ 3,461,441     $ 5,676,398     $ 5,031,442     $ 12,546,535  
 
Accounts receivable - net of allowance for doubtful accounts of $57,772, $80,847 and $92,576
    2,005,258       3,614,816       4,573,728       4,573,728  
 
Due from related parties
          355,161       641,492       641,492  
 
Inventories
    3,696,609       5,496,978       5,430,076       5,430,076  
 
Prepaid expenses and other current assets
    371,372       326,736       663,090       663,090  
                         
 
TOTAL CURRENT ASSETS
    9,534,680       15,470,089       16,339,828       23,854,921  
                         
EQUIPMENT  - net
    258,446       350,139       336,089       336,089  
OTHER ASSETS
                               
 
Intangible assets - net of accumulated amortization of $303,503, $318,698 and $459,478
    6,447,540       14,475,116       14,351,681       14,351,681  
 
Goodwill
    11,305,931       11,756,051       11,759,359       11,759,359  
 
Restricted cash
          387,494       361,993       361,993  
 
Other assets
    212,235       816,120       806,219       806,219  
                         
 
TOTAL ASSETS
  $ 27,758,832     $ 43,255,009     $ 43,955,169       51,470,262  
                         
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)
CURRENT LIABILITIES
                               
 
Current maturities of notes payable and capital leases
  $ 1,335,361     $ 3,032,383     $ 1,965,391     $ 1,965,391  
 
Accounts payable and accrued expenses
    2,866,808       4,682,517       4,963,674       4,963,674  
 
Due to related parties
    347,888       1,610,155       1,248,031       1,248,031  
 
Shareholder loans payable
    197,782       156,865       142,366       142,366  
                         
 
TOTAL CURRENT LIABILITIES
    4,747,839       9,481,920       8,319,462       8,319,462  
                         
LONG TERM LIABILITIES
                               
 
Senior notes payable
          4,561,472       4,570,706       4,570,706  
 
Notes payable, less current maturities and obligations under capital leases
    595,958       6,678,203       11,644,031       10,644,031  
 
Shareholder loans payable
    292,066       157,347       151,640       151,640  
 
Convertible shareholder loans payable
    1,674,171       1,775,627       1,658,773        
 
Preferred stock dividends payable
    319,819       681,280       752,707       752,707  
 
Deferred tax liability
    629,444       2,851,666       2,814,629       2,814,629  
                         
 
TOTAL LIABILITIES
    8,259,297       26,187,515       29,911,948       27,253,175  
                         
REDEEMABLE CONVERTIBLE PREFERRED STOCK
                               
  Redeemable convertible preferred stock Series A, B, C; 4,103,750 shares designated; 2,804,465 shares issued and outstanding at March 31, 2004, 3,741,965 at March 31, 2005 and 3,741,985 at June 30, 2005, liquidation preference of $21,731,285, $29,681,285 and $29,752,713     19,328,630       25,958,964       25,926,018        
                         
COMMITMENTS AND CONTINGENCIES
                               
MINORITY INTERESTS
    2,065       3,330,677       3,201,518       3,201,518  
                         
STOCKHOLDERS’ EQUITY (DEFICIENCY)
                               
 
Common stock, $.01 par value, 20,500,000 shares authorized, 3,106,666 shares issued and outstanding
    31,067       31,067       31,067       85,000  
 
Additional paid in capital
    17,956,680       18,012,645       17,965,084       54,011,035  
 
Accumulated deficiency
    (17,776,961 )     (30,071,286 )     (33,180,489 )     (33,180,489 )
 
Accumulated other comprehensive (loss)/ income
    (41,946 )     (194,573 )     100,023       100,023  
                         
 
TOTAL STOCKHOLDERS’ EQUITY (DEFICIENCY)
    168,840       (12,222,147 )     (15,084,315 )   $ 21,015,569  
                         
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)
  $ 27,758,832     $ 43,255,009     $ 43,955,169     $ 51,470,262  
                         
See accompanying notes to the consolidated financial statements.

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CASTLE BRANDS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
                                           
        Three Months Ended
    Years Ended March 31,   June 30,
         
    2003   2004   2005   2004   2005
                     
                (Unaudited)
Sales, net
  $ 2,419,062     $ 4,826,919     $ 12,617,863     $ 2,163,014     $ 4,498,473  
 
Cost of sales
    1,427,486       3,285,467       8,744,859       1,482,492       2,647,272  
                               
 
Gross profit
    991,576       1,541,452       3,873,004       680,522       1,851,201  
                               
 
Selling expense
    3,348,279       5,397,919       11,568,997       2,977,621       3,225,382  
 
General and administrative expense
    817,837       1,960,374       3,636,626       795,373       1,137,477  
 
Depreciation and amortization
    72,621       173,414       167,086       26,310       182,385  
 
Other (income)/expense, net
    11,065       165,545       (198,755 )     22,999       322,426  
                               
 
Operating loss before interest expense, net, income tax benefit and minority interest
    (3,258,226 )     (6,155,800 )     (11,300,950 )     (3,141,781 )     (3,016,469 )
                               
 
Interest expense, net
    (182,494 )     (303,516 )     (998,096 )     (465,740 )     (258,930 )
 
Income tax benefit
                            37,037  
 
Minority interests
          35,339       4,721       2,065       129,159  
                               
 
Net loss
  $ (3,440,720 )   $ (6,423,977 )   $ (12,294,325 )   $ (3,605,456 )   $ (3,109,203 )
 
Preferred stock dividends
    14,960       557,929       525,605       86,388       71,428  
                               
 
Net loss attributable to common stockholders
  $ (3,455,680 )   $ (6,981,906 )   $ (12,819,930 )   $ (3,691,844 )   $ (3,180,631 )
                               
 
Net loss attributable to common stockholders per common share
                                       
 
Basic
  $ (1.88 )   $ (3.12 )   $ (4.13 )   $ (1.19 )   $ (1.02 )
                               
 
Diluted
  $ (1.88 )   $ (3.12 )   $ (4.13 )   $ (1.19 )   $ (1.02 )
                               
 
Weighted average shares used in computation
                                       
 
Basic
    1,840,602       2,236,739       3,106,666       3,106,666       3,106,666  
                               
 
Diluted
    1,840,602       2,236,739       3,106,666       3,106,666       3,106,666  
                               
See accompanying notes to the consolidated financial statements.

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Table of Contents

CASTLE BRANDS INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders’ Equity (Deficiency)
                                                                   
    Membership               Accumulated   Total
    Interests   Common Stock   Additional       Other   Stockholders’
            Paid in   Accumulated   Comprehensive   Equity
    Shares   Amount   Shares   Amount   Capital   Deficiency   Income/(Loss)   (Deficiency)
                                 
BALANCE, MARCH 31, 2002
    325,000     $ 8,900,000                             $ (7,912,264 )           $ 987,736  
Net loss
                                            (3,440,720 )             (3,440,720 )
Issuance of membership interests, net
    75,000       2,109,040                                               2,109,040  
Conversion of common
shares to Series B preferred
shares
    (40,000 )     (1,086,339 )                                             (1,086,339 )
Accrued preferred dividends
                                  $ (14,960 )                     (14,960 )
                                                 
BALANCE, MARCH 31, 2003
    360,000       9,922,701                       (14,960 )     (11,352,984 )             (1,445,243 )
Comprehensive loss
                                                               
 
Net loss
                                            (6,423,977 )             (6,423,977 )
 
Foreign currency
translation adjustment
                                                  $ (41,946 )     (41,946 )
                                                 
Total comprehensive loss
                                                            (6,465,923 )
                                                 
Value ascribed to warrants issued in
connection with asset based loan
                                    282,295                       282,295  
Exchange of LLC membership
interests for common shares and
1-for-5 stock split
    (360,000 )     (9,922,701 )     1,800,000     $ 18,000       9,904,701                        
Warrants issued
in connection with
business acquisition
                                    9,500                       9,500  
Issuance of common shares in connection
with business acquisition
                    1,306,666       13,067       7,826,933                       7,840,000  
Value ascribed to warrants issued in
connection with redeemable
preferred stock
                                    253,070                       253,070  
Accrued preferred dividends
                                    (304,859 )                     (304,859 )
                                                 
BALANCE, MARCH 31, 2004
                3,106,666       31,067       17,956,680       (17,776,961 )     (41,946 )     168,840  
                                                 
Comprehensive loss
                                                               
 
Net loss
                                            (12,294,325 )             (12,294,325 )
 
Foreign currency translation adjustment
                                                    (152,627 )     (152,627 )
                                                 
Total comprehensive loss
                                                            (12,446,952 )
                                                 
Warrants issued in connection with
senior notes
                                    129,195                       129,195  
Imputed interest on note payable in connection
with acquisition of intangible assets
                                    126,152                       126,152  
Value ascribed to warrants issued in
connection with redeemable
preferred stock
                                    164,144                       164,144  
Acquisition of minority interests
                                    (2,065 )                     (2,065 )
Accrued preferred dividends
                                    (361,461 )                     (361,461 )
                                                 
BALANCES, MARCH 31, 2005
                3,106,666       31,067       18,012,645       (30,071,286 )     (194,573 )     (12,222,147 )
                                                 
Comprehensive loss
                                                               
 
Net loss
                                            (3,109,203 )             (3,109,203 )
 
Foreign currency translation adjustment
                                                    294,596       294,596  
                                                 
Total comprehensive loss
                                                            (2,814,607 )
                                                 
Vesting of stock options as compensation
                                    23,867                       23,867  
Accrued preferred dividends
                                    (71,428 )                     (71,428 )
                                                 
BALANCE, JUNE 30, 2005 (unaudited)
        $       3,106,666     $ 31,067     $ 17,965,084     $ (33,180,489 )   $ 100,023     $ 15,084,315  
                                                 
See accompanying notes to the consolidated financial statements.

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Table of Contents

CASTLE BRANDS INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
                                               
        Three Months Ended
    Years Ended March 31,   June 30,
         
    2003   2004   2005   2004   2005
                     
                (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
                                       
 
Net loss
  $ (3,440,720 )   $ (6,423,977 )   $ (12,294,325 )   $ (3,605,456 )   $ (3,109,203 )
     
Adjustments to reconcile net loss to net cash used in operating activities
                                       
     
Depreciation and amortization
    72,621       173,414       167,086       26,310       182,385  
     
Minority interest in net loss of consolidated subsidiary
          (35,339 )     (4,721 )     (2,065 )     (129,159 )
     
Loss on disposal of fixed assets
          138,249       8,316       37,063       11,816  
     
Write-off of deferred financing costs
    89,796       94,098       387,698       122,224       103,094  
     
Effect of changes in foreign currency rate
          27,706       118,476       (3,247 )     (136,729 )
     
Changes in operations, assets and liabilities, net of effects of business acquisition in 2004
                                       
     
(Increase)/decrease in accounts receivable
    (147,103 )     1,574,553       (1,775,404 )     (356,865 )     (1,030,374 )
     
Increase/(decrease) in due from related parties - GXB
                (355,161 )           (19,423 )
     
(Increase in inventory
    (444,491 )     (25,871 )     (1,569,612 )     (489,974 )     (220,758 )
     
Decrease/(increase) in prepaid expenses and supplies
    11,345       35,416       51,615       (100,904 )     (343,894 )
     
(Increase)/decrease in other assets
    (145,582 )     (85,678 )     (878,568 )     92,722       (25,357 )
     
Increase/(decrease) in accounts payable and accrued expenses
    331,479       (283,330 )     1,705,730       1,313,710       529,795  
     
(Decrease)/increase in due to related parties
          (306,859 )     1,241,179       492,343       (336,042 )
     
Decrease in brand acquisition payable
    (159,911 )     (255,879 )                  
                               
 
Total adjustments
    (391,846 )     1,050,480       (903,366 )     1,131,317       (1,414,646 )
                               
NET CASH USED IN OPERATING ACTIVITIES
    (3,832,566 )     (5,373,497 )     (13,197,691 )     (2,474,139 )     (4,523,849 )
                               
CASH FLOWS FROM INVESTING ACTIVITIES
                                       
 
Acquisition of property and equipment
    (11,439 )     (47,443 )     (165,725 )     (22,460 )     (39,435 )
 
Acquisition of intangible assets
    (9,626 )     (8,269 )     (25,988 )     (7,338 )     (39,168 )
 
Business acquisition - net of cash acquired
          (6,667,105 )     (406,116 )     (426,985 )     (3,308 )
                               
CASH USED IN INVESTING ACTIVITIES
    (21,065 )     (6,722,817 )     (597,829 )     (456,783 )     (81,911 )
                               
CASH FLOWS FROM FINANCING ACTIVITIES
                                       
 
Repayment of notes payable
    (3,190,394 )     (7,596,797 )     (6,694,880 )     (1,101,025 )     (989,180 )
 
Proceeds from notes payable and warrants
    4,070,418       5,556,725       16,288,887       4,052,867       5,000,000  
 
Payments of obligations under capital leases
          (211,706 )     (1,823 )           (1,089 )
 
Increase in restricted cash
                (377,828 )            
 
Issuance of redeemable convertible preferred stock and warrants
    3,249,170       21,500,005       7,500,000              
 
Payments for cost of stock issuance
    (209,546 )     (3,935,228 )     (705,522 )           (36,929 )
                               
NET CASH PROVIDED BY FINANCING ACTIVITIES
    3,919,648       15,312,999       16,008,834       2,951,842       3,972,802  
                               
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
    66,017       3,216,685       2,213,314       20,920       (632,958 )
EFFECTS OF FOREIGN CURRENCY TRANSLATION
          8,868       1,643       (405 )     (11,998 )
CASH AND CASH EQUIVALENTS - BEGINNING
    169,871       235,888       3,461,441       3,461,441       5,676,398  
                               
CASH AND CASH EQUIVALENTS - ENDING
  $ 235,888     $ 3,461,441     $ 5,676,398     $ 3,481,956     $ 5,031,442  
                               
SUPPLEMENTAL DISCLOSURES
                                       
 
Schedule of non-cash investing and financing activities
                                       
   
Acquisition of intangible assets
  $     $     $ (8,051,555 )   $     $  
   
Note payable - intangible assets
  $     $     $ 2,500,000     $     $  
   
Value ascribed to minority interests
  $     $     $ 3,329,333     $     $  
   
Investment in subsidiary
  $     $ (9,824,710 )   $     $     $  
   
Issuance of common stock in business acquisition
  $     $ 7,840,000     $     $     $  
   
Debt issued in business acquisition
  $     $ 1,984,710     $     $     $  
 
Interest paid
  $ 92,700     $ 132,056     $ 343,236     $ 196,729     $ 55,161  
 
Income taxes paid
  $     $     $     $     $  
See accompanying notes to the consolidated financial statements.

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Table of Contents

CASTLE BRANDS INC. AND SUBSIDIARIES
Notes to Financial Statements
 
Fiscal Years Ended March 31, 2003, 2004 and 2005
Unaudited with Respect to June 30, 2004 and 2005
 
NOTE 1 -  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Description of Business and Business Combination  – Castle Brands Inc. (“CBI” or “the Company”) is the successor to Great Spirits Company, LLC, a Delaware limited liability company (“GSC”). The Company was formed in February 1998. In May 2003, Great Spirits Ireland, a wholly owned subsidiary of the Company began operations in Ireland to market the Company’s products internationally. In July 2003, Castle Brands Inc. and Castle Brands (USA) Corp. (“CB-USA”) were formed under the laws of Delaware in contemplation of a pending acquisition. On December 1, 2003, CBI acquired The Roaring Water Bay Spirits Group Limited. and The Roaring Water Bay Spirits Marketing and Sales Company Limited. The acquisition has been accounted for under purchase accounting. Simultaneously, Great Spirits Company, LLC was merged into CB-USA, and the Company issued stock to GSC’s shareholders in exchange for their shares of GSC. Subsequent to the acquisition, The Roaring Water Bay Spirits Group Limited (“RWB”) was renamed Castle Brands Spirits Group Limited (“CB Group”) and The Roaring Water Bay Spirits Marketing and Sales Company Limited was renamed Castle Brands Spirits Marketing and Sales Company Limited (“CB-UK”).
 

The Company has experienced recurring operating losses and negative cash flows from operations and has a stockholders’ equity (deficiency) of $12,222,147 as of March 31, 2005 and $15,099,275 as of June 30, 2005. In June of 2005, the Company raised $5 million from the sale of the second tranche of its convertible notes. In August 2005, the Company raised $2.9 million from the sale of Series C preferred stock and a further $5 million from a sale of convertible notes to a second investor. The Company believes that it will be able to fund its operational cash requirements through a combination of sales of convertible notes and cash on hand through June 30, 2006.
 
B. Principles of Consolidation   - The March 31, 2004 and 2005 consolidated financial statements include the accounts of CBI, its wholly-owned subsidiaries, CB-USA and its wholly-owned foreign subsidiaries, CB Group and CB-UK, and its majority owned Gosling-Castle Partners, Inc. hereafter collectively referred to as the “Company”. The accounts of the subsidiaries have been included as of the date of acquisition. All significant intercompany transactions and balances have been eliminated.
 
C. Unaudited Interim Information  - The consolidated financial statements for the three months ended June 30, 2004 and 2005 are unaudited. The unaudited financial statements have been prepared on the same basis as the audited financial statements and, in the opinion of management, include all adjustments necessary for fair presentation, consisting of normal recurring adjustments. The results for the three months ended June 30, 2005 are not necessarily indicative of the results to be expected for the year ending March 31, 2006, or for any other interim period.
 
D. Pro Forma Balance Sheet (unaudited)  – The Company’s Board of Directors has authorized the filing of a registration statement with the Securities and Exchange Commission to register shares of its common stock in an initial public offering. If the initial public offering closed as presently anticipated in December 2005, all of the redeemable convertible preferred stock along with the related accrued dividends then outstanding would have converted into

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Table of Contents

CASTLE BRANDS INC. AND SUBSIDIARIES
Notes to Financial Statements
 
Fiscal Years Ended March 31, 2003, 2004 and 2005
Unaudited with Respect to June 30, 2004 and 2005
 
NOTE 1 -  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
4,201,709 shares of common stock and the entire principal amount of the 5% Euro denominated convertible notes into 263,362 shares of common stock and $6 million of the $15 million principal amount of the 6% convertible notes into 857,142 shares of common stock. The pro forma balance sheet (unaudited) at June 30, 2005 reflects the conversion of all outstanding redeemable convertible preferred stock and certain convertible notes payable into common stock as if such conversion had occurred at June 30, 2005.
 
E. Organization and Operations   - The Company is principally engaged in the manufacture, marketing and sale of fine spirit brands of vodka, Irish whiskey, rums and liqueurs (the “products”) in the United States, Europe, and the Caribbean.
 
F. Cash and cash equivalents   - The Company considers all highly liquid instruments with a maturity at date of acquisition of three months or less to be cash and cash equivalents.
 
G. Trade accounts receivable  – The Company records trade accounts receivable at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts to reflect any loss anticipated on the trade accounts receivable balances and charged to the provision for doubtful accounts. The Company calculates this allowance based on its history of write-offs, level of past due accounts based on contractual terms of the receivables and its relationships with and economic status of the Company’s customers.
 
H. Revenue Recognition  - Revenue from product sales is recognized when the product is shipped to a customer (generally a distributor or a control state), title and risk of loss has passed to the customer in accordance with the terms of sale (FOB shipping point or FOB destination), and collection is reasonably assured. Revenue is not recognized on shipments to control states until such time as product is sold through to the retail channel.
 
I. Inventories   - Inventories, which consists of distilled spirits, packaging and finished goods, is valued at the lower of cost or market, using the weighted average cost method. The Company assesses the valuation of its inventories and reduces the carrying value of those inventories that are obsolete or in excess of the Company’s forecasted usage to their estimated net realizable value. The Company estimates the net realizable value of such inventories based on analyses and assumptions including, but not limited to, historical usage, future demand and market requirements. Reductions to the carrying value of inventories are recorded in cost of goods sold.
 
J. Equipment   - Equipment consists of office equipment, computers and software, transportation equipment, and furniture and fixtures. When assets are retired or otherwise disposed of, the cost and related depreciation is removed from the accounts, and any resulting gain or loss is recognized in the statement of operations. Equipment is depreciated using the straight-line method over the estimated useful lives of the assets ranging from three to five years.
 
K. Goodwill and other intangible assets . Goodwill represents the excess of purchase price and related costs over the value assigned to the net tangible and identifiable intangible assets of businesses acquired. As of March 31, 2004 and 2005, goodwill and other indefinite lived intangible assets that arose from acquisitions was $11.3 million and $11.8 million, respec-

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Table of Contents

CASTLE BRANDS INC. AND SUBSIDIARIES
Notes to Financial Statements
 
Fiscal Years Ended March 31, 2003, 2004 and 2005
Unaudited with Respect to June 30, 2004 and 2005
 
NOTE 1 -  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
tively. On April 1, 2004, the Company adopted SFAS No. 142, “Goodwill and Other Intangible Assets.” Under SFAS No. 142, goodwill and other intangible assets with indefinite lives are not amortized, but instead are tested for impairment annually, or more frequently if certain circumstances indicate a possible impairment may exist. The Company evaluates the recoverability of goodwill and indefinite lived intangible assets using a two-step impairment test approach at the reporting unit level. In the first step the fair value for the reporting unit is compared to its book value including goodwill. In the case that the fair value of the reporting unit is less than the book value, a second step is performed which compares the implied fair value of the reporting unit’s goodwill to the book value of the goodwill. The fair value for the goodwill is determined based on the difference between the fair value of the reporting unit and the net fair value of the identifiable assets and liabilities of such reporting unit. If the fair value of the goodwill is less than the book value, the difference is recognized as an impairment. SFAS No. 142 also requires that intangible assets with estimable useful lives be amortized over their respective estimated useful lives to the estimated residual values and reviewed for impairment in accordance with SFAS No. 144 (see Note 6). The Company performed its impairment assessment on long-lived assets, including intangible assets and goodwill, in accordance with the methods prescribed above. The Company concluded that no impairment existed during the years ended March 31, 2004 and 2005.
 
L. Foreign Currency Translation   - The functional currency for the Company’s foreign operations is the euro in Ireland and the British pound in the United Kingdom. The translation from the applicable foreign currencies to U.S. dollars is performed for balance sheet accounts using current exchange rates in effect at the balance sheet date and for revenue and expense accounts using a weighted average exchange rate during the period. The resulting translation adjustments are recorded as a component of capital deficit. Gains or losses resulting from foreign currency transactions are included in other income/expenses.
 
M. Fair Value of Financial Instruments  - SFAS No. 107, Disclosures About Fair Value of Financial Instruments , defines the fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties and requires disclosure of the fair value of certain financial instruments. The Company believes that there is no material difference between the fair value and the reported amounts of financial instruments in the balance sheets due to the short term maturity of these instruments, or with respect to the debt, as compared to the current borrowing rates available to the Company.
 
N. Income Taxes   - The Company follows SFAS No. 109, Accounting for Income Taxes. Under the asset and liability method of SFAS No. 109, deferred tax assets and liabilities are
 

recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. A valuation allowance is provided to the extent a deferred tax asset is not considered recoverable.

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Table of Contents

CASTLE BRANDS INC. AND SUBSIDIARIES
Notes to Financial Statements
 
Fiscal Years Ended March 31, 2003, 2004 and 2005
Unaudited with Respect to June 30, 2004 and 2005
 
NOTE 1 -  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
O. Stock Based Awards  - The Company accounts for stock-based compensation for its employees, officers and directors using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees”. Under the intrinsic value method, compensation costs for stock options, if any, are measured as the excess of the Company’s estimated value of the Company’s stock at the date of grant over the amount an employee must pay to acquire the stock. This method, which is permitted by SFAS No. 123 “Accounting for Stock Based Compensation”, has not resulted in employee compensation costs for stock options. The Company accounts for stock-based awards to non-employees using a fair value method in accordance with SFAS No. 123.
 

Disclosure of pro forma net loss, as if all stock options were accounted for at fair value, is required by SFAS No. 123, under which compensation expense is based upon the fair value of each option at the date of grant using the Black-Scholes or a similar option pricing model. Had compensation expense for employee, officer and director options granted been determined based upon the fair value of the options at the grant date, the results would have been as follows as of:
                                   
    For the year then   For the quarter then
    ended   ended
         
    March 31,   March 31,   June 30,   June 30,
    2004   2005   2004   2005
                 
                    Net loss attributable to common                      stockholders, as reported
  $ (6,981,906 )   $ (12,819,930 )   $ (3,691,844 )   $ (3,180,631 )
 
                    Stock-based compensation expense                      determined under fair value method
          (370,068 )            
                         
 
                    Pro forma net loss attributable to common stockholders
  $ (6,981,906 )   $ (13,189,998 )   $ (3,691,844 )   $ (3,180,631 )
                         
 
                    Loss per share:
                               
 
                     Basic and diluted - as reported
  $ (3.12 )   $ (4.13 )   $ (1.19 )   $ (1.02 )
                         
 
                     Basic and diluted - pro forma
  $ (3.12 )   $ (4.25 )   $ (1.19 )   $ (1.02 )
                         

FASB Statement 123 (Revision 2004), “Share-Based Payment,” was issued in December 2004 and is effective as of the beginning of the first interim or annual reporting periods that begin after June 15, 2005. The new statement requires all share-based payments to employees to be recognized in the financial statements based on their fair values on the grant date. Such cost is to be recognized over the period during which an employee is required to provide service in exchange for the award, which is usually the vesting period.

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CASTLE BRANDS INC. AND SUBSIDIARIES
Notes to Financial Statements
 
Fiscal Years Ended March 31, 2003, 2004 and 2005
Unaudited with Respect to June 30, 2004 and 2005
 
NOTE 1 -  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

The pro forma disclosures previously permitted under FAS 123 no longer will be an alternative to financial statement recognition. The Company is required to adopt FAS 123R beginning April 1, 2006. The Company expects that the adoption of FAS 123R will have a material impact on its consolidated results of operations and earnings per share. The Company has not yet determined the method of adoption or the effect of adopting FAS 123R, and it has not determined whether the adoption will result in amounts that are similar to the current pro forma disclosures required under FAS 123. The Company has not yet determined the impact of FAS 123R on its compensation policies or plans, if any.
 

The fair value of the stock options granted is estimated at the grant date using the Black Scholes option pricing model with the following weighted average assumptions: expected dividend yield 0.0%; risk free interest rate 4.4%; expected volatility 25%; and expected life of 7.2 years. The weighted average fair value of options granted in fiscal year 2004 and 2005 and for the three months ended June 30, 2005 was $2.17, $2.69 and $2.17, respectively.
 
P. Research and Development Costs   - The costs of research, development and product improvement are charged to expense as incurred.
 
Q. Advertising  – Advertising costs are expensed when the advertising first appears in its respective medium. Advertising expense, which is included in selling expense, was $720,183, $1,225,056 and $4,032,061, for the years ended March 31, 2003, 2004 and 2005, respectively, and $1,440,183 and $1,068,575 the three months ended June 30, 2004 and 2005, respectively.
 
R. Impairment of Long-Lived Assets  – The Company periodically reviews whether changes have occurred that would require revisions to the carrying amounts of its long-lived assets. When the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount of the asset, an impairment loss is recognized based on the fair value of the asset.
 
S. Use of Estimates  - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates are used when accounting for certain items such as to determine whether any impairment is to be recognized, allowance for doubtful accounts, depreciation, amortization and expense accruals.
NOTE 2 –  BASIC AND DILUTED NET LOSS PER COMMON SHARE

Basic net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed giving effect to all dilutive potential common shares that were outstanding during the period. Diluted potential common shares consist of incremental shares issuable upon exercise of stock options and warrants, contingent conversion of debentures and preferred stock outstanding. In computing diluted net loss per share for fiscal 2005 and 2004, no adjustment has been made to the weighted average outstanding common shares as the

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Table of Contents

CASTLE BRANDS INC. AND SUBSIDIARIES
Notes to Financial Statements
 
Fiscal Years Ended March 31, 2003, 2004 and 2005
Unaudited with Respect to June 30, 2004 and 2005
 
NOTE 2  –  BASIC AND DILUTED NET LOSS PER COMMON SHARE (CONT’D)
assumed exercise of outstanding options and warrants and the assumed conversion of preferred stock and convertible debentures is anti-dilutive.
 

Potential common shares not included in calculating diluted net loss per share are as follows:
                                 
    March 31,   March 31,   June 30,   June 30,
    2004   2005   2004   2005
                 
                   Stock options
    563,000       745,500       594,000       899,500  
                   Stock warrants
    207,118       390,493       295,993       498,618  
                   Convertible debentures
    3,540,180       888,375       263,299       1,513,160  
                   Convertible preferred stock
    4,573,513       3,741,965       2,804,465       3,741,965  
                         
                   Total
    8,883,811       5,766,333       3,957,757       6,653,243  
                         

For the years ended March 31, 2003, the Company had issued 100,000 warrants for membership interests in GSC to a lender.
 

Subsequent to June 30, 2005, the Company issued the following dilutive securities:
 

In July 2005 the Company entered into an agreement with an investor to issue $5,000,000 of convertible notes. These notes can convert into common stock at $8 per share (see Note 15).
 

In July 2005 in connection with the Series C Preferred Stock, the Company granted, to an advisor, warrants to acquire 100,000 shares of the Company’s common stock with an exercise price of $8.00. The Warrants are subject to anti-dilution provisions, vested immediately and are exercisable through December 31, 2009.
NOTE 3 -  INVENTORIES
                             
    March 31,    
        June 30,
    2004   2005   2005
             
                   Inventories consist of:
                       
 
                    Raw materials
  $ 903,320     $ 1,154,942     $ 1,600,631  
 
                    Finished goods
    2,793,289       4,342,036       3,829,445  
                   
   
                      Total
  $ 3,696,609     $ 5,496,978     $ 5,430,076  
                   

Inventories are stated at the lower of average cost or market. The Company assesses the valuation of its inventories and reduces the carrying value of those inventories that are obsolete or in excess of the Company’s forecasted usage to their estimated net realizable value. The Company estimates the net realizable value of such inventories based on analyses and assumptions including, but not limited to, historical usage, future demand and market requirements. Reductions to the carrying value of inventories are recorded in cost of goods sold.

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Table of Contents

CASTLE BRANDS INC. AND SUBSIDIARIES
Notes to Financial Statements
 
Fiscal Years Ended March 31, 2003, 2004 and 2005
Unaudited with Respect to June 30, 2004 and 2005
 
NOTE 4 -  INVESTMENTS AND ACQUISITIONS

Investment in Gosling-Castle Partners Inc.
 

In February 2005, the Company entered into a stock subscription agreement for 60% of the stock of Gosling Partners Inc., whose name was subsequently changed to Gosling-Castle Partners Inc. (“GCP”). GCP had no operations prior to the Company entering into the stock subscription agreement. The original shareholders of GCP were E. Malcolm Gosling and Gosling’s Limited and after the Company’s purchase, ownership interests of the three parties in the venture were 60%, 20% and 20%, respectively. CB-USA had previously entered into an exclusive distribution agreement with Gosling’s Export (Bermuda) Limited (“GXB”) to distribute Gosling’s rum in the United States. Gosling Partners Inc. had originally been formed to acquire, and had acquired prior to the Company’s investment in GCP, the following:
           •   global distribution rights (excluding Bermuda) to the Gosling’s portfolio of products;
 
           •   appointment as the exclusive authorized global exporter for the GXB product line;
 
           •   an exclusive license for the use of GXB’s global trademarks for its brand portfolio;

The Company agreed to pay GCP $5,000,000 for its 60% interest in the joint venture: $100,000 in cash and issuance of a promissory note of $4,900,000 to GCP for the balance owed. This promissory note is payable in five installments as follows:
  $1,025,000 on April 1, 2005
  $1,125,000 on October 1, 2005
  $1,000,000 on April 1, 2006
  $1,000,000 on October 1, 2006; and
  $750,000 on April 1, 2007

Effective with the payment of the second installment on October 1, 2005, this promissory note accrues interest on the unpaid principal amount at the rate of 4% per annum until the note is repaid in full.
 

The global distribution agreement commenced on April 1, 2005 and has a 15 year term. It is renewable for additional 15 year terms as long as GCP meets certain case sale targets during the initial term as set forth in the agreement. (See Note 19 – Gosling-Castle Partners Inc. Export Agreement with Gosling’s Export (Bermuda) Limited). The Company ascribed the entire purchase of $5,000,000 to the Gosling global distribution agreement described above. In conjunction with this transaction the Company recorded a deferred tax liability of $2,222,222 to reflect the fact that the distribution agreement has a zero basis for income tax purposes (See Note 14). This deferred tax liability was recorded as an increase to the value of the distribution agreement.
 

Acquisition of CB Group and CB-UK
 

On December 1, 2003, the Company acquired the CB Group, including 95% of its operating subsidiary CB-UK. CB Group is the producer and primary marketer of Boru Vodka, as well as Clontarf Irish Whiskey and several Irish cream liqueurs. CB-UK is the marketing company that operates primarily in Great Britain. As part of the acquisition, in May 2004, CB Group purchased the remaining shares of its operating subsidiary from minority shareholders

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Table of Contents

CASTLE BRANDS INC. AND SUBSIDIARIES
Notes to Financial Statements
 
Fiscal Years Ended March 31, 2003, 2004 and 2005
Unaudited with Respect to June 30, 2004 and 2005
 
NOTE 4 -  INVESTMENTS AND ACQUISITIONS (CONT’D)
pursuant to the terms of a put option contained within its 1999 Business Expansion Scheme (“BES 1”). The total cost of this BES 1 share purchase of 317,491 was offset, in part, by the agreement of the four former shareholders of CB Group to contribute a total of 100,000 in the form of 15,000 shares of Castle Brands Inc. Series C preferred stock to defray the cost of this transaction to the Company which was recorded to goodwill. The aggregate net purchase price of the acquisition (as translated at the effective exchange rates) including $1,154,863 of acquisition costs consisting of investment banking and legal fees, was $17,048,946, which consisted of cash of $6,097,079, 1,306,666 shares of the Company’s common stock with a fair value of $7,840,000, $1,650,800 in convertible subordinated notes payable and $306,204 of other notes payable. The cash portion of the acquisition was financed with proceeds from the issuance of $16,550,000 of Series C convertible preferred stock.
 

Assets were valued at their respective estimated fair values at the acquisition date. The valuation of identifiable intangible assets and goodwill acquired was based on management’s estimates supported by an independent third party consultant valuation report. The identifiable intangible assets include trade names, formulations, patents and distribution agreements. Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired.
 

The following table summarizes the purchase price allocation for the acquisition of RWB:
         
                   Description   Amount
     
                   Net tangible assets acquired
  $ 210,185  
                   Identifiable intangible assets (definite life)
    825,000  
                   Identifiable intangible assets (indefinite life)
    4,840,000  
                   Goodwill
    11,756,051  
       
                   Total consideration
  $ 17,631,236  
       

At the time of the acquisition, the net tangible assets acquired included cash, accounts receivable, inventory, manufacturing and transportation equipment, computers and furniture and fixtures accounts payable and contain other assumed liabilities. Identifiable intangible assets refer to the Boru and Clontarf Trinity design which is amortized over the fifteen year life of the patent which is deemed the economic life of the asset. Those identifiable intangible assets with indefinite lives include the trade names and formulations of the Company’s various products, together with the Company’s relationship with its distributor in Dublin and its supply relationship with the distiller of its vodka.
 

On December 1, 2003, the Company has recorded $629,444 as a deferred tax liability as the amount ascribed to the difference between the book and tax basis of the tangible and intangible assets acquired. The Company allocated the fair value of the purchase price to the

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Table of Contents

CASTLE BRANDS INC. AND SUBSIDIARIES
Notes to Financial Statements
 
Fiscal Years Ended March 31, 2003, 2004 and 2005
Unaudited with Respect to June 30, 2004 and 2005
 
NOTE 4 -  INVESTMENTS AND ACQUISITIONS (CONT’D)
tangible and intangible assets, the additional value ascribed above those fair values was recorded as additional goodwill.
 

The changes in the carrying amount of goodwill for the years ended March 31, 2005 and 2004 were as follows:
           
    Amount
     
                   Balance as of March 31, 2003
  $  
 
                    Acquisition
    10,676,487  
 
                    Deferred tax liability
    629,444  
       
                   Balance as of March 31, 2004
    11,305,931  
 
                    Acquisition of minority interests
    450,120  
       
                   Balance as of March 31, 2005
    11,756,051  
 
                    Other
    3,308  
       
                   Balance as of June 30, 2005
  $ 11,759,359  
       

The results of CB Group and CB-UK have been included in the consolidated financial statements since the date of acquisition. Unaudited pro forma results of operations for the year ended March 31, 2004 are included below. Such pro forma information assumes that the acquisition had occurred as of April 1, 2003.
           
    March 31, 2004
     
                   Net sales
  $ 8,637,596  
                   Gross profit
  $ 3,513,800  
                   Net loss
  $ (6,539,200 )
                   Net loss per common share – 
       
 
                    basic and diluted
  $ (2.92 )

These pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the results of operations that actually would have resulted had the acquisition been in effect at the beginning of the period or of future results.

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Table of Contents

CASTLE BRANDS INC. AND SUBSIDIARIES
Notes to Financial Statements
 
Fiscal Years Ended March 31, 2003, 2004 and 2005
Unaudited with Respect to June 30, 2004 and 2005
 
NOTE 5 -  EQUIPMENT

Equipment consists of the following as of:
                         
    March 31,   March 31,   June 30,
    2004   2005   2005
             
                   Equipment and software
  $ 465,049     $ 670,927     $ 683,466  
                   Transportation equipment
    42,933              
                   Furniture and fixtures
    26,032       27,942       18,602  
                   Leasehold improvements
          4,733       4,733  
                   
      534,014       703,602       706,801  
                   Less: accumulated depreciation
    275,568       353,463       370,712  
                   
    $ 258,446     $ 350,139     $ 336,089  
                   

Depreciation expense for the years ended March 31, 2003, 2004, and 2005 and for the three months ended June 30, 2004 and 2005 totaled $6,904, $47,771, $81,724, and $12,560 and $27,856, respectively.
NOTE 6 -  INTANGIBLE ASSETS

Intangible assets consist of the following as of:
                         
    March 31,   March 31,   June 30,
    2004   2005   2005
             
                   Brands, trademarks and rights
  $ 1,086,043     $ 9,128,814     $ 9,146,159  
                   Other identifiable intangible assets
    5,665,000       5,665,000       5,665,000  
                   
      6,751,043       14,793,814       14,811,159  
                   Less: accumulated amortization
    303,503       318,698       459,478  
                   
                   Total
  $ 6,447,540     $ 14,475,116     $ 14,351,681  
                   

The identifiable intangible assets consist of a patent, trade names and formulations of the various products and distribution and supplier relationships.
 

Amortization expense for the years ended March 31, 2003, 2004, and 2005 and the three months ended June 30, 2004 and 2005 totaled $100,620, $90,829 and $85,362, $13,750 and $154,530 respectively.
 

The Company periodically reviews whether changes have occurred that would require revisions to the carrying amounts of long-lived assets. When the sum of expected future cash flows (undiscounted and without interest charges) is less then the carrying amount of the asset, an impairment loss is recognized based on the fair value of the asset.
NOTE 7 -  RESTRICTED CASH

In connection with the credit facilities as described in notes 8 and 9, personal guarantees of the two former managing directors of CB Group and CB-UK in the amount of 158,717 were cancelled and replaced with a deposit of cash collateral of 300,000, or $387,494 and

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Table of Contents

CASTLE BRANDS INC. AND SUBSIDIARIES
Notes to Financial Statements
 
Fiscal Years Ended March 31, 2003, 2004 and 2005
Unaudited with Respect to June 30, 2004 and 2005
 
  NOTE 7 -  RESTRICTED CASH (CONT’D)
$361,993 (as translated at the exchange rate in effect on March 31, 2005 and June 30, 2005, respectively).
NOTE 8 -  ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following as of:
                         
    March 31,        
    2004   March 31,   June 30,
        2005   2005
             
                   Accou payable
  nts $ 1,885,034     $ 2,785,179     $ 3,177,456  
                   Accru expenses
    ed 981,774       1,897,338       1,786,218  
                   
                   Total
  $ 2,866,808     $ 4,682,517     $ 4,963,674  
                   

CB Group and CB-UK maintain overdraft coverages with a financial institution in Ireland of up to 400,000 ($508,000) and £20,000 ($16,400), respectively. Overdarft balances are included in accounts payable for the periods presented.
NOTE 9 -  NOTES PAYABLE AND CAPITAL LEASE
                             
        March 31   March 31   June 30
        2004   2005   2005
    Notes payable consist of the following as of:            
    The Company has arranged revolving credit facilities aggregating approximately 1,677,000 ($2,175,000) with a lender for working capital purposes. The facilities, which are payable on demand and renew annually subject to certain provisions, call for interest at rates ranging from prime plus 3% to 7.85%. The Company has also secured a 295,000 ($382,000) term note with the same lender. The note carries an interest rate of 5.2% and calls for monthly payments of principal and interest of 6,377 through 2006.   $ 780,626     $ 1,813,592     $ 1,254,508  
 
    The Company has arranged revolving credit facilities aggregating approximately £242,000 ($457,000). The facilities, which are payable on demand and renew annually subject to certain provisions, call for interest at rates ranging from prime plus 2% to prime plus 2.25%.     209,245       171,149       256,915  

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Table of Contents

CASTLE BRANDS INC. AND SUBSIDIARIES
Notes to Financial Statements
 
Fiscal Years Ended March 31, 2003, 2004 and 2005
Unaudited with Respect to June 30, 2004 and 2005
 
NOTE 9 -  NOTES PAYABLE AND CAPITAL LEASE (CONT’D)
                             
        March 31   March 31   June 30
        2004   2005   2005
    Notes payable consist of the following as of:            
    At March 31, 2004, the Company maintained a revolving credit facility with a lender which outstanding balance was paid, together with a loan termination fee of $60,000 and accrued interest and fees of $4,176. The line terminated simultaneously with the issuance of the senior notes in June 2004.     630,909              
 
    In connection with the Company’s acquisition of CB Group, the Company issued to the former minority shareholders of CB Group 255,000 ($331,000) of subordinated notes, which mature on July 11, 2007. The notes accrue interest at the rate of 5.7% per annum with the aggregate interest payable being limited to 51,000 ($66,000). The total principal and interest on the notes are due at maturity.     310,539       329,358       307,683  

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Table of Contents

CASTLE BRANDS INC. AND SUBSIDIARIES
Notes to Financial Statements
 
Fiscal Years Ended March 31, 2003, 2004 and 2005
Unaudited with Respect to June 30, 2004 and 2005
 
NOTE 9 -  NOTES PAYABLE AND CAPITAL LEASE (CONT’D)
                             
        March 31   March 31   June 30
        2004   2005   2005
    Notes payable consist of the following as of:            
 
    On June 9, September 28 and October 13, 2004, the Company issued $3,555,000, $1,005,000 and $100,000, respectively, of senior notes collateralized by accounts receivable and inventories of CB-USA. As issued, these senior notes bore an interest rate of 8%, payable semi-annually on November 30th and May 31st, and matured on May 31, 2007. Effective August 15, 2005, the terms of these notes were modified with the consent of the note holders to mature on May 31, 2009 in exchange for an interest rate adjustment to 9%. In addition, each holder of $1,000 of senior notes received warrants to purchase 25 shares of the Company’s common shares. At March 31, 2005, there were 116,500 warrants issued and outstanding in conjunction with issuance of senior notes. These warrants have been valued at $129,195 in the aggregate and have been treated as a discount to the notes payable. Interest expense pertaining to this discount is recognized, and the notes payable accreted, over the original term of the notes with an original maturity of May 2007.           4,561,472       4,570,706  

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Table of Contents

CASTLE BRANDS INC. AND SUBSIDIARIES
Notes to Financial Statements
 
Fiscal Years Ended March 31, 2003, 2004 and 2005
Unaudited with Respect to June 30, 2004 and 2005
 
NOTE 9 -  NOTES PAYABLE AND CAPITAL LEASE (CONT’D)
                             
        March 31   March 31   June 30
        2004   2005   2005
    Notes payable consist of the following as of:            
    On March 1 2005, the Company entered into an agreement to issue up to $10,000,000 of subordinated convertible notes to a single investor. As of March 31, 2005, $5,000,000 of convertible notes were issued. The notes, which mature five years from the date of issuance, bear interest at the rate of 6% per annum which is payable quarterly. The company has the option for the first two years from the date of issuance to pay interest in kind at the rate of 7.5% per annum. The notes may be converted into common stock at $8 per share at any time, and shall be converted at the option of the holder automatically after the third year from the date of issuance on the 30th consecutive trading day on which the closing price of the common stock is no less than $20 per share. 40% of the notes convert automatically into common stock upon the completion of a public offering with gross proceeds of at least $15,000,000, at a price of $7.00 per share.           5,000,000       10,000,000  
 
    On February 14, 2005, the Company, through its interest in GCP, entered into an agreement with Gosling’s Export (Bermuda) Limited (“GXB”) to acquire the global distribution rights (excluding Bermuda) to GXB’s portfolio of products in exchange for $2,500,000 in non-interest bearing notes due in four equal semi-annual installments.           2,380,487       1,775,407  
                       
    Total   $ 1,931,319     $ 14,256,058     $ 18,165,219  
                       

The Company financed the purchase of certain office equipment totaling $17,821 included in equipment. The leases call for monthly payments of $337 in principal and interest at the rate of 5% per annum, to be paid through July 2009. As of March 31, 2005 and June 30, 2005, the

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Table of Contents

CASTLE BRANDS INC. AND SUBSIDIARIES
Notes to Financial Statements
 
Fiscal Years Ended March 31, 2003, 2004 and 2005
Unaudited with Respect to June 30, 2004 and 2005
 
NOTE 9 -  NOTES PAYABLE AND CAPITAL LEASE (CONT’D)
Company owed $16,000 and $14,909, respectively, under this lease. Future minimum lease payments equal $17,872 including interest.
 

Principal payments due over the next five years for the above listed notes payable and capital lease are due as follows (as translated at the exchange rate in effect on March 31, 2005):
             
For the years ending    
March 31,   Amount
     
  2006     $ 3,032,383  
  2007       1,224,696  
  2008       30,335  
  2009       341,498  
  2010       9,661,665  
         
  Total       14,290,577  
  Less current portion       3,032,383  
         
  Non current portion     $ 11,258,194  
         
NOTE 10 -  SHAREHOLDER NOTES PAYABLE

In connection with the Company’s acquisition of CB Group, 444,389 ($576,372) of subordinated notes were issued by CB Group in substitution of subordinated notes of the same amount originally issued on April 1, 2001 by CB Group. The original notes had a maturity date of April 1, 2006 and were non-interest bearing. The replacement notes are non-interest bearing and the terms called for annual principal payments of 177,743, 133,323 and 133,323 on December 1, 2004, 2005 and 2006, respectively. Interest of 6% was imputed on these notes resulting in an increase to goodwill at the date of acquisition of $56,653. The note discount is accreted monthly by a charge to interest expense. For the years ended March 31, 2004 and 2005 and the three months ended June 30, 2005, the Company recorded interest expense on these notes of $6,360, $19,311, and $4,832, respectively.
 

Principal payments over the remaining term of the notes are due as follows (as translated at the exchange rate in effect on March 31, 2005):
             
For the years ending    
March 31,   Amount
     
  2006     $ 172,200  
  2007       172,200  
         
  Total     $ 344,400  
         

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Table of Contents

CASTLE BRANDS INC. AND SUBSIDIARIES
Notes to Financial Statements
 
Fiscal Years Ended March 31, 2003, 2004 and 2005
Unaudited with Respect to June 30, 2004 and 2005
 
NOTE 10 -  SHAREHOLDER NOTES PAYABLE (CONT’D)

In connection with the acquisition of CB Group and CB-UK in December 2003, the former principal shareholders received 1,374,750 of convertible subordinated notes in partial consideration for their shares in CB Group and CB-UK. These notes are convertible into common shares of the Company at the current conversion price of 5.22, which is subject to adjustment from time to time as set forth in the note agreement. These convertible notes mature on December 1, 2006 and bear an interest rate of 5% payable quarterly on March 31st, June 30th September 30th and December 31st. As of March 31, 2005 and June 30, 2005, the Company was indebted in the amount of $1,775,627 and $1,658,773, respectively, on the notes (as translated at the exchange rate in effect on March 31, 2005 and June 30, 2005).
NOTE 11 -  COMMON STOCK

On March 31, 2002, Great Spirits LLC, the predecessor company to Castle Brands Inc. had 360,000 membership shares outstanding. On July 10, 2003, the Board of Directors declared a five-for-one stock split payable on December 1, 2003. The Company retained the current par value of $.01 for all common shares. On December 1, 2003 the Company, in connection with the acquisition of RWB, issued 1,306,666 shares of common stock in partial payment of the acquisition (See Note 4). At March 31, 2004 and 2005 and June 30, 2005, the Company had 3,106,666 common shares outstanding.
NOTE 12 -  REDEEMABLE CONVERTIBLE PREFERRED STOCK

The Company had convertible preferred stock outstanding, as follows:
                         
    March 31,   June 30,
         
Description   2004   2005   2005
             
Convertible Preferred Stock, Series A, $1 par value, 550,000 shares authorized, 535,715 shares issued and outstanding; cash dividends at 5% or accrued dividends at 7% at Company’s option paid semi-annually; 20% redemption per year commencing with sixth anniversary of issuance, automatic conversion to common stock at conversion price of $7 per share upon initial public offering of $10 million or more.   $ 3,750,005     $ 3,750,005     $ 3,750,005  

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Table of Contents

CASTLE BRANDS INC. AND SUBSIDIARIES
Notes to Financial Statements
 
Fiscal Years Ended March 31, 2003, 2004 and 2005
Unaudited with Respect to June 30, 2004 and 2005
 
NOTE 12 -  REDEEMABLE CONVERTIBLE PREFERRED STOCK (CONT’D)
                         
    March 31,   June 30,
         
Description   2004   2005   2005
             
Convertible Preferred Stock, Series B, $1 par value, 200,000 shares authorized, issued and outstanding; cash dividends at 5% or accrued dividends at 7% at Company’s option paid semi- annually, 20% redemption per year commencing with sixth anniversary of issuance, automatic conversion to common stock at conversion price of $6 per share upon initial public offering of $10 million or more.     1,200,000       1,200,000       1,200,000  
 
Convertible Preferred Stock, Series C, $1 par value, 3,353,750 shares authorized, 2,068,750 shares issued and outstanding at March 31, 2004 and 3,006,250 shares issued and outstanding at March 31, 2005 and June 30, 2005 cash dividends at 4% or accrued dividends at 6% at Company’s option paid semi-annually; 20% redemption per year commencing with sixth anniversary of issuance, automatic conversion to common stock at conversion price of $8 per share upon initial public offering of $10 million or more.     16,550,000       24,050,000       24,050,000  
                   
 
(See Note 15 for consideration given to warrant beneficial conversion features)                        
 
Total   $ 21,500,005     $ 29,000,005     $ 29,000,005  
                   

The following are the Series A, B, and C Preferred Stock transactions of the Company from April 1, 2002 through March 31, 2005:
 

In February 2003, Great Spirits LLC, the predecessor to the Company exchanged 40,000 membership shares on a one-for-one basis with a shareholder for an equivalent number of Series B Preferred Stock and the elimination of certain shareholder preference rights. In December 2003, this issue was exchanged for comparable Castle Brands Inc. Series B Preferred Stock and is convertible into common shares at $6.00 per share at the option of the holder or in an automatic conversion upon initial public offering of $10 million or more.

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Table of Contents

CASTLE BRANDS INC. AND SUBSIDIARIES
Notes to Financial Statements
 
Fiscal Years Ended March 31, 2003, 2004 and 2005
Unaudited with Respect to June 30, 2004 and 2005
 
NOTE 12 -  REDEEMABLE CONVERTIBLE PREFERRED STOCK (CONT’D)

In August 2003, Great Spirits LLC completed an offering of 535,715 shares of Series A preferred stock. In December 2003, this issue was exchanged for comparable CBI Series A preferred stock is convertible into common shares at $7 per share at the option of the holder or in an automatic conversion upon initial public offering of $10 million or more.
 

In December, 2003, CBI raised $16,525,000 issuing 2,065,625 shares of Series C preferred stock in conjunction with the RWB acquisition. Series C preferred stock is convertible into common stock at the option of the holder at $8 per share or in an automatic conversion upon initial public offering of $10 million or more.
 

In January 2004, CBI raised $25,000 issuing 3,125 shares of Series C preferred stock.
 

In November 2004, CBI raised $5,001,178, less $184,434 in financing charges, issuing 625,147 shares of Series C preferred stock.
 

In December 2004, CBI raised $888,400, less $86,845 in financing charges, issuing 111,050 shares of Series C preferred stock.
 

In February 2005, CBI raised $1,000,000, less $20,000 in financing charges, issuing 125,000 shares of Series C preferred stock.
 

In March 2005, CBI raised $610,422, less $15,958 in financing charges, issuing 76,303 shares of Series C preferred stock.
 

Holders of Series A and Series B preferred stock are entitled to receive semi-annual dividends at an annual rate of 5%, if paid in cash, and 7%, if accrued. The accrual rate automatically takes effect if the dividends are not paid within 90 days after the end of the relevant accrual period or if the Board of Directors elects to accrue and not pay such dividends. However, in connection with the Series C preferred stock financing, the holders of Series A and Series B preferred shares agreed that no cash dividends would be paid unless the cash dividends are paid on all three issues. The holders of Series A and Series B preferred stock have the option, at any time, to convert their preferred shares into common shares at a conversion price of $7 per share and $6 per share, respectively. Series A preferred stock will automatically convert into common stock at the then applicable conversion price, in the event of either (a) the vote of the holders of at least two-thirds of the series A and B preferred shares, or (b) the closing of an underwritten public offering with aggregate gross proceeds of at least $10 million. The Series B preferred stock is held by a single investor and possesses similar automatic conversion features. For the years ended March 31, 2004 and 2005 and the three months ended June 30, 2005, dividends of $319,819, $681,280 and $767,668 in arrears, respectively, remain unpaid.
 

Commencing December 1, 2005, holders of Series C preferred stock are entitled to receive semi-annual dividends at an annual rate of 4%, if paid in cash, and 6%, if accrued. In addition, the holders of such stock have the option, at any time, to convert their preferred shares into common shares at a conversion price of $8 per share. Commencing December 1, 2008, the Company may redeem the Series C preferred stock at any time, in whole or in part,

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Table of Contents

CASTLE BRANDS INC. AND SUBSIDIARIES
Notes to Financial Statements
 
Fiscal Years Ended March 31, 2003, 2004 and 2005
Unaudited with Respect to June 30, 2004 and 2005
 
NOTE 12 -  REDEEMABLE CONVERTIBLE PREFERRED STOCK (CONT’D)
at the redemption price of $8 per share, as adjusted, plus accrued but unpaid dividends. The Series C preferred stock will automatically convert into common stock at the then applicable conversion price, in the event of either (a) the vote of a majority of the holders of the preferred shares, or (b) the closing of an underwritten public offering with aggregate gross proceeds of at least $10 million.
 

On each of February 20, 2009, 2010, 2011, 2012 and 2013, the Company is obligated to redeem 20% of the outstanding shares of Series A and Series B preferred stock on a pro rata basis according to the number of such shares held by each stockholder and to pay for such stock at the redemption price. The redemption price equals $7 per share plus accrued and unpaid dividends for the Series A preferred stock and $6 per share plus accrued and unpaid dividends for the Series B preferred stock.
 

On each of December 1, 2009, 2010, 2011, 2012 and 2013, the Company is obligated to redeem 20% of the outstanding shares of Series C preferred stock on a pro rata basis according to the number of such shares held by each stockholder and to pay for such stock at the redemption price. The redemption price equals $8 per share plus accrued and unpaid dividends.
 

The holders of Series A, Series B and Series C preferred stock are entitled to the number of votes equal to the number of shares of common stock into which such shares of preferred stock could be converted. Each of the holders of the Series A, Series B and Series C preferred stock also have, in addition to other voting rights, the right, each such class voting together as a separate class, to elect one director of the Company.
 

The Series A, Series B and Series C preferred stock rank in parity in liquidation, are subordinate to the senior notes, and have a liquidation value equal to the original investment plus any unpaid dividends. As of March 31, 2005, the liquidation preference of the Series A, Series B and Series C preferred stock are equal to $4,254,310, $1,376,975 and $24,050,000, respectively. As of June 30, 2005, the liquidation preference of the Series A, Series B and Series C preferred stock are equal to $4,319,755, $1,397,918 and $24,050,000, respectively.
NOTE 13 -  FOREIGN CURRENCY HEDGING

The Company enters into forward contracts to attempt to limit its exposure to foreign currency cash flow fluctuations. The Company recognizes in the balance sheet derivative contracts at fair value, and reflects any net gains and losses currently in earnings. At March 31, 2005, the Company held outstanding forward exchange positions for the purchase of Euros, expiring through September 2005, in the amount of $1,357,030 with a weighted average conversion rate of 1 = $1.2924 as compared to the spot rate at March 31, 2005 of 1 = $1.2916. At June 30, 2005, the Company held outstanding forward exchange positions for the purchase of Euros, expiring through December 2005, in the amount of $798,476 with a weighted average conversion rate of 1 = $1.2730 as compared to the spot rate at June 30, 2005 of 1 = $1.2066. Gain or loss on foreign transactions is included in other income and expense.

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Table of Contents

CASTLE BRANDS INC. AND SUBSIDIARIES
Notes to Financial Statements
 
Fiscal Years Ended March 31, 2003, 2004 and 2005
Unaudited with Respect to June 30, 2004 and 2005
 
NOTE 14 -  PROVISION FOR INCOME TAXES

Income taxes benefit (expense) for the years ended March 31, 2003, 2004 and 2005 consists of federal and state and local taxes attributable to GCP, which does not join in a consolidated income tax return with the Company, and foreign taxes. As of March 31, 2005, the company had federal net operating loss carryforwards of approximately $10,120,000 for U.S. tax purposes, which expire in 2025 and foreign net operating loss carryforwards of approximately $7,080,000 which carryforward without limit of time.
 

The pre-tax income (loss), on a financial statement basis, from foreign sources totaled $0, ($1,062,885), and ($4,026,096), for the years ended March 31, 2003, 2004, and 2005, respectively.
 

The Company does not have any undistributed earnings from foreign subsidiaries at March 31, 2004 and 2005 and June 30, 2005.
 

The following table reconciles the income tax (benefit) expense and the federal statutory rate of 34%.
                 
    For the
    year ended
    March 31,
     
    2004   2005
         
    %   %
Computed expected tax benefit, at 34%
    34.00       34.00  
Increase in valuation allowance
    (23.73 )     (29.70 )
Effect of foreign rate differential
    (11.08 )     (8.61 )
Non-deductible interest expense
    (5.19 )     (1.69 )
Other
    6.00       6.00  
             
State and local taxes, net of federal benefit
           
             

On December 1, 2003, the Company has recorded $629,444 as a deferred tax liability as the amount ascribed to the difference between the book and tax basis of the tangible and intangible assets acquired. The Company allocated the fair value of the purchse prict to the distribution agreement, the additional value ascribed above the fair value was recorded as additional goodwill.
 

In connection with the investment in GCP, the company recorded a deferred tax liability on the ascribed value of the acquired intangible assets of $2,222,222, increasing the value of the asset. The deferred tax liability is being reversed and a deferred tax benefit is being recognized over the amortization period of the intangible asset (15 years). For the years ended March 31, 2004 and 2005 and the quarter ended June 30, 2005, the Company has recognized $0, $0 and $37,037 of deferred tax benefit.

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Table of Contents

CASTLE BRANDS INC. AND SUBSIDIARIES
Notes to Financial Statements
 
Fiscal Years Ended March 31, 2003, 2004 and 2005
Unaudited with Respect to June 30, 2004 and 2005
 
NOTE 14 -  PROVISION FOR INCOME TAXES (CONT’D)

The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities are presented below.
                           
    March 31,   March 31,   June 30,
    2004   2005   2005
             
Deferred income tax asset
                       
 
Foreign currency transactions
  $ 54,000     $ 92,000     $ 36,000  
 
Amortization of intangibles
    250,000       296,000       282,000  
 
Net operating loss carryforwards – U.S. 
    852,000       4,062,000       4,844,000  
 
Net operating loss carryforwards – foreign
    301,000       730,000       756,000  
 
Other
    14,000              
                   
 
Total gross assets
    1,471,000       5,180,000       5,918,000  
 
Less: Valuation allowance
    (1,471,000 )     (5,180,000 )     (5,918,000 )
                   
 
Net deferred asset
  $     $     $  
                   
Deferred income tax liability
                       
 
Intangible assets acquired in acquisition of subsidiary
  $ (629,444 )   $ (629,444 )   $ (629,444 )
 
Intangible assets acquired in investment in joint-venture
          (2,222,222 )     (2,185,185 )
                   
 
Net deferred income taxes
  $ (629,444 )   $ (2,851,666 )   $ (2,814,629 )
                   

The Company has recorded a full valuation allowance against its deferred tax assets as it believes it is more likely that such deferred tax assets will not be realized. The valuation allowance for deferred tax assets as of March 31, 2004 and March 31, 2005 and June 30, 2005 was approximately $1,471,000, $5,180,000 and $5,918,000 respectively. The net change in the total valuation allowance for the years ended March 31, 2003, 2004 and 2005 and the three months ended June 30, 2005, was $0, $1,471,000, and $3,709,000, and $815,000, respectively. The Company’s deferred tax assets and liabilities are in different taxable entities, which do not join in consolidated returns.
NOTE 15 -  STOCK OPTIONS AND WARRANTS
  A.  Stock Options  – In July 2003, the Company implemented the 2003 Stock Incentive Plan (“the Plan”) which provides for awards of incentive and non-qualified stock options, restricted stock and stock appreciation rights for its officers, employees, consultants and directors in order to attract and retain such individuals who contribute to the Company’s success by their ability, ingenuity and industry knowledge, and to enable such individuals to participate in the long-term success and growth of the Company by giving them an equity interest in the Company. There are 2,000,000 common shares reserved and

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Table of Contents

CASTLE BRANDS INC. AND SUBSIDIARIES
Notes to Financial Statements
 
Fiscal Years Ended March 31, 2003, 2004 and 2005
Unaudited with Respect to June 30, 2004 and 2005
 
NOTE 15 -  STOCK OPTIONS AND WARRANTS (CONT’D)
  available for distribution under the Plan. In January 2004, the Board of Directors approved the Plan and granted 553,000 options to its full-time U.S. and international employees at an exercise price of $6.00 per share. These options vest over a three, four or five year period and expire ten years after the grant date.
 
      In connection with the Company’s acquisition of CB Group and CB-UK, the Company granted to an individual the option to purchase up to 10,000 shares of common stock at an exercise price of $6.00 per share at any time through November 30, 2013.
 
      The Company continues to account for stock based compensation using the intrinsic value method prescribed in Accounting Principles Board No. 25, “Accounting for Stock Issued to Employees.” Compensation cost for stock options, if any, is measured as the excess of the quoted market price of the Company’s stock at the date of grant over the amount an employee must pay to acquire the stock.

A summary of the stock option plan is as follows:
                                                 
    Year Ended March 31,    
        Three Months
            Ended
    2004   2005   June 30, 2005
             
        Weighted       Weighted       Weighted
        Average       Average       Average
        Exercise       Exercise       Exercise
    Shares   Price   Shares   Price   Shares   Price
                         
Outstanding at beginning of year
        $ 0.00       563,000     $ 6.00       745,500     $ 6.47  
Granted
    563,000       6.00       248,500       7.17       150,000       8.00  
Forfeited
                (66,000 )     6.00              
                                     
Outstanding at end of year
    563,000       6.00       745,500       6.47       895,500       6.75  
                                     
Options exercisable at year end
        $ 6.00       174,533     $ 6.36       174,533     $ 6.36  
                                     
Weighted average fair value of options granted during the year
          $ 2.17             $ 2.69             $ 2.17  

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Table of Contents

CASTLE BRANDS INC. AND SUBSIDIARIES
Notes to Financial Statements
 
Fiscal Years Ended March 31, 2003, 2004 and 2005
Unaudited with Respect to June 30, 2004 and 2005
 
NOTE 15 -  STOCK OPTIONS AND WARRANTS (CONT’D)

The following table represents information relating to stock options outstanding at March 31, 2005:
                                     
    Options Outstanding   Options Exercisable
         
    Weighted   Weighted       Weighted
    Average   Average       Average
    Exercise   Remaining Life       Exercise
Shares   Price   in Years   Shares   Price
                 
  563,000     $ 6.00       8.88       143,533     $ 6.00  
  182,500       8.00       9.83       31,000       8.00  
                           
  745,500                       174,533          
                           

As of June 30, 2005, the total stock options outstanding was 895,500. The weighted average exercise price of these options was $6.73. The weighted average remaining life of these options was 8.95 years. Total stock options exercisable as of June 30, 2005 was 174,532. The weighted average exercise price of these options was $6.35.
 

The fair value of options at date of grant was estimated using the Black-Scholes option-pricing model utilizing the following assumptions:
                         
    March 31,    
        June 30,
    2004   2005   2005
             
Risk-free interest rates
    4.38%       4.38-4.59%       3.8%  
Expected options life in years
    6.42-6.50       6.83-7       6.42  
Expected stock price volatility
    25%       25%       25%  
Expected dividend yield
    0%       0%       0%  
B. Stock Warrants  – The Company has entered into various warrant agreements.
 

Common Stock Warrants Issued to the Financing Agent
 

On December 1, 2003, in connection with the revolving credit facility, the Company granted to the lender warrants to acquire 100,000 shares of the Company’s common stock with an exercise price of $6. The warrants are subject to anti-dilution provisions, vest immediately and are exercisable through September 1, 2012. The Company was not obligated to register the warrants or the underlying shares, except to the extent if the Company elects to file a registration statement then the holders can request to have the underlying shares registered. The Company will assume all registration costs and other expenses in connection with such registration.
 

The value assigned to the warrants was recorded as a reduction in the value assigned to the credit facility (discount amount) and an increase in long-term liabilities. The discount amount of $282,295 was accreted over the three-year life of the credit facility as additional interest

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Table of Contents

CASTLE BRANDS INC. AND SUBSIDIARIES
Notes to Financial Statements
 
Fiscal Years Ended March 31, 2003, 2004 and 2005
Unaudited with Respect to June 30, 2004 and 2005
 
NOTE 15 -  STOCK OPTIONS AND WARRANTS (CONT’D)
expense. The Company has recorded interest expense for the years ended March 31, 2003, 2004 and 2005 and the three months ended June 30, 2004 and 2005 of $54,890, 94,098 and $133,306, respectively The facility was closed in June 2004 and the unaccreted balance was recognized as additional interest expense in that period.
 

The warrants are exercisable at any time. The holder may convert the warrants, in whole or in part, into the number of common shares equal to the number of shares under this warrant to be converted multiplied by the amount by which (a) the fair market value of one share exceeds (b) the exercise price in effect immediately prior to such exercise of the conversion price divided by the fair market value of one share in effect immediately prior to such exercise of the conversion price. If the shares are not regularly traded in a public market, the Board of Directors in reasonable good faith judgment shall determine the fair market value as follows: the fair value of the warrant is computed at an amount equal to the Enterprise Value divided by the number of outstanding shares of common stock. If the shares are traded regularly in a public market, the fair market value of a share of common stock shall be the closing sales price of the shares reported for the business day immediately before the holder delivers its conversion notice.
 

In addition, the warrants issued in connection with the credit facility have a put right. Commencing September 1, 2006, the put may be exercised by the holder at any time prior to the expiration date. The holder may require the Company to purchase in whole or in part, for an amount equal to the number of shares as to which the holder is exercising multiplied by the amount by which (a) the fair market value of one share exceeds (b) the exercise price in effect immediately prior to such exercise of the put right. The Company shall pay the put amount in immediately available funds on the date set; provided however, that if the put amount is greater than $300,000, the Company shall pay at least $300,000 on such date and shall have the option to pay the remainder of the put amount in four equal installments due at the end of each fiscal quarter thereafter, and bear interest at the prime rate as published by The Wall Street Journal, or in the event that The Wall Street Journal is not available at any time, such rate published in another publication as determined by the holder plus two hundred fifty (250) basis points per annum, or seven percent, or LIBOR plus (500) basis points.
 

Common Stock Warrants Issued to the Placement Agents
 

In connection with the Series C Preferred Stock, the Company granted, to the placement agents, warrants to acquire approximately 173,993 shares of the Company’s common stock with an exercise price of $8.00. The Warrants are subject to anti-dilution provisions, vest immediately and are exercisable through December 31, 2009. The Company is not obligated to register the warrants or the underlying shares, except to the extent if the Company elects to file a registration statement then the holders can request to have the underlying shares registered. The Company will assume all registration costs and other expenses in connection with such registration.

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Table of Contents

CASTLE BRANDS INC. AND SUBSIDIARIES
Notes to Financial Statements
 
Fiscal Years Ended March 31, 2003, 2004 and 2005
Unaudited with Respect to June 30, 2004 and 2005
 
NOTE 15 -  STOCK OPTIONS AND WARRANTS (CONT’D)

The proceeds upon issuance of the Series C Preferred Stock were allocated as follows:
         
Face value of Preferred Stock
  $ 16,550,000  
Beneficial conversion feature
    (417,214 )
       
Relative fair value of preferred stock
  $ 16,132,786  
       

The beneficial conversion feature was calculated using the Black-Scholes method as the difference between the beneficial conversion price and the fair value of the Company’s common stock, multiplied by the number of shares into which the Preferred Stock were convertible in accordance with the Emerging Issues Task Force (“EITF”) Issue No. 00-27. The beneficial conversion feature was recorded immediately as a deemed dividend and reflected in the Net Loss Attributable to Common Stockholders and an increase in additional paid-in-capital.
 

The warrants have conversion rights and can be converted at any time. The holder may convert in whole or in part, into a number of common shares equal to the number of shares under this warrant to be converted, multiplied by the amount by which (a) the fair market value of one share exceeds (b) the exercise price in effect immediately prior to such exercise of the conversion price divided by the fair market value of one share in effect immediately prior to such exercise of the conversion price. If the shares are not regularly traded in a public market, the Board of Directors in reasonable good faith judgment shall determine the fair market value as follows: the fair value of the warrant is computed at an amount equal to the Enterprise Value divided by the number of outstanding shares of common stock. If the shares are traded regularly in a public market, the fair market value of a share of common stock shall be the closing sales price of the shares reported for the business day immediately before the holder delivers its conversion notice.
 

Common Stock Warrants Issued to Senior Note Holders
 

In connection with the issuance of the senior notes, the Company entered into a warrant agreement to grant the right to purchase 116,500 shares of the Company’s common stock at

an exercise price of $8.00 per share at any time through May 31, 2009. These warrants were fair and accounted for as a discount of the face value of the senior notes and a credit to additional paid-in capital of $129,195. This note discount will be accreted over the original term of the senior notes with a charge to interest expense and a credit to senior notes payable. For the years ended March 31, 2003, 2004 and 2005, and the three months ended June 30, 2004 and 2005, the Company recorded $0, $0, and $30,668 and $2,697 and $9,232 of senior note accretion as additional interest expense.

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Table of Contents

CASTLE BRANDS INC. AND SUBSIDIARIES
Notes to Financial Statements
 
Fiscal Years Ended March 31, 2003, 2004 and 2005
Unaudited with Respect to June 30, 2004 and 2005
 
NOTE 15 -  STOCK OPTIONS AND WARRANTS (CONT’D)

The following is a summary of the company’s outstanding warrants:
                   
        Weighted
        Average
        Exercise
        Price
    Warrants   Per Warrant
         
                   Warrants outstanding, April 1, 2003
           
 
                    Granted
    207,118     $ 7.03  
 
                    Exercised
           
 
                   Forfeited
           
             
                   Warrants outstanding, March 31, 2004
    207,118       7.03  
 
                    Granted
    183,375       8.00  
 
                    Exercised
           
 
                   Forfeited
           
             
                   Warrants outstanding and exercisable, March 31, 2005
    390,493       7.49  
 
                    Exercised
           
 
                   Forfeited
           
             
                   Warrants outstanding and exercisable, June 30, 2005
    390,493       7.49  
             
NOTE 16 -  RELATED PARTY TRANSACTIONS
A. The Company is operating under an agreement with MHW, Ltd. (“MHW”) whereby MHW acts as the Company’s agent in the distribution of its products across the United States. MHW’s president also serves as a director of the Company and has a de minimus indirect ownership interest in the Company. In addition, MHW has a 10% ownership interest in the Celtic Crossing brand, one of the Company’s products, in the United States and its territories, Canada, Mexico, and the Caribbean.
 
Pursuant to the MHW distribution agreement, MHW receives sales orders from the Company’s domestic wholesalers at prices agreed upon with the Company. MHW simultaneously purchases Company inventory necessary to fill those orders and ships that inventory to the various wholesalers. MHW then invoices, collects, and deposits remittances from those wholesalers into an MHW bank account designated for the Company. The funds are remitted to the Company on a bi-weekly basis. Although MHW is responsible for the billing function,

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CASTLE BRANDS INC. AND SUBSIDIARIES
Notes to Financial Statements
 
Fiscal Years Ended March 31, 2003, 2004 and 2005
Unaudited with Respect to June 30, 2004 and 2005
 
NOTE 16 -  RELATED PARTY TRANSACTIONS (CONT’D)
the collected funds are the property of the Company and MHW is not liable to the Company for any unpaid balances due from wholesalers.
 
In addition to the distribution services provided for the Company, MHW also provides administrative and support services on behalf of the Company. For the years ended March 31, 2003, 2004 and 2005, and the three months ended June 30, 2004 and 2005, aggregate charges recorded for all services provided were approximately $61,518, $84,450 and $121,393, and $21,327 and $52,054, respectively, which have been included in general and administrative expenses.
 
B. The Company had transactions with Knappogue Corp., a shareholder in the Company. Knappogue Corp. is controlled by the Company’s CEO and his family. The transactions primarily involved rental fees for use of Knappogue Corp.’s interest in the Knappogue Castle for various corporate purposes including Company meetings and to entertain customers. For the years ended March 31, 2003, 2004 and 2005, and the three months ended June 30, 2004 and 2005, fees incurred by the Company to Knappogue Corp. amounted to $28,009, $33,000, and $18,620, and $3,000 and $7,540, respectively.
 
C. Prior to the acquisition of CB Group, the Company purchased inventory from CB Group of approximately $737,000 pursuant to a 2001 distribution agreement. In addition, for the years ended March 31, 2003, 2004 and 2005, and the three months ended June 30, 2004 and 2005, the Company made payments to CB Group of approximately $160,000, $256,000 and $0, and $0 and $0, respectively, pursuant to their 2001 brand acquisition agreement.
 
D. In April 2004, the Company contracted with BPW, Ltd., for business development services including providing introductions for the Company to agency brands that would enhance the Company’s portfolio of products and assisting the Company in successfully negotiating agency agreement with targeted brands. BPW, Ltd. is controlled by a director of the Company. The contract provides for a monthly retainer to BPW, Ltd. of $3,500, a bonus payable to BPW Ltd. in equal quarterly installments upon the finalization of an agency brand agreement based upon estimated annual case sales by the Company during the first year of operations at the rate of $1 per 9-liter case of volume, less any retainer previously paid, and a commission based upon actual future sales of the agency brand while under the Company’s management. This contract is cancelable by either party, at their convenience, upon 30 days written notice. For the year ended March 31, 2005, and the three months ended June 30, 2005, BPW, Ltd. was paid $41,802 and $10,500, respectively, under this contract.
 
E. For the years ended March 31, 2004 and 2005, and the three months ended June 30, 2004 and 2005, the Company purchased goods from Tanis Investments Limited (“Tanis”) and Carbery Milk Products Limited (“Carbery”), both shareholders in the Company, of approximately $595,250 and $2,501,600, and $637,000 and $529,000, respectively. The Company had assumed the underlying supplier agreements with Tanis and Carbery from the predecessor company. As of March 31, 2004 and 2005, and June 30, 2004 and 2005, the Company was indebted to these two shareholders approximately $348,000 and $369,000 and $839,000 and

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CASTLE BRANDS INC. AND SUBSIDIARIES
Notes to Financial Statements
 
Fiscal Years Ended March 31, 2003, 2004 and 2005
Unaudited with Respect to June 30, 2004 and 2005
 
NOTE 16 -  RELATED PARTY TRANSACTIONS (CONT’D)
$385,000, respectively, which is included in due to related parties on the accompanying consolidated balance sheet.
 
F. For the years ended March 31, 2004 and 2005 and the three months ended June 30, 2004 and 2005, the Company made payments of approximately $25,000 and $37,500, and $9,000 and $9,500, respectively, for use of a patent, to an entity that is owned by two shareholders in the Company. The royalty agreement also includes the right to acquire the patent for the Trinity Bottle for 90,000 ($108,360) for the duration of the licensing period.
 
G. In February and August 2005, the Company executed agreements with the two Co-Managing Directors of CB Group whereby, effective March 11, 2005 and October 1, 2005, respectively, these individuals resigned their positions and directorships in CB Group in exchange for a consultancy agreement consisting of fifteen monthly payments totaling 196,875, plus VAT. The balance due, net of payments made, was $233,772 and $160,901, at March 31 and June 30, 2005, respectively. In addition, under the terms of these agreements, the stock options of these individuals were deemed to have accrued two years’ vesting at the end of the consultancy period, the exercise period for their stock options was extended to December 1, 2008, and the Company agreed to pay off the outstanding balance of their 5% Convertible Subordinated Notes, each dated December 1, 2003, and each in the amount of 465,550 and their Subordinated Note, each dated December 1, 2003, and each in the amount of 133,323 at the earlier of one month following the completion of the Company’s initial public offering or in four quarterly installments beginning January 1, 2006. The Company also reimbursed these individuals the legal fees incurred in connection with their consultancy agreements in the amounts of 8,000 and 5,000, respectively, plus VAT. For the year ended March 31, 2005 and the three months ended June 30, 2005, the Company made payments of $20,000 and $60,059, respectively pursuant to this agreement.
NOTE 17 -  COMMITMENTS AND CONTINGENCIES
A. The Company has entered into a supply agreement with Irish Distillers Limited (“Irish Distillers”), which provides for the production of Irish whiskeys for the Company through 2014, subject to automatic five year extensions thereafter. Under this agreement, the Company is obligated to notify Irish Distillers annually of the amount of liters of pure alcohol it requires for the current year and commits to purchase that amount. For the calendar year ending December 31, 2005, the Company has committed to purchase approximately 461,000 in bulk Irish whiskey. The Company has not yet taken receipt of any of the commitment. During the term of this supply agreement Irish Distillers has the right to limit additional purchases above the commitment amount.
 
B. The Company has entered into a distribution agreement with Gaelic Heritage Corporation, Ltd. (“Gaelic”), an international supplier, to be the sole-producer of Celtic Crossing, one of the Company’s products, for an indefinite period.
 
C. In August 2004, Castle Brands entered into an agency agreement with I.L.A.R. S.p.A., the producer of Pallini Limoncello and its flavor extensions, to be the sole and exclusive importer of Pallini Limoncello throughout the United States and its territories and possessions. This agreement is subject to automatic renewal for as much as five years per renewal period upon

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CASTLE BRANDS INC. AND SUBSIDIARIES
Notes to Financial Statements
 
Fiscal Years Ended March 31, 2003, 2004 and 2005
Unaudited with Respect to June 30, 2004 and 2005
 
NOTE 17 -  COMMITMENTS AND CONTINGENCIES (CONT’D)
Castle Brands achievement of contractual case sale targets. The agreement expires on December 31, 2009.
 
Under this agreement, Castle Brands is permitted to import Pallini Limoncello at a set price, updated annually, and is obligated to set aside a portion of the gross margin toward a marketing fund for Pallini. The agreement also encompasses the hiring of a Pallini Brand Manager at Castle Brands with Pallini reimbursing the costs of this position up to stipulated annual amount.
 
D. In September 2004, CB-USA entered into an exclusive distribution agreement with Gosling’s Export (Bermuda) Limited (“GXB”) to be the sole and exclusive importer of Gosling’s rum brands within the United States. Under this agreement, CB-USA is guaranteed a net sales commission on each case. In February 2005, GXB sold its interest in the distribution agreement to Gosling-Castle Partners Inc. (See Note 19).
 
E. CB-USA is guaranteed stipulated commission per case increasing annually provided certain sales are achieved case for all sales in calendar years, under the distribution agreement. The sales commission is net of agreed reimbursements, including taxes and payment to the marketing affiliate. This distribution agreement is for fifteen years, subject to extension.
 
F. In June 2004, the Company executed subleases for office space in Dublin, Ireland and midtown Manhattan. The Dublin office lease commenced on June 1, 2004 and extends through February 28, 2009. Rent is payable quarterly in advance. The New York City lease commenced on August 15, 2004 and extends through March 30, 2008. The Company has also entered into non-cancelable operating leases for certain office equipment.
 
Future minimum lease payments are as follows:
         
For the years ending    
March 31,   Amount
     
2006
  $ 292,773  
2007
    302,634  
2008
    302,634  
2009
    143,021  
2010
    5,581  
       
Total
  $ 1,046,643  
       
In addition to the above annual rental payments, the Company is obligated to pay its pro-rata share of utility and maintenance expenses on the leased premises. Rent expense under operating leases amounted to approximately $290,000, $70,000 and $60,000 and $90,000 and $50,000 for the years ended March 31, 2005, 2004 and 2003, and the three months ended June 30, 2005 and 2004, respectively.
 
G. Pursuant to the distribution agreement signed in March 1998 between the Company and Gaelic, which has been amended and restated in April 2001, the Company, which currently

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CASTLE BRANDS INC. AND SUBSIDIARIES
Notes to Financial Statements
 
Fiscal Years Ended March 31, 2003, 2004 and 2005
Unaudited with Respect to June 30, 2004 and 2005
 
NOTE 17 -  COMMITMENTS AND CONTINGENCIES (CONT’D)
owns 60% of the Celtic Crossing brand in the United States, has the option to purchase 70% of the brand outside the United States from Gaelic.
 
In the event of the sale of the brand rights by either the Company or Gaelic, the non-selling party shall have the right of first refusal to purchase the interest at the same price as the proposed sale and the right to sell alongside the other party.
 
Pursuant to the agreement, the Company is required to pay royalties to Gaelic for each case purchased. In addition, the Company is required to expend a certain percentage of Celtic Crossing product case sales on marketing.
 
H. The Company is subject to strict federal and state government regulations associated with the marketing, import, warehouse, transport, and distributions of spirits.
NOTE 18 -  CONCENTRATION OF CREDIT RISK
The Company maintains its cash balances at various large financial institutions that, at times, may exceed federally and internationally insured limits. As of March 31, 2004 and 2005, and June 30, 2004 and 2005, the Company exceeded the insured limit by approximately $6,100,000 and $5,700,000, and $2,400,000 and $5,100,000, respectively. Management believes the Company is not exposed to any significant credit risk because the institutions are international money center banking institutions with strong financial positions.
NOTE 19 -  GOSLING-CASTLE PARTNERS INC. EXPORT AGREEMENT WITH GOSLING’S EXPORT (BERMUDA) LIMITED
In February 2005, Gosling Partners Inc. secured the GXB global distribution rights under an Export Agreement (“the Agreement”) with GXB. This agreement calls for GCP to pay $2,500,000 to GXB for the assignment of its global distribution rights in four equal installments at April 1, 2005, October 1, 2005, April 1, 2006 and October 1, 2006. At March 31, 2005, this note is carried on the books at a discount of $126,152 resulting from interest imputed at 6%. For the year ended March 31, 2005 and the three months ended June 30, 2005, the Company recognized interest expense of $6,640 and $20,000, respectively, on this note.
 
In addition, under the terms of the Export Agreement, GXB has agreed to sell all brands in its portfolio to GCP at its manufacturer’s cost plus a specified producer’s profit. For the years of the agreement, the producer’s profit is a stipulated amount per case, increasing over time.
 
The Export Agreement gives GCP the right of first refusal to purchase, in the event GXB decides to sell any or all of its trademarks or other intellectual property, at the same price being offered by a bona fide third party offeror. In the event GCP waives its right of first refusal, the Company has an identical right of first refusal. Furthermore, in the event GXB should decide to sell any or all of its portfolio of products either directly or indirectly through the sale of stock of GXB or its parent company to a third party, the agreement contains a formula for GCP to share in the proceeds of the sale of the brand with such share in the sale

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CASTLE BRANDS INC. AND SUBSIDIARIES
Notes to Financial Statements
 
Fiscal Years Ended March 31, 2003, 2004 and 2005
Unaudited with Respect to June 30, 2004 and 2005
 
NOTE 19 -  GOSLING-CASTLE PARTNERS INC. EXPORT AGREEMENT WITH GOSLING’S EXPORT (BERMUDA) LIMITED (CONT’D)
proceeds up to a stipulated percentage depending upon the number of nine liter equivalent cases of product sold by GCP in the twelve months preceding the sale.
 
The Export Agreement commenced on April 1, 2005 and has a 15 year term. It is renewable for additional 15 year terms as long as GCP meets certain case sale targets during the initial term as set forth in the Agreement.
NOTE 20 -  SUBSEQUENT EVENTS
In connection with the Company’s 2005 agreement to issue up to $10,000,000 of subordinated convertible notes to an investor in order to fund Gosling-Castle Partners, Inc. and for working capital purposes, of which $5,000,000 of notes were issued as of March 31, 2005, the Company issued the remaining $5,000,000 of convertible note in June 2005.
 
In July 2005, the Company entered into an agreement with an investor to issue $5,000,000 of subordinated convertible notes. The closing was completed in August 2005. The notes, which mature five years from the date of issuance, bear interest at the rate of 6% per annum. The Company has the option for the first two years from the date of issuance to pay interest in kind at the rate of 7.5% per annum. The notes may be converted into common stock at $8 per share at any time, and shall be converted automatically after the third year from the date of issuance on the 30th consecutive trading day on which the closing price of the common stock is no less than $20 per share. 40% of the notes convert automatically into common stock upon the completion of a public offering with gross proceeds of at least $15,000,000 at a price of $7.00 per share, with such discount based on the level of interest savings to the Company.
 
In July 2005, the original $10,000,000 of convertible notes were amended to be equivalent in terms to those of the new $5,000,000 investor. If 40% of the combined $15,000,000 of convertible notes were to convert automatically, as a consequence of a qualified public offering, the $7.00 conversion price would result in the issuance of 107,143 more shares than would have been issued at the $8.00 conversion price. If such automatic conversion occurs, it is anticipated that the value of the incremental shares, valued at the initial public offering price, will be recorded as interest expense.
 
In August 2005, the Company issued 362,500 shares of Series C Preferred Stock, convertible at $8 per share and raised $2.9 million in cash.
 
In August 2005, the Company modified its senior note indenture to increase issuable notes to $10 million, extend the term two years until May 2009 and to increase the interest rate from 8% to 9%.
 
On August 15, 2005, the Company, for prior services, authorized the issuance to a financial advisor a warrant to purchase up to 100,000 shares of common stock at $8.00 per share for a period of ten years.

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CASTLE BRANDS INC. AND SUBSIDIARIES
Notes to Financial Statements
 
Fiscal Years Ended March 31, 2003, 2004 and 2005
Unaudited with Respect to June 30, 2004 and 2005
 
NOTE 20 -  SUBSEQUENT EVENTS (CONT’D)
The warrant issued on December 1, 2003 in connection with the Company’s revolving credit facility (See Note 15, B., above) was subsequently amended to amend the warrant holder’s registration rights with respect to the Company’s initial public offering, eliminate a cash put to the Company and provide certain penalties if the shares underlying the warrants have not been registered by June 2007 and June 2008.
 
In connection with the acquisition of the Company’s interest in GCP it agreed to issue warrants to purchase 90,000 shares of common stock at $8.00 per share to three members of the Gosling family and an employee and issue options to purchase 20,000 shares of its common stock to employees of GCP.
 
In connection with our amended and restated warrant agreement with Keltic Financial Partners, LP for the purchase of 100,000 shares of our common stock, we have agreed that if on either June 1, 2007 or June 1, 2008 (a) there are shares of common stock received or issuable upon the exercise of the warrant that have not been registered and (b) we have not filed a registration statement with respect to which Keltic had the opportunity to register the unregistered shares, we shall pay Keltic $100,000 within ten (10) days of such date.
NOTE 21 -  GEOGRAPHIC INFORMATION
The consolidated financial statements include revenues and assets generated in or held in foreign countries. The following table sets forth the percentage of consolidated revenues from continuing operations and consolidated assets from foreign countries.
                                                                 
    Years Ended    
        Three
                Months Ended
    March 31   March 31   March 31   June 30
    2003   %   2004   %   2005   %   2005   %
     
Consolidated Revenue:
                                                               
Ireland, United Kingdom and Canada
  $ 603,596       25.0%     $ 1,995,000       41.3%     $ 5,891,000       46.7%     $ 1,651,181       36.7%  
United States
    1,815,466       75.0%       2,831,919       58.7%       6,726,863       53.3%       2,847,292       63.3%  
                                                 
Total Consolidated Revenue
  $ 2,419,062       100%     $ 4,826,919       100%     $ 12,617,863       100%     $ 4,498,473       100%  
                                                 
Consolidated Assets:
                                                               
Ireland & United Kingdom
  $ 698,246       2.5%     $ 3,032,000       10.9%     $ 4,823,000       11.2%     $ 5,521,615       12.6%  
United States
    26,924,680       97.5%       24,726,832       89.1%       38,432,009       88.8%       38,433,554       87.4%  
                                                 
Total Consolidated Assets
  $ 27,622,926       100%     $ 27,758,832       100%     $ 43,255,009       100%     $ 43,955,169       100%  
                                                 

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CASTLE BRANDS INC. AND SUBSIDIARIES
Notes to Financial Statements
 
Fiscal Years Ended March 31, 2003, 2004 and 2005
Unaudited with Respect to June 30, 2004 and 2005
 
NOTE 22 -  INITIAL PUBLIC OFFERING
On September 15, 2005, the Company’s board of directors approved the filing of a registration statement with the Securities and Exchange Commission for an initial public offering of the Company’s common stock.

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CASTLE BRANDS SPIRITS COMPANY LIMITED
(formerly known as The Roaring Water Bay Spirits Company Limited)
Directors’ Report and Financial Statements
Year Ended 31 December 2003
Registered number    274814
(BDO LOGO)

F-40


CASTLE BRANDS SPIRITS COMPANY LIMITED
Directors’ Report and Financial Statements
         
Contents   Page
    F-42  
 
    F-44  
 
    F-45  
 
    F-47  
 
    F-49  
 
    F-50  
 
    F-51  
 
    F-52  

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CASTLE BRANDS SPIRITS COMPANY LIMITED
Directors’ Report
          The directors present their annual report and audited financial statements for the year ended 31 December 2003.
Principal activities, business review and future developments
          The principal activity of the company is the manufacture and development of a range of Irish spirit brands for the Irish and International markets. These include Boru Vodka, Clontarf Irish Whiskey and O’Leary’s Irish Cream.
          Castle Brands Spirits Company Limited is a subsidiary of Castle Brands Spirits Group Limited, a company registered in Ireland, having its registered office at 4 Herbert Place, Herbert Street, Dublin 2.
          The Boru Vodka Company Limited, The Clontarf Irish Whiskey Company and Castle Brands Whiskey Company Limited are wholly owned subsidiaries of the company. All of the companies are dormant and have their registered offices at 4 Herbert Place, Herbert Street, Dublin 2.
          On 1 December, 2003 all of the issued share capital of the parent company, Castle Brands Spirits Group Limited, was acquired by Castle Brands Inc. a Delaware corporation.
          The company changed its name from The Roaring Water Bay Spirits Company Limited to Castle Brands Spirits Company Limited with effect from 28 January 2004.
Results and dividends
          The profit and loss account, balance sheet and cash flow statement for the year ended 31 December 2003 are set out on pages F-49 to F-51.
         
   
     
The loss for the financial year amounted to
    (46,887 )
Profit and loss account at beginning of year
    (582,288 )
       
Profit and loss account at end of year
    (629,175 )
       
          The directors do not recommend payment of a final dividend.
Post balance sheet events
          There have been no significant events since the year end, which would have an impact on the financial position at 31 December 2003.
Future developments
          The directors are confident about the coming year, with a number of exciting developmental opportunities in new and existing markets that will deliver sustained organic growth for the company.
Interests of directors and secretary
          The interests of the directors and the secretary of the company who are also directors of the ultimate parent undertaking, Castle Brands Inc., in the shares of Castle Brands Inc. are stated in the financial statements of that company.
Health and safety of employees
          It is the policy of the company to ensure the health and welfare of employees by maintaining a safe place and system of work. This policy is based on the requirements of employment legislation, including the Safety, Health and Welfare at Work Act, 1989.

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CASTLE BRANDS SPIRITS COMPANY LIMITED
Directors’ Report
Books of account
          The measures taken by the directors to ensure compliance with the requirements of Section 202, Companies Act, 1990, regarding proper books of account are the implementation of necessary policies and procedures for recording transactions, the employment of competent accounting personnel with appropriate expertise and the provision of adequate resources to the financial function. The books of account are maintained at 4 Herbert Place, Herbert Street, Dublin 2.
Auditors
          The auditors, BDO Simpson Xavier, Registered Auditors, have indicated their willingness to continue in office in accordance with the provisions of Section l60(2) of the Companies Act, 1963.
On behalf of the board:
     
/s/  Patrick Rigney   /s/  David Phelan
Patrick Rigney
Director
  David Phelan
Director
Date June 2, 2004

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CASTLE BRANDS SPIRITS COMPANY LIMITED
Statement of Directors’ Responsibilities
          Irish company law requires the directors to prepare financial statements for each financial period which give a true and fair view of the state of affairs of the company and of the profit or loss for that period. In preparing those financial statements, the directors are required to:
  •  select suitable accounting policies and then apply them consistently
 
  •  make judgements and estimates that are reasonable and prudent
 
  •  prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business
          The directors are responsible for keeping proper books of account which disclose with reasonable accuracy at any time the financial position of the company and to enable them to ensure that the financial statements are prepared in accordance with accounting standards generally accepted in Ireland and comply with the Companies Acts, 1963 to 2003. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the company and to prevent and detect fraud and other irregularities.
On behalf of the board:
     
/s/ Patrick Rigney   /s/ David Phelan
Patrick Rigney
Director
  David Phelan
Director
Date June 2, 2004

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BDO SIMPSON XAVIER LOGO
Independent Auditors’ report to the members of Castle Brands Spirits Company Limited
          We have audited the financial statements on pages F-47 to F-64 which comprise the Profit and Loss Account, the Balance Sheet, the Cash Flow Statement and related notes. These financial statements have been prepared under the historical cost convention and in accordance with the accounting policies set out on pages F-47 to F-48.
Respective responsibilities of directors and auditors in relation to the financial statements
          The directors are responsible for preparing the annual report. As described on page F-44, this includes responsibility for preparing the financial statements in accordance with accounting standards generally accepted in Ireland. Our responsibilities, as independent auditors, is to audit the financial statements in accordance with relevant legal and regulatory requirements and generally accepted auditing standards in Ireland and the United States of America.
          We report to you our opinion as to whether the financial statements are presented fairly, in all material respects, and are properly prepared in accordance with the Companies Acts. We also report to you whether in our opinion: proper books of account have been kept by the company; whether, at the balance sheet date, there exists a financial situation which may require the convening of an extraordinary general meeting of the company; and whether the information given in the directors’ report is consistent with the financial statements. In addition, we state whether we have obtained all the information and explanations necessary for the purposes of our audit and whether the financial statements are in agreement with the books of account.
          We report to you, if, in our opinion, any information specified by law regarding directors’ remuneration and directors’ transactions is not given and, where practicable, include such information in our report.
          We read the other information contained in the annual report and consider whether it is consistent with the audited financial statements. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements.
Basis of audit opinion
          We conducted our audit in accordance with generally accepted auditing standards in Ireland and the United States of America. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether
BDO INFORMATION

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BDO SIMPSON XAVIER
Independent Auditors’ report to the members of Castle Brands Spirits Company Limited (Continued)
the accounting policies are appropriate to the company’s circumstances, consistently applied and adequately disclosed.
          We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.
Opinion
          In our opinion, the financial statements referred to above present fairly, in all material respects, the state of affairs of the company at 31 December 2003 and 31 December 2002 and of the results for each of the years then ended and have been properly prepared in accordance with the Companies Acts, 1963 to 2003 and all Regulations to be construed as one with those acts.
          We have obtained all the information and explanations we considered necessary for the purposes of our audit. In our opinion, proper books of account have been kept by the company. The financial statements are in agreement with the books of account.
          In our opinion, the information given in the directors’ report on pages F-42 and F-43 is consistent with the financial statements.
          The net assets of the company, as stated in the balance sheet on page F-50, are more than half of the amount of its called up share capital and, in our opinion, on that basis there did not exist at 31 December 2003 a financial situation which, under Section 40(1) of the Companies (Amendment) Act, 1983, may require the convening of an extraordinary general meeting of the company.
/s/ BDO Simpson Xavier
     
BDO Simpson Xavier   Date 3rd June 2004
Registered Auditors   Dublin, Ireland

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CASTLE BRANDS SPIRITS COMPANY LIMITED
Statement of Accounting Policies
 
For the Year Ended 31 December 2003
          The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the company’s financial statements.
Basis of preparation
          The financial statements have been prepared on a going concern basis under the historical cost convention and comply with the requirements of Irish statute comprising the Companies Acts, 1963 to 2003, and with financial reporting standards of the Accounting Standards Board, as promulgated by the Institute of Chartered Accountants in Ireland.
Turnover
          Turnover, all of which arises from continuing operations, represents the value of goods and services at invoice value, exclusive of excise duty, value added tax and trade discounts, and inclusive of royalty income.
Tangible fixed assets and depreciation
          Tangible fixed assets are stated at cost, less accumulated depreciation. The charge for depreciation is calculated to write down the cost of tangible fixed assets to their estimated residual values by equal annual installments over their expected useful lives, which are as follows:
         
Buildings
    25 years  
Plant and equipment
    7 years  
Office equipment
    4 years  
Computer equipment
    4 years  
Motor vehicles
    4 years  
lntangible assets
          Intangible assets represent patents and internally developed trademarks. The directors have elected to amortise intangible assets over a useful economic life of five years.
Deferred development expenditure
          Expenditure for Boru Vodka, Clontarf Whiskey and O’Leary’s Cream brands, design, product development, market research, copyright, trademarks, patents, organization and tooling has been deferred and is amortised over a period of five years.
Financial assets
Investments in subsidiary undertakings
          Investments in subsidiary undertakings are carried at cost less provisions for impairments in value.
Stock and work in progress
          Stocks are stated at the lower of cost and net realisable value. Cost comprises purchase price, including freight and duty, and in the case of work in progress and finished goods, all directly related production overheads. Net realisable value comprises estimated sales value less all further costs to completion and further marketing, selling, and distribution costs.

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CASTLE BRANDS SPIRITS COMPANY LIMITED
Statement of Accounting Policies
 
For the Year Ended 31 December 2003
Foreign currencies
          The financial statements are expressed in Euro ( ).
          Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction or at a contracted rate. The resulting monetary assets and liabilities are translated at the balance sheet rate or the contracted rate and the exchange differences are dealt with in the profit and loss account.
Taxation
          The charge for taxation is based on the profit or loss for the year.
          Deferred taxation is accounted for in respect of timing differences between profit as computed for taxation purposes and profit as stated in the financial statements to the extent that such differences are expected to reverse in the foreseeable future.
Leased assets
          Assets obtained under hire purchase contracts and finance leases are capitalised as tangible assets and depreciated over the shorter of the lease term and their useful lives. Obligations under such agreements are included in creditors net of finance charge allocated to future periods. The interest element of the rental payment is charged to the profit and loss account so as to produce a constant periodic rate of charge.
          Rentals payable under operating leases are charged against income on a straight line basis over the lease term.
Pensions
          The company operates a defined contribution pension scheme. Contributions to the scheme are expensed as incurred.
Government grants
          Revenue based grants are credited to the profit and loss account to offset the matching expenditure in the period to which they belong.
          Grants that relate to specific capital expenditure are treated as deferred income, which is then credited to the profit and loss account over the related asset’s useful life.
Media production
          The fixed costs of media production are deferred over a period of three years which is the expected useful life of the production.
Consolidation
          The company is a subsidiary of an EU parent and is therefore exempt from the requirement to prepare consolidated financial statements by virtue of Regulation 9 of the European Communities (Companies: Group Accounts) Regulations, 1992. Consequently these financial statements deal with the results of the company as a single entity.

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CASTLE BRANDS SPIRITS COMPANY LIMITED
PROFIT AND LOSS ACCOUNT
For the Year Ended 31 December 2003
                         
    Note   2003   2002
             
         
Turnover
    1       5,569,866       6,726,551  
Cost of sales
            (2,848,965 )     (3,012,243 )
                   
Gross profit
            2,720,901       3,714,308  
Administration expenses
            (1,297,409 )     (1,542,813 )
Selling and distribution expenses
            (1,362,634 )     (2,013,716 )
                   
Operating profit
            60,858       157,779  
Interest payable and similar charges
    2       (99,945 )     (111,360 )
                   
(Loss)/profit on ordinary activities before taxation
    3       (39,087 )     46,419  
Tax on (loss)/profit on ordinary activities
    4       (7,800 )     24,829  
                   
(Loss)/profit for the financial year
            (46,887 )     71,248  
Profit and loss account at beginning of year
            (582,288 )     (653,536 )
                   
Profit and loss account at end of year
            (629,175 )     (582,288 )
                   
          The company had no recognised gains or losses for the year or prior year, other than the loss noted in the profit and loss account.
          There is no material difference between the loss on ordinary activities before taxation and the retained loss reported in the profit and loss account and the equivalent figures calculated on the historical cost basis.
The accompanying notes form an integral part of this profit and loss account.
On behalf of the board:
     
/s/ Patrick Rigney
  /s/ David Phelan
Patrick Rigney
  David Phelan
Director
  Director
Date June 2, 2004

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CASTLE BRANDS SPIRITS COMPANY LIMITED
BALANCE SHEET
At 31 December 2003
                                         
    Note   2003       2002    
                     
             
Fixed assets
    6       271,680               372,646          
Tangible assets
    7       24,215               34,562          
Intangible assets
    8       107,564               140,547          
Deferred development expenditure
    9       9               9          
Financial assets
                    403,468               547,764  
                               
Current assets
                                       
Stocks
    10       882,057               887,258          
Debtors
    11       3,166,138               3,442,843          
Cash at bank and in hand
            229,564               60,111          
                               
              4,277,759               4,390,212          
Creditors: amounts falling due within one year
    12       (3,328,775 )             (3,280,706 )        
                               
Net current assets
                    948,984               1,109,506  
                               
Total assets less current liabilities
                    1,352,452               1,657,270  
Creditors: amounts falling due after one year
    13               (632,986 )             (895,088 )
Deferred income
    15               (7,593 )             (10,192 )
Provisions for liabilities and charges
    16               (6,770 )              
                               
                      705,103               751,990  
                               
Financed by:
                                       
 
Capital and reserves
                                       
Called up share capital
    17               771,274               771,274  
Capital conversion reserve
    18               7,127               7,127  
Share premium
    18               555,877               555,877  
Profit and loss account
    18               (629,175 )             (582,288 )
                               
Shareholders’ funds
    19               705,103               751,990  
                               
The accompanying notes from an integral part of this balance sheet.
On behalf of the board.
     
/s/ Patrick Rigney
  /s/ David Phelan
Patrick Rigney
  David Phelan
Director
  Director
Date June 2, 2004

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CASTLE BRANDS SPIRITS COMPANY LIMITED
CASH FLOW STATEMENT
For the Year Ended 31 December, 2003
                         
    Note   2003   2002
             
         
Net cash inflow/(outflow) from operating activities
    22       559,892       (474,948 )
 
Servicing of finance and returns on investments
    23       (99,945 )     (111,360 )
Taxation
    23       24,249       (62,907 )
Capital expenditures and financial investment
    23       (77,502 )     (124,819 )
                   
 
Net cash inflow/(outflow) before use of liquid resources and financing
            406,694       (774,034 )
 
Financing
    23       (99,987 )     878,120  
                   
 
Increase in cash
            306,707       104,086  
                   
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
For the Year Ended 31 December, 2003
                         
    Note   2003   2002
             
         
Increase in cash
    24       306,707       104,086  
 
Decrease/(increase) in net debt
            99,987       (623,120 )
                   
 
Movement in net debt during the period
            406,694       (519,034 )
 
Net (debt) at beginning of year
    24       (2,178,125 )     (1,659,091 )
                   
 
Net (debt) at end of year
    24       (1,771,431 )     (2,178,125 )
                   

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CASTLE BRANDS SPIRITS COMPANY LIMITED
Notes on and forming part of the Financial Statements
 
For the Year Ended 31 December 2003
 
NOTE 1 -  TURNOVER
Turnover is derived entirely from the sale of alcoholic spirits in Ireland and abroad, and includes royalty income from Great Spirits Company LLC, a distributor of the products of Castle Brands Spirits Company Limited.
NOTE 2 -  INTEREST PAYABLE AND SIMILAR CHARGES
                 
    2003   2002
         
     
                Bank interest and charges
    85,179       99,893  
                Finance lease interest
    14,766       11,467  
             
      99,945       111,360  
             
NOTE 3 -  STATUTORY AND OTHER INFORMATION
                 
    2003   2002
         
     
                Auditors’ remuneration, including expenses
    17,500       17,500  
                Directors’ remuneration and other emoluments
    184,158       170,596  
                Government grants received
    -       (40,502 )
 
                 Depreciation and amortisation of:
               
                Owned tangible fixed assets
    52,041       49,242  
                Leased tangible fixed assets
    63,299       67,634  
                Deferred development expenditure
    88,677       77,538  
                Intangible assets
    17,781       16,295  
                Media production
    -       70,344  
                Capital grants received
    (2,599 )     (2,681 )
             
NOTE 4 -  TAX ON PROFIT ON ORDINARY ACTIVITIES
                 
    2003   2002
         
     
                Overprovision from previous year
    -       (24,829 )
                Deferred tax
    6,770       -  
                Tax credit on medical insurance repayable
    1,030       -  
             
      7,800       (24,829 )
             
There is no charge for corporation tax due to losses incurred in the year. The company is liable to corporation tax on profits from its operating activities at the reduced manufacturing rate of 10%. Manufacturing relief is due to expire on 31 December 2010.

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CASTLE BRANDS SPIRITS COMPANY LIMITED
Notes on and forming part of the Financial Statements
 
For the Year Ended 31 December 2003
 
NOTE 5 -  STAFF NUMBERS AND COSTS
The average number of persons employed by the company during the year, analysed by category, was as follows:
                 
    Number of
    employees
     
    2003   2002
    No.   No.
         
                Management
    2       2  
                Administration
    2       4  
                Selling and distribution
    9       9  
             
      13       15  
             
The aggregate payroll costs of these persons were as follows:
                 
    2003   2002
         
     
                Salaries
    492,204       661,024  
                Social welfare costs
    38,582       42,930  
                Pension costs
    36,621       34,006  
             
      567,407       737,960  
             

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CASTLE BRANDS SPIRITS COMPANY LIMITED
Notes on and forming part of the Financial Statements
 
For the Year Ended 31 December 2003
 
NOTE 6 -  TANGIBLE FIXED ASSETS
                                                 
    Land and   Plant and   Office   Computer   Motor    
    buildings   equipment   equipment   equipment   vehicles   Total
                         
             
                 Cost
                                               
                At beginning of year
    5,116       238,431       6,290       64,556       253,198       567,591  
                Additions in year
    -       7,602       305       6,467       -       14,374  
                                     
                 At end of year
    5,116       246,033       6,595       71,023       253,198       581,965  
                                     
                 Depreciation
                                               
                At beginning of year
    980       83,272       4,209       39,706       66,778       194,945  
                Charge for year
    205       36,905       901       14,030       63,299       115,340  
                                     
                 At end of year
    1,185       120,177       5,110       53,736       130,077       310,285  
                                     
                 Net book value
                                               
                At 31 December 2003
    3,931       125,856       1,485       17,287       123,121       271,680  
                                     
                At 31 December 2002
    4,136       155,159       2,081       24,850       186,420       372,646  
                                     
Included in the net book value of tangible assets are motor vehicles held under finance leases amounting to 123,121 (2002: 186,420). The depreciation charge in respect of these leased assets amounts to 63,299 (2002: 67,634).

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CASTLE BRANDS SPIRITS COMPANY LIMITED
Notes on and forming part of the Financial Statements
 
For the Year Ended 31 December 2003
 
NOTE 7 -  INTANGIBLE ASSETS
         
    Trademarks
    and patents
     
   
                 Cost
       
                At beginning of year
    81,471  
                Additions in year
    7,434  
       
                 At end of year
    88,905  
       
                 Depreciation
       
                At beginning of year
    46,909  
                Charge for year
    17,781  
       
                 At end of year
    64,690  
       
                 Net book value
       
                At 31 December 2003
    24,215  
       
                At 31 December 2002
    34,562  
       
Intangible assets represent patents and internally developed trademarks. The directors have elected to amortise intangible assets over a useful economic life of five years.
NOTE 8 -  DEFERRED DEVELOPMENT EXPENDITURE
                 
    2003   2002
         
     
                Balance at beginning of year
    140,547       192,345  
                Development expenditure incurred during the year
    55,694       25,740  
                Amortisation
    (88,677 )     (77,538 )
             
                Balance at end of year
    107,564       140,547  
             
Expenditure for Boru Vodka, Clontarf Whiskey and O’Leary’s Cream brands, design, product development, market research, copyright, trademarks, patents, organization and tooling has been deferred and is amortised over a period of five years.

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CASTLE BRANDS SPIRITS COMPANY LIMITED
Notes on and forming part of the Financial Statements
 
For the Year Ended 31 December 2003
 
NOTE 9 -  FINANCIAL ASSETS
                 
    2003   2002
         
     
                Shares in
               
                The Boru Vodka Company Limited
    3       3  
                The Clontarf Irish Whiskey Company
    3       3  
                Castle Brands Whiskey Company Limited
    3       3  
             
      9       9  
             
The Boru Vodka Company Limited, The Clontarf Irish Whiskey Company and Castle Brands Whiskey Company Limited all have their registered offices at 4 Herbert Place, Herbert Street, Dublin 2.
 
Activities
 
All three companies are 100% subsidiaries of Castle Brands Spirits Company Limited. At present all three are dormant.
NOTE 10 -  STOCKS
                 
    2003   2002
         
     
                Raw materials
    289,590       686,770  
                Finished Goods
    592,467       200,488  
             
      882,057       887,258  
             
There are no material differences between the replacement cost of stock and the balance sheet amounts.
NOTE 11 -  DEBTORS
                 
    2003   2002
         
     
                Trade debtors
    1,612,657       2,366,228  
                Prepayments
    139,248       171,639  
                Other debtors
    51,421       64,616  
                Amounts owed by related companies (note 25)
    1,191,483       656,635  
                VAT receivable
    171,329       183,725  
             
      3,166,138       3,442,843  
             

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CASTLE BRANDS SPIRITS COMPANY LIMITED
Notes on and forming part of the Financial Statements
 
For the Year Ended 31 December 2003
 
NOTE 12 -  CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
                 
    2003   2002
         
     
                Trade creditors
    1,429,819       1,196,665  
                Other creditors including tax and social welfare
    47,139       50,384  
                Accruals
    483,808       649,207  
                Amounts due under finance leases (note 14)
    145,115       47,926  
                Amounts owned to related companies
          41,302  
                Bank loan and overdraft (note 14)
    552,244       290,141  
                Trade finance (note 14)
    670,650       1,005,081  
             
      3,328,775       3,280,706  
             
                 
    2003   2002
         
     
                 Taxation creditors
               
                Taxation and social welfare included in other creditors:
               
                PAYE/PRSI
    34,950       74,633  
                Corporation tax
          (24,249 )
                Withholding tax
    12,189        
             
      47,139       50,384  
             
NOTE 13 -  CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
                 
    2003   2002
         
     
                Amounts due under finance lease (note 14)
          160,365  
                Shareholders’ loans (note 14)
    444,408       419,775  
                Bank loan (note 14)
    188,578       314,948  
             
      632,986       895,088  
             

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CASTLE BRANDS SPIRITS COMPANY LIMITED
Notes on and forming part of the Financial Statements
 
For the Year Ended 31 December 2003
 
NOTE 14 -  DETAILS OF BORROWINGS

Maturity analysis
                                     
        Within   Between one   Between two    
        one year   & two years   & five years   Total
                     
             
    Repayable by installments                                
    Obligations under finance leases and hire purchase contracts     145,115                   145,115  
    Repayable other than by installments                                
    Bank loan and overdraft     552,244       68,368       120,210       740,822  
    Trade finance     670,650                   670,650  
    Shareholders’ loans                 444,408       444,408  
                             
          1,368,009       68,368       564,618       2,000,995  
                             

Security
 

The company has granted an All Monies Debenture dated 4 February, 2000 giving a first floating charge over the assets of the company including all intellectual property rights to Ulster Bank Limited. A Letter of Waiver over the trade debtors dated 31 October, 2000 was issued to Ulster Bank Commercial Services Limited in respect of facilities maintained with them.
 

The company has granted an All Monies general counter indemnity dated 29 January, 2001 together with supporting resolution to Ulster Bank Limited.
 

David Phelan and Patrick Rigney have signed a joint and several letter of guarantee in the amount of 158,717 in favour of Ulster Bank Limited.
 

A deed of postponement dated 19 September, 1999 over the shareholders’ loans in the amount of 253,948 has been signed in favour of Ulster Bank Limited.
 

Castle Brands Inc. has guaranteed the repayment of the shareholders’ loans under the terms of the Agreement of Merger and Acquisitions.

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CASTLE BRANDS SPIRITS COMPANY LIMITED
Notes on and forming part of the Financial Statements
 
For the Year Ended 31 December 2003
 
NOTE 15 -  DEFERRED INCOME
                 
    2003   2002
         
     
                 Capital grants                
                At the beginning of the year     10,192       12,873  
                Amortised during the year     (2,599 )     (2,681 )
             
 
                At end of year     7,593       10,192  
             

A liability may arise to repay, in whole or in part, revenue grants received to date amounting to  93,040, if certain events occur as detailed in the grant agreements. The terms of repayments are as follows:
 

Feasibility Grant:
 

• The company’s liability for repayment of feasibility study grant paid in any year shall terminate five years from the end of that year and;

• The agreement shall terminate five years from the date of the last payment from the grants. The grant agreement start date was 23rd July 2000.
NOTE 16 -   PROVISIONS FOR LIABILITIES AND CHARGES
                 
    2003   2002
         
     
                 Deferred taxation                
                At the beginning of year            
                Charged to the profit and loss account     6,770        
             
                At end of year     6,770        
             
                 Deferred taxation                
                The amounts provided for deferred taxation are set out below.                
                 
    2003   2002
         
     
                Difference between accumulated depreciation and amortisation and capital allowances     6,770        
             
      6,770        
             

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CASTLE BRANDS SPIRITS COMPANY LIMITED
Notes on and forming part of the Financial Statements
 
For the Year Ended 31 December 2003
 
NOTE 17 -  CALLED UP SHARE CAPITAL
                 
    2003   2002
         
     
                 Authorised                
                796,000 (2001: 1,000,000) Ordinary shares of 1.25 each     995,000       995,000  
                20,000 Class “A” Ordinary shares of 0.01 each     200       200  
                 Reclassification of 204,000 Ordinary shares                
                2,550,000 Class “B” Ordinary shares of 0.10 each     255,000       255,000  
             
      1,250,200       1,250,200  
             
 
                 Issued, allotted and fully paid                
                 At 1 December 2003                
                412,947 ordinary shares of 1.25 each     516,184       458,515  
                (2002: 361,110 ordinary shares of 1.269738 each)                
                9,000 “A” ordinary shares of 0.01 each     90        
                2,550,000 “B” ordinary shares of 0.10 each     255,000        
 
                 Issued during the year                
                Debenture converted           64,796  
                9,000 “A” ordinary shares of 0.01 each           90  
                2,550,000 “B” ordinary shares of 0.10 each           255,000  
                Renominalisation of share capital           (7,127 )
             
 
                At 31 December 2003     771,274       771,274  
             

Rights of ordinary shares
 

The “A” ordinary shares and the “B” ordinary shares rank pari passu in all respects.
NOTE 18 -  RESERVES
                                 
    Capital conversion   Share   Profit and    
    reserve   premium   loss account   Total
                 
         
                At beginning of year     7,127       555,877       (582,288 )     (19,284 )
                Loss for the financial year                 (46,887 )     (46,887 )
                         
 
                At end of year     7,127       555,877       (629,175 )     (66,171 )
                         

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CASTLE BRANDS SPIRITS COMPANY LIMITED
Notes on and forming part of the Financial Statements
 
For the Year Ended 31 December 2003
 
NOTE 19 -  RECONCILIATION OF MOVEMENT IN SHAREHOLDERS’ FUNDS
                 
    2003   2002
         
     
                Shareholders’ funds at beginning of year     751,990       425,742  
                (Loss)/profit for the financial year     (46,887 )     71,248  
                Debenture converted           (253,948 )
                Ordinary shares issued           319,886  
                Renominalisation of share capital           (7,127 )
                Capital conversion reserve           7,127  
                Increase in share premium           189,062  
             
                Shareholders’ funds at end of year     705,103       751,990  
             
NOTE 20 -  COMMITMENTS

Capital commitments
 

There were no capital commitments of a significant nature authorised at the balance sheet date.
 

Operating lease commitments
 

Annual commitments exist under non-cancellable operating leases as follows:
                                 
    2003 Motor   2003   2002 Motor   2002
    vehicles   Other   vehicles   Other
                 
         
Expiring:                                
Between two and five years           5,577       7,359       6,747  
                         
NOTE 21 -  PENSIONS

The company operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the company is an independently administered fund. The pension cost charge represents contributions payable by the company to the fund and amounted to 36,621 (2002: 34,006).

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CASTLE BRANDS SPIRITS COMPANY LIMITED
Notes on and forming part of the Financial Statements
 
For the Year Ended 31 December 2003
 
NOTE 22 -  RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM
                    OPERATING ACTIVITIES
                 
    2003   2002
         
     
                Operating profit     60,858       157,779  
                Depreciation of tangible fixed assets, amortization of intangible
                assets, deferred development expenditure and government grants
    219,199       208,028  
                Profit on disposal of leased assets
          (13,257 )
                Decrease/(increase) in stocks
    5,201       (233,360 )
                Decrease/(increase) in debtors
    287,864       (782,154 )
                (Decrease)/increase in creditors
    (13,230 )     188,016  
             
                 Net cash inflow/(outflow) from operating activities
    559,892       (474,948 )
             
NOTE 23 -  ANALYSIS OF CASH FLOWS FOR HEADINGS NETTED IN THE CASH FLOW STATEMENT
                 
    2003   2002
         
     
                 Returns on investment and servicing of finance
               
                Interest paid
    (85,179 )     (99,893 )
                Interest element of finance lease repayments
    (14,766 )     (11,467 )
             
                 Net cash (outflow) for returns on investment and servicing of

                finance
    (99,945 )     (111,360 )
             
                 Taxation
               
                Tax repaid/(paid)
    24,249       (62,907 )
             
                 Capital expenditure and financial investment
               
                Purchase of fixed assets
    (77,502 )     (178,905 )
                Disposal of fixed assets
          54,086  
             
                 Net cash outflow for capital expenditure and financial investment     (77,502 )     (124,819 )
             
                 Financing
               
                Capital element of finance lease repayments
    (63,176 )     (50,991 )
                Loans received during year
          674,111  
                Loans repaid during the year
    (36,811 )      
                Share capital issue
          255,000  
             
                 Total financing cash flows
    (99,987 )     878,120  
             

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CASTLE BRANDS SPIRITS COMPANY LIMITED
Notes on and forming part of the Financial Statements
 
For the Year Ended 31 December 2003
 
NOTE 24 -  ANALYSIS OF NET DEBT
                                             
            Bank and   Tradefinance        
        Cash at bank   shareholder   and bank   Finance    
        and in hand   loans   overdrafts   lease   Total
                         
               
    At 1 January 2003     60,111       (734,723 )     (1,295,222 )     (208,291 )     (2,178,125 )
    Cash flows     169,453       36,811       137,254       63,176       406,694  
                                             
    At 31 December 2003     229,564       (697,912 )     (1,157,968 )     (145,115 )     (1,771,431 )
                                             
NOTE 25 -  RELATED PARTY TRANSACTIONS

The following entities are considered to be related parties for the purposes of Financial Reporting Standard No. 8 - “Related Party Disclosures”:
     
 Entity   Relationship
     
                Castle Brands Inc (a Delaware Corporation)
  Ultimate parent undertaking
                Castle Brands Spirits Group Limited
                (Irish registered undertaking)
  Immediate parent undertaking
                The Boru Vodka Company Limited
                (Irish registered undertaking)
  Subsidiary undertaking
                The Clontarf Irish Whiskey Company
                (Irish registered undertaking)
  Subsidiary undertaking
                Castle Brands Whiskey Company Limited
                (Irish registered undertaking)
  Subsidiary undertaking
                Castle Brands Spirits Marketing and Sales Company Limited
                (Irish registered undertaking)
  Under common control
                The Roaring Water Bay Spirits Company (GB) Limited
                (UK registered undertaking)
  Under common control
                The Roaring Water Bay Spirits Company (NI) Limited
                (NI registered undertaking)
  Under common control
                Great Spirits Company LLC
                (a Delaware limited liability company)
  Under common control

Details of transactions with related parties during the year are as follows:
             
 Entity   Transaction   Payable (receivable)
         
       
                The Roaring Water Bay Spirits Company
  Sales     (365,790 )
                (GB) Limited
           
                Great Spirits Company LLC
  Royalties     (288,934 )
                Great Spirits Company LLC
  Sales     (663,038 )

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CASTLE BRANDS SPIRITS COMPANY LIMITED
Notes on and forming part of the Financial Statements
 
For the Year Ended 31 December 2003
 
NOTE 25 -  RELATED PARTY TRANSACTIONS (CONT’D)
                     
    Director   Directors loan    
             
           
    David Phelan     At 1 Jan 2003       24,633  
          Amounts repaid       24,633  
                 
          At 31 Dec 2003        
                 

Disclosed to note 11 as amounts due from related undertakings at the balance sheet date are the following amounts:
                 
    2003   2002
         
     
                   Castle Brands Inc
    861,544        
                   Castle Brands Spirits Group Limited
    2,613       2,613  
                   The Roaring Water Bay Spirits Company (GB) Limited
          654,022  
                   Great Spirits Company LLC
    327,326        
             
      1,191,483       656,635  
             

The amounts due from The roaring Water Bay Spirits Company (GB) Limited to the company at 31 December 2003 of 836,912 was taken over by the Ultimate parent undertaking, Castle Brands, Inc.
NOTE 26 -  COMPARATIVES

Comparatives have been regrouped where necessary, on a basis consistent with the current year.
NOTE 27 -  APPROVAL OF FINANCIAL STATEMENTS

The board of directors approved these financial statements on June 2, 2004.

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THE ROARING WATER BAY SPIRITS COMPANY (GB) LIMITED
Directors’ Report and Financial Statements
Year Ended 31 December 2003
Registered number     03699502
(BDO LOGO)

F-65


THE ROARING WATER BAY SPIRITS COMPANY (GB) LIMITED
Directors’ Report and Financial Statements
         
Contents   Page
 
    F-67  
    F-69  
    F-70  
    F-72  
    F-73  
    F-74  
    F-75  

F-66


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THE ROARING WATER BAY SPIRITS COMPANY (GB) LIMITED
Directors’ Report
          The directors present their annual report and audited financial statements for the year ended 31 December 2003.
Principal activities, business review and future developments
The principal activity of the company is the distribution of a range of Irish spirit brands in the United Kingdom. These include Boru Vodka, Clontarf Irish Whiskey and O’Leary’s Cream.
The Roaring Water Bay Spirits Company (GB) Limited is a 100% subsidiary of Castle Brands Spirits Marketing and Sales Company Limited, a company registered in Ireland, having its registered office at 4 Herbert Place, Herbert Street, Dublin 2.
Results and dividends
The profit and loss account and balance sheet for the year ended 31 December 2003 are set out on pages F-73 and F-74.
         
    £
     
The loss for the financial year amounted to
    (163,344 )
Profit and loss account at beginning of year
    (545,627 )
       
Profit and loss account at end of year
    (708,971 )
       
          The directors do not recommend payment of a final dividend.
Post balance sheet events
There have been no significant events since the year end, which would have an impact on the financial position at 31 December 2003.
Directors and their interests
The company’s articles of association do not require the directors to retire by rotation. The present directors of the company are Patrick Rigney, David Phelan and John Joseph Walsh.

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THE ROARING WATER BAY SPIRITS COMPANY (GB) LIMITED
Directors’ Report
Interests of directors and secretary
          The interests of the directors and secretary of the company who are also directors of the ultimate parent company Castle Brands Inc., in the shares of Castle Brands Inc., are stated in the financial statements of that company.
Auditors
The auditors, BDO Simpson Xavier, Registered Auditors, have indicated their willingness to continue in office and a resolution to re-appoint them will be proposed at the annual general meeting.
On behalf of the board:
     
/s/ Patrick Rigney
  /s/ David Phelan
 
Patrick Rigney
  David Phelan
 
Director
  Director
Date June 3, 2004

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THE ROARING WATER BAY SPIRITS COMPANY (GB) LIMITED
Statement of Directors’ Responsibilities
          United Kingdom company law requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the company and of the profit or loss for that period. In preparing those financial statements, the directors are required to:
  •  select suitable accounting policies and then apply them consistently
 
  •  make judgements and estimates that are reasonable and prudent
 
  •  prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business
The directors are responsible for keeping proper books of account which disclose with reasonable accuracy at any time the financial position of the company and to enable them to ensure that the financial statements comply with the Companies Acts 1985. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the company and to prevent and detect fraud and other irregularities.
On behalf of the board:
     
/s/ Patrick Rigney
  /s/ David Phelan
 
Patrick Rigney
  David Phelan
 
Director
  Director
Date June 3, 2004

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(BDO LETTERHEAD)
Independent Auditors’ report to the Shareholders of
The Roaring Water Bay Spirits Company (GB) Limited
          We have audited the financial statements on pages F-72 to F-79 which comprise the Profit and Loss Account, the Balance Sheet, and related notes. These financial statements have been prepared under the historical cost convention and in accordance with the accounting policies set out on pages F-72.
Respective responsibilities of directors and auditors
          As described on page F-69, the company’s directors are responsible for the preparation of the financial statements. It is our responsibility to form an independent opinion, based on our audit, on those statements and to report our opinion to you.
          Our responsibility is to audit the financial statements in accordance with the relevant legal and regulatory requirements and generally accepted auditing standards in the United Kingdom and the United States of America.
          We report to you our opinion as to whether the financial statements are presented fairly, in all material respects, and are properly prepared in accordance with Companies Act 1985. We also report to you if, in our opinion, the Directors’ Report is not consistent with the financial statements, if the company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors’ remuneration and transactions with the company is not disclosed.
          We read the other information contained in the annual report and consider whether it is consistent with the audited financial statements. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements.
Basis of audit opinion
          We conducted our audit in accordance with generally accepted auditing standards in the United Kingdom and the United States of America. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and, judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company’s circumstances, consistently applied and adequately disclosed.
          We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.
(BDO LETTERHEAD)

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(BDO SIMPSON XAVIER)
Independent Auditors’ report to the Members of
The Roaring Water Bay Spirits Company (GB) Limited
Opinion
          In our opinion, the financial statements referred to above present fairly, in all material respects, the state of affairs of the company at 31 December 2003 and 31 December 2002 and of the loss for the years then ended and have been properly prepared in accordance with the Companies Acts, 1985 and all Regulations to be construed as one with those Acts.
          We have obtained all the information and explanations we considered necessary for the purposes of our audit. In our opinion, proper books of account have been kept by the company. The financial statements are in agreement with the books of account.
          In our opinion, the information given in the directors’ report on pages F-67 to F-68 is consistent with the financial statements.
     
/s/ BDO Simpson Xavier
   
 
BDO Simpson Xavier
  Date 3rd June 2004
Registered Auditors
  Dublin, Ireland

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THE ROARING WATER BAY SPIRITS COMPANY (GB) LIMITED
Statement of Accounting Policies
 
For the Year Ended 31 December 2003
 
          The following accounting policies have been applied consistently in dealing with items which are considered material, in relation to the company’s financial statements.
Basis of preparation
          The financial statements have been prepared on a going concern basis under the historical cost convention and comply with the requirements of the Companies Acts 1985, and with financial reporting standards of the Accounting Standards Board.
Turnover
          Turnover, all which arises from continuing operations, represents the value of goods and services at invoice value, exclusive of excise duty, value added tax and trade discounts, and inclusive of royalty income.
Tangible fixed assets and depreciation
          Tangible fixed assets are stated at cost, less accumulated depreciation. The charge for depreciation is calculated to write down the cost of tangible fixed assets to their estimated residual values by equal annual installments over their expected useful lives, which are as follows:
     
Motor vehicles
  4 years
Stock and work in progress
          Stocks are stated at the lower of cost and net realisable value. Cost comprises purchase price, including freight and duty, and in the case of work in progress and finished goods, all directly related production overheads. Net realisable value comprises estimated sales value less all further costs to completion and further marketing, selling, and distribution costs.
Foreign currencies
          The financial statements are expressed in Sterling (£).
          Transactions in foreign currencies are recorded at the rate ruling at the date of the transactions or at a contracted rate. The resulting monetary assets and liabilities are translated at the balance sheet rate or the contracted rate and the exchange differences are dealt with in the profit and loss account.
Taxation
          The charge for taxation is based on the profit or loss for the year.
          Deferred tax is provided on all timing differences that have originated but not reversed, at the balance sheet date. Where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future, have occurred at the balance sheet date.

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THE ROARING WATER BAY SPIRITS COMPANY (GB) LIMITED
PROFIT AND LOSS ACCOUNT
For the Year Ended 31 December 2003
                         
    Note   2003   2002
             
        £   £
Turnover
    1       465,945       518,137  
Cost of sales
            (395,005 )     (461,172 )
                   
Gross profit
            70,940       56,965  
Administration expenses
            (62,782 )     (24,509 )
Selling and distribution
            (166,844 )     (98,612 )
                   
Operating loss
            (158,686 )     (66,156 )
Interest payable and similar charges
    2       (4,658 )     (2,739 )
                   
Loss on ordinary activities before taxation
    3-4       (163,344 )     (68,895 )
Tax on loss on ordinary activities
    5              
                   
Loss for the financial year
            (163,344 )     (68,895 )
Profit and loss account at beginning of year
            (545,627 )     (476,732 )
                   
Profit and loss account at end of year
            (708,971 )     (545,627 )
                   
          The company had no recognised gains or losses for the year other than the loss noted in the profit and loss account.
          There is no material difference between the loss on ordinary activities before taxation and the retained loss reported in the profit and loss account and the equivalent figures calculated on the historical cost basis.
The accompanying notes from an integral part of this profit and loss account.
On behalf of the board:
     
/s/ Patrick Rigney
Patrick Rigney
Director
  /s/ David Phelan
David Phelan
Director
Date June 3, 2004

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THE ROARING WATER BAY SPIRITS COMPANY (GB) LIMITED
BALANCE SHEET
At 31 December 2003
                                         
    Note   2003       2002    
                     
        £   £   £   £
Fixed assets
                                       
Tangible assets
    6               15,805               21,680  
Current assets
                                       
Bank
            33,592                        
Stocks
    7       72,192               43,715          
Debtors
    8       173,760               218,707          
                               
              279,544               262,422          
Creditors: amounts falling due within one year
    9       (635,725 )             (500,322 )        
                               
Net current Liabilities
                    (356,181 )             (237,900 )
                               
Total assets less current liabilities
                    (340,376 )             (216,220 )
Creditors: amounts falling due after one year
    10               (368,593 )             (329,405 )
                               
                      (708,969 )             (545,625 )
                               
Financed by:
                                       
Capital and reserves
                                       
Called up share capital
    11               2               2  
Profit and loss account
    12               (708,971 )             (545,627 )
                               
Shareholders’ deficit
    13               (708,969 )             (545,625 )
                               
The accompanying notes from an integral part of this balance sheet.
On behalf of the board:
     
/s/ Patrick Rigney
Patrick Rigney
Director
  /s/ David Phelan
David Phelan
Director
Date June 3, 2004

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THE ROARING WATER BAY SPIRITS COMPANY (GB) LIMITED
Notes on and forming part of the Financial Statements
 
For the Year Ended 31 December 2003
 
NOTE 1 -  TURNOVER
  Turnover is derived entirely from the sale of alcoholic spirits in Great Britain.
NOTE 2 -  INTEREST PAYABLE AND SIMILAR CHARGES
                 
    2003   2002
         
    £   £
                Interest and bank charges
    4,658       2,739  
             
NOTE 3 -  STATUTORY AND OTHER INFORMATION
                 
    2003   2002
         
    £   £
                Auditors’ remuneration, including expenses
    4,000       4,000  
             
NOTE 4 -  STAFF NUMBERS AND COSTS
  The average number of persons employed by the company during the year, analysed by category, was as follows:
                 
    No.   No.
    2003   2002
         
                Selling and distribution
    1       1  
             
      1       1  
             
  The aggregate payroll costs of these persons were as follows:
                 
    2003   2002
         
    £   £
                Salaries
    56,280       38,842  
             
NOTE 5 -  TAX ON LOSS ON ORDINARY ACTIVITIES
  There is no provision for Corporation Tax due to trading losses incurred.
NOTE 6 -  TANGIBLE FIXED ASSETS
                 
    Motor    
    Vehicles   Total
         
    £   £
                 Cost
               
                At beginning of year
    23,500       23,500  
                Additions in year
           
             
                 At end of year
    23,500       23,500  
             

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THE ROARING WATER BAY SPIRITS COMPANY (GB) LIMITED
Notes on and forming part of the Financial Statements
 
For the Year Ended 31 December 2003
 
NOTE 6 -  TANGIBLE FIXED ASSETS (CONT’D)
                 
    Motor    
    Vehicles   Total
         
    £   £
                 Depreciation
               
                At beginning of year
    1,820       1,820  
                Charge for year
    5,875       5,875  
             
                 At end of year
    7,695       7,695  
             
                 Net book value
               
                At 31 December 2003
    15,805       15,805  
             
                At 31 December 2002
    21,680       21,680  
             
  Included in the net book value of tangible fixed assets are motor vehicles held under finance leases amounting to £15,805. The depreciation charge in respect of these leased assets amounts to £5,875. This depreciation charge is charged to the profit and loss account of Castle Brands Spirits Company Limited as the vehicle is solely used by one of their employees, however the vehicle was financed leased by The Roaring Water Bay Spirits Company (GB) Limited.
NOTE 7 -  STOCKS
                 
    2003   2002
         
    £   £
                Finished goods
    72,192       43,715  
             
  There are no material differences between the replacement cost of stock and the balance sheet amounts.
NOTE 8 -  DEBTORS
                 
    2003   2002
         
    £   £
                Trade debtors
    171,677       214,124  
                Prepayments
    2,083       4,583  
             
      173,760       218,707  
             

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THE ROARING WATER BAY SPIRITS COMPANY (GB) LIMITED
Notes on and forming part of the Financial Statements
 
For the Year Ended 31 December 2003
 
NOTE 9 -  CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
                 
    2003   2002
         
    £   £
                Trade creditors
    30,353       2,016  
                PAYE/PRSI
    10,521       7,605  
                Accruals
     –       10,446  
                VAT
    3,778       11,671  
                Amounts owed to related undertaking
    516,038       425,312  
                Bank loans and overdraft
    14,777       39,377  
                Memorandum discounting facility
    57,072        
                Amounts due under finance lease obligations
    3,186       3,895  
             
      635,725       500,322  
             
NOTE 10 -  CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
                 
    2003   2002
         
    £   £
                Amount owed to related undertaking
    357,965       309,800  
                Amounts due under finance lease obligations
    10,628       19,605  
             
      368,593       329,405  
             
NOTE 11 -  CALLED UP SHARE CAPITAL
                 
    2003   2002
         
    £   £
                 Authorised
               
                100 Ordinary shares of £1 each
    100       100  
             
                 Alloted, called up and fully paid
               
                2 Ordinary shares of £1 each
    2       2  
             
NOTE 12 -  RESERVES
         
    Profit and
    Loss Account
     
    £
                At 1 January 2003
    (545,627 )
                Loss for the financial year
    (163,344 )
       
                At 31 December 2003
    (708,971 )
       

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THE ROARING WATER BAY SPIRITS COMPANY (GB) LIMITED
Notes on and forming part of the Financial Statements
 
For the Year Ended 31 December 2003
 
NOTE 13 -  RECONCILIATION OF MOVEMENT IN SHAREHOLDERS’ DEFICIT
                 
    2003   2002
         
    £   £
                Shareholders’ deficit at beginning of year
    (545,625 )     (476,730 )
                Loss for the financial year
    (163,344 )     (68,895 )
             
Shareholders’ deficit at end of year
    (708,969 )     (545,625 )
             
NOTE 14 -  COMMITMENTS
  Capital Commitments
  There were no capital commitments of a significant nature authorized at the balance sheet date.
NOTE 15 -  SECURITY
  David Phelan and Patrick Rigney have granted a joint and several letter of guarantee in the amount of £40,000 each, in favour of Ulster Bank Limited.
 
  Ulster Bank Limited also holds an all monies General Counter Indemnity dated 29 January 2001 together with supporting resolution in respect of the C & D Guarantee in the amount of £40,000.
NOTE 16 -  RELATED PARTY TRANSACTIONS
  The following entities are considered to be related parties for the purposes of Financial Reporting Standard No. 8 - “Related Party Disclosures”:
         
    Entity   Relationship
         
    Castle Brands Inc. (a Delaware Corporation)   Ultimate parent undertaking
    Castle Brands Spirits Marketing and Sales Company Limited (Irish registered undertaking)   Immediate parent undertaking
    The Roaring Water Bay Spirits Company (NI) Limited (NI registered undertaking)   Under common control
    Castle Brands Spirits Group Limited (Irish registered undertaking)   Under common control
    Castle Brands Spirits Company Limited (Irish registeredundertaking)   Under common control
    The Boru Vodka Company Limited (Irish registered undertaking)   Under common control
    The Clontarf Irish Whiskey Company (Irish registered undertaking)   Under common control
    Castle Brands Whiskey Company Limited (Irish registered undertaking)   Under common control
    Great Spirits Company LLC (a Delaware limited liability company)   Under common control

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THE ROARING WATER BAY SPIRITS COMPANY (GB) LIMITED
Notes on and forming part of the Financial Statements
 
For the Year Ended 31 December 2003
 
NOTE 16 -  RELATED PARTY TRANSACTIONS (CONT’D)
  Details of transactions with related parties during the year are follows:
             
 Entity   Transaction   Payable/(receivable)
         
        £
                Castle Brands Spirits Company Limited
  Purchases     255,391  
  Disclosed in note 9 as amounts due within one year to related undertakings at the balance sheet date are the following amounts:
                 
    2003   2002
         
    £   £
                Castle Brands Inc.,
    516,038       -  
                Castle Brands Spirits Company Limited
    -       425,312  
             
      516,038       425,312  
             
  Disclosed in note 10 as amounts due after one year to related undertakings at the balance sheet date are the following amounts:
                 
    2003   2002
         
    £   £
                Castle Brands Spirits Marketing and Sales Company Limited
    357,965       309,800  
             
NOTE 17 -  CASH FLOW STATEMENT
  The company has relied on specified exemptions contained in Financial Reporting Standard No. l on the grounds that the company is entitled to the benefit of those exemptions as a small company.
NOTE 18 -  COMPARATIVES
  Comparatives have been regrouped where necessary, on a basis consistent with the current year.
NOTE 19 -  APPROVAL OF FINANCIAL STATEMENTS
  The financial statements were approved by the board on June 3 2004.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
Castle Brands Inc.
          We have examined Castle Brands Spirits Company Limited’s (formerly known as The Roaring Water Bay Spirits Company Limited) schedule reconciling their financial statements prepared in accordance with the Companies Acts, 1963 to 2003 and all regulations to U.S. generally accepted accounting principles of as and for the years ended December 31, 2003 and 2002 and The Roaring Water Bay Spirits Company (GB) Limited’s schedule reconciling their financial statements prepared in accordance with the Companies Acts, 1985 and all regulations to U.S. generally accepted accounting principles of as and for the years ended December 31, 2003. Each Company’s management is responsible for their schedules of reconciliation. Our responsibility is to express an opinion based on our examinations.
          Our examinations were conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) and, accordingly, included examining on a test basis, evidence supporting the Companies’ reconciliations and performing such other procedures as we considered necessary in the circumstances. We believe that our examinations provide a reasonable basis for our opinion.
          Our examination disclosed that The Roaring Water Bay Spirits Company (GB) Limited’s financial statements omitted a statement of cash flows which is required to be presented.
          In our opinion, except for the omission of a statement of cash flows described in the preceding paragraph, the schedules referred to above present, in all material respects, the reconciling differences between net income (loss) and shareholders’ equity amounts reported in the historical financial statements and the corresponding amounts that would be reported if those financial statements were presented directly in U.S. generally accepted accounting principles.
/s/ Eisner LLP
Eisner LLP
New York, NY
September 21, 2005

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UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
The financial statements of the Castle Brands Spirits Company Limited (formerly known as the Roaring Water Bay Spirits Company Ltd.) are prepared in accordance with generally accepted accounting principles in Ireland (“Irish GAAP”) conform to those generally accepted in the United States (“U.S. GAAP”), in all material respects, except as noted below:
Reconciliation of Income/(Losses) reported to U.S. GAAP:
                   
    Year   Year
    ended   ended
    December 31,   December 31,
    2003   2003
         
Net (loss)/income as reported in accordance with Irish GAAP
  $ (54,056 )     67,393  
Adjustments:
               
 
Deferred expenditures — R&D
    (64,210 )     ( 24,347 )
 
Amortization — deferred expenditures
    102,236       73,343  
             
Net (loss)/income under U.S. GAAP
  $ (16,030 )   $ 116,389  
             
Basic and diluted net loss per share under U.S. GAAP:
  $ (.02 )   $ .19  
             
Deferred expenditures — R&D  — Under Irish GAAP, research and development costs are capitalized and amortized over five years. Under U.S. GAAP, research and development costs are expensed as incurred.
Push down accounting — The statutory financial statements of the Castle Brands Spirits Company Limited (formerly known as the Roaring Water Bay Spirits Company Ltd.) are stated at historical cost. The adjustments to U.S. GAAP include the “push down” of the fair value of all assets acquired in the acquisition by Castle Brands, Inc., as of December 1, 2003, of $17,421,051.
Reconciliation of total assets, liabilities, and shareholder equity to U.S. GAAP:
                 
    December 31,   December 31,
    2003   2002
         
Total assets under Irish GAAP
  $ 5,878,217     $ 5,176,480  
Adjustments to U.S. GAAP
    17,285,983       (147,335 )
             
Total assets under U.S. GAAP
  $ 23,164,200     $ 5,029,145  
             
Total liabilities under Irish GAAP
  $ 4,992,819     $ 4,388,169  
Adjustments to U.S. GAAP
    (   —    )     (   —    )
             
Total liabilities under U.S. GAAP
  $ 4,992,819     $ 4,388,169  
             
Total stockholders equity under Irish GAAP
  $ 885,398     $ 788,311  
Adjustments to U.S. GAAP
    17,285,983       (147,335 )
             
Total stockholders equity under U.S. GAAP
  $ 18,171,381     $ 640,976  
             
Total liabilities and stockholders equity under U.S. GAAP
  $ 23,164,200     $ 5,029,145  
             

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Reconciliation of statements of cash flow to U.S. GAAP:
                   
    Year   Year
    ended   ended
    December 31,   December 31,
    2003   2003
         
Cash flows from operating activities under Irish GAAP
               
Net loss/income as reported in accordance with U.K. GAAP
  $ ( 54,056 )   $ 67,393  
Adjustments:
               
 
Deferred expenditures — R&D
    ( 64,210 )     ( 24,347 )
 
Amortization — deferred expenditures
    102,236       73,343  
             
Net (loss)/income under U.S. GAAP
  $ (16,030 )   $ 116,389  
             
Adjustments to reconcile net (loss)/income to net cash used in operating activities
Depreciation and amortization
    (102,236 )     (73,343 )
             
Net cash provided by (used in) operating activities under U.S. GAAP
    ( 102,236 )     ( 73,343 )
             
Cash flows from investing activities under Irish GAAP Deferred expenditures — R&D
    64,210       24,347  
             
Net cash used in operating activities under U.S. GAAP
    64,210       24,347  
             
The functional currency used on these financial statements is not a highly inflationary currency.
The exchange rates used at December, 31st 2003 and December, 31st 2002, were 1.2557 and 1.0483, respectively. The weighted average exchange rates at December, 31st 2003 and December, 31st 2002 were 1.1529 and 0.9459, respectively.

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UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
The financial statements of the Roaring Water Bay Spirits Company (GB) Ltd. are prepared in accordance with generally accepted accounting principles in the United Kingdom (“UK GAAP”) and conform to those generally accepted in the United States (“U.S. GAAP”), in all material respects.

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2,500,000 Shares
(LOGO)
Common Stock
 
PROSPECTUS
 
Oppenheimer & Co.
  ThinkEquity Partners LLC
  Ladenburg Thalmann & Co. Inc.       
          Through and including                       , 2005 (25 days after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotment or subscriptions.


Table of Contents

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
          The following table sets forth the expenses payable in connection with the offering described in the Registration Statement. All such expenses are estimates except for the SEC registration fee, the NASD filing fee and the American Stock Exchange filing fee. These expenses will be borne by the Registrant.
           
SEC registration fee
  $ 3,722.26  
NASD filing fee
    3,662.50  
AMEX filing fee
    55,000.00  
Transfer agent and registrar fees
    *  
Accountants’ fees and expenses
    *  
Legal fees and expenses
    *  
Printing and engraving expenses
    *  
Miscellaneous fees and expenses
    *  
       
 
Total
  $ *  
       
 
To be filed by amendment
Item 14. Indemnification of Directors and Officers
          Section 145 of the Delaware General Corporation Law, or DGCL, permits, in general, a Delaware corporation to indemnify any person who was or is a party to any proceeding (other than an action by, or in the right of, the corporation) by reason of the fact that he or she is or was a director or officer of the corporation, or served another entity in any capacity at the request of the corporation, against liability incurred in connection with such proceeding, including the estimated expenses of litigating the proceeding to conclusion and the expenses actually and reasonably incurred in connection with the defense or settlement of such proceeding, including any appeal thereof, if such person acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation and, in criminal actions or proceedings, additionally had no reasonable cause to believe that his or her conduct was unlawful. Section 145(e) of the DGCL permits the corporation to pay such costs or expenses in advance of a final disposition of such action or proceeding upon receipt of an undertaking by or on behalf of the director or officer to repay such amount if he or she is ultimately found not to be entitled to indemnification under the DGCL. Section 145(f) of the DGCL provides that the indemnification and advancement of expense provisions contained in the DGCL shall not be deemed exclusive of any rights to which a director or officer seeking indemnification or advancement of expenses may be entitled.
          Our certificate of incorporation and bylaws provide, in general, that we shall indemnify, to the fullest extent permitted by law, any and all persons whom we shall have the power to indemnify under those provisions from and against any and all of the expenses, liabilities, or other matters referred to in or covered by those provisions. Our certificate of incorporation and bylaws also provide that the indemnification provided for therein shall not be deemed exclusive of any other rights to which those indemnified may be entitled as a matter of law or which they may be lawfully granted.
          In connection with this offering, we are entering into indemnification agreements with each of our current directors and officers to give these directors and officers additional contractual assurances regarding the scope of the indemnification set forth in our certificate of incorporation and bylaws and to provide additional procedural protections. We expect to enter into a similar agreement with any new directors or executive officers. We expect to increase our directors’ and officers’ liability insurance to $10.0 million of coverage.

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          The Underwriting Agreement to be filed as Exhibit 1 to this registration statement will provide for indemnification by us and the underwriters for certain civil liabilities.
Item 15. Recent Sales of Unregistered Securities
          During the three years preceding the filing of this registration statement, we sold the following securities which were not registered under the Securities Act of 1933, as amended:
          From December 3, 1999 through September 11, 2002, Great Spirits Company LLC, the predecessor of our company, issued 400,000 shares representing limited liability company membership interests at various prices up to $30.00 per share to 40 accredited investors, as defined in Rule 501 promulgated under the Securities Act of 1933, for an aggregate offering price of $11.2 million. These membership interests were issued in reliance upon Section 4(2) of the Securities Act of 1933 as a transaction by an issuer not involving a public offering. 40,000 of these shares representing membership interests were converted to 40,000 of our Series B convertible preferred shares on February 20, 2003 in reliance on Section 4(2) of the Securities Act of 1933. No commissions or underwriting expenses were paid in connection with this transaction.
          From February 20, 2003 through July 31, 2003, Great Spirits Company LLC sold 107,143 shares of Series A convertible preferred shares at a purchase price of $7.00 per share for an aggregate of $3.8 million to a total of 36 accredited investors. We issued these Series A convertible preferred shares in reliance upon Section 4(2) of the Securities Act of 1933 as a transaction by an issuer not involving a public offering. No commissions or underwriting expenses were paid in connection with this transaction.
          On August 23, 2003, Great Spirits Company LLC entered into a Revolving Loan Agreement with Keltic Financial Partners, LP, an institutional investor, providing for a $1.5 million financing secured by receivables, inventory and related items. In connection with the financing, Great Spirits Company LLC issued a warrant to the lender, an accredited investor, to purchase up to 100,000 shares of limited liability company membership interest at $6.00 a share. The note and warrant were issued in reliance upon Section 4(2) of the Securities Act of 1933 as a transaction by an issuer not involving a public offering. No commissions or underwriting expenses were paid in connection with this transaction.
          On December 1, 2003, Great Spirits Company LLC issued 2,068,750 Series C convertible preferred shares at $8.00 per share to 65 accredited investors or non-U.S. residents for an aggregate purchase price of $16.6 million in connection with the acquisition of Roaring Water Bay Spirits Group companies and the merger of Great Spirits Company LLC with our company. In connection with such merger and acquisition our company issued five shares of common stock or Series A or B convertible preferred stock, as applicable, to members of Great Spirits Company LLC for each like share of membership interest. On February 9, 2004, Watch Hill Advisors LLC, a registered broker-dealer, received a placement fee of $1.1 million and a warrant to purchase 107,118 shares of our common stock at $8.00 a share as placement agent for such transaction. We issued these shares and the Series C convertible preferred stock in reliance upon Section 4(2) of the Securities Act of 1933 as a transaction by an issuer not involving a public offering.
          In connection with the acquisition of the Roaring Water Bay Spirits Group companies, on December 1, 2003, we sold an aggregate principal amount of 1,374,750 of our 5% euro denominated convertible subordinated notes due December 1, 2006. On the same day, our wholly owned subsidiary Castle Brands Spirits Group Limited sold an aggregate principal amount of  444,389 of its subordinated notes due December 1, 2006, to four non-U.S. residents and former owners of the Roaring Water Bay Spirits Group companies. In connection with that closing we also sold a 5% subordinated note due July 11, 2007, in the principal amount of  255,000 to FBD International Financial Services, a non-U.S. resident in connection with the acquisition of minority interest shares in Castle Brands Spirits Group Limited. These notes were issued in reliance upon Section 4(2) of the Securities Act of 1933 as a transaction by an issuer not involving a public offering. No commissions or underwriting expenses were paid in connection with this transaction.

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          On June 9, 2004, our wholly owned subsidiary Castle Brands (USA) Corp. issued an aggregate principal amount of $4.6 million of its 8% senior secured notes which are guaranteed as to payment by our company. These notes were accompanied by warrants to purchase 25 shares of our common stock at $8.00 a share for every $1,000 principal amount of such notes for an aggregate of 116,500 shares, to 27 accredited investors or non-U.S. residents. The notes and warrants were issued in reliance upon Section 4(2) of the Securities Act of 1933 as a transaction by an issuer not involving a public offering. No commissions or underwriting expenses were paid in connection with this transaction.
          From March through August, 2005, we issued $15.0 million aggregate principal amount of our 6% convertible subordinated promissory notes to two institutional investors, each an accredited investor. The notes are convertible into one share of our common stock for each $7.00 in principal with respect to 40% of the principal amount and $8.00 for the remainder. We issued the notes in reliance upon Section 4(2) of the Securities Act of 1933 as a transaction by an issuer not involving a public offering. No commissions or underwriting expenses were paid in connection with this transaction.
          From November 30, 2004 through August 2, 2005, we sold an aggregate of 1,300,000 shares of our Series C convertible preferred stock to 116 accredited investors or non-U.S. residents at $8.00 a share for an aggregate purchase price of $10.4 million. Ladenburg Thalmann & Co. Inc., a registered broker-dealer, acted as the placement agent and Potomac Capital Markets, LLC, a registered broker-dealer, acted as sub-placement agent, and together they received aggregate placement fees of $421,330 and we issued warrants to them and/or their designees to purchase an aggregate of 65,000 shares of our common stock at $8.00 per share. We issued these shares to the investors and the placement agent warrants to Ladenburg Thalmann & Co. and its designees and Potomac Capital Markets in reliance upon Section 4(2) of the Securities Act of 1933 as a transaction by an issuer not involving a public offering and Section 901 of the Securities Act of 1933 as an offshore transaction to a non-U.S. person.
          On January 1, 2005, we issued a warrant to purchase 20,000 shares of our common stock at $8.00 per share to Charles Shuler, and on August 23, 2005 we issued a warrant to purchase 100,000 shares of our common stock at $8.00 per share to Fieldstone Partners Inc., each an accredited investor, in return for consulting services. These warrants were issued in reliance upon Section 4(2) of the Securities Act of 1933 as a transaction by an issuer not involving a public offering. No commissions or underwriting expenses were paid in connection with this transaction.
          In connection with our purchase of a 60% interest in our strategic export venture with Gosling’s and that venture’s procurement of an exclusive global (except Bermuda) export agreement with Gosling’s Export (Bermuda) Limited, we issued warrants to certain members and/or employees of the Gosling family as of April 1, 2005 for the purchase of 90,000 shares of our common stock at $8.00 per share. We issued this warrant in reliance upon Section 4(2) of the Securities Act of 1933, as a transaction by an issuer not involving a public offering. No commissions or underwriting expenses were paid in connection with the transaction.
          Between August 8, 2003 and September 27, 2005, we granted options to purchase shares of our common stock to our employees and directors under our stock incentive plan at exercise prices ranging from $6.00 to $8.00. Of the options granted under the stock incentive plan as of September 27, 2005, options to purchase an aggregate of 878,500 shares of common stock remain outstanding and options to purchase 104,000 shares have been cancelled and returned to the option plan. None of these options have been exercised. We issued these options in reliance on Rule 701 promulgated under the Securities Act of 1933 in that the securities were offered and sold either pursuant to a written compensatory benefit plan or pursuant to a written contract relating to compensation.
          In addition, each of the share or warrant certificates and each of the notes issued in the transactions listed above bears a restrictive legend permitting the transfer thereof only in compliance with applicable securities laws. The recipients of securities in each of these transactions listed above represented to us their intention to acquire the securities for investment only and not with view to or for sale in connection with any distribution thereof. All recipients had adequate access, through their relationship with us or through other access to information provided by us, to information about our company.

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Item 16. Exhibits and Financial Statement Schedules
  (a) Exhibits
         
Exhibit Number   Exhibit
     
    1*     Form of Underwriting Agreement
 
  2 .1*   Agreement of Merger and Acquisitions, dated as of July 31, 2003, by and among GSRWB, Inc., The Roaring Water Bay Spirits Group Limited, The Roaring Water Bay Spirits Marketing and Sales Company Limited, Great Spirits Company LLC, Great Spirits Corp., Patrick Rigney, David Phelan, Carbery Milk Products Limited and Tanis Investments Limited
 
  2 .2*   Amendment to Agreement of Merger and Acquisitions, dated as of October 1, 2003, by and among GSRWB, Inc., The Roaring Water Bay Spirits Group Limited, The Roaring Water Bay Spirits Marketing and Sales Company Limited, Great Spirits Company LLC, Great Spirits Corp., Patrick Rigney, David Phelan, Carbery Milk Products Limited and Tanis Investments Limited
 
  3 .1   Form of Amended and Restated Certificate of Incorporation of the Registrant
 
  3 .2   Form of Amended and Restated Bylaws of the Registrant
 
  4 .1*   Form of Common Stock Certificate
 
  4 .2   Shareholders Agreement, dated as of December 1, 2003, by and among GSRWB, Inc. and the holders of shares of Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock and the Common Stockholders
 
  5 .1*   Opinion of Patterson Belknap Webb & Tyler LLP
 
  10 .1**   Export Agreement, dated as of February 14, 2005 between Gosling Partners Inc. and Gosling’s Export (Bermuda) Limited
 
  10 .2   Amendment No. 1 to Export Agreement, dated as of February 18, 2005, by and among Gosling-Castle Partners Inc. and Gosling’s Export (Bermuda) Limited
 
  10 .3**   National Distribution Agreement, dated as of September 3, 2004, by and between Castle Brands (USA) Corp. and Gosling’s Export (Bermuda) Limited
 
  10 .4   Subscription Agreement, dated as of February 18, 2005, by and between Castle Brands Inc. and Gosling-Castle Partners Inc.
 
  10 .5   Stockholders Agreement, dated February 18, 2005, by and among Gosling-Castle Partners Inc. and the persons listed on Schedule I thereto.
 
  10 .6   Promissory Note, dated February 18, 2005, issued by Castle Brands Inc. in favor of Gosling-Castle Partners Inc.
 
  10 .7**   Agreement, dated as of August 27, 2004, between I.L.A.R. S.p.A. and Castle Brands (USA) Corp.
 
  10 .8**   Supply Agreement, dated as of January 1, 2005, between Irish Distillers Limited and Castle Brands Spirits Group Limited and Castle Brands (USA) Corp.

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Exhibit Number   Exhibit
     
 
  10 .9   Amendment No. 1 to Supply Agreement, dated as of September 20, 2005, to the Supply Agreement, dated as of January 1, 2005, among Irish Distillers Limited and Castle Brands Spirits Group Limited and Castle Brands (USA) Corp.
 
  10 .10**   Amended and Restated Worldwide Distribution Agreement, dated as of April 16, 2001, by and between Great Spirits Company LLC and Gaelic Heritage Corporation Limited
 
  10 .11**   Bottling and Services Agreement, dated as of September 1, 2002, by and between Terra Limited and The Roaring Water Bay Spirits Company Limited
 
  10 .12   Amendment to Bottling and Services Agreement, dated as of March 1, 2005, by and between Terra Limited and Castle Brands Spirit Company Limited
 
  10 .13   Amended and Restated Convertible Note Purchase Agreement, dated as of August 16, 2005, by and between Castle Brands Inc., Mellon HBV SPV LLC and Black River Global Credit Fund Ltd.
 
  10 .14   Amended and Restated Convertible Promissory Note, dated March 1, 2005, issued by Castle Brands Inc. in favor of Mellon HBV SPV LLC.
 
  10 .15   Amended and Restated Convertible Promissory Note, dated June 27, 2005, issued by Castle Brands Inc. in favor of Mellon HBV SPV LLC.
 
  10 .16   Convertible Promissory Note, dated August 16, 2005, issued by Castle Brands Inc. in favor of Black River Global Credit Fund Ltd.
 
  10 .17   License Agreement, dated December 1, 2003, between The Roaring Water Bay (Research and Development) Company Limited and GSRWB, Inc.
 
  10 .18*   Amended and Restated Employment Agreement, effective as of May 4, 2005, by and between Castle Brands Inc. and Mark Andrews
 
  10 .19*   Amended and Restated Employment Agreement, effective as of July 19, 2005, by and between Castle Brands Inc. and T. Kelley Spillane
 
  10 .20   Employment Agreement, dated as of May 2, 2005 by and between Castle Brands Inc. and Keith A. Bellinger
 
  10 .21   Summary of employment agreement with Matthew F. MacFarlane
 
  10 .22   Non-Competition Deed, dated December 1, 2003, between GSRWB, Inc. and David Phelan
 
  10 .23   Letter Agreement, dated August 4, 2005, between Castle Brands Inc. and David Phelan
 
  10 .24   Letter Agreement, dated February 15, 2005, between Castle Brands Inc. and Patrick Rigney
 
  10 .25   Letter Consulting Agreement, dated August 4, 2005, between Castle Brands Inc. and David Phelan

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Table of Contents

         
Exhibit Number   Exhibit
     
  10 .26   Letter Consulting Agreement, dated August 2, 2005, between Castle Brands Inc. and Patrick Rigney
 
  10 .27**   Supply Agreement, dated January 19, 1998, by and between Carbery Milk Products Limited and The Roaring Water Bay Spirits Company Limited
 
  10 .28**   Amendment and Consent, dated March 1, 2003, to Supply Agreement, dated January 19, 1998, by and between Carbery Milk Products Limited and Castle Brands Inc.
 
  10 .29   Castle Brands Inc. 2003 Stock Incentive Plan, as amended
 
  10 .30   Amendment to Castle Brands Inc. 2003 Stock Incentive Plan
 
  10 .31   Letter Agreement, dated as of December 1, 2004, between MHW, Ltd. and Castle Brands (USA) Corp.
 
  10 .32   Sublease, dated as of June 24, 2004, by and between Silvercrest Asset Management Group, LLC, as successor in interest to James C. Edwards & Co., Inc. and Castle Brands (USA) Corp.
 
  10 .33   Indenture of Sublease, dated June 2004, by and between Jennifer Dunne and Castle Brand Spirits Company Limited
 
  10 .34   Office Lease, dated as of February 24, 2000, by and between Great Spirits Company LLC and Crescent HC Investors L.P.
 
  10 .35   First Amendment to Office Lease, dated March 14, 2001
 
  10 .36   Second Amendment to Office Lease, dated January 30, 2002
 
  10 .37   Third Amendment to Office Lease, dated March 28, 2003
 
  10 .38   Fourth Amendment to Office Lease, dated March 23, 2004
 
  10 .39   Fifth Amendment to Office Lease, dated June 21, 2005
 
  10 .40   First Supplemental Trust Indenture, dated as of August 15, 2005, by and between Castle Brands (USA) Corp. and JPMorgan Chase Bank, as trustee and MHW Ltd., as collateral agent
 
  10 .41   First Amended and Restated Trust Indenture, dated as of August 15, 2005, by and between Castle Brands (USA) Corp., JPMorgan Chase Bank, as trustee and MHW Ltd., as collateral agent
 
  10 .42   9% Secured Note dated August 15, 2005 issued by Castle Brand (USA) Corp. in favor of JPMorgan Chase Bank, as trustee
 
  10 .43   General Security Agreement, dated as of June 1, 2004, by and between Castle Brands (USA) Corp. and JPMorgan Chase Bank, as trustee
 
  10 .44   First Amendment to General Security Agreement, dated as of August 15, 2005, by and between Castle Brands (USA) Corp. and JPMorgan Chase Bank, as trustee

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Exhibit Number   Exhibit
     
  10 .45   Guaranty of Payment and Performance, dated June 1, 2004, from Castle Brands Inc. to JPMorgan Chase Bank, as trustee
 
  10 .46   First Amendment to Guarantee of Payment and Performance, dated as of August 15, 2005, by and between Castle Brands Inc. to JPMorgan Chase Bank, as trustee
 
  10 .47   Collateral Agreement, dated as of June 1, 2004, by and among MHW Ltd., Castle Brands (USA) Corp. and JPMorgan Chase Bank, as trustee
 
  10 .48   First Amendment to Collateral Agreement, dated as of August 15, 2005, by and among MHW Ltd., Castle Brands (USA) Corp. and JPMorgan Chase Bank, as trustee
 
  10 .49   Credit Facility Agreement, dated as of December 16, 2004, by and among Ulster Bank Ireland Limited, Ulster Bank Ltd. and Castle Brands Spirits Company Limited
 
  10 .50   Accounts Receivable Credit Facility Agreement, dated as of April 4, 2005, by and among Ulster Bank Ireland Limited, Ulster Bank Ltd. and Castle Brands Spirits Company Limited
 
  10 .51   Contract, dated as of April 1, 2005, by and between Castle Brands Inc. and BPW LLC
 
  16 .1   Letter from Grodsky Caporrino & Kaufman, PC
 
  21 .1   List of Subsidiaries of the Registrant
 
  23 .1   Consent of Eisner LLP, Independent Registered Public Accounting Firm
 
  23 .2   Consent of BDO Simpson Xavier, Independent Registered Public Accounting Firm (The Castle Brands Spirits Company Limited (formerly known as The Roaring Water Bay Spirits Company Limited))
 
  23 .3   Consent of BDO Simpson Xavier, Independent Registered Public Accounting Firm (The Roaring Water Bay Spirits Company (GB) Limited)
 
  23 .4*   Consent of Patterson Belknap Webb & Tyler LLP (included in exhibit 5.1)
 
  24 .1   Power of Attorney (included on the Signature Page of the Registration Statement)
 
* To be filed by amendment.
**  Confidential treatment requested for certain portions of this exhibit pursuant to Rule 406 under the Securities Exchange Act of 1934, as amended, which portions are omitted and filed separately with the Securities and Exchange Commission.

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Table of Contents

          (b)           Financial Statement Schedules
Valuation and Qualifying Accounts (in thousands)
                                 
        Additions        
                 
        Charged to        
    Balance at   cost and       Balance at end
Description   beginning of period   expenses   Deductions   of period
                 
Valuation reserve deducted in the balance sheet from the asset to which it applies (in thousands):
                               
Accounts receivable:
                               
6/30/05 Allowance for doubtful accounts
  $ 81       12           $ 93  
2005 Allowance for doubtful accounts
    58       64       41       81  
2004 Allowance for doubtful accounts
    50       17       9       58  
2003 Allowance for doubtful accounts
    47       3             50  
 
Inventory:
                               
6/30/05 Allowance for excess and obsolescence
  $ 164                 $ 164  
2005 Allowance for excess and obsolescence
    90       74             164  
2004 Allowance for excess and obsolescence
    30       60             90  
2003 Allowance for excess and obsolescence
          30             30  
Deferred Taxes:
                               
6/30/05 Valuation reserve
  $ 5,180       815           $ 5,918  
2005 Valuation reserve
    1,471       3,709             5,180  
2004 Valuation reserve
          1,471             1,471  
2003 Valuation reserve
                       

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Item 17. Undertakings
          The undersigned registrant hereby undertakes to provide to the underwriter, at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.
          Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit, or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
          The undersigned registrant hereby undertakes that:
          (1)           For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
          (2)           For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

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SIGNATURES
          Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on the 29th day of September, 2005.
  CASTLE BRANDS INC.
  By:  /s/ Mark Andrews
 
 
  Mark Andrews
  Chairman of the Board, President and
  Chief Executive Officer
POWER OF ATTORNEY
          KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Mark Andrews, Keith A. Bellinger and Matthew F. MacFarlane, and each or any of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this Registration Statement, and any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their substitutes, may lawfully do or cause to be done by virtue hereof.
          Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
         
Signature   Title   Date
         
 
/s/ Mark Andrews
 
Mark Andrews
  Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer)   September 29, 2005
 
/s/ Keith A. Bellinger
 
Keith A. Bellinger
  Executive Vice President, Chief Operating Officer and Secretary (Principal Financial Officer)   September 29, 2005
 
/s/ Matthew F. MacFarlane
 
Matthew F. MacFarlane
  Senior Vice President and Chief Financial Officer (Principal Accounting Officer)   September 29, 2005
 
/s/ John F. Beaudette
 
John F. Beaudette
  Director   September 29, 2005
 
/s/ Robert J. Flanagan
 
Robert J. Flanagan
  Director   September 29, 2005

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Signature   Title   Date
         
 
/s/ Colm Leen
 
Colm Leen
  Director   September 29, 2005
 
/s/ Phillip Frost, M.D.
 
Phillip Frost, M.D. 
  Director   September 29, 2005
 
/s/ Richard Morrison
 
Richard Morrison
  Director   September 29, 2005
 
/s/ Frederick M.R. Smith
 
Frederick M.R. Smith
  Director   September 29, 2005
 
/s/ Kevin P. Tighe
 
Kevin P. Tighe
  Director   September 29, 2005

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INDEX
         
Exhibit Number   Exhibit
     
    1*     Form of Underwriting Agreement
 
  2 .1*   Agreement of Merger and Acquisitions, dated as of July 31, 2003, by and among GSRWB, Inc., The Roaring Water Bay Spirits Group Limited, The Roaring Water Bay Spirits Marketing and Sales Company Limited, Great Spirits Company LLC, Great Spirits Corp., Patrick Rigney, David Phelan, Carbery Milk Products Limited and Tanis Investments Limited
 
  2 .2*   Amendment to Agreement of Merger and Acquisitions, dated as of October 1, 2003, by and among GSRWB, Inc., The Roaring Water Bay Spirits Group Limited, The Roaring Water Bay Spirits Marketing and Sales Company Limited, Great Spirits Company LLC, Great Spirits Corp., Patrick Rigney, David Phelan, Carbery Milk Products Limited and Tanis Investments Limited
 
  3 .1   Form of Amended and Restated Certificate of Incorporation of the Registrant
 
  3 .2   Form of Amended and Restated Bylaws of the Registrant
 
  4 .1*   Form of Common Stock Certificate
 
  4 .2   Shareholders Agreement, dated as of December 1, 2003, by and among GSRWB, Inc. and the holders of shares of Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock and the Common Stockholders
 
  5 .1*   Opinion of Patterson Belknap Webb & Tyler LLP
 
  10 .1**   Export Agreement, dated as of February 14, 2005 between Gosling Partners Inc. and Gosling’s Export (Bermuda) Limited
 
  10 .2   Amendment No. 1 to Export Agreement, dated as of February 18, 2005, by and among Gosling-Castle Partners Inc. and Gosling’s Export (Bermuda) Limited
 
  10 .3**   National Distribution Agreement, dated as of September 3, 2004, by and between Castle Brands (USA) Corp. and Gosling’s Export (Bermuda) Limited
 
  10 .4   Subscription Agreement, dated as of February 18, 2005, by and between Castle Brands Inc. and Gosling-Castle Partners Inc.
 
  10 .5   Stockholders Agreement, dated February 18, 2005, by and among Gosling-Castle Partners Inc. and the persons listed on Schedule I thereto.
 
  10 .6   Promissory Note, dated February 18, 2005, issued by Castle Brands Inc. in favor of Gosling-Castle Partners Inc.
 
  10 .7**   Agreement, dated as of August 27, 2004, between I.L.A.R. S.p.A. and Castle Brands (USA) Corp.
 
  10 .8**   Supply Agreement, dated as of January 1, 2005, between Irish Distillers Limited and Castle Brands Spirits Group Limited and Castle Brands (USA) Corp.


Table of Contents

         
Exhibit Number   Exhibit
     
 
  10 .9   Amendment No. 1 to Supply Agreement, dated as of September 20, 2005, to the Supply Agreement, dated as of January 1, 2005, among Irish Distillers Limited and Castle Brands Spirits Group Limited and Castle Brands (USA) Corp.
 
  10 .10**   Amended and Restated Worldwide Distribution Agreement, dated as of April 16, 2001, by and between Great Spirits Company LLC and Gaelic Heritage Corporation Limited
 
  10 .11**   Bottling and Services Agreement, dated as of September 1, 2002, by and between Terra Limited and The Roaring Water Bay Spirits Company Limited
 
  10 .12   Amendment to Bottling and Services Agreement, dated as of March 1, 2005, by and between Terra Limited and Castle Brands Spirit Company Limited
 
  10 .13   Amended and Restated Convertible Note Purchase Agreement, dated as of August 16, 2005, by and between Castle Brands Inc., Mellon HBV SPV LLC and Black River Global Credit Fund Ltd.
 
  10 .14   Amended and Restated Convertible Promissory Note, dated March 1, 2005, issued by Castle Brands Inc. in favor of Mellon HBV SPV LLC.
 
  10 .15   Amended and Restated Convertible Promissory Note, dated June 27, 2005, issued by Castle Brands Inc. in favor of Mellon HBV SPV LLC.
 
  10 .16   Convertible Promissory Note, dated August 16, 2005, issued by Castle Brands Inc. in favor of Black River Global Credit Fund Ltd.
 
  10 .17   License Agreement, dated December 1, 2003, between The Roaring Water Bay (Research and Development) Company Limited and GSRWB, Inc.
 
  10 .18*   Amended and Restated Employment Agreement, effective as of May 4, 2005, by and between Castle Brands Inc. and Mark Andrews
 
  10 .19*   Amended and Restated Employment Agreement, effective as of July 19, 2005, by and between Castle Brands Inc. and T. Kelley Spillane
 
  10 .20   Employment Agreement, dated as of May 2, 2005 by and between Castle Brands Inc. and Keith A. Bellinger
 
  10 .21   Summary of employment agreement with Matthew F. MacFarlane
 
  10 .22   Non-Competition Deed, dated December 1, 2003, between GSRWB, Inc. and David Phelan
 
  10 .23   Letter Agreement, dated August 4, 2005, between Castle Brands Inc. and David Phelan
 
  10 .24   Letter Agreement, dated February 15, 2005, between Castle Brands Inc. and Patrick Rigney


Table of Contents

         
Exhibit Number   Exhibit
     
 
  10 .25   Letter Consulting Agreement, dated August 4, 2005, between Castle Brands Inc. and David Phelan
 
  10 .26   Letter Consulting Agreement, dated August 2, 2005, between Castle Brands Inc. and Patrick Rigney
 
  10 .27**   Supply Agreement, dated January 19, 1998, by and between Carbery Milk Products Limited and The Roaring Water Bay Spirits Company Limited
 
  10 .28**   Amendment and Consent, dated March 1, 2003, to Supply Agreement, dated January 19, 1998, by and between Carbery Milk Products Limited and Castle Brands Inc.
 
  10 .29   Castle Brands Inc. 2003 Stock Incentive Plan, as amended
 
  10 .30   Amendment to Castle Brands Inc. 2003 Stock Incentive Plan
 
  10 .31   Letter Agreement, dated as of December 1, 2004, between MHW, Ltd. and Castle Brands (USA) Corp.
 
  10 .32   Sublease, dated as of June 24, 2004, by and between Silvercrest Asset Management Group, LLC, as successor in interest to James C. Edwards & Co., Inc. and Castle Brands (USA) Corp.
 
  10 .33   Indenture of Sublease, dated June 2004, by and between Jennifer Dunne and Castle Brand Spirits Company Limited
 
  10 .34   Office Lease, dated as of February 24, 2000, by and between Great Spirits Company LLC and Crescent HC Investors L.P.
 
  10 .35   First Amendment to Office Lease, dated March 14, 2001
 
  10 .36   Second Amendment to Office Lease, dated January 30, 2002
 
  10 .37   Third Amendment to Office Lease, dated March 28, 2003
 
  10 .38   Fourth Amendment to Office Lease, dated March 23, 2004
 
  10 .39   Fifth Amendment to Office Lease, dated June 21, 2005
 
  10 .40   First Supplemental Trust Indenture, dated as of August 15, 2005, by and between Castle Brands (USA) Corp. and JPMorgan Chase Bank, as trustee and MHW Ltd., as collateral agent
 
  10 .41   First Amended and Restated Trust Indenture, dated as of August 15, 2005, by and between Castle Brands (USA) Corp., JPMorgan Chase Bank, as trustee and MHW Ltd., as collateral agent
 
  10 .42   9% Secured Note dated August 15, 2005 issued by Castle Brand (USA) Corp. in favor of JPMorgan Chase Bank, as trustee


Table of Contents

         
Exhibit Number   Exhibit
     
 
  10 .43   General Security Agreement, dated as of June 1, 2004, by and between Castle Brands (USA) Corp. and JPMorgan Chase Bank, as trustee
 
  10 .44   First Amendment to General Security Agreement, dated as of August 15, 2005, by and between Castle Brands (USA) Corp. and JPMorgan Chase Bank, as trustee
 
  10 .45   Guaranty of Payment and Performance, dated June 1, 2004, from Castle Brands Inc. to JPMorgan Chase Bank, as trustee
 
  10 .46   First Amendment to Guarantee of Payment and Performance, dated as of August 15, 2005, by and between Castle Brands Inc. to JPMorgan Chase Bank, as trustee
 
  10 .47   Collateral Agreement, dated as of June 1, 2004, by and among MHW Ltd., Castle Brands (USA) Corp. and JPMorgan Chase Bank, as trustee
 
  10 .48   First Amendment to Collateral Agreement, dated as of August 15, 2005, by and among MHW Ltd., Castle Brands (USA) Corp. and JPMorgan Chase Bank, as trustee
 
  10 .49   Credit Facility Agreement, dated as of December 16, 2004, by and among Ulster Bank Ireland Limited, Ulster Bank Ltd. and Castle Brands Spirits Company Limited
 
  10 .50   Accounts Receivable Credit Facility Agreement, dated as of April 4, 2005, by and among Ulster Bank Ireland Limited, Ulster Bank Ltd. and Castle Brands Spirits Company Limited
 
  10 .51   Contract, dated as of April 1, 2005, by and between Castle Brands Inc. and BPW LLC
 
  16 .1   Letter from Grodsky Caporrino & Kaufman, PC
 
  21 .1   List of Subsidiaries of the Registrant
 
  23 .1   Consent of Eisner LLP, Independent Registered Public Accounting Firm
 
  23 .2   Consent of BDO Simpson Xavier, Independent Registered Public Accounting Firm (The Castle Brands Spirits Company Limited (formerly known as The Roaring Water Bay Spirits Company Limited))
 
  23 .3   Consent of BDO Simpson Xavier, Independent Registered Public Accounting Firm (The Roaring Water Bay Spirits Company (GB) Limited)
 
  23 .4*   Consent of Patterson Belknap Webb & Tyler LLP (included in exhibit 5.1)
 
  24 .1   Power of Attorney (included on the Signature Page of the Registration Statement)
 
* To be filed by amendment.
**  Confidential treatment requested for certain portions of this exhibit pursuant to Rule 406 under the Securities Exchange Act of 1934, as amended, which portions are omitted and filed separately with the Securities and Exchange Commission.

Exhibit 3.1

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

CASTLE BRANDS INC.

Castle Brands Inc., a corporation organized and existing under the laws of the State of Delaware (the "Corporation"), hereby certifies as follows:

1. The name of the Corporation is Castle Brands Inc.

2. The Corporation was originally incorporated under the name GSRWB, Inc. and the date of filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware is July 7, 2003, as amended on November 21, 2003 and further amended on February 12, 2004 and further amended on November 30, 2004.

3. This Amended and Restated Certificate of Incorporation amends and restates the Certificate of Incorporation of the Corporation as now in effect. This Amended and Restated Certificate of Incorporation was duly adopted by the Board of Directors of the Corporation (the "Board") and stockholders of the Corporation entitled to vote in respect thereof in the manner and by the vote prescribed by Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware (the "DGCL").

4. The text of the Certificate of Incorporation is hereby amended and restated to read in its entirety as follows:

FIRST: The name of the Corporation is Castle Brands Inc.

SECOND: The address of the registered office of the Corporation in the State of Delaware is 2711 Centerville Road, Suite 400, Wilmington, County of New Castle, DE 19808. The name of its registered agent at such address is Corporation Service Company in the County of New Castle.

THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the DGCL.

FOURTH: (a) Authorized Capital Stock. The Corporation shall be authorized to issue Fifty Million (50,000,000) shares of capital stock, of which (i) Forty Five Million (45,000,000) shares shall be common stock, par value $.01 per share (the "Common Stock") and (ii) Five Million (5,000,000) shares shall be preferred stock, par value $.01 per share (the "Preferred Stock").

(b) Common Stock. Except as otherwise provided by law or by this Amended and Restated Certificate of Incorporation (including any certificate filed with the Secretary of State


of the State of Delaware establishing the terms of a series of Preferred Stock in accordance with Section (c) of this Article Fourth), the Common Stock shall have the exclusive right to vote for the election of directors and for all other purposes. Each share of Common Stock shall entitle the holder thereof to one vote on all matters on which stockholders are entitled generally to vote, and the holders of Common Stock shall vote together as a single class. The holders of shares of Common Stock shall not have cumulative voting rights.

(c) Preferred Stock. Shares of Preferred Stock may be issued from time to time in one or more series. The Board is hereby authorized to fix by resolution or resolutions the voting powers, if any, designations, powers, preferences and the relative, participating, optional or other special rights, if any, and the qualifications, limitations or restrictions thereof, of any unissued series of Preferred Stock; and to fix the number of shares constituting such series, and to increase or decrease the number of shares of any such series (but not below the number of shares thereof then outstanding). The powers, preferences and relative, participating, optional and other special rights of each series of Preferred Stock, and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding.

FIFTH: The business and affairs of the Corporation shall be managed by or under the direction of the Board except as otherwise provided herein or required by law.

(a) Board of Directors. Subject to the rights of the holders of any outstanding series of Preferred Stock or any other series or class of stock as set forth in this Amended and Restated Certificate of Incorporation to elect additional directors under specified circumstances, the number of directors of the Corporation shall be fixed, and may be increased or decreased from time to time, by resolution of the Board.

(b) Election of Directors. Unless and except to the extent that the By-laws of the Corporation shall so require, the election of directors of the Corporation need not be by written ballot.

(c) Terms of Directors. Directors who are elected at an annual meeting of stockholders, and directors who are elected in the interim to fill vacancies and newly created directorships shall hold office until the next annual meeting of stockholders and until their successors are elected and qualified or until their earlier resignation or removal.

(d) (1) Notwithstanding the foregoing, whenever, pursuant to the provisions of Article Fourth of this Amended and Restated Certificate of Incorporation, the holders of any one or more series of Preferred Stock shall have the right, voting separately as a series or together with holders of other such series, to elect directors at an annual or special meeting of stockholders, the election, term of office, filling of vacancies and other features of such directorships shall be governed by the terms of this Amended and Restated Certificate of Incorporation and any certificate of designations applicable thereto.

(2) During any period when the holders of any series of Preferred Stock have the right to elect additional directors as provided for or fixed pursuant to the provisions of Article Fourth hereof, then upon commencement and for the duration of the period during which such right continues: (i) the then otherwise total authorized number of directors of the Corporation

2

shall automatically be increased by such specified number of directors, and the holders of such Preferred Stock shall be entitled to elect the additional directors so provided for or fixed pursuant to said provisions, and (ii) each such additional director shall serve until such director's successor shall have been duly elected and qualified, or until such director's right to hold such office terminates pursuant to said provisions, whichever occurs earlier, subject to such director's earlier death, disqualification, resignation or removal. Except as otherwise provided by the Board in the resolution or resolutions establishing such series, whenever the holders of any series of Preferred Stock having such right to elect additional directors are divested of such right pursuant to the provisions of such stock, the terms of office of all such additional directors elected by the holders of such stock, or elected to fill any vacancies resulting from the death, resignation, disqualification or removal of such additional directors, shall forthwith terminate and the total and authorized number of directors of the Corporation shall be reduced accordingly.

(e) Vacancies. Subject to the rights of the holders of any series of Preferred Stock, any and all vacancies on the Board, however occurring, including, without limitation, by reason of an increase in size of the Board, or the death, resignation, disqualification or removal of a director, shall be filled solely by the affirmative vote of a majority of the remaining directors then in office, even if less than a quorum of the Board. Any director appointed in accordance with the preceding sentence shall hold office until such director's successor shall have been duly elected and qualified or until his or her earlier resignation or removal. In the event of a vacancy in the Board, the remaining directors, except as otherwise provided by law, may exercise the powers of the full Board until the vacancy is filled.

SIXTH: A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL as the same exists or may hereafter be amended. Any amendment, repeal or modification of the foregoing sentence shall not adversely affect any right or protection of a director of the Corporation existing hereunder with respect to any act or omission occurring prior to such amendment, repeal or modification.

SEVENTH: (a) Each person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent authorized or permitted by the DGCL, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys' fees, judgments, fines, excise taxes or penalties and amounts paid or to be paid in settlement) actually and reasonably incurred by such person in connection with such action, suit or proceeding, and such indemnification shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit

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of the heirs, executors and administrators of such person; provided, however, that, except as provided in paragraph (b), the Corporation shall indemnify any such person seeking indemnification in connection with an action, suit or proceeding (or part thereof) initiated by such person only if such action, suit or proceeding (or part thereof) was authorized by the Board of the Corporation. The right to indemnification conferred in this Article shall be a contract right and shall include the right to be paid by the Corporation the expenses incurred in defending any such action, suit or proceeding in advance of its final disposition; provided, however, that, if the DGCL requires, the payment of such expenses incurred by a director or officer in his capacity as such in advance of the final disposition of any such action, suit or proceeding shall be made only upon receipt by the Corporation of an undertaking by or on behalf of such director or officer to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under this Article or otherwise. The Corporation may, to the extent authorized from time to time by the Board, provide rights to indemnification and to the advancement of expenses to employees and agents of the Corporation with the same scope and effect as the foregoing indemnification of directors and officers.

(b) If a claim under paragraph (a) is not paid in full by the Corporation within thirty (30) days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Corporation) that the claimant has not met the standards of conduct which make it permissible under the DGCL for the Corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including the Board, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he has met the applicable standard of conduct set forth in the DGCL, nor an actual determination by the Corporation (including the Board, independent legal counsel or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

(c) The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Article shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of this Amended and Restated Certificate of Incorporation (as it may be amended), the By-laws, agreement, vote of stockholders or disinterested directors or otherwise.

(d) The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the DGCL.

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(e) Any amendment, repeal or modification of this Article Seventh shall not adversely affect any right or protection of a director of the Corporation existing hereunder with respect to any act or omission occurring prior to such amendment, repeal or modification.

EIGHTH: Any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of stockholders of the Corporation, and the ability of the stockholders to consent in writing to the taking of any action is hereby specifically denied.

NINTH: In furtherance and not in limitation of the powers conferred upon it by the laws of the State of Delaware, the Board shall have the power to adopt, amend, alter or repeal the Corporation's By-laws. The affirmative vote of at least a majority of the entire Board shall be required to adopt, amend, alter or repeal the Corporation's By-laws.

TENTH: The Corporation reserves the right at any time and from time to time to amend, alter, change or repeal any provision contained in this Amended and Restated Certificate of Incorporation and any other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted, in the manner now or hereafter prescribed by statute and this Amended and Restated Certificate of Incorporation, and all rights, preferences and privileges conferred upon stockholders, directors or any other persons by and pursuant to this Amended and Restated Certificate of Incorporation are granted subject to this reservation. No amendment or repeal of this Amended and Restated Certificate of Incorporation shall be made unless the same is first approved by the Board pursuant to a resolution adopted by the Board in accordance with
Section 242 of the DGCL, and, except as otherwise provided by law, thereafter approved by the stockholders. Whenever any vote of the holders of voting stock is required, and in addition to any other vote of holders of voting stock that is required by this Amended and Restated Certificate of Incorporation or by law, the affirmative vote of a majority of the total votes eligible to be cast by holders of voting stock with respect to such amendment or repeal, voting together as a single class, at a duly constituted meeting of stockholders called expressly for such purpose shall be required to amend or repeal any provisions of this Amended and Restated Certificate of Incorporation.

IN WITNESS WHEREOF, Castle Brands Inc. has caused this Amended and Restated Certificate of Incorporation to be executed this __ day of ______, 2005.

CASTLE BRANDS INC.

By:

Mark E. Andrews Chairman of the Board and Chief Executive Officer

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Exhibit 3.2

AMENDED AND RESTATED

BY-LAWS

OF

CASTLE BRANDS INC.

ARTICLE I

OFFICES

Section 1. Registered Office. The registered office of the Corporation shall be in the City of Wilmington, County of New Castle, State of Delaware.

Section 2. Other Offices. The Corporation may also have offices at such other places, both within and without the State of Delaware, as the Board of Directors may from time to time determine.

ARTICLE II

STOCKHOLDERS

Section 1. Annual Meetings. An annual meeting of stockholders shall be held on such day and at such time as may be designated by the Board of Directors for the purpose of electing directors and for the transaction of such other business as properly may come before such meeting. The meeting may be held at such time and such place within or without the State of New York as shall be fixed by the Board of Directors and stated in the notice of the meeting.

Section 2. Special Meetings. Unless otherwise prescribed by law or by the certificate of incorporation of the Corporation, as amended and restated from time to time (the "Certificate of Incorporation"), special meetings of the stockholders may be called at any time by the Board of Directors, the Chairman of the Board or the Chief Executive Officer. Such request shall state the purpose or purposes of the proposed meeting. Special meetings shall be held on the date and at the time and place either within or without the State of New York as specified in the notice thereof. The Board of Directors may, in its sole discretion, determine that the meeting of the stockholders shall not be held at any place, but instead may be held solely by means of remote communication in accordance with Delaware law. Business transacted at a special meeting shall be confined to the purpose or purposes of the meeting as stated in the notice of such meeting.

Section 3. Notice of Meetings. Except as otherwise expressly required by law or the Certificate of Incorporation of the Corporation, written notice stating the place and time of the meeting, the means of remote communication, if any, and in the case of a special meeting, the purpose or purposes of such meeting. Unless otherwise provided by applicable law, the


Certificate of Incorporation or these By-laws, notice shall be given by the Secretary to each stockholder entitled to vote not less than ten (10) nor more than sixty (60) days prior to the meeting. Such notice shall be deemed to be given when deposited in the United States mail, with postage prepaid, directed to the stockholder at his address as it appears on the records of the Corporation. Notice of any meeting of stockholders shall not be required to be given to any stockholder who shall attend such meeting in person or by proxy; and if any stockholder shall, in person or by attorney thereunto duly authorized, waive notice of any meeting, in writing or by such other electronic means as may be permissible for such notice as provided by the laws of the State of Delaware, whether before or after such meeting be held, the notice thereof need not be given to him. The attendance of any stockholder at a meeting, in person or by proxy, without protesting prior to the conclusion of the meeting the lack of notice of such meeting, shall constitute a waiver of notice by him. Notice of any adjourned meeting of stockholders need not be given except as provided in Section 5 of this ARTICLE II.

Section 4. Quorum. Except as otherwise required by law or by the Certificate of Incorporation, the holders of a majority of the capital stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business. A quorum, once established, shall not be broken by the withdrawal of enough votes to leave less than a quorum.

Section 5. Adjournment. At any meeting of stockholders, whether or not there shall be a quorum present, the holders of a majority of shares voting at the meeting, whether present in person at the meeting or represented by proxy at the meeting, may adjourn the meeting from time to time. Except as provided by law, notice of such adjourned meeting need not be given otherwise than by announcement of the time and place of such adjourned meeting at the meeting at which the adjournment is taken. At any adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally called.

Section 6. Organization. The Chairman of the Board or, in his absence or nonelection, the Chief Executive Officer or the President or, in the absence of all the foregoing officers, a Vice President shall call meetings of the stockholders to order and shall act as Chairman of such meetings. In the absence of the Chairman of the Board, the Chief Executive Officer, the President or a Vice President, the holders of a majority of the shares of the capital stock of the Corporation present in person or represented by proxy and entitled to vote at such meeting shall elect a Chairman, who may be the Secretary of the Corporation. The Secretary of the Corporation shall act as secretary of all meetings of the stockholders, but in the absence of the Secretary, the Chairman may appoint any person to act as secretary of the meeting.

Section 7. Nature of Business to be Conducted at Annual Meeting. (a) At an annual meeting of stockholders, only such business shall be conducted as shall have been brought before the meeting (i) pursuant to the Corporation's notice of the meeting, (ii) by or at the direction of the Board of Directors or (iii) by any stockholder of the Corporation who is a stockholder of record at the time of giving of the notice provided for in this By-law, who shall be entitled to vote at such meeting and who shall have complied with the notice procedures set forth in this By-law.


(b) For business to be properly brought before an annual meeting by a stockholder pursuant to Section (a)(iii) of this By-law, notice in writing must be delivered or mailed to the Secretary and received at the General Offices of the Corporation, not less than sixty (60) days nor more than ninety (90) days prior to the first anniversary of the preceding year's annual meeting; provided, however, in the event that the annual meeting is called for a date that is not within thirty (30) days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs. Such stockholder's notice shall set forth as to each matter the stockholder proposes to bring before the annual meeting (i) a brief description of the business to be brought before the annual meeting and the reasons for conducting such business at such meeting; (ii) the name and address, as they appear on the Corporation's books, of the stockholder proposing such business, and the name and address of the beneficial owner, if any, on whose behalf the proposal is made; (iii) the class and number of shares of the Corporation's stock which are beneficially owned by the stockholder, and by the beneficial owner, if any, on whose behalf the proposal is made; and (iv) any material interest of the stockholder, and of the beneficial owner, if any, on whose behalf the proposal is made, in such business.

(c) Notwithstanding anything in these By-laws to the contrary, no business shall be conducted at an annual meeting except in accordance with the procedures set forth in this By-law. The chairman of the meeting may, if the facts warrant, determine that the business was not properly brought before the meeting in accordance with the provisions of this By-law; and if the chairman should so determine, the chairman shall so declare to the meeting, and any such business not properly brought before the meeting shall not be transacted. Notwithstanding the foregoing provisions of this By-law, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this By-law. Nothing in this By-law shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act. The provisions of this Section 7 shall also govern what constitutes timely notice for purposes of Rule 14a-4(c) of the Exchange Act.

Section 8. Voting. Each stockholder shall, except as otherwise provided by law or by the Certificate of Incorporation, at every meeting of the stockholders, be entitled to one vote in person or by proxy for each share of capital stock entitled to vote held by such stockholder, but no proxy shall be voted on after three years from its date, unless said proxy provides for a longer period. Upon the demand of any stockholder, the vote for directors and the vote upon any matter before the meeting shall be by ballot. Except as otherwise provided by law, the Certificate of Incorporation or these By-laws, all elections for directors shall be decided by plurality vote, and all other matters shall be decided by the affirmative vote of a majority in voting power of shares of stock present in person or represented by proxy and entitled to vote thereon.

Section 9. Stockholders List. A complete list of the stockholders entitled to vote at any meeting of stockholders, arranged in alphabetical order with the address of each and the number of shares held by each, shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either (i) at a place within the city where the meeting is to be held, which


place shall be specified in the notice of the meeting, or (ii) if not so specified, at the place where the meeting is to be held, or (iii) on a reasonably accessible electronic network as provided by applicable law. The list shall also be produced and kept at the time and place of the meeting during the whole thereof and may be inspected by any stockholder who is present.

Section 10. Addresses of Stockholders. Each stockholder shall designate to the Secretary of the Corporation an address at which notices of meetings and all other corporate notices may be served upon or mailed to him, and if any stockholder shall fail to designate such address, corporate notices may be served upon him by mail directed to him at his last known post office address.

Section 11. Inspectors of Election. The Board of Directors may at any time appoint one or more persons to serve as Inspectors of Election at the next succeeding annual meeting of stockholders or at any other meeting or meetings and the Board of Directors may at any time fill any vacancy in the office of Inspector. If the Board of Directors fails to appoint Inspectors, or if any Inspector appointed be absent or refuse to act, or if his office becomes vacant and be not filled by the Board of Directors, the chairman of any meeting of the stockholders may appoint one or more temporary Inspectors for such meeting. All proxies shall be filed with the Inspectors of Election of the meeting before being voted upon.

ARTICLE III

BOARD OF DIRECTORS

Section 1. General Powers. The property, affairs and business of the Corporation shall be managed by or under the direction of the Board of Directors.

Section 2. Number, Qualification and Term of Office. The number of directors shall be such as the Board of Directors may by resolution direct. Directors need not be stockholders. Each director shall hold office for the term for which he is appointed or elected and until his successor shall have been duly elected and qualified, or until his death or until he shall resign or shall have been removed in the manner hereinafter provided. Directors need not be elected by ballot, except upon demand of any stockholder. The Chairman of the Board, if one be elected, shall be chosen from among the directors.

Section 3. Nomination of Directors. (a) Only persons who are nominated in accordance with the procedures set forth in these By-laws shall be eligible for election as directors. Nominations of persons for election to the Board of Directors may be made at a meeting of stockholders (i) by or at the direction of the Board of Directors or (ii) by any stockholder of the Corporation who is a stockholder of record at the time of giving of the notice provided for in this By-law, who shall be entitled to vote for the election of directors at the meeting and who complies with the notice procedures set forth in this By-law.

(b) Nominations by stockholders shall be made pursuant to notice in writing, delivered or mailed to the Secretary and received at the principal offices of the Corporation (i) in the case of an annual meeting, in accordance with the notice provisions for bringing business before the annual meeting as set forth in ARTICLE II, Section 7(b); or (ii) in the case of a special meeting


at which directors are to be elected, not earlier than the ninetieth (90th) day prior to such special meeting and not later than the close of business on the later of the sixtieth (60th) day prior to such special meeting or the tenth
(10th) day following the day on which public announcement of the date of the meeting and of the nominees proposed by the Board of Directors to be elected at such meeting is first made. In the case of a special meeting of stockholders at which directors are to be elected, stockholders may nominate a person or persons (as the case may be) for election only to such position(s) as are specified in the Corporation's notice of meeting as being up for election at such meeting. Such stockholder's notice shall set forth (i) as to each person whom the stockholder proposes to nominate for election or reelection as a director, all information relating to such person that would be required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act (including such person's written consent to being named as a nominee and to serving as a director if elected); (ii) as to the stockholder giving the notice, the name and address, as they appear on the Corporation's books, of such stockholder and the class and number of shares of the Corporation's stock which are beneficially owned by such stockholder; and (iii) as to any beneficial owner on whose behalf the nomination is made, the name and address of such person and the class and number of shares of the Corporation's stock which are beneficially owned by such person. At the request of the Board of Directors, any person nominated by the Board of Directors for election as a Director shall furnish to the Secretary that information required to be set forth in a stockholder's notice of nomination which pertains to the nominee.

(c) No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in these By-laws. The chairman of the meeting may, if the facts warrant, determine that a nomination was not made in accordance with the procedures prescribed in this By-law; and if the chairman should so determine, the chairman shall so declare to the meeting, and the defective nomination shall be disregarded. Notwithstanding the foregoing provisions of this By-law, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this By-law.

Section 4. Quorum and Manner of Action. Except as otherwise provided by law, the Certificate of Incorporation or these By-laws, a majority of the entire Board of Directors shall be required to constitute a quorum for the transaction of business at any meeting, and the act of a majority of the directors present and voting at any meeting at which a quorum is present shall be the act of the Board of Directors. In the absence of a quorum, a majority of the directors present may adjourn any meeting from time to time until a quorum be had. Notice of any adjourned meeting need not be given. The directors shall act only as a board and individual directors shall have no power as such.

Section 5. Place of Meeting, etc. The Board of Directors may hold its meetings, have one or more offices and keep the books and records of the Corporation at such place or places within or without the State of New York as the Board of Directors may from time to time determine or as shall be specified or fixed in the respective notices or waivers of notice thereof.

Section 6. Regular Meetings. A regular meeting of the Board of Directors shall be held for the election of officers and the transaction of other business as soon as practicable after each


annual meeting of stockholders, and other regular meetings of the Board of Directors shall be held at such times and places as the Board of Directors shall direct. No notice shall be required for any regular meeting of the Board of Directors but a copy of every resolution fixing or changing the time or place of regular meetings shall be mailed to every director at least three days before the first meeting held in pursuance thereof.

Section 7. Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board, the Chief Executive Officer or any two Directors. The Secretary or an Assistant Secretary shall give notice of the time and place of each special meeting by mailing a written notice of the same to each director at his last known post office address by mail not less than forty-eight (48) hours before the date of the meeting, or by telephone, facsimile, telegram or other means of electronic transmission on twenty-four
(24) hours' notice, or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances.

Section 8. Action by Consent. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if a written consent thereto is signed by all members of the Board of Directors or of such committee, as the case may be, and such written consent is delivered to the Company by mail, facsimile, telegram or electronic transmission or such other means permissible under the laws of the State of Delaware, and is filed with the minutes of proceedings of the Board of Directors or committee.

Section 9. Organization. At each meeting of the Board of Directors the Chairman of the Board or, in his absence or nonelection, the Chief Executive Officer or, in the absence of both of the foregoing officers, a director chosen by a majority of the directors shall act as chairman. The Secretary or, in his absence, an Assistant Secretary or, in the absence of both the Secretary and Assistant Secretary, any person appointed by the chairman shall act as secretary of the meeting.

Section 10. Resignations. Any director of the Corporation may resign at any time by giving written notice or by electronic transmission to the Board of Directors, the Chief Executive Officer or the Secretary of the Corporation. The resignation of any director shall take effect at the time specified therein, or, if no time is specified, immediately; and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

Section 11. Removal of Directors. Except as otherwise provided by law or the Certificate of Incorporation and subject to any rights of the holders of shares of Preferred Stock then outstanding, any director may be removed, either with or without cause, at any time by the affirmative vote of the holders of a majority of the shares having voting power at an annual meeting or at a special meeting of the stockholders called for the purpose; and the vacancy in the Board of Directors caused by any such removal may be filled by the Board of Directors in the manner provided in Section 12 of this ARTICLE III.

Section 12. Vacancies. Subject to any rights of the holders of shares of Preferred Stock then outstanding, any vacancy in the Board of Directors caused by death, resignation, removal (whether or not for cause), disqualification, an increase in the number of directors or any other cause may be filled by the majority vote of the remaining directors of the Corporation at the next


annual meeting, any regular meeting or any special meeting called for such purpose. Each director so elected shall hold office for the unexpired term or for such lesser term as may be designated and until his successor shall be duly elected and qualified, or until his death or until he shall resign or shall have been removed in the manner herein provided. In case all the directors shall die or resign or be removed or disqualified, any stockholder having voting powers may call a special meeting of the stockholders, upon notice given as herein provided for meetings of the stockholders, at which directors may be elected for the unexpired term.

Section 13. Compensation of Directors. Directors may be paid for their expenses, if any, of attending each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary, or such other compensation as may be directed by resolution of the Board of Directors; provided that nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for their services and expenses.

Section 14. Committees. By resolution or resolutions passed by a majority of the entire Board of Directors at any meeting of the Board of Directors, the directors may designate one or more committees, each committee to consist of one or more directors. To the extent provided in said resolution or resolutions, unless otherwise provided by law, such committee or committees shall have and may exercise all of the powers of the Board of Directors in the management of the business and affairs of the Corporation, including the power and authority to authorize the seal of the Corporation to be affixed to all papers which may require it, to declare dividends and to authorize the issuance of shares of capital stock of the Corporation. Further, the Board of Directors may designate one or more directors as alternate members of a committee who may replace an absent or disqualified member at any meeting. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. A committee may make such rules for the conduct of its business and may appoint such committees and assistants as it shall from time to time deem necessary. A majority of the members of a committee shall constitute a quorum for the transaction of business of such committee. Regular meetings of a committee shall be held at such times as such committee shall from time to time by resolution determine. No notice shall be required for any regular meeting of a committee but a copy of every resolution fixing or changing the time or place of regular meetings shall be mailed to every member of such committee at least three days before the first meeting held in pursuance thereof. Special meetings of a committee may be called by the chairman of such committee or the secretary of such committee, or any two members thereof. The Secretary of the Corporation or the secretary of such committee shall give notice of the time and place of each Special Meeting by mailing a written notice of the same to each member of such committee at his last known post office address by mail not less than forty-eight (48) hours before the date of the meeting, or by telephone, facsimile, telegram or electronic transmission on twenty-four (24) hours' notice, or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances before the meeting.


Section 15. Participation in Meetings. Members of the Board of Directors or of any committee may participate in any meeting of the Board of Directors or committee, as the case may be, by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation shall constitute presence in person at such meeting.

Section 16. Interested Directors. No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because such director's or officer's votes are counted for such purpose if (i) the material facts as to the director's or officer's relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (ii) the material facts as to such director's or officer's relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (iii) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee thereof or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction.

ARTICLE IV

OFFICERS

Section 1. Number. The officers of the Corporation shall be a Chief Executive Officer, President, a Treasurer and a Secretary. In addition, the Board of Directors may elect a Chairman of the Board, one or more Vice Presidents and such other officers as may be appointed in accordance with the provisions of Section 3 of this ARTICLE IV. Any number of offices may be held by the same person unless otherwise prohibited by law, the Certificate of Incorporation or these By-laws. The officers of the Corporation need not be stockholders of the Corporation nor, except in the case of the Chairman of the Board of Directors, need such officers be directors of the Corporation.

Section 2. Election, Term of Office and Qualifications. The officers shall be elected annually by the Board of Directors at their first meeting after each annual meeting of the stockholders of the Corporation. Each officer, except such officers as may be appointed in accordance with the provisions of Section 3 of this ARTICLE IV, shall hold office until his successor shall have been duly elected and qualified, or until his death or until he shall have resigned or shall have become disqualified or shall have been removed in the manner hereinafter provided.


Section 3. Subordinate Officers. The Board of Directors or the Chairman of the Board may from time to time appoint such other officers, including one or more Assistant Secretaries and one or more Assistant Treasurers, and such agents and employees of the Corporation as may be deemed necessary or desirable. Such officers, agents and employees shall hold office for such period and upon such terms and conditions, have such authority and perform such duties as in these By-laws provided or as the Board of Directors or the Chairman of the Board may from time to time prescribe. The Board of Directors or the Chairman of the Board may from time to time authorize any officer to appoint and remove agents and employees and to prescribe the powers and duties thereof.

Section 4. Removal. Any officer may be removed, either with or without cause, by the vote of a majority of the entire Board of Directors or, except in the case of any officer elected by the Board of Directors, by any committee or superior officer upon whom the power of removal may be conferred by the Board of Directors or by these By-laws.

Section 5. Resignations. Any officer may resign at any time by giving written notice to the Board of Directors, the Chairman of the Board, Chief Executive Officer or the Secretary. Any such resignation shall take effect at the date of receipt of such notice or at any later time specified therein; and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

Section 6. Vacancies. A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled for the unexpired portion of the term in the manner prescribed in these By-laws for regular election or appointment to such office.

Section 7. Chairman of the Board of Directors. The Chairman of the Board of Directors, if there be one, shall preside, if present, at all meetings of the stockholders and at all meetings of the Board of Directors, and shall serve as the representative of the Board of Directors and shall perform such other duties and have such other powers as from time to time may be assigned to him by the Board of Directors or prescribed by these By-laws. The Chairman of the Board shall possess the same power as the Chief Executive Officer to sign all contracts, certificates and other instruments of the Corporation which may be authorized by the Board of Directors.

Section 8. Chief Executive Officer. The Chief Executive Officer of the Corporation shall have general direction of the affairs of the Corporation and general supervision over its several officers, subject, however, to the control of the Board of Directors. The Chief Executive Officer shall report to the Board of Directors. At each annual meeting and from time to time the Chief Executive Officer shall report to the stockholders and the Board of Directors all matters within his knowledge which the interest of the Corporation may require to be brought to their notice, may sign with the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary any or all certificates of stock of the Corporation, shall sign and execute in the name of the Corporation all contracts or other instruments authorized by the Board of Directors, except in cases where the signing and execution thereof shall be expressly delegated or permitted by the Board of Directors or by these By-laws to some other officer or agent of the Corporation, and in general shall perform such duties and have such powers, incident to the office of Chief Executive Officer and perform such other duties and have such other powers as from time to time may be assigned to him by the Board of Directors or prescribed by these By-laws.


Section 9. President. At the request of the Chief Executive Officer or in the Chief Executive Officer's absence or in the event of the Chief Executive Officer's inability or refusal to act (and if there be no Chairman of the Board), the President shall perform the duties of the Chief Executive Officer, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Chief Executive Officer. The President shall perform such other duties and have such other powers as the Board of Directors from time to time may prescribe. The President may sign with the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary any or all certificates of stock of the Corporation, shall sign and execute in the name of the Corporation all contracts or other instruments authorized by the Board of Directors, except in cases where the signing and execution thereof shall be expressly delegated or permitted by the Board of Directors or by these By-laws to some other officer or agent of the Corporation, and in general shall perform such duties and have such powers, incident to the office of President and perform such other duties and have such other powers as from time to time may be assigned to him by the Board of Directors or prescribed by these By-laws.

Section 10. Vice Presidents. A Vice President may sign with the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary certificates of stock of the Corporation and shall have such other powers and shall perform such other duties as from time to time may be assigned to him by the Board of Directors or the President or prescribed by these By-laws.

Section 11. The Secretary. The Secretary shall keep or cause to be kept, in books provided for the purpose, the minutes of the meetings of the stockholders, the Board of Directors and any committee when so required, shall see that all notices are duly given in accordance with the provisions of these By-laws and as required by law, shall be custodian of the records and the seal of the Corporation and see that the seal is affixed to all documents, the execution of which on behalf of the Corporation under its seal is duly authorized in accordance with the provisions of these By-laws, shall keep or cause to be kept a register of the post office address of each stockholder, may sign with the President or any Vice President certificates of stock of the Corporation, and in general shall perform such duties and have such powers incident to the office of Secretary and shall perform such other duties and have such other powers as from time to time may be assigned to him by the Board of Directors, by the Chief Executive Officer or as prescribed by these By-laws.

Section 12. Assistant Secretaries. Any Assistant Secretary shall, at the request of the Secretary or in his absence or disability, perform the duties of the Secretary and when so acting shall have all the powers of, and be subject to all the restrictions upon, the Secretary and shall perform such other duties and have such other powers as from time to time may be assigned to him by the Chairman of the Board, Chief Executive Officer, President, the Secretary or the Board of Directors or as prescribed by these By-laws.

Section 13. The Treasurer. The Treasurer shall have charge and custody of, and be responsible for, all funds and securities of the Corporation, and deposit all such funds in the name of the Corporation in such banks, trust companies or other depositaries as shall be selected in accordance with the provisions of these By-laws, shall at all reasonable times exhibit his books of account and records, and cause to be exhibited the books of account and records of any corporation controlled by the Corporation to any of the directors of the Corporation upon


application during business hours at the office of the Corporation, or such other corporation, where such books and records are kept, shall render a statement of the condition of the finances of the Corporation at all regular meetings of the Board of Directors and a full financial report at the annual meeting of the stockholders, shall, if called upon to do so, receive and give receipts for moneys due and payable to the Corporation from any source whatsoever, may sign with the President or any Vice President certificates of stock of the Corporation, and in general shall perform such duties and have such powers incident to the office of Treasurer and shall perform such other duties and have such other powers as from time to time may be assigned to him by the Board of Directors, Chairman of the Board, Chief Executive Officer or as prescribed by these By-laws.

Section 14. Assistant Treasurers. Any Assistant Treasurer shall, at the request of the Treasurer or in his absence or disability, perform the duties of the Treasurer and when so acting shall have all the powers of, and be subject to all the restrictions upon, the Treasurer and shall perform such duties and have such other powers as from time to time may be assigned to him by the Chairman of the Board, Chief Executive Officer, President, the Treasurer or the Board of Directors or as prescribed by these By-laws.

Section 15. Salaries. The salaries of the officers, if any, shall be fixed from time to time by the Board of Directors. No officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the Corporation.

Section 16. Advisory Board. The Board of Directors may, by resolution adopted by a majority of the entire Board, appoint such number of senior advisors to the Corporation as members of an Advisory Board as the Board of Directors may from time to time determine. Members of the Advisory Board need not be stockholders and shall have such advisory responsibilities as the Board of Directors may designate, and the term of office of such members of the Advisory Board shall be as fixed by the Board of Directors.

ARTICLE V

CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.

Section 1. Contracts, etc., How Executed. Except as otherwise provided in these By-laws, the Board of Directors may authorize any officer or officers, employee or employees or agent or agents of the Corporation to enter into any contract or execute and deliver any instrument, on behalf and in the name of the Corporation, and such authority may be general or confined to specific instances; and, unless so authorized by the Board of Directors or by a committee appointed in accordance with the provisions of these By-laws or otherwise by these By-laws, no officer, employee or agent shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or render it liable peculiarly for any purpose or amount.

Section 2. Checks, Drafts, etc. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or officers, employee or employees or agent or agents of the Corporation as shall from time to time be determined by resolution of the Board of Directors.


Section 3. Deposits. All funds of the Corporation shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositaries as the Board of Directors or committee appointed by the Board of Directors may designate from time to time or as may be designated from time to time by any officer or officers, employee or employees or agent or agents of the Corporation to whom such power may be delegated by the Board of Directors; and for the purpose of such deposit, any officer or officers, employee or employees or agent or agents of the Corporation as from time to time shall be determined by resolution of the Board of Directors or committee appointed by the Board of Directors may endorse, assign and deliver checks, drafts and other orders for the payment of money which are payable to the order of the Corporation.

Section 4. General and Special Bank Accounts. The Board of Directors or committee appointed by the Board of Directors may authorize from time to time the opening and keeping with such banks, trust companies or other depositaries as it may designate of general and special bank accounts and may make such special rules and regulations with respect thereto, not inconsistent with the provisions of these By-laws, as it may deem expedient.

Section 5. Proxies. Except as otherwise provided in these By-laws or in the Certificate of Incorporation of the Corporation, and unless otherwise provided by resolution of the Board of Directors, the Chief Executive Officer may appoint from time to time an attorney or attorneys, or agent or agents, of the Corporation, on behalf and in the name of the Corporation, to cast the votes which the Corporation may be entitled to cast as a stockholder or otherwise in any other corporation any of whose stock or other securities may be held by the Corporation, at meetings of the holders of the stock or other securities of such other corporation, or to consent in writing to any action by such other corporation, and may instruct the person or persons so appointed as to the manner of casting such votes or giving such consent, and may execute or cause to be executed on behalf and in the name of the Corporation and under its corporate seal, or otherwise, all such written proxies or other instruments as he may deem necessary or proper in the premises.

ARTICLE VI

STOCK AND ITS TRANSFER

Section 1. Certificates of Stock. Certificates for shares of the capital stock of the Corporation shall be in such form not inconsistent with law as shall be approved by the Board of Directors. They shall be numbered in order of their issue and shall be signed by the Chairman of the Board, the President, or any Vice President, and by the Treasurer or any Assistant Treasurer or the Secretary or any Assistant Secretary of the Corporation, and the seal of the Corporation shall be affixed thereto. Any of or all the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who shall have signed or whose facsimile signature shall have been placed upon any such certificate or certificates shall cease to be such officer or officers of the Corporation, whether because of death, resignation or otherwise, before such certificate or certificates shall have been delivered by the Corporation, such certificate or certificates may nevertheless be adopted by the Corporation and be issued and delivered as though the person or persons who signed such certificate or certificates or whose facsimile signature shall have been used thereon had not ceased to be such officer or officers of the Corporation.


Section 2. Transfer of Stock. Transfer of shares of the capital stock of the Corporation shall be made only on the books of the Corporation by the holder thereof, or by his attorney thereunto authorized by a power of attorney duly executed and filed with the Secretary of the Corporation, or a transfer agent of the Corporation, if any, on surrender of the certificate or certificates for such shares properly endorsed. A person in whose name shares of stock stand on the books of the Corporation shall be deemed the owner thereof as regards the Corporation, and the Corporation shall not be bound to recognize any equitable or other claim to or interest in such shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware; provided that whenever any transfer of shares shall be made for collateral security, and not absolutely, such fact, if known to the Secretary or to said transfer agent, shall be so expressed in the entry of transfer.

Section 3. Lost, Destroyed and Mutilated Certificates. The holder of any stock issued by the Corporation shall immediately notify the Corporation of any loss, destruction or mutilation of the certificate therefor or the failure to receive a certificate of stock issued by the Corporation, and the Board of Directors or the Secretary of the Corporation may, in its or his discretion, cause to be issued to such holder a new certificate or certificates of stock, upon compliance with such rules, regulations and/or procedures as may be prescribed or have been prescribed by the Board of Directors with respect to the issuance of new certificates in lieu of such lost, destroyed or mutilated certificate or certificates of stock issued by the Corporation which are not received, including the posting with the Corporation of a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate.

Section 4. Transfer Agent and Registrar; Regulations. The Corporation shall, if and whenever the Board of Directors shall so determine, maintain one or more transfer offices or agencies, each in the charge of a transfer agent designated by the Board of Directors, where the shares of the capital stock of the Corporation shall be directly transferable, and also one or more registry offices, each in the charge of a registrar designated by the Board of Directors, where such shares of stock shall be registered, and no certificate for shares of the capital stock of the Corporation, in respect of which a Registrar and/or Transfer Agent shall have been designated, shall be valid unless countersigned by such Transfer Agent and registered by such Registrar, if any. The Board of Directors shall also make such additional rules and regulations as it may deem expedient concerning the issue, transfer and registration of certificates for shares of the capital stock of the Corporation.

Section 5. Fixing Date for Determination of Stockholder Of Record. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, to express consent to corporate action in writing without a meeting, to receive payment of any dividend or other distribution or allotment of any rights, to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date which shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action, and only such stockholders as shall be stockholders of record of the date so fixed shall be entitled to such notice of and to vote at such meeting and any adjournment thereof, to express consent to any such corporate action, to receive payment of such dividend or to receive such allotment of rights, or to exercise such


rights, as the case may be, notwithstanding any transfer of any stock on the books of the Corporation after any such record date fixed as aforesaid. If the stock transfer books are to be closed for the purpose of determining stockholders entitled to notice of or to vote at a meeting in the case of a merger or consolidation, the books shall be closed at least twenty (20) days before such meeting.

ARTICLE VII

SEAL

The Board of Directors shall provide a suitable seal containing the name of the Corporation, which seal shall be in the charge of the Secretary and which may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. If and when so directed by the Board of Directors, a duplicate of the seal may be kept and be used by an officer of the Corporation designated by the Board of Directors.

ARTICLE VIII

MISCELLANEOUS PROVISIONS

Section 1. Fiscal Year. The fiscal year of the Corporation shall end on March 31 of each year or such other date of each year as shall be determined by the Board of Directors of the Corporation.

Section 2. Waivers of Notice. Whenever any notice of any nature is required by law, the provisions of the Certificate of Incorporation or these By-laws to be given, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after it stated therein shall be deemed equivalent thereto.

Section 3. Qualifying in Foreign Jurisdictions. The Board of Directors shall have the power at any time and from time to time to take or cause to be taken any and all measures which they may deem necessary for qualification to do business as a foreign corporation in any one or more foreign jurisdictions and for withdrawal therefrom.

Section 4. Indemnification. The Corporation shall, to the fullest extent permitted by the laws of the State of Delaware, as amended from time to time, indemnify all directors and officers whom it has the power to indemnify pursuant thereto in accordance with the provisions of the Certificate of Incorporation.

ARTICLE IX

AMENDMENTS

All By-laws of the Corporation shall be subject to alteration or repeal, and new By-laws not inconsistent with any provision of the Certificate of Incorporation of the Corporation or any


provision of law, may be made by the affirmative vote of a majority of the

entire Board of Directors at any regular or special meeting.


Exhibit 4.2

THIS SHAREHOLDERS AGREEMENT, dated as of December 1, 2003 (this "Agreement"), by and among GSRWB, Inc., a Delaware company (the "Company"), the holders (the "Series A Preferred Stockholders") of shares of Series A Preferred Stock (as hereinafter defined) set forth on Schedule A attached hereto, the holder (the "Series B Preferred Stockholder") of shares of Series B Preferred Stock (as hereinafter defined) set forth on Schedule B attached hereto, the holders (the "Series C Preferred Stockholders", and together with the Series A Preferred Stockholders and the Series B Preferred Stockholders, the "Preferred Stockholders") of shares of Series C Preferred Stock (as hereinafter defined) set forth as Schedule C attached hereto, and the holders (the "Common Stockholders", and together with the Preferred Stockholders, the "Stockholders") of shares of Common Stock (as hereinafter defined) set forth on Schedule D attached hereto.

WITNESSETH

THAT WHEREAS, as of the date hereof the Common Stockholders are the record and beneficial owners of shares of common stock, par value $.01 per share, of the Company (the "Common Stock");

WHEREAS, as of the date hereof the Series A Preferred Stockholders are the record and beneficial owners of shares of Series A Convertible Preferred Stock, par value $1.00 per share, of the Company (the "Series A Preferred Stock"), representing in the aggregate, all of the issued and outstanding shares of Series A Preferred Stock of the Company;

WHEREAS, as of the date hereof the Series B Preferred Stockholders are the record and beneficial owners of shares of Series B Convertible Preferred Stock, par value $1.00 per share, of the Company (the "Series B Preferred Stock"), representing in the aggregate, all of the issued and outstanding shares of Series B Preferred Stock of the Company;

WHEREAS, as of the date hereof the Series C Preferred Stockholders are the record and beneficial owners of shares of Series C Convertible Preferred Stock, par value $1.00 per share, of the Company (the "Series C Preferred Stock" and together with the Series A Preferred Stock and Series B Preferred Stock, the "Preferred Stock" and together with the Common Stock, the "Stock"), representing in the aggregate, all of the issued and outstanding shares of Series C Preferred Stock of the Company;

WHEREAS, pursuant to the Agreement of Merger and Acquisitions, dated July 31, 2003 (the "Reorganization Agreement"), by and among the Company, The Roaring Water Bay Spirits Group Limited, a company incorporated under the laws of Ireland ("RWBS Group"), The Roaring Water Bay Spirits Marketing and Sales Company Limited, a company incorporated under the laws of Ireland ("RWBS M&S"), Patrick Rigney, an Irish citizen, David Phelan, an Irish citizen, Carbery Milk Products Limited, a company incorporated under the laws of Ireland and Tanis Investments Limited, a company incorporated under the laws of Ireland, Great Spirits Company, LLC, a Delaware limited liability company and Great Spirits Corp., a Delaware corporation, the


Company was established to effect the Reorganization (as defined in the Reorganization Agreement); all terms not otherwise defined herein shall have the meanings given to such terms in the Reorganization Agreement; and

WHEREAS, the Stockholders and the Company desire to establish certain terms, provisions and conditions with respect to (i) restrictions on the transfer by the Stockholders of shares of the Stock, (ii) certain matters relating to the corporate governance of the Company, (iii) registration rights in favor of the Stockholders to have their respective share holdings registered with the Commission (as hereinafter defined) under certain circumstances, and
(iv) preemptive rights in favor of certain Stockholders to acquire additional shares of Stock which the Company may issue from time to time in the future.

In consideration of the mutual promises and covenants hereinafter set forth, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 For the purposes of this Agreement, the following terms shall be defined as follows:

"Affiliations" shall have the meaning set forth in Section 4.3(c) hereof.

"Agreement" shall have the meaning set forth in the Preamble.

"As-Converted Basis" means the number of fully paid and nonassessable shares of Common Stock obtained upon the conversion and surrender of shares of Preferred Stock in accordance with, and subject to the terms, of the Certificate of Designations.

"Closing Date" shall have the meaning set forth in Section 4.3(c) hereof.

"Certificate of Designations" means the Certificate of Designations filed by the Company with the Secretary of State of Delaware establishing the Preferred Stock.

"Commission" means the Securities and Exchange Commission or any entity succeeding to any or all of its functions under the Securities Act or the Exchange Act.

"Common Stock" shall have the meaning set forth in the recitals.

"Common Stockholders" shall have the meaning set forth in the preamble.

"Company" shall have the meaning set forth in the Preamble.

"Consideration" shall have the meaning set forth in Section 4.3(f) hereof.


"DGCL" shall have the meaning set forth in Section 2.1 hereof.

"Director" shall have the meaning set forth in Section 6.1(a) hereof.

"Disagreeing Holders" shall have the meaning set forth in Section 4.3(f) hereof.

"Drag-Along Notice" shall have the meaning set forth in Section 4.3(c) hereof.

"Drag-Along Purchaser" shall have the meaning set forth in Section 4.3(a) hereof.

"Drag-Along Right" shall have the meaning set forth in Section 4.3(a) hereof.

"Dragged Holder" shall have the meaning set forth in Section 4.3(a) hereof.

"Dragged Shares" shall have the meaning set forth in Section 4.3(a) hereof.

"Equity Securities" shall have the meaning set forth in Section 4.1(a) hereof.

"Exchange Act" shall mean the Securities and Exchange Act of 1934, as amended.

"Final Determination" shall have the meaning set forth in Section 4.3(f) hereof.

"GS" means Great Spirits Corp., a Delaware corporation.

"GS Director" shall have the meaning set forth in Section 6.1(a).

"Indemnified Party" shall have the meaning set forth in Section 5.4(c) hereof.

"Indemnifying Party" shall have the meaning set forth in Section 5.4(c) hereof.

"Initial Public Offering" means the initial public offering of shares of Stock pursuant to a registration under the Securities Act covering the offer and sale of shares of such Stock for the account of the Company (which shares following the offering will be listed on, or the Company will have met the listing requirements for, The New York Stock Exchange, The American Stock Exchange or the Nasdaq Stock Market) from which the aggregate gross proceeds to the Company are $10,000,000 or more.

"Inspectors" shall have the meaning set forth in Section 5.3(h) hereof.


"Offered Securities" shall mean the number of shares of Stock proposed to be transferred under Section 4.2 by the Selling Stockholders.

"Offered Stockholder" shall have the meaning set forth in Section 4.1(a) hereof.

"Percentage of Offered Securities" shall have the meaning set forth in
Section 4.2 hereof.

"Person" means an individual, company, limited liability company, limited liability partnership, partnership, trust, or unincorporated association, or a government or any agency or political subdivision thereof.

"Preferred Seller" shall have the meaning set forth in Section 4.3(a) hereof.

"Preferred Stock" shall have the meaning set forth in the recitals.

"Preferred Stockholders" shall have the meaning set forth in the preamble.

The terms "register," "registered" and "registration" refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement.

"Registrable Securities" means the series of shares of Preferred Stock, Common Stock or other securities issued or issuable with respect to the series of shares of Preferred Stock or Common Stock upon any stock split, stock dividend, recapitalization, or similar event; provided, however, that such series of shares of Preferred Stock or Common Stock or other securities shall only be treated as Registrable Securities if and so long as they have not been
(a) sold to or through a broker or dealer or underwriter in a public distribution or a public securities transaction or (b) sold in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act thereof so that all transfer restrictions and restrictive legends with respect thereto are removed upon the consummation of such sale.

"Registration Expenses" means all expenses incurred by the Company in complying with Section 5.2 hereof, including all registration, qualification and filing fees, printing expenses, escrow fees, fees and disbursement, of counsel for the Company, blue sky fees and expenses, the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company which shall be paid in any event by the Company) and any other expenses incurred in connection with a registration under this Agreement other than Selling Expenses.

"Reorganization Agreement" shall have the meaning set forth in the recitals.

"Restricted Securities" means the securities of the Company required to bear the legend set forth in Section 8.1 hereof.


"RWBS Director" shall have the meaning set forth in Section 6.1(a) hereof.

"RWBS Group" shall have the meaning set forth in the recitals.

"RWBS Holder" shall have the meaning set forth in Section 6.1(a) hereof.

"RWBS M&S" shall have the meaning set forth in the recitals.

"RWBS Shareholder Agreements" shall have the meaning set forth in
Section 8.15 hereof.

"Securities Act" shall mean the Securities Act of 1933, as amended.

"Selling Expenses" means all underwriting discounts, selling commissions and stock transfer taxes applicable to the securities registered by the Stockholders and all fees and disbursements of not more than one counsel for the Stockholders to be selected by the holders of a majority of the shares of Preferred Stock (or shares of Common Stock that were formerly Preferred Stock) participating in an offering.

"Selling Stockholder" shall have the meaning set forth in Section 4.2(a) hereof.

"Series A Director" shall have the meaning set forth in Section 6.1(a) hereof.

"Series B Director" shall have the meaning set forth in Section 6.1(a) hereof.

"Series C Director" shall have the meaning set forth in Section 6.1(a) hereof.

"Series A Preferred Stockholders" shall have the meaning set forth in the Preamble.

"Series B Preferred Stockholders" shall have the meaning set forth in the Preamble.

"Series C Preferred Stockholders" shall have the meaning set forth in the Preamble.

"Series A Preferred Stock" shall have the meaning set forth in the recitals.

"Series B Preferred Stock" shall have the meaning set forth in the recitals.

"Series C Preferred Stock" shall have the meaning set forth in the recitals.

"Stock" shall have the meaning set forth in the recitals.


"Stockholders" shall have the meaning set forth in the recitals.

"Tag-Along Rightholder" shall have the meaning set forth in Section 4.2(a) hereof.

"Third Party Purchaser" shall have the meaning set forth in Section 4.2(a) hereof.

"Transfer" means to transfer, sell, assign, pledge, hypothecate, bequeath, give, create a security interest in, or lien on, place in trust (voting or otherwise), assign or in any other way encumber or dispose of, directly or indirectly and whether or not by operation of law or for value, any series of shares of Preferred Stock or Common Stock.

ARTICLE II

OFFICES

Section 2.1 Registered Office. The registered office in Delaware required by the Delaware General Corporation Law (the "DGCL") shall be as set forth in the Certificate of Incorporation until such time as the registered office is changed in accordance with the DGCL.

Section 2.2 Principal Place of Business. The principal places of business for the transaction of the business of the Company shall be 85-47 Eliot Avenue, Suite G, Rego Park, New York 11374 and/or such other place as the Board of Directors of the Company shall determine.

Section 2.3 Other Offices. The Board of Directors of the Company may at any time establish other business offices within or without the State of Delaware.

ARTICLE III

CONFIDENTIALITY AND TRANSFERS

Section 3.1 Confidentiality.

(a) Each Stockholder hereby agrees that all financial and other information about the Company, or other information of a proprietary nature, disclosed to such Stockholder at any time in connection with this Agreement or otherwise shall be kept confidential by such Stockholder and shall not be disclosed to any person or used by such Stockholder (other than on a confidential basis to the Company's officers, directors, or employees) except:
(i) with the prior written consent of the Company; (ii) as may be required by applicable law, court process or other obligations pursuant to any listing agreement with any national securities exchange; or (iii) such information which is or becomes generally available other than as a result of a violation of this provision.

(b) In the event of a breach or a threatened breach by any Stockholder of the provisions herein, the Company shall be entitled to an injunction restraining such


Stockholder from such breach. Nothing contained in this Section 3.1 or elsewhere; in this Agreement shall be construed as prohibiting the Company from pursuing any other remedies available at law or equity for such breach or threatened breach of this Agreement nor limiting the amount of damages recoverable in the event of a breach or a threatened breach by any Stockholder of the provisions herein.

(c) Notwithstanding Section 8.5, the obligations set forth in this
Section shall be continuing and shall survive the termination of this Agreement or the Company and the Transfer by a Stockholder of all of its Stock.

Section 3.2 Transferees to Remain Subject to Agreement. Any transfer of shares of Stock by any party to this Agreement made in compliance with this Agreement shall remain subject to this Agreement and each intended transferee shall execute and deliver to the Company a counterpart of this Agreement, which shall evidence such transferee's agreement that the shares of Stock intended to be transferred shall continue to be subject to, and receive the benefits of, this Agreement and that as to such shares the transferee shall be bound by the restrictions of, and receive the benefits of, this Agreement as if such transferee were an original party hereto, standing in the position of its transferor.

Section 3.3 Transfer of Shares Upon Death. Upon the death of any Stockholder the shares of Stock held by such Stockholder at any time of her or his death may be bequeathed pursuant to the provisions of the will of such Stockholder or distributed pursuant to the laws of intestate succession to any descendant by blood or adoption of a Stockholder; provided, however, that it shall be a condition to each such transfer that the transferee become a party to this Agreement with respect to the shares of Stock so transferred and from after such date each such transferee shall be deemed to be a Stockholder for all purposes of this Agreement.

Section 3.4 Transfers in Violation of Agreement Void. No purported sale, assignment, transfer, pledge, encumbrance, gift, transfer in trust (voting or other) or other disposition of, or creation of a security interest in, or lien on, any shares of Stock by any Stockholder or other holder thereof in violation of the provisions of this Agreement shall be valid and the Company shall not record the transfer of any such shares of Stock on the books of the Company and the holders of such shares of Stock shall not be entitled to vote or participate in any dividends or other distributions made by the Company (if otherwise entitled thereto). The foregoing restrictions are in addition to, and not in lieu of, any other remedies, legal or equitable, available to the Company to enforce such provisions under this Agreement.

Section 3.5 Transfer of Shares by Operation of Law. Any person who becomes the holder of any shares of Stock or the possessor of any certificate representing shares of Stock by virtue of any judicial process (other than a probate or similar proceeding upon the death of a Stockholder), attachment, bankruptcy, receivership, execution or judicial sale shall immediately offer all such shares of Stock to the Company or its designee whenever requested by the Company to do so, provided such request is made by the Company within 90 days of the date the Company receives actual notice of


any of the foregoing events. The purchase price for shares of Stock or interests therein acquired by the Company pursuant to the provisions of this Section 3.5 shall be the fair market value, as determined by the Company's regular independent accountants.

Section 3.6 Restrictions on Transfer of Shares. Except as otherwise expressly provided in this Agreement, none of the Stockholders shall during his/her lifetime or upon his/her death shall, assign, transfer, pledge, create a security interest in, or lien on, encumber, place in trust (voting or other) or otherwise dispose of, all or any part of his/her shares of Stock.

Section 3.7 Reservation of Rights. Any failure of the Company or the Stockholders to exercise any option to purchase any interest granted pursuant to this Agreement or any waiver by the Company or the Stockholders of any restrictions imposed with respect to any transfers of any interest hereunder shall not, as to any future transfer of a specified interest (either voluntary or by operation of law), discharge the interest from any restrictions herein contained unless such waiver expressly so provides.

ARTICLE IV

PREEMPTIVE AND DISPOSITION RIGHTS

Section 4.1 Preemptive Rights.

(a) Subsequent Offerings. Subject to applicable securities laws, each Stockholder holding 62,500 (as adjusted for stock splits and dividends paid in shares) or more of the outstanding shares of Stock on an As-Converted Basis, if applicable (with the shares of Stock of each of the RWBS Holders being aggregated for purposes of achieving such threshold) (each an "Offered Stockholder") shall have a right of first refusal to purchase its pro rata share of all Equity Securities (as hereinafter defined) (the allocation of shares among the RWBS Holders to be pro rata based upon the Equity Securities held by the RWBS Holders unless otherwise agreed by them), that the Company may, from time to time, propose to sell and issue after the date of this Agreement, other than the Equity Securities excluded by Section 4.1(c) hereof. Each Offered Stockholder's pro rata share is equal to the ratio of (a) the number of shares of Stock (including all shares of Stock issued or issuable upon the conversion of outstanding warrants or options or other rights to purchase shares of Stock or securities convertible into or exercisable for shares of Stock but excluding any shares of Stock issuable pursuant to any anti-dilution provisions that may be applicable to such Stockholder's interest as set forth in a separate agreement) which an Offered Stockholder is deemed to be a holder immediately prior to the issuance of such Equity Securities to (b) the total number of outstanding shares of Stock (including all shares of Stock issued or issuable upon the exercise of any outstanding warrants or options or other rights to purchase shares of Stock or securities convertible into or exercisable for shares of Stock, but excluding any shares of Stock issuable pursuant to any anti-dilution provisions that may be applicable to such Stockholder's interest as set forth in a separate agreement or pursuant to any other similar provision effecting the Company) immediately prior to the issuance of the Equity Securities. The term "Equity Securities" shall mean (i) any share or interest in the


Company, (ii) any security convertible into or exercisable or exchangeable for, with or without consideration, any share or interest (including any option to purchase such convertible security), (iii) any security carrying any warrant or right to subscribe to or purchase any share, interest or other security or (iv) any such warrant or right.

(b) Exercise of Rights. If the Company proposes to issue any Equity Securities, it shall give the Offered Stockholders written notice of its intention, describing the Equity Securities, the price and the terms and conditions upon which the Company proposes to issue the same. The Offered Stockholders shall have fifteen (15) days from the giving of such notice to agree to purchase its pro rata share of the Equity Securities for the price and upon the terms and conditions specified in the notice by giving written notice to the Company and stating therein the quantity of Equity Securities to be purchased.

(c) Excluded Securities. The rights of first refusal established by this Section 4.1 shall have no application to any of the following Equity Securities:

(i) (a) shares issuable upon conversion of the Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock of the Company, (b) shares of Common Stock issued or issuable as a dividend or distribution on Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock of the Company; (c) shares of Common Stock issued or issuable by reason of a dividend, stock split, split-up or other distribution on Common Stock, (d) any shares of Common Stock (including options or warrants to purchase shares of Common Stock) issued to financial institutions in connection with commercial credit arrangements approved by the Board of Directors of the Company, (e) any Awards (as defined in the Plan) with respect to shares of Common Stock issued pursuant to the Plan and the option to purchase 10,000 shares of Common Stock issued to Mrs. Suzy O'Connor and (f) shares of Common Stock issued upon conversion of the RW Notes;

(ii) shares or interests issued or issuable pursuant to any rights or agreements, options, warrants or convertible securities outstanding as of the date of this Agreement; and shares or interests issued pursuant to any such rights or agreements granted after the date of this Agreement;

(iii) any Equity Securities issued for consideration other than cash pursuant to a merger, consolidation, strategic alliance, acquisition or similar business combination approved by the Board of Directors of the Company;

(iv) any Equity Securities issued in connection with any recapitalization or similar event by the Company;

(v) any Equity Securities that are issued by the Company pursuant to a registration statement filed under the Securities Act;

(vi) any Equity Securities issued in connection with strategic transactions involving the Company and other entities, including joint ventures,


manufacturing, marketing or distribution arrangements; provided that the issuance of shares therein has been approved by the Board of Directors of the Company; and

(vii) any shares issued by the Company pursuant to any anti-dilution provisions that may be applicable to such Stockholder's interest as set forth in a separate agreement.

Section 4.2 Tag-Along Rights.

(a) If Stockholders ("the Selling Stockholders") are transferring a number of shares of Stock equal to 50% or more of the then outstanding shares of Stock (on an As-Converted Basis) in a single transaction or a series of transactions to a third party (a "Third Party Purchaser"), then each of the RWBS Holders (the "Tag-Along Rightholders") shall have the right to sell to the Third Party Purchaser, upon the terms and conditions set forth in the notice to the Company provided for in (ii) below, up to that percentage of shares of Stock (on an As-Converted Basis) held by such Tag-Along Rightholder as is equal to that percentage determined by dividing (i) the total number of shares of Stock (on an As-Converted Basis) proposed to be transferred by Selling Stockholders by (ii) the total number of shares of Stock (on an As-Converted Basis) then outstanding (the quotient of (i) and (ii), being the "Percentage of Offered Securities"); provided, however, the total number of shares of Stock (on an As-Converted Basis)a Tag-Along Rightholder shall be entitled to sell shall be inclusive of the number of shares of Stock proposed to be sold by such RWBS Holder if also acting in the capacity of a Selling Stockholder. The RWBS Holders may allocate their tag-along rights pursuant to this Section 4.2 among themselves by mutual agreement; provided the Tag-Along Rightholders shall not be entitled pursuant to this Section 4.2 to sell to a Third Party Purchaser a greater number of shares of Stock than the number of shares of Stock collectively held by the Tag-Along Rightholders multiplied by the Percentage of Offered Securities. The Selling Stockholders and the Tag-Along Rightholders shall effect the sale of the Offered Securities as follows: the Tag-Along Rightholders shall sell up to the number of Offered Securities permitted to be sold pursuant to this Section 4.2 and the number of Offered Securities to be sold to the Third Party Purchaser shall be reduced pro-rata among the Selling Shareholders.

(i) For purposes of this Section 4.2, unless otherwise expressly set forth therein, all shares of Stock then outstanding shall be deemed to have been converted into shares of Common Stock on an As-Converted Basis.

(ii) In order to exercise its right to sell shares of Stock to a Third Party Purchaser pursuant to this Section 4.2, a Tag-Along Rightholder must agree to make, severally and not jointly, substantially the same representations, warranties, covenants and indemnities with respect to the title and ownership of its shares of Stock to be sold as a Selling Stockholder agrees to make in connection with the proposed sale by it of Offered Securities to a Third Party Purchaser. Each Selling Stockholder shall give notice to each Tag-Along Rightholder of each proposed sale by it of Offered Securities which gives rise to the rights of the Tag-Along Rightholders set forth in this Section 4.2, at least thirty (30) days prior to the proposed consummation of the proposed sale, setting


forth the name of the Selling Stockholder, the number of Offered Securities, the name and address of the proposed Third Party Purchaser, the proposed amount and form of consideration and the terms and conditions offered by the Third Party Purchaser, the percentage of shares of Stock that the Tag-Along Rightholder may sell to the Third Party Purchaser (determined in accordance with Section 4.2 assuming that all Tag-Along Rightholders exercise their rights pursuant to this
Section 4.2), and a representation that such Third Party Purchaser has been informed of the tag-along rights provided for in this Section 4.2 and has agreed to purchase shares of Stock in accordance with the terms of this Section 4.2. The tag-along rights provided by this Section 4.2 must be exercised by the Tag-Along Rightholder wishing to sell its shares of Stock within thirty (30) days following receipt of the notice required by the preceding sentence, by delivery of a written notice to the Selling Stockholder indicating the Tag-Along Rightholder's wish to exercise its rights and specifying the number of shares of Stock (up to the maximum number of shares of Stock owned by the Tag-Along Rightholder permitted to be sold to the Third Party Purchaser) it wishes to sell; provided, however, that the Tag-Along Rightholder may waive its rights under this Section 4.2 prior to the expiration of the thirty (30)-day period by giving written notice to the Selling Stockholder, with a copy to the Company. The failure of a Tag-Along Rightholder to respond within the thirty (30)-day period shall be deemed to be a waiver of the Tag-Along Rightholder's rights under this Section 4.2. If a Tag-Along Rightholder decides to sell a number of shares which is less than the maximum number of shares permitted to be sold by it pursuant to this Section 4.2 or if a Tag-Along Rightholder fails to close its sale of shares of Stock to the Third Party Purchaser for any reason, then the Selling Stockholder may sell to the Third Party Purchaser the number of shares of Stock as the Tag-Along Rightholder failed to sell to the Third Party Purchaser. However, if the Third Party Purchaser fails to purchase shares of Stock from any Tag-Along Rightholder that has properly exercised its tag-along rights pursuant to this Section 4.2, then the Selling Stockholder shall not be permitted to consummate the proposed sale of the Offered Securities, and any proposed attempted sale shall be null and void and the Company shall not register the proposed transfer.

Section 4.3 Drag-Along Rights.

(a) At any time following the third anniversary of the date hereof, if any Stockholder or Stockholders holding in the aggregate at least eighty percent (80%) of the shares of Stock, on an As-Converted Basis (collectively, the "Preferred Seller") desire to Transfer to a Third Party Purchaser (for purposes of this Section 4.3, the "Drag-Along Purchaser") all of the shares of Stock then owned by the Preferred Seller, the Preferred Seller shall have the right (the "Drag-Along Right"), notwithstanding any other provision of this Agreement but subject to Section 4.3(d), to require that each other Stockholder (each, a "Dragged Holder") sell to the prospective purchaser that percentage of its shares of Stock (the "Dragged Shares") as is required in order for the prospective purchaser to purchase the aggregate number of shares of Stock to be purchased by it (as set forth in the Drag-Along Notice referred to below). Such sale by the Dragged Holders shall be made by them pro rata on the basis of their respective fully diluted holdings of shares of Stock, for the same consideration per share and otherwise on the same terms and conditions upon which the Preferred Seller is selling its shares of Stock, subject to and in accordance with the following terms and conditions.


(b) For purposes of this Section 4.3, unless otherwise expressly set forth herein, all shares of Stock then outstanding shall be deemed to have been converted into shares of Common Stock on an As-Converted Basis.

(c) In order to exercise its rights under this Section 4.3, the Preferred Seller shall give notice to the Company and each Dragged Holder (a "Drag-Along Notice") at least thirty (30) days prior to the date of proposed consummation of the proposed sale (the "Closing Date"), which notice shall state that the Preferred Seller proposes to sell Offered Securities and intends to exercise its Drag-Along Right, shall set forth the name of the Preferred Seller, the number of Offered Securities and that such number constitutes all of the Preferred Seller's Shares, the number of Dragged Shares, the name and address of the proposed Drag-Along Purchaser, the proposed amount and form of consideration and the terms and conditions offered by the Drag-Along Purchaser, shall specify the Closing Date to be within sixty (60) days of the provision of the Drag-Along Notice, shall include a representation that such Drag-Along Purchaser has been informed of the Drag-Along Rights provided for in this Section 4.3 and has agreed to purchase shares of Stock in accordance with this Section 4.3 and shall fully describe any existing or proposed affiliations or contractual relationships between the Preferred Seller and the Drag-Along Purchaser (the "Affiliations").

(d) Subject to Section 4.3(f) below, at least ten (10) days prior to the Closing Date, each Dragged Holder shall deliver to the Preferred Seller: (i) a limited power-of-attorney authorizing the Preferred Holder to dispose of the Dragged Shares on the terms contained in the Drag-Along Notice; and (ii) one or more certificates which represent the number of shares of Common Stock which the Dragged Holder is being required to sell pursuant the Drag-Along Right. Additionally, each Dragged Holder agrees to make, severally and not jointly, substantially the same representations, warranties, covenants and indemnities as the Preferred Seller agrees to make in connection with the proposed sale by it of Offered Securities to a Drag-Along Purchaser; provided, however, that no Dragged Holder shall, without its or his prior consent, have to (x) make any representation or warranty that they in good faith believe to be untrue, (y) agree to any covenant that (1) obligates that Dragged Holder to undertake a future performance that will not be required of the Preferred Seller or the other Dragged Holders, (2) it in good faith believes impossible to perform or
(3) relates to the Dragged Holder's non-competition with the Company's business, or (z) agrees to indemnification relating to the status, actions or shares of Stock of any other Stockholder. The documents delivered to the Preferred Seller by each Dragged Holder as provided above shall be held in escrow by the Preferred Seller pending the closing of the transaction.

(e) The Preferred Seller shall consummate the sale of shares of Stock by the Preferred Seller and all Dragged Holders on the terms and conditions, and on or within ten (10) days of the Closing Date set forth in the Drag-Along Notice or within twenty (20) days of the Final Determination (as defined in
Section 4.3(f) below). If the proposed sale is not consummated in accordance with the foregoing, the Preferred Seller shall return to the Dragged Holders all stock certificates and other documents furnished by them to the Preferred Seller in contemplation of the sale of shares of Stock pursuant to the Drag-Along Right, and all restrictions on the transfer of shares of Stock by the


Preferred Seller contained in this Agreement shall again be in effect. Simultaneously with the closing of the proposed sale in accordance with the foregoing, the Preferred Seller shall notify each Dragged Holder of the closing and shall cause the purchaser to remit directly to each Dragged Holder that portion of the sale proceeds to which such Dragged Holder is entitled by reason of its participation in the sale.

(f) Notwithstanding the foregoing, in the event that a majority of the Board of Directors of the Company determines in good faith that the Affiliations present a potential conflict of interest vis-a-vis the proposed amount and form of consideration (the "Consideration"), and any Dragged Holder objects to the Consideration (the "Disagreeing Holders"), then the Preferred Seller and the Drag-Along Purchaser, on the one hand, and the Disagreeing Holders, on the other hand, shall each designate a representative, and such representatives will meet and use their best efforts to reach an agreement on the appropriate amount and form of consideration. If they reach an agreement of the revised amount and form of consideration (a "Final Determination"), then the proposed sale shall proceed in accordance with that Final Determination. If the representatives so designated are unable to reach such an agreement, then the Preferred Seller and the Drag-Along Purchaser may either determine not to proceed with the proposed sale or may submit a list of at least three independent appraisers each of which is a recognized independent expert experienced in valuing businesses similar or related to the principal business of the Company. The Disagreeing Holders shall select one of the independent appraisers set forth on such list. The independent appraiser so selected will determine the appropriate amount and form of consideration and its determination thereof will be final and binding on all parties concerned (such determination, also a "Final Determination") and the proposed sale shall proceed in accordance with the Final Determination. The Company and the Drag-Along Purchaser will provide the independent appraiser so selected with all information about the Company and the Consideration which such independent appraiser reasonably deems necessary for determining the fair value of the Consideration. The fees and expenses of the appraisal process (including those of the independent appraiser) will be paid by the Company. The Company may require that the independent appraiser keep confidential any non-public information received as a result of this paragraph pursuant to reasonable confidentiality arrangements.

ARTICLE V

REGISTRATION RIGHTS

Section 5.1 Notice of Piggy-Back Registration.

(a) If at any time or from time to time after the Company has completed an Initial Public Offering, the Company shall determine to register any of its shares of Stock, either for its own account or the account of a Stockholder other than (x) a registration relating solely to employee benefit plans, (y) a registration relating solely to a Commission Rule 145 transaction or (z) a registration in connection with an Initial Public Offering, the Company will:


(i) promptly give to each Stockholder written notice thereof; and

(ii) include in such registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests made within 30 days after receipt of such written notice from the Company by any Stockholder.

(b) Underwriting. If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the Stockholders as a part of the written notice given pursuant to this Section 5.1. In such event, the right of any Stockholder to registration pursuant to this Section 5.1 shall be conditioned upon such Stockholder's participation in such underwriting and the inclusion of Registrable Securities in the underwriting to the extent provided herein. All Stockholders proposing to distribute their securities through such underwriting shall (together with the Company and the Stockholders distributing their shares of Stock through such underwriting) enter into an underwriting agreement in customary form with the managing underwriter selected for such underwriting by the Company and may, at their option, require that any or all of the representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of such underwriters also be made to and for their benefit and that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement also be conditions precedent to their obligations. No Stockholder other than a Stockholder who, together with its Affiliates (within the meaning of Rule 12b-2 under the Exchange Act), owns at least a majority of the outstanding Stock of the Company (on as As-Converted Basis, if applicable) shall be required to make any representations or warranties to or agreements with the Company or the underwriters other than representations, warranties or agreements regarding such Stockholder and its ownership of the shares of Stock being registered on its behalf and such Stockholder's intended method of distribution and any other representation required by law. Notwithstanding any other provision of this
Section 5.1, if the managing underwriter determines that marketing factors require a limitation of the number of shares of Stock to be underwritten, the managing underwriter may limit the number of Registrable Securities to be included in the registration and underwriting (up to the exclusion of all Registrable Securities), on a pro rata basis based on the total number of shares of Stock (including Registrable Securities) (on an As-Converted Basis) requested to be included in such registration. To facilitate the allocation of Stock in accordance with the above provisions, the Company or the underwriters may round the number of shares of Stock allocated to any Stockholder to the nearest 10 shares of Stock. If any Stockholder disapproves of the terms of any such underwriting, he or she may elect to withdraw therefrom by written notice to the Company and the managing underwriter.

(c) Right to Terminate Registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 5.1(c) prior to the effectiveness of such registration, whether or not any Stockholder has elected to include his Stock in such registration.


(d) Registrable Securities. If at any time shares of Stock are to be included in a registration pursuant to this Section 5.1, the securities to be registered shall be the underlying shares of Common Stock into which such shares of Preferred Stock are convertible. Prior to any sale of Stock pursuant to any such registration, such Stock shall immediately be converted into Common Shares.

Section 5.2 Expenses of Registration. All Registration Expenses incurred in connection with any registration pursuant to Section 5.1 shall be borne by the Company. Unless otherwise agreed, other Selling Expenses relating to any series of shares of Stock registered on behalf of the Stockholders shall be borne by the applicable Stockholders of the registered Stock included in such registration pro rata on the basis of the number of shares of Stock registered on behalf of the Company, the other Stockholders distributing their shares of Stock under such registration and the applicable Stockholders.

Section 5.3 Registration Procedures. In the case of each registration effected by the Company pursuant to Section 5.1, the Company will keep each Stockholder advised in writing as to the initiation of each registration and as to the completion thereof. At its expense the Company will:

(a) prepare and file with the Commission a registration statement with respect to such Shares and use its reasonable best efforts to cause such registration statement to become and remain effective until the distribution described in the registration statement has been completed;

(b) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all Stock covered by such registration statement;

(c) promptly notify each Stockholder and the underwriter or underwriters, if any:

(i) when such registration statement or any prospectus used in connection therewith, or any amendment or supplement thereto, has been filed and, with respect to such registration statement or any post-effective amendment thereto, when the same has become effective;

(ii) of any written comments from the Commission with respect to any filing referred to in clause (i) or of any written request by the Commission for amendments or supplements to such registration statement or prospectus;

(iii) of the notification to the Company by the Commission of its initiation of any proceeding with respect to the issuance by the Commission of, or of the issuance by the Commission of any stop order suspending the effectiveness of such registration statement; and


(iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of any Registrable Securities for sale under the applicable securities or blue sky laws of any jurisdiction;

(d) furnish to the Stockholders participating in such registration and to the underwriters of the shares of Stock being registered such reasonable number of copies of the registration statement, preliminary prospectus, final prospectus and such other documents as the Stockholders and such underwriters may reasonably request in order to facilitate the public offering of such Stock;

(e) use its reasonable best efforts to register and qualify the shares of Stock covered by such registration statement under such other securities or blue sky laws of such jurisdictions as shall be reasonably requested by the Stockholders and to keep such registration or qualification in effect or so long as such registration statement remains in effect, and take any other action which may be reasonably necessary or advisable to enable such Stockholder to consummate the disposition in such jurisdictions of the Registrable Securities owned by such Stockholder; provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;

(f) in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering; provided that each Stockholder participating in such underwriting shall also enter into and perform its obligations under such an agreement;

(g) notify each Stockholder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, and at the request of any such Stockholder promptly prepare and furnish to such Stockholder a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such shares of Stock, such prospectus shall not include 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 the light of the circumstances under which they were made, not misleading;

(h) make available for inspection by any Stockholder, any underwriter participating in any distribution pursuant to such registration statement, and any attorney, accountant, or other agent retained by such Stockholder or underwriter (collectively, the "Inspectors"), all financial and other records, pertinent corporate documents and properties of the Company reasonably necessary to enable the Inspectors to exercise their


due diligence responsibility, and cause the Company's officers, directors and employees to supply all information reasonable requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement, and permit the Inspectors to participate in the preparation of such registration statement and any prospectus contained therein and any amendment or supplement thereto;

(i) cause all such Registrable Securities registered pursuant hereunder to be listed on each securities exchange on which similar securities issued by the Company are then listed; and

(j) provide a transfer agent and registrar for all Registrable Securities registered pursuant hereunder and a CUSIP number for all such Registrable Securities, in each case not later than the affective date of such registration.

Section 5.4 Indemnification.

(a) The Company will indemnify each Stockholder, each of its officers and directors and partners, and each Person controlling such Stockholder within the meaning of Section 15 of the Securities Act, with respect to which registration has been effected pursuant to Section 5.1, and each underwriter, if any, and each Person who controls any underwriter within the meaning of Section 15 of the Securities Act, against all Losses (or actions in respect thereof), including any Losses incurred in settlement of any litigation, commenced or threatened, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement, prospectus, preliminary prospectus, offering circular or other document, or any amendment or supplement thereto, incident to any such registration, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, or any violation or any alleged violation by the Company of any rule or regulation promulgated under the Securities Act or the Exchange Act or any state securities law applicable to the Company in connection with any such registration, and the Company will reimburse each such Stockholder, each of its officers and directors, and each Person controlling such Stockholder, each such underwriter and each Person who controls any such underwriter, for any legal and any other expenses reasonably incurred in connection with investigating, preparing or defending any such Losses, as such expenses are incurred, provided that the Company will not be liable in any such case to the extent that any such Losses arise out of or are based on any untrue statement or omission or alleged untrue statement or omission, made in reliance upon and in conformity with written information furnished to the Company, by an instrument duly executed by such Stockholder, controlling Person or underwriter and stated to be specifically for use therein. The Company shall also indemnify each other Person who participates (including as an underwriter) in the offering or sale of Registrable Securities, their officers, directors and partners, and each other Person, if any, who controls any such participating Person within the meaning of the Securities Act to the same extent as provided above with respect to sellers of Registrable Securities.


(b) Each Stockholder will, if Registrable Securities held by such Stockholder are included in the securities as to which such registration is being effected, indemnify the Company, each of its directors and officers, each underwriter, if any, of the Company's securities covered by such a registration statement, each Person who controls the Company or such underwriter within the meaning of Section 15 of the Securities Act, and each other such Stockholder, each of its officers and directors and each Person controlling such Stockholder within the meaning of Section 15 of the Securities Act, against all Losses (or actions in respect; thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company, such Stockholders, such directors, officers, Persons, underwriters or control Persons for any legal or any other expenses reasonably incurred in connection with investigating or defending any such Losses, as such expenses are incurred, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by such Stockholder and stated to be specifically for use therein; provided, however, that the obligations of each of Stockholders hereunder shall be limited to an amount equal to the net proceeds to such Stockholder of shares of Stock sold as contemplated herein. Such Stockholders shall also indemnify each other Person who participates (including as an underwriter) in the offering or sale of Registrable Securities, their officers and directors and each other Person, if any, who controls any such participating Person within the meaning of the Securities Act to the same extent as provided above with respect to the Company.

(c) Each party entitled to indemnification under this Section 5.4(c) (an "Indemnified Party") shall give notice to the party required to provide indemnification (the "Indemnifying Party") promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified Party may participate in such defense at such party's expense; provided, however, that an Indemnified Party (together with all other Indemnified Parties which may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the Indemnifying Party, if representation of such Indemnified Party by the counsel retained by the Indemnifying Party would be inappropriate due to actual or potential differing interests between such Indemnified Party and any other party represented by such counsel in such proceeding. The failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this
Section 5.4(c) unless the failure to give such notice is materially prejudicial to an Indemnifying Party's ability to defend such action. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party,


which consent shall not be unreasonably withheld, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified Party of a release from all liability in respect to such claim or litigation.

(d) If the indemnity and reimbursement obligation provided for in any paragraph of this Section 5.4(d) is unavailable or insufficient to hold harmless an Indemnified Party in respect of any Losses (or actions or proceedings in respect thereof) referred to therein, then the Indemnifying Party shall contribute to the amount paid or payable by the Indemnified Party as a result of such Losses (or actions or proceedings in respect thereof) in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and the Indemnified Party on the other hand in connection with statements or omissions which resulted in such Losses, as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Indemnifying Party or the Indemnified Party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The parties hereto agree that it would not be just and equitable if contributions pursuant to this paragraph were to be determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in this paragraph. The amount paid by an Indemnified Party as a result of the Losses referred to in the first sentence of this paragraph shall be deemed to include any legal and other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any Loss which is the subject of this paragraph.

No Indemnified Party guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) or deceptive or manipulative sales practices (within the meaning of Section 10(b) of the Exchange Act or Rule 10b-5 promulgated thereunder) shall be entitled to contribution from the Indemnifying Party if the Indemnifying Party was not guilty of such fraudulent misrepresentation or deceptive or manipulative sales practices.

Section 5.5 Certain Limitations. The prospective sellers shall not have the right to participate in a registration under Section 5.1 if the prospective sellers receive a written opinion of counsel for the Company, in substance and authorship acceptable to the prospective sellers, together with a confirming opinion of counsel selected by such prospective sellers, which opinion shall be paid for by the Company, that such prospective sellers may make such transfer of all Stock (if applicable) in a public sale which will be in compliance with all applicable securities laws concerning transfer of non-registered securities. If the right to transfer Stock publicly is not available to any one of the prospective sellers as described in the preceding sentence, such prospective seller will have the right to participate in or request a registration under Section 5.1.

Section 5.6 [Intentionally Left Blank].


Section 5.7 Information by Stockholder. The Stockholders of Registrable Securities included in any registration shall furnish to the Company such information regarding such Stockholder or the Registrable Securities held by them and the distribution proposed by such Stockholders as the Company may reasonably request in writing and as shall be required in connection with any registration referred to in Section 5.1.

Section 5.8 Rule 144 Reporting. With a view to making available the benefits of certain rules and regulations of the Commission which may at any time permit the sale of the Restricted Securities to the public without registration, after such time as a public market exists for the shares of Stock of the Company, the Company agrees to use its reasonable best efforts to:

(a) make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times after the effective date that the Company becomes subject to the reporting requirements of the Securities Act or the Exchange Act;

(b) file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements); and

(c) so long as the Stockholders own any Restricted Securities, to furnish to the Stockholders forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of said Rule 144 (at any time after 90 days after the effective date of the Initial Public Offering), and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents of the Company and other information in the possession of or reasonably obtainable by the Company as a Stockholder may reasonably request in availing itself of any rule or regulation of the Commission allowing a Stockholder to sell any such securities without registration.

Section 5.9 Transfer of Registration Rights. The rights to cause the Company to register securities granted the Stockholders under Sections 5.1 may be assigned to a transferee or assignee in connection with any transfer or assignment of Registrable Securities by the Stockholders; provided that (a) such transfer may otherwise be effected in accordance with applicable securities laws and this Agreement, (b) notice of such assignment is given to the Company and
(c) if the transfer is to a transferee who is not an affiliate of the transferring Stockholder, such transferee or assignee acquires from the Stockholders at least 25% of the shares of Stock (on an As-Converted Basis, if applicable) held by the Stockholders as of the date hereof.

Section 5.10 Standoff Agreement. Each Stockholder agrees in connection with any registration of the Company's shares of Stock (other than a registration of securities in a Rule 145 transaction or with respect to an employee benefit plan), upon request of the Company or the underwriters managing any underwritten


offering of the shares of the Company's Stock, not to sell, make any short sale of, loan, pledge (or otherwise encumber or hypothecate), grant any option for the purchase of, or otherwise directly or indirectly dispose of any Registrable Securities (other than those included in the registration) without the prior written consent of the Company and such managing underwriters for such period of time, not to exceed 180 days, as the Board of Directors of the Company establishes pursuant to its good faith negotiations with such managing underwriters.

Section 5.11 Termination of Rights. The rights of any particular Series A Stockholder or Series B Stockholder to cause the Company to register securities under Section 5.1 shall terminate with respect to such Stockholder on the later of (a) the second anniversary of the effective date of the Company's Initial Public Offering and (b) the date upon which such Stockholder ceases to be an Affiliate under Rule 144 of the Securities Act; provided that in no event shall such period be beyond five (5) years after an Initial Public Offering. The rights of any particular Series C Stockholder to cause the Company to register securities under Section 5.1 shall terminate with respect to such Stockholder on the second anniversary of the effective date of the Company's Initial Public Offering.

ARTICLE VI

MANAGEMENT; BOARD OF DIRECTORS AND OFFICERS

Section 6.1 Election of Board of Directors and Officers; Management.

(a) The Board of Directors currently consists of Messrs. Mark Andrews, Patrick Rigney, David Phelan, T. Kelley Spillane, and John E. Schmeltzer, III, until their respective successors have been elected and qualified (or until their respective resignation or removal). Promptly after the closing of the Reorganization, the Stockholders shall elect a new Board of Directors of the Company, which shall consist of nine directors (each, a "Director"). The Directors shall be designated as follows: (i) six of the Directors shall be elected annually by the Stockholders by a plurality of the votes of the shares of Stock voting on an As-Converted Basis; provided, however, that the Stockholders agree to vote their shares of Stock in favor of the election of (x) Mark Andrews, T. Kelley Spillane and an individual to be named by Mr. Andrews, each as a Director (the "GS Directors") and (y) three nominees (the "RWBS Directors") designated by the Stockholders who were the former holders of shares of RWBS Group (the "RWBS Holders") (i.e., Patrick Rigney, David Phelan, Tanis Investments Limited and Carbery Milk Products Limited), (ii) one Director shall be elected annually by the Series A Preferred Stockholders by a plurality of the votes of shares of Series A Preferred Stock voting (the "Series A Director"),
(iii) one Director shall be elected annually by the Series B Preferred Stockholders holding shares of Series B Preferred Stock by a plurality of the votes of shares of Series B Preferred Stock voting (the "Series B Director"), and (iv) one Director shall be elected annually by the Series C Preferred Stockholders holding shares of Series C Preferred Stock by a plurality of the votes of shares of Series C Preferred Stock voting (the "Series C Director"). The Board of Directors shall act by a vote of the majority present and a quorum for the transaction of business by the Board of Directors shall be a majority of the Directors. Any vacancy in the Board of Directors shall be filled


by the election of a new Director by the remaining Directors; provided that (a) a GS Director's seat shall be filled by the remaining GS Directors, (b) the Series A Director's seat shall be filled by the Series A Preferred Stockholders by a plurality of the votes of the shares of Series A Preferred Stock voting,
(c) the Series B Director's seat shall be filled by the Series B Preferred Stockholders by a plurality of the votes of the shares of Series B Preferred Stock voting, (d) the Series C Director's seat shall be filled by the Series C Preferred Stockholders holding Series C Preferred Stock by a plurality of the votes of the shares of Series C Preferred Stock voting, and (e) the RW Director's seat shall be filled by the remaining RWBS Directors. The Company shall (i) provide at least three (3) business days notice of any Board of Directors meeting in accordance with the Company's Bylaws and (ii) call at least four (4) Board of Director's meetings annually.

(b) The Stockholders shall use their best efforts to cause the Board of Directors of the Company to establish an Operating Committee, an Audit Committee and a Compensation Committee of the Board of Directors of the Company. The Operating Committee shall consist of Messrs. Mark Andrews, David Phelan, Patrick Rigney and T. Kelley Spillane. Each of the Audit Committee's and the Compensation Committee's membership shall consist of three Directors, one of which shall be a GS Director, one of which shall be a RWBS Director and one of which shall be a Series A Director, Series B Director or Series C Director. The Audit Committee and the Compensation Committee shall have all of the ordinary duties of a like committee of a Board of Directors and, in the case of the Compensation Committee, shall have the authority to grant awards under the Stock Option Plan.

(c) The Stockholders shall use their best efforts to cause the Board of Directors of the Company to elect the following persons to the respective offices of the Company set forth beside their respective names, to serve in such capacity until their respective successors have been elected and have qualified (or until their earlier resignation or removal):

Name                      Officers
----                      --------
Mark Andrews              President and Chief Executive Officer

Patrick Rigney            Executive Vice President and Managing Director

David Phelan              Executive Vice President and Managing Director

T. Kelley Spillane        Executive Vice President and Managing Director

John E. Schmeltzer, III   Secretary

(d) The affairs of the Company shall be managed subject to the general oversight of the Board of Directors of the Company and day-to-day conduct of the business shall be conducted by the officers.


Section 6.2 Vacancies: Resignations.

(a) A vacancy among the officers shall be deemed to exist in case of the death, mental incompetence, physical incapacity, bankruptcy, resignation or removal of any officer, or if the Board of Directors of the Company fails at any annual or special meeting at which any officer or officers are elected, to elect the fully authorized number of officers to be voted for at that meeting.

(b) Any officer may resign effective upon giving thirty (30) days' written notice to the Board of Directors of the Company, unless the notice specifies a later time for the effectiveness of such resignation. The Board of Directors of the Company shall have power to elect a successor to take office when the resignation is to become effective.

Section 6.3 Director Vote Required.

The Stockholders hereby agree that notwithstanding anything to the contrary set forth in the Certificate of Incorporation or Bylaws of the Company, the Directors shall not be entitled to authorize any of the following transactions without the affirmative vote of (i) seven (7) Directors during the first two (2) years following the date of this Agreement, and (ii) at least two-thirds (66 2/3%) of the total number of Directors thereafter:

(i) the merger or consolidation of the Company;

(ii) the incurrence of any indebtedness resulting in total indebtedness on a consolidated basis being in excess of $15,000,000;

(iii) undertaking any material transaction outside of the Company's ordinary course of business, including any such transaction with an officer, director or any holder of five percent (5%) or more of the outstanding Stock of the Company;

(iv) issuance of additional equity securities of the Company (including common and preferred stock) which would have aggregate anticipated net proceeds (when taken together with net proceeds for all equity securities issued by the Company following the date of this Agreement) in excess of $10,000,000 following the date of this Agreement (excluding the net proceeds of the Series C Preferred Stock);

(v) dissolution or winding up of the Company or any of its operating subsidiaries; and

(vi) the sale or lease by the Company or any of its operating subsidiaries of all or substantially all of its property.

ARTICLE VII

FINANCIAL STATEMENTS


Section 7.1 Financial Statements. The Company shall maintain, and shall cause each of its subsidiaries to maintain, a system of accounting established and administered in accordance with sound business practices to permit the preparation of financial statements in conformity with GAAP (provided that monthly financial statements shall not be required to have footnote disclosure and are subject to normal year-end adjustments). The Company shall deliver to each of the Stockholders in form and detail reasonably satisfactory to the Stockholders:

(a) as soon as available, but not later than one hundred twenty (120) days after the end of each fiscal year, a copy of the audited consolidated balance sheet of the Company as at the end of such year and the related consolidated statements of income or operations, shareholders' equity and cash flows for such fiscal year, setting forth in each case (other than shareholders' equity) in comparative form the figures for the previous fiscal year commencing with fiscal year 2003, and accompanied by the opinion of any nationally-recognized independent public accounting firm. The independent auditors shall report on the fair presentation, in all material respects, of the Company's consolidated financial statements for the fiscal year then ended in conformity with generally accepted accounting principles. The scope of such audit shall not be restricted or limited in any material portion by the Company. The independent auditor shall identify any changes in accounting principles that have a material effect on comparability with the prior year's consolidated financial statements;

(b) as soon as available, but not later than sixty (60) days after the end of each fiscal month of each year, a copy of the unaudited consolidated balance sheets of the Company and each of its subsidiaries, and the related consolidated statements of income and cash flows as of the end of such month and for the portion of the fiscal year then ended, all certified on behalf of Company by an appropriate authorized person as being complete and correct and fairly presenting, in accordance with GAAP, the financial position and the results of operations of the Company and the subsidiaries, subject to normal year-end adjustments and absence of footnote disclosure; and

(c) concurrently with the delivery of the financial statements referred to in clause (a) above, to the extent not included in such financial statements, a copy of the unaudited consolidating balance sheets of the Company and each of its subsidiaries, and the related consolidating statements of income and cash flows for such fiscal year, all certified on behalf of Company by an appropriate authorized person as being complete and correct and fairly presenting, in accordance with GAAP, the financial position and the results of operations of the Company and the subsidiaries.

ARTICLE VIII

MISCELLANEOUS

Section 8.1 Restrictive Legend. All certificates for shares of Stock shall bear, in addition to any other legend required by the Certificate of Incorporation or Bylaws of the Company, the following notice conspicuously marked on the face or back thereof:


THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, AND MAY ONLY BE SOLD, RESOLD, PLEDGED, ASSIGNED, TRANSFERRED OR OTHERWISE DISPOSED OF IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE LAWS OF THE STATES, TERRITORIES AND POSSESSIONS OF THE UNITED STATES GOVERNING THE OFFER AND SALE OF SECURITIES AND ONLY (1) OUTSIDE THE UNITED STATES TO A PERSON OTHER THAN A U.S. PERSON (AS SUCH TERMS ARE DEFINED IN REGULATION S UNDER THE SECURITIES ACT) IN ACCORDANCE WITH RULES 901 THROUGH 905 AND THE PRELIMINARY NOTES OF REGULATION S UNDER THE SECURITIES ACT, (2) TO A PERSON WHOM THE HOLDER OF THE SECURITIES REPRESENTED HEREBY REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (3) PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT. THE HOLDER, BY ITS ACCEPTANCE OF THIS CERTIFICATE OR THE SECURITIES REPRESENTED HEREBY, AS THE CASE MAY BE, REPRESENTS THAT IT UNDERSTANDS AND AGREES TO THE FOREGOING RESTRICTIONS. HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREIN MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.

THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO
THE TRANSFER RESTRICTIONS AND OTHER PROVISIONS OF THE SHAREHOLDERS AGREEMENT, DATED AS OF DECEMBER 1, 2003 (THE "SHAREHOLDERS AGREEMENT"), BY AND AMONG GSRWB, INC. (THE "COMPANY"), CERTAIN OF THE SERIES A CONVERTIBLE PREFERRED STOCKHOLDERS OF THE COMPANY, CERTAIN OF THE SERIES B CONVERTIBLE PREFERRED STOCKHOLDERS OF THE COMPANY, CERTAIN OF THE SERIES C CONVERTIBLE PREFERRED STOCKHOLDERS OF THE COMPANY AND CERTAIN OF THE COMMON STOCKHOLDERS OF THE COMPANY AND MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT AS PROVIDED THEREIN."

Section 8.2 Entire Agreement, Amendment, Captions; Severability. This Agreement sets forth the entire understanding of the parties, and supersedes all prior agreements, arrangements and communications, whether oral or written, with respect to the subject matter hereof. Any amendment, revision or termination of this Agreement, which would adversely affect the rights of the Stockholders in any material way, shall require the agreement of the Company and the prior written consent of a majority of each


of the series of outstanding shares of Stock. Captions appearing in this Agreement are for convenience only and shall not be deemed to explain, limit or amplify the provisions hereof. The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if the invalid or unenforceable provision were omitted.

Section 8.3 Enforcement. The parties to this Agreement, in addition to all other remedies allowed by law for its enforcement, expressly consent to an order for its specific performance in any court having jurisdiction. All costs and expenses (including attorneys' fees) incurred by any Stockholder or the Company in connection with enforcing any provision of this Agreement shall be reimbursed by the defaulting or violating Stockholder or the Company, as the case may be.

Section 8.4 Severability. If any provision of this Agreement is held invalid or unenforceable, such invalidity or unenforceability shall not affect the validity or enforceability of any of the other provisions hereof, all of which provisions are hereby declared severable.

Section 8.5 Termination. This Agreement shall terminate upon the earlier to occur of (i) the consent of the Stockholders holding not less than eighty-five (85%) of the outstanding shares of Stock (on an As-Converted Basis), and (ii) the closing of an Initial Public Offering, provided, however, that upon the occurrence of (ii) above, the provisions of Article V shall survive notwithstanding the termination of this Agreement. Notwithstanding anything contained herein to the contrary and without affecting any other provision of this Agreement requiring termination of any rights in favor of any series of shares of Preferred Stock or Common Stock or any other permitted transferee of shares of Preferred Stock or Common Stock, this Agreement shall terminate and be of no further force or effect as to such Stockholder or permitted transferee, when, pursuant to and in accordance with this Agreement, such Stockholder or permitted transferee, as the case may be, no longer owns any shares of any series of Preferred Stock or Common Stock.

Section 8.6 Counterparts. This Agreement may be executed in any number of counterparts and by different parties to this Agreement in separate counterparts, each of which counterparts when so executed will be deemed to be an original and all of which taken together will constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement via telephone facsimile transmission will be effective as delivery of a manually executed counterpart of this Agreement.

Section 8.7 Remedies. The parties to this Agreement acknowledge and agree that the covenants of the Company and the Stockholders set forth in this Agreement may be enforced in equity by a decree requiring specific performance. Without limiting the foregoing, if any dispute arises concerning the sale or other disposition of any of the Stockholders subject to this Agreement, the parties to this Agreement agree that an injunction may be issued restraining the sale or other disposition of such Preferred Stockholders or rescinding any such sale or other disposition, pending resolution of such


controversy. Such remedies shall be cumulative and non-exclusive and shall be in addition to any other rights and remedies the parties may have under this Agreement.

Section 8.8 Notices. All notices and other communications necessary or contemplated under this Agreement shall be in writing and shall be delivered in the manner specified herein or, in the absence of such specification, shall be deemed to have been duly given (i) upon receipt when delivered by hand, (ii) one day after sending by overnight delivery service, or (iii) upon receipt of confirmation of successful transmission when delivered by mean of facsimile, to the respective addresses of the Stockholders set forth below their signatures below and to the Company at:

GSRWB, Inc.
85-47 Eliot Avenue, Suite G Rego Park, New York 11374

By notice complying with the foregoing provisions of this Section 8.8, each party shall have the right to change the mailing address for future notices and communications to such party.

Section 8.9 Binding Effect; Assignment. This Agreement shall be binding upon and inure to the benefit of the parties thereto and to their respective transferees, successors, assigns, heirs and administrators; provided, however, that the rights under this Agreement may not be assigned except as expressly provided herein. No such assignment shall relieve an assignor of its obligations hereunder.

Section 8.10 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY,
ENFORCED UNDER AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE THEREOF.

Section 8.11 Recapitalizations, Exchanges, Etc. The provisions of this Agreement shall apply, to the full extent set forth herein with respect to all series of Preferred Stock and Common Stock, to any and all shares of the Company or any successor or assign of the Company (whether by merger, consolidation, sale of assets or otherwise) which may be issued in respect of, in exchange for, or in substitution of Preferred Stock or Common Stock, by reason of a stock dividend, stock split, stock issuance, reverse stock split, combination, recapitalization, reclassification, merger, consolidation or otherwise. Upon the occurrence of any such events, amounts hereunder shall be appropriately adjusted.

Section 8.12 Disputes and Waiver of Jury Trial. THE PARTIES HEREBY
AGREE THAT ANY DISPUTE WHICH MAY ARISE BETWEEN THEM ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT SHALL BE ADJUDICATED BEFORE A COURT LOCATED IN NEW YORK CITY AND THEY HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK LOCATED IN NEW YORK, AND OF THE FEDERAL


COURTS IN THE SOUTHERN DISTRICT OF NEW YORK, WITH RESPECT TO ANY ACTION OR LEGAL PROCEEDING COMMENCED BY ANY PARTY, AND IRREVOCABLY WAIVE ANY OBJECTION THEY NOW OR HEREAFTER MAY HAVE RESPECTING THE VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR RESPECTING THE FACT THAT SUCH COURT IS AN INCONVENIENT FORUM, RELATING TO OR ARISING OUT OF THIS AGREEMENT, AND CONSENT TO THE SERVICE OF PROCESS IN ANY SUCH ACTION OR LEGAL PROCEEDING BY MEANS OF REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, IN CARE OF THE ADDRESS SET FORTH BELOW OR SUCH OTHER ADDRESS AS THE UNDERSIGNED SHALL FURNISH IN WRITING TO THE COMPANY. THE PARTIES HERETO EACH HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.

Section 8.13 Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction shall be applied against either party. Except as otherwise expressly provided in this Agreement, the following rules of interpretation apply to this Agreement: (a) nouns, pronouns and verbs shall be construed as masculine, feminine, neuter, singular or plural, whichever shall be; applicable; (b) "or" and "either" are not exclusive and "include" and "including" are not limiting; (c) a reference to any agreement or other contract includes permitted supplements and amendments; (d) a reference to a law includes any amendment or modification to such law and any rules or regulations issued thereunder; (e) a reference to generally accepted accounting principles refers to United States generally accepted accounting principles; (f) a reference in this Agreement to a Section, shall refer to the corresponding provision of this Agreement; and (g) capitalized terms used and not defined in the Schedules attached to this Agreement shall have the meanings set forth in this Agreement. The parties hereto agree that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be applied in the construction or interpretation of this Agreement.

Section 8.14 No Impairment. The Company will not, by amendment of its Certificate of Incorporation or this Agreement, or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of the provisions of this Agreement.

Section 8.15 Terminating Effect. Upon execution and delivery of this Agreement by of the parties hereto, the Shareholder Agreements, dated December 17, 1997 and July 1, 2002 (the "RWBS Shareholder Agreements"), respectively, among the RWBS Holders shall be deemed to be terminated, it being understood that the termination of the RWBS Shareholder Agreements shall not be deemed to terminate the (i) License Agreement, dated as of September 1, 2002, by and between Terra Limited and The Roaring Water Bay Spirits Company Limited; (ii) Bottling and Services Agreement,


dated as of September 1, 2002, by and between Terra Limited and The Roaring Water Bay Spirits Company Limited; (iii) Supply Agreement, dated as of January 19, 1998, by and between Carbery Milk Products Limited and The Roaring Water Bay Spirits Company Limited; and (iv) Distribution Agreement, by and between Comans Wholesale Limited and The Roaring Water Bay Spirits Company Limited.


IN WITNESS WHEREOF, each of the parties hereto have executed this Shareholders Agreement as of the date first above written.

GSRWB, Inc.

By: /s/ Mark Andrews
    ------------------------------------
Name: Mark Andrews
Title: Chairman of the Board and President

Conformed Signature Pages and Schedules A, B, C, and D are available upon

request from GSRWB, Inc.


Exhibit 10.1

EXECUTION COPY

NOTE: PORTIONS OF THIS EXHIBIT ARE THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST BY THE REGISTRANT TO THE SECURITIES AND EXCHANGE COMMISSION. SUCH
PORTIONS HAVE BEEN REDACTED AND ARE MARKED WITH A "[*]" IN PLACE OF THE
REDACTED LANGUAGE.

EXPORT AGREEMENT

This Export Agreement (this "Agreement") is entered into as of February 14, 2005, between Gosling Partners Inc., a Delaware corporation (the "Company") and Gosling's Export (Bermuda) Limited ("GXB"), a company organized under the laws of Bermuda.

WHEREAS, the parties are interested in pursuing global sales of GXB's Products (as defined below) and to maximize the distribution of the Products in the Territory (as defined below).

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and in consideration of the mutual promises set forth below, the parties hereto, intending to be legally bound, agree as follows:

1. Definitions.

a. "Case" shall mean twelve (12) bottles of 750 ml. each (nine liters) or equivalent volume of rum in different bottle sizes.

b. "Castle" shall mean Castle Brands Inc.

c. "Contract Year" shall mean any twelve (12) month period beginning on the first day of April and ending on the last day of March of the following calendar year.

d. "Industry Buyer" shall mean an entity whose primary business is the sale of beverage alcohol products.

e. "Initial Term" shall mean the period commencing on April 1, 2005 and continuing for fifteen (15) years thereafter.

f. "Intellectual Property Rights" shall mean registered or unregistered trademarks, trade names, including, but not limited to, Gosling's Black Seal(R) Rum, Gosling's Gold Rum(R) and Gosling's Old Rum(R), patents, patent applications, patent rights (including any patents issuing on such applications or rights), service marks, trade dress, licenses, technology and all other intellectual property, including, without limitation, all computer programs, formulas, databases, know-how, trade secrets used or held for use in connection with the Products.

g. "Renewal Term" shall mean the period commencing the first day following the end of the "Initial Term" or any subsequent "Renewal Term" and continuing for fifteen (15) years thereafter.

h. "Person" shall mean any individual, corporation, limited liability company, partnership, joint venture, trust, association, unincorporated organization, or other entity.

i. "Products" shall mean all of the products set forth on Schedule I hereto.


j. "Territory" shall include all national or international markets with the exception of Bermuda.

k. "Trademarks" shall mean all trademarks, brand names and logo design used on or in connection with Products.

2. Assignment of Rights.

(a) GXB hereby assigns its global distribution rights (excluding Bermuda) to all Products to the Company for the Term of this Agreement and hereby appoints the Company as its exclusive authorized global exporter of the Products in the Territory. In connection therewith, GXB hereby grants the Company an exclusive license for the use of its global Trademarks for the Products for the Term of this Agreement.

(b) The compensation to GXB by the Company for the assignment of these global distribution rights is a total payment of $2,500,000, payable in four equal installments of $625,000 at April 1, 2005, October 1, 2005, April 1, 2006 and October 1, 2006.

(c) On April 1, 2005, the beginning of the Initial Term, GXB shall assign all of its rights, title and interest in and to the National Distribution Agreement, effective January 1, 2005, between GXB and Castle (as amended to reflect an initial term of fifteen (15) years, commencing from April 1, 2005) (the "National Distribution Agreement") to the Company.

(d) GXB further agrees to assign all of its rights, title and interests in and to that certain distribution agreement to be entered into at a subsequent date between GXB and Castle with respect to the United Kingdom market (the "UK Distribution Agreement").

All rights and obligations of the parties specified in the National Distribution Agreement and the UK Distribution Agreement shall remain in full force and effect to the extent that those two agreements are not inconsistent with the terms and conditions of this Agreement. If there are inconsistencies between those agreements and this Agreement, the terms and conditions of this Agreement shall prevail.

3. Intellectual Property Rights.

a. Acknowledgement. The Company acknowledges GXB's exclusive right, title and interest in and to any and all Intellectual Property Rights embodied in or pertaining to the Products and that, except as to the sales proceeds specified in Section 4 of this Agreement, or any other agreement between the parties, the Company shall acquire no rights whatsoever in or to any of such Intellectual Property Rights and that all usage of such Intellectual Property Rights by the Company shall inure to the benefit of GXB.

b. Notices, Marks, Legends and Name. The Company shall not alter, remove, cover, or add to, in any manner whatsoever, any patent notice, copyright notice, trademark, service mark, trade name, serial number, model number, brand name or legend that GXB may attach or affix to the Products. The Company shall not market the Products under any name, sign or logo other than the trademarks authorized to be used by GXB from time to time.

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c. Third Party Claims. The Company shall promptly notify GXB (a) of any claims or objections that its use of the Intellectual Property Rights in connection with the distribution of the Products has or may infringe the Intellectual Property Rights of any other Person, and (b) of any and all infringements, imitations, illegal use, or misuse, by any Person, of GXB Intellectual Property Rights which come to its attention; provided, however, that the Company shall not take any legal action relating to the protection of GXB Intellectual Property Rights without the prior written approval of GXB; and provided further that the Company shall render to GXB at GXB's expense, all reasonable assistance in connection with any matter pertaining to the protection of GXB's Intellectual Property Rights.

d. Indemnity. GXB shall defend at its own expense any action brought against the Company to the extent that such action is based on a claim that the use or supply of any Product in the Territory infringes the Intellectual Property Rights of any other Person and shall pay any costs and damages finally awarded against the Company in any such action which are attributable to any such claim. GXB's obligation under the preceding sentence is subject to the conditions that (a) the Company shall promptly have notified GXB in writing of any such claim, and (b) GXB shall have had sole control of such defense and all negotiations for any settlement or compromise. In the event any Product shall become, or in GXB's opinion is likely to become, the subject of any infringement claim, GXB shall have the right to instruct the Company to refrain from supplying the Product or to take such other steps as GXB may consider appropriate in order to limit its liability exposure.

4. Sale of Trademarks and Right of First Refusal.

a. GXB shall retain title to the Trademarks and its other Intellectual Property for all of its portfolio brands. In the event GXB decides to sell any or all of its Trademarks or other Intellectual Property during any term of this Agreement, the Company shall have a right of first refusal to purchase said Trademark(s) and Intellectual Property at the same price being offered by a bona fide third party offeror. Within 30 days of receipt of a third party offer GXB shall give written notice to the Company stating the price, terms and the potential purchaser of the Trademarks and Intellectual Property. The option to purchase the Trademarks and Intellectual Property shall be exercisable by notice given to GXB by the Company at any time within 20 days of the receipt of the notice.

In the event the Company waives its right of first refusal then, in said event, Castle shall acquire an identical right of first refusal and GXB shall give written notice to Castle stating the price, terms and the potential purchaser of the Trademarks and Intellectual Property. The option to purchase the Trademarks and Intellectual Property shall be exercisable by notice given to GXB at any time within 20 days of the receipt of the notice to the Company. If either the Company or Castle exercises its right of first refusal, the party exercising such right shall have 90 days within which to consummate the purchase of such Trademarks and Intellectual Property on the terms set forth in the notice.

If neither the Company nor Castle exercises its option within the applicable time period set forth above, GXB may, at any time within 90 days following the expiration of the 20 day option period, sell the Trademarks and Intellectual Property to the third party offeror.

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If an offer is reduced following the Company's or Castle's waiver of its right of first refusal, the Company shall have a new right of first refusal at the reduced price.

b. In the event GXB should decide to sell any or all of its portfolio Products and/or Trademark(s), whether sold directly or indirectly through the sale of stock of GXB or its parent company, to a third party, the Company or Castle, then, in recognition of the facts that (1) the Company has enhanced the value of the Trademarks through its marketing investments and sales performance under this Agreement, and (2) the Company may henceforth no longer have the opportunity to earn a full return on its investments in the brand(s) being sold, GXB agrees to share the proceeds of any such sale with the Company pursuant to the following formula:

i. If total Case sales by GXB to the Company are less than * Cases for the last twelve full months prior to the time of a sale, the Company shall receive * of the sale proceeds.

ii. To the extent that Case sales are greater than * Cases but less than * cases, the Company shall be entitled to an additional * of the proceeds for each additional * Cases sold during the prior full twelve months (growing to a level of * at
* cases).

iii. To the extent that Case sales exceed * Cases, the Company shall be entitled to an additional * of the proceeds for each additional * Cases sold over * cases during the prior full twelve months, subject to a maximum of 50% of the sales proceeds for Case sales of * or more.

iv. If the Company no longer holds the export rights to Products at the time of a sale of Products and/or Trademarks, then the Company's share of earned proceeds shall decline at the rate of
* per Contract Year from the proceeds that would have been payable if the Company still held said export rights; beginning with the first Contract Year following non-renewal of the Company export rights. (For example, if the Company's shares were * at the time it no longer holds the export rights, that percentage would decline at the rate of * per year for * years.)

c. In the event that one or more of the Products are sold, the Case amounts above will be reduced to an amount mutually acceptable to the parties.

d. It shall be GXB's obligation to register, at its expense, the Trademarks for all portfolio Products in all export markets identified by mutual agreement of the parties.

5. Product Portfolio.

The Company shall not sell any branded items other than Products without the approval of members of the Board of Directors of the Company representing in the aggregate at least 80% of the outstanding shares. The Company shall have a right of first refusal to add to Products any new brands introduced by GXB.

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6. Prices and Terms of Sale.

a. Initial prices to be charged by GXB for the sale of its portfolio Products to the Company are listed in Schedule II attached hereto. Price increases by GXB are to be restricted to recovery of actual cost of production increases incurred by GXB. Schedule I may be amended by mutual agreement of the parties at any time. The Company shall pay the full amount of the purchase price for Products within 60 days after the date of invoice to the Company.

b. The price charged by GXB for the Products is exclusive of all taxes, including national and local sales, use or value-added taxes, customs duties, withholding taxes or similar charges imposed by any governmental entity after the Products has been delivered to the destination designated by the Company. The Company shall pay for all such taxes, assessments or charges, without reduction in the purchase price charged by GXB.

7. Warranty.

GXB warrants for a period of twelve (12) months from the date of delivery of the Products to the Company that the Products will be of merchantable quality and fit for human consumption, provided that following delivery the Products are handled and stored in a manner that is commercially reasonable for the storage of beverage alcohol products. In the event the Company claims a breach of the warranty within the warranty period, GXB shall refund the purchase price therefore, including freight, insurance and other charges to the Company. GXB shall indemnify and hold the Company harmless against any proven direct damages and proven direct losses resulting from the non-conformance of the Products with this warranty, or any punitive, incidental, special or consequential damages, awarded to a third party which result from the product quality under the warranty or through no fault or negligence by of the Company (i.e. human consumption of any Product past the warranty period if sold by the Company prior to the expiration of such warranty period). Otherwise, to the extent permitted by applicable law, the Company waives any claims for incidental, special or consequential damages or other losses including lost profits.

8. Sales and Marketing Budget.

The Company will prepare an annual Contract Year financial plan (the "Financial Plan"), which will be submitted for review and approval by the Company Board of Directors. The Financial Plan will be designed to maintain an aggressive growth in GXB Products, while also producing a reasonable profit for the Company and it stockholders. The Financial Plan will include the level of proposed sales as well as proposed marketing expenditures. It is the objective to keep the losses, if practical, to a maximum of $750,000 in the first Contract Year and $500,000 and $250,000, respectively, for the second and third Contract Year.

9. Term.

The Initial Term of this Agreement shall be fifteen (15) years. Upon expiration of the Initial Term, the Agreement will automatically renew for additional fifteen (15) year periods ("Renewal Terms" and together with the Initial Term, the "Term") as long as the Company shall have sold * cumulative Cases during the Initial Term (the "Threshold Amount"), provided that the parties have not terminated the Agreement with Section 10(b). In the event that

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one or more of the Products are sold the Threshold Amount will be reduced to an amount mutually acceptable to the parties. If the parties cannot agree upon mutually acceptable sales objectives for any Renewal Term, the category growth or decline rate for Products, as reported by Shanken Publications, or other mutually acceptable industry data supplier, shall apply instead. The Threshold Amount may be amended at any time by mutual agreement of the parties to reflect a new Threshold Amount for the Initial Term.

10. Termination.

(a) This Agreement may be terminated by written notice, effective on the date such written notice is received, after the occurrence of any of the following events:

i. Failure to achieve performance requirements as specified in
Section 9;

ii. Any material breach of this Agreement, other than by Force Majeure, provided that the non-breaching party shall give to the breaching party written notice of such breach or default and shall request that such breach or default be cured. If the breaching party shall fail to cure such breach or default within thirty (30) days of the date of the notice of breach or default, the non-breaching party may terminate this Agreement immediately by giving written notice of termination to the breaching party; or

iii. The sale of substantially all of the Trademarks for the Products listed on Schedule I pursuant to Section 4(b) to an Industry Buyer.

(b) Additionally, this Agreement may be terminated by the mutual written consent of GXB and the Company pursuant to the approval of the directors representing 80% of the issued and outstanding shares of the Company.

(c) All parties warrant and covenant that, upon expiration or termination, no party will take any action to impair or diminish the goodwill or business of another party and no party will disclose any confidential information about another party.

(d) Any termination of the Agreement will not eliminate the potential participation by the Company in a sale of the brands or Trademarks, as set forth in Section 4.

11. Compliance with Applicable Laws.

The Company shall at all times strictly comply with all applicable laws, rules, regulations and governmental orders, now or hereafter in effect, relating to its performance of this Agreement or the activities of the Company. The Company further agrees to make, obtain, and maintain in force at all times during the term of this Agreement, all material filings, registrations, reports, licenses, permits and authorizations (collectively "Authorizations") required under applicable law, regulation or order in order for the Company to perform its obligations under this Agreement, although it is recognized that the Company is primarily organized as a marketing company. GXB shall provide the Company with such assistance as the Company may reasonably request in making or obtaining any such Authorizations.

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12. General Provisions.

a. Waivers. The waiver by either party of a breach or default in any of the provisions of this Agreement by the other party shall not be construed as a waiver of any succeeding breach of the same or other provisions; nor shall any delay or omission on the part of either party to exercise or avail itself of any right, power or privilege that it has or may have hereunder operate as a waiver of any breach or default by the other party.

b. Entire Agreement and Amendments. This Agreement and the purchase orders accepted by GXB hereunder, constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior agreements between the parties, whether written or oral, relating to the same subject matter. No modification, amendments or supplements to this Agreement shall be effective for any purpose unless in writing and signed by each party. Approvals or consents hereunder of a party shall also be in writing.

c. Severability. If any term of this Agreement is in violation of, or prohibited by, any applicable law or regulation, such term shall be deemed as amended or deleted to conform to such law or regulation without invalidating or amending or deleting any other term of this Agreement.

d. Assignment. Because of the importance of the personal relationships of the parties and the mutual levels of trust established between them, it is agreed that none of the rights or obligations created by this Agreement shall be assignable by either party without the written consent of the other party, which consent cannot be unreasonably withheld. In the event of an assignment of this Agreement, the Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties. Notwithstanding the foregoing, GXB is free to sell its Products and/or Trademarks, subject to Section 4 hereof and the stockholders of the Company are free to sell their shares subject to any current or future restrictions governing such shares.

e. Future Investors. Nothing contained in this Agreement shall preclude the Company from selling any of its capital stock to any future investor nor shall anything contained herein grant GXB a right to advise, require or compel the Company to accept or reject any future purchaser of its capital stock. Furthermore, in the event the Company does sell any shares of its capital stock, this Agreement shall remain in full force and effect.

f. Force Majeure. Neither party shall be liable to the other party for any delay or omission in the performance of any obligation under this Agreement, other than the obligation to pay monies, where the delay or omission is due to any cause or condition beyond the reasonable control of the party obliged to perform, including but not limited to, strikes or other labor difficulties, acts of God, acts of government (in particular with respect to the refusal to issue necessary import or export licenses), war, riots, embargoes, terrorists attacks, or inability to obtain supplies ("Force Majeure"). If Force Majeure prevents or delays the performance by a party of any obligation under this Agreement, then the party claiming Force Majeure shall promptly notify the other party thereof in writing and the parties shall use their best efforts to continue performance under the Agreement.

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g. Governing Law; Arbitration. The rights and obligations of the parties under this agreement shall not be governed by the provisions of the United Nations Convention on Contracts for the International Sale of Goods but instead shall be construed and enforced in accordance with the laws of the State of New York, in the United States of America without giving effect to principles of conflict of laws. In the event any disagreement or dispute among the parties arises under or out of this Agreement, including termination issues, such disagreement or dispute shall be submitted to Judicial Mediation Services, Inc., a professional arbitration service consisting of retired Federal and State judges ("JAMS") for binding arbitration unless the parties mutually agree upon an alternative dispute resolution service. The arbitration shall be conducted in accordance with the rules of JAMS or such other dispute resolution service as might be agreed upon and shall be held in New York, New York. Any award made by JAMS or such other dispute resolution service as might be agreed upon shall be binding upon the parties. Binding arbitration shall be the exclusive remedy for breach of this Agreement by any party. The parties shall share equally all costs of arbitration other than representation by counsel which shall be at each party's own expense.

h. Notices. All notices and other communications provided for or permitted hereunder shall be in writing and shall be deemed to have been duly given (w) when delivered if delivered personally, (x) when sent if sent by telecopy, with a confirmation promptly sent by way of one of the methods permitted in this
Section or by U.S. mail, postage prepaid, (y) the day after deposit with an overnight courier service marked for overnight delivery, or if deposited with an overnight courier service marked for non-overnight delivery, the number of days after delivery as specified to such courier service or (z) five days after mailing if sent by registered or certified mail (return receipt requested) postage prepaid, in each case to the parties at the following addresses and/or telecopier numbers (or such other address or telecopier number for any party as shall be specified by like notice, provided that notices of a change of address shall be effective only upon receipt thereof).

If to the Company:

Gosling Partners Inc.
c/o E. Malcolm B. Gosling
78 Oak Street
Weston, MA 02493
Telecopy No.: (781) 891-0228
Attention: President and Chief Executive Officer

If to GXB:

Gosling's Export (Bermuda) Limited
PO Box HM827,
Hamilton, HM CX
Bermuda
Telecopy No.: (441) 292-1775
Attention: E. Malcolm B. Gosling, President

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13. Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, and all of which together shall constitute one and the same instrument.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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EXECUTION COPY

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives effective as of the Effective Date.

GOSLING PARTNERS INC.

By: /s/ E. Malcolm B. Gosling
    -------------------------------------
Name: E. Malcolm B. Gosling
Title: President and Chief Executive
       Officer

GOSLING'S EXPORT (BERMUDA) LIMITED

By: /s/ E. Malcolm B. Gosling
    -------------------------------------
Name: E. Malcolm B. Gosling
Title: President

[Signature Page to Export Agreement]


EXECUTION COPY

SCHEDULE I

Products

- Gosling's Black Seal(R) Rum

- Gosling's Gold Rum(R)

- Gosling's Old Rum(R)

- Certain culinary products including cakes, sauces and preserves under the name of Gosling Gourmet


EXECUTION COPY

SCHEDULE II

Prices

The initial prices to be charged by GXB for the sale of the Products to the Company shall be calculated pursuant to the formula set forth below:

- Manufacturer's Cost(1) + Producer's Profit(2)

(1) Manufacturer's Cost shall mean the actual cost of manufacturing, as documented, excluding allocations of corporate overhead.

(2) Producer's Profit for the first two (2) Contract Years shall be equal to US$7.50 per Case Producer's Profit for the remaining Contract Years shall

be US$10 per Case


Exhibit 10.2

EXECUTION COPY

AMENDMENT NO. 1 TO EXPORT AGREEMENT

Amendment No. 1 to Export Agreement (this "Amendment"), dated as of February 18, 2005, by and among Gosling Partners Inc., a Delaware corporation (the "Company") and Gosling's Export (Bermuda) Limited ("GXB"), a company organized under the laws of Bermuda.

WHEREAS, the Company has entered into a Subscription Agreement, dated as of February 18, 2005 with Castle Brands Inc. ("Castle"), pursuant to which Castle acquired a majority interest in the Company;

WHEREAS, the parties hereto seek to be protected with regard to the rights and obligations under the Export Agreement in the event Castle sells it controlling interests to a third party.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agrees as follows:

1. Section 12(d) of the Export Agreement shall be deleted in its entirety and replaced with the following:

"(d) Assignment. Because of the importance of the personal relationships of the parties and the mutual levels of trust established between them, it is agreed that none of the rights or obligations created by this Agreement shall be assignable by either party without the written consent of the other party, which consent cannot be unreasonably withheld. In the event of an assignment of this Agreement, the Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties. Furthermore, the terms and condition set forth herein and the rights and obligations of the parties under this Agreement shall not be affected by a change of control of the Company; provided that upon any such change of control, any sale or transfer of shares of the Company by the new controlling person shall be subject to the approval of GXB.

Notwithstanding the foregoing, GXB is free to sell its Products and/or Trademarks, subject to Section 4 hereof and the stockholders of the Company are free to sell their shares subject to any current or future restrictions governing such shares."

2. This Amendment shall be governed, construed and interpreted in accordance with the laws of the State of Delaware without regard to any conflicts of laws or rules which would require application of the laws of any other jurisdiction.

3. Capitalized terms used herein, unless otherwise defined herein, shall have the meanings set forth in the Export Agreement.

4. Except as specifically amended herein, the Export Agreement shall remain in full force and effect in accordance with its terms.


IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the 18th day of February 2005.

GOSLING PARTNERS INC.

By: /s/ E. Malcolm B. Gosling
    ------------------------------------
Name: E. Malcolm B. Gosling
Title: President and Chief Executive
       Officer

GOSLING'S EXPORT (BERMUDA) LIMITED

By: /s/ E. Malcolm B. Gosling
    ------------------------------------
Name: E. Malcolm B. Gosling

Title: President


Exhibit 10.3

NOTE: PORTIONS OF THIS EXHIBIT ARE THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST BY THE REGISTRANT TO THE SECURITIES AND EXCHANGE COMMISSION. SUCH
PORTIONS HAVE BEEN REDACTED AND ARE MARKED WITH A "[*]" IN PLACE OF THE
REDACTED LANGUAGE.

NATIONAL DISTRIBUTION AGREEMENT

AGREEMENT made as of the 3rd day of September, 2004 by and between Castle Brands (USA) Corp., a Delaware corporation and wholly owned subsidiary of Castle Brands Inc., which has its principal place of business at 570 Lexington Avenue, 29th Floor, New York, NY 10022 USA ("Importer") and Gosling's Export (Bermuda) Limited, which has its principal place of business at 17 Dundonald Street, Hamilton, HM 10 Bermuda ("Supplier"). This agreement is being entered into in counterparts and shall be effective as of January 1, 2005, or such earlier date that the Producer has completed the termination of its pre-existing Import Agreement (the "Effective Date").

1. Definitions.

(a) "Products" shall mean all products listed in Schedule A

(b) "Territory" shall mean the domestic market of the 50 states of the United States of America, and such other markets as may be added by mutual consent.

(c) Trademarks shall mean the trademarks Gosling's Black Seal Rum, Gosling's Gold Bermuda Rum, Gosling's Family Reserve Old Rum, Dark 'n Stormy and all other trademarks, brand names and logo designs used on or in connection with the Products.

(d) "Initial Term" shall mean the period commencing January 1, 2005 (or such earlier date that the Producer has completed the termination of its pre-existing Import Agreement) and continuing until January 1, 2010.

(e) "Renewal Term" shall mean the period commencing the first day following the end of the Initial Term or any prior Renewal Term and continuing for five (5) years thereafter.

(f) "Contract Year" shall mean the twelve (12) month period commencing January 1 and ending December 31 of that calendar year.

(g) "Case" shall mean 12 bottles of 750 ml. each, or a nine liter equivalent.

2. Appointment.

(a) Supplier hereby appoints Importer as the sole and exclusive importer and distributor of the Products for the Territory.

(b) Importer hereby accepts appointment as the sole and exclusive importer of the Products for the Territory and shall, during the term of this Agreement, use all reasonable efforts to distribute the Products throughout the Territory.


3. Duration.

(a) The term of this Agreement shall be the Initial Term, unless sooner terminated in accordance with Section 11, and shall include any Renewal Term provided renewal occurs in accordance with Section 3(b).

(b) Provided this Agreement is otherwise still in effect at the end of the Initial Term or any Renewal Term and subject to the provisions of
Section 11, the parties agree to negotiate in good faith for an additional Renewal Term of five (5) years.

4. Terms of Sale and Payment.

(a) All sales of the Products by Supplier to Importer shall be on an FOB Heaven Hill basis at the prices set in accordance with Schedule A, and as amended hereafter from time to time pursuant to Section 4(b) below. Payment shall be made in Bermuda to a bank designated by Supplier and shall be due sixty
(60) days from the date of the bill of lading. Because Supplier will be funding marketing programs in the Territory with the aforementioned receivables, time shall be of the essence for receipt of payments sixty (60) days from the date of bills of lading.

(b) All carriers engaged to ship the Products within the Territory for Importer (or any distributor designated by Importer in the Territory) shall be the agents of Importer. The risk of loss thereon shall pass immediately to Importer upon delivery of the Products from Heaven Hill (the "Bottler") to such carrier for shipment within the Territory. Importer shall have the right to determine the point of destination in the Territory and the method of shipment of the Products.

(c) It is the intention of this agreement that Importer will receive a net margin amount as set forth in the following table (the "Net Margin"). Importer will also be entitled to reimbursement for Control State (18 states plus Montgomery County) brokers' commissions as approved by Supplier, any mutually agreed salaries, warehousing, insurance and other costs of distribution, such that Importer is able to net the agreed Net Margin, but not amounts above or below the agreed Net Margin. The reimbursements shall not include the normal salaries, travel and entertainment and other overhead costs of the Importer, except with respect to certain mutually agreed personnel that will be hired and directed by Importer but will follow the strategic marketing plan prepared by the Supplier's U.S. marketing affiliate ("Supplier Sales Personnel"). The costs of Supplier Sales Personnel, including normal health or other benefits, will be reimbursed by Supplier.

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                                                NET MARGIN
        YEAR               VOLUME RANGE        TO IMPORTER
--------------------   -------------------   ---------------
2004 (if applicable)        All sales        * per case

        2005            Up to * cases        * per case
                        Over * cases         * per case

   2006 and later      Up to * cases         * per case
                        Over * cases         * per case

(d) Importer will pay to the Supplier's U.S. Marketing Affiliate (the "Affiliate") an agreed amount per month, to help defray the normal overhead costs of the Affiliate. Importer will also pay to the Affiliate a marketing fee of $1.50 per case. All of such overhead and fee payments by Importer will be reimbursable by Supplier, but in no event will reduce the Net Margin.

(e) Importer may bill Supplier monthly for reimbursements, and should be reimbursed by Supplier within 15 days by wire transfer to Importer's designated account. Importer and Supplier will work together to coordinate mutual payments and reimbursements, to minimize the levels of net funding required by either party.

(f) Any excess funds received by Importer, net of agreed Net Margins, reimbursements or payments to the Affiliate, shall be promptly forwarded to Supplier. It is the intention of this payments section to assure Importer that it receive its agreed Net Margin, but not amounts above or below the agreed Net Margin, except as relates to agreed reimbursements.

5. Marketing and Advertising.

(a) Supplier and/or its U.S. marketing affiliate shall be responsible for the creation, development and implementation of all marketing, advertising and promotional efforts of the products. At least four times per Contract Year, Supplier shall review with Importer the Supplier's plans for the current and following Contract Year. Importer will be responsible for sales efforts in the field, and will coordinate with the Supplier with respect to field-based marketing programs, including local promotions, product tastings, discounts, etc., with the cost of such programs borne entirely by the Supplier.

(b) The costs of marketing and advertising will be borne by Supplier. To the extent that the Importer pays for any billings relative to marketing or advertising, Supplier agrees to reimburse Importer within 15 days of receipt of a detailed invoice, unless there is a legitimate dispute relative to any such invoice.

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6. Representations and Warranties of Importer. Importer represents, warrants and covenants to Supplier as follows:

(a) Importer and its agent MHW Ltd. hold in full force and effect the federal, state and local licenses or permits that are necessary to conduct its business as an importer of the Products and to engage in the transactions intended by this Agreement.

(b) Importer shall maintain a distributor network of adequate size to represent and promote the sales of the Products throughout the Territory. Such sales force shall be kept properly informed as to all advertising, marketing and promotional programs and policies regarding the Products.

(c) Importer shall conduct its activities under this Agreement in accordance with local, state and federal laws and regulations regarding the sale of the Products.

(d) Importer shall monitor its customers' inventories of the Products to ensure that quantities are adequate to service the requirements of the markets in the Territory. Importer shall promptly deliver, or arrange for direct import shipments of the Products, to its customers in the Territory in accordance with good business practice and local custom.

(e) Importer shall timely file all price schedules and reports as may be required by applicable laws and regulations.

(f) Importer shall not terminate any existing wholesaler, or appoint any new wholesaler, in the Territory without the prior written consent of Supplier; which consent shall not be unreasonably withheld.

7. Representations and Warranties of Supplier. Supplier represents, warrants and covenants to Importer as follows:

(a) Supplier has the authority to enter into and carry out its obligations under this Agreement.

(b) The execution of this Agreement and the consummation of the transactions contemplated by this Agreement will not act as a breach of any agreement or understanding to which Supplier is a party.

(c) Subject to expiration or earlier termination of Supplier's current import agreement, Supplier has the right to designate and appoint the Importer as the exclusive distributor of the Products in the Territory.

(d) The Products sold to Importer under this Agreement shall be merchantable and fit for human consumption. The Products shall be manufactured, packaged and labeled in conformity with applicable U.S. federal, state and local laws, rules and regulations

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and, specifically, the rules and regulations of the Federal Alcohol Tax and Trade Bureau [new name] and the Food and Drug Administration. Samples of the Product have been provided to Importer. All shipments of the Products shall conform to any samples provided.

(e) The Products sold to Importer shall be free and clear of any liens or encumbrances. Neither the execution of this Agreement, nor compliance with its terms, will result in the creation or imposition of any lien, charge, encumbrance or restriction of any nature by any third party upon the Products sold to Importer.

(f) Supplier shall maintain an adequate inventory of the Products with which to supply Importer. Supplier shall accept all orders reasonably submitted by Importer, with shipment to follow not later than thirty (30) days from receipt of an order, unless excused by Section 15 below, or as otherwise agreed upon by the parties.

(g) Supplier shall use its best efforts to prevent the sale of unauthorized shipments of the Products in the Territory by entities or persons other than Importer. In this regard, Supplier shall not sell or otherwise transfer any of the Products to any distributor located outside the Territory whom Supplier knows, or has reason to believe, will, either directly or indirectly, sell or otherwise transfer the Products into the Territory.

(h) Subject to the provisions of Sections 8 and 10 below and in all events, with the full right to select counsel and supervise the legal and any settlement processes, Supplier shall defend, indemnify and hold harmless Importer from and against any and all damages and liability, costs or expenses, including attorneys' fees, it may incur as a result of product liability, trademark infringement, product recall, breach of contract or other action relating to breach of warranty or representation by Supplier.

(i) Supplier warrants that the shelf life of all Products sold to Importer shall be not less than twelve (12) months provided all such Products are properly handled, stored and shelved by Importer and its customers.

8. Product Liability and Returns.

(a) During the term of this Agreement, each party shall maintain, in full force and effect, general liability insurance with product hazard coverage regarding the sale of the Products in the Territory in an amount of not less than five million dollars ($5,000,000) aggregately and one million dollars ($1,000,000) for single accident occurrence. Such insurance shall contain a broad form vendor's endorsement inuring to the benefit of the other party. Each party shall, on an annual basis, furnish to the other party a certificate confirming such coverage.

(b) Subject to the provisions of Paragraph 7(i) above, any Products not merchantable due to quality deficiencies, packaging problems or errors committed by Supplier or its suppliers, may be returned to Supplier at Supplier's cost, for full credit or replacement, provided that notice of such defect, if patent, is given to Supplier within six (6) months of receipt of shipment of the Products and, if latent, within six (6) months after Importer's knowledge of the defect. Supplier shall not be obliged to issue a credit for any Products that have been

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rendered unmerchantable by inordinate delays in shipping, improper handling or other negligent acts on the part of Importer or its customers. Notice of unmerchantable Products shall be given to all parties upon receipt of such information.

9. Rights of First Refusal. During the term of this Agreement, Importer shall have the right of first refusal regarding:

(a) any other current or future products Supplier currently maintains in, or adds to, its product line for sale in the Territory.

(b) If Importer exercises its option pursuant to paragraph 9(a) above, paragraph 1(a) shall be automatically amended and the term "Products" as used in this Agreement shall be deemed to include such additional product. In the event that Importer declines to exercise such option, Supplier shall be free to negotiate with other Importers for such products, but Supplier shall not thereafter enter into an importation agreement with any other importer upon terms more favorable than those offered to Importer

10. Intellectual Property.

(a) Supplier represents and warrants that it is the exclusive Producer of the Products and in connection with these rights: it has the authority to market and sell the Products into the Territory for resale; it is authorized to hold or claim for itself or for its licensor(s) all common law or statutory rights in all symbols, designs, words and other trade dress features used upon or associated with the Products, whether registered as trademarks, service marks or copyrights, or not (the "Intellectual Property"); and it is authorized to grant rights or sublicenses to its customers for non-exclusive and limited use of the Intellectual Property in connection with the sale and distribution of the Products within the Territory.

(b) Supplier hereby grants to Importer a non-exclusive license to use the Intellectual Property in the Territory for the Term of this Agreement for the limited purposes of the sale, promotion and distribution of the Products, subject to the following, to which the Importer hereby agrees:

Importer shall use the Intellectual Property only in connection with the sale, promotion and distribution of the Products, and

All uses of the Intellectual Property shall reproduce faithfully the design and appearance of the Intellectual Property as represented in or on the labels and packaging or as is otherwise provided by Supplier, including claims of copyright or trademark protection and/or registration, and

Any uses of the Intellectual Property by Importer, shall first be approved by Supplier. E-mail approval shall be sufficient for this purpose.

The Intellectual Property shall not be used in juxtaposition or conjunction with intellectual property associated with any product or service other than the

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Products and shall always be used in good taste and in a manner which is not in any way denigrating to the Supplier or the Intellectual Property, and

Importer shall have no right to sublicense to any third party the right to reproduce the Intellectual Property for any purpose, except in connection with media advertising, which shall first be reviewed and approved in writing or provided (e.g., advertising mats) by the Supplier.

(c) Notwithstanding any rights granted in any provision of this Agreement, Importer expressly acknowledges and agrees that the Intellectual Property is the property of the Supplier and/or its licensor(s) and Importer neither shall make claim nor assert any right to, or interest in, the Intellectual Property during or after the expiration or termination of this Agreement, except the right to limited non-exclusive use during the Term hereof in accordance with the foregoing provisions.

11. Termination.

(a) Supplier may terminate this Agreement prior to its expiration by giving notice to the Importer for any of the following reasons:

(i) Importer has failed to purchase seventy five thousand (75,000) cases of Products in the third Contract Year or one hundred thousand (100,000) cases of Products in the Fifth Contract Year. If Supplier elects to exercise its option to terminate this Agreement pursuant to this paragraph it must do so within ninety (90) days after the end of the relevant Contract Year. Failure to exercise said termination option during the aforementioned ninety
(90) day period shall be deemed to be a waiver of said option to terminate and the Agreement shall continue.

(ii) Importer, through failure to renew, or because of cancellation, suspension or revocation continuing for a period in excess of sixty (60) days, has suffered the loss of any material license or permit required by law and necessary to carry out the provisions of this Agreement;

(iii) Importer has failed to make payment of any invoice in accordance with Supplier's credit terms and has not remedied the failure after thirty (30) days' written notice of such failure and no bona fide dispute regarding said invoice(s) exists between the parties;

(iv) Importer has breached or failed to fulfill any other material term or condition of this Agreement and has not remedied the breach or failure after thirty (30) days' written notice of said breach or failure to perform and there is no bona fide dispute that a material breach has occurred.

(v) Importer has changed ownership through a sale, merger, acquisition or other major change in equity control without the prior written approval of

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Importer, with such approval not to be unreasonably withheld. For purposes of this provision a major change shall be defined as change affecting more than twenty five percent (25%) of control at any one time or a cumulative series of changes affecting fifty one percent (51%) of control.

(b) Importer may terminate this Agreement prior to its expiration by giving notice to Supplier for either of the following reasons:

(i) Supplier has failed to honor any commitment regarding sales, delivery, credits, allowances, returns, packaging quality or product quality, and that such failure has continued for a period of thirty (30) days after written notice to Supplier.

(ii) Supplier has failed to fulfill any other material term or condition of this Agreement and has not remedied this failure after thirty
(30) days' notice thereof and there is no bona fide dispute that a material breach has occurred.

(c) This Agreement shall terminate automatically and without notice for any of the following reasons:

(i) Either party has filed a voluntary petition in bankruptcy or entered into an arrangement under a national or federal bankruptcy statute or other voluntary proceeding under any federal, state, or local law for the settlement or extension of payment of its obligations to general creditors; or

(ii) An involuntary lien or petition in bankruptcy has been filed against either party and such involuntary lien or petition has not been dismissed within thirty (30) days; or

(iii) Either party ceases to do business.

12. Events Upon Expiration or Termination.

12.1 Upon the expiration of the final Term or upon the effective date of any termination of this Agreement, the following shall occur:

(a) Subject to the provisions of Section 12.2 below, all outstanding, but unshipped orders for Product by the Importer shall be deemed cancelled, whether previously accepted by Supplier or not.

(b) All outstanding invoices of Supplier to Importer for Product sold and delivered to carriers, whether due in accordance with their terms or not, shall become due and payable immediately.

(c) Importer promptly shall release and deliver to Supplier (FOB Importer's facility loading dock) all point-of-sale or other materials in its possession that

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Supplier furnished to it without charge and any items in its possession (other than Product) that bear Intellectual Property (as described in Section ten, above).

(d) Importer and its employees immediately shall cease all use of the Intellectual Property referred to in Section ten above, except as required to sell any remaining inventory held by Importer.

(e) Supplier or its designee, shall have the option, for thirty
(30) days after the effective date of expiration or termination, to repurchase, at Importer's laid-in-cost, its inventory of factory sealed cases of the Product and/or point-of sale material for the Product purchased by Importer, less any sums for payments Importer owes to Supplier. Importer hereby agrees to sell said inventory to Supplier, or Supplier's designee, provided said Designee is a licensed vendor of alcoholic beverages, on said terms, in the event Supplier provides timely written notice of the exercise of the aforementioned option.

(f) Both parties warrant and covenant that, upon expiration or termination, neither party will take any action to impair or diminish the goodwill or business of the other party and neither party will disclose any confidential information about the other party.

12.2 Upon the occurrence of a termination event or following notice of termination to Importer, but prior to the effective date thereof:

Supplier shall honor Importer's outstanding and unshipped orders or orders submitted prior to the effective date of termination only on a payment-before-shipment basis, provided the following conditions are met:

(a) All outstanding invoices due and owing to Supplier have been paid in full;

(b) Such orders are in accord with past purchasing practices;

(c) Such orders are scheduled for delivery prior to the effective date of termination; and

(d) Such orders for the Product shall be sufficient to satisfy only Importer's demand for the Product in the Territory prior to the date of termination and not thereafter.

13. Choice of Law and Disputes.

The rights and obligations of the parties under this agreement shall not be governed by the provisions of the United Nations Convention on Contracts for the International Sale of Goods but instead shall be construed and enforced in accordance with the laws of the State of New York in the United States of America without giving effect to principles of conflict of laws. In the event any disagreement or dispute between the parties arises under or out of this

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Agreement, such disagreement or dispute shall be submitted to Judicial Mediation Services, Inc., a professional mediating service consisting of retired Federal and State judges ("JAMS") or a mutually agreed upon dispute resolution service. The mediation shall be conducted in accordance with the rules of JAMS or such other dispute resolution service as might be agreed upon and shall be held in New York, New York. Any award made by JAMS or such other dispute resolution service as might be agreed upon shall be binding upon the parties. Mediation shall be the exclusive remedy for breach of this Agreement by either party. The parties shall share equally all costs of mediation other than representation by counsel which shall be at each party's own expense.

14. Miscellaneous.

(a) All notices or consents provided for by this Agreement shall be in writing and shall be delivered by hand or registered or certified mail to the party to whom notice or consent is to be given at the address set forth above. Such notice may be given by facsimile but a confirming copy must be delivered by hand or registered or certified mail. The date of delivery of the written confirmation will be considered the effective date of delivery of notice. For required Marketing and Intellectual Property approval, e-mail notification shall be acceptable when confirmed by the receiving party.

(b) This agreement represents the entire agreement between the parties, supersedes all their prior oral or written agreements or understandings, and shall not be changed except by a further written agreement or a written amendment to this Agreement executed by both parties.

(c) The failure by either party to exercise any of its rights under this Agreement shall not be construed as a waiver of such rights. Any such failure shall not preclude the exercise of such rights at any later time.

15. Force Majeure. If any party is prevented from performing any of its obligations hereunder by an occurrence beyond its reasonable control such as, but not limited to, acts of God, fire, flood, war, insurrection, government regulations, raw material shortage, strikes, or lack of common carrier facilities, then the affected party shall be excused from performance for so long as such occurrence exists.

16. Severability. If any term of this Agreement is in violation of, or prohibited by, any applicable law or regulation, such term shall be deemed as amended or deleted to conform to such law or regulation without invalidating or amending or deleting any other term of this Agreement.

17. Assignment. Neither party may assign this Agreement without the prior written consent of the other party. Any purported assignment without such consent shall be null and void.

18. Notice. Any required notices pursuant to this Agreement shall be sent to:

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For Importer:

Castle Brands (USA) Corp.
570 Lexington Avenue
29th Floor
New York, NY 10022

Attn: Mark Andrews, Chairman and CEO

with a copy to:

Mr. E. Vincent O'Brien, Esq.

Nixon Peabody LLP
437 Madison Avenue
New York, New York 10022

For Supplier:

Gosling's Export (Bermuda) Limited

P. O. Box HM 827
17 Dundonald Street
Hamilton, HM 10 Bermuda

Attn: E. Malcolm B. Gosling, President

with a copy to:

19. Relationship of the Parties. The parties acknowledge that no joint venture has been created by this Agreement and that neither party can take any action that is legally binding on the other party without the prior consent of the party to be charged.

IN WITNESS WHEREOF, the parties have caused this agreement to be executed on the day and year first above written.

Gosling's Export (Bermuda) Limited

By: /s/ E. Malcolm B. Gosling
    ---------------------------------
    E. Malcolm B. Gosling, President

Castle Brands (USA) Corp.

By: /s/ Mark Andrews
    ---------------------------------
    Mark Andrews, Chairman and CEO

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SCHEDULE "A"

PRICES

Product Price per case FOB

Note: This Schedule will be finalized prior to the commencement of purchases and sales of the product by the Importer, based on updated cost and tax information. The parties have agreed that the Importer will be entitled to receive a net payment equal to the Net Margin referred to in Section 4(c), net of agreed reimbursements, including taxes and payments to the marketing affiliate, as set forth in that section:

I.E., NET OF:

"mutually agreed salaries, warehousing, insurance and other costs of distribution, such that Importer is able to net the agreed Net Margin, but not amounts above or below the agreed Net Margin. The reimbursements shall not include the normal salaries, travel and entertainment and other overhead costs of the Importer, except with respect to certain mutually agreed personnel that will be hired and directed by Importer but will follow the strategic marketing plan prepared by the Supplier's U.S. marketing affiliate ("Supplier Sales Personnel"). The costs of Supplier Sales Personnel, including normal health or other benefits, will be reimbursed by Supplier."

The parties will determine prior to the marketing period the appropriate flow of funds, including payments to the marketing affiliate, to achieve the agreed result.

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Exhibit 10.4

EXECUTION COPY

SUBSCRIPTION AGREEMENT

SUBSCRIPTION AGREEMENT dated as of February 18, 2005 by and between Castle Brands Inc., a Delaware corporation (the "Investor") and Gosling Partners Inc., a Delaware corporation ("Company").

WHEREAS, the Company desires to issue shares of its common stock and Investor wishes to purchase said shares of common stock.

It is therefore agreed as follows:

1. Acquisition of Shares. The Company hereby conveys to the Investor and the Investor hereby receives from Company 600,000 shares of common stock, $0.01 par value per share (the "Common Stock") of Company (the "Shares"). The aggregate consideration for the Shares is $5,000,000 (approximately $8.33 per share), receipt of which is hereby acknowledged by Company in cash and a promissory note issued by the Investor in favor of the Company with interest to accrue on the unpaid principal amount at a rate equal to four percent (4.0%) per annum (the "Promissory Note"), as more specifically set forth on Schedule I. Simultaneously herewith, and as a condition hereof, the Investor is entering into a Stockholders Agreement, dated as of the date hereof, with the existing stockholders of the Company and the Investor is delivering to Company the Promissory Note.

2. Representations and Warranties of the Investor

The Investor represents and warrants to Company as follows:

(a) The Investor is purchasing the Shares for investment, and has not previously solicited the transfer, resale or disposal of the Shares and presently does not have a view to, or the purpose of, engaging in a distribution thereof or of any interest therein in any transaction that would be in violation of the securities laws of the United States or any state thereof.

(b) The Investor understands that the Shares have not been registered under the Securities Act of 1933, as amended (the "Act") and will be "restricted securities" within the meaning of the regulations under the Act, and by reason of the foregoing the Shares may not be resold in the absence of an effective registration statement under, or applicable exemption from, the Act, and that a restrictive legend will be affixed to the Shares upon issuance to the Investor, as detailed in the Stockholders Agreement.

(c) The Investor understands that there are substantial restrictions on the transferability of the Shares, including without limitation those referred to in Section 2(b) hereof and those contained in the Stockholders Agreement and in this Agreement. Accordingly, the Investor may have to hold the Shares indefinitely and it may not be possible for the Investor to liquidate its investment in the Shares.

(d) The Investor has had an opportunity to ask questions and receive answers concerning Company or the terms and conditions of the offering and to obtain any additional relevant information to the extent the Company possessed such information or was able to obtain


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it without unreasonable effort or expense. The Investor is knowledgeable, sophisticated and experienced in business and financial matters and with respect to securities similar to the Shares, and is capable of evaluating the merits and risks of purchasing the Shares. The Investor is able to bear the economic risk of its investment in the Shares and is able to afford the complete loss of such investment. The Investor has relied solely on the representations and warranties contained herein and Investor's own knowledge about the Company in making Investor's decision to acquire the Shares. If the box relating to "Accredited Investor" status on Schedule I has been checked, the "Investor" is an "Accredited Investor" within the meaning of Rule 501(a) of Regulation D under the Act.

3. Representations and Warranties of Company

Company represents and warrants to the Investor as follows:

(a) Company has been duly organized and is validly existing as a corporation 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 and proposed to be conducted.

(b) Company has all requisite corporate power and authority to enter into, deliver and perform its obligations under this Agreement. This Agreement has been duly authorized, executed and delivered by Company, and all legally required corporate proceedings by Company in connection with the execution and delivery thereof have been taken.

(c) The authorized capital stock of Company consists of 1,000,000 shares of Common Stock of which 1,000,000 shares will be issued and outstanding after giving effect to the transactions contemplated by this Agreement and otherwise to occur on the date hereof. Except as disclosed on Schedule II (and any agreements related thereto, as the same may be amended from time to time), there are no outstanding subscriptions, options, rights, warrants, convertible securities or other agreements, or calls, demands or commitments of any kind relating to the issuance, sale or transfer of any capital stock or other equity securities of Company, whether directly or upon exercise or conversion of other securities or pursuant to the terms and conditions of any instrument evidencing indebtedness of Company. The Shares, when issued and delivered to the Investor, will be duly authorized, validly issued, fully paid and nonassessable and the issuance of the Shares will not be subject to any preemptive or similar rights.

(d) The execution, delivery and performance by Company of this Agreement, including the issuance and delivery of the Shares to the Investor, will not (i) require Company to obtain any consent, approval, authorization or other order of, or to make any filing, registration or qualification with any court, regulatory body, administrative agency or other governmental body (except such as may have previously been obtained, filed or made or are permitted to be, and will be, filed or made promptly following the date hereof), or (ii) conflict with or constitute a violation of any provision of the certificate of incorporation or bylaws of Company, or (iii) breach, constitute a default under, or result in the imposition of a lien or encumbrance on any material properties of Company pursuant to any bond, debenture, note or other evidence of indebtedness of Company or any indenture or other material agreement to which it is a party or by which it is bound or to which any material property of Company may be subject; provided that the representations in clause (i) of this paragraph are made in reliance upon the representations and warranties of the Investor in Section 2 of this Agreement.


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(e) The Company has entered into an Export Agreement, dated as of February 14, 2005, between the Company and Gosling's Export (Bermuda) Limited.

4. Name Change

Upon the execution of this Agreement, the Company hereby agrees to change its name to "Gosling - Castle Partners Inc." and execute and file or cause to be filed the necessary certificate with the Secretary of State of the State of Delaware to effectuate such name change.

5. Notices

All notices and other communications provided for or permitted hereunder shall be in writing and shall be deemed to have been duly given (w) when delivered if delivered personally, (x) when sent if sent by telecopy, with a confirmation promptly sent by way of one of the methods permitted in this
Section or by U.S. mail, postage prepaid, (y) the day after deposit with an overnight courier service marked for overnight delivery, or if deposited with an overnight courier service marked for non-overnight delivery, the number of days after delivery as specified to such courier service or (z) five days after mailing if sent by registered or certified mail (return receipt requested) postage prepaid, in each case to the parties at the following addresses and/or telecopier numbers (or such other address or telecopier number for any party as shall be specified by like notice, provided that notices of a change of address shall be effective only upon receipt thereof).

If to Company:

Gosling Partners Inc.
c/o E. Malcolm B. Gosling
78 Oak Street
Weston, MA 02493
Telecopy No.: (781) 891-0228
Attention: President and Chief Executive Officer

If to the Investor:

Castle Brands Inc.
570 Lexington Avenue, 29th Floor New York, NY 10022
Telecopy No.: (646) 356-0222
Attention: Mark Andrews - Chairman and Chief Executive Officer

6. Choice of Law

This Agreement shall be governed by the laws of the State of Delaware applicable to agreements made and to be performed therein.


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7. Transfer and Assignment

This Agreement shall be binding upon and inure to the benefit of each Investor and Company and their respective permitted successors and assigns (subject to the restrictions in the Stockholders Agreement).

8. Arbitration

In the event any disagreement or dispute among the parties arises under or out of this Agreement, including termination issues, such disagreement or dispute shall be submitted to Judicial Mediation Services, Inc., a professional arbitration service consisting of retired Federal and State judges ("JAMS") for binding arbitration unless the parties mutually agree upon an alternative dispute resolution service. The arbitration shall be conducted in accordance with the rules of JAMS or such other dispute resolution service as might be agreed upon and shall be held in New York, New York. Any award made by JAMS or such other dispute resolution service as might be agreed upon shall be binding upon the parties. Binding arbitration shall be the exclusive remedy for breach of this Agreement by any party. The parties shall share equally all costs of arbitration other than representation by counsel which shall be at each party's own expense.

9. Miscellaneous

This Agreement is a complete statement of the agreement between the parties with respect to the matters provided for and there are no agreements, promises, warranties, covenants or undertakings other than as expressly set forth in this Agreement. This Agreement supersedes any previous agreements and understandings between the parties with respect to the matters provided for and cannot be changed or terminated except in writing signed by both parties. The headings in this Agreement are for convenience of reference only and shall not affect the meaning of any provision of this Agreement.

10. Counterparts; Facsimile Signature

This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same instrument. This Agreement may be executed via facsimile transmission, and any executed facsimile copy or counterpart shall be treated as an original.


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IN WITNESS WHEREOF, each of Company and the Investor has caused this Agreement to be executed on its behalf by officers thereunto duly authorized, as of the day and year first above written.

GOSLING PARTNERS INC.

By: /s/ E. Malcolm B. Gosling
    ------------------------------------
Name: E. Malcolm B. Gosling
Title: President and Chief Executive
       Officer

CASTLE BRANDS INC.

By: /s/ Mark Andrews
    ------------------------------------
Name: Mark Andrews
Title: Chairman and Chief Executive
       Officer


SCHEDULE I

Date: February 18, 2005

Investor Name & Address: Castle Brands Inc. 570 Lexington Avenue, 29th Floor New York, NY 10022

Common Stock:

Number of Shares: 600,000

Total Purchase Price: $5,000,000.00

Portion of Purchase Price Paid in Cash: $100,000.00

Portion of Purchase Price Payable via Promissory Note: $4,900,000.00

- An installment in the amount of $1,025,000 due April 1, 2005;

- An installment in the amount of $1,125,000 due October 1, 2005;

- An installment in the amount of $1,000,000 due April 1, 2006

- An installment in the amount of $1,000,000 due October 1, 2006; and

- An installment in the amount of $750,000 due April 1, 2007.

- Accrued interest to be paid at each installment beginning on October 1, 2005.

[ ] Check here if the Investor is an "Accredited Investor" within the meaning of Rule 501(a) of Regulation D under the Act.


SCHEDULE II

None.


Exhibit 10.5

EXECUTION COPY

STOCKHOLDERS AGREEMENT

This Stockholders Agreement (the "Agreement"), made as of the 18th day of February, 2005, by and among Gosling Partners Inc., a Delaware corporation (the "Company") and the persons listed on Schedule I hereto (the "Stockholders" and, individually, a "Stockholder").

WHEREAS, the Stockholders own all of the issued and outstanding stock of the Company in the amount shown opposite their names on Schedule I; and

WHEREAS, the Company and Stockholders desire to agree to certain restrictions and covenants in connection with the ownership of such stock in the Company and the management of the Company.

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and in consideration of the mutual promises set forth below, the parties hereto, intending to be legally bound, agree as follows:

1. Definitions of Shares. As used in this Agreement, "Shares" shall mean and include all common stock, $0.01 par value per share ("Common Stock") of the Company, together with any shares of Common Stock and other capital stock of the Company acquired as a result of any conversion, stock split, stock dividend, recapitalization or the like.

2. Voluntary Transfers. Each Stockholder hereby agrees that he, she or it will not sell, assign, encumber, transfer pursuant to any pledge, or make any other disposition or transfer (each a "Transfer") of any Shares now or hereafter owned by him, her or it unless all of the provisions of this Agreement that are applicable to such Transfer have been complied with.

3. Prohibited and Permitted Transfers. From and after the date hereof, except as permitted by this Section 3, no Stockholder shall sell, assign, transfer, pledge, hypothecate, mortgage, encumber or dispose of all or any of its Shares except pursuant to Section 4 hereof. Notwithstanding the foregoing, a Stockholder may transfer all or any of his Shares without complying with this
Section 3: (i) if the Stockholder is an individual, by way of gift to his spouse or to the siblings or lineal descendants or ancestors of such Stockholder or his spouse, or to any trust for the benefit of any one or more of the foregoing; provided, that any such transferee shall agree in writing, as a condition to such transfer, to be bound by all of the provisions of this Agreement to the same extent as if such transferee were the Stockholder transferring such Shares;
(ii) if the Stockholder is an individual, by will or the laws of descent and distribution; provided, that such Shares shall thereafter remain subject to the provisions of this Agreement to the same extent they would be if held by the Stockholder; (iii) pursuant to a merger or consolidation of the Company with any other entity in which all of the Stockholders are participating on a ratable basis (based upon the number of Shares held); (iv) to another Stockholder provided that such Shares as are transferred to a Stockholder shall thereafter remain subject to the provisions of this Agreement; or (v) pursuant to a sale in which Castle Brands Inc. (the "Majority Stockholder") is selling all of its shares; provided that the purchaser of the Shares of the Majority Stockholder shall have executed and delivered an agreement, in a form acceptable to the Company, to be bound by the terms of this Agreement. Notwithstanding the foregoing, borrowings with commercial banks or comparable financial institutions, secured by


the Shares, are permitted, as long as the lending institution agrees to be bound by the provisions of this Agreement, should it obtain title to the Shares.

4. Right of First Refusal. If any Stockholder shall at any time receive a bona fide offer from a third party to purchase for cash all of his, her or its Shares that the Stockholder wishes to accept, he or she shall give written notice to the Company stating the price, terms and the potential purchaser of the Shares. The Company shall have the option to purchase all, but not less than all, of the offered Shares at the price and on the other terms stated in the notice. The option to purchase the Shares shall be exercisable by notice given to the applicable Stockholder at any time within 30 days of the receipt of the notice given by such Stockholder. If the Company does not exercise its option within 30 days after receipt of the notice given by any Stockholder, the Stockholder shall give notice to the other Stockholders stating the price, terms and the potential purchaser of the Shares. The Stockholders shall have the option to purchase a number of the offered Shares equal to the same percentage of shares then owned by the Stockholder (excluding the offered Shares) at the price and on the other terms stated in the notice; provided that in order to fully exercise their rights as set forth in this Section 4 the Stockholders must collectively purchase all of the offered shares. If any Stockholder declines to exercise his, her or its rights set forth in this Section 4, the Stockholders exercising such rights shall be entitled to purchase the non-exercising Stockholders' portion of the Shares equal to the same percentage of shares then owned by the Stockholder (excluding the offered Shares and the shares of the non-exercising Stockholder). If neither the Company nor any of the other Stockholders exercises its option within 30 days after receipt of the notice given by the Stockholder, such Stockholder may, at any time within 60 days following the expiration of that 30-day option period, sell for value all, but not less than all, of the offered Shares to the purchaser listed in the notice at a cash price per share not less than the minimum price stated in the notice, provided that (i) prior to any sale, counsel for such Stockholder shall have delivered to the Company its opinion, in form and substance reasonably acceptable to the Company, that the sale will not violate any applicable federal or state securities law and (ii) the purchaser shall have executed and delivered an agreement, in a form acceptable to the Company, to be bound by the terms of this Agreement. If the offered Shares remain unsold at the end of such 60-day period, such Shares may not thereafter be transferred (except as may be permitted under another provision of this Agreement) unless the applicable Stockholder again complies with this Section 4.

5. Preemptive Right. If the Company proposes to issue any shares of Common Stock or securities convertible into or exchangeable or exercisable for shares of Common Stock, other than securities issued as a result of any stock split, stock dividend, reclassification, recapitalization or the like the Company will deliver to each Stockholder a written notice (the "New Issuance Notice") not less than thirty (30) days prior to the date of completion of such issuance (the "New Issuance"). Each Stockholder shall have the right, exercisable within fifteen (15) business days of the date of the New Issuance Notice, to purchase all or any part of such Stockholder's Pro Rata Share (as defined below) of the New Securities at the price and on the terms and conditions on which the Company proposes to make the New Issuance, such price to be paid in full in cash or by check against the issuance and delivery of the New Securities promptly after notice from the Company. For purposes of this Section 5, a Stockholder's "Pro Rata Share" means the product of (x) the number of New Securities and (y) a fraction, the numerator of which is the number of shares of Common Stock outstanding as of the date of (and

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immediately prior to) the proposed New Issuance held by such Stockholder and the denominator of which is the total number of shares of Common Stock outstanding as of the date of (and immediately prior to) the proposed New Issuance.

6. Liquidation, Dissolution or Winding Up. In the event of any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, Castle shall be entitled to the greater of its pro rata share of ownership in the Company or $5,000,000 of the assets of the Company available for distribution to its stockholders.

7. Certain Covenants. The Company covenants and agrees that it will comply with and observe the following covenants and provisions, unless with respect to a specific transaction, event or action that is subject to the provisions of this Section 7, it shall have been permitted to effect, participate in or proceed with such transaction, event or action pursuant to the approval of the members of the Board of Directors representing in the aggregate at least 80% of the outstanding shares of the Company:

(a) The Company will not enter into or be a party to any material transaction or arrangement with any director, officer, employee or Stockholder of the Company, or any member of their respective immediate families or any corporation or other entity directly or indirectly controlled by one or more of such officers, employees, directors or Stockholders or members of their immediate families, except in the ordinary course of business and on terms not less favorable to the Company than it would obtain in a comparable arm's length transaction with an unrelated third party.

(b) The Company will not increase the number of directors serving on its Board of Directors to more than five (5).

8. Inspection Right. The Company shall permit each Stockholder and any authorized representative thereof, at such Stockholder's expense, to visit and inspect the properties of the Company, to examine its records, including its corporate and financial records, and to discuss its affairs, finances and accounts with its officers and certified public accountants, all at such reasonable times upon reasonable prior written notice to the Company and in a manner which does not unduly interfere with the business and operations of the Company. The rights set forth in this Section 8 shall be exercised solely in furtherance of the proper interests of such Stockholder as an investor in the Company, and any Stockholder exercising its rights of inspection hereunder, and its agents and representatives, shall maintain the confidentiality of all financial and other confidential information of the Company acquired by them except as and only to the extent required by applicable laws, regulations or legal process. In addition, if requested by the Company, and as a condition to each Stockholder exercising its rights hereunder, such Stockholder shall execute a confidentiality agreement with the Company containing terms and conditions reasonably satisfactory to the Company.

9. Specific Enforcement. The Company and each Stockholder expressly agree that the Stockholders and the Company will be irreparably damaged if this Agreement is not specifically enforced. Upon a breach or threatened breach of the terms, covenants and/or conditions of this Agreement, the non-breaching Stockholders and/or the Company, as applicable, shall, in addition to all other remedies, each be entitled to a temporary or permanent

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injunction, without showing any actual damage, and/or a decree for specific performance, in accordance with the provisions hereof.

10. Failure to Deliver Shares. If a Stockholder becomes obligated to sell any Shares pursuant to the terms of this Agreement and fails to deliver such Shares in accordance with the terms of this Agreement, the Company or any of the other Stockholders, as the case may be, may, at his, her or its option, in addition to all other remedies he, she or it may have, send to such Stockholder the applicable purchase price for such Shares as determined in accordance with the terms of this Agreement. Thereupon, the Company upon written notice to such Stockholder (a) shall cancel on its books the certificate or certificates representing the Shares to be sold and (b) shall issue, in lieu thereof, in the name of the appropriate transferee in accordance with the terms of this Agreement, a new certificate or certificates representing such Shares, and thereupon all of such Stockholder's rights in and to such Shares shall terminate.

11. Management. The Company shall be managed and controlled by the Board of Directors. The Board of Directors of the Company shall comprise of five (5) directors, three (3) of whom shall be appointed by the Majority Stockholder, one by Gosling's Export (Bermuda) Limited and one by E. Malcolm B. Gosling (or his designee). The Stockholders agree that, at the first Board of Directors meeting held after the date hereof for the purpose of electing the officers of the Company or in connection with the taking of any written consent to action in respect thereto, each of the Stockholders shall direct his or its Board of Director designee to vote in favor of the election of E. Malcolm B. Gosling as President and Chief Executive Officer, Matt MacFarlane as Chief Financial Officer and Treasurer, Nancy Gosling as Secretary and Amelia Gary as Assistant Secretary of the Company, to ensure the election of such persons as such officers of the Company. The Company plans to separately enter into a five-year employment agreement with E. Malcolm B. Gosling, which agreement shall contain standard protective and non-compete provisions, and will endeavor to obtain at least $5,000,000 of Key Man Insurance on the life of E. Malcolm B. Gosling. The obligations set forth in this Section 11 shall terminate effective, as to each Stockholder, upon the sale of all of the Stockholder's Shares or upon the death or permanent disability of such Stockholder. Notwithstanding the appointment of Matt MacFarlane as Treasurer, the Stockholders hereby agree that all functions normally performed by the treasurer of a corporation shall be performed by Castle Brands Inc. which shall maintain the financial records on behalf of the Company, unless otherwise mutually agreed in writing by the Stockholders. The Company shall reimburse Castle Brands Inc. for its reasonable expenses in connection with providing such accounting and financial reporting, such expenses to be documented and subject to periodic review by the Chief Executive Officer and the Board of Directors.

12. Notices. Notices given hereunder shall be in writing and shall be deemed received (i) when delivered by hand or telecopy or other method of facsimile, (ii) the next business day after sent by a nationally recognized overnight delivery service, and (iii) five (5) business days after sent by certified or registered mail, return receipt requested, postage prepaid, to the party being notified as set forth below:

If to the Company, at c/o E. Malcolm B. Gosling, 78 Oak Street, Weston, MA 02493, Fax: (781) 891-0228, Attention: President and Chief Executive Officer, or at such other address

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or addresses as may have been furnished in writing by the Company to the Stockholder, with a copy to Castle Brands Inc., 570 Lexington Avenue, 29th Floor, New York, NY 10022.

If to a Stockholder, at the address set forth on the applicable schedule hereto, or at such other address or addresses as may have been furnished in writing by the Stockholders to the Company.

13. Invalidity of Transfer. No purported Transfer of any Shares by any of the Stockholders in violation of any provision of this Agreement shall be valid, and the Company shall not transfer any of said Shares on the books of the Company, nor shall any of said Shares be entitled to vote, nor shall any dividends be paid thereon during the period of any such violation. Such disqualifications shall be in addition to and not in lieu of any other legal or equitable right to enforce said provisions.

14. Extraordinary Events. If from time to time during the term hereof there is any stock split, stock dividend, reclassification, recapitalization or similar event, then, in such event, any and all new, substituted or additional securities or other property (other than cash) to which a Stockholder is entitled to receive by reason of his, her or its ownership of Shares shall be immediately subject to the provisions of this Agreement and be included in the term "Shares" for all purposes hereof.

15. Legend. All certificates representing any Shares held by any Stockholder shall be stamped or otherwise imprinted with a legend in substantially the following form:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY APPLICABLE STATE OR FOREIGN SECURITIES LAWS. AND MAY NOT BE SOLD, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE ACT OR THE AVAILABILITY OF AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS AND IN ACCORDANCE WITH AND SUBJECT TO ALL THE TERMS AND CONDITIONS OF A CERTAIN STOCKHOLDERS AGREEMENT DATED AS OF FEBRUARY 18, 2005 (AS THE SAME MAY THEREAFTER BE FURTHER AMENDED, RESTATED OR MODIFIED), A COPY OF WHICH THE COMPANY WILL FURNISH TO THE HOLDER OF THIS CERTIFICATE UPON REQUEST AND WITHOUT CHARGE.

Each Stockholder agrees that the Company may impose transfer restrictions on the Shares represented by certificates bearing the legend referred to in this Section 15 to enforce the provisions of this Agreement. The legend may be removed upon termination of this Agreement.

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16. Term; Termination of Agreement.

(a) The term of this Agreement shall be for the longer of twenty five (25) years or ten (10) years past the expiration of the Export Agreement, dated as of February 14, 2005, among the Company, Gosling's Export (Bermuda) Limited and Gosling Brothers Limited (the "Export Agreement"), unless earlier terminated as provided in subsection (b) or unless extended by mutual written agreement.

(b) This Agreement shall earlier terminate upon the occurrence of any of the following events, provided that such termination shall not affect any right or remedy existing hereunder prior to the effective date of such termination:

(i) mutual written agreement of the Stockholders;

(ii) a sale of all of the shares of Common Stock held by all of the Stockholders (but nothing in this Agreement would preclude the Majority Stockholder from issuing its own equity or entering into a merger with or a sale to a third party);

(iii) a merger (in which the Company is not the surviving entity), a consolidation or a sale of all or substantially all of the assets of the Company;

(iv) the cessation of the Company's business;

(v) one of the Stockholders becoming the owner of all shares of the capital stock of the Company.

17. Change of Control. In the event that the Majority Stockholder transfers control of the Company, either directly (through the sale of substantially all of its Shares) or indirectly (through the sale or merger of Castle Brands Inc.), the new controlling person shall agree to be bound by the terms and conditions of this Agreement as set forth in Section 3, and the Export Agreement shall remain in full force and effect, provided that if the new controlling person wishes to sell its interest in the Company, either directly or indirectly, the approval of Gosling Brothers Limited and Gosling's Export (Bermuda) Limited would be required to effectuate such a sale.

18. Entire Agreement and Amendments. This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and neither this Agreement nor any provision hereof may be waived, modified, amended or terminated except by a written agreement signed by the stockholders representing at least 80% of the outstanding shares. No waiver of any breach or default hereunder shall be considered valid unless in writing, and no such waiver shall be deemed a waiver of any subsequent breach or default of the same or similar nature.

19. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the heirs, personal representatives, executors, administrators, successors and permitted assigns and transferees of the Company and each of the Stockholders.

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20. Severability. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be deemed prohibited, invalid or unenforceable under such applicable law, such provision shall be ineffective to the extent of such prohibition, invalidity or unenforceability, and such prohibition, invalidity or unenforceability shall not invalidate the remainder of such provision or the other provisions of this Agreement.

21. Section Headings. The descriptive headings in this Agreement have been inserted for convenience only and shall not be deemed to limit or otherwise affect the construction of any provision hereof.

22. Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, and all of which together shall constitute one and the same instrument.

23. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware without reference to its principles of conflicts of law.

24. Interpretation. The parties acknowledge and agree that: (i) each party and its counsel, if any, reviewed and negotiated the terms and provisions of this Agreement and have contributed to its revision; (ii) the rule of construction to the effect that any ambiguities are resolved against the drafting party shall not be employed in the interpretation of this Agreement; and (iii) the terms and provisions of this Agreement shall be construed fairly as to all parties hereto, regardless of which party was generally responsible for the preparation of this Agreement.

25. Arbitration

In the event any disagreement or dispute among the parties arises under or out of this Agreement, including termination issues, such disagreement or dispute shall be submitted to Judicial Mediation Services, Inc., a professional arbitration service consisting of retired Federal and State judges ("JAMS") for binding arbitration unless the parties mutually agree upon an alternative dispute resolution service. The arbitration shall be conducted in accordance with the rules of JAMS or such other dispute resolution service as might be agreed upon and shall be held in New York, New York. Any award made by JAMS or such other dispute resolution service as might be agreed upon shall be binding upon the parties. Binding arbitration shall be the exclusive remedy for breach of this Agreement by any party. The parties shall share equally all costs of arbitration other than representation by counsel which shall be at each party's own expense.

[remainder of page intentionally left blank]

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EXECUTION COPY

STOCKHOLDERS AGREEMENT SIGNATURE PAGE

IN WITNESS WHEREOF, the parties have duly executed and delivered this Agreement or caused this Agreement to be duly executed and delivered by their proper and duly authorized officers, as the case may be, as of the date first above written.

GOSLING PARTNERS INC.

By: /s/ E. Malcolm B. Gosling
    ------------------------------------
Name: E. Malcolm B. Gosling
Title: President and Chief Executive
       Officer

STOCKHOLDERS:

By: /s/ E. Malcolm B. Gosling
    ------------------------------------
E. Malcolm B. Gosling

GOSLING'S LIMITED

By: /s/ Nancy Gosling
    ------------------------------------
Name: Nancy Gosling
Title: President

CASTLE BRANDS INC.

By: /s/ Mark Andrews
    ------------------------------------
Name: Mark Andrews
Title: Chairman and Chief Executive
       Officer


SCHEDULE I

Stockholders

Name                               Number of Shares Owned
----                               ----------------------
E. Malcolm B. Gosling              200,000
78 Oak Street
Weston, MA 02493

Gosling's Limited                  200,000
PO Box HM827,
Hamilton, HM CX
Bermuda

Castle Brands Inc.                 600,000
570 Lexington Avenue, 29th Floor
New York, NY 10022




Exhibit 10.6

PROMISSORY NOTE

$4,900,000.00 New York, New York February 18, 2005

FOR VALUE RECEIVED, Castle Brands Inc., a Delaware corporation (the "Debtor") hereby promises to pay to the order of Gosling Partners Inc., a Delaware corporation (the "Holder"), whose address is c/o E. Malcolm B. Gosling, 78 Oak Street, Weston, MA 02493, or at such other place as the Holder may from time to time designate, the principal sum of Four Million Nine Hundred Thousand Dollars ($4,900,000.00), together with interest thereon as follows:

Debtor shall pay Holder

1. An installment in the amount of $1,025,000 due April 1, 2005;
2. An installment in the amount of $1,125,000 due October 1, 2005;
3. An installment in the amount of $1,000,000 due April 1, 2006
4. An installment in the amount of $1,000,000 due October 1, 2006; and
5. An installment in the amount of $750,000 due April 1, 2007,

together with interest as the same accrues on the unpaid principal amount at a rate equal to four percent (4.0%) per annum, commencing with the second installment payment which is due October 1, 2005 and continuing with each installment thereafter until the Note is paid in full. Unless the Note is accelerated upon an Event of Default (as defined below), any outstanding principal, plus any outstanding interest, shall be due and payable on the last scheduled payment date.

This Note may be prepaid at any time, in whole or in part, at the option of the Debtor and shall immediately be prepaid in full upon any sale or transfer of the Debtor's ownership interest in Holder. Any prepayment shall be made together with all interest accrued but unpaid through the date of prepayment but without penalty.

An "Event of Default" occurs if the Debtor shall fail to make in full any payment of principal or interest under this Note on the date provided for or within ninety (90) calendar days thereafter. If an Event of Default shall occur and is continuing, then at the option of the Holder, the entire unpaid balance of this Note shall be accelerated and the same, together with all accrued interest, shall become immediately due and payable. No delay or omission on the part of the Holder in exercising any right hereunder shall operate as a waiver of such right or of any other right hereunder and a waiver of any such right on any one occasion shall not be construed as a bar to or a waiver of any such right of any future occasion.

This Note may not be modified or terminated orally.

This Note shall be governed by the law of the State of New York applicable to agreements made and to be performed in that State.


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CASTLE BRANDS INC.

By: /s/ Mark Andrews
    ------------------------------------
Name: Mark Andrews
Title: Chairman and Chief Executive
          Officer

[Signature Page to Promissory Note by Castle Brands Inc.

in Favor of Gosling Partners Inc.]


Exhibit 10.7

NOTE: PORTIONS OF THIS EXHIBIT ARE THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST BY THE REGISTRANT TO THE SECURITIES AND EXCHANGE COMMISSION. SUCH
PORTIONS HAVE BEEN REDACTED AND ARE MARKED WITH A "[*]" IN PLACE OF THE
REDACTED LANGUAGE.

AGREEMENT

This agreement has been executed by and between I.L.A.R. S.p.A. (hereinafter referred to as "Producer") located at Via Tiburtina 1314, 00131, Rome, Italy, and Castle Brands (USA) Corp., located at 570 Lexington Avenue, 29th Floor, New York, NY 10022 (hereinafter referred to collectively as "Importer") in counterparts on the dates specified adjacent to the signatures of the respective parties and shall be effective as of August 27, 2004, or such earlier date that the Producer has completed the termination of the pre-existing Import Agreement (the "Effective Date").

I. WHEREAS, Producer is the exclusive owner of a brand of liqueur called Pallini Limoncello and its extensions as defined in Exhibit II (hereinafter referred to as THE PRODUCTS); and

II. WHEREAS Importer is a U.S. Corporation organized under the laws of the State of Delaware, United States of America and Importer is engaged in the import and distribution of alcoholic beverages in the United States of America; and

III. WHEREAS, Producer would not enter into this Contract without the specific undertakings by Importer (a) not to challenge directly or indirectly anywhere in the world the validity of, interfere with or claim for themselves, any of THE PRODUCTS and (b) not to compete in any way in the field of Lemon Based Cordials or such other products as may be added to Exhibit II in the TERRITORY and
(c) not to own a TRADEMARK or brand name in connection with a Lemon Based Cordial Product in the TERRITORY; and

IV. WHEREAS, it is understood by the parties that Producer has the right to, and will, manufacture, bottle, sell, market and distribute products other than THE PRODUCTS (subject to Importer's Right of First Refusal as described below) in the TERRITORY as well as THE PRODUCTS and other products outside of the TERRITORY; and

V. WHEREAS, the contracting parties declare that the determining motive for the execution of the present Agreement is in consideration of the respective qualities of each party, and Producer further desires to enter into this Contract in view of the present distribution capabilities in the alcoholic beverage businesses of Importer; and

VI. WHEREAS Producer wishes to appoint Importer, and Importer wishes to accept its appointment, as sole importer of THE PRODUCTS in the TERRITORY (as defined in Exhibit II) upon the terms and condition set out in this agreement.

NOW, THEREFORE, in consideration of the premises and the mutual promises herein set forth, and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows:


1. DEFINITIONS

For the effects of this Contract, Importer and Producer agree on the following definitions:

(a) AFFILIATED or RELATED COMPANY:

(i) a company which, directly or indirectly, is CONTROLLED by or CONTROLS another company, or

(ii) a company which is under common CONTROL with another company.

(b) AMP: Strategy, plans and spending levels for advertising merchandising and promotions, including creative copy and media and shall not include salaries, expenses or bonuses of sales, marketing and administrative personnel or other overhead; except as provided otherwise in Exhibit III.

(c) BRAND MANAGER: A person hired by Importer, with the consent of Producer, who will oversee the marketing plan, advertising programs, use of AMP funds, public relations projects, sales staff interaction and day-to-day sales of THE PRODUCTS. The costs of such Brand Manager, including travel and entertainment, shall be paid 50% by Producer (up to an annual maximum of $75,000).

(d) CONFIDENTIAL INFORMATION: Confidential Information shall be as defined in paragraph 11 below.

(e) CONTROL, CONTROLS or CONTROLLED:

(i) a direct or indirect holding, or aggregate holdings, of shares carrying more than 50% of the voting rights attributable to the issued and outstanding share capital of a company which are currently exercisable at a general meeting, irrespective of whether the holding or holdings give de facto control; or

(ii) the right to elect or remove directly or indirectly at least one half of the board of directors or equivalent managing body of a company; or

(iii) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a PERSON or entity, whether through the ownership of equity securities, by contract, or otherwise.

(iv) a change in the President or Chief Executive Officer.

(f) DOMAIN NAME: An address in conveniently readable form for use on the worldwide web, the Internet, any other computer network or communication system.

(g) IMPORTER GROUP: Importer and AFFILIATED or related companies of Importer.

(h) INITIAL TERM: From the date of execution of this Contract and expiring on December 31, 2009.

2

(i) LAID-IN-COST: The purchase price paid by Importer for THE PRODUCTS plus all taxes, duties and other expenses and charges paid by Importer including storage costs.

(j) OPERATIONAL YEAR: any calendar year during the INITIAL TERM or any RENEWAL TERM starting from the year 2005.

(k) PERSON: an individual, corporation, company, partnership, joint venture, trust, unincorporated organization, government or agency or political subdivision thereof or any other entity that may be treated as a person under applicable law.

(l) THE PRODUCTS: As set forth on the attached Exhibit II.

(m) PROPRIETARY INFORMATION: All information used or developed pursuant to this Contract.

(n) RENEWAL TERM: Any extended term following the Initial Term.

(o) SHIPMENTS: Shipments of THE PRODUCTS from Importer to Importer's wholesalers or to State purchasing agencies pursuant to this Contract.

(p) TERRITORY: The TERRITORY as set forth on the attached Exhibit II.

(q) TRADE DRESS: Overall appearance and presentation of THE PRODUCTS' Labeling, packaging, and containers, as well as associated advertising and copyrights in all materials which are connected with it.

(r) TRADEMARK: As set forth on the attached Exhibit IV.

2. GRANT OF RIGHTS AND RESERVATION OF RIGHTS

(a) Subject to, and specifically conditioned upon, Producer having terminated its prior Importer in the TERRITORY, Producer hereby appoints Importer as Producer's exclusive distributor in the TERRITORY of the THE PRODUCTS, subject to the terms and conditions hereafter set forth. Importer agrees to accept said appointment only after confirmation that Producer has effectively terminated any pre-existing Import Agreements for the TERRITORY.

(b) Importer agrees that it shall not produce, sell, market, advertise or distribute any of THE PRODUCTS to any party outside of the TERRITORY, unless specifically authorized by Producer in writing. If Importer learns that any quantity of THE PRODUCTS is being exported from the TERRITORY, Importer shall promptly inform Producer thereof.

(c) (i) Except for the deletion of the TRADEMARK, Producer may reasonably modify, delete, or add to, labeling or packaging used on or in connection with the promotion or sale of the THE PRODUCTS, including, but not limited to, adding to or

3

deleting, diminishing or expanding size, or relocating on the labeling or packaging any TRADE DRESS elements, label design or logotypes on one hundred eighty (180) days' written notice to Importer (or less time if specifically mandated by a regulatory body in Italy or the TERRITORY). If Importer does not agree with any such modification, Importer shall promptly advise Producer in writing, expressing the reasons for such disagreement. Producer agrees to discuss such proposed modification with Importer prior to the implementation of such modification which implementation shall in any event be at Producer's sole and absolute discretion, provided however that Producer shall at all times comply with any modification mandated by a regulatory body in the TERRITORY. All costs and expenses incurred by Importer to implement such modifications shall be at Producer's expense.

(ii) In the event of any such modification, Importer shall have the right, with the prior written approval of Producer, which cannot be unreasonably withheld, to use up any materials, labels, packaging or signage bearing the affected labels, TRADEMARK, packaging or TRADE DRESS. If Producer disapproves of, or wishes to accelerate such use-up rights, then Producer shall reimburse Importer for all actual out-of-pocket expenses incurred due to destruction and non-use of such materials, labels, packaging or signage or shall repurchase any affected inventory from Importer at the Importer's LAID-IN-COST. Both parties will use all reasonable efforts to sell off old inventory as expeditiously as possible.

(d) Rights of First Refusal. During the term of this Agreement, Importer shall have the right of first refusal regarding:

(i) any other current or future products with the Pallini brand name that Producer currently maintains in, or adds to, its product line for sale in the TERRITORY.

(ii) If Importer exercises its option pursuant to paragraph(2)(d)(i) above, paragraph (1)(l) and Exhibit II shall be automatically amended and the term "THE PRODUCTS" as used in this Agreement shall be deemed to include such additional products. In the event that Importer declines to exercise such option, Producer shall have the right to offer such additional products to other Importers, provided, however, that Producer shall not thereafter enter into an importation agreement with any other importer upon terms more favorable than those originally offered to Importer without first offering those more favorable terms to Importer.

(iii) Importer shall be required to exercise its Right of First Refusal within sixty (60) days of being notified by Producer of Producer's intent to offer a new product in the TERRITORY. Failure to exercise said option within sixty (60) days shall be deemed to be a waiver by Importer of its first refusal right.

(iv) Any new flavor extension of THE PRODUCTS shall automatically be added to the definition of THE PRODUCTS in Exhibit II and are not therefore subject to Importer's Right of First Refusal. Producer will discuss any flavor extensions or deletions with Importer prior to Producer making final decisions regarding same.

3. SUPPLY AND PRODUCT QUALITY

(a) At least sixty (60) days prior to the beginning of each OPERATIONAL YEAR, Importer shall propose to Producer in writing a commercially reasonable rolling forecast of the quantities and types of THE PRODUCTS to be supplied to Importer by Producer during each quarter of the following OPERATIONAL YEAR. Such

4

proposed forecast shall be subject to discussion between the parties and shall be subject to revision to reflect market conditions.

(b) In the event of any request by Importer for SHIPMENTS greater than the forecast amount for any given OPERATIONAL YEAR, Producer will make all reasonable efforts to supply such additional products under terms and conditions to be discussed between the parties.

4. PURCHASES AND TERMS

(a) Importer shall purchase from Producer THE PRODUCTS set forth in Exhibit II.

(b) Importer shall make all payments in U.S. Dollars to any place or party Producer requests in writing, within a term of 90 days from date of shipment.

(c) Importer shall pay all import duties and all expenses of importation into the TERRITORY as well as freight, taxes, insurance and expenses for movement from the Producer's plant to the TERRITORY destination. All storage expenses, if any, shall also be paid by Importer. Risk of loss with respect to THE PRODUCTS shall pass to Importer when loaded on trucks at the distillery.

5. PRICES

Prices for THE PRODUCTS as set forth in Exhibit II hereto may be adjusted by Producer not more than once in any twelve (12) month period and upon not less than one hundred twenty (120) days' written notice to Importer. The prices will not be changed during 2005. Beginning January 1, 2006 and through December 31, 2007, prices may be adjusted based on the percentage increase (if any) reflected in the Italian inflation rate as compiled by the Institute of Statistics (I.S.T.A.T.).

If Producer incurs a raw materials cost increase of 5% or more during any calendar quarter of this Agreement, to the extent that such increase exceeds the I.S.T.A.T. index referenced above, said increase, while effective, may be passed along as a price increase to Importer on not less than one hundred twenty
(120) days' notice and upon documentation by Producer.

After 2007 Producer shall have discretion to raise prices without reference to the prior two paragraphs, but Producer recognizes the need for THE PRODUCTS to be competitively priced at the wholesale, retail, and consumer levels and agrees to refrain from price increases that exceed those of major competitors for comparable products.

6. QUALITY STANDARDS

(a) Producer, or Producer's designee, shall manufacture and bottle THE PRODUCTS in its own premises in accordance with: (1) all applicable laws and regulations in the place of production (including those of any self-regulatory bodies), (2) all laws and regulations applicable to the production and sale of spirits to be imported in the

5

TERRITORY; and (3) industry best manufacturing practices. Importer shall have access during all reasonable business hours to the premises where THE PRODUCTS are manufactured.

(b) THE PRODUCTS that Producer sells to Importer must be "Merchantable" which shall mean that THE PRODUCTS are of good quality, free from defects (whether patent or latent) in material and workmanship, merchantable and fit for human consumption, and shall be substantially of the same quality as THE PRODUCTS already distributed in the U.S. market. Importer acknowledges that Producer has no permanent structure in the U.S.A. and is therefore not in a condition to be updated and timely informed about the change in U.S. laws and regulations regarding the alcoholic beverage trade. Importer shall advise Producer of all relevant changes to all applicable rules relating to THE PRODUCTS being sold in the TERRITORY. In absence of adequate information from Importer, Producer will not be held responsible for any infringement of such rules.

(c) Importer shall use all reasonable efforts to maintain high standards of quality on all THE PRODUCTS sold and distributed by Importer, and to this end:

(i) Importer acknowledges that THE PRODUCTS are of a uniquely high quality and unique and distinctive taste, different from all other similar products, made of natural ingredients and subject to factors as temperature, humidity, heat, light, etc.

(ii) Importer shall ship and warehouse THE PRODUCTS in accordance with the reasonable warehousing standards approved by Producer and Producer or its duly authorized representatives shall have access during all reasonable business hours to the places where THE PRODUCTS are stored by Importer.

(d) In consultation with Importer, Producer may reasonably modify THE PRODUCTS upon not less than one hundred twenty (120) days' written notice to Importer (or less if mandated by a regulatory body in Italy or in the TERRITORY). If Importer does not agree with such modification, it shall so advise Producer. Except in the case of a mandate by a regulatory body, Producer agrees to discuss such proposed modification with Importer. If the parties cannot agree on the proposed modification, Producer's decision as the owner of the TRADEMARK shall be controlling, except that it shall have the obligation to comply with any change mandated by a regulatory body in Italy or in the TERRITORY.

(e) In the event of such modification, Importer shall have the right, with Producer's prior written approval, which cannot be unreasonably withheld, to use up all THE PRODUCTS previously supplied to it. If Producer fails to permit a use-up requested by importer, Producer shall be required to repurchase from Importer all pre-modification inventory at Importers, LAID-IN-COST.

(f) During the TERM of this Contract, each party shall provide, at no cost to the other party, all information related to this Contract. Importer shall also provide Producer with: (i) all reasonable information in its possession on the relevant spirits market and the relevant adult beverage market, including without limitation all information that relates to THE PRODUCTS, and (ii) all information that Importer possesses or controls with respect to THE PRODUCTS, storage of THE PRODUCTS, improvement to THE PRODUCTS or the development of new products to be marketed under the TRADEMARK.

6

(g) Importer shall not (i) distribute, or (ii) advertise, promote or merchandise THE PRODUCTS, or (iii) use or ship any materials bearing the TRADEMARK outside of the TERRITORY, without the prior written approval of Producer.

(h) Producer may, by its own initiative and under its own responsibility for compliance with the provisions of this agreement, contract to a third-party of its trust the right to produce THE PRODUCTS provided Producer guarantees the same quality and service standards (packaging, quality of the liquid, compliance to regulations and law requirements).

7. MEETINGS AND REPORTS

Planning Meetings. Importer shall include the Brand Manager in any internal or agency strategic planning meetings at which Importer knows that there will be discussed any significant strategic issues relating to THE PRODUCTS.

(a) Reports. Importer shall submit to Producer.

(i) Quarterly statements showing shipments to wholesalers by market;

(ii) Within sixty (60) days after the end of each calendar quarter reports detailing the amount and destination of expenditures on advertising and marketing.

(iii) Such other figures and marketing information as Producer may reasonably require in writing to judge the progress and the standing of THE PRODUCTS in the TERRITORY.

(iv) Brand Manager's monthly report.

(b) Work with Sales Personnel. Importer acknowledges the importance of allowing the Brand Manager to work with distributors' sales representatives both with regard to the possibility of focusing salespeople attention on THE PRODUCTS for at least one full day periodically, make them aware of the sales potential of THE PRODUCTS, and provide them with some education regarding the cultural heritage and the use of THE PRODUCTS. Importer shall select the key states in which it wants to concentrate its marketing and promotional activities and Importer will make arrangements with distributors for the Brand Manager to work with sales people and to meet sales and marketing managers of distributors in such selected States,

8. MARKETING AND AMP

(a) By September 30 of each calendar year, commencing with 2005, Importer shall produce a preliminary annual long-term strategic plan for the years remaining in the INITIAL or RENEWAL TERM and a full annual marketing plan for THE PRODUCTS for the next calendar year. Overall strategic guidelines will be provided by Producer which shall be incorporated in these plans. The strategic plans will contain a vision of future market growth potential for the TERRITORY and THE PRODUCTS and will include a consideration of alternative strategies for achieving long-term objectives and the forecasts and projected increases provided by Importer. These plans will be presented for approval by Producer. The

7

aforementioned preliminary plans will generally include the items listed in Exhibit I and shall be revised, as necessary.

(b) Producer has the right to review and approve, prior to implementation of the plans or any deviations therefrom, the aforesaid strategic and marketing plans or to request reasonable changes to such plans. Once the strategic annual plan has been approved by Producer, implementation of such plan shall be left to Importer to fulfill in its discretion and judgment.

(c) Importer, upon Producer's request, shall periodically review with Producer the results and trends of the strategic and marketing plan elements referred to in Paragraph 1 hereof, the administration of this Contract and any other factors relating to the THE PRODUCTS. At least one meeting every six months to review the annual marketing plan shall take place at a mutually agreed location at which meeting Importer's senior marketing personnel and the BRAND MANAGER responsible for THE PRODUCTS shall be present.

(d) Importer shall provide to Producer: (i) all information reasonably required in Exhibit I or otherwise required in this Contract, and
(ii) any other information in Importer's possession reasonably requested by Producer that affects THE PRODUCTS, including, but not limited to, the strategic and marketing plans, financial and marketing information, sales results, market research and financial data related to the development of THE PRODUCTS or the development of the spirits market or the adult beverage market. However, Importer shall not be required to provide information to Producer if such provision of information would violate any federal, state or local law or if it would be unreasonably burdensome. Producer shall be permitted without Importer's approval to use all information received pursuant to this paragraph for its own purposes, in any country, including countries outside of the TERRITORY, without any payment from Producer to Importer, but always subject to the provisions of Paragraph 11 hereof.

(e) Any change that Importer shall desire to make to any product, labels, packaging, and/or designs of THE PRODUCTS, shall require the written consent of Producer prior to distribution or sale of such product except that Importer shall have the right to make any change mandated by a regulatory body in the TERRITORY.

(f) Importer and Producer shall consult with each other and shall have the opportunity to participate in discussions regarding the selection of, and changes in, the advertising, merchandising or promotional agencies working on THE PRODUCTS. However, the final decision with respect to any selection or changes shall be in Importer's sole and absolute discretion.

(g) Importer's and Producer's total AMP expenditures under this Contract for THE PRODUCTS shall be in no event less than the amounts as set forth on Exhibit III, to be spent in the TERRITORY pursuant to the approved marketing plan. Said AMP expenditures shall be made only for advertising, advertising production, agency fees, merchandising, publicity, Limoncello market research and trade and consumer promotions directed to the consumer. Importer shall send copies of invoices for all such expenditures to Producer not less than quarterly.

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(h) Producer acknowledges that THE PRODUCTS will be sold in combination promotions with Boru Vodka and Sea Wynde rum. Other combinations will be discussed with Producer before being introduced to the market.

9. TRADEMARK

(a) The appointment as per paragraph 2(a) shall include the permission granted by Producer to Importer to use the TRADEMARK free from any additional payment in the TERRITORY only in relation to the marketing, sales and promotion of THE PRODUCTS. Importer shall ensure that each reference to and use of the TRADEMARK by Importer is in a manner from time to time approved by Producer.

(b) The permission to use the TRADEMARK in the TERRITORY hereby granted shall not be capable of assignment by Importer and upon termination of this Contract all rights granted to Importer to use the TRADEMARK shall cease forthwith.

(c) Importer acknowledges the title of Producer to the TRADEMARK in the TERRITORY and elsewhere and agrees not to tamper with it or do any act which might invalidate such title or the registration of the TRADEMARK, nor do any act which might support any application to remove the TRADEMARK from the register nor assist any other person directly or indirectly in any such act.

(d) The goodwill arising from the permitted use of THE TRADEMARK by the Importer shall accrue to Producer.

(e) Importer undertakes not to use in its business any other TRADEMARK which is similar to, or substantially similar to, or so nearly resembles the Limoncello TRADEMARK as to cause deception or confusion.

(f) In the event that Importer learns of any infringement or threatened TRADE DRESS infringement of the TRADEMARK, or any common law passing-off by reason of imitations or otherwise, or that any third party alleges claim that the TRADEMARK is liable to cause deception or confusion to the public, Importer shall forthwith notify Producer giving particulars thereof and Importer will, at Producer's expense, provide all reasonable information and assistance to Producer in the event that Producer decides that proceeding should be commenced or defended. Any such proceedings shall be under the control and expense of Producer.

(g) The copyright in all brochures, pamphlets and material supplied by Producer to Importer and relating to THE PRODUCTS shall be and shall remain the property of Producer and Importer shall, upon termination of this Contract, return to Producer or dispose of as Producer shall direct at the cost of Producer, all samples supplied by Producer together with all such brochures and materials as aforesaid.

10. REASONABLE EFFORTS

(a) Importer undertakes to use its reasonable efforts (i) throughout the entire TERRITORY, and (ii) for each of THE PRODUCTS, in order to comply with the

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obligations assumed hereunder. For purposes hereof, "reasonable efforts" shall mean that Importer will use at least the same effort, diligence and attention to the distribution, sale and marketing of each of THE PRODUCTS and the goodwill and image thereof, as Importer uses in the distribution, sales, marketing and protection of its own brands in the TERRITORY, taking into account the different AMP levels applicable to each of THE PRODUCTS as provided in the strategic and annual marketing plans set forth in Exhibit I.

(b) If Producer believes Importer has failed to use reasonable efforts as required under Paragraph 10 (a) with respect to any of THE PRODUCTS, the parties shall discuss this matter in good faith and seek a mutually acceptable solution within a mutually agreed upon term which shall not exceed sixty (60) days. If agreement is not reached within the agreed upon term, the issue shall be submitted to arbitration.

(c) The parties hereby acknowledge that THE PRODUCTS are and will remain of a premium image and quality and positioning and agree to maintain THE PRODUCTS in those positions in pricing, image and communications to both trade and consumer, in the TERRITORY and in other markets. In the event a party desires to change the positioning of any of THE PRODUCTS, such party shall discuss such proposed change in positioning with the other party. If the parties cannot agree on such proposed change in positioning, the positioning of THE PRODUCTS will not be changed.

11. CONFIDENTIALITY

(a) Importer, and Producer agree to keep confidential, and not to disclose the contents of this Contract, and all PROPRIETARY INFORMATION related to it (including but not limited to information contained in the strategic or marketing plans), received or used under this Contract unless the disclosure of such information is required by the Government or the laws of any country, but always in accordance with written agreements containing the appropriate provisions to protect the confidentiality of the disclosure.

(b) Each party agrees to only disclose PROPRIETARY INFORMATION to any PERSON within the respective organizations who have a need to know such PROPRIETARY INFORMATION to perform their duties and responsibilities under this Contract.

(c) This confidentiality obligation shall continue for a minimum period of five (5) years after receipt of such PROPRIETARY INFORMATION or for a period of two (2) years after termination of this Contract, whichever occurs later.

(d) Notwithstanding the foregoing, Producer shall have no obligation to keep confidential:

(i) any information related to THE PRODUCTS other than PROPRIETARY INFORMATION of Importer, including but not limited to the manufacturing and marketing of THE PRODUCTS; or

(ii) any non-proprietary information provided to Producer pursuant to Exhibit I hereof.

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12. ASSIGNABILITY

(a) Based upon the consideration of the status of Importer's position as a major distributor of alcoholic beverages and of Producer's position as a major producer of alcoholic beverages, therefore it is strictly forbidden for Importer to transfer, allocate, or assign totally or partially, formally or informally, by operation of law or otherwise, or share with, any other PERSON any of the rights or obligations under this Contract without the prior written consent of Producer. Any such transfer, allocation or assignment without the prior written consent of Producer shall be deemed void. Notwithstanding the foregoing, Importer shall be permitted to assign this Agreement to any parent, subsidiary, sister or affiliated company, with the consent of Producer which shall not be unreasonably withheld.

(b) Producer may sublicense, transfer, allocate or assign in whole or in part its rights or obligations under this Contract to another PERSON without the prior written consent of Importer, provided, that such PERSON shall assume in writing all obligations with respect to and on behalf of Producer under this Contract and under any other related agreement if such PERSON is under CONTROL of Producer.

13. TERMINATION, RENEWAL AND DURATION

(a) This Contract shall come into effect upon the date of execution of this Contract by both parties and shall remain in full force until December 31, 2009, subject to the provisions of this Contract and the renewal and termination provisions specified herein. The contract will be automatically renewed for a period of:

(i) Three (3) years if PURCHASES of the Limoncello Product (excluding flavored brands) equal at least * 9 liter cases in the year 2009, or

(ii) Five (5) years if PURCHASES of the Limoncello Product (excluding flavored brands) equal at least * 9 liter Cases in the year 2009. If Importer's purchases of the Limoncello Products (excluding flavored brands) do not equal at least * 9 liter cases in the year 2009, in determining what course of action to pursue Producer will, among other things, consider the performance of the category in the TERRITORY.

(b) Except as provided in paragraph (a) herein, if either party does not provide the other party at least six months written notice of its intention to not renew this Contract upon the expiration of the INITIAL TERM, this Contract shall be automatically renewed for a further term of five years and shall continue to be renewed for further terms of five years unless and until one party gives to the other party such six months' prior written notice of its intention not to renew this Contract at the end of the current term. The parties shall negotiate in good faith at the beginning of each renewed term the levels of required AMP expenditure and the OPERATIONAL YEAR's sales for such renewed term, provided that, if such agreement is not reached within 60 days from the beginning of such renewed term, the parties shall agree to use the category growth rate; the category being defined as all flavored European cordials.

(c) Notwithstanding the foregoing, it remains understood that Producer shall not have the right to terminate this Contract upon expiration of the INITIAL TERM, or any subsequent RENEWAL TERM, if PURCHASES by Importer during the calendar

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year 2009 or any subsequent RENEWAL TERM, in the aggregate, equal or exceed the requirements for such OPERATIONAL YEARS as set forth above.

(d) In the event of default under this Contract, Producer and Importer shall have the right to terminate this Contract only through a notice of termination of the Contract to the defaulting party specifying the default. Before termination takes place, the defaulting party shall have thirty (30) days after receipt of the notice of termination to convince the non-defaulting party that a default has not occurred. If the non-defaulting party maintains after such thirty (30) day period that a default has occurred by means of a second notice of termination, then the defaulting party shall, from the receipt of the second notice of termination, have a right of correction, consisting of a period of sixty (60) days to remedy the stated default. If the non-defaulting party is convinced that the default has been cured, notices of termination shall be without effect. If the default is not cured within the sixty (60) day period, the notice of termination of this Contract shall become effective as of the end of the sixty (60) day period pursuant to a notice from the non-defaulting party to defaulting party (hereinafter "Effective Date of Termination"). Neither party shall have the right to exercise such right of correction more than twice during the INITIAL TERM, or any RENEWAL TERM.

(e) Producer and Importer are not by this Paragraph 13 waiving any right to damages arising from any breach of this Contract which rights are expressly reserved, provided that Importer shall have no right to claim damages in the event of a termination of this Contract by Producer pursuant to the provisions of Section 16 hereof.

14. EFFECT OF TERMINATION

(a) Following the effective date of any termination hereof, Importer shall cease marketing and selling THE PRODUCTS and cease all use of advertising, packaging, containers or labels bearing the TRADEMARK or DOMAIN NAMES used in connection therewith. Notwithstanding the foregoing, Importer shall have the right to use the TRADEMARK OR DOMAIN NAMES to sell any remaining inventory of THE PRODUCTS unless purchased by Producer pursuant to Paragraph 14(b) below.

(b) Any stocks of THE PRODUCTS and marketing and promotional materials relating thereto which shall remain in Importer's possession after the termination of this Contract shall, at Producer's option, be sold by Importer to Producer, or to a third party designated by Producer, at Importer's LAID-IN-COST.

(c) A waiver by either party of any breach of any provision of this Contract will not be deemed to be a waiver of a subsequent breach thereof.

(d) It is understood that in the event of termination of this Contract for any reason, both Parties will continue to be responsible for all obligations which may have occurred up to, including and following the date of termination.

(e) In case of expiration or rightful termination of this Contract, Importer expressly waives any claim to past, present or future rights to the goodwill or to any other right that under any law or cause may be granted for having carried out the distribution, sale and marketing related to this Contract during its effectiveness.

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(f) Importer shall not, during the six (6) month term prior to the expiration of the TERM of this Contract, order or purchase quantities of THE PRODUCTS in excess of expected market demand (which shall be consistent with the past and current purchasing history of THE PRODUCTS).

(g) Importer acknowledges that, as of the Effective Date of Termination of this Contract, Importer's failure to cease all use of the TRADEMARK may result in immediate and irreparable harm to Producer and/or to the rights of any licensee or distributor appointed by Producer. Importer acknowledges and admits that damages may not constitute adequate relief for such failure to cease all use of the TRADEMARK and Importer agrees in the event of such failure Producer shall be entitled to relief by way of temporary and permanent injunctions and such other further relief as any court with jurisdiction may deem just and proper and any preliminary injunction shall not require the placing of a bond by Producer.

(h) In the event of termination, or at the expiration of this Contract, Importer agrees that Producer, or its designee, may "use-up" any labels or bottles that contain Importer's name as the importer of THE PRODUCTS and Importer agrees that it will sign a written document agreeing to such "use-up" if required by any governmental authority, provided Importer has been fully reimbursed for all outstanding payables due from Producer.

15. REPRESENTATIONS BY THE PARTIES

(a) Notwithstanding any other provision of this Contract, Importer represents and warrants that Importer shall abide by the following:

(i) not to produce, distribute, license or otherwise profit from lemon liqueur other than THE PRODUCTS, in the TERRITORY.

(ii) not to challenge, directly or indirectly, in any country of the world, Producer's sole and exclusive ownership of the TRADEMARK and any variations or modifications thereof, as well as the goodwill symbolized by such TRADEMARK.

(b) Importer represents and warrants that THE PRODUCTS shall be warehoused or shipped in compliance with the reasonable quality standards approved by Producer; while under its control and

(c) Importer represents and warrants that it or its agents have and will maintain and update all licenses necessary to distribute THE PRODUCTS, and will continue to be in compliance in all material respects with and in lawful possession of all licenses, permits, approvals, consents and registrations required in order for Importer to comply with all of its obligations under this Contract. Should such licenses not be updated or maintained, this Contract may be cancelled by Producer pursuant to the terms of Paragraph 13(d).

(d) Without prejudice to any other representation and warranty made by Producer in this Contract, Producer represents and warrants that THE PRODUCTS shall be of good and merchantable quality and fit for the purpose intended when delivered to Importer, including but not limited to, produced and labeled in compliance with all laws and regulations from time to time in force in the TERRITORY, packed in sealed, clean and undamaged cases, with undamaged packaging and TRADE DRESS.

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(e) The execution of this Agreement and the consummation of the transactions contemplated by this Agreement will not act as a breach of any agreement or understanding to which Producer is a Party.

(f) Producer has the right to designate and appoint the Importer as the exclusive distributor of THE PRODUCTS in the TERRITORY. Producer further warrants that no distribution rights to any of THE PRODUCTS are currently designated or granted to anyone else in the TERRITORY.

(g) Producer shall maintain an adequate inventory of THE PRODUCTS with which to supply Importer. Producer shall accept all orders reasonably submitted by Importer, with shipment to follow not later than thirty (30) days from receipt of an order unless excused by paragraph 18 below, or as otherwise agreed upon by the parties.

(h) Producer shall use all reasonable efforts to prevent the sale of unauthorized shipments of THE PRODUCTS in the TERRITORY by entities or persons other than Importer. In this regard, Producer shall not sell or otherwise transfer any of THE PRODUCTS to any distributor located outside the TERRITORY whom Producer knows, or has reason to believe, will, either directly or indirectly, sell or otherwise transfer THE PRODUCTS into the TERRITORY.

(i) Producer warrants that the shelf life of all THE PRODUCTS sold to Importer shall not be less than twelve (12) months provided THE PRODUCTS are properly handled, stored and shelved by Importer and its customers.

16. PERFORMANCE STANDARDS

It is understood that it is essential to Producer that Importer meet specified benchmarks in Importer's performance under this Contract. Producer may terminate the contract:

(a) If aggregate purchases for Limoncello for the three (3) years 2005, 2006 and 2007 do not equal at least * 9-liter cases.

(b) If Importer has not purchased a minimum of * cases of Limoncello in 2009.

(c) If any portion of a shortfall in PURCHASES or the failure of such PURCHASES to increase as required under this Contract is due to the inability of Producer to supply agreed upon quantities of THE PRODUCTS to Importer as provided in the marketing plan, the amount of such shortfall or failure to so increase that is attributable to Producer's inability to supply agreed amounts of THE PRODUCTS shall be deducted from minimum requirements set forth above in determining whether the performance standards are met.

17. DISTRIBUTION INDEMNITY

(a) Importer will indemnify, defend and otherwise hold Producer harmless against any claims, losses, damages, liability or expenses (including reasonable attorneys' fees) incurred by Producer arising out of third party claims relating to the marketing,

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promotion, sale or distribution of THE PRODUCTS except as provided for in Paragraph 17(b). Importer shall acquire and maintain at its sole cost and expense throughout the term of this Contract and any sell-off period, standard Product Liability Insurance. This insurance coverage shall provide protection of not less than five million dollars U.S. ($5,000,000) for each occurrence and Producer shall be named as an additional named insured.

Such insurance policies shall provide that they may not be cancelled or amended in a manner which restricts the existing coverage without at least thirty (30) days written notice to Producer.

(b) Producer will indemnify, defend and otherwise hold Importer harmless in the TERRITORY only as against any claims, losses, damages, liability or expenses (including reasonable attorneys' fees) incurred by Importer arising out of third party claims concerning compliance with United States laws and regulations (provided Importer has informed Producer of such regulatory requirements) or the quality or fitness for use of THE PRODUCTS produced, bottled and shipped directly to Importer by Producer, and provided that THE PRODUCTS have been warehoused by Importer and shipped in compliance with reasonable quality standards provided by Producer. Producer shall acquire and maintain at its sole cost and expense throughout the term of this Contract standard Product Liability Insurance from a reputable insurance company. This insurance coverage shall provide protection of not less than five million dollars U.S. ($5,000,000) for each occurrence and Importer shall be named as an additional named insured against any and all claims, demands, causes of action or damages, including reasonable attorney's fees, arising out of any alleged defects in THE PRODUCTS.

Such insurance policies shall provide that they may not be cancelled or amended in a manner which restricts the existing coverage without at least thirty (30) days written notice to both parties.

18. FORCE MAJEURE

Neither party shall be liable to the other for failure or delay in the performance of any of its obligations under this Contract for the time and to the extent such failure or delay, including a failure or delay caused by a shortage of supply of lemon, is caused by riots, civil commotion, wars, hostilities between nations, governmental laws, orders or regulations, embargoes, actions by the government or any agency thereof, acts of God, storms, fires, earthquakes, floods, accidents, strikes, sabotages, explosions, terrorist acts or other similar or different contingencies beyond the reasonable control of the affected party or parties.

19. APPLICABLE LAW AND ARBITRATION

The rights and obligations of the parties under this agreement shall not be governed by the provisions of the United Nations Convention on Contracts for the International Sale of Goods but instead shall be construed and enforced in accordance with the laws of Italy and the State of New York in the United States of America, as further specified below, without giving effect to principles of conflict of laws. In the event any disagreement or dispute between the parties arises under or out of this Agreement, such disagreement or dispute shall be submitted to Arbitration with Judicial Mediation Services, Inc. (a professional Arbitration service

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consisting of retired Federal and State judges ("JAMS")) if the Arbitration is to take place in the U.S., or the International Chamber of Commerce or any other mutually agreed upon dispute resolution service if the Arbitration is to take place in Italy. Any award made by JAMS, the International Chamber of Commerce or such other dispute resolution service as might be agreed upon shall be binding upon the parties. Arbitration shall be the exclusive remedy for breach of this Agreement by either party. The parties shall share equally all costs of Arbitration other than representation by counsel which shall be at each party's own expense. The party applying for Arbitration shall be obligated to invoke Arbitration proceedings in the other party's home country.

20. FURTHER ACTIONS

The parties agree to grant and formalize any document in Italian and English that may be necessary or desirable, from time to time, to comply with the intentions expressed in this Contract.

21. VERSIONS

This Contract has been drafted in English. As this Contract has been fully negotiated by the parties and they have been represented by counsel during such negotiations, this Contract shall be deemed to have been drafted by both parties and no provision shall be interpreted as against either party merely as a result of the party responsible for the drafting of this Contract.

22. SEVERABILITY

If any term or other provision of this Contract is invalid, illegal or incapable of being enforced by any rule of law or public policy or which if enforced would jeopardize the TRADEMARK, all other conditions and provisions of this Contract shall nevertheless remain in full force and effect so long as the legal substance of the transactions contemplated hereby is not affected in any substantially adverse manner to either party. Upon such determination that any term or other provision is invalid, illegal, or incapable of being enforced or which if enforced would jeopardize the TRADEMARK, the parties hereto shall negotiate in good faith to modify this Contract so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.

23. NOTICES

Producer and Importer agree that all notices made under this Contract shall only be deemed sufficient if in writing, in English, and addressed to the Chairman or President of Importer and to the President of Producer as required in this Paragraph. Any communications or notices that are not communicated or received pursuant to this paragraph shall not be deemed to be proper notices under this Contract. Notices shall be sent to the addresses set forth on the attached Exhibit II.

If any of these notification addresses is changed, then notice of such change must be sent to the other party. Otherwise, all notices sent to the above addresses shall be valid.

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Notifications pursuant to this Contract shall be valid only if signed by or sent to and received by the above officers of the parties at the appropriate addresses by certified mail (return receipt requested), by facsimile, with confirmation, or by Federal Express or other similar courier.

24. BINDING PROVISIONS

During the term of this Contract and thereafter as provided for in this Contract, all obligations shall apply to and be binding on the parties hereto, their successors, assigns, transferees, as well as their agents, officers, directors and employees, providing that such succession, assignment or transfer is not in contradiction to the provisions of Paragraph 12 of this Contract.

25. AUDIT RIGHTS

Where Importer is required to provide to Producer pursuant to the terms of this Contract sales data or expenditures or other financial information, Producer shall have the right at its expense and sole discretion to conduct an independent audit of Importer with respect to such sales or expenditures or other financial information, for a period of one (1) year after the date of such statement. However if such audit indicates an error to Producer's detriment of five percent (5%) or more such audit shall be at Importer's sole expense.

26. JOINT VENTURE

Nothing contained herein shall be construed to place the parties in the relationship of partners, joint venturers, agents or employees of the other. Producer and Importer shall have no power to obligate or bind each other in any manner whatsoever, except as otherwise expressly provided herein.

27. EXHIBITS

Exhibits I through IV attached hereto shall, for all purposes, be deemed to be and by this reference are made part of this Contract.

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28. ENTIRE AGREEMENT.

This agreement represents the entire agreement between the parties, supersedes all prior oral or written agreements or understandings, and shall not be changed except by a further written agreement or a written amendment to this Contract executed by both parties.

IN WITNESS WHEREOF, the parties hereto have caused this Contract to be Executed

I.L.A.R. S.p.A.

By: /s/ Virgilio Pallini
    ------------------------------------
    VIRGILIO PALLINI - President

CASTLE BRANDS (USA) CORP.

By: /s/ Mark Andrews
    ------------------------------------
    MARK ANDREWS - President

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EXHIBIT I
PLANNING

The strategic plan shall include information of the type outlined below, but the plan shall not be unreasonably burdensome to Importer:

1) SWOT (strengths, weaknesses, opportunities, threats) analysis and evaluation of competition.

2) Analysis of strategic options.

3) Definition of the current and long-term strategic role of each TRADEMARK, pricing needs stated for each current and future product. Potential for accelerating and maximizing growth.

4) Strategies for building and maximizing long-term brand equity.

5) Forecasts of key trends and market development.

6) Analysis of opportunities for new products and line extensions.

7) Portfolio priority evaluation.

8) Projections of market share and volumes for each brand of THE PRODUCTS.

The annual marketing plan shall be produced on a regional and consolidated basis in the TERRITORY and shall include information of the type outlined below, but such marketing plan should also not be unreasonably burdensome to Importer:

9) An analysis of the total estimated market for spirits and adult beverages including volumes and trends.

10) Analysis of the status of each brand of THE PRODUCTS in terms of estimated market share and distribution growth, comparing each of THE PRODUCTS performance with key competitors' brands to the extent that information regarding competitors' brands is known to Importer.

11) Brand positioning as determined by Producer and Importer for each brand of THE PRODUCTS. Analysis of consumer target markets and source of business including relevant demographic data.

12) Analysis of current price position of THE PRODUCTS and key competitors indicating with a matrix, the volume achieved by such Limoncello (and lemon flavored liqueurs in general) brands and their competitive set. Competitive set is defined and determined by Producer after consultation with Importer.

13) Quantitative SHIPMENTS and depletion data, to the extent available, for each brand of THE PRODUCTS compared to prior years and the strategic plan.

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14) Analysis of AMP expenditure by category of expense and compared to prior year and contractual requirements.

15) SWOT analysis for each brand of THE PRODUCTS with evaluation of key opportunities.

16) Proposed marketing strategies including, but not limited to:

Positioning
Pricing
Target groups
Source of business
Advertising
Promotion
Merchandising
Distribution
Event Marketing
Public Relations
Direct Marketing
Interactive Marketing

17) Additionally, plans will include proposed strategies for areas of critical importance to Limoncello (and lemon flavored liqueurs in general) brands including:

Ethnic marketing            Lifestyle marketing
Tourism plans
Super premium development   New drinks development

18) Schedules with monthly shipments forecasts.

19) Annual projected schedule of AMP activities by month.

20) Importer shall contract with a Tracking services, if available, to provide regular quarterly data to track key brand equity measures, including brand awareness, advertising recall, penetration, repeat purchase, key attribute ratings etc. This data will be available nationally and regionally and will be the key means by which equity building performance is measured. The cost of such data preparation will be charged to the AMP budget.

The foregoing strategic and marketing plans shall take into account the aspects of THE PRODUCTS as directed and defined by Producer which include, but are not limited to the following:

a) THE PRODUCTS' appeal to consumers with an active and sociable lifestyle;

b) THE PRODUCTS are perceived to be of high quality and a good value;

c) All advertising and promotions for THE PRODUCTS must reflect the brands, premium status and quality and be unique to Producer.

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EXHIBIT II

TERRITORY, DISTRIBUTED PRODUCTS, NOTICES

1) TERRITORY:

The fifty (50) States of the United States of America and the District of Columbia, which shall include military bases and the territories and possessions of the United States of America or the overseas Commonwealths of the United States of America or the Commonwealth of Puerto Rico, excluding duty free and ships chandlers sales which will be included in a separate agreement between the parties.

2) THE PRODUCTS:

It is understood by the parties that, with respect to THE PRODUCTS, these products are bottled by Producer and are sold to Importer as finished products. Therefore, notwithstanding any other provision of this Contract, Importer is not granted a license to manufacture, bottle, process, prepare, filter or take any other action to produce, modify, rebottle, repackage or in any way affect these finished products unless authorized by Producer in writing. These finished products must be sold only as supplied to Importer pursuant to this Contract.

Prices for bottled in Rome, Italy shall be as follows:

                                             CASEPRICE EX ROME DISTILLERY
                                             ----------------------------
Limoncello (and flavors)   12-750ML   USD * for 2004 and USD * for 2005
Limoncello (and flavors)   120-50ML   USD * for 2004 and USD * for 2005

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NOTICES

3) Notices are to be sent to the following addresses:

To Producer:    Virgilio Pallini
                ILAR. S.p.A.
                Via Tiburtina 1314
                Rome, Italy 00131

with Copy to:   William Schreiber
                c/o Wormser, Kiely, Galef & Jacobs LLP
                825 Third Avenue, 26th Floor
                New York, NY 10022

To Importer:    Mark Andrews
                Castle Brands (USA) Corp.
                570 Lexington Avenue, 29th Floor
                New York, NY 10022

with copy to:   E. Vincent O'Brien
                c/o Nixon Peabody LLP
                437 Madison Avenue
                New York, NY 10022

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EXHIBIT III

AMP EXPENDITURES

Producer

$15 per 9-liter case for all cases of THE PRODUCTS in excess of 7,000 cases per annum

Importer

An amount per 9-liter case to be applied to cost of Importer's sales force (as such costs are reasonably allocable to THE PRODUCTS) and an amount per 9-liter case to be applied to advertising and promotional expenses as set forth below.

                                                 Cost per case of
                           Cost per Case of       Advertising and
Annual Case Purchases   Importer's Sales Force       Promotion
---------------------   ----------------------   ----------------
Up to 30,000                      *                      *
30,001 to 50,000                  *                      *
50,001 or more                    *                      *

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EXHIBIT IV

APPROVED DISTRIBUTED TRADEMARK

The following TRADEMARK only as used on THE PRODUCTS:

PALLINI (THE "TRADEMARK")

Producer represents and warrants that it has all rights, title and interest in the TERRITORY and worldwide to the above TRADEMARK, and other trademarks used in connection of its domestic and international activity, copyrights, labels, designs, recipes, slogans (excluding the bottle shape and the production process), together with the goodwill associated therewith. Importer acknowledges Producer's representation that the "Pallini" TRADEMARK is registered in the U.S. under number 2,450,341 and that "Pallini Limoncello" is not registered.

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Exhibit 10.8

NOTE: PORTIONS OF THIS EXHIBIT ARE THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST BY THE REGISTRANT TO THE SECURITIES AND EXCHANGE COMMISSION. SUCH PORTIONS HAVE BEEN REDACTED AND ARE MARKED WITH A "[*]" IN PLACE OF THE REDACTED LANGUAGE.

SUPPLY AGREEMENT

This Agreement is dated as of January 1, 2005, between

IRISH DISTILLERS LIMITED an Irish company having its registered office at Bow Street Distillery, Smithfield, Dublin 7 (hereinafter called Irish Distillers);

CASTLE BRANDS SPIRITS GROUP LIMITED with its principal office at Victoria House, Haddington Road, Dublin 2 and CASTLE BRANDS (USA) CORP., a Delaware corporation with its principal office at 570 Lexington Avenue, 29th Floor, New York, NY 10022 (hereinafter collectively called CASTLE BRANDS); and

CASTLE BRANDS INC., a Delaware corporation with its principal office at 570 Lexington Avenue, 29th Floor, New York, NY 10022 (hereinafter called the GUARANTOR).

WHEREAS, Irish Distillers is in the business of distilling and manufacturing Irish whiskey;

WHEREAS, Castle Brands is in the business of selling and distributing various Irish whiskeys and liquers;

WHEREAS, Castle Brands wishes to provide for a regular supply of Irish whiskey; and

WHEREAS, Irish Distillers is willing to provide such supply of whiskey to Castle Brands for certain brands specified in Exhibit 1.

In consideration of the mutual covenants, conditions and other consideration hereinafter provided for, the receipt and sufficiency of which is irrevocably acknowledged, IT IS AGREED as follows:

1. TERM

This Agreement shall have effect from 1 January 2005 and be for an initial term of ten (10) calendar years commencing on the date hereof and shall automatically renew thereafter for successive five (5) calendar year renewal terms. Irish Distillers may terminate this Agreement either at the end of its initial term or any time during subsequent renewal terms provided that Irish Distillers gives Castle Brands not less than two (2) calendar years' prior notice of such termination.

2. PROCEDURE FOR SUPPLYING WHISKEY SPIRITS

2.1. Castle Brands will notify Irish Distillers by March 31, 2005 and by January 31 of each calendar year thereafter as to the quantity of whiskey in litres of pure alcohol (LPAs) required during that year ("the Specified Amount") for each Brand. Unless agreed to by Irish Distillers, these annual Specified Amounts will not exceed the quantities opposite each Brand shown on Exhibit I. If the quantity of whiskey depleted by Castle Brands throughout any given year ("the Actual Amount") for any given Brand does not aggregate to the Specified Amount for that Brand, Irish Distillers shall, at the end of each year, invoice Castle Brands for


the shortfall between the Actual Amount and the Specified Amount. The shortfall will be stored by Irish Distillers for collection by Castle Brands and Castle Brands will be invoiced monthly for the storage costs accrued at Irish Distillers' then current rates for such storage.

2.2. Irish Distillers shall supply the whiskey for the Brands in accordance with the samples agreed by the parties. In respect of Knappogue Single Malt only, Irish Distillers agrees to make a reasonably sufficient number of casks available for sampling by an expert designated by Castle Brands to result in the selection of the Specified Amount. Any incremental cost incurred by Irish Distillers in connection with facilitating the selection process will be billed to, and paid by, Castle Brands.

2.3. The price per LPA shall be as specified for each Brand listed in Exhibit 2 and will be increased by the percentage increase in the Irish Consumer Price Index for subsequent years or such other index as the parties may agree in writing during the term of this Agreement.

2.4. BRANDS:- means those brands listed in Exhibit 1 and such other brand names as shall be agreed by Irish Distillers from time to time.

2.5. ORDER TIME:- the lead time for having each whiskey consignment available for collection shall be 45 days from receipt of order unless otherwise agreed by Irish Distillers.

2.6. DELIVERY:- Castle Brands shall be responsible for all transport, tax and other collection costs from Irish Distillers' properties in Fox and Geese in Dublin, Midleton in Cork and Bushmills in Antrim.

3. PAYMENT

Castle Brands shall pay in full for each order within 30 days of the invoice date which invoice date shall be the date of collection of the whiskey consignment from Irish Distillers' properties.

4. TITLE

Irish Distillers represents and warrants that the whiskey purchased hereunder shall, when the purchase price is paid in full by Castle Brands, be free and clear of all liens, encumbrances, mortgages and charges. Title to the various quantities of whiskey purchased hereunder shall irrevocably vest in Castle Brands upon transfer of funds representing the applicable purchase price, provided that Irish Distillers shall maintain and keep safe the casks and whiskey so purchased until the collection date.

5. FORCE MAJEURE

Notwithstanding any other provision of this Agreement, neither party shall be liable to the other for any default hereunder where the same is due to causes beyond the control of

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the party in default, including without limitation, fire, flood, act of God, strikes, lockouts, stoppage of work, trade disputes and any act or omission outside the party's control, provided that any party seeking to rely on this provision shall promptly give written notice to the other of such cause.

6. USE/CONFIDENTIALITY

6.1. Castle Brands shall only sell whiskey supplied by Irish Distillers pursuant to this Agreement as premium brand Irish whiskey under the brand names previously approved in writing by Irish Distillers and must use all whiskey supplied hereunder for approved brands only.

6.2. During the term of this Agreement and at any time up to two years following termination, Irish Distillers and Castle Brands agree not to disclose to any third party any information relating to this Agreement, except insofar as may be necessary for the proper performance of its obligations under this Agreement or to the extent that such information is generally available to the public or disclosure of such information is required by law or any court of competent jurisdiction or as provided below, and will ensure that its employees are aware of and comply with this clause.

6.3. Irish Distillers agrees that Castle Brands and its designees will have the right to view the casks owned under clause 2.1 hereof by Castle Brands upon reasonable notice and, so far as possible, said casks will be stored together in an area reasonably accessible for viewing. Castle Brands will pay Irish Distillers' usual customary storage charges in respect of these casks.

7. TRADEMARKS

Castle Brands shall not use the name Irish Distillers in connection with any marketing or promotion of the Brands or in any manner without the prior written approval of Irish Distillers.

8. AGENCY

Nothing in this Agreement shall constitute either party as agent for the other or a joint venture or partnership among the parties, or authorize either party to pledge the other's credit or contract any liabilities on the other party's behalf.

9. ASSIGNMENT

Neither Castle Brands nor Irish Distillers shall be entitled to assign, subcontract, transfer, charge or otherwise dispose of any of its rights or the performance of its obligations under this Agreement except with the prior written consent of the other.

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10. NOTICES

10.1. Any notice required to be given hereunder shall be given in writing, by personal delivery, by post or by facsimile transmission, and shall be deemed to be served:

10.1.1. if given by post, 10 days after the said notice has been posted by first class registered mail (or the equivalent thereof) addressed to the other party at its address appearing herein or at such other address as either party may from time to time notify to the other as the address for the service of notice, and

10.1.2. if given by personal delivery or facsimile transmission at the time of delivery or transmission.

10.2. All notices under this Agreement to Castle Brands shall be deemed to be delivered, if delivered in accordance with clause 10.1, to Castle Brands (USA) Corp.

11. ENTIRE AGREEMENT

This Agreement constitutes the entire Agreement between the parties in connection with the subject matter of this Agreement and supersedes all previous correspondence or negotiations between the parties relative hereto.

12. COUNTERPARTS

This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts each of which when executed and delivered shall constitute an original and all such counterparts together constituting but one and the same instrument.

13. WAIVER OF BREACH

A waiver by any party of any breach by the other party hereto of any of the terms, provisions or conditions of this Agreement or the acquiescence of any party in any act (whether commission or omission) which but for the acquiescence would be a breach as aforesaid shall not constitute a general waiver of such term, provision or condition or an acquiescence to any subsequent act contrary thereto.

14. VARIATION

No variation of this Agreement shall be valid unless it is in writing and signed by or on behalf of each of the parties hereto.

15. SEVERABILITY

Each of the provisions of this Agreement is separate and severable and enforceable accordingly and if at any time any provision is adjudged by any court of competent

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jurisdiction to be void or unenforceable the validity, legality and enforceability of the remaining provisions hereof and of that provision in any other jurisdiction shall not in any way be affected or impaired thereby.

16. BINDING AGREEMENT

This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.

17. FURTHER ASSURANCES

Each of the parties hereto agree to take any and all such further action and to execute, acknowledge and deliver such instruments, documents and other agreements as the other party may reasonably request to effectuate, consummate or confirm the transactions contemplated hereby.

18. GOVERNING LAW

This Agreement shall be interpreted in accordance with the laws of Ireland.

19. JURISDICTION

It is irrevocably agreed that the Irish courts are to have jurisdiction to settle any disputes which may arise out of or in connection with this Agreement or its performance and accordingly that any suit, action or proceedings so arising may be brought in such courts. It is further agreed that nothing in this clause will limit a party's right to take any suit, action or proceedings ("Proceedings") against the other in the United States or in any other court of competent jurisdiction if such party is prevented by applicable law or procedure from initiating Proceedings in the Irish courts, nor will the taking of Proceedings in one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not.

20. COMPLIANCE WITH APPLICABLE LAWS

Each party hereby warrants that the supply of whiskey by Irish Distillers pursuant to this Agreement and the terms of this Agreement do not breach the laws of the country of its residence and hereby agrees that in the event that any such breach does occur which causes any loss, damage, cost or expense to the other party or the non-fulfillment of the terms of this Agreement, that the party the laws of whose residence are breached hereby shall be liable to and shall indemnify and keep indemnified the other party for any loss, cost, damage or expense which it thereby incurs and hereby further acknowledges that in the event that any term of this Agreement or the performance of the terms thereof causes any such breach of such local law that the other party shall have the right to terminate this Agreement following notice of intention to do so and the failure of the parties to agree to an amendment hereof to avoid such breach, consent to which amendment not to be unreasonably withheld by either party.

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21. GUARANTEE

Notwithstanding any other provision including the termination of this Agreement, the Guarantor guarantees the prompt performance of Castle Brands of each and every obligation hereunder.

22. TERMINATION AND CONSEQUENCES OF TERMINATION

22.1. In addition to the provisions providing for termination of this Agreement at the end of the initial term or during any renewal terms, Irish Distillers will be entitled to terminate this Agreement by giving not less than 30 days' written notice to Castle Brands if

22.1.1. there is at any time a material change in the control of Castle Brands;

22.1.2. Castle Brands at any time challenges the validity of any intellectual property right of Irish Distillers.

22.1.3. Castle Brands uses the whiskey supplied by Irish Distillers other than for the sale of brands approved by Irish Distillers.

22.2. In addition to the provisions providing for termination of this Agreement at the end of the initial term or during any renewal terms, either Castle Brands or Irish Distillers will be entitled to terminate this Agreement by giving not less than 30 days' written notice to the other if:

22.2.1. the other party commits any material breach of any of the provisions of this Agreement and, in the case of a breach capable of remedy, fails to remedy the same within 30 days after receipt of a written notice giving full particulars of the breach and requiring it to be remedied;

22.2.2. a receiver, liquidator, administrator or analogous person is appointed over any of the property or assets of the other party or Guarantor;

22.2.3. the other party or Guarantor makes any voluntary arrangement with its creditors or becomes subject to an administration order;

22.2.4. the other party or Guarantor goes into liquidation (except for the purposes of amalgamation or reconstruction and in such manner that the company resulting therefrom effectively agrees to be bound by or assume the obligations imposed on that other party under this Agreement);

22.2.5. any analogous procedure to any of the foregoing under the law of any jurisdiction occurs in relation to the other party; or

22.2.6. the other party or the Guarantor ceases, or threatens to cease, to carry on business.

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For the purposes of clause 22.1 above, a breach will be considered capable of remedy if the party in breach can comply with the provision in question in all respects other than as to the time of performance. The rights to terminate this Agreement given by this Section 22 will be without prejudice to any other right or remedy of either party in respect of the breach concerned (if any) or any other breach.

22.3. Upon the termination of this Agreement for any reason:

22.3.1. Castle Brands may sell or dispose of all stocks of whiskey which it has ordered hereunder prior to the date of termination;

22.3.2. At completion of 22.3.1 above, Castle Brands shall at its own expense within 30 days send to Irish Distillers or otherwise dispose of in accordance with the directions of Irish Distillers all advertising, promotional or sales material relating specifically to the whiskey supplied by Irish Distillers then in the possession of Castle Brands or ordered by Castle Brands;

22.3.3. outstanding unpaid invoices rendered by Irish Distillers in respect of the whiskey and liqueurs supplied will become immediately payable by Castle Brands and invoices in respect of whiskey ordered prior to termination but for which an invoice has not been submitted will be payable immediately upon submission of the invoice and delivery of the whiskey to Castle Brands; and

22.3.4. At completion of 22.3.1 above, Castle Brands shall cease to promote, market or advertise the whiskey supplied or to make any use of the trademarks or other intellectual property rights of Irish Distillers; provided Castle Brands may make references to the fact that it had previously purchased whiskey from Irish Distillers.

Upon the termination of this Agreement, the provisions of Sections 3, 4, 5, 6, 18, 19, 20 and 21 shall survive.

IN WITNESS WHEREOF, this Agreement has been executed by a duly authorized officer of Irish Distillers, Castle Brands and Castle Brands Inc the day and year first herein written.

IRISH DISTILLERS LIMITED

By: /s/ Savinel Philippe
    ------------------------------------
Name: Savinel Philippe
Title: CEO

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SIGNED in the presence of:

/s/ Maurice Smythe
-------------------------------------
Witness
Production Director

CASTLE BRANDS INC.

By: /s/ Mark Andrews
    ------------------------------------
Name: Mark Andrews
Title: Chairman and CEO

SIGNED in the presence of:

/s/ John E. Schmeltzer, III
-------------------------------------
Witness

John E. Schmeltzer, III
1133 Avenue of the Americas
New York, New York 10036
Attorney

CASTLE BRANDS SPIRITS GROUP LIMITED

By: /s/ Patrick Rigney
    ------------------------------------
Name: Patrick Rigney
Title: Managing Director

SIGNED in the presence of:

/s/ Tom O'Connor
-------------------------------------
Witness

Tom O'Connor
Operations Manager

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CASTLE BRANDS (USA) CORP.

By: /s/ Mark Andrews
    ------------------------------------
Name: Mark Andrews
Title: Chairman and CEO

SIGNED in the presence of:

/s/ John E. Schmeltzer, III
-------------------------------------
Witness

John E. Schmeltzer, III
1133 Avenue of the Americas
New York, New York 10036
Attorney

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EXHIBIT 1

                            Brands/Quantities
       -----------------------------------------------------------
                     Clontarf                      Knappogue
       -----------------------------------   ---------------------
Year   Black Label   Reserve   Single Malt   Single Malt   Premium
----   -----------   -------   -----------   -----------   -------
2005       *            *           *             *           *
2006       *            *           *             *           *
2007       *            *           *             *           *
2008       *            *           *             *           *
2009       *            *           *             *           *
2010       *            *           *             *           *
2011       *            *           *             *           *
2012       *            *           *             *           *
2013       *            *           *             *           *
2014       *            *           *             *           *

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EXHIBIT 2

PRICING

CLONTARF - YEAR 2005   EURO PER L.ALC
--------------------   --------------
Clontarf Black Label        *
Clontarf Reserve            *
Clontarf Malt               *

KNAPPOGUE -- YEAR 2005   EURO PER L.ALC
----------------------   --------------
Knappogue Premium           *
Knappogue Malt              *

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Exhibit 10.9

AMENDMENT NO. 1 TO SUPPLY AGREEMENT

Amendment No. 1, dated as of September 20, 2005, to the Supply Agreement, dated as of January 1, 2005, among Irish Distillers Limited, Castle Brands Spirits Group Limited, Castle Brands (USA) Corp., and Castle Brands Inc. ("Supply Agreement").

WHEREAS, the parties desire to amend the Supply Agreement in accordance with the terms set forth below; and

WHEREAS, Irish Distillers Limited is willing to provide certain consents in connection with Castle Brands Inc.'s planned initial public offering;

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1. Section 1 of the Supply Agreement is amended by substituting the following language:

"1. Term

This Agreement shall have effect from 1 January 2005 and initially be for a term of ten (10) calendar years commencing from the date hereof. At each anniversary of the effective date, an estimate for whiskey needs for another year will be added to the bottom of the schedule on Exhibit 1. Unless Irish Distillers and Castle Brands cannot agree on the quantities for such additional year, the term of this Agreement will automatically be extended for one year. Irish Distiller may terminate this Agreement at the end of its term."

2. Sections 22.1 and 22.2 of the Supply Agreement are amended by replacing the words "initial term or during any renewal terms" with the word "term" and section 22.1.1 will be eliminated.

3. In connection with Castle Bands Inc.'s initial public offering, Irish Distillers agrees to the filing of the Supply Agreement and the inclusion of additional related information and disclosures, including the proposed disclosure attached hereto as Exhibit A (or substantially similar disclosure), in the prospectus and the Registration Statement on Form S-1 to be filed by Castle Brands Inc. with the Securities and Exchange Commission and consents to such disclosure (or substantially similar disclosure) in periodic reports on Forms 10-K and 10-Q, and any other documents filed or furnished to the Securities and Exchange Commission, provided that the consents granted in this paragraph 3 will cease to apply if Castle Brands Inc.'s registration has not become effective by June 1, 2006.

4. This Amendment shall be governed, construed and interpreted in accordance with the laws of Ireland.

5. Capitalized terms used herein, unless otherwise defined herein, shall have the meaning set forth in the Supply Agreement.


6. This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, and all of which together shall constitute one and the same instrument.

7. Except as specifically amended herein, the Supply Agreement shall remain in full force and effect in accordance with its terms.

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first written above.

SIGNED in the presence of:          IRISH DISTILLERS LIMITED



/s/ Paula Somers                    By: /s/ Paul Duffy
--------------------------             ------------------------------
Witness                             Name:  Paul Duffy
5 Greenlea Park                     Title: CEO
Perenure, Dublin 6W


SIGNED in the presence of:          CASTLE BRANDS INC.


/s/ John E. Schmeltzer III          By: /s/ Mark Andrews
--------------------------             ------------------------------
Witness                             Name:  Mark Andrews
                                    Title:  Chairman and CEO


SIGNED in the presence of:          CASTLE BRANDS SPIRITS GROUP LIMITED


/s/ Amelia Gary                     By: /s/ Keith Bellinger
--------------------------             ------------------------------
Witness                             Name:  Keith Bellinger
                                    Title:  Director and COO


SIGNED in the presence of:          CASTLE BRANDS (USA) CORP.


/s/ John E. Schmeltzer III          By: /s/ Mark Andrews
--------------------------             ------------------------------
Witness                             Name:  Mark Andrews
                                    Title:  Chairman and CEO


EXHIBIT A

KNAPPOGUE CASTLE AND CLONTARF IRISH WHISKEYS

In 2005, we entered into a long-term supply agreement with Irish Distillers, a subsidiary of Pernod Ricard, pursuant to which it has agreed to supply us with the aged single malt and grain whiskeys used in our Knappogue Castle Irish single malt whiskey, the Knappogue Castle blend and all three of our Clontarf Irish whiskey products through December 31, 2014. The supply agreement includes a ten-year estimate of our supply needs for these five products, each of which is produced to a flavor profile proscribed by us. At the beginning of each year of the agreement, we must nominate our specific supply needs for each product for that year, which amounts we are then obligated to purchase over the course of that year. The agreement provides for fixed prices for the whiskeys used in each product, with escalations based on certain cost increases. The whiskies for the five products are then sent to Terra Limited where they are bottled in bottles designed by us and packaged for shipment.


Exhibit 10.10

NOTE: PORTIONS OF THIS EXHIBIT ARE THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST BY THE REGISTRANT TO THE SECURITIES AND EXCHANGE COMMISSION. SUCH PORTIONS HAVE BEEN REDACTED AND ARE MARKED WITH A "[*]" IN PLACE OF THE REDACTED LANGUAGE.

AMENDED AND RESTATED
WORLDWIDE DISTRIBUTION AGREEMENT

AGREEMENT made as of the 16th day of April, 2001 (the "Agreement"), by and between Great Spirits Company LLC (hereinafter referred to as "Great Spirits"), a Delaware limited liability company having its principal place of business at 1331 Lamar, Suite 1125, Houston, Texas 77010, USA, and Gaelic Heritage Corporation Limited (hereinafter referred to as the "Supplier"), an Irish corporation having its principal place of business at Institute Road, Bailieboro, Co. Cavan, Republic of Ireland.

1. Definitions: when used in this Agreement:

(a) "Products" shall mean all items sold under the name "Celtic Crossing" including the current liqueur and any items subsequently added pursuant to Paragraph 10(b) below.

(b) "Old Territory" shall mean the United States of America, Canada, Mexico, Puerto Rico, the Caribbean, including all islands situated between North and South America, and all United States territories and possessions, including duty free shops located therein, U.S. military bases (wherever located), and flights and cruises originating in any of the above-mentioned places.

(c) "New Territory" shall mean the remainder of the world such that the Old Territory and the New Territory (collectively, the "Territory") shall mean the world and all commercial disposition of Products.

(d) "Case" shall mean the various case sizes set forth in Exhibit A, which is attached and made part of this agreement, and any other configurations which Supplier and Great Spirits may subsequently agree to add.

(e) "Royalty" for the purposes of this Agreement shall mean a payment on a per Case basis as set out in Exhibit B, which is attached to and made part of this agreement, and shall be payable in accordance with Paragraph 5(f).

(f) "Brand" shall mean the Celtic Crossing brand and label, including tradename, trademark and tradedress.

2. Sales of Ownership Rights and Product

(a) Supplier has heretofore sold to Great Spirits 65% of the ownership of the Brand in the Old territory.

(b) In consideration for services rendered, Great Spirits and the Supplier each assigned 5% of the Brand in the Old Territory to MHW, Ltd., with the result that the


Brand in the Old Territory is owned 60% by Great Spirits, 30% by the Supplier and 10% by MHW Ltd.

(c) For a period of three years from the execution of this Agreement, Great Spirits will have the right, but not the obligation, to purchase 70% of the ownership of the Brand in the New Territory for Irish L140,000 (the "Purchase Option"). After the third anniversary of the execution of this Agreement, Great Spirits shall continue to have the right, but not the obligation, to purchase 70% of the ownership of the Brand in the New Territory, but the option price shall be adjusted from Irish L140,000 by the change from year to year of the Irish Consumer Price Index. In the event of such purchase, Supplier will execute and deliver such instruments as Great Spirits shall reasonably request to give full effect to such purchase and prior purchases.

(d) In the event of the sale of the Brand rights by either Great Spirits or the Supplier, the non-selling party shall have (i) a pre-emptive right of first refusal to purchase the interest to be sold at the same price as the proposed sale and (ii) the right to sell alongside the other and share pro rata in the sales proceeds. MHW, Ltd. will not have the right to dispose of its interest in the Brand except in conjunction with a sale by Great Spirits and the Supplier. In the event of such sale, MHW, Ltd. will be required to sell and will be entitled to receive its pro rata share of the sales proceeds. In addition, upon a disposition of the Brand by the Supplier where Great Spirits retains its interest, Supplier shall either
(i) continue to be fully obligated to supply Products hereunder without amendment to this Agreement or (ii) terminate the Agreement upon six-month notice and release the formula and right to produce the Products to Great Spirits as described in Paragraph 18.

(e) Supplier shall not sell or encumber any interest in the Brand or make any assignment or take any other action which would limit Great Spirits' rights under this Section.

3. Appointment

(a) Supplier hereby appoints Great Spirits (itself or acting through Great Spirits' agents) as the sole and exclusive importer and distributor of the Products in the Territory. Supplier irrevocably grants Great Spirits (on the terms of this Agreement) sole and exclusive rights to use the Brand in the Territory.

(b) Great Spirits and Supplier shall devise mutually acceptable methods of operation in order to expedite the production, shipment and handling of the Products so as to provide Great Spirits with timely supply of Products. The parties shall cooperate on other joint activities intended by this Agreement.

4. Duration

This Agreement shall continue until terminated in accordance with Paragraph 11.

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5. Terms of Sale and Payment

(a) Great Spirits shall provide Supplier with annual forecasts of requirements reflecting anticipated needs of Products by Case and type of bottle, such forecasts to be delivered to Supplier on or before the last day of February commencing with 2002. Great Spirits shall be obligated to order the aggregate amounts set forth in each such forecast within the year of such forecast. Payment shall be made as provided in (b) below.

(b) Except as provided, all sales of the Products by the Supplier to Great Spirits shall be FOB Irish Port at the prices set in accordance with subsections 5(c),(d) and (e) and payment by Great Spirits for the Products shall be due 60 days from date of shipment by carrier designated by Great Spirits.

(c) The prices at which Cases of Products will be sold by Supplier to Great Spirits during 2001 are set forth on Exhibit C which is attached to and made a part of this agreement.

(d) For each year after 2001, Supplier, based upon the annual forecasts, shall seek to achieve reductions and savings in costs related to production and bottling of the Products. All such costs, reductions and savings shall be reflected in the price per Case of the Products. Supplier and Great Spirits shall cooperate to achieve the least expensive cost for the Products and shall mutually agree the prices at which Cases of Products will be sold by Supplier to Great Spirits.

(e) At any time during the term of this Agreement, Supplier may decrease the prices of the Products. Such decrease in prices shall become effective upon Great Spirits receipt of written notice thereof.

(f) Royalty payments in respect of Products purchased by Great Spirits pursuant to Paragraph 5 shall be paid at the same time as each purchase invoice is payable in respect of such Products.

6. Marketing and Advertising; Additional Supplier Services

(a) Great Spirits will work with the Supplier to develop mutually satisfactory marketing and advertising plans for the Products in the Territory. However, final authority on all matters relating to this plan will rest with Great Spirits. Marketing and advertising shall include all selling, marketing, promotion, commissions and administrative expenses, payments to MHW, Ltd. and travel and entertainment expenses related to the Products ("Marketing and Advertising Expenses"). (Marketing and Advertising Expenses related to other products which Great Spirits may sell will not qualify as Marketing and Advertising Expenses under this Agreement.) In 2001 and 2002, Great Spirits will commit to expend at least 50% of gross profits (gross profits is defined as gross margin per Case multiplied by the number of Cases sold) from the sale of the Products in the Territory on Marketing and Advertising Expenses except to the

3

extent necessary to pay members' tax obligations arising out of their interests in Great Spirits and to pay financing obligations of Great Spirits. Aside from the foregoing, Great Spirits shall have no other obligation with regard to marketing and advertising.

(b) At the election of Great Spirits, Supplier will provide shipping and invoicing services from bond to bond. Great Spirits shall provide Supplier with customers' duty and excise number and all other relevant information and documents as deemed necessary in order to execute shipment. Supplier shall receive mutually agreed upon fees for such services. Great Spirits shall indemnify Supplier from all duty and VAT liability for Products shipped pursuant to this Section 6(b).

7. Representation and Warranties of Great Spirits

Great Spirits represents, warrants and covenants, during the term of this Agreement, to Supplier as follows:

(a) Great Spirits or its agents shall be a duly licensed importer of alcoholic beverages and shall have at the time of signing this Agreement, in full force and effect, such federal, state and local licenses as may be necessary to conduct its business as an importer and marketer of alcoholic beverages.

(b) Great Spirits shall submit to the Supplier:

(i) Annual sales reports showing the performance of each Product in the Territory.

(ii) Annual reports showing the amount and allocation of expenditures on Marketing and Advertising Expenses. Upon written request, the Supplier shall have the right to verify these expenditures.

(c) Great Spirits or its agents shall file such price schedules and reports as may be prescribed by applicable laws and regulations.

(d) During the period of this Agreement, Great Spirits shall not distribute, within the Territory, any other Irish liqueur (cordial) product not bottled in Supplier's facilities without the written consent of the Supplier.

8. Representations and Warranties of Supplier

Supplier represents, warrants and covenants, during the term of this Agreement, to Great Spirits as follows:

(a) Supplier has the authority to enter into and carry out its obligations under this Agreement.

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(b) The execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement will not breach any contract or agreement to which Supplier is a party, or violate any law or regulation by which it is bound.

(c) Supplier has the right to designate and appoint Great Spirits as the exclusive importer and distributor of the Products in the Territory and, subject to Section 2, is the sole owner of the Brand free and clear of any lien or encumbrance.

(d) The Products to be sold to Great Spirits under this Agreement shall be merchantable and fit for human consumption. The Products shall be manufactured, packaged and labeled in Ireland in conformity with applicable U.S. federal, state and local laws, rules and regulations and the rules and regulations of the United States Bureau of Alcohol, Tobacco and Firearms or the laws and regulations of other governments regarding bottles and labels for the Products, as advised by Great Spirits to the Supplier from time to time. In addition, all Cases of Products sold to Great Spirits shall be coded in such a manner that Supplier and Great Spirits are able to identify production lots. The Products shall have a shelf life of a minimum of five years from date of manufacture.

(e) The formulation and quality of ingredients and the packaging of the Products to be sold in the Territory will not change without Great Spirits' written approval.

(f) The Products to be sold to Great Spirits shall be free and clear of all liens. Neither the execution and delivery of this Agreement or compliance with its terms and provisions will result in the creation or imposition of any lien, charge, encumbrance, or restriction of any nature upon the Products and other assets to be sold to Great Spirits.

(g) Supplier shall not sell or otherwise transfer Products to any other party.

9. Product Liability and Returns

(a) During the term of this Agreement, Supplier shall maintain in full force and effect public liability insurance and product liability insurance covering the Products purchased by Great Spirits in the amount of not less than five million Irish Pounds (IRL5,000,000). With respect to the public liability insurance, the sum insured shall be IRL5,000,000 for any one occurrence. With respect to the product liability insurance, the sum insured shall be IRL5,000,000 for all occurrences in any twelve-month period. Great Spirits shall be named an additional insured on all such policies and such policies shall provide for 30 days prior notice to Great Spirits of cancellation. It is the responsibility of Great Spirits to ensure that marine insurance is in force.

(b) Any Products not merchantable due to obvious quality deficiencies, packaging problems, or to errors committed by Supplier may be returned to Supplier for full credit plus cost of shipping provided that notice of such deficiency, problem, or error has been given to Supplier within sixty (60) days after the date of receipt by Great Spirits of the Products. Any Products not merchantable due to quality deficiencies or packaging

5

problems which are not obvious, may be returned to Supplier for full credit plus cost of shipping provided that notice of such latent defect has been given to the Supplier within six (6) months after the date of receipt of the Products by Great Spirits.

(c) The Supplier will indemnify Great Spirits against all claims relating to commissions and fees resulting from actions or events which occurred prior to the date of this Agreement.

(d) The Supplier irrevocably agrees to protect, indemnify and hold harmless Great Spirits, its officers, members, employees and agents from any claims, demands, causes of action, damages, liabilities, losses or suits brought by third parties arising out of, relating to or resulting from any negligent act or omission of Supplier in respect of the manufacture of the Products.

(e) During the term of the Agreement, Great Spirits agrees to maintain general liability insurance (including umbrella) with respect to its activities in an amount of not less than U.S. $5,000,000.

(f) Notwithstanding any provision of this Agreement to the contrary, the provisions of Paragraph 9(a), (c) and (d) shall survive the termination of this Agreement.

10. Production Modification and Future Products

(a) The Supplier agrees that it will cooperate in modifying the formula for the Product to be sold in the Territory and the packaging of same, such cooperation to be based upon the good faith anticipation by Great Spirits that modifications to the formula or packaging will increase sales and upon such modifications the price per Case shall be adjusted to reflect any increased costs to Supplier.

(b) Great Spirits shall have the right of first refusal regarding any future product which Supplier desires to distribute in the Territory. In the event that Great Spirits exercises its first right of refusal hereunder to distribute additional products produced or sold by Supplier or the parties otherwise agree to include additional products hereunder, the term "Products" as used in this Agreement shall be deemed to include such additional products. Great Spirits shall have ninety (90) days from notice by Supplier to exercise that right of first refusal.

11. Termination

Great Spirits or the Supplier shall be entitled to terminate this Agreement by written notice to the other if:

(a) that other party commits any continuing or material breach or violation of any of the provisions of this Agreement and, in the case of such a breach or violation which is capable of remedy, fails to remedy the same within sixty (60) days after receipt of a

6

written notice giving full particulars of the breach or violation and requiring it to be remedied;

(b) an encumbrance takes possession or a receiver is appointed over the property or assets of that other party except in the case of liens to financing institutions under arrangements not in default;

(c) that other party makes any voluntary arrangement with its creditors or becomes subject to an administration order;

(d) that other party goes into liquidation (except for the purpose of an amalgamation, reconstruction or other reorganization made in such manner that the company resulting from the reorganization effectively agrees to be bound by or assume the obligations imposed on that other party under this Agreement);

(e) an examiner or equivalent is appointed to that other party whether under Section 2 of the Companies (Amendment) Act of 1990 of Ireland.

12. Trademarks

Supplier represents and warrants that it has the exclusive and unrestricted right to sell the trademark, tradename, brand name and label included in the Brand to Great Spirits as contemplated by 2(a) and (c) and further confirms that it has not received any notice contesting the entitlement of the Supplier to use and sell same. The tradename and trademark for the Product is currently registered in the USA and certain other countries. Trademark registration in the Territory shall become the responsibility of Great Spirits, provided Great Spirits shall have no obligation to register same in any given country. In addition, Great Spirits shall have no obligation to police or enforce the Brand in the Territory.

13. Choice of Law and Disputes

(a) This Agreement shall be governed by and construed in accordance with the laws of the Republic of Ireland.

(b) In the event of any controversy or claim (whether such controversy involves a dispute, disagreement or difference of interpretation and whether such claim sounds in contract, tort or otherwise) arising out of or relating to (i) this Agreement, (ii) the actual or alleged breach hereof or
(iii) the commercial or economic relationship of the parties hereto (a "Dispute"), the party hereto alleging the existence of a Dispute shall give to the other written notice setting out the material particulars of such Dispute. A senior executive officer or senior official with settlement authority (a "Senior Official") from each party hereto shall agree to meet personally in New York or such other location as the parties may mutually agree, or to conduct a telephonic meeting within five business days of the date of receipt of such notice (the "Notice Date") by the relevant party to

7

attempt in good faith, and using their reasonable endeavors at all times, to resolve such Dispute.

(c) If (i) such Dispute is not resolved within fifteen business days (or such longer period as to which the parties may agree) after the applicable Notice Date or (ii) any party hereto fails or refuses to meet as required by the notice described in Section 13(b), the Dispute shall be mediated through non-binding mediation through the Centre for Dispute Resolution in London ("CEDR").

(d) If the Dispute is not resolved within 60 days after the commencement of the mediation, the Dispute shall be referred to litigation in which case the Courts of the Republic of Ireland are to have exclusive jurisdiction to hear and determine the dispute.

14. Force Majeure

If either party is prevented from performing any of its obligations hereunder by an occurrence beyond its reasonable control such as, but not limited to, acts of God, fire, flood, war, insurrection, riot, government regulations, raw material shortage, strikes, or lack of common carrier facilities, then the affected party shall be excused from performance for so long as such occurrence exists.

15. Severability

In the event any of the terms and provisions of this Agreement are in violation of, or prohibited by, any applicable law or regulation, such terms and provisions shall be deemed amended or deleted to conform to such law or regulation without invalidation or amending or deleting any of the other terms or conditions of this Agreement.

16. Successor

This Agreement shall not be assignable by any party without the written consent of the other and shall be binding upon the parties and their respective successors and permitted assigns.

17. Relationship of the Parties

The parties acknowledge that no joint venture or partnership has been created by this Agreement, and that no party can take any action which is legally binding on the other without the prior written consent of the party to be charged.

18. Deposit Formula

The Supplier has deposited the full formula and production instructions for the Products, together with irrevocable and exclusive right to produce same for sale and the right to use the Brand within the Territory, with a mutually agreeable escrow agent pursuant to a

8

mutually acceptable escrow agreement providing for release of the aforementioned items to Great Spirits (i) upon failure of Supplier to supply timely the Products or (ii) upon termination of this Agreement by Great Spirits pursuant to Paragraph 11.

19. Miscellaneous

(a) Any demand, notice, or request provided for by this Agreement shall be in writing, and shall be made by delivery or by ordinary airmail addressed to the party to whom notice is to be given or to whom a demand or request is to be made.

The addresses of the parties are as follows:

Great Spirits:   Great Spirits Company LLC
                 1331 Lamar, Suite 1125
                 Houston, Texas 77010
                 United States of America
                 Fax: 713-756-6150

Supplier:        Gaelic Heritage Corporation Limited
                 Institute Road
                 Bailieboro, Co. Cavan
                 Republic of Ireland
                 Fax: 353-4296-65519

(b) This Agreement represents the entire agreement between Great Spirits and Supplier, supersedes all their prior oral and written arrangements and agreements including, but not limited to, the National Distribution Agreement, dated as of March 17, 1998, by and among the parties hereto, and may not be changed except by a further written agreement or by an amendment to this Agreement signed by both parties.

(c) Any failure by a party hereto to exercise any of its rights under this Agreement shall not be construed as a waiver of such rights; any such failure shall not preclude exercise of such rights at any later time.

(d) Section headings are for convenience only and are not to be construed as part of this Agreement.

9

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

GAELIC HERITAGE CORPORATION LIMITED

By /s/ Patrick McKevitt
   ----------------------------------
Name: Patrick McKevitt
Title: President

GREAT SPIRITS COMPANY LLC

By /s/ Mark Andrews
   ----------------------------------
Name: Mark Andrews
Title: President

For purposes of joinder with respect to Paragraphs 2(d):

MHW, LTD.

By /s/ John F. Beaudette
   ----------------------------------
Name: John F. Beaudette
Title: President

10

EXHIBIT A

CASE CONFIGURATIONS

Standard US Case              12 X 750ml
Standard International Case   12 X 70cl
Litre Case                    12 X 1 Litre
Glass Mini Case               120 X 50ml
Plastic Mini Case             120 X 50ml
Gift Pack (US)                6 X 750ml
Gift Pack (International)     6 X 70cl



EXHIBIT B

ROYALTIES

OLD TERRITORY*

Standard Case        *
Litre Case           *
Glass Mini Case      *
Plastic Mini Case    *
Gift Pack            *

NEW TERRITORY**

                      *
Standard and Litre    *
                      *
                      *
Glass Mini Case       *
Plastic Mini Case     *
Gift Pack             *


* Commencing with purchases ordered subsequent to March 2002, the Old Territory Royalties shall be increased or decreased by the same percentage that the standard price charged by Great Spirits to its distributors is increased or decreased (excluding special promotional pricing) in the Old Territory, subject to a minimum Royalty of $ * . Great Spirits shall inform Supplier when changes in that standard price occur and provide Supplier with documentation supporting such changes.

** If Great Spirits exercises its Purchase Option, the New Territory Royalties as set out in this exhibit will no longer apply to Cases purchased by Great Spirits for distribution in the New Territory and the Royalty for such Purchases will become L * (Irish) per Case. (L * per gift packs of 6 bottles.) Further, it is agreed that, if Great Spirits has purchased a portion of the Brand in the New Territory pursuant to Section 2(c), the parties will review the Royalties in the New Territory in 2003 and, if a standard FOB has been established, implement an adjustment mechanism similar to the one established in the Old Territory.


EXHIBIT C

FOBs IRISH PORT

Standard US Case               *
Standard International Case    *
Litre Case                     *
Glass Mini Case                *
Plastic Mini Case              *
Gift Pack (US)                 *
Gift Pack (International)      *




Exhibit 10.11

NOTE: PORTIONS OF THIS EXHIBIT ARE THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST BY THE REGISTRANT TO THE SECURITIES AND EXCHANGE COMMISSION. SUCH PORTIONS HAVE BEEN REDACTED AND ARE MARKED WITH A "[*]" IN PLACE OF THE REDACTED LANGUAGE.

TERRA LIMITED

AND

THE ROARING WATER BAY SPIRITS COMPANY
LIMITED

BOTTLING AND SERVICES AGREEMENT


Terra Limited Institute Road Bailieboro Co Cavan

THIS AGREEMENT is made the 1st day of September 2002

BETWEEN:

(1) The Roaring Water Bay Spirits Company Limited, having its registered office at 4 Herbert Place, Dublin 2 ("the Company"); and

(2) Terra Limited, having its registered office at Institute Road, Bailieborough, County Cavan ("Terra")

WHEREAS:

(A) The Company is involved in the business of manufacturing, producing, marketing, distributing, and selling branded whiskey, vodka, and other spirit based products.

(B) Terra, pursuant to a Bottling and Services Agreement dated 19th day of January 1998 ("the Original Agreement") has been providing certain bottling and other services to the Company as provided in the Original Agreement.

(C) Terra and the Company have agreed to enter into this Agreement in substitution for the Original Agreement.

NOW THEREFORE IN CONSIDERATION OF THE PAYMENTS AND COVENANTS HEREINAFTER CONTAINED IT IS HEREBY AGREED AS FOLLOWS:

1. DURATION

This Agreement will commence with effect from September 1st 2002 and, subject as hereinafter appearing, will continue for a period of three and a half (3.5) years until 28th February 2005 and thereafter as may be agreed between the parties.

2. SERVICES

Terra shall, utilizing the equipment in Appendix 1, provide the bottling and other services described in Appendix 1 and elsewhere in this Agreement ("the Services") to the Company. The Company shall exclusively retain Terra to provide bottling and other requirements of the Company for all Vodka,

2

Whiskey and Gin permutations in conjunction with, but limited to Appendix 2.

3. PRICING/INVOICING

The pricing shall be as outlined in Appendix 2. Prices will be adjusted in line with the Irish Consumer Price Index (CPI) every March 1st up to a maximum of 3.5%. Both parties will use their best endeavors to agree pricing on future new product configurations on a product by product basis. Terra will invoice the Company monthly and payment will be made by the Company within 60 days from the date of invoice.

4. DISCOUNT

With effect from March 1st, 2003, under this agreement an annual 3.5% discount will apply in respect of the increase in bottling fees billed by Terra over those billed in the immediately preceding year. The credit note relating to this discount will be submitted to the Company by April in each year, commencing in April 2004. This discount excludes bottling fees billed in respect of new product configurations.

5. COMPANY ORDERS

All orders from the Company to Terra, to be valid, must be received by Terra in writing, duly signed by the Company or a duly authorized representative of the Company.

6. ORDER ACKNOWLEDGEMENT

Each order received by Terra from the Company will be acknowledged to the Company by fax, post or e-mail by Terra within one working day of receipt by Terra of the order.

7. CHANGE PARTS/NON-STANDARD EQUIPMENT

The Company will be responsible for the purchasing of the required change parts, which are necessary and exclusive to the Company in order for Terra to carry out the services. Where parts are deemed not exclusive to the Company a cost sharing arrangement will be agreed. It is agreed that Terra will obtain a purchase order form from the Company before proceeding with any Purchase of change parts on its behalf.

8. PRODUCT SPECIFICATION

All bottling specifications will be supplied in writing to Terra by the Company and are subject to agreement between Terra and the Company. No changes will be made to the agreed bottling specifications without the prior written consent of the Company and Terra.

3

9. MATERIALS PROCUREMENT

Terra will be responsible for materials call off necessary for the provision of the Services. Procurement shall be effected in the name and at the cost of the Company. To permit Terra to call off such materials in a timely and efficient manner, orders for product by the Company will be required on a three (3) month rolling basis to allow for supplier lead tines in the delivery of materials. Terra will endeavor to call off raw materials subject to a pre-agreed call off plan.

Supplies of materials for the Company's products will only be purchased from approved suppliers of the Company.

Minimum and maximum stock holding levels will be agreed between the Company and Terra. Stocks will be continually monitored by the Company and Terra against sales to avoid obsolescence. Terra will not be accountable for obsolete stocks.

Minimum and maximum order quantities will also be agreed between Terra and the Company to achieve economies of scale in purchasing.

The limited warehousing capacity of Terra is acknowledged. Where additional storage space to warehouse the stock of the Company is necessary, the Company will reimburse Terra on a pre-agreed basis.

10. INWARDS QUALITY INSPECTION

Terra will be responsible for maintaining quality standards to be agreed between Terra and the Company. Materials supplied to Terra will be inspected in accordance with such standards. A certificate of conformance will be supplied by the company for all raw material items confirming that the raw materials conform to the agreed quality standards. The Company will be required to sign off on all proposed new packaging and ensure that a new certificate of conformance is supplied. Notwithstanding the foregoing, any changes in the specification of raw materials must be agreed with Terra before being proceeded with. Terra must notify the Company on a timely basis of all quality issues. All raw material received must be signed in as "unchecked for quality and quantity".

11. QUALITY

Terra will be responsible for bottling the Company's products and providing the other Services in accordance with the specifications agreed between Terra and the Company. Testing of the Company's products shall be carried out in accordance with the principles set out in Appendix 3.

Where specialized tests or testing equipment are required for materials or products, the Company will provide Terra with written instructions on these

4

test procedures. Any costs incurred in testing, in accordance with Appendix 3, and any additional costs incurred in specialized testing will be charged separately to the Company.

12. STEWARDSHIP OF MATERIALS ON SITE

Packaging and finished products will be stored by Terra at ambient temperatures in pallet stacks, in the store area at the Terra premises at Bailieborough, Co. Cavan ("Premises"). All storage areas will be kept neat and tidy and will be reviewed during hygiene audits.

For materials requiring specialized storage, the Company will provide Terra with written instructions on the correct handling and storage of such materials. Where additional costs are incurred in specialized storage, these costs will be charged separately to the Company.

All of the Company's products on the Premises from time to time will be under Terra's Customs and Excise bond.

It is anticipated that stocks of the Company's products on Terra's premises will be kept to a minimum.

13. MATERIALS USAGE TOLERANCES

The levels of losses of materials during bottling should not exceed 1% of the standard usage of materials in each year. This factor will be reviewed by the Company on a batch basis and Terra must ensure that wastage reports are prepared on a batch basis. Terra will also endeavor to explain any wastage over this level and the company will give special consideration to the wastage of alcohol and small run sizes.

14. CUSTOMS AND EXCISE

Management of the day-to-day relationship with Customs and Excise representatives on the Premises will be the responsibility of Terra, and Terra shall have the responsibility of notifying the Company in good time, of any duty or tax payable by the Company to Customs and Excise in respect of the Company's products on the Premises. The Company acknowledges that duty is payable by the Company to Terra within a week of being invoiced at the end of the month if the products which are removed from the Terra bonded warehouse are not traveling under bond.

15. STOCK CONTROL

Terra with maintain detailed stock records of the Company's stock in a format reasonably required by the Company, and will make these records available to the Company in a timely and efficient manner.

5

16. STOCK OBSOLESCENCE

Terra will use all reasonable endeavors to minimize stock obsolescence.

Materials called off against the Company's sales projections that are subsequently not used due to revisions in the sales projections are the responsibility of the Company.

Finished goods produced against the Company's sales projections which subsequently become obsolete, are the responsibility of the Company.

17. SHIPPING/TRANSPORT

Shipping administration will be carried out by Terra for and on behalf of the Company.

All shipping and transport costs will be the responsibility of the Company.

18. INSURANCE

Alcohol on the Terra site will come under the Terra customs bond. All other insurance including, without limitation, product, packaging, public/products liability and marine will be the responsibility of the Company. The interest of Terra must be noted on all the Company's insurance policies as sole loss payee in claims involving or including Customs and Excise duty payable.

19. CUSTOMER SERVICE

Those aspects of customer service being invoicing, shipping and customer queries relating to invoicing and shipping of the Company's products will be dealt with by Terra. Costs resulting from errors made by Terra in shipping will be met by Terra.

20. RESEARCH AND DEVELOPMENT

Terra will assist in the development of products and use all its expertise in the launch and marketing of new products.

The Terra facilities will be made available to the Company in areas of research, and use of Terra's pilot plant facilities will also be made available in each case at costs to be agreed.

21. PROJECT MANAGEMENT

Terra will provide assistance in connection with logistics and project management to include:

- Sourcing Materials

6

- Agreeing standards and specifications with suppliers

- Supplier contracts and pricing

- Assisting in label approval with legal authorities such as, without limitation, BATF etc.

- In all areas of research and development and project management, final approval and sign off will be by a director or other authorized signatory of the Company.

22. ACCESS TO SITE

With reasonable notice, Terra will make available for inspection/review, its facilities at the Premises to the Company and its customers.

23. CREAM LIQUEUR PRODUCTS AND NON-COMPLETE

(i) The Company acknowledges that Terra is prohibited from and shall not be required to perform any services whatsoever, relating directly or indirectly to the business of the manufacture, processing, production, bottling, sale or distribution of any Cream Liqueur Products and, accordingly, Terra will not, and will not be required by the Company to, provide any such services hereunder. "Cream Liqueur Products" means alcohol beverages that contain alcohol and dairy, or alternative fats, which in combination with sweetening and sugars are intended to compete with, or replicate existing cream or fat based alcoholic beverages.

(ii) Without prejudice to the foregoing, Terra shall not during the period of this Agreement, do any of the following, without the prior consent of the Company

(a) Either solely or jointly, with or on behalf of any person, directly or indirectly, carry on or be engaged or interested (except as a holder for investment purposes of securities dealt with on a recognized stock exchange) in any business in Ireland which competes either directly or indirectly, with the business of the Company, in so far as it relates to the development, manufacture or supply of vodka or whiskey.

(b) Solicit the custom of any person in Ireland, who is, or has been at any time during the period of this Agreement, a customer of the Company for the purposes of offering to such customer, vodka or whiskey which compete directly or indirectly with those manufactured and/or supplied by the Company

7

(c) Solicit or entice away, or endeavor to solicit or entice away any director or employee of the Company.

PROVIDED HOWEVER that nothing herein will preclude or restrict Terra from providing any production, bottling, labeling or ancillary services to any person or continuing with its investment in, and services to Gaelic Heritage Corporation Limited, so long as Gaelic Heritage Corporation Limited is not involved in the manufacture of Irish branded vodka or whiskey.

24. TERMINATION

24.1 Either party shall be entitled forthwith to terminate this agreement by written notice to the other if:

24.1.1 that other party commits any continuing or material breach of any of the provisions of this Agreement and, in the case of such a breach, which is capable of remedy, fails to remedy the same within 30 days after receipt of a written notice giving full particulars of the breach and requiring it to be remedied

24.1.2 an encumbrancer takes possession or a receiver is appointed over any of the property or assets of that other party

that other party makes any voluntary arrangement with its creditors or becomes subject to an administration order

24.1.3 that other party goes into liquidation (except for the purposes of an amalgamation, reconstruction or other reorganization, and in such manner that the company resulting from the reorganization effectively agrees to be bound by or assume the obligations imposed on that other party under this agreement)

24.1.4 an examiner is appointed to that other party under Section 2 of the Companies (Amendment) Act 1990; or

24.1.5 that other party ceases, or threatens to cease, to carry on business.

25. INFRINGEMENT

The Company shall indemnify and keep indemnified Terra against all damages, penalties, costs and expenses to which Terra may become liable as a result of work done or the supply of goods in accordance with the Company's requirements, which involves the infringement of any letters patent, registered design, copyright, trademark, or trade name, or other rights of confidentiality or industrial, commercial, or intellectual property.

8

26. NATURE OF AGREEMENT

26.1 This Agreement is personal to the parties, and neither of them may, without the written consent of the other, assign, mortgage, charge (otherwise than by floating charge) or dispose of any of its rights hereunder, or sub-contract or otherwise delegate any of its obligations under this Agreement.

26.2 Nothing in this Agreement shall create, or be deemed to create, a partnership between the parties.

26.3 This Agreement contains the entire agreement between the parties with respect to its subject matter, supersedes all previous agreements and understandings between the parties, and may not be modified except by an instrument in writing signed by the duly authorized representatives of the parties.

26.4 If any provision of this Agreement is held by any court or other competent authority to be void or unenforceable in whole or in part, the other provisions of this Agreement and the remainder of the affected provisions shall continue to be valid.

26.5 This Agreement shall be governed and construed in all respects in accordance with the laws of Ireland.

27. FORCE MAJEURE

27.1 If either party is affected by Force Majeure, it shall promptly notify the other party of the nature and extent of the circumstances in question.

27.2 Notwithstanding any provisions of this Agreement, neither party shall be deemed to be in breach of this Agreement, or otherwise be liable to the other, for any delay in performance, or the non-performance of any of its obligations under this Agreement, to the extent that the delay or non-performance is due to any Force Majeure of which it has notified the other party, and the time for performance of that obligation shall be extended accordingly.

27.3 If at any time Terra claims Force Majeure in respect of its obligations under this Agreement with regard to the supply of Services, the Company shall be entitled to obtain from any other person such quantity of the Services as Terra is unable to supply

28. NOTICES

Any notices to be given under this Agreement shall be either delivered personally or sent by fax. The address of personal service of each party is its registered office. A notice is deemed to be served as follows:

9

(a) if personally delivered, at the time of delivery;

(b) if sent by fax, at 12 noon on the first business day after transmission, provided always that an acknowledgement of such transmission has been received.

29. WARRANTIES AND LIABILITY

29.1 Terra warrants to the Company that the provision of the Services in accordance with the terms of this Agreement:

(i) will be of satisfactory quality (within the meaning of the Sale of Goods Act 1893, and the Sale of Goods and Supply of Services Act 1980, as amended);

(ii) will be free from defects in design, material and workmanship;

(iii) will correspond with any specification agreed between the Company and Terra; and

(iv) will comply with all statutory requirements and regulations relating to the provision of the Services.

29.2 Without prejudice to any other remedy, if any of the Services are not provided in accordance with this Agreement, then the Company shall be entitled:

(i) to require Terra to make good the failure to supply the Services in accordance with this Agreement within 14 days; or

(ii) at the Company's sole option, require the repayment of any part of the price which has been paid in respect of such Services.

29.3 Terra shall indemnify and keep indemnified the Company in full against all liability, loss, damages, costs and expenses (including legal expenses) awarded against or incurred or paid by the Company, as a result of or in connection with breach of any warranty given by Terra in this clause 29.

29.4 The procedures described in Appendix 3 shall be employed by the parties in order to facilitate the ascertainment of responsibility for any defect in the products or any failure to comply with the Services.

30. ARBITRATION

In the event that there shall be any dispute between the parties hereto in relation to this Agreement, then either party may serve notice on the other specifying the nature of the dispute and if such dispute is not settled within 60 days from the date of the service of such notice, then either party may serve

10

on the other, a notice requiring the matter to be submitted to arbitration. The arbitrator shall be agreed by the parties within 30 days of the date of such notice and failing such agreement, the arbitrator shall be determined by the President for the time being of the Institute of Chartered Accountants. The decision of such arbitrator as to the dispute shall be final and binding on the parties, and the provisions of the Arbitration Acts 1954 and 1980 (as amended) shall apply to such arbitration.

11

AS WITNESS the hands of the parties hereto (by authorized signatories)

/s/ Philip O'Shea
-------------------------------------

SIGNED by or on behalf of
TERRA in the presence of: - /s/ Patsy McKevitt
                            ----------------------------


/s/ Niall McQuillan
-------------------------------------
2/9/2002

SIGNED by or on behalf of

the Company in the presence of: - /s/ Patrick Rigney
                                  ----------------------

12

APPENDIX 1

EQUIPMENT AND THE SERVICES

EQUIPMENT

The standard bottling equipment of Terra consists of air blowing, filling, ropp capping, front and back labeling, bottom stapling outer case, taping outer case, semi-automatic pallet shrink wrapping, bottle coding, case coding and case weighing.

SERVICES

1. Intake and Storage (limited) of all raw materials required by the Company

2. Storage of final product at bottling strength

3. Sampling, testing, final approval of bulk and finished product as per this Agreement. On-line QC checks.

4. Final filtering, filling, capping and labeling of bottles.

5. Packing into final cases, taping, weighing, coding, palletising of final cases and pallet wrapping facilities (optional).

6. Storage in warehouse for a period, loading and shipping administration

7. Record keeping of packaging and finished products.

13

Appendix 3

PROCESS PROCEDURE FOR CUSTOMERS

1. Bulk spirit, on ordering is produced to the Company's specifications from the supplier, Carbery Milk Products.

2. On arrival from Carbery, the product is accompanied by a Certificate of Conformance and weighed to ensure that the correct volume has been received. Terra and the Company retain samples of 250ml, and a sample is lifted for Carbery.

3. The spirit is then transferred to the Company's premises.

4. Manufacturing of Vodka commences by transferring the quantity of spirit delivered to a product dilution tank.

5. This product is diluted with de-ionised water to 55% v/v.

6. The Product is then manufactured by pumping the 55% v/v spirit through a final clarifying filter to the final bottling product tank.

7. The manufactured product in the bottling tank is then diluted with de-ionised water to the desired bottling strength as per specification. Five samples of final product are taken, two samples for Terra, one for retaining and one for testing, two samples for Carbery, one for retaining and one for testing.

8. All samples following manufacture, including the bulk spirit samples, are sent to Carbery the day after production.

9. The manufactured product is jointly approved by both Terra and Carbery within three days. If there are any issues regarding the samples, a joint decision between all parties will be decided upon. The Company retains one sample. The procedures in this paragraph shall be reviewed by all the parties, on an annual basis. The cost of any additional testing will be borne by the Company.

10. The approved product is transferred by Terra.

11. The product is filtered to bottling line and bottled to the required specification. Two samples are retained from the bottling line, one for the Company and one for Terra.

12. Once bottling is completed and approved by Terra, the product is then released to meet the Company's order.

15

APPENDIX 2

                                                PRICES
PRODUCT BOTTLING PRICES 2002                      NOW     PRICES
ROARING WATER BAY                                 LIR       NOW
----------------------------                   --------   ------
Boru - 700ml x 12 37.5%                            *        *
Odessa/Value Vodka - 700ml x 12 37.5%                       *
Boru - 700ml x 12 37.5% Orange                     *        *
Boru - 700ml x 6 Germany 37.5%                     *        *
Boru - 700ml x 12 45%                              *        *
Boru - 750ml x 12 40%                              *        *
Boru - 750ml x 12 40% Citrus                       *        *
Boru - 750ml x 12 40% Orange                       *        *
Boru - 1000ml x 12 37.5%                           *        *
Odessa/Value Vodka - 1000ml x 12 37.5%                      *
Boru - 1000ml x 12 40% ORANGE                      *        *
Boru - 1000ml x 12 40% GE                          *        *
Boru - 1000ml x 12 40% USA                         *        *
Boru - 1000ml x 12 50%                             *        *
Boru - 1000ml x 15 40%                             *        *
Boru - 1000ml x 15 40% CITRUS                      *        *
Boru - 1000ml x 15 40% ORANGE                      *        *
Boru - 1500ml x 6 37.5%                            *        *
Boru 3 Litre x 4 37.5%                             *        *
Boru Miniture Trinity X 72 (40.0%)                 *        *
Boru Naggin 200ml x 24 37.5%                       *        *
Odessa/Value Vodka - Naggin 200ml x 24 37.5%                *
Boru Naggin 350ml x 24 37.5%                       *        *
Odessa/Value Vodka - Naggin 350ml x 24 37.5%                *
Boru Tops x 24 40%                                 *        *
Boru Trinity Vodka 3 Pk - 200MLx3x6 40%            *        *
Boru Vodka 1.75 LitreX6 (40.0%)                    *        *
Boru mins x 72 40%                                 *        *
Boru mins x 72 40% - Citrus                        *        *
Boru mins x 72 40% - Orange                        *        *
Boru Vodka 50ml x 120 (40%) Orange                 *        *
BoruMiniature Pets x 120 40%                       *        *
Clontarf - 700/750ml x 6 40/43%                    *        *
Clontarf Trinity Whiskey - 600MLx6 40%             *        *
Clontarf Trinity Whiskey - 600MLx6 43%             *        *
Clontarf Whiskey - 1 LitreX6                       *        *
Clontarf Whiskey MINI Trinity X72 40%              *        *

Note 1: The above prices exclude consumables

Note 2: The Odessa/Value Vodka prices above include processing

Note 3: Prices will be increased in line with the Irish CPI every March 1st by
the % change in this index over the preceeding year.

14

Exhibit 10.12

AMENDMENT TO BOTTLING AND SERVICES AGREEMENT

This Amendment, dated as of March 1, 2005, to Bottling and Services Agreement, by and between Terra Limited, a company incorporated in Ireland ("Terra") and Castle Brands Spirit Company Limited, a company incorporated in Ireland (formerly The Roaring Water Bay Spirits Company Limited) (the "Customer");

WITNESSETH:

THAT WHEREAS, the Customer and Terra are parties to that certain Bottling and Services Agreement, dated September 5, 2002 (the "Bottling and Services Agreement");

WHEREAS, Terra and the Customer wish to extend the Bottling and Services Agreement, confirm the current prices of products thereunder, provide for the continued supply of cream liqueurs, and agree to renegotiate said prices in the future;

NOW, THEREFORE, in consideration of the mutual covenants and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

1. Section 1 of the Bottling and Services Agreement is hereby amended such that the duration of this Bottling and Services Agreement will extend until 28th February 2009.

2. The parties hereby agree (i) that the prices in effect 28th February 2005 will continue to remain in effect through 31st December 2005 and
(ii) to negotiate in good faith appropriate price adjustments for 2006 and subsequent years, based on changes in raw materials and/or relevant price indexes.

3. Section 23 (i) of the Bottling and Services Agreement is hereby deleted in its entirety. The remaining provisions of Section 23 shall remain unchanged.

4. Terra agrees that it shall, under the direction and subject to the specifications of Customer, obtain the raw materials, vat, mix and bottle Brady's, O'Leary's and O'Shea's Irish Creams and such other Irish creams as the parties shall agree for the term of the Bottling and Services Agreement. The parties hereby agree (i) that the prices in effect 28th February 2005 for the services referred to in this Section 4 will continue to remain in effect through 31st December 2005 and (ii) to negotiate in good faith appropriate price adjustments for 2006 and subsequent years, based on changes in raw materials and/or relevant price indexes.

5. Except as expressly set forth herein the Bottling and Services Agreement shall remain in full force and effect and is ratified and confirmed as amended hereby.


Signed for and on behalf of
TERRA LIMITED

in the presence of:                     /s/ Patsy McKevitt
                                        -------------------------------------
                                              Director

/s/ Shawn McKevitt
-------------------------------------

Date:  23rd September, 2005             Date:  23rd September, 2005

Signed for and on behalf of
CASTLE BRANDS SPIRITS COMPANY LIMITED

in the presence of:                     /s/ Keith A. Bellinger
                                        -------------------------------------
                                              Director

/s/ Mark Andrews
-------------------------------------

2

EXECUTION COPY

Exhibit 10.13

CASTLE BRANDS INC.

AMENDED AND RESTATED CONVERTIBLE NOTE PURCHASE AGREEMENT

AUGUST 16, 2005


Table of Contents

                                                                                                        Page
A.       Amendment and Restatement of Original Note Purchase Documents............................        1

1.       Definitions..............................................................................        2

2.       Purchase and Sale of Notes...............................................................        5

         2.1      Sale and Issuance of Notes......................................................        5

         2.2      Sale and Issuance of Additional Notes...........................................        6

         2.3      Closing; Delivery...............................................................        6

3.       Registration Rights; Corporate Transaction...............................................        6

4.       Right of First Offer.....................................................................        7

         4.1      Notice of Offering..............................................................        7

         4.2      Offering Period.................................................................        7

         4.3      Expiration of Offering Period...................................................        7

         4.4      Acknowledgement of Right of First Offer.........................................        8

5.       Representations and Warranties of the Company............................................        8

         5.1      Representations and Warranties of the Company at each Closing...................        8

         5.2      Representations and Warranties of the Company at the Initial Closing and the
                  June 27, 2005 Closing...........................................................       10

         5.3      Representations and Warranties of the Company at the Additional Note Closing....       11

6.       Representations and Warranties of the Purchasers.........................................       13

         6.1      Authorization...................................................................       13

         6.2      Purchase Entirely for Own Account...............................................       13

         6.3      Knowledge.......................................................................       14

         6.4      Restricted Securities...........................................................       14

         6.5      No Public Market................................................................       14

         6.6      Legends.........................................................................       14

         6.7      Accredited Investor.............................................................       15

7.       Conditions to the Purchasers' Obligations at Closing.....................................       15

8.       Conditions to the Company's Obligations at Closing.......................................       16

         8.1      Representations and Warranties..................................................       16

         8.2      Qualifications..................................................................       16

         8.3      Delivery of Form W-8 BEN or Form W-9............................................       16

i

Table of Contents
(continued)

                                                                                                        Page
9.       Affirmative Covenants of the Company.....................................................       16

         9.1      Financial Statements; Reports; Certificates.....................................       16

         9.2      Taxes...........................................................................       17

         9.3      Notices.........................................................................       17

         9.4      Corporate Existence and Compliance with Laws....................................       17

         9.5      Further Assurances..............................................................       17

10.      Negative Covenants of the Company........................................................       17

         10.1     Amendment or Modification of the Notes..........................................       17

         10.2     Issuance of Equity Securities...................................................       17

         10.3     Change in Authorized Capital Stock..............................................       18

         10.4     Mergers or Acquisitions.........................................................       18

         10.5     Indebtedness of the Company.....................................................       18

         10.6     Distributions; Investments......................................................       18

         10.7     Redemption or Repurchase of Equity Securities...................................       18

         10.8     Transactions with Affiliates....................................................       18

         10.9     Maintenance.....................................................................       19

         10.10    Securities Law Compliance.......................................................       19

11.      Events of Default........................................................................       19

         11.1     Payment Default.................................................................       19

         11.2     Cross-Default...................................................................       19

         11.3     Covenant Default................................................................       19

         11.4     Attachment......................................................................       20

         11.5     Insolvency......................................................................       20

         11.6     Other Agreements................................................................       20

         11.7     Judgments.......................................................................       20

         11.8     Misrepresentations..............................................................       20

12.      Board Representation.....................................................................       20

13.      Miscellaneous............................................................................       21

         13.1     Successors and Assigns..........................................................       21

ii

Table of Contents
(continued)

                                                                                               Page
13.2     Governing Law...................................................................       21

13.3     Counterparts....................................................................       21

13.4     Titles and Subtitles............................................................       21

13.5     Notices.........................................................................       21

13.6     Finder's Fee....................................................................       21

13.7     Amendments and Waivers..........................................................       22

13.8     Severability....................................................................       22

13.9     Entire Agreement................................................................       22

13.10    Exculpation Among Purchasers....................................................       22

13.11    Fee and Cost Reimbursement; Closing Fee.........................................       23

13.12    Lock-Up Agreement...............................................................       23

Schedule of Exhibits

Schedule of Exceptions

iii

CASTLE BRANDS INC.

AMENDED AND RESTATED CONVERTIBLE NOTE PURCHASE AGREEMENT

This Amended and Restated Convertible Note Purchase Agreement (this "AGREEMENT") is made as of the 16th day of August, 2005 by and among Castle Brands Inc., a Delaware corporation (the "COMPANY") and the Purchasers (as defined below).

RECITALS

A. The Company and Mellon HBV (as defined below) have previously entered into that certain Convertible Note Purchase Agreement dated as of March 1, 2005 (the "ORIGINAL NOTE PURCHASE AGREEMENT"), pursuant to which the Company issued and sold and Mellon HBV purchased the Initial Note (as defined below) and an Additional Note (the "MELLON ADDITIONAL NOTE" and together with the Original Note Purchase Agreement and the Initial Note, the "ORIGINAL NOTE PURCHASE
DOCUMENTS").

B. The Company desires to issue and sell to a certain Purchaser, and such Purchaser desires to purchase, an Additional Note (as defined below).

C. The Company and Mellon HBV each desire to amend and restate the Original Note Purchase Documents in order to induce such Purchaser to purchase an Additional Note and make certain other changes.

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:

A. AMENDMENT AND RESTATEMENT OF ORIGINAL NOTE PURCHASE DOCUMENTS. Effective and contingent upon the execution of this Agreement, the Amended Initial Note (as defined below) and the Amended Additional Note (as defined below) by the Company and Mellon HBV, (i) the Original Note Purchase Agreement is hereby amended and restated in its entirety as set forth below in this Agreement, and the Company and each of the Purchasers hereby agree to be bound by the provisions hereof as the sole agreement of the Company and the Purchasers with respect to the issuance, sale and purchase of the Notes and certain other rights, as set forth herein; (ii) the Initial Note shall be amended and restated in its entirety in the form of amended and restated Initial Note attached hereto as Exhibit B (the "AMENDED INITIAL NOTE") and the Company and Mellon HBV hereby agree to be bound by the provisions of the Amended Initial Note and that the Initial Note shall be deemed cancelled as of the date of the Amended Initial Note; and (iii) the Mellon Additional Note shall be amended and restated in its entirety in the form of amended and restated Mellon Additional Note attached hereto as Exhibit C (the "AMENDED ADDITIONAL NOTE") and the Company and Mellon HBV hereby agree to be bound by the provisions of the Amended Additional Note and that the Mellon Additional Note shall be deemed cancelled as of the date of the Amended Additional Note.


1. DEFINITIONS.

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

"ADDITIONAL NOTE" means an additional US $5,000,000 convertible promissory note due March 1, 2010 issued by the Company in substantially the form attached to this Agreement as Exhibit D;

"ADDITIONAL NOTE CLOSING" has the meaning set forth in Section 2.3 below;

"ADDITIONAL NOTE CLOSING FINANCIAL STATEMENTS" has the meaning set forth in Section 5.2 below.

"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 Convertible Note Purchase Agreement, as amended from time to time;

"AMENDED ADDITIONAL NOTE" has the meaning set forth in Section A above;

"AMENDED INITIAL NOTE" has the meaning set forth in Section A above;

"BLACK RIVER" means Black River Global Credit Fund Ltd.;

"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 Initial Closing, the June 27, 2005 Closing and the Additional Note Closing;

"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;

"CONVERSION SHARES" has the meaning set forth in Section 3 below;

"CORPORATE TRANSACTION" means, whether effected in one transaction or one or more related transactions, (i) a liquidation, dissolution or winding up of the Company, (ii) a sale of all or substantially all of the assets of the Company or (iii) a merger, consolidation or sale of capital stock as a result of which the stockholders of the Company immediately prior to such merger, consolidation or sale own less than 50% of the Company's voting power immediately after such merger, consolidation or sale;

2

"DISCLOSURE MATERIALS" has the meaning set forth in Section 5.3 below;

"EQUITY SECURITIES" means any share or interest in the Company and any convertible notes, warrants or other instruments convertible into any share or interest in the Company;

"EVENT OF DEFAULT" has the meaning set forth in Section 11 below;

"EXCLUDED SECURITIES" means, with respect to any Equity Securities issued by the Company, (i) the Notes and the Conversion Shares; (ii) Common Stock issued or issuable as a dividend or distribution on or upon conversion of the preferred stock of the Company; (iii) Common Stock issued or issuable by reason of a dividend, stock split, split-up or other distribution on Common Stock, (iv) any Common Stock issued or issuable (including pursuant to options or warrants) to financial institutions in connection with commercial credit arrangements approved by the Board of Directors of the Company, (v) any Common Stock issued or issuable to employees, officers, or directors of the Company or their respective immediate family members pursuant to currently outstanding or newly created options or warrants that are approved by the Board of Directors of the Company or a committee thereof, (vi) Common Stock issued upon conversion of the Company's 5% Convertible Subordinated Notes due on or about the third anniversary of the Series C Closing Date as defined in the Restated Charter in the aggregate principal amount of E1,374,750, (vii) shares or interests issued or issuable pursuant to any rights or agreements, options, warrants or convertible securities outstanding as of the date of this Agreement or the issuance of any of the warrants listed on Section 5.3(a) of the Schedule of Exceptions to this Agreement or the issuance of any shares of Common Stock upon exercise thereof, (viii) any Equity Securities issued for consideration other than cash pursuant to a merger, consolidation, strategic alliance, acquisition or similar business combination approved by the Board of Directors of the Company, (ix) any Equity Securities issued in connection with any recapitalization or similar event by the Company, (x) any Equity Securities that are issued by the Company pursuant to an IPO, and (xi) any Equity Securities issued in connection with strategic transactions involving the Company and other entities, including joint ventures, manufacturing, marketing or distribution arrangements provided that the issuance of shares therein has been approved by the Board of Directors of the Company;

"FINANCIAL STATEMENTS" has the meaning set forth in the Section 5.1 below;

"FULLY-EXERCISING PURCHASER" means a Purchaser electing to purchase the full amount of the Equity Securities offered to such Purchaser in accordance with Section 4.2 below;

"GOSLING'S" means Gosling's Export (Bermuda) Limited;

"GOSLING'S INVESTMENT" means a joint venture agreement with Gosling's whereby a 60% owned subsidiary of the Company, Gosling - Castle Partners Inc., will acquire a 100% interest in the worldwide export rights of all products made by Gosling's for a total investment of $5 million;

3

"INITIAL CLOSING" means closing of the sale of the Initial Note at the offices of Orrick, Herrington & Sutcliffe LLP, 666 Fifth Avenue, New York, NY 10103-0001, at 5:00 p.m., on March 1, 2005;

"INITIAL NOTE" means that certain convertible promissory note of the Company issued to Mellon HBV due March 1, 2010;

"INTEREST NOTE" means a convertible promissory note or notes due March 1, 2010 in substantially the form attached to this Agreement as Exhibit E;

"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 1933, as amended;

"JUNE 27, 2005 CLOSING" means the closing of the sale of the Mellon Additional Note at the offices of Orrick, Herrington & Sutcliffe LLP, 666 Fifth Avenue, New York, NY 10103-0001 at 5 p.m. on June 27, 2005;

"MATERIAL ADVERSE EFFECT" means a change or effect that is or is reasonably likely to be, materially adverse to the condition (financial or otherwise), properties, assets, liabilities, business, operations or results of operations of the Company and its Affiliates, taken as a whole, or will prevent or materially delay consummation of the transactions contemplated by this Agreement or otherwise will prevent the Company and/or Affiliates from performing their material obligations under the Notes or this Agreement;

"MATURITY DATE" shall have the meaning set forth in the Notes;

"MELLON ADDITIONAL NOTE" has the meaning set forth in the recitals above;

"MELLON HBV" means Mellon HBV SPV LLC;

"NET EQUITY VALUE" means the product of (i) the aggregate amount of the Company's outstanding Equity Securities on a fully-diluted basis (excluding any warrants or options to purchase Common Stock) multiplied by (ii) the average of the highest bid and lowest asked prices on the exchange or over-the-counter quotation system on which Common Stock is listed; provided that if there are no sales of Common Stock on such exchange or over-the-counter quotation system on any given day, then the Net Equity Value for such day shall equal that of the previous day;

"NOTES" means the Amended Initial Note, the Amended Additional Note, the Additional Note and the Interest Notes, if any;

"NOTICE" has the meaning set forth in Section 4.1 below;

"ORIGINAL NOTE PURCHASE AGREEMENT" has the meaning set forth in the Recitals above.

4

"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;

"PURCHASER" or "PURCHASERS" means Mellon HBV and any other purchaser listed on Exhibit A attached hereto;

"QUALIFIED ACQUISITION DEBT" means, in connection with the acquisition of a brand related to or an entity doing business in or related to the beverage alcohol market (collectively, the "TARGET"), any debt incurred by the Company or its Affiliates in connection the acquisition of the Target (including costs and fees associated with incurring such debt) that does not exceed an amount equal to three times the Target's earnings before interest, taxes, depreciation and amortization ("EBITDA"), subject to reasonable adjustments thereof to reflect normal continuing operations of the Target as of the date of acquisition;

"QUALIFIED IPO" means an initial public offering of the Company's Common Stock that results in gross proceeds to the Company of at least US $15,000,000 (net of underwriting discounts and commissions);

"REGISTRATION RIGHTS" means registration rights granted pursuant to a registration rights agreement on terms no less favorable than those granted to the holders of the Series C Preferred as more particularly described in the Series C PPM;

"RESTATED CERTIFICATE" means the Amended Certificate of Designations, a copy of which is attached hereto as Exhibit H;

"SECURITIES ACT" means the Securities Act of 1933, as amended;

"SERIES A PREFERRED" means the Series A Convertible Preferred Stock, $1.00 par value per share, of the Company;

"SERIES B PREFERRED" means the Series B Convertible Preferred Stock, $1.00 par value per share, of the Company;

"SERIES C PREFERRED" means the Series C Convertible Preferred Stock, $1.00 par value per share, of the Company;

"SERIES C PPM" means collectively, that certain Confidential Private Placement Memorandum dated October 14, 2004, as supplemented from time to time and as attached hereto as Exhibit G;

"SHAREHOLDERS AGREEMENT" means that certain Shareholders Agreement dated December 1, 2003, as amended, by and among the Company and certain of its shareholders;

5

"STOCK PLAN" means the Company's 2003 Stock Incentive Plan duly adopted by the Board of Directors and approved by the holders of the Company's voting capital stock; and

"SUPER MAJORITY INTEREST" means the holders of at least 70% of the then outstanding aggregate principal amount of the Notes.

"THIRD PARTY INDEBTEDNESS LIMIT" means US $15,000,000 in the aggregate; provided that in the event (i) there is a Qualified IPO and (ii) after the Initial Closing, the Company issues Equity Securities (other than debt securities and excluding US $610,442 of Series C Preferred Stock) resulting in aggregate gross proceeds of US $25,000,000 to the Company, "Third Party Indebtedness Limit" shall mean US $30,000,000 in the aggregate.

2. PURCHASE AND SALE OF NOTES.

2.1 SALE AND ISSUANCE OF INITIAL NOTE AND MELLON ADDITIONAL NOTE.

Subject to the terms and conditions of this Agreement, Mellon HBV purchased and the Company sold and issued to Mellon HBV at the Initial Closing the Initial Note and at the June 27, 2005 Closing the Mellon Additional Note against (1) payment of the purchase price in the principal amount set forth opposite such Purchaser's name on Exhibit A at each respective Closing, (2) delivery of executed counterpart signature pages to the Initial Note and Original Convertible Note Purchase Agreement at the Initial Closing and Mellon Additional Note at the June 27, 2005 Closing, respectively and (3) delivery of a validly executed IRS Form W-9 at the Initial Closing. The purchase price of each of the Initial Note and the Mellon Additional Note was equal to 100% of the principal amount of the Initial Note and the Mellon Additional Note, respectively.

2.2 SALE AND ISSUANCE OF ADDITIONAL NOTES.

Subject to the terms and conditions of this Agreement, as of the Additional Note Closing, the Company shall issue and sell to Black River and Black River shall purchase the Additional Note. The purchase price of the Additional Note shall be equal to 100% of the principal amount of the Additional Note.

2.3 CLOSING; DELIVERY.

(A) The purchase and sale of the Additional Note shall take place at the offices of Orrick, Herrington & Sutcliffe LLP, 666 Fifth Avenue, New York, New York 10103-0001 at 5:00 p.m., on August 16, 2005, or at such other time and place as the Company and Black River mutually agree upon, orally or in writing (the "ADDITIONAL NOTE CLOSING").

(B) At the Additional Note Closing, the Company shall deliver to Black River counterpart signature pages to this Agreement together with counterpart signature pages to the Additional Note against (1) payment of the purchase price for the Additional Note by check payable to the Company or by wire transfer to a bank

6

designated by the Company, (2) delivery of counterpart signature pages to this Agreement and the Additional Note, and (3) delivery of a validly completed and executed IRS Form W-8 BEN or IRS Form W-9, as applicable, establishing Black River's exemption from withholding tax, which forms are attached to this Agreement as Exhibit F.

3. REGISTRATION RIGHTS; CORPORATE TRANSACTION.

The Company hereby agrees that upon conversion of the Notes into Common Stock (the "CONVERSION SHARES") it shall enter into a registration rights agreement granting the holders of Conversion Shares Registration Rights and that the Registration Rights shall survive an IPO. The Company hereby acknowledges and agrees that in the event of a Corporate Transaction, the Purchasers shall be entitled to receive, prior and in preference to the holders of any class or series of capital stock of the Company, an amount equal to the aggregate principal amount of the Notes outstanding at such time plus all accrued but unpaid interest thereon. The Company and each Purchaser hereby acknowledge that the Company has granted registration rights in the Shareholders Agreement that are similar to those to be granted to the Purchasers and the Registration Rights to be granted to the Purchasers shall work in conjunction with, and not adversely effect the registration rights contained in the Shareholders Agreement.

4. RIGHT OF FIRST OFFER.

Subject to the terms and conditions specified in this Section 4, the Company hereby grants to each Purchaser a right of first offer with respect to future sales by the Company of any Equity Securities offered prior to the consummation of an IPO by the Company other than Excluded Securities. If, prior to the consummation of an IPO by the Company, the Company proposes to issue Equity Securities other than Excluded Securities, it shall first make an offering of such Equity Securities to each Purchaser in accordance with the following provisions:

4.1 NOTICE OF OFFERING.

The Company shall deliver a written notice (the "NOTICE") to the Purchasers stating (a) its bona fide intention to offer such Equity Securities,
(b) the number of such Equity Securities to be offered, and (c) the price and terms, if any, upon which it proposes to offer such Equity Securities.

4.2 OFFERING PERIOD.

Within 15 calendar days after delivery of the Notice, each Purchaser may elect to purchase or obtain, at the price and on the terms specified in the Notice, up to that portion of such Equity Securities which equals the proportion that the number of shares of Equity Securities then held by such Purchaser bears to the total number of shares of Equity Securities then outstanding (assuming full conversion and exercise of all convertible or exercisable securities). Such purchase shall be completed at the same closing as that of any third party purchasers or at an additional closing thereunder. The

7

Company shall promptly, in writing, inform each Fully-Exercising Purchaser of any other Purchasers' failure to purchase all the Equity Securities available to such Purchasers. During the ten (10)-day period commencing after receipt of such information, each Fully Exercising Purchaser shall be entitled to obtain that portion of the Equity Securities for which Purchasers were entitled to subscribe but which were not subscribed for by the Purchasers that is equal to the proportion that the number of shares of Equity Securities then held by such Fully-Exercising Purchaser bears to the total number of shares of Equity Securities then outstanding (assuming full conversion and exercise of all convertible or exercisable securities).

4.3 EXPIRATION OF OFFERING PERIOD.

The Company may, during the 90 day period following the expiration of the period provided in Section 4.2 hereof, offer the remaining unsubscribed portion of Equity Securities to any person or persons at a price not less than, and upon terms no more favorable to the offeree than those specified in the Notice. If the Company does not enter into an agreement for the sale of the Equity Securities within such period, or if such agreement is not consummated within 60 days of the execution thereof, the right provided hereunder shall be deemed to be revived and such Equity Securities shall not be offered unless first reoffered to the Purchasers in accordance herewith.

4.4 ACKNOWLEDGEMENT OF SHAREHOLDER RIGHT OF FIRST OFFER.

The Company and each of the Purchasers hereby acknowledge and agree that the Company has granted rights of first offer to certain of its shareholders in the Shareholders Agreement that are similar to those contained in this Section 4 and that this Section 4 shall work in conjunction with, and shall not adversely effect the rights of first offer contained in, the Shareholders Agreement.

5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

5.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY AS OF EACH CLOSING.

The Company hereby represents and warrants to each Purchaser that, except as set forth on a Schedule of Exceptions attached to this Agreement which exceptions shall be deemed to be incorporated into these representations and warranties as if made hereunder, the following representations are true and complete as of the date of each Closing, except as otherwise indicated.

(A) 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 is 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.

8

(B) AUTHORIZATION.

All corporate action 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 Notes, (ii) the performance of all obligations of the Company under this Agreement and the Notes and (iii) the authorization, issuance and delivery of the Notes and the Conversion Shares has been taken or will be taken prior to the Closing, and this Agreement and the Notes, 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, (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, or (iii) to the extent any indemnification provisions set forth in the Registration Rights may be limited by applicable federal or state securities laws.

(C) VALID ISSUANCE OF COMMON STOCK.

The Conversion Shares have been duly and validly reserved for issuance, and upon issuance in accordance with the terms of this Agreement, the Notes and the Restated Certificate, will be duly and validly issued, fully paid and nonassessable and free of restrictions on transfer other than restrictions on transfer, if any, under this Agreement, the Registration Rights, and applicable state and federal securities laws and liens or encumbrances created by or imposed by a Purchaser. Based in part upon the representations of the Purchasers in Section 6 of this Agreement and subject to the provisions of Section 5.3(c) hereof, the Conversion Shares will be issued in compliance with all applicable federal and state securities laws.

(D) COMPLIANCE WITH OTHER INSTRUMENTS; NO EVENTS OF DEFAULT.

The Company is not in violation or default of any provisions of its Restated Certificate or Bylaws, 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 Notes and the Conversion Shares 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 Event of Default shall have occurred or occur as a result of the Company's execution of this Agreement or the Notes.

9

(E) DISCLOSURE.

The Company and the Purchasers have engaged in a due diligence process, and in connection with that process the Company has made available to the Purchasers all the information reasonably available to the Company that the Purchasers have requested for deciding whether to acquire the Notes (the "DISCLOSURE MATERIALS"). Assuming the accuracy of the Purchasers' representations regarding their sophistication with respect to investments in companies similar to the Company and in light of the due diligence process mentioned above, neither (i) any representation or warranty of the Company contained in this Agreement and the exhibits attached hereto, any certificate furnished or to be furnished to the Purchasers at the Closing, or the Disclosure Materials (when read together) nor (ii) during the offering of the Series C Preferred, the Series C PPM contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading in light of the circumstances under which they were made.

5.2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY AS OF THE INITIAL CLOSING AND THE JUNE 27, 2005 CLOSING.

The Company hereby represents and warrants to each Purchaser that, except as set forth on a Schedule of Exceptions attached to this Agreement which exceptions shall be deemed to be incorporated into these representations and warranties as if made hereunder, the following representations are true and complete as of the date of the Initial Closing, except as otherwise indicated.

(A) CAPITALIZATION.

The Company's capitalization consisted, immediately prior to the Initial Closing, of:

1) 4,500,000 shares of authorized preferred stock, consisting of (i) 550,000 shares that have been designated as Series A Preferred, of which 535,715 shares are issued and outstanding immediately prior to the Initial Closing, (ii) 200,000 shares that have been designated as Series B Preferred, all of which are issued and outstanding immediately prior to the Initial Closing, (iii) 3,375,000 shares that have been designated as Series C Preferred, of which 2,914,947.25 are issued and outstanding immediately prior to the Initial Closing and (iv) 375,000 shares that remain undesignated, none of which have been issued immediately prior to the Initial Closing. The rights, privileges and preferences of the preferred stock are as stated in the Restated Certificate. All of the outstanding shares of preferred stock have been duly authorized, are fully paid and nonassessable and were issued in compliance with all applicable federal and state securities laws.

2) 20,500,000 shares of Common Stock, 3,106,666 shares of which were issued and outstanding immediately prior to the Initial Closing. All of the outstanding shares of Common Stock have been duly authorized, are fully paid

10

and nonassessable and were issued in compliance with all applicable federal and state securities laws.

3) The Company had reserved 2,000,000 shares of Common Stock for issuance to officers, directors, employees and consultants of the Company pursuant to the Stock Plan. Of such reserved shares of Common Stock, no shares have been issued pursuant to restricted stock purchase agreements, options to purchase 744,500 shares have been granted and are currently outstanding, and 1,255,500 shares of Common Stock remain available for issuance to officers, directors, employees and consultants pursuant to the Stock Plan.

4) Except for rights under the Shareholders Agreement, outstanding options issued pursuant to the Stock Plan, warrants to purchase shares of Common Stock set forth on the Schedule of Exceptions, convertible promissory notes currently convertible into 263,493 shares of Common Stock and the authorized preferred stock listed above there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal or similar rights) or agreements, orally or in writing, for the purchase or acquisition from the Company of any Equity Securities. None of the Company's stock purchase agreements or stock option documents contains a provision for acceleration (or lapse of a repurchase right) upon the occurrence of any event. The Company has never adjusted or amended the exercise price of any stock options previously awarded, whether through amendment, cancellation, replacement grant, repricing, or any other means.

5) The list of holders of the Company's Equity Securities, dated as of February 15, 2005, provided to counsel to the Purchasers, was true and correct.

(B) FINANCIAL STATEMENTS.

The Company has made available to the Purchasers its unaudited financial statements (including balance sheet, income statement and statement of cash flows) as of December 31, 2004 and its audited financial statements (including balance sheet, income statement and statement of cash flows) for the fiscal year ended December 31, 2003 (collectively, the "INITIAL CLOSING FINANCIAL STATEMENTS"). The Financial Statements have been prepared in accordance with generally accepted accounting principals 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 December 31, 2004 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

11

condition or operating results of the Company.

5.3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY AS OF THE ADDITIONAL NOTE CLOSING.

The Company hereby represents and warrants to each Purchaser that, except as set forth on a Schedule of Exceptions attached to this Agreement which exceptions shall be deemed to be incorporated into these representations and warranties as if made hereunder, the following representations are true and complete as of the date of the Additional Note Closing, except as otherwise indicated.

(A) CAPITALIZATION.

The Company's capitalization consists, immediately prior to the Additional Note Closing, of:

1) 4,500,000 shares of authorized preferred stock, consisting of (i) 550,000 shares that have been designated as Series A Preferred, of which 535,715 shares are issued and outstanding immediately prior to the Additional Note Closing, (ii) 200,000 shares that have been designated as Series B Preferred, all of which are issued and outstanding immediately prior to the Additional Note Closing, (iii) 3,375,000 shares that have been designated as Series C Preferred, of which 3,353,750 are issued and outstanding immediately prior to the Additional Note Closing and (iv) 375,000 shares that remain undesignated, none of which have been issued immediately prior to the Additional Note Closing. The rights, privileges and preferences of the preferred stock are as stated in the Restated Certificate. All of the outstanding shares of preferred stock have been duly authorized, are fully paid and nonassessable and were issued in compliance with all applicable federal and state securities laws.

2) 20,500,000 shares of Common Stock, 3,106,666 shares of which were issued and outstanding immediately prior to the Additional Note Closing. All of the outstanding shares of Common Stock have been duly authorized, are fully paid and nonassessable and were issued in compliance with all applicable federal and state securities laws.

3) The Company had reserved 2,000,000 shares of Common Stock for issuance to officers, directors, employees and consultants of the Company pursuant to the Stock Plan. Of such reserved shares of Common Stock, no shares have been issued pursuant to restricted stock purchase agreements, options to purchase 909,500 shares have been granted and are currently outstanding, and 1,090,500 shares of Common Stock remain available for issuance to officers, directors, employees and consultants pursuant to the Stock Plan.

4) Except for rights under the Shareholders Agreement, outstanding options issued pursuant to the Stock Plan, warrants to purchase shares of Common Stock set forth on the Schedule of Exceptions, convertible promissory notes currently convertible into 263,362.06 shares of Common Stock, the Notes and the Conversion Shares issuable upon conversion thereof and the authorized preferred stock

12

listed above there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal or similar rights) or agreements, orally or in writing, for the purchase or acquisition from the Company of any Equity Securities. None of the Company's stock purchase agreements or stock option documents contains a provision for acceleration (or lapse of a repurchase right) upon the occurrence of any event. The Company has never adjusted or amended the exercise price of any stock options previously awarded, whether through amendment, cancellation, replacement grant, repricing, or any other means.

5) The list of holders of the Company's Equity Securities, dated as of the Additional Note Closing, provided to counsel to the Purchasers, is true and correct.

(B) FINANCIAL STATEMENTS.

The Company has made available to the Purchasers its unaudited financial statements (including balance sheet, income statement and statement of cash flows) as of April 30, 2005 and its audited financial statements (including balance sheet, income statement and statement of cash flows) for the fiscal year ended December 31, 2004 (collectively, the "ADDITIONAL NOTE CLOSING FINANCIAL STATEMENTS"). The Financial Statements have been prepared in accordance with generally accepted accounting principals 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 April 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.

6. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.

Each Purchaser hereby represents and warrants to the Company that:

6.1 AUTHORIZATION.

Such Purchaser has full power and authority to enter into this Agreement. This Agreement, when executed and delivered by the Purchaser, will constitute a valid and legally binding obligation of the Purchaser, 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.

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6.2 PURCHASE ENTIRELY FOR OWN ACCOUNT.

This Agreement is made with the Purchaser in reliance upon the Purchaser's representation to the Company, which by the Purchaser's execution of this Agreement, the Purchaser hereby confirms, that the Notes and the Conversion Shares to be acquired by the Purchaser will be acquired for investment for the Purchaser'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 Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, the Purchaser further represents that the Purchaser 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 Notes or the Conversion Shares. The Purchaser has not been formed for the specific purpose of acquiring the Notes and the Conversion Shares.

6.3 KNOWLEDGE.

In reliance on the Disclosure Materials, the Purchaser 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 Notes and the Conversion Shares.

6.4 RESTRICTED SECURITIES.

The Purchaser understands that the Notes and Conversion Shares have 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 Purchaser's representations as expressed herein. The Purchaser understands that the Notes and the Conversion Shares are "restricted securities" under applicable U.S. federal and state securities laws and that, pursuant to these laws, the Purchaser must hold the Notes and the Conversion Shares indefinitely unless they are registered with the Securities and Exchange Commission and qualified by state authorities, or an exemption from such registration and qualification requirements is available. The Purchaser acknowledges that the Company has no obligation to register or qualify the Notes and the Conversion Shares for resale, except as set forth in Section 3 hereof. The Purchaser 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 Notes and the Conversion Shares, and on requirements relating to the Company which are outside of the Purchaser's control, and which the Company is under no obligation and may not be able to satisfy.

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6.5 NO PUBLIC MARKET.

The Purchaser 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 the Equity Securities.

6.6 LEGENDS.

The Purchaser understands that the Conversion Shares, may bear one or all of the following legends:

(A) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933."

(B) Any legend required by the Blue Sky laws of any state to the extent such laws are applicable to the shares represented by the certificate so legended.

6.7 ACCREDITED INVESTOR.

The Purchaser is an accredited investor as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

7. CONDITIONS TO THE PURCHASERS' OBLIGATIONS AT CLOSING.

The obligation of each Purchaser to purchase Notes at a Closing is subject to the fulfillment, on or before such Closing, of each of the following conditions, unless otherwise waived by such Purchaser:

(A) the representations and warranties of the Company contained in Section 5 shall be true on and as of such Closing with the same effect as though such representations and warranties had been made on and as of the date of such Closing;

(B) 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 such Closing;

(C) the non-occurrence of any event having a Material Adverse Effect;

15

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

(E) compliance by the Company with all applicable federal and state securities laws;

(F) completion of all required and/or appropriate state and local filings required to be made by the Company for the issuance and delivery of the Notes and the Conversion Shares;

(G) a legal opinion of counsel to the Company in a form reasonably satisfactory to the Purchasers shall have been delivered to the Purchasers;

(H) the definitive agreements providing for the Gosling's Investment shall have been executed by the parties thereto and, with respect to the Initial Closing, on terms reasonably satisfactory to the Purchasers;

(I) the Company shall have issued and sold for cash consideration at least US $6,889,578 of the Series C Preferred prior to the Initial Closing and at least an additional US $610,422 of the Series C Preferred within forty five (45) days from the Initial Closing; and

(J) no default or Event of Default under the Notes shall have occurred and be continuing or would arise as a result of the sale of the Notes at such Closing.

8. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING.

The obligation of the Company to sell Notes to each Purchaser at a Closing is subject to the fulfillment, on or before such Closing, of each of the following conditions, unless otherwise waived by the Company:

8.1 REPRESENTATIONS AND WARRANTIES.

The representations and warranties of each Purchaser contained in Section 6 shall be true on and as of such Closing with the same effect as though such representations and warranties had been made on and as of the date of such Closing.

8.2 QUALIFICATIONS.

All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Notes and Conversion Shares pursuant to this Agreement shall be obtained and effective as of the Closing.

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8.3 DELIVERY OF FORM W-8 BEN OR FORM W-9.

Each Purchaser shall have completed and delivered to the Company a validly executed IRS Form W-8 BEN or IRS Form W-9, as applicable, establishing such Purchaser's exemption from withholding tax, which forms are attached as Exhibit F to this Agreement.

8.4 AMENDED AND RESTATED AGREEMENT AND NOTES.

Mellon HBV shall have executed and delivered to the Company this Agreement, the Amended Initial Note and the Amended Additional Note and returned the Initial Note and the Mellon Additional Note to the Company for cancellation.

9. AFFIRMATIVE COVENANTS OF THE COMPANY.

The Company will do all of the following for so long as any of the Notes are outstanding:

9.1 FINANCIAL STATEMENTS; REPORTS; CERTIFICATES.

(A) Deliver to the Purchasers: (i) as soon as possible, but no later than forty-five (45) days after the last day of each month, the monthly financial statements in a form reasonably acceptable to the Purchasers together with a Compliance Certificate signed by an officer of the Company in the form of Exhibit I; (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 Purchasers; (iii) a prompt report of any legal actions pending or threatened against the Company that could result in damages or costs to the Company of US $150,000 or more; and (iv) budgets, sales projections, operating plans or other financial information the Purchasers reasonably request.

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

9.2 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 Purchasers, on demand, appropriate certificates attesting to such payment.

9.3 NOTICES.

Provide notice within thirty (30) days of the Company's receipt of any governmental and/or environmental proceedings initiated against the Company that is

17

reasonably likely to result in damages or costs to the Company of US $150,000 or more.

9.4 CORPORATE EXISTENCE AND COMPLIANCE WITH LAWS.

Maintain its and its Affiliates 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.

9.5 FURTHER ASSURANCES.

Take such further action as the Purchasers reasonably request to fulfill the Company's obligations under this Agreement.

10. NEGATIVE COVENANTS OF THE COMPANY.

So long as at least US $1,500,000 of the principal amount of the Notes remains outstanding and is held by the Purchasers or Affiliates of the Purchasers, the Company will not:

10.1 AMENDMENT OR MODIFICATION OF THE NOTES.

Without the prior written consent of the Super Majority Interest, amend or modify any right, preference, privilege of the Notes that materially adversely affects the rights of the holders thereof.

10.2 ISSUANCE OF EQUITY SECURITIES.

Prior to a Qualified IPO, without the prior written consent of the Super Majority Interest, except for Excluded Securities, issue Equity Securities (i) pari passu or in preference to the Notes or (ii) in a single transaction or series of related transactions, in an amount that would represent more than a twenty percent (20%) cumulative change of ownership in the Company.

10.3 CHANGE IN AUTHORIZED CAPITAL STOCK.

Without the prior written consent of the Super Majority Interest, prior to a Qualified IPO, increase or decrease the total number of authorized shares of capital stock of the Company, except as required to permit the additional issuance of Equity Securities as provided for in Section 10.2 above.

10.4 MERGERS OR ACQUISITIONS.

Without the prior written consent of the Super Majority Interest, except for the Gosling's Investment, prior to a Qualified IPO, engage in any Corporate Transaction.

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10.5 INDEBTEDNESS OF THE COMPANY.

Without the prior written consent of the Super Majority Interest, at any time prior to the Company maintaining a Net Equity Value of at least US $100,000,000 for a period of no less than 90 days, incur third party indebtedness of the Company (excluding the Notes) of more than the Third Party Indebtedness Limit; provided however, that (i) the Third Party Indebtedness Limit shall not include Qualified Acquisition Debt and (ii) once the Company has maintained a Net Equity Value of at least US $100,000,000 for a period of no less than 90 days, this covenant shall no longer apply.

10.6 DISTRIBUTIONS; INVESTMENTS.

Without the prior written consent of the holders of at least a majority in interest of the principal amount outstanding of the Notes, except for any mandatory dividends payable on the Series A Preferred, the Series B Preferred or the Series C Preferred, pay any dividends or make any distribution or payment on any Equity Securities.

10.7 REDEMPTION OR REPURCHASE OF EQUITY SECURITIES.

Without the prior written consent of the holders of at least a majority in interest of the principal amount outstanding of the Notes, redeem or repurchase Equity Securities (other than repurchases of Common Stock from employees upon termination of their employment with the Company).

10.8 TRANSACTIONS WITH AFFILIATES.

Without the prior written consent of the Super Majority Interest, directly or indirectly enter into or permit to exist any material transaction with any Affiliate of the Company except for transactions that are in the ordinary course of the Company's business, upon fair and reasonable terms that are no less favorable to the Company than would be obtained in an arm's length transaction with a nonaffiliated Person.

10.9 MAINTENANCE.

Without the prior written consent of the Super Majority Interest, by charter amendment or through reorganization, consolidation, merger, dissolution or sale of assets, or by any other voluntary act, avoid or seek to avoid the observance or performance of any of the covenants, stipulations or conditions to be observed or performed hereunder by the Company, or the provisions contained in the Company's organizational documents relating to the rights of the holders of the Notes and/or the Conversion Shares.

10.10 SECURITIES LAW COMPLIANCE.

Without the prior written consent of the Super Majority Interest, take any action between the date of this Agreement and the date of the Initial Closing that would cause

19

the issuance of the Notes and the Conversion Shares to fail to comply with all applicable federal and state securities laws.

11. EVENTS OF DEFAULT.

Any one of the following is an "EVENT OF DEFAULT":

11.1 PAYMENT DEFAULT.

If the Company fails to pay (i) any of the principal amount of and accrued interest on the Notes on the Maturity Date of any such Notes or (ii) any fees related to the Notes when due, and such failure to pay such fees remains unremedied for five (5) Business Days.

11.2 CROSS-DEFAULT.

If the Company fails to pay any other debt for borrowed money in excess of US $250,000 of the Company as and when it becomes due and payable.

11.3 COVENANT DEFAULT.

(A) If the Company fails to perform any obligation under
Section 9 and such failure remains unremedied for more than ten (10) Business Days, or

(B) If the Company fails or neglects to perform, keep, or observe any other material term, provision, condition, covenant, or agreement contained in this Agreement, the Notes or any other present or future agreement between the Company and the Purchasers (other than those contained in Section 9 of this Agreement) and as to any default under such other term, provision, condition, covenant or agreement that can be cured, has failed to cure such default within twenty (20) days after the occurrence thereof; provided, however, that if the default cannot by its nature be cured within the twenty (20) day period or cannot after diligent attempts by the Company be cured within such twenty (20) 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 thirty (30) 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;

11.4 ATTACHMENT.

If any material portion of the Company's assets is attached, seized, levied on, or comes into possession of a trustee or receiver and the attachment, seizure or levy is not removed in thirty (30) days, or if the Company is enjoined, restrained, or prevented by court order from conducting a material part of its business or if a judgment or other claim becomes a lien on a material portion of the Company's assets, or if a notice of lien, levy, or assessment is filed against any of the Company's assets by any government agency and not paid within thirty (30) days after the Company receives

20

notice. Such notices shall not constitute Events of Default if stayed or if a bond is posted pending contest by the Company;

11.5 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 sixty (60) days;

11.6 OTHER AGREEMENTS.

If there is a default in any agreement between the Company and a third party that gives the third party the right to accelerate any indebtedness exceeding US $250,000;

11.7 JUDGMENTS.

If one or more money judgments in the aggregate of at least US $250,000 are rendered against the Company and is unsatisfied and unstayed for thirty (30) days; or

11.8 MISREPRESENTATIONS.

If the Company or any Person acting for the Company has made or makes any material misrepresentation or material misstatement now or later in any warranty or representation in this Agreement or in any writing delivered to the Company or to induce the Company to enter this Agreement or the Notes.

12. BOARD REPRESENTATION.

So long as Mellon HBV and Black River each hold at least 5% of the capital stock of the Company (on an as-converted basis), Mellon HBV and Black River may each designate in writing a representative to the Board of Directors of the Company. Each representative shall have the right to attend meetings of the Board of Directors of the Company as an observer, and shall receive proper notice of such meetings, and shall be entitled to receive copies of all proposed actions by written consent of the Board of Directors and all materials provided to members of Board of Directors in connection with the matters to be discussed at such meetings.

13. MISCELLANEOUS.

13.1 SUCCESSORS AND ASSIGNS.

Subject to the limitations set forth herein, each of the Purchasers may assign this Agreement and the rights and obligations conferred hereby, in whole or in part, to eligible financial institutions upon the written consent of the Company, such consent not to be unreasonably withheld or delayed. 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

21

successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

13.2 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.

13.3 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.

13.4 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.

13.5 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.

13.6 FINDER'S FEE.

Except for the fee to be paid by the Company to Fieldstone Partners upon the occurrence of the Initial Closing, each party represents that it neither is nor will be obligated for any finder's fee or commission in connection with this transaction. Each Purchaser agrees to indemnify and to hold harmless the Company from any liability for any commission or compensation in the nature of a finder's fee (and the costs and expenses of defending against such liability or asserted liability) for which each Purchaser or any of its officers, employees, or representatives is responsible. The Company agrees to indemnify and hold harmless each Purchaser from any liability for any commission or compensation in the nature of a finder's fee (and the costs and expenses of defending against such liability or asserted liability) for which the Company or any of its officers, employees or representatives is responsible.

13.7 AMENDMENTS AND WAIVERS.

Except as required by Section 10 of this Agreement, any term of this Agreement may be amended or waived only with the written consent of the Company and the holders of at least a majority in interest of the principal amount outstanding of the Notes;

22

provided however that if the amendment or waiver will materially adversely affect the holders of the Notes, then such amendment or waiver will require the Consent of the Company and the Super Majority Interest. Any amendment or waiver effected in accordance with this Section 13.7 shall be binding upon each Purchaser and each transferee of the Notes or Conversion Shares, each future holder of all such Notes or Conversion Shares, and the Company.

13.8 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.

13.9 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.

13.10 EXCULPATION AMONG PURCHASERS.

Each Purchaser 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. Each Purchaser agrees that no Purchaser nor the respective controlling persons, officers, directors, partners, agents, or employees of any Purchaser shall be liable for any action heretofore or hereafter taken or omitted to be taken by any of them in connection with the Notes or the Conversion Shares.

13.11 FEE AND COST REIMBURSEMENT; CLOSING FEE.

The Company shall at each Closing reimburse the Purchasers for all reasonable legal fees and diligence costs and expenses incurred by the Purchasers in connection with such Closing for a maximum amount of US $20,000. The Company shall pay to Black River at the Additional Note Closing a fee equal to US $125,000. The Company shall also have paid to Mellon HBV at the Initial Closing a fee equal to US $250,000.

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13.12 LOCK-UP AGREEMENT.

In connection with the initial public offering of the Company's securities and upon request of the Company or the underwriters managing such offering of the Company's securities, each Purchaser agrees not to sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any securities of the Company, however or whenever acquired (other than those included in the registration) without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed 180 days) from the effective date of such registration as may be requested by the Company or such managing underwriters and to execute an agreement reflecting the foregoing as may be requested by the underwriters at the time of the Company's initial public offering, so long as such terms are no more restrictive than the terms imposed upon holders of the Series C Preferred.

[Signature Pages Follow]

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The parties have executed this Amended and Restated Convertible Note Purchase 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

PURCHASERS:

MELLON HBV SPV LLC

By: /s/ James P. Jenkins
   ----------------------------------

Name:  James P. Jenkins
     --------------------------------

Title: Portfolio Manager
      -------------------------------

Address: Suite 3300 200 Park Avenue New York, NY 10166 Facsimile Number: (212) 808-3955

BLACK RIVER GLOBAL CREDIT FUND LTD.

By: /s/ Paula M. Weis
   ----------------------------------

Name:  Paula M. Weis
     --------------------------------

Title: Authorized Signer
      -------------------------------

Address: 623 Fifth Avenue, 27th Floor New York, NY 10022 Facsimile Number: (212) 588-7299


SCHEDULE OF EXHIBITS

Exhibit A - Schedule of Purchasers

Exhibit B - Form of Amended Initial Note

Exhibit C - Form of Amended Additional Note

Exhibit D - Form of Additional Note

Exhibit E Form of Interest Note

Exhibit F - Purchaser Withholding Exemptions

Exhibit G - Series C Private Placement Memorandum

Exhibit H Restated Certificate

Exhibit I Compliance Certificate


EXHIBIT A

SCHEDULE OF PURCHASERS


       NAME/ADDRESS AND FACSIMILE NUMBER            ORIGINAL PRINCIPAL AMOUNT
                  OF PURCHASER                               OF NOTE
INITIAL CLOSING:
Mellon HBV SPV LLC                                        US $5,000,000
c/o Mellon HBV Alternative Strategies LLC
200 Park Avenue, Suite 3300
New York, New York  10166
(212) 808-3955
JUNE 27, 2005 CLOSING:
Mellon HBV SPV LLC                                        US $5,000,000
c/o Mellon HBV Alternative Strategies LLC
200 Park Avenue, Suite 3300
New York, New York  10166
(212) 808-3955
AUGUST 16, 2005 CLOSING:
Black River Global Credit Fund Ltd.                       US $5,000,000
623 Fifth Avenue, 27th Floor
New York, New York 10022
Fax (212) 588-7299
--------------------------------------------------------------------------------
TOTAL:                                                   US $15,000,000


EXHIBIT E

FORM OF INTEREST NOTE


EXECUTION COPY

NEITHER THIS NOTE NOR THE EQUITY SECURITIES FOR WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY OTHER JURISDICTION. NONE OF SUCH SECURITIES MAY 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.

Convertible Promissory Note

$ Date:

FOR VALUE RECEIVED, the undersigned Castle Brands Inc., a Delaware corporation (the "Company"), promises to pay to the order of _______________ ("Holder") the principal amount of _______________ US DOLLARS (US $_______________) (the "Principal Amount"), together, with interest on the unpaid balance of the Principal Amount, on the Maturity Date, and subject to the following provisions.

The following is a statement of the rights of Holder and the conditions to which this Note is subject, and to which 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 Convertible Note Purchase Agreement unless otherwise defined herein:

"40% Conversion" has the meaning set forth in Section 7.2(i) below;

"Additional Stock" means any Equity Securities of the Company issued by the Company after the applicable Closing Date but prior to the second anniversary of the applicable Closing Date other than (i) the Notes (as defined in the Convertible Note Purchase Agreement) and the Conversion Shares; (ii) Common Stock issued or issuable as a dividend or distribution on or upon conversion of the Preferred Stock of the Company; (iii) Common Stock issued or issuable by reason of a dividend, stock split, split-up or other distribution on Common Stock, (iv) any Common Stock issued or issuable (including pursuant to options or warrants) to financial institutions in connection with commercial credit arrangements approved by the Board of Directors of the Company, (v) any Common Stock issued or issuable to employees, officers, or directors of the Company or their respective immediate family members pursuant to currently outstanding or newly created options or warrants that are approved by the Board of Directors of the Company or a committee thereof, (vi) Common Stock issued upon conversion of the Company's 5% Convertible Subordinated Notes due on or about the third anniversary of the Series C Closing Date as defined in the Restated Charter in the aggregate principal amount of (EURO)1,374,750, (vii) shares or interests


issued or issuable pursuant to any rights or agreements, options, warrants or convertible securities outstanding as of the date of this Note or the issuance of any of the warrants listed on Section 5.3(a) of the Schedule of Exceptions to the Convertible Note Purchase Agreement or the issuance of any shares of Common Stock upon exercise thereof, (viii) any Equity Securities issued for consideration other than cash pursuant to a merger, consolidation, strategic alliance, acquisition or similar business combination approved by the Board of Directors of the Company, (ix) any Equity Securities issued in connection with any recapitalization or similar event by the Company, (x) any Equity Securities that are issued by the Company pursuant to an IPO, and (xi) any Equity Securities issued in connection with strategic transactions involving the Company and other entities, including joint ventures, manufacturing, marketing or distribution arrangements provided that the issuance of shares therein has been approved by the Board of Directors of the Company;

"Certificate of Designations" has the meaning set forth in Section 7.2 below;

"Conversion Notice" has the meaning set forth in Section 7.3 below;

"Conversion Price" means a price equal to, in the case of conversion of this Note into Conversion Shares, $8.00 per share; provided, however, that (i) in the event that the Company issues or is deemed to issue Additional Stock at a per share purchase price of less than the then in effect Conversion Price, the Conversion Price shall be subject to the following adjustment upon the issuance of any Additional Stock: the new Conversion Price shall be determined by multiplying the Conversion Price then in effect by a fraction, (x) the numerator of which shall be the number of shares of Common Stock deemed outstanding immediately prior to such issuance ("Outstanding Common") plus the number of shares of Common Stock that the aggregate consideration received by the Company for such issuance would purchase at the Conversion Price then in effect; and (y) the denominator of which shall be the number of shares of Outstanding Common plus the number of shares of such Additional Stock, and (ii) the Conversion Price shall be proportionately adjusted in the case of any stock dividend, stock split, split-up or other distribution on Common Stock; for purposes of clarity, "Outstanding Common" shall include all outstanding shares of Common Stock and all shares of Common Stock issuable upon conversion of outstanding shares of Preferred Stock or other convertible instruments of the Company or issuable upon exercise of options, warrants or other rights to acquire Common Stock;

"Conversion Shares" means Common Stock to which Holder shall be entitled under the terms of this Note;

"Convertible Note Purchase Agreement" means that certain Amended and Restated Convertible Note Purchase Agreement dated as of August [__], 2005, by and among the Company and the Purchasers, and/or their affiliates and assigns, set forth on Exhibit A thereto;

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

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"Discounted Conversion Rate" has the meaning set forth in Section 7.2(i) below;

"Equity Securities" means (i) any share or interest in the Company,
(ii) any security convertible into or exercisable or exchangeable for, with or without consideration, any share or interest (including any option to purchase such convertible security) in the Company, (iii) any security carrying any warrant or right to subscribe to purchase any share, interest or other security in the Company or (iv) any such warrant or right;

"Final Conversion" has the meaning set forth in Section 7.2 below;

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

"Interest Note Rate" means the rate of 7.5% calculated on the basis of a 360 day year based on the number of days actually elapsed including the first day but excluding the day on which such calculation is being made; provided that in the absence of an Event of Default and in the event the Company does not complete an IPO by June 30, 2006, the Interest Note Rate will increase by 100 basis points as of June 30, 2006; provided further that upon the occurrence of an Event of Default, the Interest Note Rate will increase to the Default Rate;

"Maturity Date" means March 1, 2010 or such earlier date as this Note shall become due and payable in accordance with Section 2.4 or Section 6 below;

"Note" means this Convertible Promissory Note due March 1, 2010;

"Principal Amount" has the meaning set forth in the introductory paragraph to this Note; and

"Series C Preferred Conversion" has the meaning set forth in Section 7.2 below.

2. Time of Payment.

2.1 Payment at Maturity Date.

The Principal Amount together with all accrued but unpaid interest 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.

2.2 Interest Payment.

Interest shall accrue on the Principal Amount at the Interest Note Rate. Interest accrued but unpaid on the Principal Amount as of the end of each quarter of

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each calendar year that this Note remains outstanding shall be payable within 30 days after the end of each calendar quarter in accordance with the terms of this Note.

2.3 No Prepayment.

Except as set forth in this Note, the Company may not prepay the Principal Amount and/or the accrued but unpaid interest or any part thereof without the prior written consent of the Super Majority Interest.

2.4 Maturity Date Acceleration.

In the event that any of the holders of Series A Preferred, Series B Preferred or Series C Preferred have the right to require the Company to redeem any of their shares of preferred stock, at least forty-five (45) days before the date the Company is required to redeem such stock, the Company shall provide written notice to each Holder describing the number of shares of stock the Company is required to redeem, the redemption price, the date of redemption (the "Redemption Date") and any other material terms and conditions relating to such redemption. Within fifteen (15) days after receipt of such written notice, holders of at least a majority in interest of the principal amount outstanding on the Notes may notify the Company in writing of their election to accelerate the Maturity Date to the date ten (10) Business Days prior to the Redemption Date. Upon the written election to accelerate the Maturity Date in accordance with the preceding sentence, the Company agrees that it shall pay the then outstanding Principal Amount, all accrued but unpaid interest and other amounts due under this Note prior to the payment of any amount to redeem the Company's preferred stock.

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 on the Maturity Date; (b) the Company's failure to pay any fees related to this Note when due and any such failure to pay shall remain unremedied for five (5) Business Days or (c) an Event of Default under, and as defined in, the Convertible Note Purchase Agreement.

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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 Super Majority Interest, 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 Note Rate shall increase by 400 basis points above the then applicable Interest Note Rate (the "Default Rate").

7. Conversion.

Subject to the provisions hereof, this Note, unless otherwise provided hereinafter, will be converted into shares of Conversion Shares at any time, and from time to time, in whole, as follows:

7.1 Voluntary Conversion.

Any Note may be converted into Conversion Shares, at any time or from time to time, at the option of the holder of such Note. The number of shares of Conversion Shares into which such Note may be converted shall be determined by dividing the principal amount of such Note then outstanding by the Conversion Price, as adjusted and then in effect.

7.2 Automatic Conversion.

(i) Forty percent (40%) of the principal under the Notes shall be converted automatically into Conversion Shares at a 12.5% discount to the then-applicable Conversion Price (the "Discounted Conversion Price") upon the completion of a Qualified IPO (the "40% Conversion"); and

(ii) The remaining principal under the Notes shall be converted automatically into Conversion Shares at the then applicable Conversion Price (the "Final Conversion") on the first date that is both (A) after the third anniversary of the date of the Initial Closing and (B) the 30th consecutive trading day on a nationally recognized securities exchange or dealer quotation system from and after the consummation of an IPO by the Company on which the closing price of the Company's Common Stock is no less than $20.00 per share (subject to proportionate adjustments for dividends, stock splits, split-ups or other distributions on Common Stock).

Notwithstanding anything to the contrary in this Note, if (i) the 40% Conversion constitutes an issuance of "Additional Common Stock" under the Company's Certificate of Designations of the Series A Convertible Preferred Stock, Series B Convertible Preferred Stock and Series C Convertible Preferred Stock , as amended from time to time, (the "Certificate of Designations") requiring an adjustment to the Conversion Price (as defined in the Certificate of Designations)

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applicable to the Company's Series C Preferred Stock, and (ii) such adjustment to the Series C Preferred Stock Conversion Price has not been waived by the requisite majority of holders of Series C Preferred Stock, then, upon conversion of Series C Preferred Stock into Common Stock (the "Series C Preferred Conversion"), the Conversion Price applicable to the outstanding principal under this Note that was not subject to the 40% Conversion shall be adjusted pursuant to the formula set forth in the definition of Conversion Price in this Note as if the Common Stock being issued upon the 40% Conversion were issued immediately prior to the Series C Preferred Conversion as shares of Additional Stock at the Discounted Conversion Price.

Upon the Final Conversion, this Note, without any further action of the parties, shall cease to be a payment obligation and shall represent only the right to represent the Conversion Shares.

7.3 Conversion; Surrender of Note.

Any voluntary conversion of this Note shall be by presentation and surrender of this Note to the Company at the principal office of the Company, accompanied by a written notice of conversion (the "Conversion Notice"). The Conversion Notice shall become effective when received by the Company.

7.4 Conversion Closing.

Upon presentation and surrender of this Note and the Conversion Notice, the Company shall promptly conduct a Closing to effect the issuance of the Conversion Shares to Holder. At such Closing, the Company shall deliver to Holder validly executed share certificates representing such Conversion Shares.

7.5 Deemed Stockholder.

Holder shall not, by virtue hereof, be entitled to any rights of a stockholder in the Company, but will have the rights of a debt holder set forth in the Convertible Note Purchase Agreement and/or this Note. Upon receipt by the Company of the Conversion Notice, Holder shall be deemed to be holder of the shares issuable upon such conversion notwithstanding that the share transfer books of the Company shall then be closed and that certificates representing such shares shall not then be actually delivered to Holder. The Company shall pay all taxes and other charges that may be payable in connection with the issuance of the shares and the preparation and delivery of stock certificates pursuant to this Section 7 in the name of Holder, but shall not pay any taxes payable by Holder by virtue of the holding, issuance, exercise or sale of this Note or the shares by Holder.

7.6 No Fractional Shares.

No fractional Conversion Shares shall be issued in connection with the conversion of this Note, and the number of shares issued shall be rounded to the nearest whole number (with one-half being rounded downward) and the amount of principal constituting such fraction shall be paid in cash.

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8. 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.

9. 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.

10. Senior Subordinated Note.

This Note and the principal and interest payable hereunder shall be wholly subordinate in right of payment to all obligations of the Company under the senior secured notes issued pursuant to that certain Trust Indenture Agreement dated as of June 1, 2004, between the Company and JPMorgan Chase Bank, and joined by MHW, Ltd., as collateral agent, and other senior debt subsequently incurred, subject to the limitations on Company indebtedness set forth in
Section 10.5 of the Convertible Note Purchase Agreement.

11. 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.

12. 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.

13. 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.

14. 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

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other words of similar import refer to this Note as a whole and not to any particular part of this Note.

15. 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).

16. 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.

17. Specific Performance.

Without limiting the foregoing or any remedies available to the parties, the parties will be entitled to specific performance of the obligations hereunder and injunctive relief against actual or threatened violations of the obligations of any person subject to this Note.

18. Transfer and Assignment.

This Note and the rights conferred hereby shall be transferable by Holder to eligible financial institutions, subject, in whole or in part, to the limitations set forth in the Convertible Note Purchase Agreement with the written consent of the Company, which consent shall not be unreasonably withheld or delayed. If this Note should be transferred in part only, the Company shall, upon surrender of this Note for cancellation, execute and deliver new Notes evidencing, separately, the rights and obligations of Holder and the rights and obligations of the transferee to payment and conversion of their respective portions of the principal and interest hereunder into Conversion Shares.

19. 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.

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20. Amendments and Waivers.

Any term of this Note may be amended or waived only with the written consent of the Company and the holders of a majority in interest of the principal amount of the Notes outstanding under the Convertible Note Purchase Agreement; provided however that if the amendment or waiver will materially adversely affect any holder(s) of the Notes, then such amendment or waiver will require the consent of the Company and the Super Majority Interest. Any amendment or waiver effected in accordance with this Section 20 shall be binding upon each Holder and each transferee of this Note, the Conversion Shares, each future holder of all such Conversion Shares, and the Company.

21. 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 Note 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]

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

CASTLE BRANDS INC.                             ACKNOWLEDGED AND AGREED TO BY:

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

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


By:                                        By:
   ---------------------------------          ----------------------------------
   Mark Andrews, Chairman &
   CEO                                        ----------------------------------

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

Castle Brands Inc.
29th Floor
570 Lexington Avenue
New York, NY  10022

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EXHIBIT 10.14
EXECUTION COPY

NEITHER THIS NOTE NOR THE EQUITY SECURITIES FOR WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY OTHER JURISDICTION. NONE OF SUCH SECURITIES MAY 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.

AMENDED AND RESTATED CONVERTIBLE PROMISSORY NOTE

$5,000,000 Date: March 1, 2005

FOR VALUE RECEIVED, the undersigned Castle Brands Inc., a Delaware corporation
(the "COMPANY"), promises to pay to the order of Mellon HBV SPV LLC ("HOLDER")
the principal amount of Five Million US DOLLARS (US $5,000,000) (the "PRINCIPAL AMOUNT"), together, with interest on the unpaid balance of the Principal Amount, on the Maturity Date, and subject to the following provisions.

The following is a statement of the rights of Holder and the conditions to which this Note is subject, and to which 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 Convertible Note Purchase Agreement unless otherwise defined herein:

"40% CONVERSION" has the meaning set forth in Section 7.2(i) below;

"ADDITIONAL STOCK" means any Equity Securities of the Company issued by the Company after the applicable Closing Date but prior to the second anniversary of the applicable Closing Date other than (i) the Notes (as defined in the Convertible Note Purchase Agreement) and the Conversion Shares; (ii) Common Stock issued or issuable as a dividend or distribution on or upon conversion of the Preferred Stock of the Company; (iii) Common Stock issued or issuable by reason of a dividend, stock split, split-up or other distribution on Common Stock, (iv) any Common Stock issued or issuable (including pursuant to options or warrants) to financial institutions in connection with commercial credit arrangements approved by the Board of Directors of the Company, (v) any Common Stock issued or issuable to employees, officers, or directors of the Company or their respective immediate family members pursuant to currently outstanding or newly created options or warrants that are approved by the Board of Directors of the Company or a committee thereof, (vi) Common Stock issued upon conversion of the Company's 5% Convertible Subordinated Notes due on or about the third anniversary of the Series C Closing Date as defined in the Restated Charter in the aggregate principal amount of E1,374,750, (vii) shares or interests issued or issuable pursuant to any rights or agreements, options, warrants or


convertible securities outstanding as of the date of this Note or the issuance of any of the warrants listed on Section 5.3(a) of the Schedule of Exceptions to the Convertible Note Purchase Agreement or the issuance of any shares of Common Stock upon exercise thereof, (viii) any Equity Securities issued for consideration other than cash pursuant to a merger, consolidation, strategic alliance, acquisition or similar business combination approved by the Board of Directors of the Company, (ix) any Equity Securities issued in connection with any recapitalization or similar event by the Company, (x) any Equity Securities that are issued by the Company pursuant to an IPO, and (xi) any Equity Securities issued in connection with strategic transactions involving the Company and other entities, including joint ventures, manufacturing, marketing or distribution arrangements provided that the issuance of shares therein has been approved by the Board of Directors of the Company;

"CERTIFICATE OF DESIGNATIONS" has the meaning set forth in Section 7.2 below;

"CONVERSION NOTICE" has the meaning set forth in Section 7.3 below;

"CONVERSION PRICE" means a price equal to, in the case of conversion of this Note into Conversion Shares, $8.00 per share; provided, however, that (i) in the event that the Company issues or is deemed to issue Additional Stock at a per share purchase price of less than the then in effect Conversion Price, the Conversion Price shall be subject to the following adjustment upon the issuance of any Additional Stock: the new Conversion Price shall be determined by multiplying the Conversion Price then in effect by a fraction, (x) the numerator of which shall be the number of shares of Common Stock deemed outstanding immediately prior to such issuance ("OUTSTANDING COMMON") plus the number of shares of Common Stock that the aggregate consideration received by the Company for such issuance would purchase at the Conversion Price then in effect; and (y) the denominator of which shall be the number of shares of Outstanding Common plus the number of shares of such Additional Stock, and (ii) the Conversion Price shall be proportionately adjusted in the case of any stock dividend, stock split, split-up or other distribution on Common Stock; for purposes of clarity, "Outstanding Common" shall include all outstanding shares of Common Stock and all shares of Common Stock issuable upon conversion of outstanding shares of Preferred Stock or other convertible instruments of the Company or issuable upon exercise of options, warrants or other rights to acquire Common Stock;

"CONVERSION SHARES" means Common Stock to which Holder shall be entitled under the terms of this Note;

"CONVERTIBLE NOTE PURCHASE AGREEMENT" means that certain Amended and Restated Convertible Note Purchase Agreement dated as of August 16, 2005, by and among the Company and the Purchasers, and/or their affiliates and assigns, set forth on Exhibit A thereto;

"DEFAULT RATE" shall have the meaning set forth in Section 6.1 below;

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"DISCOUNTED CONVERSION PRICE" has the meaning set forth in Section 7.2(i) below;

"EQUITY SECURITIES" means (i) any share or interest in the Company,
(ii) any security convertible into or exercisable or exchangeable for, with or without consideration, any share or interest (including any option to purchase such convertible security) in the Company, (iii) any security carrying any warrant or right to subscribe to purchase any share, interest or other security in the Company or (iv) any such warrant or right;

"FINAL CONVERSION" has the meaning set forth in Section 7.2 below;

"HOLDER" has the meaning set forth in the introductory paragraph to this Note;

"INTEREST RATE" means the rate of 6% 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; provided that in the absence of an Event of Default and in the event the Company does not complete an IPO by June 30, 2006, the Interest Rate applicable to this Note will increase by 100 basis points as of June 30, 2006; provided further that upon the occurrence of an Event of Default, the Interest Rate will increase to the Default Rate;

"INTEREST NOTE RATE" means the rate of 7.5% calculated on the basis of a 360 day year based on the number of days actually elapsed including the first day but excluding the day on which such calculation is being made; provided that in the absence of an Event of Default and in the event the Company does not complete an IPO by June 30, 2006, the Interest Note Rate will increase by 100 basis points as of June 30, 2006; provided further that upon the occurrence of an Event of Default, the Interest Note Rate will increase to the Default Rate;

"MATURITY DATE" means March 1, 2010 or such earlier date as this Note shall become due and payable in accordance with Section 2.4 or Section 6 below;

"NOTE" means this Convertible Promissory Note due March 1, 2010;

"PRINCIPAL AMOUNT" has the meaning set forth in the introductory paragraph to this Note; and

"SERIES C PREFERRED CONVERSION" has the meaning set forth in Section 7.2 below.

2. TIME OF PAYMENT.

2.1 PAYMENT AT MATURITY DATE.

The Principal Amount together with all accrued but unpaid interest 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

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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.

2.2 INTEREST PAYMENT.

Interest shall accrue on the Principal Amount at the Interest Rate. Interest accrued but unpaid on the Principal Amount as of the end of each quarter of each calendar year that this Note remains outstanding shall be payable within 30 days after the end of each calendar quarter in accordance with the terms of this Note; provided that for the period beginning on the date of this Note and terminating two years from the date of this Note, at the Company's election, the Company may pay interest on this Note by issuing Interest Notes on the same terms as the Initial Note except that interest payable on any Interest Note (i) shall accrue at the Interest Note Rate and (ii) may not be paid in kind.

2.3 NO PREPAYMENT.

Except as set forth in this Note, the Company may not prepay the Principal Amount and/or the accrued but unpaid interest or any part thereof without the prior written consent of the Super Majority Interest.

2.4 MATURITY DATE ACCELERATION.

In the event that any of the holders of Series A Preferred, Series B Preferred or Series C Preferred have the right to require the Company to redeem any of their shares of preferred stock, at least forty-five (45) days before the date the Company is required to redeem such stock, the Company shall provide written notice to each Holder describing the number of shares of stock the Company is required to redeem, the redemption price, the date of redemption (the "REDEMPTION DATE") and any other material terms and conditions relating to such redemption. Within fifteen (15) days after receipt of such written notice, holders of at least a majority in interest of the principal amount outstanding on the Notes may notify the Company in writing of their election to accelerate the Maturity Date to the date ten (10) Business Days prior to the Redemption Date. Upon the written election to accelerate the Maturity Date in accordance with the preceding sentence, the Company agrees that it shall pay the then outstanding Principal Amount, all accrued but unpaid interest and other amounts due under this Note prior to the payment of any amount to redeem the Company's preferred stock.

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.

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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 on the Maturity Date; (b) the Company's failure to pay any fees related to this Note when due and any such failure to pay shall remain unremedied for five (5) Business Days or (c) an Event of Default under, and as defined in, the Convertible Note Purchase 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 Super Majority Interest, 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 400 basis points above the then applicable Interest Rate (the "DEFAULT RATE").

7. CONVERSION.

Subject to the provisions hereof, this Note, unless otherwise provided hereinafter, will be converted into shares of Conversion Shares at any time, and from time to time, in whole, as follows:

7.1 VOLUNTARY CONVERSION.

Any Note may be converted into Conversion Shares, at any time or from time to time, at the option of the holder of such Note. The number of shares of Conversion Shares into which such Note may be converted shall be determined by dividing the principal amount of such Note then outstanding by the Conversion Price, as adjusted and then in effect.

7.2 AUTOMATIC CONVERSION.

(i) Forty percent (40%) of the principal under the Notes shall be converted automatically into Conversion Shares at a 12.5% discount to the then-applicable Conversion Price (the "DISCOUNTED CONVERSION PRICE") upon the completion of a Qualified IPO (the "40% CONVERSION"); and

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(ii) The remaining principal under the Notes shall be converted automatically into Conversion Shares at the then applicable Conversion Price (the "FINAL CONVERSION") on the first date that is both (A) after the third anniversary of the date of the Initial Closing and (B) the 30th consecutive trading day on a nationally recognized securities exchange or dealer quotation system from and after the consummation of an IPO by the Company on which the closing price of the Company's Common Stock is no less than $20.00 per share (subject to proportionate adjustments for dividends, stock splits, split-ups or other distributions on Common Stock).

Upon the Final Conversion, this Note, without any further action of the parties, shall cease to be a payment obligation and shall represent only the right to represent the Conversion Shares.

7.3 CONVERSION; SURRENDER OF NOTE.

Any voluntary conversion of this Note shall be by presentation and surrender of this Note to the Company at the principal office of the Company, accompanied by a written notice of conversion (the "CONVERSION NOTICE"). The Conversion Notice shall become effective when received by the Company.

7.4 CONVERSION CLOSING.

Upon presentation and surrender of this Note and the Conversion Notice, the Company shall promptly conduct a Closing to effect the issuance of the Conversion Shares to Holder. At such Closing, the Company shall deliver to Holder validly executed share certificates representing such Conversion Shares.

7.5 DEEMED STOCKHOLDER.

Holder shall not, by virtue hereof, be entitled to any rights of a stockholder in the Company, but will have the rights of a debt holder set forth in the Convertible Note Purchase Agreement and/or this Note. Upon receipt by the Company of the Conversion Notice, Holder shall be deemed to be holder of the shares issuable upon such conversion notwithstanding that the share transfer books of the Company shall then be closed and that certificates representing such shares shall not then be actually delivered to Holder. The Company shall pay all taxes and other charges that may be payable in connection with the issuance of the shares and the preparation and delivery of stock certificates pursuant to this Section 7 in the name of Holder, but shall not pay any taxes payable by Holder by virtue of the holding, issuance, exercise or sale of this Note or the shares by Holder.

7.6 NO FRACTIONAL SHARES.

No fractional Conversion Shares shall be issued in connection with the conversion of this Note, and the number of shares issued shall be rounded to the nearest whole number (with one-half being rounded downward) and the amount of principal constituting such fraction shall be paid in cash.

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8. 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.

9. 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.

10. SENIOR SUBORDINATED NOTE.

This Note and the principal and interest payable hereunder shall be wholly subordinate in right of payment to all obligations of the Company under the senior secured notes issued pursuant to that certain Trust Indenture Agreement dated as of June 1, 2004, between the Company and JPMorgan Chase Bank, and joined by MHW, Ltd., as collateral agent, and other senior debt subsequently incurred, subject to the limitations on Company indebtedness set forth in
Section 10.5 of the Convertible Note Purchase Agreement.

11. 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.

12. 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.

13. 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.

14. 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

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other words of similar import refer to this Note as a whole and not to any particular part of this Note.

15. 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).

16. 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.

17. SPECIFIC PERFORMANCE.

Without limiting the foregoing or any remedies available to the parties, the parties will be entitled to specific performance of the obligations hereunder and injunctive relief against actual or threatened violations of the obligations of any person subject to this Note.

18. TRANSFER AND ASSIGNMENT.

This Note and the rights conferred hereby shall be transferable by Holder to eligible financial institutions, subject, in whole or in part, to the limitations set forth in the Convertible Note Purchase Agreement with the written consent of the Company, which consent shall not be unreasonably withheld or delayed. If this Note should be transferred in part only, the Company shall, upon surrender of this Note for cancellation, execute and deliver new Notes evidencing, separately, the rights and obligations of Holder and the rights and obligations of the transferee to payment and conversion of their respective portions of the principal and interest hereunder into Conversion Shares.

19. 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.

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20. AMENDMENTS AND WAIVERS.

Any term of this Note may be amended or waived only with the written consent of the Company and the holders of a majority in interest of the principal amount of the Notes outstanding under the Convertible Note Purchase Agreement; provided however that if the amendment or waiver will materially adversely affect any holder(s) of the Notes, then such amendment or waiver will require the consent of the Company and the Super Majority Interest. Any amendment or waiver effected in accordance with this Section 20 shall be binding upon each Holder and each transferee of this Note, the Conversion Shares, each future holder of all such Conversion Shares, and the Company.

21. 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]

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

CASTLE BRANDS INC.                          ACKNOWLEDGED AND AGREED TO BY:

                                            MELLON HBV SPV LLC


By: /s/ Mark Andrews                        By: /s/ James P. Jenkins
    -------------------------                   -------------------------
     Mark Andrews, Chairman &                   James P. Jenkins
     CEO                                        Portfolio Manager

Castle Brands Inc.
29th Floor
570 Lexington Avenue
New York, NY  10022

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EXHIBIT 10.15
EXECUTION COPY

NEITHER THIS NOTE NOR THE EQUITY SECURITIES FOR WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY OTHER JURISDICTION. NONE OF SUCH SECURITIES MAY 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.

AMENDED AND RESTATED CONVERTIBLE PROMISSORY NOTE

$5,000,000 Date: June 27, 2005

FOR VALUE RECEIVED, the undersigned Castle Brands Inc., a Delaware corporation
(the "COMPANY"), promises to pay to the order of Mellon HBV SPV LLC ("HOLDER")
the principal amount of Five Million US DOLLARS (US $5,000,000) (the "PRINCIPAL AMOUNT"), together, with interest on the unpaid balance of the Principal Amount, on the Maturity Date, and subject to the following provisions.

The following is a statement of the rights of Holder and the conditions to which this Note is subject, and to which 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 Convertible Note Purchase Agreement unless otherwise defined herein:

"40% CONVERSION" has the meaning set forth in Section 7.2(i) below;

"ADDITIONAL STOCK" means any Equity Securities of the Company issued by the Company after the applicable Closing Date but prior to the second anniversary of the applicable Closing Date other than (i) the Notes (as defined in the Convertible Note Purchase Agreement) and the Conversion Shares; (ii) Common Stock issued or issuable as a dividend or distribution on or upon conversion of the Preferred Stock of the Company; (iii) Common Stock issued or issuable by reason of a dividend, stock split, split-up or other distribution on Common Stock, (iv) any Common Stock issued or issuable (including pursuant to options or warrants) to financial institutions in connection with commercial credit arrangements approved by the Board of Directors of the Company, (v) any Common Stock issued or issuable to employees, officers, or directors of the Company or their respective immediate family members pursuant to currently outstanding or newly created options or warrants that are approved by the Board of Directors of the Company or a committee thereof, (vi) Common Stock issued upon conversion of the Company's 5% Convertible Subordinated Notes due on or about the third anniversary of the Series C Closing Date as defined in the Restated Charter in the aggregate principal amount of E1,374,750, (vii) shares or interests issued or issuable pursuant to any rights or agreements, options, warrants or


convertible securities outstanding as of the date of this Note or the issuance of any of the warrants listed on Section 5.3(a) of the Schedule of Exceptions to the Convertible Note Purchase Agreement or the issuance of any shares of Common Stock upon exercise thereof, (viii) any Equity Securities issued for consideration other than cash pursuant to a merger, consolidation, strategic alliance, acquisition or similar business combination approved by the Board of Directors of the Company, (ix) any Equity Securities issued in connection with any recapitalization or similar event by the Company, (x) any Equity Securities that are issued by the Company pursuant to an IPO, and (xi) any Equity Securities issued in connection with strategic transactions involving the Company and other entities, including joint ventures, manufacturing, marketing or distribution arrangements provided that the issuance of shares therein has been approved by the Board of Directors of the Company;

"CERTIFICATE OF DESIGNATIONS" has the meaning set forth in Section 7.2 below;

"CONVERSION NOTICE" has the meaning set forth in Section 7.3 below;

"CONVERSION PRICE" means a price equal to, in the case of conversion of this Note into Conversion Shares, $8.00 per share; provided, however, that (i) in the event that the Company issues or is deemed to issue Additional Stock at a per share purchase price of less than the then in effect Conversion Price, the Conversion Price shall be subject to the following adjustment upon the issuance of any Additional Stock: the new Conversion Price shall be determined by multiplying the Conversion Price then in effect by a fraction, (x) the numerator of which shall be the number of shares of Common Stock deemed outstanding immediately prior to such issuance ("OUTSTANDING COMMON") plus the number of shares of Common Stock that the aggregate consideration received by the Company for such issuance would purchase at the Conversion Price then in effect; and (y) the denominator of which shall be the number of shares of Outstanding Common plus the number of shares of such Additional Stock, and (ii) the Conversion Price shall be proportionately adjusted in the case of any stock dividend, stock split, split-up or other distribution on Common Stock; for purposes of clarity, "Outstanding Common" shall include all outstanding shares of Common Stock and all shares of Common Stock issuable upon conversion of outstanding shares of Preferred Stock or other convertible instruments of the Company or issuable upon exercise of options, warrants or other rights to acquire Common Stock;

"CONVERSION SHARES" means Common Stock to which Holder shall be entitled under the terms of this Note;

"CONVERTIBLE NOTE PURCHASE AGREEMENT" means that certain Amended and Restated Convertible Note Purchase Agreement dated as of August 16, 2005, by and among the Company and the Purchasers, and/or their affiliates and assigns, set forth on Exhibit A thereto;

"DEFAULT RATE" shall have the meaning set forth in Section 6.1 below;

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"DISCOUNTED CONVERSION PRICE" has the meaning set forth in Section 7.2(i) below;

"EQUITY SECURITIES" means (i) any share or interest in the Company,
(ii) any security convertible into or exercisable or exchangeable for, with or without consideration, any share or interest (including any option to purchase such convertible security) in the Company, (iii) any security carrying any warrant or right to subscribe to purchase any share, interest or other security in the Company or (iv) any such warrant or right;

"FINAL CONVERSION" has the meaning set forth in Section 7.2 below;

"HOLDER" has the meaning set forth in the introductory paragraph to this Note;

"INTEREST RATE" means the rate of 6% 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; provided that in the absence of an Event of Default and in the event the Company does not complete an IPO by June 30, 2006, the Interest Rate applicable to this Note will increase by 100 basis points as of June 30, 2006; provided further that upon the occurrence of an Event of Default, the Interest Rate will increase to the Default Rate;

"INTEREST NOTE RATE" means the rate of 7.5% calculated on the basis of a 360 day year based on the number of days actually elapsed including the first day but excluding the day on which such calculation is being made; provided that in the absence of an Event of Default and in the event the Company does not complete an IPO by June 30, 2006, the Interest Note Rate will increase by 100 basis points as of June 30, 2006; provided further that upon the occurrence of an Event of Default, the Interest Note Rate will increase to the Default Rate;

"MATURITY DATE" means March 1, 2010 or such earlier date as this Note shall become due and payable in accordance with Section 2.4 or Section 6 below;

"NOTE" means this Convertible Promissory Note due March 1, 2010;

"PRINCIPAL AMOUNT" has the meaning set forth in the introductory paragraph to this Note; and

"SERIES C PREFERRED CONVERSION" has the meaning set forth in Section 7.2 below.

2. TIME OF PAYMENT.

2.1 PAYMENT AT MATURITY DATE.

The Principal Amount together with all accrued but unpaid interest 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

3

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.

2.2 INTEREST PAYMENT.

Interest shall accrue on the Principal Amount at the Interest Rate. Interest accrued but unpaid on the Principal Amount as of the end of each quarter of each calendar year that this Note remains outstanding shall be payable within 30 days after the end of each calendar quarter in accordance with the terms of this Note; provided that for the period beginning on the date of this Note and terminating two years from the date of this Note, at the Company's election, the Company may pay interest on this Note by issuing Interest Notes on the same terms as the Initial Note except that interest payable on any Interest Note (i) shall accrue at the Interest Note Rate and (ii) may not be paid in kind.

2.3 NO PREPAYMENT.

Except as set forth in this Note, the Company may not prepay the Principal Amount and/or the accrued but unpaid interest or any part thereof without the prior written consent of the Super Majority Interest.

2.4 MATURITY DATE ACCELERATION.

In the event that any of the holders of Series A Preferred, Series B Preferred or Series C Preferred have the right to require the Company to redeem any of their shares of preferred stock, at least forty-five (45) days before the date the Company is required to redeem such stock, the Company shall provide written notice to each Holder describing the number of shares of stock the Company is required to redeem, the redemption price, the date of redemption (the "REDEMPTION DATE") and any other material terms and conditions relating to such redemption. Within fifteen (15) days after receipt of such written notice, holders of at least a majority in interest of the principal amount outstanding on the Notes may notify the Company in writing of their election to accelerate the Maturity Date to the date ten (10) Business Days prior to the Redemption Date. Upon the written election to accelerate the Maturity Date in accordance with the preceding sentence, the Company agrees that it shall pay the then outstanding Principal Amount, all accrued but unpaid interest and other amounts due under this Note prior to the payment of any amount to redeem the Company's preferred stock.

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.

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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 on the Maturity Date; (b) the Company's failure to pay any fees related to this Note when due and any such failure to pay shall remain unremedied for five (5) Business Days or (c) an Event of Default under, and as defined in, the Convertible Note Purchase 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 Super Majority Interest, 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 400 basis points above the then applicable Interest Rate (the "DEFAULT RATE").

7. CONVERSION.

Subject to the provisions hereof, this Note, unless otherwise provided hereinafter, will be converted into shares of Conversion Shares at any time, and from time to time, in whole, as follows:

7.1 VOLUNTARY CONVERSION.

Any Note may be converted into Conversion Shares, at any time or from time to time, at the option of the holder of such Note. The number of shares of Conversion Shares into which such Note may be converted shall be determined by dividing the principal amount of such Note then outstanding by the Conversion Price, as adjusted and then in effect.

7.2 AUTOMATIC CONVERSION.

(i) Forty percent (40%) of the principal under the Notes shall be converted automatically into Conversion Shares at a 12.5% discount to the then applicable Conversion Price (the "DISCOUNTED CONVERSION PRICE") upon the completion of a Qualified IPO (the "40% CONVERSION"); and

5

(ii) The remaining principal under the Notes shall be converted automatically into Conversion Shares at the then applicable Conversion Price (the "FINAL CONVERSION") on the first date that is both (A) after the third anniversary of the date of the Initial Closing and (B) the 30th consecutive trading day on a nationally recognized securities exchange or dealer quotation system from and after the consummation of an IPO by the Company on which the closing price of the Company's Common Stock is no less than $20.00 per share (subject to proportionate adjustments for dividends, stock splits, split-ups or other distributions on Common Stock).

Notwithstanding anything to the contrary in this Note, if (i) the 40% Conversion constitutes an issuance of "Additional Common Stock" under the Company's Certificate of Designations of the Series A Convertible Preferred Stock, Series B Convertible Preferred Stock and Series C Convertible Preferred Stock , as amended from time to time, (the "CERTIFICATE OF DESIGNATIONS") requiring an adjustment to the Conversion Price (as defined in the Certificate of Designations) applicable to the Company's Series C Preferred Stock, and (ii) such adjustment to the Series C Preferred Stock Conversion Price has not been waived by the requisite majority of holders of Series C Preferred Stock, then, upon conversion of Series C Preferred Stock into Common Stock (the "SERIES C PREFERRED CONVERSION"), the Conversion Price applicable to the outstanding principal under this Note that was not subject to the 40% Conversion shall be adjusted pursuant to the formula set forth in the definition of Conversion Price in this Note as if the Common Stock being issued upon the 40% Conversion were issued immediately prior to the Series C Preferred Conversion as shares of Additional Stock at the Discounted Conversion Price.

Upon the Final Conversion, this Note, without any further action of the parties, shall cease to be a payment obligation and shall represent only the right to represent the Conversion Shares.

7.3 CONVERSION; SURRENDER OF NOTE.

Any voluntary conversion of this Note shall be by presentation and surrender of this Note to the Company at the principal office of the Company, accompanied by a written notice of conversion (the "CONVERSION NOTICE"). The Conversion Notice shall become effective when received by the Company.

7.4 CONVERSION CLOSING.

Upon presentation and surrender of this Note and the Conversion Notice, the Company shall promptly conduct a Closing to effect the issuance of the Conversion Shares to Holder. At such Closing, the Company shall deliver to Holder validly executed share certificates representing such Conversion Shares.

7.5 DEEMED STOCKHOLDER.

Holder shall not, by virtue hereof, be entitled to any rights of a stockholder in the Company, but will have the rights of a debt holder set forth in the

6

Convertible Note Purchase Agreement and/or this Note. Upon receipt by the Company of the Conversion Notice, Holder shall be deemed to be holder of the shares issuable upon such conversion notwithstanding that the share transfer books of the Company shall then be closed and that certificates representing such shares shall not then be actually delivered to Holder. The Company shall pay all taxes and other charges that may be payable in connection with the issuance of the shares and the preparation and delivery of stock certificates pursuant to this Section 7 in the name of Holder, but shall not pay any taxes payable by Holder by virtue of the holding, issuance, exercise or sale of this Note or the shares by Holder.

7.6 NO FRACTIONAL SHARES.

No fractional Conversion Shares shall be issued in connection with the conversion of this Note, and the number of shares issued shall be rounded to the nearest whole number (with one-half being rounded downward) and the amount of principal constituting such fraction shall be paid in cash.

8. 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.

9. 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.

10. SENIOR SUBORDINATED NOTE.

This Note and the principal and interest payable hereunder shall be wholly subordinate in right of payment to all obligations of the Company under the senior secured notes issued pursuant to that certain Trust Indenture Agreement dated as of June 1, 2004, between the Company and JPMorgan Chase Bank, and joined by MHW, Ltd., as collateral agent, and other senior debt subsequently incurred, subject to the limitations on Company indebtedness set forth in
Section 10.5 of the Convertible Note Purchase Agreement.

11. 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.

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12. 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.

13. 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.

14. 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.

15. 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).

16. 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.

17. SPECIFIC PERFORMANCE.

Without limiting the foregoing or any remedies available to the parties, the parties will be entitled to specific performance of the obligations hereunder and injunctive relief against actual or threatened violations of the obligations of any person subject to this Note.

18. TRANSFER AND ASSIGNMENT.

This Note and the rights conferred hereby shall be transferable by Holder to eligible financial institutions, subject, in whole or in part, to the limitations set forth in

8

the Convertible Note Purchase Agreement with the written consent of the Company, which consent shall not be unreasonably withheld or delayed. If this Note should be transferred in part only, the Company shall, upon surrender of this Note for cancellation, execute and deliver new Notes evidencing, separately, the rights and obligations of Holder and the rights and obligations of the transferee to payment and conversion of their respective portions of the principal and interest hereunder into Conversion Shares.

19. 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.

20. AMENDMENTS AND WAIVERS.

Any term of this Note may be amended or waived only with the written consent of the Company and the holders of a majority in interest of the principal amount of the Notes outstanding under the Convertible Note Purchase Agreement; provided however that if the amendment or waiver will materially adversely affect any holder(s) of the Notes, then such amendment or waiver will require the consent of the Company and the Super Majority Interest. Any amendment or waiver effected in accordance with this Section 20 shall be binding upon each Holder and each transferee of this Note, the Conversion Shares, each future holder of all such Conversion Shares, and the Company.

21. 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]

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

CASTLE BRANDS INC.                          ACKNOWLEDGED AND AGREED TO BY:

                                            MELLON HBV SPV LLC


By: /s/ Mark Andrews                        By: /s/ James P. Jenkins
    --------------------------                  --------------------------
    Mark Andrews, Chairman &                    James P. Jenkins
     CEO

Castle Brands Inc.
29th Floor
570 Lexington Avenue
New York, NY  10022

10

Exhibit 10.16

EXECUTION COPY

NEITHER THIS NOTE NOR THE EQUITY SECURITIES FOR WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY OTHER JURISDICTION. NONE OF SUCH SECURITIES MAY 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.

CONVERTIBLE PROMISSORY NOTE

$5,000,000 Date: August 16, 2005

FOR VALUE RECEIVED, the undersigned Castle Brands Inc., a Delaware corporation (the "COMPANY"), promises to pay to the order of Black River Global Credit Fund Ltd. ("HOLDER") the principal amount of Five Million US DOLLARS (US $5,000,000) (the "PRINCIPAL AMOUNT"), together, with interest on the unpaid balance of the Principal Amount, on the Maturity Date, and subject to the following provisions.

The following is a statement of the rights of Holder and the conditions to which this Note is subject, and to which 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 Convertible Note Purchase Agreement unless otherwise defined herein:

"40% CONVERSION" has the meaning set forth in Section 7.2(i) below;

"ADDITIONAL STOCK" means any Equity Securities of the Company issued by the Company after the applicable Closing Date but prior to the second anniversary of the applicable Closing Date other than (i) the Notes (as defined in the Convertible Note Purchase Agreement) and the Conversion Shares; (ii) Common Stock issued or issuable as a dividend or distribution on or upon conversion of the Preferred Stock of the Company; (iii) Common Stock issued or issuable by reason of a dividend, stock split, split-up or other distribution on Common Stock, (iv) any Common Stock issued or issuable (including pursuant to options or warrants) to financial institutions in connection with commercial credit arrangements approved by the Board of Directors of the Company, (v) any Common Stock issued or issuable to employees, officers, or directors of the Company or their respective immediate family members pursuant to currently outstanding or newly created options or warrants that are approved by the Board of Directors of the Company or a committee thereof, (vi) Common Stock issued upon conversion of the Company's 5% Convertible Subordinated Notes due on or about the third anniversary of the Series C Closing Date as defined in the Restated Charter in the aggregate principal amount of E1,374,750, (vii) shares or interests


issued or issuable pursuant to any rights or agreements, options, warrants or convertible securities outstanding as of the date of this Note or the issuance of any of the warrants listed on Section 5.3(a) of the Schedule of Exceptions to the Convertible Note Purchase Agreement or the issuance of any shares of Common Stock upon exercise thereof, (viii) any Equity Securities issued for consideration other than cash pursuant to a merger, consolidation, strategic alliance, acquisition or similar business combination approved by the Board of Directors of the Company, (ix) any Equity Securities issued in connection with any recapitalization or similar event by the Company, (x) any Equity Securities that are issued by the Company pursuant to an IPO, and (xi) any Equity Securities issued in connection with strategic transactions involving the Company and other entities, including joint ventures, manufacturing, marketing or distribution arrangements provided that the issuance of shares therein has been approved by the Board of Directors of the Company;

"CERTIFICATE OF DESIGNATIONS" has the meaning set forth in Section 7.2 below;

"CONVERSION NOTICE" has the meaning set forth in Section 7.3 below;

"CONVERSION PRICE" means a price equal to, in the case of conversion of this Note into Conversion Shares, $8.00 per share; provided, however, that (i) in the event that the Company issues or is deemed to issue Additional Stock at a per share purchase price of less than the then in effect Conversion Price, the Conversion Price shall be subject to the following adjustment upon the issuance of any Additional Stock: the new Conversion Price shall be determined by multiplying the Conversion Price then in effect by a fraction, (x) the numerator of which shall be the number of shares of Common Stock deemed outstanding immediately prior to such issuance ("OUTSTANDING COMMON") plus the number of shares of Common Stock that the aggregate consideration received by the Company for such issuance would purchase at the Conversion Price then in effect; and (y) the denominator of which shall be the number of shares of Outstanding Common plus the number of shares of such Additional Stock, and (ii) the Conversion Price shall be proportionately adjusted in the case of any stock dividend, stock split, split-up or other distribution on Common Stock; for purposes of clarity, "Outstanding Common" shall include all outstanding shares of Common Stock and all shares of Common Stock issuable upon conversion of outstanding shares of Preferred Stock or other convertible instruments of the Company or issuable upon exercise of options, warrants or other rights to acquire Common Stock;

"CONVERSION SHARES" means Common Stock to which Holder shall be entitled under the terms of this Note;

"CONVERTIBLE NOTE PURCHASE AGREEMENT" means that certain Amended and Restated Convertible Note Purchase Agreement dated as of August 16, 2005, by and among the Company and the Purchasers, and/or their affiliates and assigns, set forth on Exhibit A thereto;

"DEFAULT RATE" shall have the meaning set forth in Section 6.1 below;

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"DISCOUNTED CONVERSION PRICE" has the meaning set forth in Section 7.2(i) below;

"EQUITY SECURITIES" means (i) any share or interest in the Company, (ii) any security convertible into or exercisable or exchangeable for, with or without consideration, any share or interest (including any option to purchase such convertible security) in the Company, (iii) any security carrying any warrant or right to subscribe to purchase any share, interest or other security in the Company or (iv) any such warrant or right;

"FINAL CONVERSION" has the meaning set forth in Section 7.2 below;

"HOLDER" has the meaning set forth in the introductory paragraph to this Note;

"INTEREST RATE" means the rate of 6% 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; provided that in the absence of an Event of Default and in the event the Company does not complete an IPO by September 30, 2006, the Interest Rate applicable to this Note will increase by 100 basis points as of September 30, 2006; provided further that upon the occurrence of an Event of Default, the Interest Rate will increase to the Default Rate;

"INTEREST NOTE RATE" means the rate of 7.5% calculated on the basis of a 360 day year based on the number of days actually elapsed including the first day but excluding the day on which such calculation is being made; provided that in the absence of an Event of Default and in the event the Company does not complete an IPO by September 30, 2006, the Interest Note Rate will increase by 100 basis points as of September 30, 2006; provided further that upon the occurrence of an Event of Default, the Interest Note Rate will increase to the Default Rate;

"MATURITY DATE" means March 1, 2010 or such earlier date as this Note shall become due and payable in accordance with Section 2.4 or Section 6 below;

"NOTE" means this Convertible Promissory Note due March 1, 2010;

"PRINCIPAL AMOUNT" has the meaning set forth in the introductory paragraph to this Note; and

"SERIES C PREFERRED CONVERSION" has the meaning set forth in Section 7.2 below.

2. TIME OF PAYMENT.

2.1 PAYMENT AT MATURITY DATE.

The Principal Amount together with all accrued but unpaid interest 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

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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.

2.2 INTEREST PAYMENT.

Interest shall accrue on the Principal Amount at the Interest Rate. Interest accrued but unpaid on the Principal Amount as of the end of each quarter of each calendar year that this Note remains outstanding shall be payable within 30 days after the end of each calendar quarter in accordance with the terms of this Note; provided that for the period beginning on the date of this Note and terminating two years from the date of this Note, at the Company's election, the Company may pay interest on this Note by issuing Interest Notes on the same terms as the Initial Note except that interest payable on any Interest Note (i) shall accrue at the Interest Note Rate and (ii) may not be paid in kind.

2.3 NO PREPAYMENT.

Except as set forth in this Note, the Company may not prepay the Principal Amount and/or the accrued but unpaid interest or any part thereof without the prior written consent of the Super Majority Interest.

2.4 MATURITY DATE ACCELERATION.

In the event that any of the holders of Series A Preferred, Series B Preferred or Series C Preferred have the right to require the Company to redeem any of their shares of preferred stock, at least forty-five (45) days before the date the Company is required to redeem such stock, the Company shall provide written notice to each Holder describing the number of shares of stock the Company is required to redeem, the redemption price, the date of redemption (the "REDEMPTION DATE") and any other material terms and conditions relating to such redemption. Within fifteen (15) days after receipt of such written notice, holders of at least a majority in interest of the principal amount outstanding on the Notes may notify the Company in writing of their election to accelerate the Maturity Date to the date ten (10) Business Days prior to the Redemption Date. Upon the written election to accelerate the Maturity Date in accordance with the preceding sentence, the Company agrees that it shall pay the then outstanding Principal Amount, all accrued but unpaid interest and other amounts due under this Note prior to the payment of any amount to redeem the Company's preferred stock.

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.

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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 on the Maturity Date; (b) the Company's failure to pay any fees related to this Note when due and any such failure to pay shall remain unremedied for five (5) Business Days or (c) an Event of Default under, and as defined in, the Convertible Note Purchase 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 Super Majority Interest, 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 400 basis points above the then applicable Interest Rate (the "DEFAULT RATE").

7. CONVERSION.

Subject to the provisions hereof, this Note, unless otherwise provided hereinafter, will be converted into shares of Conversion Shares at any time, and from time to time, in whole, as follows:

7.1 VOLUNTARY CONVERSION.

Any Note may be converted into Conversion Shares, at any time or from time to time, at the option of the holder of such Note. The number of shares of Conversion Shares into which such Note may be converted shall be determined by dividing the principal amount of such Note then outstanding by the Conversion Price, as adjusted and then in effect.

7.2 AUTOMATIC CONVERSION.

(i) Forty percent (40%) of the principal under the Notes shall be converted automatically into Conversion Shares at a 12.5% discount to the then applicable Conversion Price (the "DISCOUNTED CONVERSION PRICE") upon the completion of a Qualified IPO (the "40% CONVERSION"); and

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(ii) The remaining principal under the Notes shall be converted automatically into Conversion Shares at the then applicable Conversion Price (the "FINAL CONVERSION") on the first date that is both (A) after the third anniversary of the date of the Initial Closing and (B) the 30th consecutive trading day on a nationally recognized securities exchange or dealer quotation system from and after the consummation of an IPO by the Company on which the closing price of the Company's Common Stock is no less than $20.00 per share (subject to proportionate adjustments for dividends, stock splits, split-ups or other distributions on Common Stock).

Notwithstanding anything to the contrary in this Note, if (i) the 40% Conversion constitutes an issuance of "Additional Common Stock" under the Company's Certificate of Designations of the Series A Convertible Preferred Stock, Series B Convertible Preferred Stock and Series C Convertible Preferred Stock , as amended from time to time, (the "CERTIFICATE OF DESIGNATIONS") requiring an adjustment to the Conversion Price (as defined in the Certificate of Designations) applicable to the Company's Series C Preferred Stock, and (ii) such adjustment to the Series C Preferred Stock Conversion Price has not been waived by the requisite majority of holders of Series C Preferred Stock, then, upon conversion of Series C Preferred Stock into Common Stock (the "SERIES C PREFERRED CONVERSION"), the Conversion Price applicable to the outstanding principal under this Note that was not subject to the 40% Conversion shall be adjusted pursuant to the formula set forth in the definition of Conversion Price in this Note as if the Common Stock being issued upon the 40% Conversion were issued immediately prior to the Series C Preferred Conversion as shares of Additional Stock at the Discounted Conversion Price.

Upon the Final Conversion, this Note, without any further action of the parties, shall cease to be a payment obligation and shall represent only the right to represent the Conversion Shares.

7.3 CONVERSION; SURRENDER OF NOTE.

Any voluntary conversion of this Note shall be by presentation and surrender of this Note to the Company at the principal office of the Company, accompanied by a written notice of conversion (the "CONVERSION NOTICE"). The Conversion Notice shall become effective when received by the Company.

7.4 CONVERSION CLOSING.

Upon presentation and surrender of this Note and the Conversion Notice, the Company shall promptly conduct a Closing to effect the issuance of the Conversion Shares to Holder. At such Closing, the Company shall deliver to Holder validly executed share certificates representing such Conversion Shares.

7.5 DEEMED STOCKHOLDER.

Holder shall not, by virtue hereof, be entitled to any rights of a stockholder in the Company, but will have the rights of a debt holder set forth in the

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Convertible Note Purchase Agreement and/or this Note. Upon receipt by the Company of the Conversion Notice, Holder shall be deemed to be holder of the shares issuable upon such conversion notwithstanding that the share transfer books of the Company shall then be closed and that certificates representing such shares shall not then be actually delivered to Holder. The Company shall pay all taxes and other charges that may be payable in connection with the issuance of the shares and the preparation and delivery of stock certificates pursuant to this Section 7 in the name of Holder, but shall not pay any taxes payable by Holder by virtue of the holding, issuance, exercise or sale of this Note or the shares by Holder.

7.6 NO FRACTIONAL SHARES.

No fractional Conversion Shares shall be issued in connection with the conversion of this Note, and the number of shares issued shall be rounded to the nearest whole number (with one-half being rounded downward) and the amount of principal constituting such fraction shall be paid in cash.

8. 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.

9. 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.

10. SENIOR SUBORDINATED NOTE.

This Note and the principal and interest payable hereunder shall be wholly subordinate in right of payment to all obligations of the Company under the senior secured notes issued pursuant to that certain Trust Indenture Agreement dated as of June 1, 2004, between the Company and JPMorgan Chase Bank, and joined by MHW, Ltd., as collateral agent, and other senior debt subsequently incurred, subject to the limitations on Company indebtedness set forth in
Section 10.5 of the Convertible Note Purchase Agreement.

11. 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.

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12. 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.

13. 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.

14. 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.

15. 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).

16. 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.

17. SPECIFIC PERFORMANCE.

Without limiting the foregoing or any remedies available to the parties, the parties will be entitled to specific performance of the obligations hereunder and injunctive relief against actual or threatened violations of the obligations of any person subject to this Note.

18. TRANSFER AND ASSIGNMENT.

This Note and the rights conferred hereby shall be transferable by Holder to eligible financial institutions, subject, in whole or in part, to the limitations set forth in

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the Convertible Note Purchase Agreement with the written consent of the Company, which consent shall not be unreasonably withheld or delayed. If this Note should be transferred in part only, the Company shall, upon surrender of this Note for cancellation, execute and deliver new Notes evidencing, separately, the rights and obligations of Holder and the rights and obligations of the transferee to payment and conversion of their respective portions of the principal and interest hereunder into Conversion Shares.

19. 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.

20. AMENDMENTS AND WAIVERS.

Any term of this Note may be amended or waived only with the written consent of the Company and the holders of a majority in interest of the principal amount of the Notes outstanding under the Convertible Note Purchase Agreement; provided however that if the amendment or waiver will materially adversely affect any holder(s) of the Notes, then such amendment or waiver will require the consent of the Company and the Super Majority Interest. Any amendment or waiver effected in accordance with this Section 20 shall be binding upon each Holder and each transferee of this Note, the Conversion Shares, each future holder of all such Conversion Shares, and the Company.

21. 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]

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

CASTLE BRANDS INC.                    ACKNOWLEDGED AND AGREED TO BY:

                                      BLACK RIVER GLOBAL
                                      CREDIT FUND LTD.

By:   /s/ Mark Andrews                By:  /s/ Paula M. Weis
      ------------------------             ------------------------
      Mark Andrews, Chairman &             Paula M. Weis
      CEO                                  Authorized Signer

Castle Brands Inc.
29th Floor
570 Lexington Avenue
New York, NY  10022

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Exhibit 10.17

DATED DEC 01 2003

BETWEEN

THE ROARING WATER BAY (RESEARCH AND
DEVELOPMENT) COMPANY LIMITED

AND

GSRWB, INC.


LICENCE AGREEMENT


MATHESON ORMSBY PRENTICE
30 Herbert Street
Dublin 2
Ireland

TEL + 353 1 619 9000
FAX + 353 1 619 9010
\MOP_DUBLIN\869259.4


THIS LICENCE AGREEMENT BETWEEN THE ROARING WATER BAY (RESEARCH AND DEVELOPMENT) COMPANY LIMITED, an Irish company of Roaring Water Bay House, 4 Herbert Place, Dublin 2, Ireland (hereinafter called "RWBRDCL") of the One Part; and

GSRWB, Inc., a Delaware corporation whose principal place of business is 85 - 47 Eliot Avenue, Suite G, Rego Park, New York, 11374 (hereinafter called "GSRW") of the Other Part.

WHEREAS RWBRDCL is in possession of an invention for which certain Patents (as defined below) have been obtained.

WHEREAS RWBRDCL has agreed to grant GSRW an exclusive license to use the said invention for which the said Patents have been obtained.

IT IS HEREBY AGREED AS FOLLOWS:-

1 DEFINITIONS

In this Licence Agreement the following words and expressions shall have the following meanings:-

"APPLICATION(S)"             means any Application for Letters Patent filed in
                             respect of the Invention, including any renewals,
                             extensions or improvement. "Applications" shall be
                             construed accordingly.

"ARBITRATOR"                 has the meaning set out in Clause 21 hereof.

"CALL OPTION"                means the option granted by RWBRDCL to GSRW in clause 3 hereof.

"CALL OPTION PERIOD"         means the duration of this Licence Agreement


"CONFIDENTIAL INFORMATION"   has the meaning set out in Clause 8 hereof.

"INVENTION(S)"               means the claimed subject matter of any of the
                             Patents listed in Schedule One, including without
                             limit all improvements thereon. "Inventions" shall
                             be construed accordingly.

"NET INVOICE PRICE"          means the sales price at the time of the subject
                             sale of the Product, excluding all taxes.

"NOTICE"                     has the meaning set out in Clause 3.2 hereof.


"OPERATIVE DATE"             means the 1st day of December 2003.

"PARTIES"                    means the parties to this Licence Agreement.

"PATENT(S)"                  Patents shall be construed accordingly.
                             "Patents" means the Patents referred to in Schedule
                             One.

"PRODUCT(S)"                 means goods manufactured incorporating and/or using
                             the Invention. "Products" shall be construed
                             accordingly.

"TERRITORY"                  means the territory as defined in Schedule Two
                             hereto.

"YEAR OF THIS LICENCE        means the period of twelve (12) months first
AGREEMENT"                   commencing on the Operative Date or any anniversary
                             of the Operative Date.

2 GRANT OF LICENCE

2.1 RWBRDCL agrees subject to the terms and conditions of this Licence Agreement to grant to GSRW an exclusive licence to manufacture and sell, as well as the right to sub-licence pursuant to Section 4 hereof, the Invention in the Territory under each and every Patent as may be granted for the term of this Licence Agreement.

BY THIS LICENCE The Roaring Water Bay (Research and Development) Company Limited, an Irish company of Roaring Water Bay House, 4 Herbert Place, Dublin 2, Ireland HEREBY GRANTS to GSRWB, Inc., a Delaware corporation having a principal place of business at 85 - 47 Eliot Avenue, Suite G, Rego Park, New York 11374 of the following Letters Patent of which it is the proprietor that is to say, Nos. IE990967, 990969 and GB2344095 (hereinafter called the "Patent") full and exclusive Licence and authority to make use of the Invention claimed in the specification of the Patent to the intent that such Licence shall endure from the date hereof SUCH LICENCE being SUBJECT TO and with the benefit of this Licence Agreement.

3 CALL OPTION

3.1 Grant of Call Option and all rights, title and interest in the Invention

In consideration of the payment by GSRW of EUR 1 (receipt of which RWBRDCL hereby acknowledges) RWBRDCL hereby grants to GSRW an option to require RWBRDCL to sell during, the Call Option Period, to GSRW all of the outstanding Applications and Patent(s) and the right, title and interest thereon for the aggregate sum of EUR90,000.

3.2 Exercise of Call Option

The Call Option may be exercised at any time during the Call Option Period by notice in writing (the "Notice") served by GSRW on RWBRDCL. RWBRDCL shall sell or

2

procure the sale of the Applications and Patent(s) and all rights, title and interest in the Invention to GSRW within a period of 30 days from the receipt of the Notice by GSRW.

4 SUB-CONTRACTING

Nothing in this Licence Agreement shall restrict the right of GSRW to enter into any sub contract which permits any sub-contractor to manufacture and sell the Invention provided that if any Confidential Information as defined in Clause 8 hereof is disclosed GSRW shall take all reasonable steps to safeguard the confidential nature of such Confidential Information.

5 ROYALTY

In the period from the _____________ day of __________ to the date of termination of this Licence Agreement, The Roaring Water Bay Spirits Company Limited ("RWBSCL"), as GSRW's subsidiary, shall pay to RWBRDCL as a royalty a sum equal to EIGHT PER CENT (8%) of the Net Invoice Price of all Products sold, or otherwise disposed of by RWBSCL subject to a maximum in each year of EUR30,000 in accordance with the terms of Section 7 hereof.

6 ACCOUNTS

To enable the determination of the sum due as royalties, GSRW shall during the life of this Licence Agreement cause RWBSCL to keep at its principal place of business, true, clear particular and separate accounts and records and permit and in every way facilitate inspection and copies to be taken of them by a representative or representatives of RWBRDCL at reasonable times on giving reasonable notice. Payments shall be transferred and credited to an account of RWBRDCL, at such bank as RWBRDCL may from time to time nominate for the purpose, of the amount due or paid in any manner as may be determined by RWBRDCL from time to time.

7 DUE DATES FOR PAYMENTS

GSRW shall cause RWBSCL on the _____________ day of _____________ and every three (3) months thereafter or such other dates as agreed by the parties from time to time while this Licence Agreement is in force, to render to RWBRDCL a statement showing details of the sum due as royalties and GSRW shall cause RWBSCL to pay the sum due, within thirty (30) days of the date on which each and every such statement is due to be rendered.

8 CONFIDENTIAL TREATMENT OF INFORMATION

Save as provided at Clause 4 hereof GSRW agrees to keep strictly secret and confidential during the term of any Patent and for two (2) years thereafter, all and any information, acquired from RWBRDCL pursuant to this Licence Agreement (herein referred to as "Confidential Information"), except where disclosure or use of such information is expressly permitted by RWBRDCL, or where such Confidential Information has come into the public domain other than due to an unauthorised act of GSRW.

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9 ASSIGNMENT

GSRW shall not grant, assign, sub-licence, mortgage or otherwise charge or convey, voluntarily or involuntarily any rights accruing to GSRW under this Licence Agreement except to its affiliates, without the prior written consent of RWBRDCL. Such consent may be withheld without reason being given.

10 REPRESENTATIONS AND WARRANTIES

10.1 RWBRDCL represents that, the rights licensed hereunder do not infringe the rights of any third party.

10.2 RWBRDCL warrants that it owns, and throughout the term of this Agreement will own, all right, title and interest to the Invention and the Patents, free and clear of any lien or encumbrance and the use of the Invention by RWBSCL will not infringe any rights of third parties in any country of the Territory.

11 IMPROVEMENTS

11.1 Where either party makes any improvement on the Invention, that Party shall own all legal and beneficial rights and interests in any said improvements on the Invention.

11.2 The Parties shall jointly and severally own all legal and beneficial rights and interests in any improvements on the Invention made jointly by the Parties.

11.3 Where either Party makes any improvement on the Invention, that Party shall on reasonable terms offer to disclose said improvement on the Invention to, and permit the use of said improvement on the Invention by the other Party.

12 TERMINATION

If the royalties due hereunder have not been paid within the time allowed by this Licence Agreement or if either party shall breach of any of the representations, warranties, covenants, promises or undertakings herein contained and on its part to be performed or observed and shall not have remedied such breach within thirty (30) days after notice is given to the breaching party by the non-breaching party requiring such remedy or if either party shall have an Examiner appointed over the whole or any part of its assets or an order is made or a resolution passed for winding up of such party unless such order is part of a scheme for reconstruction or amalgamation of such party then the other party may forthwith terminate this Licence Agreement without being required to give any or any further notice in advance of such termination but such termination shall be without prejudice to the remedy of such party to sue for and recover any royalties then due and to pursue any remedy in respect of any previous breach of any of the covenants or agreements contained in this Licence Agreement.

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13 DURATION

13.1 Subject to the provisions for termination hereinbefore contained, this Licence Agreement shall operate from the Operative Date and shall continue in force for a period of five (5) years.

13.2 On expiration of this Licence Agreement RWBRDCL may on request enter into a further licence agreement on terms and for a period to be agreed, provided that no such further Licence Agreement shall continue for any period which shall expire later than [one (1) day] prior to the date on which any Patent shall expire.

13.3 RWBRDCL shall notify GSRW in writing of any expiry of this Licence Agreement no later than thirty (30) day prior to any expiry. If RWBRDCL fails to so notify GSRW, the Parties shall at the election of GSRW be deemed to have entered into a further licence agreement for a period of one
(1) year commencing next after any such expiry. The terms of this Licence Agreement including the provisions of this sub-clause shall apply mutatis mutandis to any such further licence agreement, provided that no such further licence agreement shall expire later than one day (1) prior to the date on which any Patent shall expire. The provisions of this sub-clause shall not apply where this Licence Agreement or any such further licence agreement is terminated under Clause 12 hereof or any corresponding term deemed to be in any such further licence agreement.

13.4 This Licence Agreement shall not be modified, amended or supplemented in any way unless such modification, amendment or supplement is agreed to in writing by each of the Parties hereto.

14 PATENTS AND APPLICATIONS

RWBRDCL shall during the life of this Licence Agreement pay all costs and fees payable in respect of the Applications and do all such acts and things as may be necessary to maintain and keep on foot the Patents including any additional Applications and improvements requested by GSRW and RWBRDCL shall apply for or continue to prosecute any application for any extension of the term of any Patent if so requested by GSRW.

15 INFRINGEMENT

If any infringement action, proceedings or claim of any kind is threatened or instituted against GSRW resulting from the exercise of any rights granted under the Licence Agreement RWBRDCL shall take timely steps to defend such action, proceeding or claims and shall promptly notify GSRW. GSRW shall not be obliged to defend RWBRDCL against any such action proceeding or claim. RWBRDCL shall defend such actions at its own expense. At the request of RWBRDCL GSRW shall permit RWBRDCL to intervene or appear in connection with any action proceeding or claim at the sole expense of RWBRDCL. The rights of RWBRDCL under this Licence Agreement shall in no way be affected by any adverse decision in or with respect to any such action, proceeding or claim.

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16 COUNTRIES IN WHICH PATENT APPLICATIONS ARE FILED

RWBRDCL and GSRW shall decide in which countries, if any, any further Applications are to be filed. Each and every further Application for a Patent for the Invention so filed shall be notified to GSRW by RWBRDCL and each such further Application for a Patent for the Invention shall be deemed to be included in Schedule One on the date on which it is filed.

17 FORCE MAJEURE

In the event that either Party is delayed or hindered in the performance of its obligations hereunder by force majeure this Licence Agreement shall remain in suspense until the cause thereof has ceased to delay or hinder. For the purpose of this Licence Agreement, but not by way of limitation, force majeure shall mean any cause beyond the reasonable control of the Party liable to perform unless conclusive evidence to the contrary is provided and shall include strikes, riots and sabotage, acts of war or terrorism, acts of piracy, destruction of essential equipment by fire, explosion, storm, flood, earthquake or other natural disaster, compliance with economic, trade or political sanctions, failure of power supplies or transport facilities.

18 SEVERABILITY

In the event any provision of this Licence Agreement is declared invalid or unenforceable or becomes unlawful in its operation or any part thereof, such provision shall not affect the rights and duties of the Parties with regard to the remaining provisions of this Licence Agreement which shall continue as binding.

19 OUTSTANDING ROYALTY ON TERMINATION

On the expiration or sooner termination of this Licence Agreement, GSRW shall pay to RWBRDCL within thirty days (30) following the date of such expiration or sooner termination all royalties outstanding on the date of such expiration or sooner termination.

20 COSTS OF LICENCE AGREEMENT

RWBRDCL agrees to be responsible for the costs incurred in respect of the preparation and recording of this Licence Agreement.

21 ARBITRATION

If any dispute or difference of any kind whatsoever arises or occurs between the Parties in relation to any thing or matter arising under or out of or in connection with this Licence Agreement the Parties shall appoint an arbitrator (the "Arbitrator") and submit such dispute or difference to such arbitrator whose award shall be binding. If the Parties fail to agree on the appointment of an arbitrator within one (1) calendar month of the date on which such dispute or difference arises or occurs either Party may, on giving one (1) calendar months notice to the other Party, refer such dispute or difference to arbitration under the Arbitration Rules of the Chartered Institute of Arbitrators - Irish Branch.

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22 GOVERNING LAW

This Licence Agreement shall be governed by and construed in accordance with Irish law. The Parties hereby agree that the Courts of Law in Ireland shall have exclusive jurisdiction in any action in respect hereof, and that in the event of such proceeding being commenced service of documents at such address as is the address for the time being of the addressee by prepaid registered post, shall be deemed good service.

23 The Parties hereto agree that (i) this Licence Agreement supersedes, in all respects, the terms and provisions of that certain Licence Agreement, dated November 19, 1999 (the "Original Licence Agreement") by and between RWBRDCL (formerly Roaring Water Bay Vodka Company Limited) and RWBSCL, and (ii) the Original Licence Agreement shall no longer have any force or effect as of the date hereof.

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IN WITNESS WHEREOF the Parties hereto have caused this Agreement to be executed, intending that it shall be legally binding upon them their executors, administrators, heirs, estates, successors and assigns.

PRESENT WHEN THE COMMON SEAL of
THE ROARING WATER BAY (RESEARCH AND
DEVELOPMENT) COMPANY LIMITED
was affixed hereto.

/s/ David Phelan
----------------------------------------
Director


/s/ Patrick Rigney
----------------------------------------
Director/Secretary

EXECUTED AS A DEED BY:

FOR AND ON BEHALF OF GSRWB, INC.

/s/ Mark Andrews
-------------------------------------

8

SCHEDULE ONE

PATENT PUBLICATIONS

Irish Patent No:   IE990967
Date Filed:        July 12, 2000
Entitled:          "Packaging for a bottle assembly"

Irish Patent No:   990969
Date Filed:        July 12, 2000
Entitled:          "Packaging for a bottle assembly"

UK Patent NO:      GB2344095
Date Filed:        May 31, 2000
Entitled:          "Stackable bottles":

9

SCHEDULE TWO

For the purposes of this Licence Agreement the Territory is each and every country in the World.

10

Exhibit 10.20

EMPLOYMENT AGREEMENT

This Employment Agreement (the "Agreement") is made as of May 2, 2005 (the "Effective Date"), by and between Castle Brands, Inc, a Delaware corporation (the "Company") and Keith A. Bellinger (the "Executive"). In consideration of the mutual covenants contained in this Agreement, the Company and the Executive agree as follows:

1. Definitions.

(a) "Change of Control" shall occur if the Company (a) is a party to a merger, consolidation or exchange of securities which results in the holders of voting securities of the Company outstanding immediately prior thereto failing to continue to hold at least 50% of the combined voting power of the voting securities of the Company, the surviving entity or a parent of the surviving entity outstanding immediately after such merger, consolidation or exchange, or
(b) sells or disposes of all or substantially all of the Company's assets.

(b) "Disability" shall mean a mental or physical disability because of which Executive cannot continue to perform the essential functions of his position, with or without a reasonable accommodation.

(c) "Successor" shall mean any successor (whether direct or indirect) by purchase, merger, reorganization, consolidation, acquisition of property or stock, liquidation or otherwise to all or substantially all of the assets of the Company.

2. Employment Capacity; Employment at Will.

(a) As of the Effective Date, the Company agrees to employ the Executive, and the Executive agrees to serve the Company, as Chief Operating Officer of the Company, with such duties consistent with such capacity as may be assigned to him by the Board of Directors or the President of the Company. The Executive shall perform all services to be rendered hereunder faithfully, devote his full business time and attention to the duties assigned to him by the Board of Directors of the Company and use his best efforts to promote the business interest of the Company.

(b) Employment of the Executive pursuant to the terms of this Agreement shall continue from day to day until terminated by the Company or the Executive, subject to the terms and conditions hereinafter set forth.

3. Compensation and Benefits. The Company agrees to compensate the Executive for the services rendered by him during his employment as follows:

(a) Salary. Commencing on the Effective Date, the Company shall pay the Executive an annual base salary of $270,000 ("Base Salary"), payable semi-monthly in arrears in accordance with the standard payroll practices of the Company. The Executive's Base Salary shall be reviewed at least annually at which times it shall be subject to increase in the discretion of the Board of Directors. Notwithstanding the foregoing, an increase in the Executive's Base Salary to an annual base salary of $300,000 will be considered by the Compensation Committee of the Board of Directors of the Company ("Compensation Committee") in January 2006, based


on targeted achievements to be decided upon between the Executive and the Chairman and Chief Executive Officer.

(b) Bonus. The Executive shall be eligible to receive an incentive performance bonus up to a maximum of 100% of the Executive's Base Salary ("Incentive Performance Bonus"), subject to the successful achievement of a series of goals and objectives to be agreed upon with the Chairman and Chief Executive Office of the Company. The Incentive Performance Bonus will be paid following the end of the Company's fiscal year. For the first year of employment, the first $100,000 of the Incentive Performance Bonus, if any, shall be payable to the Executive in January, 2006, after completion of the review of achievements by the Compensation Committee of the Company, and the balance, if any, shall be payable after the end of the Company's 2005 fiscal year (year ending March 31, 2006). On all subsequent years the Incentive Performance Bonus will be paid following the end of the Company's fiscal year.

(c) Stock Options. The Company shall grant to the Executive 150,000 stock options at a strike price of $8.00 per share, pursuant to a Stock Option Agreement to be entered into between the Company and the Executive. The options shall vest over a four year period with 25% of the shares vesting each year on the anniversary of the Effective Date. Subject to the Executive's prior consent, which consent shall not be unreasonably withheld, the Company shall have the right to replace the stock options with an alternate form of compensation that is of the same or greater economic value to the Executive.

(d) Benefits. (i) The Executive shall be permitted to participate in the employee medical, retirement and insurance benefit plans applicable to officers of the Company, and such other plans as may from time to time be made available or applicable to the Executive, consistent with the policies of the Company.

(ii) The Executive shall be permitted to take four (4) weeks of paid vacation annually to be earned and used in accordance with the Company's vacation policy. Accrued vacation not taken in any calendar year may be carried forward or be usable in any subsequent calendar year in accordance with the Company's vacation policy. Paid holidays may be taken in accordance with the holiday policy and schedule of the Company as from time to time in effect.

(iii) The Company shall reimburse the Executive, consistent with the Company's policies, for all reasonable and necessary out-of-pocket travel, business entertainment and other business expenses incurred or expended by him incident to the performance of his duties hereunder.

(e) Car Allowance. The Company shall provide the Executive with a car allowance of $900 per month.

4. Termination and Termination Benefits

(a) Termination for Cause. Executive's employment under this Agreement may be terminated for Cause without further liability on the part of the company upon written notice from Chief Executive officer of any of the following:

2

(i) the failure by the Executive to perform the Executive's duties or responsibilities under this Agreement (other than any such failure due to physical or mental illness) and which Executive does not remedy within thirty days after receipt of written notice from the Company, which notice identifies the manner in which the Company believes that Executive has not performed his duties and responsibilities;

(ii) a finding by the Company, after notice to the Executive and an opportunity for him to be heard, that the Executive has engaged in any fraud, embezzlement or material act of dishonesty affecting the Company; or

(iii) the Executive's conviction for a felony or any lesser crime that would require his removal from any federal or state license or permit, or which would require his removal from any such Company license or permit.

(b) Termination Without Cause. Subject to the payment of Termination Benefits to the extent provided under Section 4(f), the Executive's employment under this Agreement may be terminated by the Company without Cause upon written notice to the Executive by the Chief Executive Officer.

(c) Termination by Reason of Disability. Subject to the payment of Termination Benefits to the extent provided under Section 4(f), the Executive's employment under this Agreement may be terminated by the Company by Reason of Disability on the 30th day following the delivery to Executive of written notice from the Company that Executive has been terminated by reason of Disability; provided that any such notice given before the close of a continuous period of three (3) months during which Executive shall have been incapable of performing the essential functions of his position by reason of Disability shall be deemed to be provided at the close of such period. The determination that Executive is disabled within the meaning of this Agreement shall be made upon the advice of an independent qualified physician, in the case of a physical disability, or an independent qualified psychiatrist, in the case of a mental disability, who has been selected by the Company with the approval of the Executive, which approval shall not be unreasonably withheld.

(d) Resignation By the Executive for Good Reason. Subject to the payment of Termination Benefits to the extent provided under Section 4(f), the Executive may resign his employment under this Agreement for Good Reason upon written notice to the Chief Executive Officer. Any of the following shall constitute "Good Reason" for such resignation:

(i) the continued failure by the Company (or any Successor) to perform its obligations under this Agreement for a period of thirty (30) days after a written demand for substantial performance is delivered to the Company by the Executive, which demand specifically identifies the manner in which Executive believes that the Company has not performed its obligations;

(ii) a demotion or significant diminution of the Executive's responsibilities and/or duties;

(iii) a material loss of title or office;

3

(iv) the relocation of Executive's principal work location (other than on a temporary basis) to a location more than fifty (50) miles from Executive's principal Work location as of the Effective Date; or

(v) a Change of Control of the Company.

(e) Resignation by the Executive Without Good Reason. The Executive may resign his employment under this Agreement upon sixty (60) days written notice to the Chief Executive Officer.

(f) Certain Termination Benefits. In the event the Company terminates this Agreement of the Executive's employment with the Company is terminated pursuant to Sections 4(b), 4(c) or 4(d) above, the Company shall provide to the Executive the following termination benefits ("Termination Benefits" ), provided the Executive signs the form of general release attached hereto as Exhibit A:

(i) If the termination occurs on or before the first anniversary of the Effective Date of this Agreement, the Termination Benefits shall consist of (A) continuation of the Executive's Salary at the rate then in effect for a period of six (6) months, (B) the Incentive Performance Bonus with respect to the year in which termination occurs (pro rated for the portion of the year in which the Executive was so employed) and (C) continuation of group health plan benefits ("Continuation Coverage") for a period of six (6) months or such longer period as may be required under federal law. During the first six (6) months of the Continuation Coverage period, the premium costs for the Continuation Coverage shall be shared by the Company and the Executive in the same relative proportion as in effect on the date of termination.

(ii) If the termination occurs after the first anniversary of the Effective Date of this Agreement, the Termination Benefits shall consist of (A) continuation of the Executive's Salary at the rate then in effect for a period of twelve (12) months, (B) the Incentive Performance Bonus with respect to the year in which termination occurs (pro rated for the portion of the year in which the Executive was so employed), and (C) continuation of group health plan benefits for a period of twelve (12) months or such longer period as may be required under federal law. During the first twelve (12) months of the Continuation Coverage period, the premium costs for the Continuation Coverage shall be shared by the Company and the Executive in the same relative proportion as an effect on the date of termination.

(g) Termination Upon Death. This Agreement will terminate automatically upon the death of the Executive. In the event that the employment of the Executive is terminated pursuant to this Section 4(g), the Company will pay to the representative of the Executive the amount of all accrued but unpaid Base Salary to the date of such termination, and the Incentive Performance Bonus with respect to the year in which termination occurs (pro rated for the portion of the year in which the Executive was so employed) in accordance with Company policy.

(h) Other Entitlements. Nothing in this Section 4 shall deprive the Executive of any accrued benefits to which he has acquired a vested right under any employee benefit plan,

4

stock plan or deferred compensation arrangement, or to any health care continuation coverage to the extent required by applicable law.

5. Nonsolicitation. In consideration of this Agreement and all the provisions contained herein, and in view of the Executive's participation in and access to the unique and valuable information of the current and proposed business activities of the Company in all its aspects, the Executive covenants and agrees that during the term of the Executive's employment (including any subsequent period during which the Executive renders consulting or advisory services to the Company) and thereafter for a period of (i) six months following termination of employment, if such termination occurs on or before the first anniversary of the Effective Date, or (ii) one year following termination of employment, if such termination occurs after the first anniversary of the Effective Date, the Executive shall not, directly or indirectly:

(i) solicit or induce, or assist other to solicit or induce, any individual who is an actual or prospective employee, consultant or agent of the Company to terminate his or her employment or prospective employment relationship or offer employment to or hire or otherwise engage any such individual; provided that nothing herein shall prevent general solicitation through advertising or similar means which are not specifically directed at employees of, consultants to or agent of the Company; or

(ii) solicit or induce, or assist others to solicit or induce, any distributors, manufacturers, suppliers, customers or representatives with whom the Company is doing business to terminate or otherwise curtail or impair their business relationship with the Company.

6. Withholding. All payments provided for hereunder shall be reduced by payroll taxes and withholding required by any federal, state or local law, and any additional withholding to which the Executive has agreed in writing.

7. Successors, Assignment, etc. Except as hereinafter set forth, this Agreement shall be binding upon and inure to the benefit of the Executive and the Company and their respective permitted Successors. Neither this Agreement nor any of the rights or benefits hereunder may be assigned by the Executive. In the event the Company merges or consolidates with or into any other corporation or sells or otherwise transfers substantially all of its assets to another corporation, the provisions of this Agreement shall be binding upon and inure to the benefit of the corporation surviving or resulting from the merger or consolidation or to which such assets are sold or transferred.

8. Enforceability. If any portion or provision of this Agreement shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

9. Notices. Any termination of Executive's employment by the Company or by Executive other than by reason of death shall be communicated by written notice of termination

5

to the other party hereto. In case of any termination of Executive's employment by the Company for Cause or Disability, or by Executive for Good Reason, such notice shall set forth the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail all facts claimed to provide a basis under the provision indicated. The notice shall be hand delivered or sent by registered or certified mail and mailed to Executive at the last address he has filed with the Company's principal executive offices, or to the Company at its principal executive offices.

10. Entire Agreement; Amendment; Waivers. This Agreement contains the entire agreement between the parties relating to the subject matter hereof and supersedes any prior or other understanding, agreements or representations relating thereto. This Agreement may not be amended, modified or supplemented except by an agreement in writing signed by the parties hereto. Waiver by any part of any breach of this Agreement shall not operate or be construed as a continuing waiver or as a waiver of any subsequent breach.

11. Governing Law. This Agreement has been executed and delivered in the State of New York and its validity, interpretation, performance and enforcement shall be governed by the laws of said State without regard to principles of conflict of laws.

12. Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be taken to be an original; but such counterparts shall together constitute one and the same document.

IN WITNESS WHEREOF, this Agreement has been executed by the Company, by its duly authorized officer, and by the Executive, as of the Effective Date.

CASTLE BRANDS INC.

By: /s/ Mark Andrews
    ------------------------------------
Name: Mark Andrews
Title: Chairman and CEO and President


/s/ Keith A. Bellinger
----------------------------------------
Keith A. Bellinger

6

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 4(f) of the Agreement dated May 2, 2005 between Castle Brands, Inc. and me relating to my employment with Castle Brands, Inc., and for other good and valuable consideration, I, with the intention of binding myself and my heirs, beneficiaries, trustees, administrators, executives, assigns and legal representatives (collectively, the "Releasors"), hereby irrevocably and unconditionally release, remise, and forever discharge Castle Brands Inc. and the Releasees (as hereinafter defined) with respect to any and all agreements, promises, rights, liabilities, claims, and demands of any kind whatsoever (upon any legal or equitable theory, whether contractual, common law, or statutory, under federal, state or local law or otherwise), whether known or unknown, asserted or unasserted, fixed or contingent, apparent or concealed, that the Releasors ever had, now have or hereafter can, shall or may have for, upon, or by reason of any matter, cause or thing whatsoever existing, accruing, arising or occurring at any time on or prior to the date I execute this General Release, including, without limitation, (i) any and all rights and claims arising out of or in connection with my employment by Castle Brands Inc., the terms and conditions of such employment, or the termination of my employment; (ii) any and all contract claims, claims for bonuses, claims for severance allowances or entitlements; (iii) fraud claims, defamation, disparages 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 health care continuation coverage to the extent required by applicable law; or any right that I may have under the Agreement dated May 2, 2005.

(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 affiliates, successors, assigns, and all of its and their past, present, 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. (a) Opportunity to Review. I acknowledge that before signing this General Release, I was given a period of at least 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 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: Mark Andrews. 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: May 2, 2005

/s/ Keith A. Bellinger
-------------------------------------

8

Exhibit 10.21

SUMMARY OF AGREEMENT
WITH
MATTHEW MACFARLANE

1. Title: Vice President and Chief Accounting Officer

2. Base Salary: $145,000 per year

3. Bonus Potential: 25%

4. GS will provide a 401K program, initially without company contribution.

5. GS will provide a car allowance in line with our discussion.

6. GS will provide a term Life Insurance Policy in the amount of $500,000, subject to satisfactory physical examination.

7. Stock Options: GS will provide options to purchase 25,000 shares at a price of $6 per share. These options will vest over a 4-year period from date of hire.

8. Change of Control: In the event the company is sold or merged, and there is a change of control, all of your options will vest; and, in the event that you do not receive a comparable position with the new company, you will receive a payment of $75,000.

9. GS will provide you our standard Healthcare Benefits program. Robin Godfrey, our Controller, will provide you with the details and help you get signed up.

10. Sign on Bonus: $10,000.

11. Vacation: 3 weeks

Agreed

/s/ Matthew MacFarlane
----------------------------------------

12-17-03


Exhibit 10.22

NON-COMPETITION DEED

This Non-Competition Deed is made as of the 1st day of DEC., 2003,

BETWEEN

1. GSRWB, INC a company incorporated in the State of Delaware, United States of America ("GSRW")

AND

2. DAVID PHELAN of 17 Terenure Park, Terenure, Dublin 6 ("Mr Phelan").

WHEREAS:

A. Pursuant to a Merger and Acquisition Agreement dated July 31, 2003 between The Roaring Water Bay Spirits Group Limited, The Roaring Water Bay Marketing and Sales Company Limited, Patrick Rigney, David Phelan, Carbery Milk Products Limited, Tanis Investments Limited, Great Spirits Company, LLC, Great Spirits Corp (the "Merger Agreement") inter alia Mr Phelan transferred his Shares in Roaring Water Bay Spirits Group Limited and Roaring Water Bay Spirits Marketing and Sales Company Limited to GSRW.

B. Defined terms herein shall the meaning set out in the Merger Agreement, unless otherwise defined in this Deed. Mr. Phelan has entered into this Deed in connection with the Merger Agreement.

1 COVENANT NOT TO COMPETE OR SOLICIT

1.1 For a period of 2 years after the date of the Merger Agreement (the "Non-Competition Period"), Mr. Phelan shall not, without the prior written consent of GSRW, such consent not to be unreasonably withheld, directly or indirectly, as a consultant to, officer, director, independent contractor, shareholder or other owner or participant in any entity engage in the business of the sale and marketing of alcohol products competing directly with the products sold and marketed by RW and RW-UK as at the date of this Deed in Ireland and the United Kingdom.

1.2 During the Non-Competition Period, Mr. Phelan shall not directly or indirectly, solicit, encourage or take any other action which is intended to induce or encourage, or has the effect of inducing or encouraging any employee of RW or RW-UK to terminate his or her employment with RW or RW-UK.

1.3 Mr. Phelan acknowledges that it would be difficult to fully compensate GSRW for damages for any breach of this Agreement. Accordingly, Mr. Phelan specifically agrees that GSRW shall be entitled to temporary and injunctive relief to enforce the provisions of this Section and that such relief may be granted without the necessity to prove actual damages.


2 MISCELLANEOUS

2.1 All notices or communication required or permitted under this Deed shall be made in writing and delivered personally to the other party or sent by certified or registered post, return receipt requested and postage prepaid or express courier with confirmation of delivery to the following addresses (or such other address for a party as shall have been specified by like notice):

(a) if to GSRW, to:

GSRWB, Inc.
Rego Park
Suite G
New York 11374
U.S.A.

Fax No: [_________________________________________]

(b) if to Mr. Phelan, to:

17 Terenure Park
Terenure
Dublin 6W
Ireland

Fax No: [_________________________________________]

2.2 This Deed shall be construed under and governed by the laws of Ireland and the Courts of Ireland shall have exclusive jurisdiction to deal with all disputes arising from or touching upon this Agreement.

2.3 If any provision of this Deed is unenforceable or illegal, the remainder of this Deed shall remain in full force and effect. If any one or more provisions contained in this Deed shall for any reason be held to be excessively broad as to duration, geographical scope, activity or subject, such provisions shall be construed by limiting and reducing it so as to be enforceable to the extent compatible with existing law.

2.4 This Deed will not be assignable. Subject to the previous sentence, this Deed shall inure to the benefit of GSRW and its successors and assigns.

2.5 This Deed contains the entire agreement and understanding of the parties and supersedes all prior discussions, agreements and understandings relating to the subject matter hereof. This Deed may not be changed or modified, except by an agreement in writing executed by GSRW and Mr. Phelan.

2.6 The waiver of a breach of any term or provision of this Deed, which must be in writing, shall not operate as or be construed to be a waiver of any other previous or subsequent breach of this Deed.

2

2.7 This Deed may be executed in counterparts, and each counterpart shall have the same force and effect as an original and shall constitute an effective, binding agreement on the part of each of the undersigned.

IN WITNESS WHEREOF, the parties have duly executed this Deed as of the date and year first above written.

3

EXECUTED AS A DEED BY AND BEHALF
OF GSRW BY:

/s/ Mark Andrews
----------------------------------------
Name: Mark Andrews
Title: President

SIGNED, SEALED AND DELIVERED
BY MR PHELAN

                                        /s/ David D. Phelan
                                        ----------------------------------------
                                        Signature


                                        /s/ David D. Phelan
                                        ----------------------------------------
                                        Print Name


/s/ Philip O'Shea
-------------------------------------
Witness


Witness


Witness

4

Exhibit 10.23

[LOGO]
CASTLE BRANDS

August 4, 2005

Mr. David Phelan
Executive Vice President, Castle Brands Inc, Managing Director, Castle Brands Spirits Group Limited Victoria House
Haddington Road
Dublin 4
Ireland

Dear Dave:

We have informally discussed the advisability of your becoming a consultant to Castle Brands Inc. (the "Company") to provide counsel on a number of initiatives, including the expansion of our international markets and potential acquisitions in Ireland and Europe. As we have discussed, I am writing you this letter to address that move.

In consideration of the payment of one Euro to you, and the mutual covenants, the receipt and sufficiency of which is acknowledged, we agree as follows in this letter agreement.

We agree you will become a consultant to the Company on October 1, 2005, for a period of 18 months, and to your simultaneous resignation of your current management positions with the Company and its subsidiaries and your directorships of all the subsidiaries. Your consultancy compensation will be E157,500 per annum plus VAT (at the appropriate rate) to the extent that you are required to charge VAT. You will be paid monthly by direct debit on the 15th of the month to an account designated by you. You will continue on the Company's Board of Directors as a non-executive director, except as provided below, until the earlier of September 30, 2005 or the initiation of the Company's initial public offering.

The provisions of Clause 15 of your Service Agreement, dated December 1, 2003, and your Non-Competition Deed, dated December 1, 2003, shall apply to the consultancy and remain in effect through March 31, 2006. Thereafter, the Non-Competition Deed shall be deemed null and void and the provisions of Clause 15.3.1 of the Service Agreement shall apply to your activities during the remainder of the consultancy. Notwithstanding such Clause, you will be permitted to solicit employment or consulting agreements after March 31, 2006 and if you wish to accept employment or consulting assignments, or engage in any activity, after March 31, 2006, which would violate such provisions, you may request the Company to consent to such proposed activity and continuation of the consultancy. If such consent is not granted within twenty (20) days of written request, you shall be deemed no longer subject to Clause 15.3.1 and shall be entitled to payment of (a) the remaining monthly consultancy payments through March 31, 2007 or (b) an accelerated single payment within ten (10) days of resignation of E10,417 plus VAT, to the extent you are required to charge VAT, times the remaining number of months through March 31, 2007 for which you had not received payment.


Mr. David Phelan
August 4, 2005

Page 2

Your options would continue to vest through the consulting period and absent a default, you will be deemed to have accrued three years' vesting at the end of the consultancy. The exercise period for your stock options would be extended to December 1, 2008. All appropriate business expenses incurred in the course of performing your duties under the consultancy will be reimbursed according to Company policy upon presentation of required documentation, subject to reasonable review. We are prepared to reimburse you for up to E5,000 of your legal fees in connection with the consultancy.

Pursuant to the terms of the License Agreement dated December 1, 2003, the royalty payments paid to The Roaring Water Bay (Research and Development) Company Limited shall not be affected by your consultancy. The Company warrants that the royalty payments (maximum of E2,500 per month) payable under such License Agreement shall be paid during the term of the consultancy, until such time that your interest in such company is purchased. The Company will purchase your interest in such company on or before the termination of your consultancy pursuant to the License Agreement, whereupon the royalty payments paid to you by The Roaring Water Bay (Research and Development) Company Limited shall cease.

For the remainder of August and September, your focus as an officer of the Company and certain subsidiaries will need to be transitioning your areas of responsibility to Keith Bellinger and agreed managers in Dublin or Europe. Keith will work with you to determine the most effective organization structure for the international markets.

Starting October 1, 2005, and for an additional 18 months of consultancy (through March 31, 2007), your primary focus would be on identifying new opportunities and markets for the Company, on an as agreed basis. Except as requested, the consultancy would no longer be carried on from the Company's Dublin office. With regard to this timing, we believe that it is important for any change of this type to be completed promptly, so that the Company can transition effectively prior to the launch of the proposed public offering.

We understand that you would like to have the amounts due of the 5% Convertible Subordinated Note, dated December 1, 2003, issued to you in the original principal amount of E465,550 and the Subordinated Note, dated December 1, 2003, issued to you in the original principal amount of E133,323 (the "Notes") paid as quickly as possible. While the Company is under no obligation to do so, in the spirit of cooperation we are prepared to pay off the Notes with the proceeds of the public offering within one month after completion of the offering, which we hope to complete later this year. Furthermore, even if we are not able to complete such offering in 2005, we will pay off the outstanding balance of the Notes in four quarterly installments in 2006, beginning January 1, 2006 and ending December 1, 2006, provided such payments would not create a default under any of the Company's credit facilities. We could accelerate that schedule if the public offering were to be completed during 2006.

We will also endeavor to facilitate the transfer of your pension as promptly as practicable.

This letter agreement shall be governed by and construed in accordance with the laws of Ireland ("Irish Matters"), except in the case of the aforesaid options and 5% Convertible Subordinated Note, matters pertaining to which shall be governed by Delaware and New York law ("U.S.


Mr. David Phelan
August 4, 2005

Page 3

Matters"), in each case exclusive of choice of law or conflicts of law, rules, provisions, or principles.

The parties agree that the courts in the City of Dublin shall have jurisdiction to hear and determine any suit, action or proceeding to settle any dispute between them, that may arise out of or in connection with Irish Matters and, for such purposes, each irrevocably submits to the jurisdiction or such courts. Each of the parties irrevocably and unconditionally waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of venue of any actions, suits or proceedings brought in any court as provided in the preceding sentence of this paragraph, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court his been brought in an inconvenient forum.

The parties agree that the courts in New York, New York shall have jurisdiction to hear and determine any suit, action or proceeding to settle any dispute between them, that may arise out of or in connection with U.S. Matters and, for such purposes, each irrevocably submits to the jurisdiction of such courts. Each of the parties irrevocably and unconditionally waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of venue of any actions, suits or proceedings brought in any court as provided in the preceding sentence of this paragraph, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

If the Company determines to announce your resignation generally, the Company and you will agree to a mutually agreeable text of such announcement.

While we can make no assurances with regard to your shares, if there is a good opportunity for you to sell a portion of your shares, we will endeavor to help you do so.

We look forward to working with you in this new relationship. Please indicate your acceptance of the terms hereof by signing and returning the enclosed copy of this letter whereupon this letter agreement shall replace and supersede the Service Agreement and the provisions regarding your tenure as officer and director of the Company and subsidiaries under the Shareholders' Agreement, dated December 1, 2003, shall no longer pertain.

Very best regards,

Castle Brands Inc.                      Castle Brands Spirits Group Limited


By: /s/ Mark Andrews                    By: /s/ Matthew MacFarlane
    ---------------------------------      -------------------------------------
Name: Mark Andrews                      Name: Matthew MacFarlane
Title: Chairman and CEO                 Title: Chief Financial Officer

Accepted and agreed
as of the data first written above:

Mr. David Phelan
August 4, 2005
Page 4


/s/ David Phelan
-------------------------------------

David Phelan


Exhibit 10.24

[LOGO]

CASTLE BRANDS

February 15, 2005

Mr. Patrick Rigney
Executive Vice President, Castle Brands Inc. Managing Director, Castle Brands Spirits Group Limited Victoria House
Haddington Road
Dublin 4
Ireland

Dear Pat:

Over the last several months, we have informally discussed the advisability of your becoming a consultant to Castle Brands Inc. or its subsidiaries (the "Company") to champion several important initiatives including the identification of attractive agency brands and potential acquisitions. As we have discussed, I am writing you this letter to address that move.

In consideration of the payment of one Euro to you by each of Castle Brands Inc. and Castle Brands Spirits Group Limited, and the mutual covenants, the receipt and sufficiency of which is acknowledged, we agree as follows in this letter agreement.

We agree you will become a consultant to the Company on March 11, 2005 and to your simultaneous resignation of your current management positions with the Company and its subsidiaries. Your consultancy compensation will be E157,500 per annum plus VAT (at the appropriate rate) to the extent that you are required to charge VAT. You would be paid monthly by direct debit on the 15th of the month to an account designated by you. You would continue on the Castle Brands Inc.'s Board of Directors as a non-executive director, except as provided below, until the earlier of December 31, 2005, or the initiation of the Company's initial public offering or registration of its shares. We agree that you will resign from the Boards of Directors of the subsidiaries on March 11, 2005.

The provisions of Clause 15 of your Service Agreement, dated December 1, 2003, and your Non-Competition Deed, dated December 1, 2003, shall apply to the consultancy and remain in effect through September 12, 2005, as if set forth herein. Thereafter, the Non-Competition Deed shall be deemed null and void and Clauses 15.2, 15.3.1 and 15.3.2 shall apply to the remainder of the consultancy. In the event that you wish to accept employment or consulting assignments, or engage in any activity, including, but not limited to, entering into competition with the Company or its subsidiaries, you shall give one month's prior written notice to the Company of your intention to accept such employment or consulting assignments or engage in such activity. The Company may then request that you, and on such request you shall, resign as a Director of the


Mr. Patrick Rigney
February 15, 2005

Page 2

Company. Upon your resignation from the Board of Directors of the Company, whether at the request of the Company or through your own volition, the provisions of Clauses 15.3.1 and 15.3.2(b) shall no longer apply to you and you shall be entitled to a payment of the remaining monthly consultancy payments through June 9, 2006 or an accelerated single payment within ten (10) days of resignation of E10,417 plus VAT, to the extent you are required to charge VAT, times the remaining number of months through June 9, 2006 for which you had not received payment.

Your options would continue to vest through the consulting period and absent a default, you will be deemed to have accrued two years' vesting at the end of the consultancy. The exercise period for your stock options would be extended to December 1, 2008. All appropriate business expenses incurred in the course of performing your duties under the consultancy will be reimbursed according to Company policy upon presentation of required documentation. We are prepared to reimburse you for up to E8,000 plus VAT (at the appropriate rate) of your legal fees in connection with the consultancy.

Pursuant to the terms of the License Agreement, dated December 1, 2003, the royalty payments paid to The Roaring Water Bay (Research and Development) Company Limited shall not be affected by your consultancy. The Company warrants that the royalty payments (maximum of E2,500 per month) payable under such License Agreement shall be paid during the consultancy. The Company will purchase your interest in such company on or before the termination of your consultancy pursuant to the License Agreement, whereupon the royalty payments paid to you by The Roaring Water Bay (Research and Development) Company Limited shall cease.

For March, April and May, your focus will need to be transitioning your areas of responsibility to David Phelan. Since Mr. Phelan will be responsible for the 2005 Plan, people currently reporting to you will report to Mr. Phelan as of March 11, 2005. Starting June 10, 2005, and for the additional twelve months of consultancy, your primary focus would be on identifying new opportunities and markets for the Company, on an as agreed basis. Except as requested, the consultancy would no longer be carried on from the Company's Dublin office. With regard to this timing, we believe that it is important for any change of this type to be completed promptly, so that the Company can transition effectively prior to the launch of the proposed public offering, and so that we can start building our pipeline of agency brands and acquisitions.

We understand that you would like to have the amounts due of the 5% Convertible Subordinated Note, dated December 1, 2003, issued to you in the original principal amount of E465,550 and the Subordinated Note, dated December 1, 2003, issued to you in the original principal amount of E133,323 (the "Notes") paid as quickly as possible. While the Company is under no obligation to do so, in the spirit of cooperation we are prepared to pay off the Notes with the proceeds of the public offering within one month after completion of the offering, which we hope to complete later this year. Furthermore, even if we are not able to complete such offering in 2005, we will pay off the outstanding balance of the Notes in four quarterly installments in 2006, beginning January 1, 2006 and ending December 1, 2006, provided we have entered into the Joint venture with Gosling's, and the $10 million facility from Mellon HBV Alternative


Mr. Patrick Rigney
February 15, 2005

Page 3

Strategies LLC (or a comparable facility) is available to us. We could accelerate that schedule if the public offering were to be completed during 2006.

We will also use reasonable best efforts to facilitate the transfer of your pension as promptly as practicable.

This letter agreement shall be governed by and construed in accordance with the laws of Ireland ("Irish Matters"), except in the case of the aforesaid options and 5% Convertible Subordinated Note, matters pertaining to which shall be governed by Delaware and New York law ("U.S. Matters"), in each case exclusive of choice of law or conflicts of law, rules, provisions, or principles.

The parties agree that the courts in the City of Dublin shall have jurisdiction to hear and determine any suit, action or proceeding and to settle any dispute between them, that may arise out of or in connection with Irish Matters and, for such purposes, each irrevocably submits to the jurisdiction of such courts. Each of the parties irrevocably and unconditionally waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of venue of any actions, suits or proceedings brought in any court as provided in the preceding sentence of this paragraph, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

The parties agree that the courts in New York, New York shall have jurisdiction to hear and determine any suit, action or proceeding and to settle any dispute between them, that may arise out of or in connection with U.S. Matters and, for such purposes, each irrevocably submits to the jurisdiction of such courts. Each of the parties irrevocably and unconditionally waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of venue of any actions, suits or proceedings brought in any court as provided in the preceding sentence of this paragraph, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

If the Company determines to announce your resignation generally, the Company and you will agree to a mutually agreeable text of such announcement.

While we can make no assurances with regard to your shares, if there is a good opportunity for you to sell a portion of your shares, we will endeavor to help you do so.

We look forward to working with you in this new relationship and are confident that it will produce important new opportunities for Castle Brands. Please indicate your acceptance of the terms hereof by signing and returning the enclosed copy of this letter whereupon this letter agreement shall replace and supersede the Service Agreement which will have no further force and effect and the provisions regarding your tenure as officer and director of the Company and subsidiaries under the Shareholders Agreement, dated December 1, 2003, shall no longer pertain. While this letter agreement is viewed as binding by the parties, we will also use our best


Mr. Patrick Rigney
February 15, 2005

Page 4

endeavors to enter into a brief consultancy agreement between now and March 11, 2005, to specify more clearly the focus of the consultancy.

Very best regards,

Castle Brands Inc.                      Castle Brands Spirits Group Limited


By: /s/ Mark Andrews                    By: /s/ Matthew MacFarlane
    ---------------------------------       ------------------------------------
Name: Mark Andrews                      Name: Matthew MacFarlane
Title: Chairman and CEO                 Title: Chief Financial Officer


Accepted and agreed
as of the date first written above:


By: /s/ Patrick Rigney
    ---------------------------------

    Patrick Rigney


Exhibit 10.25

[LOGO]

CASTLE BRANDS

August 4, 2005

Mr. David Phelan
Executive Vice President, Castle Brands Inc. Managing Director, Castle Brands Spirits Group Limited Victoria House
Haddington Road
Dublin 4
Ireland

Dear Dave:

Based on our letter agreement of August 4, 2005 (the "Agreement"), we have mutually agreed that you will become a consultant to Castle Brands Inc. ("CBI"), effective October 1, 2005, on the terms outlined in the accompanying Agreement. This supplemental consulting agreement has been drafted to clarify several items, at the request of our Irish Counsel.

1. CONSULTING STATUS - As a consultant, you will no longer be an employee, as it relates to Irish tax, employment law or employment benefits.

2. TAX RELEASE - As a consultant, you will assume the responsibility for any employment taxes, income taxes or other levies that may become due as a result of your consulting, but with the understanding that we will reimburse you for any VAT payments, to the extent that you are required to charge VAT.

3. RELEASE - As a consultant, you accept payment under the Agreement, in full payment and satisfaction of all of your claims, rights and interests against CBI, its subsidiaries and affiliates, except for any vested benefits under any employment benefit plan(s) to which you may be entitled, and you hereby release and forever discharge CBI, its subsidiaries and affiliates and their respective past and present officers, directors, employees, representatives, agents, attorneys, successors and assigns from all claims and liabilities of any nature, including but not limited to all actions, causes of actions, suits, debts, sums of money, attorneys' fees, costs or other claims whatsoever, known or unknown, at law or in equity, that you now have or will ever have arising out of any event, action or inaction occurring prior to or on the effective date of the Agreement. Without limiting the generality of the foregoing, you specifically release and discharge any and all claims and causes of action arising from your employment at CBI arising out of all applicable Irish or United States laws and regulations.


Mr. David Phelan
August 4, 2005

Page 2

We look forward to working with you in this new relationship. Please indicate your acceptance of the terms hereof by signing and returning the enclosed copies of the Agreement and this letter, which will become effective upon execution.

Very best regards,

Castle Brands Inc.                      Castle Brands Spirits Group Limited


By: /s/ Mark Andrews                    By: /s/ Matthew MacFarlane
    ---------------------------------   ----------------------------------------
Name: Mark Andrews                      Name: Mathew MacFarlane
Title: Chairman and CEO                 Title: Chief Financial Officer

Accepted and agreed
as of the date first written above:


/s/ David Phelan
-------------------------------------

David Phelan


Exhibit 10.26

[LOGO]

CASTLE BRANDS

August 2, 2005

Mr. Pat Rigney
Director, Castle Brands Inc.
Victoria House
Haddington Road
Dublin 4
Ireland

Dear Pat:

Based on our letter agreement of February 15, 2005 (the "Agreement"), we have mutually agreed that you would become a consultant to Castle Brands Inc, ("CBI"), effective March 11, 2005, on the terms outlined in the Agreement. This supplemental consulting agreement has been drafted to clarify several items, at the request of our Irish Counsel.

1. CONSULTING STATUS - As a consultant, you are no longer be an employee, as it relates to Irish tax, employment law or employment benefits.

2. TAX RELEASE - As a consultant, you assume the responsibility for any employment taxes, income taxes or other levies that may become due as a result of your consulting, but with the understanding that we will reimburse you for any VAT payments, to the extent that you are required to charge VAT.

3. RELEASE - As a consultant, you accept payment under the Agreement, in full payment and satisfaction of all of your claims, rights and interests against CBI, its subsidiaries and affiliates, except for any vested benefits under any employment benefit plan(s) & or the loan notes, patent income and payments due to which you may be entitled, and you hereby release and forever discharge CBI, its subsidiaries and affiliates and their respective past and preset officers, directors, employees, representatives, agents, attorneys, successors and assigns from all claims and liabilities of in relation to your employment, including but not limited to all actions, causes of actions, suits, debts, sums of money, attorneys' fees, costs or other claims whatsoever, known or unknown, at law or in equity, that you now have or will ever have arising out of any event, action or inaction occurring prior to or on the effective date of the Agreement. Without limiting the generality of the foregoing, you specifically release and discharge any and all claims and causes of action arising from your employment at CBI arising out of all applicable Irish or United States laws and regulations.


Mr. Pat Rigney
July 21, 2005

Page 2

We look forward to continue working with you in this new relationship. Please indicate your acceptance of the terms hereof by signing and returning the enclosed copies of the Agreement and this letter.

Very best regards,

Castle Brands Inc.                         Castle Brands Spirits Group Limited


By: /s/  Mark Andrews                      By: /s/ Matthew MacFarlane
    ------------------------------------       ---------------------------------
Name: Mark Andrews                         Name: Matthew MacFarlane
Title: Chairman and CEO                    Title: Chief Financial Officer

Accepted and agreed
as of the date first written above:


/s/ Patrick Rigney
----------------------------------------

Patrick Rigney


Exhibit 10.27

NOTE: PORTIONS OF THIS EXHIBIT ARE THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST BY THE REGISTRANT TO THE SECURITIES AND EXCHANGE COMMISSION. SUCH PORTIONS HAVE BEEN REDACTED AND ARE MARKED WITH A "[*]" IN PLACE OF THE REDACTED LANGUAGE.

SUPPLY AGREEMENT

Date: 19th January, 1998

Parties:

1. 'The Supplier': Carbery Milk Products Limited a company incorporated in Ireland whose registered office is at Ballineen, County Cork, Ireland

2. 'The Customer': The Roaring Water Bay Spirits Company Limited a company incorporated in Ireland whose registered office is at Carrick House, 49 Fitzwilliam Square, Dublin 2.

RECITALS:

(A) The Supplier carries on, inter alia, the business of manufacturing and selling the Products.

(B) The Customer intends, with effect from 1 March, 1998 to carry on the business of manufacturing and selling branded vodkas ant other alcoholic drinks and wishes to purchase the Products from the Supplier for that business, and the Supplier is willing to supply the Products to the Customer, on the terms set out in this Agreement.

Operative Provisions:

1 Interpretation

1.1 In this Agreement, unless the context otherwise requires:

'CREAM LIQUEUR PRODUCTS' means alcohol beverages which contain alcohol and dairy, or alternative fats, which in combination with sweetening and sugars are intended to compete with or replicate existing cream or fat based alcoholic beverages

'FORCE MAJEURE' means, in relation to either party, any circumstances beyond the reasonable control of that party (including, without limitation, any strike, lock-out or other industrial action)

'PRODUCTS' means neutral spirit with an alcohol level as set out in the Specification

'SPECIFICATION' means the specification of the Products described in Schedule I or any other specification of the Products agreed in writing between the Supplier and the Customer from time to time

'PROCESS PROCEDURE' refers to the matters set out in Schedule II

1.2 Any reference in this Agreement to 'writing', or cognate expressions, includes a reference to any communication effected by telex, cable, facsimile transmission or any comparable means.


1.3 The headings in this Agreement are for convenience only and shall not affect its interpretation.

2 Sale of the Products

2.1 During the continuance of this Agreement the Supplier shall sell and the Customer shall exclusively purchase all quantities of the Products and other neutral spirit requirements of the Company required by the Customer subject to the terms and conditions of this Agreement.

2.2 Each order shall specify the quantities of each of the Products by volume and type. The Products or any of them shall be delivered in bulk tanker container form.

2.3

2.3.1 The Customer shall, where the expected requirement for any one year of the Products is greater than twice that set out for that year in clause 5.1 below, inform the Supplier of such projected increased requirements at least six months in advance of that year;

2.3.2 The Customer shall give the supplier not less than three months notice of its estimated requirements of the Products for each month and shall promptly notify the Supplier of any changes in circumstances which may affect its requirements.

2.4 If the Customer's orders for the Products exceed (or it appears from any of the estimates or revised estimates given pursuant to clause 2.3 or 5.1 that they will exceed) the output capacity or stocks of the Supplier, whether produced by the Supplier or obtained by the Supplier from a third party the Supplier shall as soon as practicable notify the Customer and, the customer shall, be entitled to obtain from any other person such quantity of the Products as the Supplier is unable to supply in accordance with the Customer's orders.

2.5 For the avoidance of doubt, in the event that the Supplier is unable to supply sufficient quantities of the Products to the Customer and the Customer, as a result of such inability obtains Products from a third party at a cost greater than that which the Customer would have paid to the Supplier, the Supplier shall forthwith repay the difference in price between the price charged by the third party and the price which would have been charged by the Supplier. Any price negotiated with a third party shall be a price negotiated on a commercial basis and at arms length.

3 Conditions of sale

All sales of the Products sold pursuant to this Agreement shall be subject to the terms and conditions of this Agreement and shall prevail over any other terms and conditions unless this Agreement is varied by the parties hereto. This Agreement shall not be and shall not be deemed to be varied by the parties hereto unless the parties state in writing that this Agreement is so varied.

4 Specification of the products

2

4.1 All Products sold by the Supplier to the Customer pursuant to this Agreement shall conform in all respects to the Specification.

4.2 The parties shall consult with each other from time to time during the continuance of this Agreement in order to ensure that the Specification is acceptable to both parties, and the Specification may subsequently be changed by agreement in writing by the parties.

4.3 Testing of the Products shall take place in accordance with the provisions of Schedule II.

4.4 If as a result of inspection or testing the Customer is lot satisfied that the Products will comply in all respects with the Specification and the Customer so informs the Supplier within 7 days of inspection of testing, the Supplier shall take such steps as are necessary to ensure compliance.

4.5 The Products shall be marked in accordance with the Customer's instructions and any applicable regulations or requirements of the carrier, and properly packed and secured so as to reach their destination in an undamaged condition in the ordinary course.

5 Orders & Supply

5.1 The Customer projects (but without commitment to purchase) that it will purchase from the Supplier the following quantities of Product in the years set out below (where reference to Year 1 refers to the 12 month period commencing on 1 June, 1998 and reference to each subsequent year refers to each 12 month period thereafter).

         No. of Cases    Litres of Alcohol
         ------------   -------------------
Year 1    *              *      litres p.a.
     2    *              *      litres p.a.
     3    *              *      litres p.a.
     4    *              *      litres p.a.
     5    *              *      litres p.a.

6 Trade Secrets

6.1 The parties agree that notwithstanding any termination in accordance with clause 12 hereof, they shall not use any name, trademark, trade name or logo of the other party. The Supplier shall not be entitled either by implication or otherwise to any title, or right of interest in any trademarks, trade names, logos or symbols employed, designed, or developed by the Customer in connection with the Products. The Supplier further acknowledges that it is granted no rights in relation to copyright or other rights of whatever nature subsisting in any Product produced or developed by the Customer.

3

In particular the Supplier acknowledges that all and any sights subsisting in any bottle or graphic representation (including any label on any bottle) belongs to the Customer.

6.2 The Supplier acknowledges that it has no right to sell any brands of vodka or other branded alcoholic product produced or developed by the Customer throughout the world. The Customer acknowledges that the provisions of clause 15.2 do not apply insofar as they relate to Cream Liqueur Products.

7 Manufacture and delivery of the Products

7.1 The Supplier shall use its best endeavours to manufacture and maintain sufficient stocks of the Products to fulfill its obligations under this Agreement.

7.2 The Supplier shall ensure delivery of each of the Customer's orders of the Products on the date specified in the order, and time of delivery stall be of the essence.

7.3 Delivery of the Products shall be on a CIF basis and shall take place at the premises of Terra Limited at Institute Road, Bailieboro, Co Cavan or such other location as the Customer may agree with the Supplier. The obligation to store the Products in bonded warehouse storage shall pass from the Supplier to the Customer or its nominee upon delivery of the Products pursuant to clause 7.3 to the Customer or its agents.

7.4 The Supplier shall comply with all applicable regulations or other legal requirements concerning the manufacture and delivery of the Products.

7.5 The Customer, or its nominee, shall be entitled to reject any Products delivered which are not in accordance with the Specification within 14 days of delivery of the Products to the Customer or its nominee as the case may be and failing such rejection, be deemed to have accepted the Products one day after expiry of such 14 day period.

7.6 The Supplier shall supply the Customer or its nominee in good time with any instructions or other information required to enable the Customer or its nominee to accept delivery of the Products.

7.7 If the Customer or its nominee rejects any delivery of the Products which are not in accordance with clause 7.5 the Supplier at its own cost shall forthwith take possession of such Products and remove them from the premises of Terra Limited or from such other location to which such Products were delivered and the Supplier shall within 10 days of being requested to do so by the Customer or its nominee supply replacement Products which are in accordance with the Specification (in which event the Supplier shall not be deemed to be in breach of this Agreement or have any liability to the Customer) or shall notify the Customer or its nominee that it is unable to do so, whereupon the Customer or its nominee shall be entitled to obtain from any other person such quantity of the Products as the Supplier has been unable so to supply, and the provisions of clause 2.5 shall apply accordingly.

7.8 The Supplier on request, shall, at the Suppliers cost, send to the Customer or its nominee samples of the Products or any other Products manufactured by the Supplier.

4

8 Risk and Property

8.1 Risk of damage to or loss of the Products shall pass to the Customer upon delivery to the Customer or its nominee in accordance with clause 7.3.

8.2 The property in each consignment of the Products delivered shall pass to the Customer upon payment in full for all of the Products contained in such consignment unless payment for such Products is made prior to delivery, when it shall pass to the Customer once payment has been made and the Products have been appropriated to the Customer.

8.3 If the Customer shall sell or otherwise dispose of the Products, or any of them before payment in full by the Customer has been made to the Supplier, the Customer shall in such case hold all monies received by it from such sale or disposal in trust for the Supplier and shall on request furnish the Supplier with the names and addresses of the persons to whom such disposals have been made together with all necessary particulars to enable the Supplier to recover any outstanding sums due from such persons. So long as the property in the Products shall remain in the Supplier, the Customer shall hold the Products as bailee for the Supplier and store the Products so as to clearly show them to be the property of the Supplier, and the Supplier shall have the right in default of payment by the Customer for such Products as and when due, without prejudice to the obligations of the Customer to purchase the Products, to retake possession of the Products (and for that purpose to go upon any premises occupied by the Customer).

Nothing in this clause shall confer any right upon the Customer to return the Products. The Supplier may maintain an action for the price notwithstanding that property in the Products shall have vested in the Customer.

Default by Customer

(a) If the Customer: -

(i) fails to comply with any material term of this Agreement (including stipulations as to payment);

(ii) commits an act of bankruptcy, makes an arrangement or composition with the creditors or suffers any distress or execution; or

(iii) resolves to or is ordered to be wound up or has a receiver or examiner appointed

then, in any such event, the Supplier shall have the right (without prejudice to any other remedies) to cancel any completed order and withhold or suspend delivery of further Products, and to demand payment forthwith of all sums due by the Customer to the Supplier.

(b) In the event the Supplier exercises any rights it may have, under this Agreement to stop goods in transit which have been ordered by the

5

Customer, the Supplier may at its option resell such Products at public or private sale without notice to the Customer and without affecting the Supplier's rights to hold the Customer liable for any loss or damage caused by breach of contract by the Customer.

9 Warranties and liability

9.1 The Supplier warrants to the Customer that the Products:

9.1.1 will be of satisfactory quality (within the meaning of the Sale of Goods Act, 1893 and the Sale of Goods and Supply of Services Act, 1980 as amended) and fit for any purpose held out by the Supplier;

9.1.2 will be free from defects in design, material and workmanship;

9.1.3 will correspond with the Specification or any relevant sample; and

9.1.4 will comply with all statutory requirements and regulations relating to the sale of the Products;

9.2 Without prejudice to any other remedy, if any Products are not supplied in accordance with this Agreement, then the Customer shall be entitled:

9.2.1 following rejection of Product in accordance with clause 7.5 to require the Supplier to supply replacement Products in accordance with this Agreement within 7 days; or

9.2.2 at the Customer's sole option, require the repayment of any part the price which has been paid for such Products.

9.3 The Supplier shall indemnify and keep indemnified the Customer in full against all liability, loss, damages, costs and expenses (including legal expenses) awarded against or incurred or paid by the Customer as a result of or in connection with:

9.3.1 breach of any warranty given by the Supplier in relation to the Products:

9.3.2 any claim that the Products infringe, or their importation, use or resale, infringes, the patent, copyright, design right, trade mark or other intellectual property rights of any other person, except to the extent that the claim arises from compliance with any Specification supplied by the Customer;

9.3.3 any act or omission of the Supplier or its employees, agents or sub-contractors in supplying or delivering the Products.

9.4 The procedures described in Schedule II shall be employed by the parties in order to facilitate the ascertainment of responsibility for any defect in the products or any failure to comply with the Specification.

6

9.5 Infringement

The Customer shall indemnify and keep indemnified the Supplier against all damages, penalties, costs and expenses to which the Supplier may become liable as a result of work done or the supply of goods in accordance with the Customer's specifications which involves the infringement of any letters patent, registered design, copyright, trademark or trade name or other rights of confidentiality of information or industrial, commercial or intellectual property.

10 Price of the products

10.1 The price for the Products shall be as set out in Schedule III and is: -

10.1.1 inclusive of any costs of carriage and insurance of the Products; and

10.1.2 exclusive of any value added tax or other applicable sales tax or duty, which shall be added to the sum in question.

10.2 the Supplier shall invoice the Customer by the fifth day after delivery of the Products in respect of each such delivery and the customer or its nominee shall make payment in respect of such deliveries within 60 days of the receipt thereof;

10.3 The price of the Products, until 31 March, 1999 shall be those as set out in Schedule III hereto;

10.4 There shall be no variation in the prices charged by the Supplier as set out in Schedule III prior to 31 March 1999.

10.5 Any proposal to increase prices of the Products shall be notified in writing to the Customer not less than 90 days prior to implementation of such increases.

11 Force majeure

11.1 If either party is affected by Force Majeure it shall promptly notify the other party of the nature and extent of the circumstances in question.

11.2 Notwithstanding any other provision of this Agreement, neither party shall be deemed to be in breach of this Agreement, or otherwise be liable to the other, for any delay in performance or the non-performance of any of its obligations under this Agreement, to the extent that the delay or non-performance is due to any Force Majeure of which it has notified the other party, and the time for performance of that obligation shall be extended accordingly.

11.3 If at any time the Supplier claims Force Majeure in respect of its obligations under this Agreement with regard to the supply of the Products, the Customer shall be entitled to obtain from any other person such quantity of the Products as the Supplier is unable to supply.

7

12 Duration and termination

12.1 This Agreement shall come into force on the date of final completion in accordance with the terms of the Shareholders Agreement referred to at clause 12.6 below and, subject to the following provisions of this clause, shall, continue in force for an initial period of five years, thereafter renewable on terms to be agreed by the parties.

12.2 Either party shall be entitled forthwith to terminate this Agreement by written notice to the other if:

12.2.1 that other party commits any continuing or material breach of any of the provisions of this Agreement and, in the case of such a breach which is capable of remedy, fails to remedy the same within 30 days after receipt of a written notice giving full particulars of the breach and requiring it to be remedied;

12.2.2 an encumbrancer takes possession or a receiver is appointed over any of the property or assets of that other party;

12.2.3 that other party makes any voluntary arrangement with its creditors or becomes subject to an administration order;

12.2.4 that other party goes into liquidation (except for the purposes of an amalgamation, reconstruction or other reorganisation and in such manner that the company resulting from the reorganisation effectively agrees to be bound by or to assume the obligations imposed on that other party under this Agreement);

12.2.5 an examiner is appointed to that other party under Section 2 of the Companies (Amendment) Act, 1990; or

12.2.6 that other party ceases, or threatens to cease, to carry on business;

12.2.7 the Supplier is unable or unwilling to supply the Customer with its full requirements of the Products pursuant to this Agreement.

12.3 Any waiver by either party of a breach of any provision of this Agreement shall not be considered as a waiver of any subsequent breach of the same or any other provision.

12.4 The rights to terminate this Agreement given by this clause shall not prejudice any other right or remedy of either party in respect of the breach concerned (if any) or any other breach.

12.5 Upon the termination of this Agreement for any reason, subject as otherwise provided in this Agreement and to any rights or obligations which have accrued prior to termination, neither party shall have any further obligation to the other under this Agreement.

12.6 This Agreement shall automatically terminate upon the termination (n accordance with the terms thereof) of a certain Shareholders Agreement dated 19 December, 1997 entered

8

into between Mr. Patrick Rigney, Mr. David Phelan, Tanis Investment Limited, the Supplier and the Customer.

13 Nature of agreement

13.1 This Agreement is personal to the parties, and neither of than may, without the written consent of the other, assign, mortgage, charge (otherwise than by floating charge) or dispose of any of its rights hereunder, or sub-contract or otherwise delegate any of its obligations under this Agreement;

13.2 Nothing in this Agreement shall create, or be deemed to create, a partnership between the parties.

13.3 This Agreement contains the entire agreement between the parties with respect to its subject matter, supersedes all previous agreements and understandings between the parties, and may not, without prejudice to the provisions of clause 3 hereof, be modified except by an instrument in writing signed by the duly authorised representatives of the parties.

13.4 If any provision of this Agreement is :held by any court or other competent authority to be void or unenforceable in whole or part, the other provisions of this Agreement and the remainder of the affected provisions Shall continue to be valid.

13.5 (i) This Agreement shall be governed by and construed in all respects in accordance with the laws of Ireland;

(ii) In the event that there shall be any dispute between the parties hereto in relation to this Agreement, then any party may serve notice on the others specifying the nature of the dispute and if such dispute is not settled within 60 days from the date of the service of such notice, then either party may serve on the other a notice requiring the matter to be submitted to arbitration. The arbitrator shall be agreed by the parties within 30 days of the date of such notice and failing such agreement the arbitrator shall be determined by the President for the time being of the Law Society. The decision of such arbitrator as to the dispute shall be final and binding on the parties and the provisions of the Arbitration Act, 1954 and 1980 shall apply to such arbitration.

14 Notices and service

14.1 Any notice. or other information required or authorised by this Agreement to be given by either party to the other may be given by hand or sent (by first class pre-paid post, telex, cable, facsimile transmission or comparable means of communication) to the other party at the address of each of the parties hereinbefore referred to.

14.2 Any notice or other information given by post under clause this clause 14 which is not returned to the sender as undelivered shall be deemed to have been given on the third day

9

after the envelope containing the same was so posted; and proof that the envelope containing any such notice or information was properly addressed, and sent by first class, pre-paid post, and that it has not been so returned to the sender, shall be sufficient evidence that such notice or information has been duly given.

14.3 Any notice or other information sent by telex, cable, facsimile transmission or comparable means of communication shall be deemed to have been duly sent within 24 hours of the date of transmission.

14.4 Service of any legal proceedings concerning or arising out of this Agreement shall be effected by causing the same to be delivered to the company secretary of the party to be served at its registered office, or to such other address as may be notified by the party concerned in writing from time to time.

15 Confidentiality Clause and Covenant

15.1 Each of the Parties hereto irrevocably undertake that they shall keep all information of a confidential nature in particular, but not limited to, that concerning the business, organisation, processes, methods, technology, compositions, systems, techniques used, data, finances, dealings transactions or other affairs of each party hereto confidential and shall not at any time, without prior written consent, disclose or permit the disclosure of any such information to any person, and shall take all steps and do all things that are reasonably necessary or prudent or desirable in order to safeguard the confidentiality of any such information and shall not publish any information so disclosed in written form or verbally, or make use of or divulge to third parties any information so disclosed or any sample of material so provided to it, its directors, employees, agents and consultants by the other party hereto or its employees, agents or representatives concerning or in connection with any manufacturing, marketing or engineering operations or any research, development or testing activities carried out by the Supplier or the Customer in relation to the Products.

15.2 The Supplier shall not during the period of this Agreement do any of the following without the prior written consent of the Customer.

15.2.1 either solely or jointly with or on behalf of any person directly or indirectly carry on or be engaged or interested (except as a holder for investment purposes of securities dealt with on a recognised stock exchange) in any business in Ireland which competes directly or indirectly with the business of the Customer, in so far as it relates to the development, manufacture or supply of vodka or whiskey;

15.2.2 solicit the custom of any person in Ireland who is or has been at any time during the period of this Agreement a customer of the Customer for the purposes of offering to such customer vodka or whiskey which compete directly or indirectly with those manufactured and/or supplied by the Customer; or

15.2.3 solicit or entice away or endeavour to solicit or entice away any director or employee of the Customer save that such restriction shall be without prejudice to

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the right of the Customer to terminate arrangements under which any executive personnel of Carbery are seconded to the Customer from time to time;

PROVIDED HOWEVER that nothing herein will preclude or restrict the Supplier from offering any goods similar to those previously supplied by the Customer but subsequently discontinued and not supplied by the Customer at the time when such similar goods are offered by the Supplier. Notwithstanding the above and for the avoidance of doubt, the supply or provision of neutral spirits alcohol, Cream Liqueurs, cream or other raw materials by the Supplier to competitors of the Customer or to any other party or parties is not restricted by this clause 15.2.

16 Severability

Each of the provisions of this Agreement is separate and severable and enforceable accordingly and if at any time any provision is adjudged by any court of competent jurisdiction to be void or unenforceable the validity, legality and enforceability of the remaining provisions hereof and of that provision in any other jurisdiction shall not in any way be affected or impaired thereby.

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SCHEDULE I

Specification

Specification                                 Standard
-------------                                 --------
Clarity                                          *

Organoleptic                                     *

Alcohol Strength % v/v                           *

*Diacetyl                                        *

*Absorbance (@270mm)                             *

*Aldehydes                                       *

*Esters (as Ethyl Acetate)                       *

*Methanol                                        *

*Higher Alcohols                                 *

*Total Acidity                                   *

*Volatile Bases                                  *

*Furfural                                        *

*Dry Extract                                     *

*Note: All deliveries made to customer must be accompanied by a Certificate of Conformance.

12

SCHEDULE II

PROCESS PROCEDURE FOR CUSTOMERS

(1) Bulk Spirit, on ordering is produced to RWBS specifications from the Supplier, Carbery Milk Products.

(2) on arrival from Carbery the product is accompanied by a Certificate of Conformance and weighed to ensure that the correct volume has been received. Samples of 250m1 are retained by Terra and the customer and a sample is lifted for Carbery.

(3) The spirit is then transferred to RWBS premises.

(4) Manufacturing of Vodka commences by transferring the quantity of spirit delivered to a product dilution tank.

(5) This product is diluted with de-ionised water to 55% v/v.

(6) The Product is then manufactured by pumping the 55% v/v spirit through activated carbon beds for approximately 15 mins. At this stage, the product is tested for taste and clarity and when approved is pumped through a final clarifying filter to the final bottling product tank.

(7) The manufactured product in the bottling tank is then diluted with de-ionised water to the desired bottling strength as per specification. Five samples of final product are taken, two samples for Terra, one for retaining and one for testing, two samples for Carbery, one for retaining and one for testing.

(8) All samples following manufacture, including the bulk spirit samples, are sent to Carbery the day after production.

(9) The manufactured product is jointly approved by both Terra and Carbery within three days. If there are any issues regarding the samples a joint decision between all parties will be decided upon. One sample is retained by RWBS. The procedures in this paragraph shall be reviewed by all the parties after the production of the first six batches of the manufactured product.

(10) The approved product is transferred to Terra.

(11) The product is filtered to bottling line and bottled to the required specification. Two samples are retained from the bottling line, one for RWBS and one for Terra.

(12) Once bottling is completed and approved by Terra, the product is then released to meet the customer's order.

13

SCHEDULE III

PRICES

Year l       * per litre
Year 2       * per litre
Year 3       no greater than * per litre
Year 4 & 5   to be agreed

14

Signed for and on behalf of

CARBERY MILK PRODUCTS LIMITED

in the presence of:

/s/ Mark Ward
AOL Goodbody Solicitors                 /s/ Colm Leen
Dublin 2                                ----------------------------------------
                                        Director


Director / Secretary

Signed for and on behalf of

THE ROARING WATER BAY SPIRITS COMPANY LIMITED

in the presence of:

/s/ Fergal Brennan
Matheson Ormsby Prentice                /s/ David Phelan
Solicitors                              ----------------------------------------
30 Herbert Street                       Director
Dublin 2

                                        /s/ Pat Rigney
                                        ----------------------------------------
                                        Director / Secretary

15

Exhibit 10.28

NOTE: PORTIONS OF THIS EXHIBIT ARE THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST BY THE REGISTRANT TO THE SECURITIES AND EXCHANGE COMMISSION. SUCH PORTIONS HAVE BEEN REDACTED AND ARE MARKED WITH A "[*]" IN PLACE OF THE REDACTED LANGUAGE.

AMENDMENT TO SUPPLY AGREEMENT AND CONSENT

This Amendment and Consent, dated as of March 1, 2003, to Supply Agreement, dated as of January 19, 1998, by and between Carbery Milk Products Limited, a company incorporated in Ireland (the "Supplier") and Castle Brands Spirit Company Limited, a company incorporated in Ireland (formerly The Roaring Water Bay Spirits Company Limited) (the "Customer");

WITNESSETH:

THAT WHEREAS, the Customer and Supplier are parties to that certain Supply Agreement, dated January 19, 1998 (the "Supply Agreement");

WHEREAS, the Supplier and the Customer wish to extend the Supply Agreement and confirm the price of products as defined in the Supply Agreement;

WHEREAS, pursuant to Section 15.1 of the Supply Agreement, the Customer wishes to obtain the consent of Supplier to disclose certain information regarding the Supply Agreement and this Amendment to Supply Agreement in the prospectus and the Registration Statement on Form S-1 to be filed by Castle Brands Inc. ("Castle Brands") with the Securities and Exchange Commission in connection with Castle Brands' initial public offering; and

NOW, THEREFORE, in consideration of the mutual covenants and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

1. Commencing with March 1, 2003 and continuing through December 31, 2008, the price of products supplied by the Supplier shall be */lpa.

2. Section 12.1 of the Supply Agreement is deleted and replaced in its entirety with the following: "This Agreement, subject to the following provisions of this clause, shall continue through December 31, 2008, thereafter renewable on terms to be agreed by the parties."

3. Section 12.2.7 of the Supply Agreement is hereby deleted.

4. Section 12.6 of the Supply Agreement is hereby deleted.

5. Schedule 2 (1) of the Supply Agreement is hereby deleted and replaced in its entirety with the following: "Bulk Spirit, on ordering is produced to Castle Brands Spirits Company Limited specifications, including Bulk Spirit distillation of at least five times, from the


Supplier, Carbery Milk Products."

6. Schedule 3 of the Supply Agreement is hereby amended by addition of the following phrase: "commencing on March 1, 2003 ____________________ */lpa.


7. Except as expressly set forth herein the Supply Agreement is ratified and confirmed as amended hereby.

8. In connection with the Castle Brands' initial public offering, Supplier hereby consents to the use of Supplier's name, the filing of the Supply Agreement and this Amendment and Consent and the inclusion of additional related information and disclosures, including the proposed disclosure attached hereto as Exhibit A (or substantially similar disclosure), in the prospectus and the Registration Statement on Form S-1 to be filed by Castle Brands with the Securities and Exchange Commission. Supplier also consents to the inclusion of such disclosure (or substantially similar disclosure) in periodic reports on Forms 10-K and 10-Q, and any other documents filed or furnished to the Securities and Exchange Commission following Castle Brands' initial public offering.

Signed for and on behalf of
CARBERY MILK PRODUCTS LIMITED
in the presence of:

                                             /s/ Dan MacSweeney
                                             -----------------------------------
/s/ Liz Barry                                                           Director
-----------------------------------

                                             /s/ Colm Leen
                                             -----------------------------------
                                                              Director/Secretary

Signed for and on behalf of
CASTLE BRANDS SPIRITS
COMPANY LIMITED
in the presence of:

                                             /s/ Matthew MacFarlane
                                             -----------------------------------
/s/ Amelia Gary                              Director
-----------------------------------


                                             /s/ Keith A. Bellinger
                                             -----------------------------------
                                                              Director/Secretary


EXHIBIT A

BORU VODKA

We have a supply agreement with Carbery Milk Products Limited, a member of the Carbery Group, a large distiller and food producer based in Bandon, Ireland, to provide us with the distilled alcohol used in our Boru Vodka. This supply agreement with Carbery was originally entered into by Roaring Water Bay in 1998 and became ours in 2003, when we acquired Roaring Water Bay and with it, our Boru Vodka brand. The supply agreement provides for Carbery to produce natural spirit for us with specified levels of alcohol content pursuant to specifications set forth in the agreement and at specified prices through its current expiration in _________, in quantities to be designated by us annually. We believe that Carbery has more than enough distilling capacity to meet our needs for Boru Vodka for the foreseeable future. Carbery also produces the flavoring ingredients used in the Boru Vodka flavor extensions and in our Brady's Irish Cream.

From Carbery, the quadruple distilled alcohol is delivered by them to the bottling premises at Terra Limited in Baileyboro, Ireland, where pursuant to our bottling and services agreement with Terra it is filtered in several proprietary ways, pure water is added to achieve the desired proof, and, in the case of the citrus, orange and crazzberry versions of Boru Vodka, flavorings (obtained from Carbery) are added. Each of our Boru Vodka products is then bottled in various sized bottles. We believe that Terra, which also acts as bottler for all of our Irish whiskeys and as producer and bottler of our Brady's Irish cream (and as bottler for Celtic Crossing which is supplied to us by one of Terra's affiliates), has sufficient bottling capacity to meet our current needs, and its facility can be expanded to meet future supply needs, should this be required.

BRADY'S IRISH CREAM

Brady's Irish Cream is produced for us by Terra Limited. Fresh cream is combined with Irish whiskey, grain neutral spirits and various flavorings procured from the Carbery Group, to our specifications and then bottled by Terra in bottles designed for us. We believe that Terra has the capacity to meet our foreseeable supply needs for this brand.

AGREEMENTS WITH CARBERY GROUP AND ITS AFFILIATES

Mr. Leen, one of our directors, is the financial director of the Carbery Group. Since January 1998, we have had a supply agreement with Carbery Milk Products Limited, which is a member of the Carbery Group, pursuant to which it acts as our sole distiller for Boru Vodka in Ireland and the supplier of natural flavors for our products. For the fiscal years ended March 31, 2003, 2004 and 2005, we purchased approximately E432,046 ($485,706), E346,206 ($421,610) and E405,359 ($761,670) respectively, of goods from Carbery Milk Products Limited. Carbery Milk Products also holds E546,071 ($687,722) principal amount of our 5% Euro denominated notes, which were issued to it in connection with our December 2003 acquisition of Roaring Water


Bay and will convert into shares of our common stock immediately prior to the closing of this offering. In addition, on December 1, 2004, we repaid subordinated indebtedness to Carbery Milk Products also incurred by us in connection with the Roaring Water Bay acquisition in the amount of E111,102 ($138,284).


Exhibit 10.29

CASTLE BRANDS INC.
2003 STOCK INCENTIVE PLAN

(EFFECTIVE AS OF AUGUST 8, 2003, AS AMENDED FEBRUARY 17, 2004)

SECTION 1. Purpose.

1.1 The purpose of Castle Brands Inc. 2003 Stock Incentive Plan is to enable Castle Brands Inc., a Delaware corporation (the "Corporation") and any Parent or Related Company (as defined below) to attract and retain employees, consultants and directors who contribute to the Corporation's success by their ability, ingenuity and industry, and to enable such individuals to participate in the long-term success and growth of the Corporation by giving them an equity interest in the Corporation.

SECTION 2. Types of Awards.

2.1 Awards under the Plan may be in the form of (i) Stock Options (as hereinafter defined), (ii) rights to purchase Restricted Stock of the Corporation (as hereinafter defined); (iii) Deferred Stock (as hereinafter defined); and Stock Appreciation Rights (as hereinafter defined).

2.2 An eligible Participant may be granted one or more types of Awards. Each Award shall be evidenced by a related Award letter or agreement.

SECTION 3. Administration.

3.1 The Plan shall be administered by the Compensation Committee of the Board of Directors of the Corporation or such other committee appointed either by the Board or by the Compensation Committee of the Board.

3.2 The Committee shall have the authority to grant Awards to eligible Participants under the Plan; to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it shall deem advisable; to interpret the terms and provisions of the Plan and any Award granted under the Plan; to establish, amend and rescind any rules and regulations relating to the Plan; and to make any other determinations that it deems necessary or desirable for the administration of the Plan. In particular, and without limiting its authority and powers, the Committee shall have the authority:

(a) to determine whether and to what extent any Award or combination of Awards will be granted hereunder;

(b) to select the Participants to whom Awards will be granted;

(c) to determine the number of shares of Stock of the Corporation to be covered by each Award granted hereunder;


(d) to determine the terms and conditions of any Award granted hereunder, including, but not limited to, any vesting or other restrictions based on performance and such other factors as the Committee may determine, and to determine whether the terms and conditions of the Award are satisfied;

(e) to determine the treatment of Awards upon an Participant's retirement, disability, death, termination for cause or other termination of Employment;

(f) to determine pursuant to a formula or otherwise the Fair Market Value of the Stock on a given date;

(g) to determine that amounts equal to the amount of any dividends declared with respect to the number of shares covered by an Award (including Stock Options) (i) will be paid to the holder of the Award currently, (ii) will be deferred and deemed to be reinvested, (iii) will otherwise be credited to the holder of the Award, or (iv) that the holder of the Award has no rights with respect to such dividends;

(h) to determine whether, to what extent, and under what circumstances Stock and other amounts payable with respect to an Award will be deferred either automatically or at the election of a Participant, including providing for and determining the amount (if any) of deemed earnings on any deferred amount during any deferral period;

(i) to amend the terms of any Award, prospectively or retroactively; provided, however, that no amendment shall impair the rights of the Award holder without his or her consent; and

(j) to substitute new Stock Options for previously granted Stock Options, or for options granted under other plans, in each case including previously granted options having higher option prices.

3.3 All determinations made by the Committee pursuant to the provisions of the Plan shall be final and binding on all persons, including the Corporation and Plan Participants and their beneficiaries or successors.

3.4 The Committee may from time to time delegate to one or more officers of the Corporation, a Parent or any Related Company any or all of its authorities granted hereunder. The Committee shall specify the maximum number of shares that the officer or officers to whom such authority is delegated may issue pursuant to Awards made hereunder.

3.5 Notwithstanding anything in the Plan to the contrary, to the extent determined to be advisable by the Committee, the terms of the grant of Awards (and, as applicable, any related disposition to the Corporation) under the Plan shall be subject to the prior approval of the Board. Any prior approval of the Board, as provided in the preceding sentence, shall not otherwise limit or restrict the authority of the Committee to grant Awards under the Plan.

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SECTION 4. Stock Subject to Plan.

4.1 The total number of shares of Stock reserved and available for distribution under the Plan shall be 2,000,000. The shares of Stock hereunder may consist of authorized but unissued shares or treasury shares. Shares of Stock reserved and available for distribution under the Plan shall be subject to further adjustment as provided below.

4.2 To the extent a Stock Option is surrendered, canceled or terminated without having been exercised, or an Award is surrendered, canceled or terminated without the Award holder having received payment of the Award, or shares awarded are surrendered, canceled, repurchased at less than fair market value or forfeited, the shares subject to such Award shall again be available for distribution in connection with future Awards under the Plan. At no time will the overall number of shares issued under the Plan plus the number of shares covered by outstanding Awards under the Plan exceed the aggregate number of shares authorized under the Plan. At no time will the number of shares issued under the Plan to any individual plus the number of shares covered by a previous award to such individual under the Plan with respect to a Stock Option or Stock Appreciation Right, whether or not outstanding, exceed the maximum number of shares which may be distributed with respect to Stock Options or Stock Appreciation Rights granted under the Plan to any individual.

4.3 In the event of any merger, reorganization, consolidation, sale of all or substantially all of the Corporation's assets, recapitalization (collectively, a "Reorganization"), Stock dividend, Stock split, spin-off, split-up, split-off, distribution of assets (including cash) or other change in corporate structure affecting the Stock, the Committee may in its sole discretion, in such manner as it deems equitable, adjust any and all of (i) the number of shares of Stock or other securities of the Corporation (or number and kind of other securities or property) with respect to which Awards may be granted, (ii) the aggregate number of shares of Stock available for distribution under the Plan to any single individual with respect to a Stock Option awarded hereunder (iii) the aggregate number of shares of Stock that relate to Stock Appreciation Rights that may be granted to any single individual hereunder, (iv) the number of shares of Stock or other securities of the Corporation (or number and kind of other securities or property) subject to outstanding Awards, and (v) the grant or exercise price with respect to any Award or, if deemed appropriate, make provision for a cash payment to the holder of an outstanding Award in consideration for the cancellation of such Award. In addition, in the event of a Reorganization, the Committee shall have the right to cause the Corporation, and all Awards shall be subject to such right, to repurchase or cash-out all Awards upon such terms and conditions as the Committee shall deem appropriate in its sole discretion.

SECTION 5. Eligibility.

Any employee, director, consultant, officer, advisor of the Corporation, its Parent, if any, or a Related Company or other individual is eligible to be designated a Participant under the Plan by the Committee, in its sole discretion, to the extent such eligibility does not prevent the Plan and Awards from having the exemption from registration provided by Rule 701 promulgated under the Securities Act of 1933, as amended, to the extent applicable.

3

SECTION 6. Stock Options.

6.1 The Stock Options awarded under the Plan may be of two types: (i) Incentive Stock Options within the meaning of Section 422 of the Code or any successor provision thereto; and (ii) Non-Qualified Stock Options. To the extent that any Stock Option does not qualify as an Incentive Stock Option, it shall constitute a Non-Qualified Stock Option; provided that such Stock Option (or portion thereof) otherwise complies with the Plan's requirements relating to Non-Qualified Stock Options. In no event shall any member of the Committee, the Corporation, its Parent, if any, or any Related Company or their respective employees, officers or directors, have any liability to any Participant or any other person due to the failure of a Stock Option to qualify for any reason as an Incentive Stock Option.

6.2 Stock Options granted under the Plan shall be evidenced by the related Award letter or agreement and shall be subject to the foregoing and following terms and conditions and to such other terms and conditions, not inconsistent therewith, as the Committee shall determine:

(a) Option Price. The option price per share of Stock purchasable under a Stock Option shall be determined by the Committee.

(b) Option Term. The term of each Stock Option shall be determined by the Committee, but in no case shall the term of a Stock Option exceed ten years.

(c) Exercisability. Stock Options shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee; but in no event shall an Option be exercisable more than ten years after the date it is granted. If the Committee provides that any Stock Option is exercisable only in installments, the Committee may waive such installment exercise provisions at any time in whole or in part.

(d) Method of Exercise. Except as otherwise provided in the Plan or in an Award letter or agreement, Stock Options may be exercised in whole or in part at any time during the option period, to the extent then exercisable, by giving written notice of exercise to the Corporation specifying the number of shares to be purchased, accompanied by payment of the purchase price. Payment of the purchase price shall be made in such manner as the Committee may provide in the Award letter or agreement, which may include cash (including cash equivalents), delivery of unrestricted shares of Stock owned by the Participant for at least six months (or such other period as established from time to time by the Committee) or subject to Awards hereunder, any other manner permitted by law as determined by the Committee, or any combination of the foregoing. The Committee may provide that all or part of the shares received upon the exercise of a Stock Option which are paid for using Restricted Stock or Deferred Stock shall be restricted or deferred in accordance with the original terms of the Restricted Stock or Deferred Stock so used.

4

(e) No Stockholder Rights. A Participant shall have neither rights to dividends (other than amounts credited in accordance with Section 3.2(g) above) nor other rights of a stockholder with respect to shares subject to a Stock Option until the Participant has given written notice of exercise, has paid for such shares of Stock, and if applicable has satisfied any other conditions imposed by the Committee pursuant to the Plan.

(f) Surrender Rights. The Committee may provide that options may be surrendered for cash upon any terms and conditions set by the Committee.

(g) Non-transferability. No Stock Option shall be transferable by the Participant other than by will or by the laws of descent and distribution. During the Participant's lifetime, all Stock Options shall be exercisable only by the Participant.

(h) Termination of Employment. If a Participant's Employment with the Corporation, its Parent, or a Related Company terminates by reason of death, disability, retirement, voluntary or involuntary termination or otherwise, the Stock Option shall be exercisable to the extent determined by the Committee. The Committee may provide that, notwithstanding the option term determined pursuant to Section 6.2(b) above, a Stock Option which is outstanding on the date of a Participant's death shall remain outstanding for an additional period after the date of such death.

6.3 Notwithstanding the provisions of Section 6.2 above, no Incentive Stock Option shall (i) have an option price which is less than 100% of the Fair Market Value of the Stock on the date of the award of the Incentive Stock Option (or, in the case of a Participant who owns Stock possessing more than 10% of the total voting power of all classes of stock of the Corporation (or its Parent or subsidiary corporation) (a "10% shareholder"), have an option price which is less than 110% of the fair market value of the Stock on the date of grant), (ii) be exercisable more than ten years (or, in the case of a 10% shareholder, five years) after the date such Incentive Stock Option is awarded, or (iii) be awarded more than ten years after the date of the adoption of the Plan. Notwithstanding anything to the contrary in this Plan, only employees of the Corporation or a Parent or subsidiary of the Corporation (as defined in Sections 424(e) and 424(f)), respectively, of the Code) shall be eligible to receive Awards of Incentive Stock Options. By accepting an Incentive Stock Option granted under the Plan, each such Participant agrees, and any agreement or letter evidencing such option grant shall so provide, that he or she will notify the Corporation in writing immediately after such Participant disposes of Stock acquired upon the exercise of an Incentive Stock Option either (i) within two years after the date of grant of such Incentive Stock Option or (ii) within one year after the transfer of such Stock to the Participant.

SECTION 7. Restricted Stock.

Subject to the following provisions, all Awards of rights to purchase Restricted Stock shall be in such form and shall have such terms and conditions as the Committee may determine:

5

(a) The Restricted Stock Award shall specify the number of rights to purchase and number of shares of Restricted Stock that may be purchased, the price, if any, to be paid by the recipient of the rights to purchase Restricted Stock (which shall in no event be less than par value), and the date or dates on which, or the conditions upon the satisfaction of which, the Restricted Stock will vest. The vesting of Restricted Stock may be conditioned upon the completion of a specified period of service with the Corporation or a Related Company, upon the attainment of specified performance goals or upon such other criteria as the Committee may determine.

(b) Stock certificates representing the Restricted Stock awarded to a Participant shall be registered in the Participant's name, but the Committee may direct that such certificates be held by the Corporation on behalf of the Participant. Except as may be permitted by the Committee, no share of Restricted Stock may be sold, transferred, assigned, pledged or otherwise encumbered by the Participant until such share has vested in accordance with the terms of the Restricted Stock Award. At the time Restricted Stock vests, a certificate for such vested shares shall be delivered to the Participant (or his or her designated beneficiary in the event of death) free of all restrictions.

(c) The Committee may provide that the Participant shall have the right to vote or receive dividends on Restricted Stock. The Committee may provide that Stock received as a dividend on, or in connection with a stock split of, Restricted Stock shall be subject to the same restrictions as the Restricted Stock.

(d) Except as may be provided by the Committee, in the event of an Participant's termination of Employment before all of his or her Restricted Stock has vested, or in the event any conditions to the vesting of Restricted Stock have not been satisfied prior to any deadline for the satisfaction of such conditions set forth in the Award, the shares of Restricted Stock which have not vested shall be forfeited, and the Committee shall provide that (i) the purchase price paid by the Participant with respect to such shares shall be returned to the Participant or (ii) a cash payment equal to such Restricted Stock's Fair Market Value on the date of forfeiture, if lower, shall be paid to the Participant.**

(e) The Committee may waive, in whole or in part, any or all of the conditions to receipt of, or restrictions with respect to, any or all of the Participant's Restricted Stock.

SECTION 8. Deferred Stock Awards.

Subject to the following provisions, all Awards of Deferred Stock shall be in such form and shall have such terms and conditions as the Committee may determine:

6

(a) The Deferred Stock Award shall specify the number of shares of Deferred Stock to be awarded to any Participant and the duration or the period (the "Deferral Period") during which, and the conditions under which, receipt of the Stock will be deferred. The Committee may condition the Award of Deferred Stock, or receipt of Stock or cash at the end of the Deferral Period, upon the attainment of specified performance goals or such other criteria as the Committee may determine.

(b) Except as may be permitted by the Committee, Deferred Stock Awards may not be sold, assigned, transferred, pledged or otherwise encumbered during the Deferral Period.

(c) At the expiration of the Deferral Period, the Participant (or his or her designated beneficiary in the event of death) shall receive (i) certificates for the number of shares of Stock equal to the number of shares covered by the Deferred Stock Award, (ii) cash equal to the fair market value of such Stock or (iii) a combination of shares and cash, as the Committee may determine.

(d) Except as may be provided by the Committee, in the event of a Participant's termination of Employment before the end of the Deferral Period, his or her Deferred Stock Award shall be forfeited.

(e) The Committee may waive, in whole or in part, any or all of the conditions to receipt of, or restrictions with respect to, Stock or cash under a Deferred Stock Award.

SECTION 9. Stock Appreciation Rights.

9.1 Grants. Subject to the provisions of the Plan, the Committee shall have the sole and complete authority to determine which Participants shall be granted Stock Appreciation Rights, the number of shares of Stock to be covered by each Stock Appreciation Right Award, the reference price thereof and the conditions and limitations applicable to the exercise thereof. Stock Appreciation Rights may be granted in tandem with Stock Option Awards, in addition to another Award or unrelated to another Award. Stock Appreciation Rights granted in tandem with or in addition to an Award may be granted either at the same time as the Award or at a later time.

9.2 Exercise and Payment. A Stock Appreciation Right shall entitle the Participant to receive an amount equal to the excess of the Fair Market Value of shares of Stock to which the Award relates on the date of exercise of the Stock Appreciation Right over the amount specified by the Committee. The Committee shall determine whether a Stock Appreciation Right shall be settled in cash, shares of Stock or a combination of cash and Stock.

9.3 Other Terms and Conditions. Subject to the terms of the Plan and any applicable Award letter or agreement, the Committee shall determine, at or after the grant of a Stock Appreciation Right, the term, methods of exercise, methods and form of settlement, and any other terms and conditions of and Stock Appreciation Right. Any such determination by

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the Committee may be changed by the Committee from time to time and may govern the exercise of the Stock Appreciation Rights granted or exercised prior to such determination as well as Stock Appreciation Rights granted or exercised thereafter. The Committee may impose such conditions or restrictions on the exercise of any Stock Appreciation Right as it shall deem appropriate.

9.4 Tax Withholding.

9.5 Each Participant shall, no later than the date as of which the value of an Award (or portion thereof) first becomes includible in the Participant's income for applicable tax purposes, pay to the Corporation, or make arrangements satisfactory to the Committee regarding payment of, any federal, state, local or other taxes of any kind required by law to be withheld with respect to the Award (or portion thereof). The obligation of the Corporation under the Plan shall be conditioned on such payment or arrangements, and the Corporation (and, where applicable, any Parent or any Related Company), shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the Participant including, but not limited to, the right to withhold shares of stock otherwise deliverable to the Participant with respect to any Awards hereunder.

9.6 To the extent permitted by the Committee, and subject to such terms and conditions as the Committee may provide, a Participant may irrevocably elect to have the withholding tax obligation or any additional tax obligation with respect to any Awards hereunder satisfied by (i) having the Corporation withhold shares of Stock otherwise deliverable to the Participant with respect to the Award, (ii) delivering to the Corporation shares of unrestricted Stock, or (iii) through any combination of withheld and delivered shares of Stock, as described in (i) and (ii).

SECTION 10. Amendments and Termination.

The Board or the Committee may amend, alter or discontinue the Plan at any time. No such action of the Board or the Committee shall require the approval of the stockholders of the Corporation, unless such stockholder approval is required by applicable law or by the rules or regulations of any securities exchange or regulatory agency. No amendment or discontinuation of the Plan shall adversely affect any Award previously granted without the Award holder's written consent. To the extent necessary to enable options granted hereunder to constitute Incentive Stock Options, any amendments to the provisions of this Plan relating to Incentive Stock Options shall require stockholder approval before such amendments are effective.

SECTION 11. Change in Control.

11.1 Unless otherwise determined by the Committee at the time of grant or by amendment (with the holder's consent) of such grant, in the event of the earliest to occur (after the Effective Date of the Plan) of (i) the occurrence of a Change in Control, or (ii) the publication or dissemination of an announcement of action intended to result in a Change in Control, and solely with respect to Awards held by an individual in service with the Corporation or a Related Company at the time of any such event described in (i) above:

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(a) all outstanding Stock Options and Stock Appreciation Rights awarded under the Plan shall become fully exercisable and vested; and

(b) the restrictions and deferral limitations applicable to any outstanding Restricted Stock and Deferred Stock Awards under the Plan shall lapse and such shares and Awards shall be deemed fully vested.

11.2 Notwithstanding anything to the contrary contained herein, neither the initial public offering of the Stock of the Corporation, nor the temporary holding of the Corporation securities by an underwriter pursuant to an offering of such securities, shall be deemed to constitute, or otherwise be treated as, an event described in clauses (i) or (ii) of Section 12.1 above.

SECTION 12. General Provisions.

12.1 Each Award under the Plan shall be subject to the requirement that, if at any time the Committee shall determine that (i) the listing, registration or qualification of the Stock subject or related thereto upon any securities exchange or under any state or federal law, or (ii) the consent or approval of any government regulatory body or (iii) an agreement by the recipient of an Award with respect to the disposition of Stock is necessary or desirable (in connection with any requirement or interpretation of any federal or state securities law, rule or regulation) as a condition of, or in connection with, the granting of such Award or the issuance, purchase or delivery of Stock thereunder, such Award shall not be granted or exercised, in whole or in part, unless such listing, registration, qualification, consent, approval or agreement shall have been effected or obtained free of any conditions not acceptable to the Committee.

12.2 Nothing set forth in this Plan shall prevent the Board from adopting other or additional compensation arrangements. Neither the adoption of the Plan nor the granting of any Award hereunder shall confer upon any Participant any right to continued Employment and shall not lessen or affect the Corporation or any other entity's right to terminate the Employment of such Participant.

12.3 Determinations by the Committee under the Plan relating to the form, amount, and terms and conditions of Awards need not be uniform, and may be made selectively among persons who receive or are eligible to receive Awards under the Plan, whether or not such persons are similarly situated.

12.4 No member of the Board or the Committee, nor any officer or employee of the Corporation, its Parent or a Related Company acting on behalf of the Board or the Committee, shall be personally liable for any action, determination or interpretation taken or made with respect to the Plan, and all members of the Board and the Committee, and all officers or employees of the Corporation, its Parent and Related Companies acting on their behalf, shall, to the extent permitted by law, be fully indemnified and protected by the Corporation in respect of any such action, determination or interpretation.

12.5 Unless otherwise determined by the Committee, all securities of the Corporation acquired by a Participant under this Plan or otherwise shall be subject to a shareholders agreement, which shall be entered into concurrently with the acquisition of the

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securities by the Participant.

SECTION 13. Effective Date and Duration.

The Plan shall be effective on August 8, 2003, subject to approval by the Corporation's stockholders (the "Effective Date"). No Awards of Stock Options, Stock Appreciation Rights, rights to purchase Restricted Stock, or Deferred Stock shall be made under the Plan after August 8, 2013.

SECTION 14. Definitions.

As used in this Plan, the following terms shall have the meanings set forth below:

"Award" shall mean and Stock Option Award, Restricted Stock Award, Deferred Stock Award or Stock Appreciation Right Award.

"Board" shall mean the Board of Directors of the Corporation.

"Change in Control" shall mean any of the following events:

(a) the reorganization, merger or consolidation of the Corporation with one or more corporations as a result of which the Stock of the Corporation is exchanged for or converted into cash or property or securities not issued by the Corporation, whether or not the reorganization, merger or consolidation shall have been affirmatively recommended to the Corporation's stockholders by a majority of the members of the Board;

(b) the sale or disposition, in or a series of related transactions, of all or substantially all of the Corporation's consolidated property or assets or of more than 35% of the voting stock of the Corporation to any "person" or "group" as defined in Section 13(d) and 14(d) of the Exchange Act, unless such person had beneficial ownership of at least 10% of the voting stock of the Corporation as of the effective date of this Plan other than in connection with the private placement of securities of the Corporation pursuant to the Confidential Private Placement Memorandum dated September, 2003; or

(c) during any period of two consecutive years, individuals who at the beginning of such period were members of the Board cease for any reason to constitute at least a majority thereof (unless the election, or the nomination for election by the Corporation's stockholders, of each new director 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).

"Code" shall mean the Internal Revenue Code of 1986, as amended or any successor thereto.

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"Committee" shall mean the Compensation Committee of the Board or such other committee appointed either by the Board or by the Compensation Committee of the Board.

"Deferred Stock" shall mean any Stock granted pursuant to Section 8 of the Plan.

"Employment" shall be deemed to refer to (i) a Participant's employment if the Participant is an employee of the Corporation, its Parent or a Related Company; (ii) a Participant's services as a consultant, if the Participant is a consultant to the Corporation, its Parent or a Related Company; (iii) a Participant's services as a non-employee director, if the Participant is a non-employee member of the Board; and (iv) a Participant's service as an advisor, if the Participant is an advisor to the Corporation, its Parent or a Related Company.

"Fair Market Value" shall mean on a given date, (i) if there should be a public market for the Stock on such date, the arithmetic mean of the high and low prices of the Stock as reported on such date on the composite tape of the principle national securities exchange on which such shares of Stock are listed or admitted to trading, or, if the Stock is not listed or admitted on any national securities exchange, the arithmetic mean of the per share closing bid price and per share closing asked price of the Stock on such date as quoted on the National Association of Securities Dealers Automated Quotation System (or such market in which such prices are regularly quoted) (the "NASDAQ"), or, if no sale of Stock shall have been reported on the composite tape of any national securities exchange or quoted on the NASDAQ on such date, then the immediately preceding date on which sales of the Shares have been so reported or quoted shall be used, and
(ii) if there should not be a public market for the Stock on such date, the fair market value of the of the Stock shall be the value established by the Committee in good faith.

"Incentive Stock Option" shall mean any Stock Option granted pursuant to Section 6 of the Plan that satisfies the requirements for treatment as an Incentive Stock Option pursuant to Section 422 of the Code.

"Non-Qualified Stock Option" shall mean a Stock Option granted pursuant to Section 6 of the Plan that does not constitute an Incentive Stock Option.

"Parent" shall have the meaning set forth in Section 424(e) of the Code.

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"Participant" shall mean an employee, director, consultant, officer, advisor of the Corporation, its Parent, if any, or a Related Company or other individual as designated by the Committee, in its sole discretion, to the extent such designation does not prevent the Plan does not prevent the Plan and Awards from having the exemption from registration provided by Rule 701 promulgated under the Securities Act of 1933, as amended, to the extent applicable.

"Plan" shall mean the the Corporation 2003 Stock Incentive Plan.

"Related Company" shall mean at the time of grant any corporation, partnership, joint venture or other entity in which the Corporation owns, directly or indirectly, more than a 50% beneficial ownership interest.

"Restricted Stock" shall mean any Stock granted under Section 7 of the Plan.

"Stock" shall mean shares of common stock, par value $.01 per share, of the Corporation.

"Stock Appreciation Right" shall mean a stock appreciation right granted pursuant to Section 9 of the Plan.

"Stock Options" shall collectively refer to Incentive Stock Options and Non-Qualified Stock Options.

SECTION 15. Governing Law.

The validity, construction and effect of the Plan and any rules and regulations relating to the Plan and any Award Agreement shall be determined in accordance with the laws of the State of New York.

[remainder of page intentionally left blank; signature page follow]

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Castle Brands Inc.

By: /s/ Mark Andrews
    ------------------------------------
Name: Mark Andrews
Title. President and Chief Executive
       Officer

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Exhibit 10.30

AMENDMENT TO THE CASTLE BRANDS INC.

2003 STOCK INCENTIVE PLAN

The Castle Brands Inc., 2003 Stock Incentive Plan (the "Plan") is amended to add the following paragraph as Section 12.6:

"12.6 Notwithstanding any other provision of this Plan, to the extent necessary to permit Awards to be treated as not providing for the deferral of compensation, within the meaning of Internal Revenue Code Section 409A and the rules, regulations and guidance thereunder, in no event (i) shall an Award's exercise price or reference price be less than the fair market value of the Stock underlying such Award on the date the Award is granted or (ii) shall an Award provide for the further deferral of compensation other than the deferral of recognition of income until the later of the

date such Award is exercised or disposed of."


Exhibit 10.31

MHW, LTD.
ALCOHOLIC BEVERAGE IMPORTERS, DISTRIBUTORS, & SERVICES
272 PLANDOME ROAD, MANHASSET, NEW YORK 11030
TEL: (516) 869-9170 FAX: (516) 869-9171

As of December 1, 2004

Mr. Mark Andrews
Chief Executive Officer
Castle Brands Inc.
570 Lexington Avenue
29th Floor
New York, NY 10022

Dear Mr. Andrews:

I am writing with reference to our understanding and agreement concerning certain Distribution Services to be rendered by MHW, Ltd. ("MHW") to Castle Brands (USA) Corp. ("CB"). Effective December 1, 2004, MHW Ltd. (MHW) will serve as the importer and national distributor for CB brands "Knappogue Castle Whiskey", "Celtic Crossing Liquor", "Boru Vodka", "Sea Wynde Rum", "British Royal Navy Imperial Rum", "Brady's Irish Cream", "Pallini Limoncello" and "Gosling's Rum" and ship to these wholesalers in various states (registered by MHW) designated and approved by CB from stock delivered and owned by CB at duly licensed public beverage alcohol warehouses including Western Carriers, Inc. in New Jersey (or shipped direct to wholesalers in the case of Direct Import orders). MHW will receive orders from your customers, take title to such products as are necessary to fill orders, coordinate pick-up from the warehouse, then invoice (at prices agreed upon with CB and properly filed with state agencies), collect, and deposit the remittances into one MHW account designated for CB. MHW will also file all required state reports to the applicable state agencies and pay all relevant beverage excise taxes. On a weekly basis (or as necessary) MHW will remit "Funds Due" CB.

It is agreed that MHW will earn a monthly service fee of $4,900.00 plus $1.00 per case on all cases sold during the month. Additional brands can be added if mutually agreed upon. Both parties agree to periodically re-visit the monthly fee and adjust it accordingly based upon the number of brands, markets covered, and cases sold. The term of this agreement shall commence December 1, 2004 through March 31, 2006 and shall continue automatically thereafter on a month to month basis unless specifically terminated by either party with at least four months prior written notice.

"Funds Due" CB are defined as the net wholesale selling price received less any applicable warehousing, ocean freight, delivery, federal & state (if applicable) taxes / duties, registration fees, insurance, promotional expenses, sales broker commission payments, etc. and the MHW service fee. At the express request of CB (and availability of Funds Due), MHW may also process supplier payments pertaining to CB brands imported by MHW on behalf of CB. Otherwise, CB shall satisfy all product supplier obligations. Any advances given to MHW for costs associated with CB brands will be credited to your account. MHW will keep you informed


on the status of sales, receivables, collections, cash balances, and expenses associated with your activity and file reports as required by Section 7(b) of Distributor Agreement dated March 17, 1998, between CB and Gaelic Heritage Company Limited.

As agreed, in the event a wholesaler refuses to pay on an order shipped to one of your accounts, MHW will not be liable for the payment. However, we will take necessary actions to try and secure payment from the wholesaler. In the event CB instructs MHW to institute legal action to collect the outstanding monies, MHW will agree to do so and to prosecute such action fully, in consultation with but at the sole cost of CB. Title to any products subject to contested sales as described above shall revert from MHW to CB.

In consideration of the services to be performed by MHW, CB hereby agrees to indemnify MHW and its officers, directors and employees and hold it harmless against any claims, actions, demands, liabilities, damages, losses, costs and expenses (including reasonable attorneys' fees) arising out of, or arising from MHW's performance of its obligations, pursuant to this service agreement, for claims brought by third parties for product liability, infringement of intellectual property rights, or non-compliance with regulatory requirements. This indemnification does not cover any third party claims or actions against CB and/or its designated distributor or MHW arising through the act, omission, neglect of MHW, its officers, directors, employees, servants or agents.

If you are in agreement with these terms, please sign below. This letter replaces the April 15, 1998, May 2, 2002 and December 1, 2003 letters between this firm and CB or its predecessors.

We look forward to continuing to work with you and enjoying a mutually prosperous relationship.

Sincerely,

MHW Ltd.

By:  /s/  John F. Beaudette
     ------------------------------
John F. Beaudette
President

ACCEPTED and AGREED to,

By:  /s/  Mark E. Andrews, III
     -----------------------------------------
Name:   Mark E. Andrews, III
Title:  Chairman and CEO
Company:  Castle Brands (USA) Corp.


EXHIBIT 10.32

SUBLEASE

SUBLEASE (this "Sublease"), dated as of June 24, 2004, by and between SILVERCREST ASSET MANAGEMENT GROUP, LLC, a New York limited liability company, successor in interest to James C. Edwards & Co., Inc., having an office at 1330 Avenue of the Americas, New York, New York 10019 ("Sublandlord"), and CASTLE BRANDS (USA) CORP., a Delaware corporation, having an address at 85-47 Elliot Avenue, Suite G, Rego Park, NY 11374, ("Subtenant").

W I T N E S S E T H:

WHEREAS, pursuant to a lease by and between 570 Lexington Avenue Company, LP, a New York limited liability company ("Landlord"), as landlord, and Sublandlord, as tenant, dated as of April____, 1998, (the "Master Lease"), Landlord did demise and let unto Sublandlord, and Sublandlord did hire and take from Landlord, certain premises consisting of the entire rentable area of the twenty-ninth (29th) floor, as more particularly identified in the Master Lease, in a building known as and by the street address of 570 Lexington Avenue, New York, New York (the "Building"); and

WHEREAS, Subtenant acknowledges and represents that it has received and reviewed the Master Lease, a current copy of which is attached hereto as Exhibit A and made a part hereof, except as hereinafter provided; and

WHEREAS, Sublandlord wishes to sublet to Subtenant, and Subtenant desires to hire and rent from Sublandlord the premises as more particularly described on the floor plan attached to the Master Lease which consists of all the premises demised to Sublandlord under the Master Lease (the "Premises") and Subtenant is desirous of hiring and taking the Premises from Sublandlord, upon the terms, covenants and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the mutual covenants and promises herein contained, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Sublandlord and Subtenant hereby agree as follows:

1. TERM. Sublandlord hereby subleases to Subtenant, and Subtenant hereby hires from Sublandlord, the Premises for the purposes, and in compliance with the terms, set forth in Article 2 of the Master Lease, for a term commencing on the date Sublandlord delivers vacant possession thereof to Subtenant, on not less than fifteen (15) days' prior notice, subject to, and in accordance with the terms and conditions of this Sublease, which date shall in no event be later than August 15, 2004, and ending, unless sooner terminated pursuant to any of the provisions of the Master Lease, this Sublease or pursuant to applicable law, on March 30, 2008 (the "Expiration Date"), upon the terms and conditions set forth in this Sublease. The provisions of this Section 1 shall be regarded as an "express provision to the contrary" within the meaning of Section 223-a of the Real Property Law of the State of New York.

2. BASE RENT. Subtenant shall pay to Sublandlord as and for base rent ("Base Rent") for the Premises the amounts set forth on Exhibit C attached hereto and made a part hereof, payable in advance and without notice or demand, commencing on the sixty-first (61st)


day after the Commencement Date (the "Rent Commencement Date") and on the first day of each month during the term of this Sublease, except that Subtenant shall pay to Sublandlord the first full monthly installment with Subtenant's execution and return of this Sublease. If the Rent Commencement Date shall occur on a date other than the first (1st) day or any calendar month then the Base Rent in respect of such month shall be appropriately prorated based on the actual number of days in such month.

3. ADDITIONAL RENT.

(a) In addition to the Base Rent set forth above, commencing on the Commencement Date, Subtenant shall pay to Sublandlord as additional rent ("Additional Rent"), the following:

(i) additional rent equal to one hundred percent (100%) ("Subtenant's Proportionate Share") of all amounts payable by Sublandlord, if any, pursuant to the Master Lease for Operating Expenses (defined in the Master Lease), except that for purposes of this Sublease the Base Operating Year (as defined in the Master Lease) shall be the calendar year ended December 31, 2005;

(ii) additional rent equal to Subtenant's Proportionate Share of all amounts payable by Sublandlord on account of electricity, as set forth in Article 13 of the Master Lease, which is currently $1,438.41 per month as indicated on the escalation statement attached hereto as Schedule 1, and which is subject to adjustment as provided in the Master Lease;

(iii) additional rent equal to Subtenant's Proportionate Share of any Taxes (as defined in the Master Lease) as set forth in Section 27.01 of the Master Lease, except that for purposes of this Sublease, Subtenant's Base Taxes shall be deemed to be actual Taxes for the period July 1, 2004 to June 30, 2005;

(iv) additional rent equal to Subtenant's Proportionate Share of any and all additional rent payable by Sublandlord under any other provisions of the Master Lease during the term of this Sublease (other than amounts payable as a result of Sublandlord's breach of the Master Lease, which breach is not caused by or attributable to a breach by Subtenant of this Sublease);

(v) the cost of any additional services or materials requested of Landlord by or on behalf or at the request of Subtenant; and

(vi) any other amounts payable by Subtenant pursuant to the provisions of this Sublease.

(b) The aforesaid Additional Rent shall be payable by Subtenant to Sublandlord upon the later of (i) five (5) days prior to the date Sublandlord, as tenant under the Master Lease, is required to make a corresponding payment, if any, for each item of Additional Rent, to the Landlord, or (ii) twenty (20) days after presentation by Sublandlord to Subtenant of the bills therefor, whether issued during or after the term of this Sublease. This paragraph 3 shall survive the expiration or earlier termination of this Sublease.

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(c) Base Rent and Additional Rent is referred to in this Sublease collectively as "Rent".

(d) Attached hereto and made a part hereof as Schedule 1 are copies of Sublandlord's most recent bills received from the Landlord reflecting the current amounts charged under the Master Lease to Sublandlord for Operating Expense, Taxes and electricity charges.

4. PAYMENT OF RENT. All Rent shall be paid to Sublandlord, or as Sublandlord may direct by notice to Subtenant, in lawful money of the United States of America which shall be legal tender for payment of all debts and dues, public and private, at the time of payment, at the principal office of Sublandlord, or such other place as Sublandlord may by notice designate, without any abatement, deduction, set-off or counterclaim whatsoever, except to the extent expressly provided in this Sublease or incorporated herein from the Master Lease. Sublandlord shall have the same remedies for default in the payment of Additional Rent as for default in the payment of Base Rent.

5. CONDITION OF PREMISES.

(a) The Premises are hereby sublet and shall be delivered "broom clean" to Subtenant on an "as-is" basis on the Commencement Date, free of all liens, occupants and personal property (other than the Furnishings (as hereinafter defined)). Acceptance of the Premises by Subtenant shall be conclusive evidence that the Subtenant has inspected the Premises and found them to be satisfactory for Subtenant's occupancy as of the date of this Sublease except as to latent defects and provided that Subtenant shall be afforded an opportunity to inspect the Premises before taking possession and any patent defects due to damage subsequent to such inspection and prior to delivery of possession or found upon such inspection shall be repaired.

(b) Neither Sublandlord nor Sublandlord's agents or representatives have made any representations, warranties or promises with respect to the condition, quality, permitted use, restrictions, value or adequacy of the Premises and no rights, easements or licenses are granted by Sublandlord or acquired by Subtenant, by implication or otherwise, except as expressly set forth in this Sublease.

6. RIGHTS OF SUBTENANT. Subtenant shall be entitled to the benefit of all of the rights and remedies of the tenant and all of the obligations of Landlord pursuant to the Master Lease with respect to the Building and the Premises including, but not limited to, Landlord's obligations to repair and restore and provide or render work and services, if any, and Subtenant acknowledges and agrees that such obligations are and shall be the responsibility of Landlord and not those of Sublandlord. In the event Landlord shall fail or refuse to comply with any of the terms of the Master Lease affecting the Premises or the use or occupancy thereof by Subtenant or anyone claiming by, under or through Subtenant, Subtenant may notify Sublandlord, and Sublandlord, at Subtenant's request, shall take any action reasonably requested by Subtenant in accordance with the Master Lease to enforce the provisions of the Master Lease against Landlord, all at Subtenant's sole cost and expense (unless the Landlord's failure or refusal to comply is as a result of Sublandlord's default under the Master Lease with respect to an

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obligation not assumed by Subtenant under this Sublease in which case Sublandlord shall cure its default). If Sublandlord shall fail to take any action reasonably requested by Subtenant to enforce the rights of Sublandlord or the obligations of Landlord or obtain a recovery against Landlord, in each instance, with respect to the Master Lease, the Premises and/or the Building, as set forth above, then, upon seven (7) days prior notice to Sublandlord, Subtenant shall have the right, in its own name (or in the name of the Sublandlord, if Subtenant cannot bring an action, proceeding or make demand in its own name due to lack of privity or otherwise, or if Subtenant shall have obtained Sublandlord's prior written approval of the use of its name, not to be unreasonably withheld or delayed, and Subtenant shall indemnify and hold Sublandlord harmless from and against any and all damages, losses, penalties, fines, costs or expenses, including, without limitation, reasonable attorneys' fees and costs, which Sublandlord may incur or be subject to as a result of any action taken by Subtenant in accordance with this paragraph, provided, however, that if Subtenant retains counsel reasonably satisfactory to Sublandlord for the prosecution of any action or proceeding or demand, Subtenant shall not have to pay Sublandlord's counsel fees to monitor such action, proceeding or demand), and at its own cost, to compel performance by Landlord pursuant to the terms of the Master Lease. Subtenant shall have no claim against Sublandlord by reason of Landlord's failure or refusal to comply with any of the terms of the Master Lease and no such failure or refusal shall be deemed a constructive eviction hereunder (unless the Landlord's failure or refusal to comply is as a result of Sublandlord's default under the Master Lease with respect to an obligation not assumed by Subtenant under this Sublease). This Sublease shall remain in full force and effect notwithstanding Landlord's failure or refusal to comply with any of the terms of the Master Lease, and Subtenant shall pay the Rent provided in this Sublease without any abatement, deduction, set-off or counterclaim, Subtenant's sole remedy being the right to have Sublandlord enforce the provisions of the Master Lease against Landlord at Subtenant's cost as set forth above, except if and to the extent that Sublandlord shall be entitled to and actually receives an abatement for Landlord's action or inaction under the terms of the Master Lease or at law or in equity occurring during the term of this Sublease, then Subtenant shall be entitled to, and receive, a proportionate abatement in Rent under this Sublease. Subtenant shall look solely to Landlord
(i) to provide any and all services and utilities required to be provided by Landlord under the Master Lease, (ii) to make any of the repairs or restorations that Landlord has agreed to make under the Master Lease, (iii) to comply with any laws or requirements of public authorities with which Landlord has agreed in the Master Lease to comply, and (iv) to take any action with respect to the operation, administration, or control of the Building or any of its public or common areas that the Landlord has agreed in the Master Lease to take; and Subtenant shall not, under any circumstances, seek to require or require Sublandlord to provide any of such services or utilities, make such repairs or restorations, comply with such laws or requirements, or take such action, nor shall Subtenant make any claim upon Sublandlord for any damages, costs or expenses which arise by reason of the negligence, whether by omission or commission, or intentional, willful or tortious acts of Landlord, unless Subtenant is not permitted to make such claim directly against Landlord (in which case any judgment obtained by Subtenant with respect to same shall be satisfied solely out of any recovery Sublandlord or Subtenant acting in the name of Sublandlord in accordance with the terms of this Sublease may obtain from Landlord with respect to same, and not out of the personal assets of Sublandlord), or unless Sublandlord fails to perform its obligations under this paragraph 6 with respect thereto. Furthermore, Sublandlord shall have no liability to Subtenant by reason of any inconvenience, annoyance, interruption or

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injury to business or operations arising from Landlord's making any repairs, alterations or changes which Landlord is required or permitted by the Master Lease, or required by law, to make in or to any portion of the Building and/or the Premises, or in or to the fixtures, equipment or appurtenances of the Building and/or the Premises; provided however, Subtenant shall not be prohibited from exercising its rights to enforce the provisions of the Master Lease in accordance with the terms of this Section 6.

7. REMEDIES. In addition to such rights and remedies as it may have pursuant to applicable law, if Subtenant shall default under this Sublease, Sublandlord shall have against Subtenant all of the rights and remedies granted to Landlord pursuant to the Master Lease in the event of a default by Sublandlord, as tenant under the Master Lease. In addition to the other rights Sublandlord may have under the Master Lease (as incorporated in this Sublease), this Sublease or pursuant to applicable law, if Subtenant shall default under this Sublease beyond the expiration of any applicable notice and cure periods, then Sublandlord shall have the right, but not the obligation, without notice to Subtenant in a case of emergency and otherwise after five (5) days notice to Subtenant, without waiving or releasing Subtenant from any obligations hereunder, to perform any such obligation of Subtenant in such manner and to such extent as Sublandlord shall reasonably deem necessary. Subtenant shall pay to Sublandlord within twenty (20) days after notice from Sublandlord (with reasonable evidence of the amounts incurred), any and all actual, reasonable costs incurred by Sublandlord in so doing, including, but not limited to, reasonable attorneys' fees and costs, together with interest thereon (compounded monthly) at a rate of interest equal to the lesser of twelve percent (12%) per annum or the highest legal rate from the date such costs were incurred until the date Sublandlord is reimbursed.

8. PROVISIONS OF THE MASTER LEASE.

(a) This Sublease is in all respects subject to the terms and conditions of the Master Lease. Except as otherwise provided in this Sublease, the terms, provisions, covenants, stipulations, conditions, rights, obligations, remedies and agreements contained in the Master Lease are incorporated in this Sublease by reference and are made a part hereof as if herein set forth at length and each and every provision, term, condition and covenant of the Master Lease binding upon or inuring to the benefit of Landlord thereunder shall, in respect of this Sublease, bind or inure to the benefit of Sublandlord against Subtenant, and each provision of the Master Lease binding upon or inuring to the benefit of Sublandlord, as tenant thereunder shall, in respect of this Sublease, bind or inure to the benefit of Subtenant against Sublandlord, with the same force and effect as though those provisions were completely set forth in this document. For the purpose of incorporation by reference of provisions of the Master Lease into this Sublease, the words "Lessor" or "Landlord" or "Owner" (whether or not capitalized) wherever used in the Master Lease, shall be construed to mean "Sublandlord" and the words "Lessee" or "Tenant" (whether or not capitalized) wherever used in the Master Lease shall be construed to mean "Subtenant", and the words "Premises" or "Demised Premises" (whether or not capitalized), or words of similar import, wherever used in the Master Lease, shall be construed to mean "Premises" as defined in this Sublease, the words "Agreement", "lease", "Lease", or words of similar import, wherever they appear in the Master Lease, shall be construed to mean this Sublease, the word "rent" and words of similar import, wherever used in the Master Lease, shall be construed to mean the Rent payable under this Sublease, the words "term", "Commencement Date" and "Expiration Date", or words of similar import, wherever used in the Master Lease,

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shall be construed to mean, respectively, the term of this Sublease and the dates set for the beginning and the end of the term of this Sublease, and the words "sublease", "sublet" or "subtenant", or words of similar import, wherever used in the Master Lease, shall be construed to refer to sub-subleases, sub-sublettings and sub-subtenants, respectively, and any prohibitions on assignment of the Master Lease by Sublandlord, as tenant under the Master Lease, shall be deemed to prohibit Subtenant from assigning this Sublease. To the maximum extent possible, the provisions of the Master Lease incorporated by reference into this Sublease shall be construed as consistent with and complementary to the other provisions of this Sublease, but in the event of any inconsistency, those provisions of this Sublease not incorporated by reference from the Master Lease shall control. Subtenant covenants and agrees to perform and observe and to be bound by, all terms, covenants, obligations and conditions of the Master Lease and the use thereof applicable to the tenant thereunder except as provided to the contrary in this Sublease. Notwithstanding anything in this Sublease to the contrary, Subtenant covenants and agrees not to do or commit or suffer to be done or committed or fail to do any acts or things, or create or suffer to be created, any conditions that might create or result in a default or breach on the part of Sublandlord under any of the terms, covenants or conditions of the Master Lease or render Sublandlord liable for any charge, cost or expense thereunder (other than for "Sublease Profits", if any, under
Section 12.7 of the Master Lease).

(b) Notwithstanding anything in this Sublease to the contrary, for purposes of incorporation by reference into this Sublease, the following provisions of the Master Lease are deemed deleted from the Master Lease and are expressly not incorporated into this Sublease, except as otherwise provided below in this subparagraph (b):

Article 1; Section 3.5, 7.7, 19.1, 19.2, 19.3, Article 22, Article 26,
Section 28.8, Articles 31, 34 and 35.

For purposes of the following provisions of the Master Lease, the term "Landlord", as used therein, shall mean Landlord only and not Sublandlord:

Section 3.1, 3.2, 3.3, 3.4, 6.1(B), 6.2, Article 8, Section 10.1, 10.2, 10.3 and Article 28 and Section 37.2.

The provisions of Article 7 of the Master Lease shall not apply to any leasehold mortgage having Sublandlord as the mortgagor, and Sublandlord represents that there is no leasehold mortgage encumbering Sublandlord's leasehold interest in the Master Lease.

Sublandlord shall not object to any alteration of the Demised Premises, assignment of this Sublease or sub-subletting of the Demised Premises, in whole or in part, if Landlord consents thereto in accordance with the terms of the Master Lease.

Nothing contained herein shall obligate Subtenant for (or relieve Sublandlord of its obligations, if any, with respect to) removal of any existing alterations or installations made by, or for Sublandlord prior to the Commencement Date of this Sublease upon the expiration or sooner termination of the term of this Sublease.

(c) In order to facilitate the coordination of the provisions of this Sublease with those of the Master Lease, the time periods contained in the provisions of the Master Lease

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that are incorporated by reference into this Sublease and for which the same action must be taken under both the Master Lease and this Sublease (such as, for example and without limitation, the time period for the curing of a default under this Sublease that is also a default under the Master Lease, or for the response to a request by Subtenant to Sublandlord which also requires Landlord's consent), are changed for the purpose of incorporation by reference by shortening or lengthening, as appropriate, that period in each instance by two
(2) business days such that in each instance Subtenant shall have that much less time to observe or perform hereunder than Sublandlord has, as the tenant under the Master Lease, and Sublandlord shall have that much more time to observe, perform, consent, approve, or otherwise act hereunder than Landlord has under the Master Lease.

9. INSURANCE.

(a) Subtenant shall, at its expense, obtain and keep in force and effect during the term of this Sublease such insurance as is required to be carried by Sublandlord as tenant under the Master Lease. Such insurance shall name Sublandlord, Landlord and such other persons as Sublandlord shall designate as additional insureds as their interest may appear.

(b) On or prior to the date Subtenant first enters into the Premises (whether or not for the commencement of its ordinary business in the Premises), Subtenant shall deliver to Sublandlord appropriate certificates of insurance, including evidence of the waiver of subrogation required pursuant to the Master Lease and covering Subtenant's contractual indemnity pursuant to paragraph 10 of this Sublease, and the insurance required to be carried by Subtenant pursuant to this paragraph 9. Evidence of each renewal or replacement of a policy shall be delivered to Sublandlord at least thirty (30) days prior to the expiration of such policy.

10. INDEMNITY. In addition to any indemnification provisions incorporated herein from the Master Lease, Subtenant shall indemnify Landlord and Sublandlord, and Landlord's and Sublandlord's respective members, directors, officers, shareholders, employees, agents, lenders and managing agents ("Sublandlord Indemnified Parties") against, and hold the Sublandlord Indemnified Parties harmless from, all claims, damages, losses, liabilities, costs and expenses (including reasonable attorneys' fees and disbursements and court costs) which any of the Sublandlord Indemnified Parties may incur, pay or be subject to by reason of (i) the nonperformance or non-observance by Subtenant of the terms, covenants, obligations and conditions of this Sublease or the Master Lease (as applicable to Subtenant), and (ii) any tortious act or negligence on the part of Subtenant, its agents, contractors, servants, employees, invitees or licensees, and any claims made or damages suffered or incurred as a result of Subtenant's or its agents, contractors, servants, employees, invitees or licensees, occupancy of the Premises and/or the Building. Nothing contained herein is intended to require Subtenant to indemnify any party from any claim or liability arising from the negligence or intentional misconduct of the indemnitee.

11. BROKER. Subtenant and Sublandlord hereby represent and warrant to each other that neither has dealt with any broker or real estate agent in connection with this Sublease other than CB Richard Ellis ("CB") and Trammell Crow Company ("Trammell Crow") (CB and Trammel Crow being referred to herein, collectively as the "Broker"). Subtenant and Sublandlord hereby agree to indemnify, defend and hold the other harmless from and against any

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and all claims, losses, liabilities, costs and expenses (including reasonable attorneys' fees and disbursements), resulting from any claims that may be made against the other by any brokers, agents or persons claiming a commission, fee or other compensation by reason of this Sublease, other than Broker, if the same shall arise or result or claim to arise or result by, through or on account of any act of the Subtenant or Sublandlord, as the case may be. Sublandlord shall pay any fees due Broker in accordance with a separate agreement between Sublandlord and Trammell Crow. The foregoing notwithstanding, Sublandlord shall indemnify, defend and hold Subtenant harmless with respect to any claims for fees, commission or other similar compensation made by the Broker relating to this Sublease. The indemnity provisions of this paragraph will survive cancellation of this Sublease for lack of Landlord's consent.

12. SUBORDINATION. This Sublease is subject and subordinate to the Master Lease as well as to all of the instruments and matters to which the Master Lease is subordinate. If Landlord shall take over all right, title and interest of Sublandlord under this Sublease, Subtenant shall attorn to Landlord pursuant to the then executory provisions of this Sublease, except that Landlord shall not
(i) be liable for any previous act or omission of Sublandlord under this Sublease, (ii) be subject to any offset, not expressly provided in this Sublease, which thereto accrued to Subtenant against Sublandlord, or (iii) be bound by any previous modification of this Sublease not delivered to Landlord or by any previous prepayment by Subtenant of more than one month's Rent. Subject to the provisions of Section 25(a) of this Sublease, if the term of the Master Lease is terminated prior to the Expiration Date, this Sublease shall thereupon be terminated automatically. In such event, provided Subtenant is not in monetary default hereunder, the Rent (hereinafter defined) for the month in which such termination occurs shall be pro-rated based on the actual number of days in such month unless such termination was the result of a default by Subtenant hereunder.

13. NOTICES. Any notice or other communication by either party to the other relating to this Sublease (other than a bill or statement for Rent due sent by Sublandlord, provided that this provision shall not be deemed to require Sublandlord to send any bill or statement of Rent due) shall be in writing and shall be deemed to have been duly given upon receipt when delivered to the recipient party in person (against signed receipt) or three (3) days after being mailed by United States Registered or Certified Mail, return receipt requested, postage prepaid, or the next business day when sent by nationally recognized overnight courier regularly maintaining a record of receipt, and addressed: (a) if to Sublandlord, at the address hereinabove set forth, Attention: Martin Jaffe, with a copy sent in the same manner to Joseph D'Angelo, Esq., Wolf, Block, Schorr and Solis-Cohen LLP, 250 Park Avenue, New York, New York 10177, or
(b) if to Subtenant prior to its initial occupancy of the Premises, at the address set forth at page 1 of this Sublease, and after its initial occupancy of the Premises at the address hereinabove set forth, in either case, with a copy sent in the same manner to Joel B. Singer, Esq., 100 West 57th Street, New York, NY 10019. Either party may by notice to the other party designate a different address within the United States to which notices shall be sent.

14. ASSIGNMENT AND SUBLETTING. In addition to any restrictions on subleasing and/or assigning set forth in the Master Lease and incorporated into this Sublease by reference, Subtenant expressly covenants and agrees that it shall not assign, mortgage, pledge or encumber this Sublease nor sublet the Premises or any part thereof, nor suffer or permit the Premises or any part thereof to be used or occupied by others, except with the prior written

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consent of Landlord, to the extent required under the Master Lease, and of Sublandlord, which consent Sublandlord agrees not to unreasonably withhold, delay or condition provided Landlord has consented (if required under the Master Lease). If this Sublease be assigned, or if the Premises or any part thereof be sublet or occupied by anyone other than Subtenant, Sublandlord may, after default by Subtenant, collect rent from the assignee, subtenant or occupant, and apply the net amount collected to the Rent reserved in this Sublease, but no such assignment, subletting, occupancy, or collection by Sublandlord shall be deemed a waiver of the covenant set forth above or the acceptance of the assignee, subtenant or occupant as subtenant or a release of Subtenant from the further performance by Subtenant of covenants and agreements on the part of Subtenant contained in this Sublease. Sublandlord covenants and agrees to respond to any request for consent from Subtenant pursuant to this paragraph 14 within the same period of time as the Landlord has to respond to such a request from Sublandlord, as tenant under the Master Lease.

15. HOLDOVER. Subtenant expressly assumes the obligations of Sublandlord to Landlord in the event possession of the Premises is not surrendered at the Expiration Date or sooner termination of the term of this Sublease by Subtenant or anyone claiming under or through Subtenant, including, without limitation, the payment to Sublandlord of the greater of (i) two (2) times the Rent payable under the Master Lease for the month prior to such termination and (ii) the then fair market rental value for the Premises, as set forth in Article 20 of the Master Lease, and all additional rent payable pursuant to the Master Lease, as well as payment to the Landlord of any damages and costs, including, without limitation, reasonable attorney's fees, payable by Sublandlord as a result thereof.

16. CONSENT OF LANDLORD. Anything contained in this Sublease to the contrary notwithstanding, this Sublease is subject to the written consent ("Consent") of Landlord to this Sublease, and notwithstanding the execution of this Sublease by the parties hereto, the term of this Sublease shall not commence until Sublandlord receives Landlord's Consent. Subtenant agrees to provide to Landlord promptly, any financial information of Subtenant reasonably requested by Landlord in connection with the issuance of such consent or evaluation of Subtenant. If Landlord fails to deliver the Consent, on Landlord's standard form and otherwise reasonably satisfactory to Sublandlord and Subtenant, within thirty (30) days after this Sublease is submitted to Landlord for its consent by Sublandlord (provided such delay is not caused by Subtenant's failure to submit information requested by Landlord, in which event such thirty
(30) day period shall be extended one (1) day for each day of delay caused by Subtenant's failure to provide such information), Subtenant shall have the right, commencing on the thirty first (31st) day, to terminate this Sublease by providing not less than five (5) days' prior written notice to Sublandlord prior to receipt of the Consent by Sublandlord. Upon the expiration of such five (5) day period, provided Landlord's Consent has not been obtained, this Lease shall terminate, Subtenant shall receive a refund of all amounts paid by Subtenant to Sublandlord on account of this Sublease, without any deduction or setoff whatsoever and there shall be no further liability on the part of Sublandlord or Subtenant under this Sublease. Sublandlord agrees to deliver a fully executed copy of this Sublease to Landlord for Landlord's consent (with a copy to Subtenant), within three (3) business days after Sublandlord's receipt of an original of this Sublease executed by Subtenant. Landlord's Consent shall be obtained by Sublandlord at no cost or expense to Subtenant.

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It is a condition of this Sublease that the Landlord's written consent to this Sublease contain the agreement of the Landlord that Castle Brands, (USA) Corp., the "Subtenant" named herein may, on prior notice to Landlord and Sublandlord in accordance with the terms of the Master Lease: (i) sublet the Demised Premises (without any subdivision of the Demised Premises into more than one separate independently serviceable unit of space, through construction of demising walls, separate entrances and the like) to an "Affiliate" or "Subsidiary" of Subtenant; or (ii) assign this Sublease to a "Successor". A "Successor" of Subtenant shall mean: (A) a corporation, a partnership, limited liability company or other entity in which, or with which Subtenant is merged or consolidated, in accordance with applicable statutory provisions for merger or consolidation, provided that by operation of law or by effective provisions contained in the instruments of merger or consolidation, the liabilities of the entities participating in such merger or consolidation are assumed by the entity surviving such merger or created by such consolidation, or (B) a corporation or other entity acquiring all or substantially all of the assets of Subtenant including, without limitation, Subtenant's interest in this Sublease. A "Subsidiary" shall mean any corporation or other entity that is owned or controlled by Subtenant. An "Affiliate" shall mean any corporation or other entity that owns or controls Subtenant or is owned or controlled by the same person or entity that owns and controls Subtenant or a shareholder, manager, member or joint venture partner of the Subtenant. Acquisition by Subtenant, of a substantial portion of the assets, together with the assumption of all or substantially all of the obligations and liabilities of any corporation or other entity, shall be deemed a merger of such corporation or other entity into Subtenant for the purposes hereof. In addition, a transfer, sale, pledge or other disposition of fifty percent or more of the stock of Subtenant and a transfer of a majority voting or ownership interest in any other entity that is the Subtenant whether in one or a series of transactions shall be permitted without Landlord's consent (i) by and between the individuals who are now existing shareholders (or members) of Subtenant, to or with any member of the immediate family of an existing shareholder or member of Subtenant by gift, testate or intestate succession or sale, or to or with a family limited liability company or other entity or person(s) for estate planning purposes,
(ii) involving an initial public offering of stock or shares traded on a national securities exchange, or (iii) to effect a statutory change in form or organization from a limited liability company to corporation or otherwise.

17. ENTIRE AGREEMENT/SUBLANDLORD'S CONSENT. This Sublease contains the entire agreement between the parties relating to the subject matter hereof and supersedes all prior negotiations, conversations, correspondence and agreements. There are no representations or warranties that are not set forth herein. No waiver, modification or termination of this Sublease or any portion thereof shall be valid or effective unless in writing signed by the parties hereto. In any instance in which Sublandlord is required by any provision of this Sublease or applicable law not unreasonably to withhold consent or approval, Subtenant's sole remedy if Sublandlord unreasonably withholds such consent or approval shall be an action for specific performance or injunction requiring Sublandlord to grant such consent or approval, all other remedies which would otherwise be available being hereby waived by Subtenant subject to the understanding that if Landlord consents to any matter Sublandlord will not refuse to consent.

18. SUCCESSORS AND ASSIGNS. The terms, conditions and covenants of this Sublease shall be binding on and inure to the benefit of Sublandlord and Subtenant and their respective successors, and except as otherwise provided in this Sublease, their assigns.

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19. GOVERNING LAW. This Sublease shall be governed by and construed in accordance with the laws of the State of New York as if it were a contract negotiated, entered into and wholly performed within the State of New York, and without regard to principles of conflicts of law.

20. COUNTERPARTS. This Sublease may be executed in any number of counterparts and/or by facsimile, each of which shall be deemed an original and all of which, when taken together, shall constitute one and the same instrument, binding on the parties as if all parties had signed one document on the same signature page, and the signature of any party to any counterpart shall be deemed a signature to, and may be appended or attached to, any other counterpart by Sublandlord.

21. NO OFFER. The submission of this Sublease is not and shall not be deemed an offer. This Sublease is submitted to Subtenant for its review and discussion purposes only and neither Subtenant nor Sublandlord shall be bound unless and until Subtenant and Sublandlord shall execute and deliver a copy of this Sublease.

22. SECURITY.

(a) Subject to the terms of this Section 22, Subtenant shall, upon its execution and return of this Sublease to Sublandlord, deposit with Sublandlord as security for the full and faithful performance and observance by Subtenant of the terms, provisions, covenants and conditions of this Sublease, and any modifications hereof, the sum of $50,000.00 in cash ("Security"). If this Sublease has not been terminated for a default of Subtenant, or if Subtenant is not then in default of its obligations under this Sublease, the Security shall be reduced to $35,000.00 eighteen (18) months after the term of this Sublease commences.

(b) Sublandlord may, at its sole option, retain, use or apply the whole or any part of the Security to the extent required for payment of any:

(1) Base Rent;

(2) Additional Rent;

(3) other sums as to which Subtenant is obligated to pay under this Sublease;

(4) sums which Sublandlord may expend or may be required to expend by reason of Subtenant's default after any required notice and the expiration of any applicable grace or cure period under this Sublease;

(5) loss or damage that Sublandlord may suffer by reason of Subtenant's default, including, without limitation, any damages incurred by Sublandlord; and

(6) all costs, if any, incurred by Sublandlord in connection with the cleaning or repair of the Premises.

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(c) In no event shall Sublandlord be obligated to apply the Security, or any portion thereof. Sublandlord's right to bring an action or special proceeding to recover damages or otherwise to obtain possession of the Premises before or after any default or termination of this Sublease shall not be affected by Sublandlord's holding of the Security.

(d) The Security shall not be nor be deemed (1) a limitation on Sublandlord's damages or other rights and remedies available under this Sublease, or at law or in equity; (2) a payment of liquidated damages, or (3) an advance payment of Base Rent or Additional Rent.

(e) If Sublandlord uses, applies or retains all or any portion of the Security, Subtenant shall restore and replenish the Security to the amount required originally deposited hereunder within five (5) days after written demand from Sublandlord.

(f) Sublandlord shall keep the Security separate or segregated from its own funds, and shall not commingle the Security with its own funds, as required by law in an interest bearing bank account with the accrued interest (less a 1% administrative fee to be retained by Sublandlord) to belong to the Subtenant. Sublandlord shall have no fiduciary responsibilities or trust obligations whatsoever with regard to the Security and shall not assume the duties of a trustee for the Security.

(g) If Subtenant shall fully and faithfully comply with all of the terms, provisions, covenants and conditions of this Sublease, and any modifications hereof, any part of the Security then not used, applied or retained by Sublandlord shall be returned to Subtenant within thirty (30) days after Subtenant has discharged all of its then known obligations under this Sublease, and any modifications hereof. In no event shall the release of the Security, or any portion thereof, by Sublandlord be deemed to release Subtenant from any liability under this Sublease, or affect Subtenant's indemnification obligations under this Sublease, which arise, accrue or first become known to Sublandlord after the release of any remaining Security (or such interest thereon).

(h) Subtenant shall not, and shall not attempt to, assign, pledge or otherwise encumber the Security, and Sublandlord and its successors and assigns shall not be bound by any, or any attempted, assignment, pledge or other encumbrance.

(i) In the event of a sale, assignment or transfer of Sublandlord's interest in the Master Lease, Sublandlord shall transfer the Security to the purchaser, assignee or transferee, as the case may be, and upon the purchaser, assignee or transferee assuming in writing the obligations of Sublandlord under this Sublease accruing from and after the date of such assignment and assumption (including, but not limited to obligations as to the security deposit). Sublandlord shall thereupon automatically be released by Subtenant from all liability for the return of the Security, and Subtenant agrees to look solely to the purchaser, assignee or transferee for the return of the Security.

(j) The payment by Subtenant and acceptance by Sublandlord of the Security submitted by Subtenant shall not render this Sublease effective unless and until Subtenant and Sublandlord shall have executed and each shall have received a fully executed copy of this Sublease.

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(k) For purposes of this Sublease, the phrase "Letter of Credit" shall mean a clean, unconditional and irrevocable letter of credit which (i) is issued by a bank or other institution satisfactory to Sublandlord having a retail office in New York County, New York at which office the Letter of Credit may be presented for payment, (ii) is for an amount equal to the Security, (iii) is for a period of one (1) year from the date of issuance thereof, and thereafter automatically renewable each year thereafter with a final expiration no earlier than December 31, 2010, (iv) is payable to Sublandlord (Attention: Martin Jaffe) upon presentation only of a sight draft, (v) provides that prior to the expiration or termination thereof, the issuer thereof will provide notice to Sublandlord of the non-renewal or termination thereof at least sixty (60) days prior to the expiration or termination thereof, (vi) is freely transferable by Sublandlord without cost to Sublandlord, and (vii) is otherwise in form and substance satisfactory to Sublandlord.

(l) In lieu of the cash Security, Subtenant shall have the right to deposit and maintain with Sublandlord during the entire term of this Sublease a Letter of Credit in the amount of the Security. If (i) any default beyond applicable notice and cure periods occurs under this Sublease, or (ii) Sublandlord transfers its right, title and interest under the Master Lease to a third party and the issuer of the Letter of Credit does not consent to the transfer of such Letter of Credit to such third party or if Subtenant at its expense, upon request of Sublandlord, fails or refuses to replace the Letter of Credit delivered to Sublandlord with a Letter of Credit issued to such third party or (iii) Sublandlord receives notice or becomes aware that the issuer of the Letter of Credit does not intend to renew it prior to the expiration thereof, and Subtenant shall fail to provide a replacement Letter of Credit no later than thirty (30) days prior to the expiration of the Letter of Credit then in Sublandlord's possession then in any of such events, Sublandlord may, at its option, draw down the Letter of Credit then in its possession in full prior to the expiration thereof and the proceeds thereof shall then be held and maintained by Sublandlord as the Security. Subtenant shall pay all costs and expenses related to or in any way arising out of the performance by Subtenant of its obligations under this paragraph, including, without limitation, the issuance, delivery, replacement, draw upon, transfer, maintenance or other matters relating to the Letter of Credit, it being understood that Sublandlord shall incur no cost or expense in connection therewith. The foregoing notwithstanding, if there is an assignment or other transfer of Sublandlord's interest in this Sublease and the Security is held in the form of a Letter of Credit, then Subtenant shall not be responsible for the payment of any transfer charges of the issuer for changing the beneficiary and Sublandlord shall surrender the Letter of Credit that it holds to the issuer thereof for such purpose. If the Letter of Credit requires the applicant to pay any transfer charges, then Sublandlord shall reimburse Subtenant therefor.

23. FURNISHINGS. Sublandlord hereby grants to Subtenant a license ("License"), for the term of this Sublease and at no additional cost to Subtenant, to use and have the benefit of the furniture, furnishings, telephone equipment and other personal property located in the Premises on the date of this Sublease more particularly described on Exhibit D-1 attached hereto and made a part hereof (collectively, the "Furnishings"). Notwithstanding the foregoing, the items more particularly described on Exhibit D-2 attached hereto and made a part hereof, shall not be deemed to be Furnishings, shall remain the sole property of Sublandlord and shall be removed by Sublandlord prior to the Commencement Date. The Furnishings are provided to Subtenant "as is" and "where is" and Sublandlord makes no representation or warranty with respect to such Furnishings, including, without limitation, fitness for a particular purpose, except that Sublandlord represents that it owns the Furnishings free and clear and that the same are not

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subject to any lease or any security agreement. Subtenant hereby releases Sublandlord from all, and shall indemnify and hold Sublandlord harmless from and against any, losses, liabilities, claims, damages, and injuries caused by, arising out of or relating to, the use of the Furnishings by Subtenant or its employees, agents, contractors, sub-subtenants, officers or any other person claiming by, through or under Subtenant. Subtenant may dispose of the Furnishings as it sees fit without liability to Sublandlord for any Furnishings missing or replaced at the end of the Term.

24. INTENTIONALLY OMITTED

25. SUBLANDLORD'S REPRESENTATIONS, WARRANTIES AND COVENANTS. Sublandlord hereby represents and warrants to, and covenants and agrees with, Subtenant as follows:

(a) Sublandlord covenants and agrees that Sublandlord will not surrender or terminate or take any action which would cause the termination of the Master Lease without the prior written consent of Subtenant. In the event of a fire, casualty or condemnation which would trigger any right of Sublandlord to cancel or terminate the Lease, Sublandlord agrees that it shall use commercially reasonable efforts to cooperate with Subtenant in exercising Sublandlord's rights, as tenant, under the Master Lease. Sublandlord's liability for breach of the first sentence of this paragraph shall survive any termination of this Sublease for lack of Landlord's consent (other than a termination of this Sublease for Subtenant's default), provided that the reason for Landlord's refusal to grant its consent was because the Master Lease was terminated by Sublandlord in violation of the first sentence of this paragraph.

(b) Sublandlord warrants and represents to Subtenant that the Master Lease attached hereto as Exhibit A is a true, correct and complete copy of the Master Lease, is in full force and effect, and has not been modified or amended except as expressly set forth herein.

(c) Sublandlord covenants and agrees that it shall not default in the payment of its obligations to Landlord under the Master Lease, or otherwise cause a default beyond the expiration of any applicable notice and cure periods under the Master Lease.

(d) Sublandlord represents that it has received no written notice claiming a violation of any applicable laws, governmental rules or regulations with respect to the Premises.

(e) Sublandlord represents that it has not received any notice from Landlord alleging a default by Sublandlord under the Master Lease that has not been cured, and, to Sublandlord's knowledge, there is no default on the part of either Sublandlord or Landlord under the Master Lease.

(f) Existing HVAC, plumbing and all other electrical and mechanical systems serving the Premises are in working order.

(g) Sublandlord is not the debtor, defendant or respondent in any pending bankruptcy, foreclosure, lease termination, landlord/tenant, insolvency, receivership or other creditors' action or proceeding.

[Signatures follow on next page.]

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IN WITNESS WHEREOF, the parties hereto have duly executed this Sublease on or as of the day and year first above.

SUBLANDLORD:

SILVERCREST ASSET MANAGEMENT GROUP LLC

By:  /s/ Martin Jaffe
    ------------------------------------------
          Name:  Martin Jaffe
          Title: Chief Operating Officer

SUBTENANT:

CASTLE BRANDS (USA) CORP.

By:  /s/ Amelia Gary
     -----------------------------------------
          Name:  Amelia Gary
          Title:  VP - Finance

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EXHIBIT A

Copy of the Master Lease Attached


EXHIBIT B

Floor Plan of the Premises Attached

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EXHIBIT C

Base Rent Schedule

      PERIOD                             ANNUAL BASE RENT            MONTHLY BASE RENT
From Rent Commencement Date through the   $147,440.00                  $12,286.67
Expiration Date

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EXHIBIT D-1

Inventory of Furnishings

1. Desks (10)
2. Credenzas (10)
3. Desk Chairs (12)
4. Visitor Chairs (12)
5. Glass Table Reception (1)
6. Meeting Room Chairs (6)
7. Meeting Room Table (1)
8. 5 Draw Files (13)
9. 3 Draw Files (18)
10. Small Glass or Wood End Tables (5)
11. Microwave (1)
12. Water Cooler (1)
13. Refrigerator (1)
14. Over-Head Storage (7)
15. PC Stands (6)
16. Lucent Phone System (1)
17. Lucent Voicemail System (1)
18. Phones (14)
19. SMC Ethernet Switch 24 Port (1)
20. Desk Top PC (1) and Television (1) in Conference Room

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EXHIBIT D-2

Items Retained by Sublandlord

                 FURNITURE TO SILVERCREST                                            LOCATION
1 Desk                                                                        Jerry Bogert's Office
2 Leather Reception chairs                                                        Reception Area
1 Couch (green)                                                               Jerry Bogert's Office
1 Chair (green)                                                               Jerry Bogert's Office
All desk top PC's (other than the Desk Top PC identified                            Per Office
in No. 20 in Exhibit D-1)
All printers                                                                        Per Office
All servers                                                                       Server Closet
3 Water color paintings                                                       Jerry Bogert's Office
2 Pen and Ink Architectural drawings                                          Jerry Bogert's Office
3 Photos                                                                      Jerry Bogert's Office
2 Paintings                                                                      Conference Room
1 Water color painting                                                           Conference Room
2 Photos                                                                          Bart's Office
2 Photos                                                                           Bob's Office
1 Water color painting                                                             Bob's Office
1 Poster with Postage Stamps                                                      Dave's Office
3 Prints                                                                           Empty Office
3 Prints                                                                           Empty Office

2

SCHEDULE 1

Escalation Statement

3

Exhibit 10.33

DATED THE __ DAY OF ____________ 2004

JENNIFER DUNNE

AND

CASTLE BRANDS SPIRITS COMPANY

LIMITED

SUB-LEASE

FOR LETTING OF PREMISES AT FIRST FLOOR,

VICTORIA HOUSE,

HADDINGTON ROAD, DUBLIN 4

Gill Traynor
Solicitors
39/41 Sundrive Road,
DUBLIN 12


THIS INDENTURE OF SUB-LEASE made the __ day of June 2004 BETWEEN (1) JENNIFER DUNNE of 39 Hampton Park, St. Helen's, Booterstown, County Dublin (hereinafter called "The Landlord" which expression shall where the context so admits or requires include her executors administrators and assigns)

AND

(2) CASTLE BRANDS SPIRITS COMPANY LIMITED a limited liability company having its registered office at 4 Herbert Place Herbert Street Dublin 2 (hereinafter called "the Tenant" which expression shall where the context so admits or requires include its successors and permitted assigns)

WITNESSETH as follows:

A. In this Lease and In any Schedules hereto the following expressions shall have the meaning assigned to them respectively that is to say:

"the landlord" shall include the person or persons for the time being entitled to the reversion immediately expectant on the determination of the Term.

"the tenant" shall include the Tenant's successors in title and permitted assigns.

"the demised premises" means the premises demised by this sub-lease as more particularly described in the First Schedule hereto and shall be deemed to include the fixtures and fittings and rights hereby demised.

"the rent" means the yearly sums set out in the Second Schedule hereto.

"the term" means the term of 4 years and 9 months commencing on the 31st May 2004 and expiring on the 28th February 2009.

"the head lease" means the Lease dated the 21st day of May 2004 made between (1) Sean Dunne of the First Part, (2) Victoria House Management Company Limited of the Second Part and (3) the Landlord of the Third Part.

"the superior landlord" means the person or persons for the time being entitled to the reversion immediately expectant on the determination of the Head Lease.

The masculine shall include the feminine and neuter and vice versa and the singular, the plural and vice versa.

Where obligations are undertaken by more than a single person same shall be deemed to be joint and several obligations.

Any covenant by the Tenant not to do or omit an act or thing shall be construed as if it were a covenant not to do or omit or permit or suffer such act or thing to be done or omitted.


B. In consideration of the Rent and of the other payments to be hereby made and of the covenants on the part of the Tenant and conditions hereinafter contained the Landlord HEREBY DEMISES unto the Tenant ALL THAT AND THOSE the Demised Premises together with the rights therein specified excepting and reserving as therein provided TO HOLD the same unto the Tenant for the Term YIELDING AND PAYING therefor yearly and proportionately for any fraction of a year the Rent such Rent to be paid by equal quarterly payments in advance on the 31st day of May, 31st day of August, 30th day of November and 28th day of February in each year of the term hereby granted by Banker's Order or such other method as the Landlord may reasonably require, the first of such quarterly payments (if not already made) to be made on the execution hereof.

C. The Tenant hereby covenants with the Landlord as follows:

1. To pay the Rent on the days and in the manner herein prescribed without any deductions.

2. Notwithstanding Clause C5 hereunder, to pay to the Landlord (or to the person or company nominated by the Landlord) from time to time on demand without any deduction or abatement the sum payable by the Landlord to the Superior Landlord pursuant to the Head Lease in respect of Insurance premium and Service Charge in respect of the Demised Premises (as defined in the Head Lease) payable by the Landlord to the Superior Landlord on foot of the Head Lease.

3. To pay to the Landlord on demand without any deductions such amounts as may be incurred in the procurement and provision of services including, but not limited to, security services, security alarm fire extinguishers and such other services as the Landlord shall from time to time deem necessary.

4. To pay and discharge to the Landlord pending a separate valuation of the Demised Premises (if such be the case) all rates, taxes, duties, charges, assessment, Impositions and outgoings whatsoever whether parliamentary, parochial, local or of any other description (and whether or not of an entirely novel character) which are now or may at any time hereafter be charged, taxed, assessed, levied or imposed upon or payable in respect of the Demised Premises on demand.

5. To pay to the suppliers thereof all charges for electricity and telephone (including meter rents) consumed in the Demised Premises during the term.

6. To comply with the covenants and obligations on the part of the Landlord contained in the Sixth Schedule to the Head Lease (save for the rent thereby reserved and other payments thereby covenanted to be made and save for the covenants at Clauses 3, 4, 5, 6, 14, 15, 16, 17, 18, 19 and 20 thereof) in so far as the same relate to the Demised Premises and to keep the interior of the Demised Premises (excluding any structural parts of the Demised Premises) including the glass in the windows, all locks, sash cords, electric, gas, telephone, central heating system, air conditioning systems and other fittings and installations, cables and all


additional fittings, drainage and sanitary fittings, appliances and pipes in good and tenantable repair order condition but excluding damage caused by or arising from any of the insured risks, save where the insurance has been rendered void by the action or default of the Tenant and to keep the Landlord effectually indemnified against all claims in respect thereof and to keep the windows and chimneys clean and keep clean and free from blockages, wash basins, lavatory basins, drains, sewers and gulley traps serving the Demised Premises and pay for any damage thereto or expenses of cleaning the same caused by the negligence of or the misuse by the Tenant, his licencees, servants or agents.

7. To pay to the Landlord the stamp duty on this Lease and Counterpart thereof.

8. To yield up the Demised Premises (including all fixtures and fittings therein and in particular the floor coverings thereof) on expiry or sooner determination of the Term in its present state end condition and to make good all damage occasioned.

9. (a) Not to transfer assign underlet mortgage charge hold in trust for another part with nor share possession or control or occupation of part only of the Demised Premises without the prior consent in writing (which shall not be unreasonably withheld) of the Landlord and the Superior Landlord and not to hold in trust for another part with nor share possession or control or occupation of the whole of the Demised Premises.

(b) Not to transfer assign underlet mortgage or charge the whole of the Demised Premises without the prior consent in writing (which shall not be unreasonably withheld) or the Landlord and the Superior Landlord.

10. Not without prior consent in writing of the Landlord to make any alterations to the Demised Premises whatsoever save in accordance with the provisions and procedures set out in the Head Lease and save for such alterations agreed/approved in advance and in accordance with such specifications submitted to the Landlord prior to the execution of this sub-lease and on expiry or sooner determination hereof to yield up the Demised Premises fully reinstated to its present state and condition in accordance with clause 8 hereof.

11. Not to use or occupy or allow to be used or occupied the Demised Premises otherwise than for the purpose of the provision of and the marketing and sale of Alcoholic Spirits and such related office and commercial business and for general commercial offices.

12. To pay to the Landlord any VAT payable on the Rent payable under this Lease.

D. It is hereby agreed and declared by and between the Landlord and Tenant as follows:

1. All rights hereby reserved to and covenants made with the Landlord shall be deemed to extend to the Superior Landlord.


2. This Lease is granted subject to the provisos contained at the First Schedule of the Head Lease mutatis mutandis in so far as the same relate to the Demised Premises.

3. For a period of six months before the expiry of the term hereby created commencing 31st May 2004 to permit the Landlord or agent appointed by the Landlord access to the premises with prospective tenants/assignees at all reasonable times and a reasonable notice to the Tenant causing minimal obstruction to the Tenant's business for the purpose of re-letting same.

4. That if the rent hereby reserved or any part thereof shall be unpaid for twenty-one days after becoming payable (whether formally demanded or not) or if any covenant on the Tenant's part to be performed or observed is breached it shall be lawful for the Landlord at any time thereafter to re-enter upon the premises in the name of the whole and thereupon this Lease shall absolutely determine but without prejudice to any claim by the Landlord in respect of any antecedent breach of any covenant or provision herein contained.

E. The Landlord covenants with the Tenant:

1. That so long as the Tenant complies with the covenants on its part herein contained the Tenant may enjoy the Demised Premises peaceably during the term without any interruption by the Landlord.

2. To pay the rent reserved under the Head Lease.

IT IS HEREBY CERTIFIED:

1. That the consideration of for this Lease is wholly attributable to property which is not residential property and that the transaction effected by this instrument does not form part of a larger transaction or series of transactions in respect of which the amount or value or the aggregate amount or value of the consideration (other than rent) which is not residential property exceeds E10,000.00.

2. That Section 53 (Lease combined with Building Agreement for dwelling house/apartment) of the Slamp Duties Consolidation Act 1999 does not apply to this instrument.

3. That the Demised Premises are situate in the County Borough of Dublin.

4. That for the purposes of Section 29 of the Companies Act, 1990 that the Landlord and the Tenant are not bodies corporate connected with one another in a manner which would require this transaction to be ratified by resolution of either.

IN WITNESS whereof the parties hereto have executed this Lease the day and year first herein written.


FIRST SCHEDULE
(The Demised Premises)

ALL THAT AND THOSE office premises comprising the entire first floor of Victoria House, Haddington Road, Dublin 4 being the hereditaments and premises comprised in and demised by the Head Lease and more particularly described in the Third Schedule thereto EXCEPTING AND RESERVING unto the Landlord and the Superior Landlord the exceptions and reservations excepted and reserved in the Head Lease and excepting and reserving unto the Landlord and the Superior Landlord and such others as may be authorized by the Landlord from time to time the right of ingress, egress and regress in through and from the Demised Premises in the event of an emergency.

SECOND SCHEDULE
(The Rent)

E80,000.00 per annum for the first year of the Term; E114,000.00 for the second year of the Term; E114,000.00 for the third year of the Term; E114,000.00 for the fourth year of the Term; and E85,612.00 for the last 9 months of the Term.

SIGNED SEALED AND DELIVERED
By the Landlord in the presence of

PRESENT when the Common Seal of
the TENANT was affixed hereto:

/s/ David Phelan
----------------------------------------
Director


/s/ Patrick Rigney
----------------------------------------
Director/Secretary


Exhibit 10.34

(CRESCENT LOGO)

OFFICE LEASE

BETWEEN

CRESCENT REAL ESTATE EQUITIES LIMITED PARTNERSHIP

("LANDLORD")

AND

GREAT SPIRITS COMPANY L.L.C.

("TENANT")


Table of Contents

                                                                            PAGE
                                                                            ----
1.  Basic Lease Information..............................................     1
2.  Lease Grant..........................................................     2
3.  Term: Adjustment of Commencement Date; Possession....................     2
4.  Rent.................................................................     3
5.  Compliance with Laws: Use............................................     6
6.  Security Deposit.....................................................     7
7.  Services to be Furnished by Landlord.................................     7
8.  Use of Electrical Services by Tenant.................................     8
9.  Leasehold Improvements...............................................     8
10. Repairs and Alterations..............................................     9
11. Entry by Landlord....................................................    10
12. Assignment and Subletting............................................    10
13. Liens................................................................    11
14. Indemnity and Waiver of Claims.......................................    11
15. Insurance............................................................    12
16. Waiver of Subrogation................................................    12
17. Casualty Damage......................................................    13
18. Condemnation.........................................................    13
19. Events of Default....................................................    13
20. Remedies.............................................................    14
21. Limitation of Liability..............................................    16
22. No Waiver............................................................    16
23. Tenant's Right to Possession.........................................    16
24. Relocation...........................................................    16
25. Holding Over.........................................................    16
26. Subordination to Mortgages: Estoppel Certificate.....................    17
27. Attorneys' Fees......................................................    17
28. Notice...............................................................    17
29. Reserved Rights......................................................    18
30. Surrender of Premises................................................    18
31. Hazardous Materials..................................................    18
32. Miscellaneous........................................................    19

EXHIBITS AND RIDERS

EXHIBIT A-1   OUTLINE AND LOCATION OF PREMISES
EXHIBIT A-2   LEGAL DESCRIPTION OF PROPERTY
EXHIBIT B     RULES AND REGULATIONS
EXHIBIT C     COMMENCEMENT LETTER
EXHIBIT D     WORK LETTER
EXHIBIT E     PARKING AGREEMENT

RIDER NO. 1   OPTION TO EXTEND

i

OFFICE LEASE

This Office Lease (the "Lease") is entered into, and shall be effective, as of the 24th day of February, 2000 (the "Effective Date"), by and between CRESCENT REAL ESTATE EQUITIES LIMITED PARTNERSHIP, a Delaware limited partnership ("Landlord") and GREAT SPIRITS COMPANY L.L.C., a Delaware limited liability company ("Tenant").

1. BASIC LEASE INFORMATION. The key business terms used in this Lease are defined as follows:

A. "Building" shall mean the building located at 1331 Lamar, Houston, Texas 77010, and commonly known as "4 Houston Center".

B. "Rentable Square Footage of the Building" is deemed to be 674,246 square feet.

C. "Premises" shall mean the area shown on EXHIBIT A-1 to this Lease. The Premises are located on floor eleven and known as suite number 1125. The "Rentable Square Footage of the Premises" is deemed to be 1,016 square feet. If the Premises include one or more floors in their entirety, all corridors and restroom facilities located on such full floor(s) shall be considered part of the Premises. Landlord and Tenant stipulate and agree that the Rentable Square Footage of the Building and the Rentable Square Footage of the Premises are correct and shall not be remeasured.

D. "Base Rent":

                                    Annual Rate      Monthly
            Period                Per Square Foot   Base Rent
            ------                ---------------   ---------
April 1, 2000 to March 31, 2001       $15.28        $1,293.71

E. "Tenant's Pro Rata Share" is equal to the Rentable Square Footage of the Premises divided by the Rentable Square Footage of the Building and currently equals .001506868%.

F. "Term": The period of 12 months starting on the Commencement Date.

G. "Commencement Date": April 1, 2000.

H. "Security Deposit": None.

I. "Guarantor(s)": None.

J. "Permitted Use": Office and related uses.

K. "Notice Addresses":

Tenant:

On or after the Commencement Date, notices shall be sent to Tenant at the Premises. Prior to the Commencement Date, notices shall be sent to Tenant at the following address:


1331 Lamar, Suite 900
Houston, Texas 77010
Attention: Vicki Arbuthnot
Telephone: (713) 750-0033
Facsimile: (713) 756-6150
Landlord:                       With a copy to:

Crescent Real Estate Equities   Post Oak Central
Limited Partnership
909 Fannin, Suite 100           2000 Post Oak Blvd., Suite 1950
Houston, Texas 77010            Houston, Texas 77056
Attention: Property Manager     Attn: Director of Asset Management
Telephone: (713) 655-5505       Houston Region
Facsimile: (713) 652-2041

L. "Rent Address": Rent (defined in SECTION 4.A.) is payable to the order of Crescent Real Estate Equities Limited Partnership at the following address:
P.O. Box 844785, Dallas, Texas 75284-4785 or by wire transfer to Bank of America, Dallas, Texas, ABA# 111-0000-25, Account #163-076-7129.

M. "Business Day(s)" are Monday through Friday of each week, exclusive of New Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, the day after Thanksgiving and Christmas Day ("Holidays"). Landlord may designate additional Holidays, provided that the additional Holidays are commonly recognized by other office buildings in the area where the Building is located.

N. "Landlord Work" means the work, if any, that Landlord is obligated to perform in the Premises pursuant to a separate work letter agreement (the "Work Letter"), if any, attached as EXHIBIT D. If a Work Letter is not attached to this Lease or if an attached Work Letter does not require Landlord to perform any work, the occurrence of the Commencement Date shall not be conditioned upon the performance of work by Landlord and, accordingly, SECTION 3.B shall not be applicable to the determination of the Commencement Date.

O. "Law(s)" means all applicable statutes, codes, ordinances, orders, rules and regulations of any municipal or governmental entity, now or hereafter adopted, including but not limited to the Americans with Disabilities Act ("ADA") and all laws pertaining to the environment, including but not limited to the Comprehensive Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C. Sections 9601 et. seq. ("CERCLA").

P. "Normal Business Hours" for the Building are 7:30 A.M. to 6:00 P.M. on Business Days and 9:00 A.M. to 1:00 P.M. on Saturdays.

Q. "Property" means the Building and the parcel(s) of land on which it is located as more fully described on EXHIBIT A-2 together with all other buildings and improvements located thereon; and at Landlord's discretion, the Building garage and other improvements serving the Building, if any, and the parcel(s) of land on which they are located.

2. LEASE GRANT. Landlord leases the Premises to Tenant and Tenant leases the Premises from Landlord, together with the right in common with others to use any portions of the Property that are designated by Landlord for the common use of tenants and others, such as sidewalks, common corridors, elevator foyers, restrooms, vending areas and lobby areas (the "Common Areas").

3. TERM: ADJUSTMENT OF COMMENCEMENT DATE; POSSESSION.

A. TERM. The term of this Lease shall commence on the Effective Date and, unless terminated early in accordance with this Lease, continue through the last day of the Term specified in SECTION 1.F. (the "Expiration Date"). However, if Landlord is required to Substantially Complete (defined in SECTION 3.B.) any Landlord Work prior to the Commencement Date under the terms of a Work Letter:
(1) the date set forth in SECTION 1.G. as the "Commencement Date" shall instead be defined as the "Target Commencement Date" by which date Landlord will

2

use reasonable efforts to Substantially Complete the Landlord Work; and (2) the actual "Commencement Date" shall be the date on which the Landlord Work is Substantially Complete, as determined pursuant to SECTION 3.B. In such circumstances, the Expiration Date will instead be postponed by the number of days between the Target Commencement Date and the actual Commencement Date. If Landlord is delayed in delivering possession of the Premises or any other space due to any reason, including Landlord's failure to Substantially Complete the Landlord Work by the Target Commencement Date, the holdover or unlawful possession of such space by any third party, or for any other reason, such delay shall not be a default by Landlord, render this Lease void or voidable, or otherwise render Landlord liable for damages. If Landlord is so delayed and was not required to Substantially Complete the Landlord Work before the Commencement Date, the Commencement Date shall be postponed until the date Landlord delivers possession of the Premises to Tenant free from occupancy by any third party, and the Expiration Date shall be postponed by an equal number of days. Promptly after the determination of the Commencement Date, Landlord and Tenant shall enter into a commencement letter agreement in the form attached as EXHIBIT C. If Tenant fails to execute such commencement letter agreement, the Commencement Date shall be deemed to be the date on which the Landlord Work is Substantially Complete or the date that Landlord delivered possession of the Premises to Tenant as set forth above. Notwithstanding any other provision of this Lease to the contrary, if the Expiration Date would occur on a date other than the last day of a calendar month, then the Expiration Date shall be automatically extended to the last day of such calendar month.

B. SUBSTANTIAL COMPLETION. The Landlord Work shall be deemed to be "Substantially Complete" on the date that all Landlord Work has been performed, other than any details of construction, mechanical adjustment or any other similar matter, the noncompletion of which does not materially interfere with Tenant's use or occupancy of the Premises. However, if Landlord is delayed in the performance of the Landlord Work as a result of any Tenant Delay(s) (defined below), the Landlord Work shall be deemed to be Substantially Complete on the date that Landlord could reasonably have been expected to Substantially Complete the Landlord Work absent any Tenant Delay. "Tenant Delay" means any act or omission of Tenant or its agents, employees, vendors or contractors that actually delays the Substantial Completion of the Landlord Work, including, without limitation: (1) Tenant's failure to furnish information or approvals within any time period specified in this Lease, including the failure to prepare or approve preliminary or final plans by any applicable due date; (2) Tenant's selection of equipment or materials that have long lead times after first being informed by Landlord in writing that the selection may result in a delay; (3) changes requested or made by Tenant to previously approved plans and specifications; or (4) performance of work in the Premises by Tenant or Tenant's contractor(s) during the performance of the Landlord Work.

C. ACCEPTANCE OF PREMISES. Subject to Landlord's obligation, if any, to perform Landlord Work, Landlord's repair obligations under SECTION 10.B., and any latent defects in the Premises or the Landlord Work of which Tenant notifies Landlord within one year of taking possession and occupancy of the Premises, the Premises are accepted by Tenant in "as is" condition and configuration. By taking possession of the Premises, Tenant agrees that the Premises are in good order and satisfactory condition, and that there are no representations or warranties by Landlord regarding the condition of the Premises or the Building.

D. POSSESSION OF PREMISES PRIOR TO COMMENCEMENT DATE. Tenant shall not take possession of the Premises prior to the Commencement Date except with the prior written consent of Landlord. If Tenant takes possession of the Premises or commences business activities at the Premises before the Commencement Date with Landlord's permission, such possession and occupancy shall be subject to the terms and conditions of this Lease and Tenant shall pay Rent (defined in SECTION
4.A.) to Landlord for each day of possession before the Commencement Date. However, except for the cost of services requested by Tenant (e.g., freight elevator usage), Tenant shall not be required to pay Rent for any days of possession before the Commencement Date during which Tenant, with the written consent of Landlord, is in possession of the Premises for the sole purpose of performing improvements or installing furniture, equipment or other personal property.

4. RENT.

A. PAYMENTS. As consideration for this Lease, commencing on the Commencement Date, Tenant shall pay Landlord, without any setoff or deduction, the total amount of Base Rent and Additional Rent due for the Term. "Additional Rent" means all sums (exclusive of Base Rent) that Tenant is required to pay Landlord. Additional Rent and Base Rent are sometimes collectively referred to as "Rent." Tenant shall pay and be liable for

3

all rental, sales and use taxes (but excluding income taxes), if any, imposed upon or measured by Rent under applicable Law. Base Rent and recurring monthly charges of Additional Rent shall be due and payable in advance on the first day of each calendar month without notice or demand, provided that the installment of Base Rent for the first full calendar month of the Term shall be payable upon the execution of this Lease by Tenant. All other items of Rent shall be due and payable by Tenant on or before 30 days after billing by Landlord. All payments of Rent shall be by good and sufficient check or by other means (such as automatic debit or electronic transfer) acceptable to Landlord. If the Term commences on a day other than the first day of a calendar month, the monthly Base Rent and the OE Payment (defined in SECTION 4.B.) for the month shall be prorated on a daily basis based on a 360 day calendar year. Landlord's acceptance of less than the correct amount of Rent shall be considered a payment on account of the earliest Rent due. No endorsement or statement on a check or letter accompanying a check or payment shall be considered an accord and satisfaction, and either party may accept such check or payment without such acceptance being considered a waiver of any rights such party may have under this Lease or applicable Law. Tenant's covenant to pay Rent is independent of every other covenant in this Lease.

B. OPERATING EXPENSES. Tenant shall pay Tenant's Pro Rata Share of the amount of Operating Expenses (defined in SECTION 4.D.) for each calendar year during the Term (the "OE Payment"). No later than January 1 of each calendar year, Landlord shall provide Tenant with a good faith estimate of the OE Payment for such calendar year during the Term. On or before the first day of each month, Tenant shall pay to Landlord a monthly installment equal to one-twelfth of Landlord's estimate of the OE Payment. If Landlord determines that its good faith estimate of the OE Payment was incorrect, Landlord may provide Tenant with a revised estimate. After its receipt of the revised estimate, Tenant's monthly payments shall be based upon the revised estimate. If Landlord does not provide Tenant with an estimate of the OE Payment by January 1 of a calendar year, Tenant shall continue to pay monthly installments based on the most recent estimate(s) until Landlord provides Tenant with the new estimate. Upon delivery of the new estimate, an adjustment shall be made for any month for which Tenant paid monthly installments based on the previous year's estimate(s). Tenant shall pay Landlord the amount of any underpayment within 30 days after receipt of the new estimate. Any overpayment shall be refunded to Tenant within 30 days or credited against the next due future installment(s) of Additional Rent. The obligation of Tenant to pay the OE Payment as provided herein shall survive the expiration or earlier termination of this Lease.

C. RECONCILIATION OF OPERATING EXPENSES. Within 120 days after the end of each calendar year or as soon thereafter as is practicable, Landlord shall furnish Tenant with a statement of the actual Operating Expenses and the OE Payment for such calendar year. If the estimated OE Payment paid by Tenant for such calendar year is more than the actual OE Payment for such calendar year, Landlord shall apply any overpayment by Tenant against Rent due or next becoming due, provided if the Term expires before the determination of the overpayment, Landlord shall refund any overpayment to Tenant after first deducting the amount of Rent due. If the estimated OE Payment paid by Tenant for the prior calendar year is less than the actual OE Payment for such year, Tenant shall pay Landlord, within 30 days after its receipt of the statement of Operating Expenses and the OE Payment, any underpayment for the prior calendar year.

D. OPERATING EXPENSES DEFINED. "Operating Expenses" means all costs and expenses incurred or accrued in each calendar year in connection with the ownership, operation, maintenance, management, repair and protection of the Property which are directly attributable or reasonably allocable to the Building, including Landlord's personal property used in connection with the Property and including, but not limited to, all costs and expenditures relating to the following:

(1) Operation, maintenance, repair and replacements of any part of the Property, including the mechanical, electrical, plumbing, HVAC, vertical transportation, fire prevention and warning and security systems; materials and supplies (such as light bulbs and ballasts); equipment and tools; floor, wall and window coverings; personal property; required or beneficial easements; and related service agreements and rental expenses.

(2) Administrative and management fees, including accounting, information and professional services (except for negotiations and disputes with specific tenants not affecting other parties); management office(s); and wages, salaries, benefits, reimbursable expenses and taxes (or allocations thereof) for full and part time personnel involved in operation, maintenance and management.

4

(3) Janitorial service; window cleaning; waste disposal; gas, water and sewer and other utility charges (including add-ons); and landscaping, including all applicable tools and supplies.

(4) Property, liability and other insurance coverages carried by Landlord, including deductibles and risk retention programs and an allocation of a portion of the cost of blanket insurance policies maintained by Landlord and/or its affiliates.

(5) Real estate taxes, assessments, business taxes, excises, association dues, fees, levies, charges and other taxes of every kind and nature whatsoever, general and special, extraordinary and ordinary, foreseen and unforeseen, including interest on installment payments, which may be levied or assessed against or arise in connection with ownership, use, occupancy, rental, operation or possession of the Property (including, without limitation, personal property taxes for property that is owned by Landlord and used in connection with the operation, maintenance and repair of the Property), or substituted, in whole or in part, for a tax previously in existence by any taxing authority, or assessed in lieu of a tax increase, or paid as rent under any ground lease. Real estate taxes do not include Landlord's income, franchise or estate taxes (except to the extent such excluded taxes are assessed in lieu of taxes included above).

(6) Compliance with Laws, including license, permit and inspection fees; and all expenses and fees, including attorneys' fees and court costs, incurred in negotiating or contesting real estate taxes or the validity and/or applicability of any governmental enactments which may affect Operating Expenses; provided Landlord shall credit against Operating Expenses any refunds received from such negotiations or contests to the extent originally included in Operating Expenses (less Landlord's costs).

(7) Security services, to the extent provided or contracted for by Landlord.

(8) Goods and services purchased from Landlord's subsidiaries and affiliates to the extent the cost of same is generally consistent with rates charged by unaffiliated third parties for similar goods and services (except no such limitation shall apply in emergencies).

(9) Depreciation (or amortization) of capital expenditures incurred: (A) to conform with Laws; (B) to provide or maintain building standards (other than building standard tenant improvements); or (C) with the intention of promoting safety or reducing or controlling increases in Operating Expenses, such as lighting retrofit and installation of energy management systems. Such expenditures shall be depreciated or amortized uniformly over a reasonable period of time determined by Landlord, together with interest on the undepreciated or unamortized balance at the Prime Rate (hereinafter defined) (as of the date incurred) plus 2%.

(10) Electrical services used in the operation, maintenance and use of the Property; sales, use, excise and other taxes assessed by governmental authorities on electrical services supplied to the Property, and other costs of providing electrical services to the Property.

E. EXCLUSIONS FROM OPERATING EXPENSES. Operating Expenses exclude the following expenditures:

(1) Leasing commissions, attorneys' fees and other expenses related to leasing tenant space and constructing improvements for the sole benefit of an individual tenant.

(2) Goods and services furnished to an individual tenant of the Building above building standard which are separately reimbursable directly to Landlord in addition to Operating Expenses.

(3) Repairs required because of casualty or condemnation damage to the extent of insurance or condemnation proceeds actually received by Landlord.

(4) Except as provided in SECTION 4.D(9), depreciation, amortization, interest payments on any

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encumbrances on the Building and the cost of capital improvements or additions and replacements.

F. PRORATION OF OPERATING EXPENSES; ADJUSTMENTS. If Landlord incurs Operating Expenses for the Property together with one or more other buildings or properties, whether pursuant to a reciprocal easement agreement, common area agreement or otherwise, the shared costs and expenses shall be equitably prorated and apportioned by Landlord between the Property and the other buildings or properties. If the Building is not 100% occupied during any calendar year or if Landlord is not supplying services to 100% of the total Rentable Square Footage of the Building at any time during a calendar year, Operating Expenses shall be determined as if the Building had been 100% occupied and Landlord had been supplying services to 100% of the Rentable Square Footage of the Building during that calendar year. The extrapolation of Operating Expenses under this Section shall be performed by Landlord by adjusting the cost of those components of Operating Expenses that are impacted by changes in the occupancy of the Building.

G. AUDIT RIGHTS. Within 60 days (the "Audit Election Period") after Landlord furnishes its statement of actual Operating Expenses for any calendar year, Tenant may, at its expense during Landlord's normal business hours, elect to audit Landlord's Operating Expenses for such calendar year only, subject to the following conditions: (1) there is no uncured event of default under this Lease; (2) the audit shall be prepared by an independent certified public accounting firm of recognized national standing; (3) in no event shall any audit be performed by a firm retained on a "contingency fee" basis; (4) the audit shall commence within 30 days after Landlord makes Landlord's books and records available to Tenant's auditor and shall conclude within 60 days after commencement; (5) the audit shall be conducted where Landlord maintains its books and records and shall not unreasonably interfere with the conduct of Landlord's business; (6) Tenant and its accounting firm shall treat any audit in a confidential manner and shall each execute Landlord's confidentiality agreement for Landlord's benefit prior to commencing the audit; and (7) the accounting firm's audit report shall, at no charge to Landlord, be submitted in draft form for Landlord's review and comment before the final approved audit report is delivered to Landlord, and any reasonable comments by Landlord shall be incorporated into the final audit report. Notwithstanding the foregoing, Tenant shall have no right to conduct an audit if Landlord furnishes to Tenant an audit report for the calendar year in question prepared by an independent certified public accounting firm of recognized national standing (whether originally prepared for Landlord or another party). This paragraph shall not be construed to limit, suspend, or abate Tenant's obligation to pay Rent when due, including the OE Payment. Landlord shall credit any overpayment determined by the approved audit against the next sums due and owing by Tenant or, if no further Rent is due, refund such overpayment directly to Tenant. Likewise, Tenant shall pay Landlord any underpayment determined by the approved audit within 30 days of determination. The foregoing obligations shall survive the Expiration Date. If Tenant does not give written notice of its election to audit Landlord's Operating Expenses during the Audit Election Period, Landlord's Operating Expenses for the applicable calendar year shall be deemed approved for all purposes, and Tenant shall have no further right to review or contest the same.

5. COMPLIANCE WITH LAWS: USE. The Premises shall be used only for the Permitted Use and for no other use whatsoever. Tenant shall not use or permit the use of the Premises for any purpose which is illegal, creates obnoxious odors (including but not limited to tobacco smoke), noises or vibrations, is dangerous to persons or property, could increase Landlord's insurance costs, or which, in Landlord's reasonable opinion, unreasonably disturbs any other tenants of the Building or interferes with the operation of the Building. Except as provided below, the following uses are expressly prohibited in the Premises: government offices or agencies; personnel agencies; collection agencies; credit unions; data processing, telemarketing or reservation centers; medical treatment and health care; restaurants and other retail; customer service offices of a public utility company; or any other purpose which would, in Landlord's reasonable opinion, impair the reputation or quality of the Building, overburden any of the Building systems, Common Areas or parking facilities (including but not limited to any use which would create a population density in the Premises which is in excess of the density which is standard for the Building), impair Landlord's efforts to lease space or otherwise interfere with the operation of the Property. Notwithstanding the foregoing, the following ancillary uses are permitted in the Premises only so long as they do not, in the aggregate, occupy more than 10% of the Rentable Square Footage of the Premises or any single floor (whichever is less): (A) the following services provided by Tenant exclusively to its employees: schools, training and other educational services; credit unions; and similar employee services; and (B) the following services directly and exclusively supporting Tenant's business telemarketing; reservations; storage; data processing; debt collection; and

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similar support services. Tenant shall comply with all Laws, including the ADA, regarding the operation of rules business and the use, condition, configuration and occupancy of the Premises and the use of the Common Areas. Tenant, within 10 days after receipt, shall provide Landlord with copies of any notices Tenant receives regarding a violation or alleged violation of any Laws. Tenant shall comply with the rules and regulations of the Building attached as EXHIBIT B and such other reasonable rules and regulations (or modifications thereto) adopted by Landlord from time to time. Tenant shall also cause its agents, contractors, subcontractors, employees, customers, and subtenants to comply with all rules and regulations.

6. SECURITY DEPOSIT. The Security Deposit shall be delivered to Landlord upon the execution of this Lease by Tenant and shall be held by Landlord without liability for interest (unless required by Law) as security for the performance of Tenant's obligations. The Security Deposit is not an advance payment of Rent or a measure of Tenant's liability for damages. Landlord may, from time to time, without prejudice to any other remedy, use all or a portion of the Security Deposit to satisfy past due Rent or to cure any uncured default by Tenant. If Landlord uses the Security Deposit, Tenant shall on demand restore the Security Deposit to its original amount. Landlord shall return any unapplied portion of the Security Deposit to Tenant within 30 days after the later to occur of: (A) the determination of the OE Payment for the final year of the Term; (B) the date Tenant surrenders possession of the Premises to Landlord in accordance with this Lease; or (C) the Expiration Date. If Landlord transfers its interest in the Premises, Landlord may assign the Security Deposit to the transferee and, following the assignment, Landlord shall have no further liability for the return of the Security Deposit. Landlord shall not be required to keep the Security Deposit separate from its other accounts.

7. SERVICES TO BE FURNISHED BY LANDLORD.

A. STANDARD SERVICES. Landlord agrees to furnish Tenant with the following services during the Term:

(1) Water service for use in the lavatories on each floor on which the Premises are located.

(2) Heat and air conditioning in season during Normal Business Hours, at such temperatures and in such amounts as required by governmental authority or as Landlord determines are standard for the Building. Tenant, upon such advance notice as is reasonably required by Landlord, and subject to the capacity of the Building systems, may request HVAC service during hours other than Normal Business Hours. Tenant shall pay Landlord the standard charge for the additional service as determined by Landlord from time to time.

(3) Maintenance and repair of the Property as described in SECTION 10.B.

(4) Janitor service five days per week (excluding Holidays), as determined by Landlord. If Tenant's use, floor covering or other improvements require special services in excess of the standard services for the Building, Tenant shall pay the additional cost attributable to the special services.

(5) Elevator service, subject to proper authorization and Landlord's policies and procedures for use of the freight elevator(s) in the Building.

(6) Exterior window washing at such intervals as determined by Landlord.

(7) Electricity to the Premises for general office use, in accordance with and subject to the terms and conditions in ARTICLE 8.

B. SERVICE INTERRUPTIONS. Landlord's failure to furnish, or any interruption or termination of, services due to the application of Laws, the failure of any equipment, the performance of repairs, improvements or alterations, or the occurrence of any other event or cause whether or not within the reasonable control of Landlord (a "Service Failure") shall not render Landlord liable to Tenant, constitute a constructive eviction of Tenant, give rise to an abatement of Rent, nor relieve Tenant from the obligation to fulfill any covenant or agreement. In no event shall Landlord be liable to Tenant for any loss or damage, including the theft of Tenant's Property (defined in

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ARTICLE 15), arising out of or in connection with the failure of any security services, personnel or equipment.

C. THIRD PARTY SERVICES. If Tenant desires any service which Landlord has not specifically agreed to provide in this Lease, such as private security systems or telecommunications services serving the Premises, Tenant shall procure such service directly from a reputable third party service provider ("Provider") for Tenant's own account. Tenant shall require each Provider to comply with the Building's rules and regulations, all Laws, and Landlord's reasonable policies and practices for the Building. Tenant acknowledges Landlord's current policy that requires all Providers utilizing any area of the Building outside the Premises to be approved by Landlord and to enter into a written agreement acceptable to Landlord prior to gaining access to, or making any installations in or through, such area. Accordingly, Tenant shall give Landlord advance written notice sufficient for such purposes.

8. USE OF ELECTRICAL SERVICES BY TENANT.

A. LANDLORD'S ELECTRICAL SERVICE. Landlord shall furnish building standard electrical service to the Premises sufficient to operate customary lighting, office machines and other equipment of similar low electrical consumption. Landlord may, at any time and from time to time, calculate Tenant's actual electrical consumption in the Premises either by a survey conducted by a reputable consultant selected by Landlord, or through separate meters installed, maintained and read by Landlord, all at Tenant's expense. The cost of any electrical consumption in excess of that which Landlord determines is standard for the Building shall be paid by Tenant in accordance with SECTION 8.D.

B. SELECTION OF ELECTRICAL SERVICE PROVIDER. Landlord reserves the right to select the provider of electrical services to the Building and/or the Property. To the fullest extent permitted by Law, Landlord shall have the continuing right, upon 30 days written notice, to change such utility provider and install a submeter for the Premises at Tenant's expense. All charges and expenses incurred by Landlord due to any such changes in electrical services, including maintenance, repairs, installation and related costs, shall be included in the electrical services costs referenced in SECTION 4.D(10), unless paid directly by Tenant.

C. SUBMETERING. If submetering is installed for the Premises, Landlord may charge for Tenant's actual electrical consumption monthly in arrears at commercially reasonable rates determined by Landlord (plus, to the fullest extent permitted by applicable Laws, Landlord's then quoted administrative fee for such submetering), except as to electricity directly purchased by Tenant from third party providers after obtaining Landlord's consent to the same. Even if the Premises are submetered, Tenant shall remain obligated to pay Tenant's Pro Rata Share of the cost of electrical services as provided in SECTION
4.D(10), except that Tenant shall be entitled to a credit against electrical services costs equal to that portion of the amounts actually paid by Tenant separately and directly to Landlord which are attributable to building standard electrical services submetered to the Premises.

D. EXCESS ELECTRICAL SERVICE. Tenant's use of electrical service shall not exceed, either in voltage, rated capacity, use beyond Normal Business Hours or overall load, that which Landlord deems to be standard for the Building. If Tenant requests permission to consume excess electrical service, Landlord may refuse to consent or may condition consent upon conditions that Landlord reasonably elects (including, without limitation, the installation of utility service upgrades, meters, submeters, air handlers or cooling units). The costs of any approved additional consumption (to the extent permitted by Law), installation and maintenance shall be paid by Tenant.

9. LEASEHOLD IMPROVEMENTS. All improvements to the Premises (collectively, "Leasehold Improvements") shall be owned by Landlord and shall remain upon the Premises without compensation to Tenant. However, Landlord, by 10 days' written notice to Tenant, may require Tenant to remove, at Tenant's expense, any or all of the following on or before the Expiration Date (or earlier termination): (1) Cable (defined in SECTION 10.A.) installed by or for the benefit of Tenant and located in the Premises or other portions of the Building; (2) any Leasehold Improvements that are performed by or for the benefit of Tenant and, in Landlord's reasonable judgment, are of a nature that would require removal and repair costs that are materially in excess of the removal and repair costs associated with standard office improvements; and (3) Tenant's personal property (collectively, "Tenant's Removable Property"). Except as otherwise designated by Landlord, Tenant's Removable Property shall be removed by Tenant before the Expiration Date or date of termination of this Lease, if earlier than the Expiration Date, provided that upon Landlord's prior written consent, which shall not be unreasonably withheld, Tenant may remain in the Premises for up to five days after the Expiration Date for the sole purpose of removing Tenant's

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Removable Property. Tenant's possession of the Premises for such purpose shall be subject to all of the terms and conditions of this Lease, including the obligation to pay Rent on a per diem basis at the rate in effect for the last month of the Term. Tenant shall repair damage caused by the installation or removal of Tenant's Removable Property. If Tenant fails to remove any of Tenant's Removable Property, Landlord may, to the fullest extent permitted by Law: (1) treat such Tenant's Removable Property as abandoned by Tenant with full rights of ownership in Landlord; (2) remove and store such Tenant's Removable Property at Tenant's expense with reimbursement by Tenant to Landlord upon demand; and/or (3) sell or dispose of such Tenant's Removable Property without delivering any proceeds to Tenant. To the fullest extent permitted by applicable Law, any unused portion of Tenant's Security Deposit may be applied to offset Landlord's costs set forth in the preceding sentence. Notwithstanding the foregoing, Tenant, at the time it requests approval for a proposed Alteration (defined in SECTION 10.C.), may request in writing that Landlord advise Tenant whether the Alteration or any portion of the Alteration will be designated as Tenant's Removable Property.

10. REPAIRS AND ALTERATIONS.

A. TENANT'S REPAIR OBLIGATIONS. Tenant shall, at its sole cost and expense, promptly perform all maintenance and repairs to the Premises that are not Landlord's express responsibility under this Lease, and shall keep the Premises in good condition and repair, ordinary wear and tear excepted. Tenant's repair obligations include, without limitation, repairs to: (1) floor covering and/or raised flooring; (2) interior partitions; (3) doors; (4) the interior side of demising walls; (5) electronic, phone and data cabling and related equipment (collectively, "Cable") that is installed by or for the benefit of Tenant and located in the Premises or other portions of the Building; (6) supplemental air conditioning units, private showers and kitchens, including hot water heaters, plumbing, dishwashers, ice machines and similar facilities serving Tenant exclusively; (7) phone rooms used exclusively by Tenant; (8) Alterations performed by contractors retained by Tenant, including related HVAC balancing; and (9) all of Tenant's furnishings, trade fixtures, equipment and inventory. All work shall be performed in accordance with the rules and procedures described in SECTION 10.C. below. If Tenant fails to make any repairs to the Premises for more than 15 days after notice from Landlord (although notice shall not be required if there is an emergency and any notice of default given pursuant to SECTION 19.B. describing such failure shall be deemed to constitute such notice), Landlord may make the repairs, and Tenant shall pay the reasonable cost of the repairs to Landlord within 30 days after receipt of an invoice, together with an administrative charge in an amount equal to 15% of the cost of the repairs.

B. LANDLORD'S REPAIR OBLIGATIONS. Landlord shall keep and maintain in good repair and working order and make repairs to and perform maintenance upon: (1) structural elements of the Building; (2) standard mechanical (including HVAC), electrical, plumbing and fire/life safety systems serving the Building generally; (3) Common Areas; (4) the roof of the Building; (5) exterior windows of the Building; and (6) elevators serving the Building. Landlord shall promptly make repairs (considering the nature and urgency of the repair) for which Landlord is responsible. If any of the foregoing maintenance or repair is necessitated due to the acts or omissions of any Tenant Party, Tenant shall pay the costs of such repairs or maintenance to Landlord within 30 days after receipt of an invoice, together with an administrative charge in an amount equal to 15% of the cost of the repairs.

C. ALTERATIONS. Tenant shall not make alterations, additions or improvements to the Premises or install any Cable in the Premises or other portions of the Building (collectively, "Alterations") without first obtaining the written consent of Landlord in each instance, which consent shall not be unreasonably withheld or delayed. However, Landlord's consent shall not be required for any Alteration that satisfies all of the following criteria (a "Minor Alteration"): (1) is of a cosmetic nature such as painting, wallpapering, hanging pictures and installing carpeting; (2) is not visible from outside the Premises or Building; (3) will not affect the systems or structure of the Building; and (4) does not require work to be performed inside the walls or above the ceiling of the Premises. However, even though consent is not required, the performance of Minor Alterations shall be subject to all the other provisions of SECTION 10.C. Prior to starting work on any non-Minor Alteration, Tenant shall furnish Landlord with plans and specifications reasonably acceptable to Landlord; names of contractors reasonably acceptable to Landlord (provided that Landlord may designate specific contractors with respect to Building systems); copies of contracts; necessary permits and approvals; evidence of contractor's and subcontractor's insurance in amounts reasonably required by Landlord; and any security for performance that is reasonably required by Landlord. Changes to the plans and specifications must also be submitted to Landlord for its approval. Alterations shall be constructed in a good and workmanlike manner using materials of a quality that is at least equal

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to the quality designated by Landlord as the minimum standard for the Building. Landlord may designate reasonable rules, regulations and procedures for the performance of work in the Building and, to the extent reasonably necessary to avoid disruption to the occupants of the Building, shall have the right to designate the time when Alterations may be performed. Tenant shall reimburse Landlord within 30 days after receipt of an invoice for sums paid by Landlord for third party examination of Tenant's plans for Alterations. In addition, within 30 days after receipt of an invoice from Landlord, Tenant shall pay to Landlord its then-quoted standard fee for Landlord's oversight and coordination of any Alterations. Upon completion, Tenant shall furnish "as-built" plans (except for Minor Alterations), completion affidavits, full and final waivers of lien and receipts bills covering all labor and materials. Tenant shall assure that the Alterations comply with all insurance requirements and Laws. Landlord's approval of an Alteration shall not be a representation by Landlord that the Alteration complies with applicable Laws or will be adequate for Tenant's use. Tenant acknowledges that Landlord is not an architect or engineer, and that the Alterations will be designed and/or constructed using independent architects, engineers and contractors selected by Landlord. Accordingly, Landlord does not guarantee or warrant that the applicable construction documents will comply with Laws or be free from errors or omissions, nor that the Alterations will be free from defects, and Landlord will have no liability therefor.

11. ENTRY BY LANDLORD. Landlord, its agents, contractors and representatives may enter the Premises to inspect or show the Premises, to clean and make repairs, alterations or additions to the Premises, and to conduct or facilitate repairs, alterations or additions to any portion of the Building, including other tenants' premises. Except in emergencies or to provide janitorial and other Building services after Normal Business Hours Landlord shall provide Tenant with reasonable prior notice of entry into the Premises, which may be given orally. If reasonably necessary for the protection and safety of Tenant and its employees, Landlord shall have the right to temporarily close all or a portion of the Premises to perform repairs, alterations and additions. However, except in emergencies, Landlord will not close the Premises if the work can reasonably be completed on weekends and after Normal Business Hours; provided, however, that Landlord is not required to conduct work on weekends or after Normal Business Hours if such work can be conducted without closing the Premises. Entry by Landlord for any such purposes shall not constitute constructive eviction or entitle Tenant to an abatement or reduction of Rent.

12. ASSIGNMENT AND SUBLETTING.

A. LANDLORD'S CONSENT REQUIRED. Except in connection with a Permitted Transfer (defined in SECTION 12.E.), Tenant shall not assign, transfer or encumber any interest in this Lease or sublease or allow any third party to use any portion of the Premises (collectively or individually, a "Transfer") without the prior written consent of Landlord, which consent shall not be unreasonably withheld if Landlord does not elect to exercise its termination rights under
SECTION 12.B below. Without limitation, Tenant agrees that Landlord's consent shall not be considered unreasonably withheld if: (1) the proposed transferee's financial condition does not meet the criteria Landlord uses to select Building tenants having similar leasehold obligations; (2) the proposed transferee is a governmental agency or present occupant of the Building, or Landlord is otherwise engaged in lease negotiations with the proposed transferee for other premises in the Building; (3) any uncured event of default exists under this Lease (or a condition exists which, with the passage of time or giving of notice, would become an event of default); (4) any portion of the Building or Premises would likely become subject to additional or different Laws as a consequence of the proposed Transfer; (5) the proposed transferee's use of the Premises conflicts with the Permitted Use or any exclusive usage rights granted to any other tenant in the Building; (6) the use, nature, business, activities or reputation in the business community of the proposed transferee (or its principals, employees or invitees) are not acceptable to Landlord; (7) either the Transfer or any consideration payable to Landlord in connection therewith adversely affects the real estate investment trust (or pension fund or other ownership vehicle) qualification tests applicable to Landlord or its affiliates; or (8) the proposed transferee is or has been involved in litigation with Landlord or any of its affiliates. Tenant shall not be entitled to receive monetary damages based upon a claim that Landlord unreasonably withheld its consent to a proposed Transfer and Tenant's sole remedy shall be an action to enforce any such provision through specific performance or declaratory judgment. Any attempted Transfer in violation of this Article is voidable at Landlord's option. Consent by Landlord to one or more Transfer(s) shall not operate as a waiver of Landlord's rights to approve any subsequent Transfers. In no event shall any Transfer or Permitted Transfer release or relieve Tenant from any obligation under this Lease.

B. CONSENT PROCEDURE: TERMINATION. As part of its request for Landlord's consent to a Transfer, Tenant shall provide Landlord with financial statements for the proposed transferee, a complete copy of the

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proposed assignment, sublease and other contractual documents and such other information as Landlord may reasonably request. Landlord shall, by written notice to Tenant within 30 days of its receipt of the required information and documentation, either: (1) consent to the Transfer by the execution of a consent agreement in a form reasonably designated by Landlord or reasonably refuse to consent to the Transfer in writing; or (2) exercise its right to terminate this Lease with respect to the portion of the Premises that Tenant is proposing to assign or sublet. Any such termination shall be effective on the proposed effective date of the Transfer for which Tenant requested consent. Tenant shall pay Landlord a review fee of $750 for Landlord's review of any Permitted Transfer or requested Transfer, provided if Landlord's actual reasonable costs and expenses (including reasonable attorney's fees) exceed $750, Tenant shall reimburse Landlord for its actual reasonable costs and expenses in lieu of a fixed review fee.

C. PAYMENT TO LANDLORD. If the aggregate consideration paid to Tenant for a Transfer exceeds that payable by Tenant under this Lease (prorated according to the transferred interest), Tenant shall pay Landlord 50% of such excess (after deducting therefrom reasonable leasing commissions and reasonable costs of tenant improvements in connection with the Transfer). Tenant shall pay Landlord for Landlord's share of any excess within 30 days after Tenant's receipt of such excess consideration. If Tenant is in Monetary Default (defined in SECTION 19.A.), Landlord may require that all sublease payments be made directly to Landlord, in which case Tenant shall receive a credit against Rent in the amount of any payments received (less Landlord's share of any excess).

D. CHANGE IN CONTROL OF TENANT. Except for a Permitted Transfer, if Tenant is a corporation, limited liability company, partnership, or similar entity, and if the entity which owns or controls a majority of the voting shares/rights at any time changes for any reason (including but not limited to a merger, consolidation or reorganization), such change of ownership or control shall constitute a Transfer. The foregoing shall not apply so long as, both before and after the Transfer, Tenant is an entity whose outstanding stock is listed on a recognized security exchange, or if at least 80% of its voting stock is owned by another entity, the voting stock of which is so listed; provided, however, that Tenant shall give Landlord written notice at least 30 days prior to the effective date of such change in ownership or control.

E. NO CONSENT REQUIRED. Tenant may assign its entire interest under this Lease to a successor to Tenant by purchase, merger, consolidation or reorganization without the consent of Landlord, provided that all of the following conditions are satisfied (a "Permitted Transfer"): (l) no event of default shall have occurred under this Lease; (2) Tenant's successor shall own all or substantially all of the assets of Tenant; (3) Tenant's successor shall have a net worth which is at least equal to the greater of Tenant's net worth at the date of this Lease or Tenant's net worth as of the day prior to the proposed purchase, merger, consolidation or reorganization; (4) no portion of the Building or Premises would likely become subject to additional or different Laws as a consequence of the proposed Transfer; (5) Tenant's successor's use of the Premises shall not conflict with the Permitted Use or any exclusive usage rights granted to any other tenant in the Building; (6) neither the Transfer nor any consideration payable to Landlord in connection therewith adversely affects the real estate investment trust (or pension fund or other ownership vehicle) qualification tests applicable to Landlord or its affiliates; (7) Tenant's successor is not and has not been involved in litigation with Landlord or any of its affiliates; and (8) Tenant shall give Landlord written notice at least 30 days prior to the effective date of the proposed purchase, merger, consolidation or reorganization. Tenant's notice to Landlord shall include information and documentation showing that each of the above conditions has been satisfied. If requested by Landlord, Tenant's successor shall sign a commercially reasonable form of assumption agreement.

13. LIENS. Tenant shall not permit mechanic's or other liens to be placed upon the Property, Premises or Tenant's leasehold interest in connection with any work or service done or purportedly done by or for the benefit of Tenant. If a lien is so placed, Tenant shall, within 10 days of notice from Landlord of the filing of the lien, fully discharge the lien by settling the claim which resulted in the lien or by bonding or insuring over the lien in the manner prescribed by the applicable lien Law. If Tenant fails to discharge the lien, then, in addition to any other right or remedy of Landlord, Landlord may bond or insure over the lien or otherwise discharge the lien. Tenant shall reimburse Landlord for any amount paid by Landlord to bond or insure over the lien or discharge the lien, including, without limitation, reasonable attorneys' fees within 30 days after receipt of an invoice from Landlord.

14. INDEMNITY AND WAIVER OF CLAIMS.

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A. TENANT'S INDEMNITY. Except to the extent caused by the negligence or willful misconduct of any Landlord Parties (defined below), Tenant shall indemnify, defend and hold Landlord, its trustees, members, principals, beneficiaries, partners, officers, directors, employees, Mortgagee(s) (defined in ARTICLE 26) and agents (collectively, "Landlord Parties") harmless against and from all liabilities, obligations, damages penalties, claims, actions, costs, charges and expenses, including, without limitation, reasonable attorneys' fees and other professional fees, which may be imposed upon, incurred by or asserted against any Landlord Parties that arise out of or in connection with any damage or injury occurring in the Premises or any acts or omissions (including violations of Law) of any Tenant Parties (defined below) or any of Tenant's transferees, contractors or licensees. The foregoing indemnities, waivers and obligations to defend of Tenant contained in this ARTICLE 14 are independent of, and will not be limited by each other or any insurance obligations in this Lease (whether or not complied with).

B. LANDLORD'S INDEMNITY. Except to the extent caused by the negligence or willful misconduct of any Tenant Parties (defined below), Landlord shall indemnify, defend and hold Tenant, its trustees, members, principals, beneficiaries, partners, officers, directors, employees and agents (collectively, "Tenant Parties") harmless against and from all liabilities, obligations, damages, penalties, claims, actions, costs, charges and expenses, including, without limitation, reasonable attorneys' fees and other professional fees, which may be imposed upon, incurred by or asserted against any Tenant Parties that arise out of or in connection with the acts or omissions (including violations of Law) of any Landlord Parties or any of Landlord's contractors.

15. INSURANCE. Tenant shall carry and maintain the following insurance ("Tenant's Insurance"), at its sole cost and expense: (1) Commercial General Liability Insurance applicable to the Premises and its appurtenances providing, on an occurrence basis, a minimum combined single limit of $5,000,000.00 (coverage in excess of $1,000,000.00 may be provided by way of an umbrella/excess liability policy); (2) All Risk Property insurance, including flood and earthquake, subject to a replacement cost valuation policy covering all of Tenant's trade fixtures, equipment, furniture and other personal property within the Premises ("Tenant's Property"); (3) Business Interruption insurance written on an actual loss sustained form or subject to sufficient limits to address reasonably anticipated business interruption losses; (4) Business Automobile Liability insurance to cover all owned, hired and nonowned automobiles owned or operated by Tenant providing a minimum combined single limit of $1,000,000.00; (5) Workers' Compensation Insurance as required by the state in which the Premises is located and in amounts as may be required by applicable statute; and (6) Employers Liability Coverage of at least $500,000.00 per occurrence. Any company writing any of Tenant's Insurance shall have an A.M. Best rating of not less than A-VIII. All Commercial General Liability and Business Automobile Liability Insurance policies shall name Tenant as a named insured and Landlord (or any successor), Landlord's Mortgagee (if any), and their respective members, principals, beneficiaries, partners, officers, directors, employees, and agents, and other designees of Landlord as the interest of such designees shall appear, as additional insureds. If any aggregate limit is reduced because of losses paid to below 75% of the limit required by this Lease, Tenant will notify Landlord in writing within 10 days of the date of reduction. All policies of Tenant's Insurance shall contain endorsements that the insurer(s) shall give Landlord and its designees at least 30 days' advance written notice of any change, cancellation, termination or lapse of insurance. Tenant shall provide Landlord with a certificate of insurance evidencing Tenant's Insurance prior to the earlier to occur of the Commencement Date or the date Tenant is provided with possession of the Premises for any reason, and upon renewals at least 10 days prior to the expiration of the insurance coverage. All of Tenant's Insurance policies, endorsements and certificates will be on forms and with deductibles and self-insured retention, if any, reasonably acceptable to Landlord. Landlord shall maintain All Risk property insurance on the Building at replacement cost value, as reasonably estimated by Landlord. Except as specifically provided to the contrary, the limits of either party's insurance shall not limit such party's liability under this Lease.

16. WAIVER OF SUBROGATION. Notwithstanding anything in this Lease to the contrary, Landlord and Tenant each waive, and shall cause their respective insurance carriers to waive any and all rights (by way of subrogation or otherwise) of recovery, claim, action or causes of action against the other and their respective trustees, principals, beneficiaries, partners, officers, directors, agents, and employees, for any loss or damage that may occur to Landlord or Tenant or any party claiming by, through or under Landlord or Tenant, as the case may be, with respect to Tenant's Property, the Building, the Premises, any additions or improvements to the Building or Premises, or any contents thereof, INCLUDING ALL RIGHTS (BY WAY OF SUBROGATION OR OTHERWISE) OF RECOVERY, CLAIMS, ACTIONS OR CAUSES OF ACTION ARISING OUT OF THE NEGLIGENCE OF ANY LANDLORD PARTIES OR THE NEGLIGENCE OF ANY TENANT PARTIES, which loss or damage is (or would have been, had the insurance required by this Lease been carried) covered by insurance.

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17. CASUALTY DAMAGE.

A. REPAIR OR TERMINATION BY LANDLORD. If all or any part of the Premises is damaged by fire or other casualty, Tenant shall immediately notify Landlord in writing. During any period of time that all or a material portion of the Premises is rendered untenantable as a result of a fire or other casualty, the Rent shall abate for the portion of the Premises that is untenantable and not used by Tenant. Landlord shall have the right to terminate this Lease if: (1) the Building shall be damaged so that, in Landlord's reasonable judgment, substantial alteration or reconstruction of the Building shall be required (whether or not the Premises has been damaged); (2) Landlord is not permitted by Law to rebuild the Building in substantially the same form as existed before the fire or casualty; (3) the Premises have been materially damaged and there is less than 2 years of the Term remaining on the date of the casualty; (4) any Mortgagee requires that the insurance proceeds be applied to the payment of the mortgage debt; or (5) an uninsured loss of the Building occurs. Landlord may exercise its right to terminate this Lease by notifying Tenant in writing within 90 days after the date of the casualty. If Landlord does not terminate this Lease, Landlord shall commence and proceed with reasonable diligence to repair and restore the Building and/or the Premises to substantially the same condition as existed immediately prior to the date of damage; provided, however, that Landlord shall only be required to reconstruct building standard leasehold improvements existing in the Premises as of the date of damage, and Tenant shall be required to pay the cost for restoring any other leasehold improvements. However, in no event shall Landlord be required to spend more than the insurance proceeds received by Landlord. Landlord shall not be liable for any loss or damage to Tenant's Property or to the business of Tenant resulting in any way from the fire or other casualty or from the repair and restoration of the damage. Landlord and Tenant hereby waive the provisions of any Law relating to the matters addressed in this Article, and agree that their respective rights for damage to or destruction of the Premises shall be those specifically provided in this Lease.

B. TIMING FOR REPAIR: TERMINATION BY EITHER PARTY. If all or any portion of the Premises is untenantable as a result of fire or other casualty, Landlord shall, with reasonable promptness, cause an architect or general contractor selected by Landlord to provide Landlord and Tenant with a written estimate of the amount of time required to substantially complete the repair and restoration of the Premises and make the Premises tenantable again, using standard working methods ("Completion Estimate"). If the Completion Estimate indicates that the Premises cannot be made tenantable within 270 days from the date the repair and restoration is started, then regardless of anything in SECTION 17.A. above to the contrary, either party shall have the right to terminate this Lease by giving written notice to the other of such election within 10 days after receipt of the Completion Estimate. Tenant, however, shall not have the right to terminate this Lease if the fire or casualty was caused by the negligence or intentional misconduct of any Tenant Parties or any of Tenant's transferees, contractors or licensees.

18. CONDEMNATION. Either party may terminate this Lease if the whole or any material part of the Premises is taken or condemned for any public or quasi-public use under Law, by eminent domain or private purchase in lieu thereof (a "Taking"). Landlord shall also have the right to terminate this Lease if there is a Taking of any portion of the Building or Property which would leave the remainder of the Building unsuitable for use as an office building in a manner comparable to the Building's use prior to the Taking. In order to exercise its right to terminate this Lease, Landlord or Tenant, as the case may be, must provide written notice of termination to the other within 45 days after the terminating party first receives notice of the Taking. Any such termination shall be effective as of the date the physical taking of the Premises or the portion of the Building or Property occurs. If this Lease is not terminated, the Rentable Square Footage of the Building, the Rentable Square Footage of the Premises and Tenant's Pro Rata Share shall, if applicable, be appropriately adjusted by Landlord. In addition, Rent for any portion of the Premises taken or condemned shall be abated during the unexpired Term effective when the physical taking of the portion of the Premises occurs. All compensation awarded for a Taking, or sale proceeds, shall be the property of Landlord, any right to receive compensation or proceeds being expressly waived by Tenant. However, Tenant may file a separate claim at its sole cost and expense for Tenant's Property and Tenant's reasonable relocation expenses, provided the filing of the claim does not diminish the award which would otherwise be receivable by Landlord.

19. EVENTS OF DEFAULT. Tenant shall be considered to be in default of this Lease upon the occurrence of any of the following events of default:

A. Tenant's failure to pay when due all or any portion of the Rent ("Monetary Default").

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B. Tenant's failure (other than a Monetary Default) to comply with any term, provision or covenant of this Lease, if the failure is not cured within 10 days after written notice to Tenant. However, if Tenant's failure to comply cannot reasonably be cured within 10 days, Tenant shall be allowed additional time (not to exceed an additional 10 days) as is reasonably necessary to cure the failure so long as: (1) Tenant commences to cure the failure within 10 days, and (2) Tenant diligently pursues a course of action that will cure the failure and bring Tenant back into compliance with this Lease. However, if Tenant's failure to comply creates a hazardous condition, the failure must be cured immediately upon notice to Tenant. In addition, if Landlord provides Tenant with notice of Tenant's failure to comply with any particular term, provision or covenant of this Lease on more than two (2) occasions during any 12 month period, Tenant's subsequent violation of the same term, provision or covenant shall, at Landlord's option, be an incurable event of default by Tenant.

C. Tenant or any Guarantor becomes insolvent, files a petition for protection under the U.S. Bankruptcy Code (or similar law) or a petition is filed against Tenant or any Guarantor under such laws and is not dismissed within 45 days after the date of such filing, makes a transfer in fraud of creditors or makes an assignment for the benefit of creditors, or admits in writing its inability to pay its debts when due.

D. The leasehold estate is taken by process or operation of Law.

E. In the case of any ground floor or retail tenant, Tenant does not take possession of, or abandons or vacates all or any portion of the Premises.

F. Tenant is in default beyond any notice and cure period under any other lease or agreement with Landlord, including, without limitation, any lease or agreement for parking.

20. REMEDIES.

A. LANDLORD'S REMEDIES. Upon any default, Landlord shall have the right without notice or demand (except as provided in ARTICLE 19) to pursue any of its rights and remedies at Law or in equity, including any one or more of the following remedies:

(1) Terminate this Lease, in which case Tenant shall immediately surrender the Premises to Landlord. If Tenant fails to surrender the Premises, Landlord may, in compliance with applicable Law and without prejudice to any other right or remedy, enter upon and take possession of the Premises and expel and remove Tenant, Tenant's Property and any parties occupying all or any part of the Premises. Tenant shall pay Landlord on demand the amount of all past due Rent and other losses and damages which Landlord may suffer as a result of Tenant's default, whether by Landlord's inability to relet the Premises on satisfactory terms or otherwise, including, without limitation, all Costs of Reletting (defined below) and any deficiency that may arise from reletting or the failure to relet the Premises. "Costs of Reletting" shall include commercially reasonable costs, losses and expenses incurred by Landlord in reletting all or any portion of the Premises, including the cost of removing and storing Tenant's furniture, trade fixtures, equipment, inventory or other property, repairing and/or demolishing the Premises, removing and/or replacing Tenant's signage and other fixtures, making the Premises ready for a new tenant, including the cost of advertising, commissions, architectural fees, legal fees and leasehold improvements (even if amortized over a new lease term which exceeds the balance of the Term), and any allowances and/or concessions provided by Landlord.

(2) Terminate Tenant's right to possession of the Premises and change the locks, without judicial process, and, in compliance with applicable Law, expel and remove Tenant, Tenant's Property and any parties occupying all or any part of the Premises. If Landlord terminates Tenant's possession of the Premises under this SECTION 20.A(2), Landlord shall have no obligation to post any notice and Landlord shall have no obligation whatsoever to tender to Tenant a key for new locks installed in the Premises. Landlord may (but shall not be obligated to) relet all or any part of the Premises, without notice to Tenant, for a term that may be greater or less than the balance of the Term and on such conditions (which may include concessions, free rent and alterations of the Premises) and for such uses as Landlord in its absolute discretion shall determine. Landlord may collect and

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receive all rents and other income from the reletting. Tenant shall pay Landlord on demand all past due Rent, all Costs of Reletting and any deficiency arising from the reletting or failure to relet the Premises. Landlord shall not be responsible or liable for the failure to relet all or any part of the Premises or for the failure to collect any Rent. The re-entry or taking of possession of the Premises shall not be construed as an election by Landlord to terminate this Lease unless a written notice of termination is given to Tenant.

(3) Cure such event of default for Tenant at Tenant's expense (plus a 15% administrative fee).

(4) Withhold or suspend payment of sums Landlord would otherwise be obligated to pay to tenant under this Lease or any other agreement.

(5) Require all future payments to be made by cashier's check, money order or wire transfer after the first time any check is returned for insufficient funds, or the second time any sum due hereunder is more than five (5) days late.

(6) In lieu of calculating damages under SECTIONS 20.A(1) or 20.A(2) above, Landlord may elect to receive as damages the sum of (a) all Rent accrued through the date of termination of this Lease or Tenant's right to possession, and (b) an amount equal to the total Rent that Tenant would have been required to pay for the remainder of the Term discounted to present value at the Prime Rate (defined in SECTION 20.B.) then in effect, minus the then present fair rental value of the Premises for the remainder of the Term, similarly discounted, after deducting all anticipated Costs of Reletting.

B. TENANT NOT RELIEVED FROM LIABILITIES. Unless expressly provided in this Lease, the repossession or re-entering of all or any part of the Premises shall not relieve Tenant of its liabilities and obligations under this Lease. No right or remedy of Landlord shall be exclusive of any other right or remedy. Each right and remedy shall be cumulative and in addition to any other right and remedy now or subsequently available to Landlord at Law or in equity. If Landlord declares Tenant to be in default, Landlord shall be entitled to receive interest on any unpaid item of Rent at a rate equal to the lesser of 18% per annum or the highest rate permitted by Law. In addition, if Tenant fails to pay any item or installment of Rent when due, Tenant shall pay Landlord an administrative fee equal to 5% of the past due Rent, provided that Tenant shall be entitled to a grace period of 5 days for the first 2 late payments of Rent in a given calendar year. For purposes hereof, the "Prime Rate" shall be the per annum interest rate publicly announced as its prime or base rate by a federally insured bank selected by Landlord in the state in which the Building is located. Forbearance by Landlord to enforce one or more remedies shall not constitute a waiver of any default.

C. MITIGATION OF DAMAGES. Upon termination of Tenant's right to possess the Premises, Landlord shall, to the extent required by Law (and no further), use objectively reasonable efforts to mitigate damages by reletting the Premises. Landlord shall not be deemed to have failed to do so if Landlord refuses to lease the Premises to a prospective new tenant with respect to whom Landlord would be entitled to withhold its consent pursuant to SECTION 12.A., or who (1) is an affiliate, parent or subsidiary of Tenant; (2) is not acceptable to any Mortgagee of Landlord; (3) requires improvements to the Premises to be made at Landlord's expense; or (4) is unwilling to accept lease terms then proposed by Landlord, including: (a) leasing for a shorter or longer term than remains under this Lease; (b) re-configuring or combining the Premises with other space, (c) taking all or only a part of the Premises; and/or (d) changing the use of the Premises. Notwithstanding Landlord's duty to mitigate its damages as provided herein, Landlord shall not be obligated to give any priority to reletting Tenant's space in connection with its leasing of space in the Building.

D. LANDLORD'S LIEN. To secure Tenant's obligations under this Lease, Tenant grants Landlord a contractual security interest on all of Tenant's furniture, fixtures and equipment now or hereafter situated in the Premises and all proceeds therefrom, including insurance proceeds (collectively, "Collateral"). No Collateral shall be removed from the Premises without Landlord's prior written consent until all of Tenant's obligations are fully satisfied (except in the ordinary course of business and then only if replaced with items of same value and quality). Upon any event of default, Landlord may, to the fullest extent permitted by Law and in addition to any other remedies provided herein, enter upon the Premises and take possession of any Collateral without being held liable

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for trespass or conversion, and sell the same at public or private sale, after giving Tenant at least 5 days' written notice (or more if required by Law) of the time and place of such sale. Such notice may be sent with or without return receipt requested. Unless prohibited by Law, any Landlord Party may purchase any Collateral at such sale. The proceeds from such sale, less Landlord's expenses, including reasonable attorneys' fees and other expenses, shall be credited against Tenant's obligations. Any surplus shall be paid to Tenant (or as otherwise required by Law) and any deficiency shall be paid by Tenant to Landlord upon demand. Upon request, Tenant shall execute and deliver to Landlord a financing statement sufficient to perfect the foregoing security interest or Landlord may file a copy of this Lease as a financing statement, as permitted under Law.

21. LIMITATION OF LIABILITY. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS LEASE, THE LIABILITY OF LANDLORD (AND OF ANY SUCCESSOR LANDLORD) TO TENANT SHALL BE LIMITED TO THE INTEREST OF LANDLORD IN THE PROPERTY. TENANT SHALL LOOK SOLELY TO LANDLORD'S INTEREST IN THE PROPERTY FOR THE RECOVERY OF ANY JUDGMENT OR AWARD AGAINST LANDLORD. No LANDLORD PARTY SHALL BE PERSONALLY LIABLE FOR ANY JUDGMENT OR DEFICIENCY. BEFORE FILING SUIT FOR AN ALLEGED DEFAULT BY LANDLORD, TENANT SHALL GIVE LANDLORD AND THE MORTGAGEE(S) (DEFINED IN ARTICLE 26) WHOM TENANT HAS BEEN NOTIFIED HOLD MORTGAGES (DEFINED IN ARTICLE 26) ON THE PROPERTY, BUILDING OR PREMISES, NOTICE AND REASONABLE TIME TO CURE THE ALLEGED DEFAULT. TENANT HEREBY WAIVES ALL CLAIMS AGAINST ALL LANDLORD PARTIES FOR CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES ALLEGEDLY SUFFERED BY ANY TENANT PARTIES, INCLUDING LOST PROFITS AND BUSINESS INTERRUPTION.

22. NO WAIVER. Either party's failure to declare a default immediately upon its occurrence, or delay in taking action for a default shall not constitute a waiver of the default, nor shall it constitute an estoppel. Either party's failure to enforce its rights for a default shall not constitute a waiver of its rights regarding any subsequent default. Receipt by Landlord of Tenant's keys to the Premises shall not constitute an acceptance or surrender of the Premises.

23. TENANT'S RIGHT TO POSSESSION. Tenant shall, and may peacefully have, hold and enjoy the Premises without hindrance from Landlord or any person lawfully claiming through Landlord, subject to the terms of this Lease, provided Tenant pays the Rent and fully performs all of its covenants and agreements. This covenant and all other covenants of Landlord shall be binding upon Landlord and its successors only during its or their respective periods of ownership of the Building, and shall not be a personal covenant of any Landlord Parties.

24. RELOCATION. Landlord may, upon 60 days' notice to Tenant, relocate the Premises to any other premises within the Building ("Relocated Premises") on a date of relocation (the "Relocation Date") specified therein. The Relocated Premises shall in all respects be substantially the same or better, as reasonably determined by Landlord, in area, finish, and appropriateness for the Permitted Use. In such event, all reasonable expenses of moving Tenant and decorating the Relocated Premises with substantially the same leasehold improvements shall be at the expense of Landlord, including the physical move, telephone installation and other costs set forth below. All moving costs (including the cost to relocate phones, computers and other systems of similar nature), all costs of reprinting stationery, cards and other printed material bearing Tenant's address at the Premises if such address changes due to the relocation (but only the quantity existing immediately prior to the relocation) and all other out-of-pocket costs directly incurred by Tenant in connection with relocation to the Relocated Premises, including but not limited to reasonable decorating and design costs, shall be paid by Landlord within thirty (30) days after receipt of third party invoices therefor. Within 5 business days following receipt of Landlord's relocation notice, Tenant shall have the option, effective as of the Relocation Date, either to enter into an appropriate lease amendment relocating the Premises, or to terminate this Lease. Failure of Tenant to choose either option shall constitute Tenant's election to relocate. If Tenant elects to relocate, Landlord shall have the option to tender the Relocated Premises to Tenant on any date within a 30 day period prior to or after the Relocation Date, in which event the date of tender of possession of the Relocated Premises shall become the Relocation Date. From the Relocation Date through the Expiration Date, the aggregate Base Rent for the Relocated Premises shall be the same as for the original Premises.

25. HOLDING OVER. Except for any permitted occupancy by Tenant under ARTICLE 8, if Tenant or any party claiming by through or under Tenant fails to surrender the Premises at the expiration or earlier termination of this Lease, continued occupancy of the Premises shall be that of a tenancy at sufferance. Tenant's occupancy of the Premises during the holdover shall be subject to all the terms and provisions of this Lease and Tenant shall pay an

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amount (on a per month basis without reduction for partial months during the holdover) equal to 200% of the greater of: (1) the sum of the Base Rent and Additional Rent due for the period immediately preceding the holdover; or (2) the fair market gross rental for the Premises as reasonably determined by Landlord. No holdover by Tenant or payment by Tenant after the expiration or early termination of this Lease shall be construed to extend the Term or prevent Landlord from immediate recovery of possession of the Premises by summary proceedings or otherwise. In addition to the payment of the amounts provided above, if Landlord is unable to deliver possession of the Premises to a new tenant, or to perform improvements for a new tenant, as a result of Tenant's holdover and Tenant fails to vacate the Premises within 15 days after Landlord notifies Tenant of Landlord's inability to deliver possession, or perform improvements, Tenant shall be liable to Landlord for all damages, including without limitation, consequential damages, that Landlord suffers from the holdover.

26. SUBORDINATION TO MORTGAGES; ESTOPPEL CERTIFICATE. Tenant accepts this Lease subject and subordinate to any mortgage(s), deed(s) of trust, ground lease(s) or other lien(s) now or subsequently affecting the Premises, the Building or the Property, and to renewals, modifications, refinancings and extensions thereof (collectively, a "Mortgage"). The party having the benefit of a Mortgage shall be referred to as a "Mortgagee." This clause shall be self-operative, but upon request from a Mortgagee, Tenant shall execute a commercially reasonable subordination agreement in favor of the Mortgagee. In lieu of having the Mortgage be superior to this Lease, a Mortgagee shall have the right at any time to subordinate its Mortgage to this Lease. If requested by a successor-in-interest to all or a part of Landlord's interest in this Lease, Tenant shall, without charge, attorn to the successor-in-interest. However, in the event of attornment after a foreclosure sale or deed in lieu of foreclosure, no purchaser of such sale, grantee of such deed, or immediate transferee from such purchaser or grantee shall be: (i) liable for any act, omission or default of Landlord; (ii) subject to any offsets or defenses which Tenant might have against Landlord; (iii) liable for or bound by any Base Rent or Additional Rent which Tenant might have paid for more than the current month to Landlord; (iv) if the Premises is more than 10,000 RSF, bound by any modification, amendment, surrender or termination of this Lease without Mortgagee's written consent (other than any modification, amendment, surrender or termination that does not require Mortgagee's consent under that certain Deed of Trust, Leasehold Deed of Trust, Security Agreement and Fixture Filing and Assignment of Leases and Rents recorded at County Clerk File No. T966808 in the Official Public Records of Real Property of Harris County, Texas and any recorded amendments thereof); (v) liable for or obligated to cure any defaults of Landlord which occurred prior to the time that Mortgagee succeeded to the interest of Landlord under this Lease;
(vi) liable, bound or responsible for or with respect to the retention, application and/or return to Tenant of any security deposit or cleaning deposit paid to Landlord under this Lease, whether or not still held by Landlord, unless and until Mortgagee has actually received for its own account the full amount of such security deposit or cleaning deposit, or (vii) liable for or bound by any agreement of Landlord with respect to the completion of any improvements to the Project or Premises or for the payment or reimbursement to Tenant of any contribution to the cost of the completion of any such improvements. Tenant shall, within 5 days after receipt of a written request from Landlord, execute and deliver an estoppel certificate to those parties as are reasonably requested by Landlord (including a Mortgagee or prospective purchaser). The estoppel certificate shall include a statement certifying that this Lease is unmodified (except as identified in the estoppel certificate) and in full force and effect, describing the dates to which Rent and other charges have been paid, representing that, to the best of Tenant's knowledge, there is no default (or stating the nature of the alleged default) and certifying other matters with respect to this Lease that may reasonably be requested.

27. ATTORNEYS' FEES. If either party institutes a suit against the other for violation of or to enforce any covenant or condition of this Lease, or if either party intervenes in any suit in which the other is a party to enforce or protect its interest or rights, the prevailing party shall be entitled to all of its costs and expenses, including, without limitation, reasonable attorneys' fees.

28. NOTICE. If a demand, request, approval, consent or notice (collectively, a "notice") shall or may be given to either party by the other, the notice shall be in writing and delivered by hand or sent by registered or certified mail with return receipt requested, or sent by overnight or same day courier service, or sent by facsimile, at the party's respective Notice Address(es) set forth in Article 1, except that if Tenant has vacated the Premises (or if the Notice Address for Tenant is other than the Premises, and Tenant has vacated such address) without providing Landlord a new Notice Address, Landlord may serve notice in any manner described in this Article or in any other manner permitted by Law. Each notice shall be deemed to have been received or given on the earlier to occur of actual delivery (which, in the case of delivery by facsimile, shall be deemed to occur at the time of delivery indicated on the electronic confirmation of the facsimile) or the date on which delivery is refused, or, if Tenant has vacated the

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Premises or the other Notice Address of Tenant without providing a new Notice Address, three (3) days after notice is deposited in the U.S. mail or with a courier service in the manner described above. Either party may, at any time, change its Notice Address by giving the other party written notice of the new address in the manner described in this Article.

29. RESERVED RIGHTS. This Lease does not grant any rights to light or air over or about the Building. Landlord excepts and reserves exclusively to itself the use of: (A) roofs, (B) telephone, electrical and janitorial closets, (C) equipment rooms, Building risers or similar areas that are used by Landlord for the provision of Building services, (D) rights to the land and improvements below the floor of the Premises, (E) the improvements and air rights above the Premises, (F) the improvements and air rights outside the demising walls of the Premises, (G) the areas within the Premises used for the installation of utility lines and other installations serving occupants of the Building, and (H) any other areas designated from time to time by Landlord as service areas of the Building. Landlord has the right to change the Building's name or address. Landlord also has the right to make such other changes to the Property and Building as Landlord deems appropriate, provided the changes do not materially affect Tenant's ability to use the Premises for the Permitted Use. Landlord shall also have the right (but not the obligation) to temporarily close the Building if Landlord reasonably determines that there is an imminent danger of significant damage to the Building or of personal injury to Landlord's employees or the occupants of the Building. The circumstances under which Landlord may temporarily close the Building shall include, without limitation, electrical interruptions, hurricanes and civil disturbances. A closure of the Building under such circumstances shall not constitute a constructive eviction nor entitle Tenant to an abatement or reduction of Rent.

30. SURRENDER OF PREMISES. At the expiration or earlier termination of this Lease or Tenant's right of possession, Tenant shall remove Tenant's Property from the Premises, and quit and surrender the Premises to Landlord, broom clean, and in good order, condition and repair, ordinary wear and tear excepted. Tenant shall also be required to remove Tenant's Removable Property in accordance with ARTICLE 9. If Tenant fails to remove any of Tenant's Property within 2 days after the termination of this Lease or of Tenant's right to possession, Landlord, at Tenant's sole cost and expense, shall be entitled (but not obligated) to remove and store Tenant's Property. Landlord shall not be responsible for the value, preservation or safekeeping of Tenant's Property. Tenant shall pay Landlord, upon demand, the expenses and storage charges incurred for Tenant's Property. In addition, if Tenant fails to remove Tenant's Property from the Premises or storage, as the case may be, within 30 days after written notice, Landlord may deem all or any part of Tenant's Property to be abandoned, and title to Tenant's Property shall be deemed to be immediately vested in Landlord.

31. HAZARDOUS MATERIALS. No Hazardous Material (hereinafter defined) (except for de minimis quantities of household cleaning products and office supplies used in the ordinary course of Tenant's business at the Premises and that are used, kept and disposed of in compliance with Laws) shall be brought upon, used, kept or disposed of in or about the Premises or the Building by any Tenant Parties or any of Tenant's transferees, contractors or licensees without Landlord's prior written consent, which consent may be withheld in Landlord's sole and absolute discretion. Tenant's request for such consent shall include a representation and warranty by Tenant that the Hazardous Material in question (A) is necessary in the ordinary course of Tenant's business, and (B) shall be used, kept and disposed of in compliance with all Laws. If Contamination (hereinafter defined) occurs as a result of an act or omission of any Tenant Party, Tenant shall, at its expense, promptly take all actions necessary to comply with Laws and to return the Premises, the Building, the Property and/or any adjoining or affected property to its condition prior to such Contamination, subject to Landlord's prior written approval of Tenant's proposed methods, times and procedures for remediation. Tenant shall provide Landlord reasonably satisfactory evidence that such actions shall not adversely affect any Landlord Party or contaminated property. Landlord may require that a representative of Landlord be present during any such actions and/or that such actions be taken after business hours. If Tenant fails to take and diligently prosecute any necessary remediation actions within 30 days after written notice from Landlord or an authorized governmental agency (or any shorter period required by any governmental agency), Landlord may take such actions and Tenant shall reimburse Landlord therefor, plus a 15% administrative fee, within 30 days of Landlord's invoice. For purposes of this ARTICLE 31, a "Hazardous Material" is any substance (Y) the presence of which requires, or may hereafter require, notification, investigation or remediation under any Laws; or (Z) which is now or hereafter defined, listed or regulated by any governmental authority as a "hazardous waste", "extremely hazardous waste", "solid waste", "toxic substance", "hazardous substance", "hazardous material" or "regulated substance", or otherwise regulated under any Laws. "Contamination" means any release or disposal of a Hazardous Material in, on, under, at or from the Premises, the Building or the Property which may result in any liability, fine,

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use restriction, cost recovery lien, remediation requirement or other government or private party action or imposition affecting any Landlord Party. For purposes of this Lease, claims arising from Contamination shall include diminution in value, restrictions on use, adverse impact on leasing space, and all costs of site investigation, remediation, removal and restoration work, including response costs under CERCLA and similar statutes.

32. MISCELLANEOUS.

A. GOVERNING LAW; JURISDICTION AND VENUE; SEVERABILITY; PARAGRAPH HEADINGS. This Lease and the rights and obligations of the parties shall be interpreted, construed and enforced in accordance with the Laws of the state in which the Building is located and Landlord and Tenant hereby irrevocably consent to the jurisdiction and proper venue of such state. If any term or provision of this Lease shall to any extent be invalid or unenforceable, the remainder of this Lease shall not be affected, and each provision of this Lease shall be valid and enforced to the fullest extent permitted by Law. The headings and titles to the Articles and Sections of this Lease are for convenience only and shall have no effect on the interpretation of any part of this Lease.

B. RECORDING. Tenant shall not record this Lease or any memorandum without Landlord's prior written consent.

C. FORCE MAJEURE. Whenever a period of time is prescribed for the taking of an action by Landlord or Tenant, the period of time for the performance of such action shall be extended by the number of days that the performance is actually delayed due to strikes, acts of God, shortages of labor or materials, war, civil disturbances and other causes beyond the reasonable control of the performing party ("Force Majeure"). However, events of Force Majeure shall not extend any period of time for the payment of Rent or other sums payable by either party or any period of time for the written exercise of an option or right by either party.

D. TRANSFERABILITY; RELEASE OF LANDLORD. Landlord shall have the right to transfer and assign, in whole or in part, all of its rights and obligations under this Lease and in the Building and/or Property referred to herein, and upon such transfer Landlord shall be released from any further obligations hereunder, and Tenant agrees to look solely to the successor in interest of Landlord for the performance of such obligations.

E. BROKERS. Tenant represents that it has(1) in connection with this Lease. Tenant shall indemnify and hold the Landlord Parties harmless from all claims of any other brokers claiming to have represented Tenant in connection with this Lease. Landlord agrees to indemnify and hold the Tenant Parties harmless from all claims of any brokers claiming to have represented Landlord in connection with this Lease.

F. AUTHORITY; JOINT AND SEVERAL LIABILITY. Tenant covenants, warrants and represents that: (1) each individual executing, attesting and/or delivering this Lease on behalf of Tenant is authorized to do so on behalf of Tenant; (2) this Lease is binding upon and enforceable against Tenant; and (3) Tenant is duly organized and legally existing in the gate of its organization and is qualified to do business in the state in which the Premises are located. If there is more than one Tenant, or if Tenant is comprised of more than one party or entity, the obligations imposed upon Tenant shall be joint and several obligations of all the parties and entities. Notices, payments and agreements given or made by, with or to any one person or entity shall be deemed to have been given or made by, with and to all of them.

G. TIME IS OF THE ESSENCE; RELATIONSHIP; SUCCESSORS AND ASSIGNS. Time is of the essence with respect to Tenant's exercise of any expansion, renewal or extension rights or other options granted to Tenant. This Lease shall create only the relationship of landlord and tenant between the parties, and not a partnership, joint venture or any other relationship. This Lease and the covenants and conditions in this Lease shall inure only to the benefit of and be binding only upon Landlord and Tenant and their permitted successors and assigns.

H. SURVIVAL OF OBLIGATIONS. The expiration of the Term, whether by lapse of time or otherwise, shall not relieve either party of any obligations which accrued prior to or which may continue to accrue after the


(1) NOT DEALT WITH ANY BROKER.

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expiration or early termination of this Lease. Without limiting the scope of the prior sentence, it is agreed that Tenant's obligations under SECTIONS 4.A, 4.B, 8, 14, 20, 25, 30 and 31 shall survive the expiration or early termination of this Lease.

I. BINDING EFFECT. Landlord has delivered a copy of this Lease to Tenant for Tenant's review only, and the delivery of it does not constitute an offer to Tenant or an option. This Lease shall not be effective against any party hereto until an original copy of this Lease has been signed by such party. The term of this Lease shall commence on the Effective Date and end, unless sooner terminated in accordance with the terms hereof, on the Expiration Date.

J. FULL AGREEMENT; AMENDMENTS. This Lease contains the parties' entire agreement regarding the subject matter hereof. All understandings, discussions, and agreements previously made between the parties, written or oral, are superseded by this Lease, and neither party is relying upon any warranty, statement or representation not contained in this Lease. This Lease may be modified only by a written agreement signed by Landlord and Tenant. The exhibits and riders attached hereto are incorporated herein and made a part of this Lease for all purposes.

K. TAX WAIVER. TENANT WAIVES ALL RIGHTS PURSUANT TO ALL LAWS TO PROTEST APPRAISED VALUES OR RECEIVE NOTICE OR REAPPRAISAL REGARDING THE PROPERTY (INCLUDING LANDLORD'S PERSONALTY), IRRESPECTIVE OF WHETHER LANDLORD CONTESTS SAME.

L. WAIVER OF CONSUMER RIGHTS. TENANT HEREBY WAIVES ALL ITS RIGHTS UNDER THE TEXAS DECEPTIVE TRADE PRACTICES - CONSUMER PROTECTION ACT, SECTION 17.41 ET. SEQ. OF THE TEXAS BUSINESS AND COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF TENANT'S OWN SELECTION, TENANT VOLUNTARILY CONSENTS TO THIS WAIVER.

M. TENANT'S SECURITY. Tenant shall (1) lock the doors to the Premises and take other reasonable steps to secure the Premises and the personal property of all Tenant Parties and any of Tenant's transferees, contractors or licensees in the Common Areas and parking facilities of the Building and Property, from unlawful intrusion, theft, fire and other hazards; (2) keep and maintain in good working order all security devices installed in the Premises by or for the benefit of Tenant (such as locks, smoke detectors and burglar alarms), which shall be integrated with any other Building security systems; and (3) cooperate with Landlord and other tenants in the Building on security matters. Tenant acknowledges that Landlord is not a guarantor of the security or safety of the Tenant Parties or their property, and that such matters are the responsibility of Tenant and the local law enforcement authorities.

Landlord and Tenant have executed this Lease as of the day and year first above written.

LANDLORD

CRESCENT REAL ESTATE EQUITIES LIMITED
PARTNERSHIP,
a Delaware limited partnership

By: Crescent Real Estate Equities, Ltd.,
a Delaware corporation, its General
Partner

By: /s/ Jane B. Page
    ------------------------------------
    Jane B. Page, Vice President
    Houston Region--Asset Management

20

TENANT

GREAT SPIRITS COMPANY L.L.C.,
a Delaware limited liability company

By: /s/ Mark Andrews
    ------------------------------------
Mark Andrews
Title: President

21

EXHIBIT A-1

OUTLINE AND LOCATION OF PREMISES

[Diagram]

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EXHIBIT A-2

LEGAL DESCRIPTION OF PROPERTY

All of Block 131, South Side Buffalo Bayou ("S.S.B.B."), City of Houston, Harris County, Texas, being that property bounded by the center lines of Caroline and Austin Streets and McKinney and Lamar Avenues in the City of Houston, Harris County, Texas.

All of Block 132, S.S.B.B., City of Houston, Harris County, Texas, being that property bounded by the center lines of San Jacinto and Caroline Streets and McKinney and Lamar Avenues in the City of Houston, Harris County, Texas.

All of those air rights, as hereinafter defined in the easements abutting Blocks 131 and 132, being a portion of those rights conveyed by the City of Houston to Houston Center corporation by one or more of three (3) Quitclaim Deeds, the first dated August 26, 1971, recorded in Volume 8575, Page 518 of the Deed Records of Harris County, Texas, the second dated December 18, 1973, recorded under film Code No. 000-00-0000 in the Official Public Records of Real Property of Harris County, Texas, and the third dated January 7, 1977, recorded under Film Code No. 156-190-1502 in the Official Public Records of Real Property of Harris County, Texas, all of such Deeds being authorized by City of Houston Ordinance No. 70-1881 passed on October 28, 1970, the air rights conveyed by said Quitclaim Deeds being the City of Houston easement rights between a plane 20 feet above the crowns of the existing streets and a plane 500 feet above such street crowns, in certain streets including those surrounding Blocks 131 and 132, except all rights in the South one-half of McKinney Avenue abutting Block 132 adjoining the Hornberger Tract which is described as Lot 11 and West 16.67 feet of Lot 5.

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EXHIBIT B

RULES AND REGULATIONS

(1) Tenant and Tenant's employees shall have access to the Premises 24 hours a day, seven days per week. On Saturdays, Sundays and Holidays, and on other days between the hours of 6:00 P.M. and 8:00 A.M. the following day, or such other hours as Landlord shall determine from time to time, access to the Building and/or to the passageways, entrances, exits, shipping areas, halls, corridors, elevators or stairways and other areas in the Building may be restricted and access gained by use of a key to the outside doors of the Building, or pursuant to such security procedures Landlord may from time to time impose. All such areas, and all roofs, are not for use of the general public and Landlord shall in all cases retain the right to control and prevent access thereto by all persons whose presence in the judgment of Landlord shall be prejudicial to the safety, character, reputation and interests of the Building and its tenants provided, however, that nothing herein contained shall be construed to prevent such access to persons with whom Tenant deals in the normal course of Tenant's business unless such persons are engaged in activities which are illegal or violate these Rules. No Tenant and no employee or invitee of Tenant shall enter into areas reserved for the exclusive use of Landlord, its employees or invitees. Tenant shall keep doors to corridors and lobbies closed except when persons are entering or leaving.

(2) Tenant shall not paint, display, inscribe, maintain or affix any sign, placard, picture, advertisement, name, notice, lettering or direction on any part of the outside or inside of the Building, or on any part of the inside of the Premises which can be seen from the outside of the Premises, without the prior consent of Landlord, and then only such name or names or matter and in such color, size, style, character and material as may be first approved by Landlord in writing. Landlord shall prescribe the suite number and identification sign for the Premises (which shall be prepared and installed by Landlord at Tenant's expense). Landlord reserves the right to remove at Tenant's expense all matter not so installed or approved without notice to Tenant.

(3) Tenant shall not in any manner use the name of the Building for any purpose other than that of the business address of the Tenant, or use any picture or likeness of the Building, in any letterheads, envelopes, circulars, notices, advertisements, containers or wrapping material without Landlord's express consent in writing.

(4) Tenant shall not place anything or allow anything to be placed in the Premises near the glass of any door, partition, wall or window which may be unsightly from outside the Premises, and Tenant shall not place or permit to be placed any article of any kind on any window ledge or on the exterior walls. Blinds, shades, awnings or other forms of inside or outside window ventilators or similar devices, shall not be placed in or about the outside windows in the Premises except to the extent, if any, that the character, shape, color, material and make thereof is first approved by the Landlord.

(5) Furniture, freight and other large or heavy articles, and all other deliveries may be brought into the Building only at times and in the manner designated by Landlord, and always at the Tenant's sole responsibility and risk. All damage done to the Building by moving or maintaining such furniture, freight or articles shall be repaired by Landlord at Tenant's expense. Landlord may inspect items brought into the Building or Premises with respect to weight or dangerous nature. Landlord may require that all furniture, equipment, cartons and similar articles removed from the Premises or the Building be listed and a removal permit therefor first be obtained from Landlord. Tenant shall not take or permit to be taken in or out of other entrances or elevators of the Building, any item normally taken, or which Landlord otherwise reasonably requires to be taken, in or out through service doors or on freight elevators. Tenant shall not allow anything to remain in or obstruct in any way, any lobby, corridor, sidewalk, passageway, entrance, exit, hall, stairway, shipping area, or other such area. Tenant shall move all supplies, furniture and equipment as soon as received directly to the Premises, and shall move all such items and waste (other than waste customarily removed by Building employees) that are at tiny time being taken from the Premises directly to the areas designated for disposal. Any hand-carts used at the Building shall have rubber wheels.

(6) Tenant shall not overload any floor or part thereof in the Premises, or Building, including any public corridors or elevators therein bringing in or removing any large or heavy articles, and Landlord may direct and control the location of safes and all other heavy articles and require supplementary supports at Tenant's expense of such material and dimensions as Landlord may deem necessary to properly distribute the weight.

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(7) Tenant shall not attach or permit to be attached additional locks or similar devices to any door or window, change existing locks or the mechanism thereof, or make or permit to be made any keys for any door other than those provided by Landlord. If more than two keys for one lock are desired, Landlord will provide them upon payment therefor by Tenant. Tenant, upon termination of its tenancy, shall deliver to the Landlord all keys of offices, rooms and toilet rooms which have been furnished Tenant or which the Tenant shall have had made, and in the event of loss of any keys so furnished shall pay Landlord therefor.

(8) If Tenant desires signal, communication, alarm or other utility or similar service connections installed or changed, Tenant shall not install or change the same without the prior approval of Landlord, and then only under Landlord's direction at Tenant's expense. Tenant shall not install in the Premises any equipment which requires more electric current than Landlord is required to provide under this Lease, without Landlord's prior approval, and Tenant shall ascertain from Landlord the maximum amount of load or demand for or use of electrical current which can safely be permitted in the Premises, taking into account the capacity of electric wiring in the Building and the Premises and the needs of tenants of the Building, and shall not in any event connect a greater load than such safe capacity.

(9) Tenant shall not obtain for use upon the Premises ice, drinking water, towel, janitor and other similar services, except from persons approved by the Landlord. Any person engaged by Tenant to provide janitor or other services shall be subject to direction by the manager or security personnel of the Building.

(10) The toilet rooms, urinals, wash bowls and other such apparatus shall not be used for any purpose other than that for which they were constructed and no foreign substance of any kind whatsoever shall be thrown therein and the expense of any breakage, stoppage or damage resulting from the violation of this Rule shall be borne by the tenant who, or whose employees or invitees shall have caused it.

(11) The janitorial closets, utility closets, telephone closets, brown closets, electrical closets, storage closets, and other such closets, rooms and areas shall be used only for the purposes and in the manner designated by Landlord, and may not be used by tenants, or their contractors, agents, employees, or other parties without Landlord's prior written consent.

(12) Landlord reserves the right to exclude or expel from the Building any person who, in the judgment of Landlord, is intoxicated or under the influence of liquor or drugs, or who shall in any manner do any act in violation of any of these Rules. Tenant shall not at any time manufacture, sell, use or give away, any spirituous, fermented, intoxicating or alcoholic liquors on the Premises, except in the normal course of business as an importer and marketer of spirits, nor permit any of the same to occur (except in connection with occasional social or business events conducted in the Premises which do not violate any Laws nor bother or annoy any other tenants). Tenant shall not at any time sell, purchase or give away, food in any form by or to any of Tenant's agents or employees or any other parties on the Premises, nor permit any of the same to occur (other than in lunch rooms or kitchens for employees as may be permitted or installed by Landlord, which does not violate any laws or bother or annoy any other tenant).

(13) Tenant shall not make any room-to-room canvass to solicit business or information or to distribute any article or material to or from other tenants or occupants of the Building and shall not exhibit, sell or offer to sell, use, rent or exchange any products or services in or from the Premises unless ordinarily embraced within the Tenant's use of the Premises specified in the Lease.

(14) Tenant shall not waste electricity, water, heat or air conditioning or other utilities or services, and agrees to cooperate fully with Landlord to assure the most effective and energy efficient operation of the Building and shall not allow the adjustment (except by Landlord's authorized Building personnel) of any controls. Tenant shall keep corridor doors closed and shall not open any windows, except that if the air circulation shall not be in operation, windows which are openable may be opened with Landlord's consent. As a condition to claiming any deficiency in the air-conditioning or ventilation services provided by Landlord, Tenant shall close any blinds or drapes in the Premises to prevent or minimize direct sunlight.

(15) Tenant shall conduct no auction, fire or "going out of business sale" or bankruptcy sale in or from the Premises, and such prohibition shall apply to Tenant's creditors.

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(16) Tenant shall cooperate and comply with any reasonable safety or security programs, including fire drills and air raid drills, and the appointment of "fire wardens" developed by Landlord for the Building, or required by Law. Before leaving the Premises unattended, Tenant shall close and securely lock all doors or other means of entry to the Premises and shut off all lights and water faucets in the Premises (except heat to the extent necessary to prevent the freezing or bursting of pipes).

(17) Tenant will comply with all municipal, county, state, federal or other government laws, statutes, codes, regulations and other requirements, including without limitation, environmental, health, safety and police requirements and regulations respecting the Premises, now or hereinafter in force, at its sole cost, and will not use the Premises for any immoral purposes.

(18) Tenant shall not (i) carry on any business, activity or service except those ordinarily embraced within the permitted use of the Premises specified in the Lease and more particularly, but without limiting the generality of the foregoing, shall not (ii) install or operate any internal combustion engine, boiler, machinery, refrigerating (except a refrigerator in the kitchen or employee break room), heating or air conditioning equipment in or about the Premises, (iii) use the Premises for housing, lodging or sleeping purposes or for the washing of clothes, (iv) place any radio or television antennae other than inside of the Premises, (v) operate or permit to be operated any musical or sound producing instrument or device which may be heard outside the Premises,
(vi) use any source of power other than electricity, (vii) operate any electrical or other device from which may emanate electrical or other waves which may interfere with or impair radio, television, microwave, or other broadcasting or reception from or in the Building or elsewhere, (viii) bring or permit any bicycle or other vehicle, or dog (except in the company of a blind person or except where specifically permitted) or other animal or bird in the Building, (ix) make or permit objectionable noise or odor to emanate from the Premises, (x) do anything in or about the Premises tending to create or maintain a nuisance or do any act tending to injure the reputation of the Building, (xi) throw or permit to be thrown or dropped any article from any window or other opening in the Building, (xii) use or permit upon the Premises anything that will invalidate or increase the rate of insurance on any policies of insurance now or hereafter carried on the Building or violate the certificates of occupancy issued for the premises or the Building, (xiii) use the Premises for any purpose, or permit upon the Premises anything, that may be dangerous to persons or property (including but not limited to flammable oils, fluids, paints, chemicals, firearms or any explosive articles or materials) nor (xiv) do or permit anything to be done upon the Premises in any way tending to disturb any other tenant at the Building or the occupants of neighboring property.

(19) If the Building shall now or hereafter contain a building garage, parking structure or other parking area or locally, the following Rules shall apply in such areas or facilities:

(i) Parking shall be available in areas designated generally for tenant parking 24 hours a day, seven days per week, for such daily or monthly charges as Landlord may establish from time to time. In all cases, parking for Tenant and its employees and visitors shall be on a "first come, first served," unassigned basis, with Landlord and other tenants at the Building, and their employees and visitors, and other persons to whom Landlord shall grant the right or who shall otherwise have the right to use the same, all subject to these Rules, as the same may be amended or supplemented, and applied on a non-discriminatory basis. Notwithstanding the foregoing to the contrary, Landlord reserves the right to assign specific spaces, and to reserve spaces for visitors, small cars, handicapped individuals, and other tenants, visitors of tenants or other persons, and Tenant and its employees and visitors shall not park in any such assigned or reserved spaces. Landlord may restrict or prohibit full size vans and other large vehicles.

(ii) In case of any violation of these provisions, Landlord may refuse to permit the violator to park, and may remove the vehicle owned or driven by the violator from the Building without liability whatsoever, at such violator's risk and expense. Landlord reserves the right to close all or a portion of the parking areas or facilities in order to make repairs or perform maintenance services, or to alter, modify, re-stripe or renovate the same, or if required by casualty, strike, condemnation, act of God, Law or governmental requirement, or any other reason beyond Landlord's reasonable control. In the event access is denied for any reason, any monthly parking charges shall be abated to the extent access is denied, as Tenant's sole recourse. Tenant acknowledges that such parking areas or facilities may be operated by an independent contractor not affiliated with Landlord, and

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Tenant acknowledges that in such event, Landlord shall have no liability for claims arising through acts or omissions of such independent contractor, if such contractor is reputable.

(iii) Hours shall be 7:30 AM. to 6:00 P.M., Monday through Friday, and 9:00
A.M. to 1:00 P.M. on Saturdays, or such other hours as may be reasonably established by Landlord or its parking operator from time to time; cars must be parked entirely within the stall lines, and only small cars may be parked in areas reserved for small cars; all directional signs and arrows must be observed; the speed limit shall be 5 miles per hour; spaces reserved for handicapped parking must be used only by vehicles properly designated; every parker is required to park and lock his own car; washing, waxing, cleaning or servicing of any vehicle is prohibited; parking spaces may be used only for parking automobiles; parking is prohibited in areas: (a) not striped or designated for parking, (b) aisles, (c) where "no parking" signs are posted, (d) on ramps, and (e) loading areas and other specially designated areas. Delivery trucks and vehicles shall use only those areas designated therefor.

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EXHIBIT C

COMMENCEMENT LETTER

Re: Office Lease dated ____________________, 200_, (the "Lease") between CRESCENT REAL ESTATE EQUITIES LIMITED PARTNERSHIP ("Landlord") and GREAT SPIRITS COMPANY L.L.C. ("Tenant") for Premises, the Rentable Square Footage of which is 1,016, located on the 11th floor of 4 Houston Center. Unless otherwise specified, all capitalized terms used herein shall have the same meanings as in the Lease.

Landlord and Tenant agree that:

1. Except for punchlist items if any, Landlord has fully completed all Landlord Work required under the terms of the Lease.

2. The Premises are usable by Tenant as intended; Landlord has no further obligation to perform any Landlord Work or other construction (except punchlist items), and Tenant acknowledges that both the Building and the Premises are satisfactory in all respects.

3. The Commencement Date of the Lease is __________________, 20__.

4. The Expiration Date of the Lease is the last day of __________________, ____.

5. Tenant's Address at the Premises after the Commencement Date is:




Attention:_________________________

Telephone: ________________________

Facsimile: ________________________

All other terms and conditions of the Lease are ratified and acknowledged to be unchanged.

EXECUTED as of _________________, 200_.

(ATTACH APPROPRIATE SIGNATURES)

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EXHIBIT D

NONE

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EXHIBIT E

PARKING AGREEMENT

This Parking Agreement (the "Agreement") is attached as an Exhibit to an Office Lease (the "Lease") between CRESCENT REAL ESTATE EQUITIES LIMITED PARTNERSHIP, as Landlord, and GREAT SPIRITS COMPANY L.L.C., as Tenant, for Premise, the Rentable Square Footage of which is 1,016, located on the 11th floor of the Building. Unless otherwise specified, all capitalized terms used in this Agreement shall have the same meanings as in the Lease. In the event of any conflict between the Lease and this Agreement, the latter shall control.

1. Within 30 days after the Commencement Date (and with respect to any future permits, within 30 days after the delivery of additional Rentable Square Footage of the Premises applicable to such future permits), Tenant may elect to take, by giving Landlord written notice within such 30 day period, and Landlord shall then provide up to one (1) unreserved permit allowing access to unreserved spaces in the 4 Houston Center Garage (the "Parking Facilities"), and one (1) additional unreserved permit allowing access to unreserved spaces in the Parking Facilities on a month-to-month basis. During the Term (including any renewal or extension), Tenant shall pay Landlord's quoted monthly contract rate (as set from time to time) for each unreserved permit, plus any taxes thereon. Landlord's quoted monthly contract rate is currently set as $146.00 for each unreserved permit in the Parking Facilities. Tenant's failure to pay for any of the above-referenced parking permits as provided for herein shall be an event of default under the Lease.

2. Tenant may permanently return, all or any, of the parking permits that it has timely elected to take by giving Landlord thirty (30) days' written notice of the effective date of the return. Upon such effective date, Landlord's obligation to provide, and Tenant's obligation to pay for, such returned permits shall terminate. Prior to such effective date, Tenant shall return any key-card, sticker, or other identification or entrance enabling device provided by Landlord. Landlord shall have no obligation to provide Tenant, and Tenant shall have no right to, any packing permits that are returned or that Tenant does not timely elect to take.

3. Tenant shall at all times comply with all Laws respecting the use of the Parking Facilities. Landlord reserves the right to adopt, modify, and enforce reasonable rules and regulations governing the use of the Parking Facilities from time to time including any key-card, sticker, or other identification or entrance systems and hours of operations. Landlord may refuse to permit any person who violates such rules and regulations to park in the Parking Facilities, and any violation of the rules and regulations shall subject the car to removal from the Parking Facilities.

4. Tenant may validate visitor parking by such method or methods as Landlord may approve, at the validation rate from time to time generally applicable to visitor parking. Unless specified to the contrary above, the parking spaces for the parking permits provided hereunder shall be provided on an unreserved, "first-come, first-served" basis. Tenant acknowledges that Landlord has arranged or may arrange for the Parking Facilities to be operated by an independent contractor, not affiliated with Landlord. In such event, Tenant acknowledges that Landlord shall have no liability for claims arising through acts or omissions of such independent contractor. Except for intentional acts or gross negligence, Landlord shall have no liability whatsoever for any damage to vehicles or any other items located in or about the Parking Facilities, nor for any personal injuries or death arising out of any matter relating to the Parking Facilities, and in all events, Tenant agrees to seek recovery from its insurance carrier and to require Tenant's employees to seek recovery from their respective insurance carriers for payment of any losses sustained in connection with any use of the Parking Facilities. Tenant hereby waives on behalf of its insurance carriers all rights of subrogation against Landlord or Landlord's agents. Landlord reserves the right to assign specific parking spaces, and to reserve parking spaces for visitors, small cars, handicapped persons and for other tenants, guests of tenants or other parties, with assigned and/or reserved spaces. Such reserved spaces may be relocated as determined by Landlord from time to time, and Tenant and persons designated by Tenant hereunder shall not park in any such assigned or reserved parking spaces. Landlord also reserves the right to close all or any portion of the Parking Facilities, at its discretion or if required by casualty, strike, condemnation, repair, alteration, act of God, Laws, or other reason beyond Landlord's reasonable control; provided, however, that except for matters beyond Landlord's reasonable control, any such closure shall be temporary in nature. If Tenant's use of any parking permit is precluded for any reason, Tenant's sole remedy for any period during which Tenant's use of any parking permit is precluded shall be abatement of parking charges for such precluded permits. Tenants shall not assign its rights under this Agreement except in connection with a Permitted Transfer.

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5. Except as may be expressly set forth to the contrary in Paragraph 1 of this Agreement, if Tenant fails to pay any charges for parking permits as provided herein, or otherwise defaults in its performance of any of the terms or conditions of this Agreement, such default shall constitute an event of default under the Lease, and in addition to any rights or remedies available to Landlord in the event of a default under the Lease, Landlord shall have the right to cancel this Agreement and/or remove any vehicles from the Parking Facilities. In addition, any default under the Lease shall constitute a default under this Agreement.

6. TENANT ACKNOWLEDGES AND AGREES THAT TO THE FULLEST EXTENT PERMITTED BY LAW, LANDLORD SHALL NOT BE RESPONSIBLE FOR ANY LOSS OR DAMAGE TO TENANT OR TENANT'S PROPERTY (INCLUDING WITHOUT LIMITATION, ANY LOSS OR DAMAGE TO TENANT'S AUTOMOBILES OR THE CONTENTS THEREFOR DUE TO THEFT, VANDALISM, OR ACCIDENT) ARISING FROM OR RELATED TO TENANT'S USE OF THE PARKING FACILITIES OR EXERCISE OF ANY RIGHTS UNDER THIS AGREEMENT, WHETHER OR NOT SUCH LOSS OR DAMAGE RESULTS FROM LANDLORD'S ACTIVE NEGLIGENCE OR NEGLIGENT OMISSION. THE LIMITATION ON LANDLORD'S LIABILITY UNDER THE PRECEDING SENTENCE SHALL NOT APPLY, HOWEVER, TO LOSS OR DAMAGE ARISING DIRECTLY FROM LANDLORD'S WILLFUL MISCONDUCT.

7. WITHOUT LIMITING THE PROVISIONS OF PARAGRAPH 6 ABOVE, TENANT HEREBY VOLUNTARILY RELEASES, DISCHARGES, WAIVES, AND RELINQUISHES ANY AND ALL ACTIONS OR CAUSES OF ACTION FOR PERSONAL INJURY OR PROPERTY DAMAGE OCCURRING TO TENANT ARISING AS A RESULT OF USING THE PARKING FACILITIES, OR ANY ACTIVITIES INCIDENTAL THERETO, WHEREVER OR HOWEVER THE SAME MAY OCCUR, AND FURTHER AGREES THAT TENANT WILL NOT PROSECUTE ANY CLAIM FOR PERSONAL INJURY OR PROPERTY DAMAGE AGAINST LANDLORD OR ANY OF ITS OFFICERS, AGENTS, SERVANTS, OR EMPLOYEES FOR ANY SUCH CAUSE OF ACTION. IT IS THE INTENTION OF TENANT BY THIS INSTRUMENT, TO EXEMPT AND RELIEVE LANDLORD FROM LIABILITY FOR PERSONAL INJURY OR PROPERTY DAMAGE CAUSED BY NEGLIGENCE.

Tenant acknowledges that it has read the provisions of PARAGRAPH 7, has been fully and completely advised of the potential dangers of parking in the Parking Facilities, and is fully aware of the legal consequences of this instrument.

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RIDER NO. 1

OPTION TO EXTEND

A. RENEWAL PERIOD. Tenant may, at its option, extend the Term for one renewal period(s) of one year each (the "RENEWAL PERIOD(S)") by written notice to Landlord (the "RENEWAL NOTICE") given no earlier than 3 nor later than 2 months prior to the expiration of the Term (as it may have been extended or preceding Renewal Period, as applicable), provided that at the time of such notice and at the commencement of such Renewal Period, (i) Tenant remains in occupancy of the Premises, and (ii) no uncured Event of Default exists under the Lease (and no condition exists which, with the passage of time and/or giving of notice, would be an Event of Default). Such Renewal Period shall commence upon the expiration date of the initial Term (or preceding Renewal Period, as applicable). The Base Rent payable during the Renewal Period shall be at Landlord's then-quoted Building rental rates for the Premises, including any projected rate increases over the applicable Renewal Period. However, in no event shall the Base Rent for any Renewal Period be less than the Base Rent during the last year of the Term (or preceding Renewal Period, as applicable). Except as provided in this Rider No. 1, all terms and conditions of the Lease shall continue to apply during the Renewal Period(s).

B. ACCEPTANCE. Within 30 days of the Renewal Notice, Landlord shall notify Tenant of the Base Rent for such Renewal Period (the "RENTAL NOTICE"). Tenant may accept the terms set forth in the Rental Notice by written notice (the "ACCEPTANCE NOTICE") to Landlord given within 15 days after receipt of the Rental Notice. If Tenant timely delivers its Acceptance Notice, Tenant shall, within 15 days after receipt, execute a lease amendment confirming the Base Rent and other terms applicable during the Renewal Period. If Tenant fails timely (i) to deliver its Acceptance Notice or (ii) to execute and return the required lease amendment, then this Option to Extend shall automatically expire and be of no further force or effect. In addition, this Option to Extend shall terminate upon assignment of this Lease or subletting of all or any part of the Premises.

Rider No. 1 Page 1


Exhibit 10.35

FIRST AMENDMENT TO OFFICE LEASE

THIS FIRST AMENDMENT TO OFFICE LEASE (this "Amendment") is entered into between CRESCENT REAL ESTATE EQUITIES LIMITED PARTNERSHIP, a Delaware limited partnership ("Landlord"), and GREAT SPIRITS COMPANY L.L.C., a Delaware limited liability company ("Tenant"),with reference to the following:

A. Landlord and Tenant entered into that certain Office Lease dated effective as of February 24, 2000 (the "Lease") covering approximately 1,016 square feet of rentable area on the eleventh (11th) floor (the "Premises") of 4 Houston Center, Houston, Texas (the "Building").

B. Landlord and Tenant now desire to amend the Lease as set forth below. Unless otherwise expressly provided in this Amendment, capitalized terms used in this Amendment shall have the same meanings as in the Lease.

FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which are acknowledged, the parties agree as follows:

1. First Extension Period. The term of the Lease is extended for a period of one (1) year (the "First Extension Period") commencing on April 1, 2001, and expiring on March 31, 2002.

2. Base Rent. Commencing on April 1, 2001, and continuing through the First Extension Period, Tenant shall, at the time and place and in the manner provided in the Lease, pay to Landlord as Base Rent for the Premises the amounts set forth in the following rent schedule, plus any applicable tax thereon:

PREMISES

                                           MONTHLY
     FROM           THROUGH       RATE    BASE RENT
-------------   --------------   ------   ---------
April 1, 2001   March 31, 2002   $16.75   $1,418.17

3. Operating Expenses. Commencing on April 1, 2001, and continuing through the First Extension Period, Tenant shall continue to pay Tenant's Pro Rata Share of Operating Expenses payable under Article 4 of the Lease. Tenant hereby confirms that its Pro Rata Share of Operating Expenses equals 0.1506868%, which is the percentage that the Rentable Square Footage of the Premises (i.e., 1,016 square feet) bears to the Rentable Square Footage of the Building (i.e., 674,246 square feet). Tenant shall not be entitled to any free rent period, construction allowance, tenant improvements or other work to the Premises, or any other economic incentives that may have been provided to Tenant in connection with entering into the Lease.

4. Condition of Premises. Tenant accepts the Premises in its "as-is" condition.


5. Option to Extend. By extending the Term of the Lease for the First Extension Period, Tenant has exercised its option to extend the lease set forth in Rider No. 1 of the Lease. Therefore, Tenant's option to extend set forth in Rider No. 1 of the Lease is deleted in its entirety.

6. Assignment and Subletting. Notwithstanding anything to the contrary contained in the Lease, Tenant may not assign the Lease (either absolutely or collaterally) or sublet the Premises to any person or entity that would cause an adverse effect on the real estate investment trust (or pension fund or other ownership vehicle) qualification tests applicable to Landlord or its affiliates.

7. Consent. This Amendment is subject to, and conditioned upon, any required consent or approval being unconditionally granted by Landlord's mortgagee(s). If any such consent shall be denied, or granted subject to an unacceptable condition, this Amendment shall be null and void and the Lease shall remain unchanged and in full force and effect.

8. No Broker. Tenant represents and warrants that it has not been represented by any broker or agent in connection with the execution of this Amendment. Tenant shall indemnify and hold harmless Landlord and its designated property management, construction and marketing firms, and their respective partners, members, affiliates and subsidiaries, and all of their respective officers, directors, shareholders, employees, servants, partners, members, representatives, insurers and agents from and against all claims (including costs of defense and investigation) of any broker or agent or similar party claiming by, through or under Tenant in connection with this Amendment.

9. Time of the Essence. Time is of the essence with respect to Tenant's execution and delivery to Landlord of this Amendment. If Tenant fails to execute and deliver a signed copy of this Amendment to Landlord by 5:00 p.m. (in the city in which the Premises is located) on February 26, 2001, this Amendment shall be deemed null and void and shall have no force or effect, unless otherwise agreed in writing by Landlord. Landlord's acceptance, execution and return of this Amendment shall constitute Landlord's agreement to waive Tenant's failure to meet such deadline.

10. Miscellaneous. This Amendment shall become effective only upon full execution and delivery of this Amendment by Landlord and Tenant. This Amendment contains the parties' entire agreement regarding the subject matter covered by this Amendment, and supersedes all prior correspondence, negotiations, and agreements, if any, whether oral or written, between the parties concerning such subject matter. There are no contemporaneous oral agreements, and there are no representations or warranties between the parties not contained in this Amendment. Except as modified by this Amendment, the terms and provisions of the Lease shall remain in full force and effect, and the Lease, as modified by this Amendment, shall be binding upon and shall inure to the benefit of the parties hereto, their successors and permitted assigns.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

2

LANDLORD AND TENANT enter into this Amendment on March 14, 2001.

LANDLORD:                               CRESCENT REAL ESTATE EQUITIES LIMITED
                                        PARTNERSHIP, a Delaware limited
                                        partnership

                                        By: Crescent Real Estate Equities, Ltd.,
                                            a Delaware corporation, its General
                                            Partner


                                        By: /s/ Robert H. Boykin, Jr.
                                            ------------------------------------
                                            Robert H. Boykin, Jr.
                                            Vice President
                                            Leasing & Marketing


TENANT:                                 GREAT SPIRITS COMPANY L.L.C.,
                                        a Delaware limited liability company


                                        By: /s/ Mark Andrews
                                            ------------------------------------
                                        Name: Mark Andrews
                                        Title: President

3

Exhibit 10.36

SECOND AMENDMENT TO OFFICE LEASE

THIS SECOND AMENDMENT TO OFFICE LEASE (this "AMENDMENT") is entered into between CRESCENT REAL ESTATE EQUITIES LIMITED PARTNERSHIP, a Delaware limited partnership ("LANDLORD"), and GREAT SPIRITS COMPANY L.L.C., a Delaware limited liability company ("TENANT"), with reference to the following:

A. Landlord and Tenant entered into that certain Office Lease dated effective as of February 24, 2000; and that certain First Amendment to Office Lease dated March 14, 2001 (as amended, the "LEASE") covering approximately 1,016 square feet of rentable area on the eleventh (11th ) floor (the "PREMISES") of 4 Houston Center, Houston, Texas (the "BUILDING").

B. Landlord and Tenant now desire to further amend the Lease as set forth below. Unless otherwise expressly provided in this Amendment, capitalized terms used in this Amendment shall have the same meanings as in the Lease.

FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which are acknowledged, the parties agree as follows:

1. SECOND EXTENSION PERIOD. The Term of the Lease is extended for a period of one (1) year (the "SECOND EXTENSION PERIOD"), commencing on April 1, 2002, and expiring on March 31, 2003.

2. BASE RENT. Commencing on April 1, 2002, and continuing through the Second Extension Period, Tenant shall, at the time and place and in the manner provided in the Lease, pay to Landlord as Base Rent for the Premises the amounts set forth in the following rent schedule, plus any applicable tax thereon:

PREMISES

                                 ANNUAL
                                  RATE
                                  PER
                                 SQUARE    MONTHLY
     FROM           THROUGH       FOOT    BASE RENT
-------------   --------------   ------   ---------
April 1, 2002   March 31, 2003   $17.30   $1,464.73

3. OPERATING EXPENSES. Commencing on April 1, 2002, and continuing through the Second Extension Period, Tenant shall continue to pay Tenant's Pro Rata Share of Operating Expenses payable under Article 4 of the Lease. Tenant shall not be entitled to any free rent period, construction allowance, tenant improvements or other work to the Premises, or any other economic incentives that may have been provided to Tenant in connection with entering into the Lease.

               4. CONDITION OF PREMISES. Tenant accepts the Premises in its
"as-is" condition.

               5. NO BROKER. Tenant represents and warrants that it has not been

represented by any broker or agent in connection with the execution of this Amendment. Tenant shall indemnify and hold harmless Landlord and its designated property management,

-i-

construction and marketing firms, and their respective partners, members, affiliates and subsidiaries, and all of their respective officers, directors, shareholders, employees, servants, partners, members, representatives, insurers and agents from and against all claims (including costs of defense and investigation) of any broker or agent or similar party claiming by, through or under Tenant in connection with this Amendment.

6. TIME OF THE ESSENCE. Time is of the essence with respect to Tenant's execution and delivery to Landlord of this Amendment. If Tenant fails to execute and deliver a signed copy of this Amendment to Landlord by 5:00 p.m. (in the city in which the Premises is located) on January 25, 2002, this Amendment shall be deemed null and void and shall have no force or effect, unless otherwise agreed in writing by Landlord. Landlord's acceptance, execution and return of this Amendment shall constitute Landlord's agreement to waive Tenant's failure to meet such deadline.

7. MISCELLANEOUS. This Amendment shall become effective only upon full execution and delivery of this Amendment by Landlord and Tenant. This Amendment contains the parties' entire agreement regarding the subject matter covered by this Amendment, and supersedes all prior correspondence, negotiations, and agreements, if any, whether oral or written, between the parties concerning such subject matter. There are no contemporaneous oral agreements, and there are no representations or warranties between the parties not contained in this Amendment. Except as modified by this Amendment, the terms and provisions of the Lease shall remain in full force and effect, and the Lease, as modified by this Amendment, shall be binding upon and shall inure to the benefit of the parties hereto, their successors and permitted assigns.

LANDLORD AND TENANT enter into this Amendment on January 30, 2002.

LANDLORD:                               CRESCENT REAL ESTATE EQUITIES LIMITED
                                        PARTNERSHIP, a Delaware limited
                                        partnership

                                        By: Crescent Real Estate Equities, Ltd.
                                            a Delaware corporation, its General
                                            Partner


                                        By: /s/ Robert H. Boykin, Jr.
                                            ------------------------------------
                                            Robert H. Boykin, Jr.
                                            Vice President Leasing &
                                            Marketing


TENANT:                                 GREAT SPIRITS COMPANY L.L.C.,
                                        a Delaware limited liability company


                                        By: /s/ Mark Andrews
                                            ------------------------------------
                                        Name: Mark Andrews
                                        Title: President

-ii-

Exhibit 10.37

THIRD AMENDMENT TO OFFICE LEASE

THIS THIRD AMENDMENT TO OFFICE LEASE (this "AMENDMENT") is entered into between CRESCENT REAL ESTATE EQUITIES LIMITED PARTNERSHIP, a Delaware limited partnership ("LANDLORD"), and GREAT SPIRITS COMPANY LLC, a Delaware limited liability company ("TENANT"), with reference to the following:

A. Landlord and Tenant entered into that certain Office Lease dated effective as of February 24, 2000; that certain First Amendment to Office Lease dated March 14, 2001; and that certain Second Amendment to Office Lease dated January 30, 2002 (as amended, the "LEASE"), covering approximately 1,016 square feet of Rentable Square Footage on the floor 11 (the "PREMISES") of 4 Houston Center, Houston, Texas (the "BUILDING").

B. Landlord and Tenant now desire to further amend the Lease as set forth below. Unless otherwise expressly provided in this Amendment, capitalized terms used in this Amendment shall have the same meanings as in the Lease.

FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which are acknowledged, the parties agree as follows:

1. THIRD EXTENSION PERIOD. The Term is extended for a period of one (1) year (the "THIRD EXTENSION PERIOD") commencing on April 1, 2003, and expiring on March 31, 2004.

2. BASE RENT. Commencing on April 1, 2003, and continuing through the Third Extension Period, Tenant shall, at the time and place and in the manner provided in the Lease, pay to Landlord as Base Rent for the Premises the amounts set forth in the following rent schedule, plus any applicable tax thereon:

PREMISES

                                           MONTHLY
     FROM           THROUGH       RATE    BASE RENT
-------------   --------------   ------   ---------
April 1, 2003   March 31, 2004   $12.00   $1,016.00

3. OPERATING EXPENSES. Commencing on April 1, 2003, Tenant shall continue to pay Tenant's Pro Rata Share of Operating Expenses payable under ARTICLE 4 of the Lease. Tenant shall not be entitled to any free rent period, construction allowance, tenant improvements or other work to the Premises, or any other economic incentives that may have been provided to Tenant in connection with entering into the Lease.

               4. CONDITION OF PREMISES. Tenant accepts the Premises in its
"as-is" condition.

               5. METHOD OF CALCULATION. The Lease is amended to provide that a

new SECTION 32.N is added as follows:

-1-

N. METHOD OF CALCULATION. Tenant is knowledgeable and experienced in commercial transactions and does hereby acknowledge and agree that the provisions of this Lease for determining charges and amounts payable by Tenant are commercially reasonable and valid and constitute satisfactory methods for determining such charges and amounts as required by Section 93.004 (assessment of charges) of the Texas Property Code, as enacted by House Bill 2186, 77th Legislature. TENANT FARTHER VOLUNTARILY AND KNOWINGLY WAIVES (TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW) ALL RIGHTS AND BENEFITS OF TENANT UNDER SUCH SECTION 93.004, AS IT NOW EXISTS OR AS IT MAY BE HEREAFTER AMENDED OR SUCCEEDED.

6. CONSENT. This Amendment is subject to, and conditioned upon, any required consent or approval being unconditionally granted by Landlord's mortgagee(s). If any such consent shall be denied, or granted subject to an unacceptable condition, this Amendment shall be null and void and the Lease shall remain unchanged and in full force and effect.

7. NO BROKER. Tenant represents and warrants that it has not been represented by any broker or agent in connection with the execution of this Amendment. Tenant shall indemnify and hold harmless Landlord and its designated property management, construction and marketing firms, and their respective partners, members, affiliates and subsidiaries, and all of their respective officers, directors, shareholders, employees, servants, partners, members, representatives, insurers and agents from and against all claims (including costs of defense and investigation) of any broker or agent or similar party claiming by, through or under Tenant in connection with this Amendment.

8. TIME OF THE ESSENCE. Time is of the essence with respect to Tenant's execution and delivery to Landlord of this Amendment. If Tenant fails to execute and deliver a signed copy of this Amendment to Landlord by 5:00 p.m. (in the city in which the Premises is located) on March 26, 2003, this Amendment shall be deemed null and void and shall have no force or effect, unless otherwise agreed in writing by Landlord. Landlord's acceptance, execution and return of this Amendment shall constitute Landlord's agreement to waive Tenant's failure to meet such deadline.

9. MISCELLANEOUS. This Amendment shall become effective only upon full execution and delivery of this Amendment by Landlord and Tenant. This Amendment contains the parties' entire agreement regarding the subject matter covered by this Amendment, and supersedes all prior correspondence, negotiations, and agreements, if any, whether oral or written, between the parties concerning such subject matter. There are no contemporaneous oral agreements, and there are no representations or warranties between the parties not contained in this Amendment. Except as modified by this Amendment, the teams and provisions of the Lease shall remain in full force and effect, and the Lease, as modified by this Amendment, shall be binding upon and shall inure to the benefit of the parties hereto, their successors and permitted assigns.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

-2-

LANDLORD AND TENANT enter into this Amendment on March 28, 2003.

LANDLORD:                               CRESCENT REAL ESTATE EQUITIES LIMITED
                                        PARTNERSHIP, a Delaware limited
                                        partnership

                                        By: Crescent Real Estate Equities, Ltd.,
                                            a Delaware corporation, its General
                                            Partner


                                        By: /s/ Robert H. Boykin, Jr.
                                            ------------------------------------
                                            Robert H. Boykin, Jr.
                                            Regional Vice President
                                            Leasing & Marketing
                                            Houston Region


TENANT:                                 GREAT SPIRITS COMPANY LLC,
                                        a Delaware limited liability company


                                        By: /s/ Robin Godfrey
                                            ------------------------------------
                                        Name: Robin Godfrey
                                        Title: Controller

-3-

Exhibit 10.38

FOURTH AMENDMENT TO OFFICE LEASE

THIS FOURTH AMENDMENT TO OFFICE LEASE (this "Amendment") is entered into between CRESCENT REAL ESTATE EQUITIES LIMITED PARTNERSHIP, a Delaware limited partnership ("LANDLORD"), and GREAT SPIRITS CORP., a Delaware corporation ("TENANT"), successor by merger to Great Spirits Company LLC, with reference to the following:

A. Landlord and Tenant entered into that certain Office Lease dated effective as of February 24, 2000; that certain First Amendment to Office Lease dated March 14, 2001; that certain Second Amendment to Office Lease dated January 30, 2002; and that certain Third Amendment" to Office Lease dated March 28, 2003 (as amended, the "LEASE"), covering approximately 1,016 square feet of Rentable Square Footage (the "PREMISES") on floor 11 of 4 Houston Center, 1331 Lamar, Houston, Texas 77010 (the "BUILDING").

B. Landlord and Tenant now desire to further amend the Lease as set forth below. Unless otherwise expressly provided in this Amendment, capitalized terms used in this Amendment shall have the same meanings as in the Lease.

FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which are acknowledged, the parties agree as follows:

1. FOURTH EXTENSION PERIOD. The Term is extended for a period of one (1) year (the "FOURTH EXTENSION PERIOD") commencing on April 1, 2004, and expiring on March 31, 2005.

2. BASE RENT. Commencing on April 1, 2004, and continuing through the Fourth Extension Period, Tenant shall, at the time and place and in the manner provided in the Lease, pay to Landlord as Base Rent for the Premises the amounts set forth in the following rent schedule, plus any applicable tax thereon:

PREMISES

                                           MONTHLY
     FROM           THROUGH       RATE    BASE RENT
-------------   --------------   ------   ---------
April 1, 2004   March 31, 2005   $10.50    $889.00

3. OPERATING EXPENSES. Commencing on April 1, 2004, Tenant shall continue to pay Tenant's Pro Rata Share of Operating Expenses payable under ARTICLE 4 of the Lease. Tenant shall not be entitled to any free rent period, construction allowance, tenant improvements or other work to the Premises, or any other economic incentives that may have been provided to Tenant in connection with entering into the Lease.

4. CONDITION OF PREMISES. Tenant accepts the Premises in its "as-is" condition.


5. CONSENT. This Amendment is subject to, and conditioned upon, any required consent or approval being unconditionally granted by Landlord's mortgagee(s). If any such consent shall be denied, or granted subject to an unacceptable condition, this Amendment shall be null and void and the Lease shall remain unchanged and in full force and effect.

6. NO BROKER. Tenant represents and warrants that it has not been represented by any broker or agent in connection with the execution of this Amendment. Tenant shall indemnify and hold harmless Landlord and its designated property management, construction and marketing firms, and their respective partners, members, affiliates and subsidiaries, and all of their respective officers, directors, shareholders, employees, servants, partners, members, representatives, insurers and agents from and against all claims (including costs of defense and investigation) of any broker or agent or similar party claiming by, through or under Tenant in connection with this Amendment.

7. TIME OF THE ESSENCE. Time is of the essence with respect to Tenant's execution and delivery to Landlord of this Amendment. If Tenant fails to execute and deliver a signed copy of this Amendment to Landlord by 5:00 p.m. (in the city in which the Premises is located) on March 31, 2004, this Amendment shall be deemed null and void and shall have no force or effect, unless otherwise agreed in writing by Landlord. Landlord's acceptance, execution and return of this Amendment shall constitute Landlord's agreement to waive Tenant's failure to meet such deadline.

8. MISCELLANEOUS. This Amendment shall become effective only upon full execution and delivery of this Amendment by Landlord and Tenant. This Amendment contains the parties' entire agreement regarding the subject matter covered by this Amendment, and supersedes all prior correspondence, negotiations, and agreements, if any, whether oral or written, between the parties concerning such subject matter. There are no contemporaneous oral agreements, and there are no representations or warranties between the parties not contained in this Amendment. Except as modified by this Amendment, the terms and provisions of the Lease shall remain in full force and effect, and the Lease, as modified by this Amendment, shall be binding upon and shall inure to the benefit of the parties hereto, their successors and permitted assigns.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

2

LANDLORD AND TENANT enter into this Amendment on March 23, 2004.

LANDLORD:                               CRESCENT REAL ESTATE EQUITIES
                                        LIMITED PARTNERSHIP,
                                        a Delaware limited partnership

                                        By: Crescent Real Estate Equities, Ltd.
                                            a Delaware corporation, its
                                            General Partner


                                        By: /s/ Robert H. Boykin, Jr.
                                            ------------------------------------
                                            Robert H. Boykin, Jr.
                                            Regional Vice President
                                            Leasing & Marketing
                                            Houston Region


TENANT:                                 GREAT SPIRITS COMPANY L.L.C.
                                        a Delaware limited liability company,
                                        successor by merger to Great Spirits
                                        Company LLC


                                        By: /s/ Matthew F. MacFarlane
                                            ------------------------------------
                                        Name: Matthew F. MacFarlane
                                        Title: CFO

3

Exhibit 10.39

FIFTH AMENDMENT TO OFFICE LEASE

THIS FIFTH AMENDMENT TO OFFICE LEASE (this "AMENDMENT") is entered into between CRESCENT HC INVESTORS, L.P., a Delaware limited partnership ("LANDLORD"), and CASTLE BRANDS (USA) CORP. (formerly known as Great Spirits Corp., successor-by-merger to Great Spirits Company L.L.C.), a Delaware corporation ("TENANT"), with reference to the following:

A. Crescent Real Estate Equities Limited Partnership (predecessor-in-interest to Landlord) and Great Spirits Company L.L.C. (predecessor-in-interest to Tenant) entered into that certain Office Lease dated effective as of February 24, 2000; that certain First Amendment to Office Lease dated March 14, 2001; that certain Second Amendment to Office Lease dated January 30, 2002; that certain Third Amendment to Office Lease dated March 28, 2003; and that certain Fourth Amendment to Office Lease dated March 23, 2004 (as amended, the "LEASE") covering approximately 1,016 square feet of Rentable Square Footage on floor 11 (the "PREMISES") of 4 Houston Center, Houston, Texas
(the "BUILDING").

B. Landlord and Tenant now desire to further amend the Lease as set forth below. Unless otherwise expressly provided in this Amendment, capitalized terms used in this Amendment shall have the same meanings as in the Lease.

FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which are acknowledged, the parties agree as follows:

1. FIFTH EXTENSION PERIOD. The Term is extended for a period of one (1) year (the "FIFTH EXTENSION PERIOD") commencing on April 1, 2005, and expiring on March 31, 2006.

2. BASE RENT. Commencing on April 1, 2005, and continuing through the Fifth Extension Period, Tenant shall, at the time and place and in the manner provided in the Lease, pay to Landlord as Base Rent for the Premises the amounts set forth in the following rent schedule, plus any applicable tax thereon:

PREMISES

                                 ANNUAL BASE RATE    MONTHLY
     FROM           THROUGH       PER SQUARE FOOT   BASE RENT
     ----           -------      ----------------   ---------
April 1, 2005   March 31, 2006        $11.50         $973.67

3. OPERATING EXPENSES. Commencing on April I, 2005, Tenant shall continue to pay Tenant's Pro Rata Share of Operating Expenses payable under Article 4 of the Lease.

4. CONDITION OF PREMISES. Tenant accepts the Premises in its "as-is" condition.

5. ERISA REPRESENTATION. The Lease is amended to provide that a new Section 31.0 is added as follows:


O. ERISA REPRESENTATION. Tenant represents that (a) neither Tenant nor any entity controlling or controlled by Tenant owns a five percent (5%) or more interest (within the meaning of Prohibited Transaction Class Exemption 84-14) in JPMorgan Chase Bank, N.A. ("JPMORGAN") or any of JPMorgan's affiliates, and (b) neither JPMorgan, nor any of its affiliates, owns a five percent (5%) or more interest in Tenant or any entity controlling or controlled by Tenant.

6. CONSENT. This Amendment is subject to, and conditioned upon, any required consent or approval being unconditionally granted by Landlord's mortgagee(s). If any such consent shall be denied, or granted subject to an unacceptable condition, this Amendment shall be null and void and the Lease shall remain unchanged and in full force and effect.

7. NO BROKER. Tenant represents and warrants that it has not been represented by any broker or agent in connection with the execution of this Amendment. Tenant shall indemnify and hold harmless Landlord and its designated property management, construction and marketing firms, and their respective partners, members, affiliates and subsidiaries, and all of their respective officers, directors, shareholders, employees, servants, partners, members, representatives, insurers and agents from and against all claims (including costs of defense and investigation) of any broker or agent or similar party claiming by, through or under Tenant in connection with this Amendment.

8. TIME OF THE ESSENCE. Time is of the essence with respect to Tenant's execution and delivery to Landlord of this Amendment. If Tenant fails to execute and deliver a signed copy of this Amendment to Landlord by 5:00 p.m. (in the city in which the Premises is located) on March 31, 2005, this Amendment shall be deemed null and void and shall have no force or effect, unless otherwise agreed in writing by Landlord. Landlord's acceptance, execution and return of this Amendment shall constitute Landlord's agreement to waive Tenant's failure to meet such deadline.

9. MISCELLANEOUS. This Amendment shall become effective only upon full execution and delivery of this Amendment by Landlord and Tenant. This Amendment contains the parties' entire agreement regarding the subject matter covered by this Amendment, and supersedes all prior correspondence, negotiations, and agreements, if any, whether oral or written, between the parties concerning such subject matter. There are no contemporaneous oral agreements, and there are no representations or warranties between the parties not contained in this Amendment. Except as modified by this Amendment, the terms and provisions of the Lease shall remain in full force and effect, and the Lease, as modified by this Amendment, shall be binding upon and shall inure to the benefit of the parties hereto, their successors and permitted assigns.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


LANDLORD AND TENANT enter into this Amendment on June 21, 2005.

LANDLORD:
CRESCENT HC INVESTORS, L.P.,
a Delaware limited partnership

By: Crescent HCI GP, LLC,
A Delaware limited liability company,
its General Partner

By: /s/ Robert H. Boykin, Jr.
    -------------------------------------
    Robert H. Boykin, Jr.
    Senior Vice President
    Leasing

TENANT:
CASTEL BRANDS (USA) CORP.
(formerly known as Great Spirits Corp.,
successor-by-merger to Great Spirits
Company L.L.C.), a Delaware corporation

By: /s/ Matthew F. MacFarlane
    -------------------------------------
Name: Matthew F. MacFarlane

Title: Chief Financial Officer


Exhibit 10.40


FIRST SUPPLEMENTAL
TRUST INDENTURE

BETWEEN

CASTLE BRANDS (USA) CORP.

AS ISSUER

AND

JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION

AS INDENTURE TRUSTEE

DATED AS OF AUGUST 15 , 2005



TABLE OF CONTENTS

                                                                            Page
                                                                            ----
                                   ARTICLE ONE
                  DEFINITIONS, EXHIBITS AND GENERAL PROVISIONS

Section 1.1   Definitions Generally......................................     2

                                   ARTICLE TWO
               AMENDMENTS TO ORIGINAL INDENTURE AND ORIGINAL NOTES

Section 2.1   Amendment and Restatement of the Indenture.................     2
Section 2.2   Amendment and Restatement of Original Notes................     2

                                  ARTICLE THREE
                            MISCELLANEOUS PROVISIONS

Section 3.1   Severability...............................................     2
Section 3.2   Counterparts...............................................     3

-1


FIRST SUPPLEMENTAL TRUST INDENTURE

This FIRST SUPPLEMENTAL TRUST INDENTURE (the "First Supplemental Indenture") is made and entered into as of August 15, 2005, by and between CASTLE BRANDS (USA) CORP., a corporation duly organized and existing under the laws of the State of Delaware (the "Issuer"), and JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, a national banking association, authorized to accept and execute trusts of the character herein set out, with a payment office in Dallas, Texas (the "Trustee") and is joined in by MHW, LTD., a New York corporation serving as the Collateral Agent under the Security Documents (as defined herein).

WITNESSETH

WHEREAS:

A. The Issuer and the Trustee, joined by the Collateral Agent, have heretofore entered into a Trust Indenture dated as June 1, 2004 (the "Original Indenture") authorizing the issuance of up to Five Million Dollars ($5,000,000) of the Issuer's 8% Senior Secured Notes, Series 2004, due May 31, 2007 (the "Original Notes").

B. The Issuer has heretofore issued Four Million Six Hundred Sixty Thousand Dollars ($4,660,000) of Original Notes.

C. The Issuer desires to amend the terms of the Original Notes (i) to extend the maturity date from May 31, 2007 to May 31, 2009, and (ii) to increase the interest rate payable on the Original Notes from eight percent (8%) to nine percent (9%) (hereinafter referred to as the "Amended Notes").

D. The Issuer desires to amend the terms of the Original Indenture (i) to authorize a maximum of Ten Million Dollars ($10,000,000) of Amended Notes to be issued thereunder (inclusive of the $4,660,000 of outstanding Original Notes being amended hereby) and (ii) to amend and restate the Original Indenture to conform to the terms of the Amended Notes.

E. The Issuer and the Trustee, joined by the Collateral Agent, are permitted by Section 11.2 of the Original Indenture to make such amendments to the Original Notes and Original Indenture with the consent of two-thirds or more of the beneficial owners of the Original Notes, referred to in the Original Indenture as a "Supermajority of Owners."

F. The Issuer and the Trustee, joined in by the Collateral Agent and having obtained the consent of a Supermajority of Owners, now wish to enter into this First Supplemental Indenture to amend and restate the Original Indenture and the Original Notes.

NOW THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:

-1-

ARTICLE ONE
DEFINITIONS, EXHIBITS AND GENERAL PROVISIONS

Section 1.1 Definitions Generally.

All terms capitalized but not otherwise defined in this First Supplemental Indenture shall have the meanings assigned to such terms in the First Amended and Restated Indenture. In this First Supplemental Indenture, the following terms have the following meanings unless the context hereof clearly requires otherwise:

"AMENDED NOTES" mean as defined in Recital C.

"FIRST AMENDED AND RESTATED INDENTURE" means the First Amended and Restated Indenture of Trust originally dated as of June 1, 2004, and as amended and restated as of August 15, 2005, in substantially the form attached hereto as Exhibit A, as executed by the Trustee and the Issuer with the joinder of the Collateral Agent.

"FIRST SUPPLEMENTAL INDENTURE" means as defined in the introductory paragraph hereto.

"ORIGINAL INDENTURE" means as defined in Recital A.

"ORIGINAL NOTES" mean as defined in Recital A.

ARTICLE TWO
AMENDMENTS TO ORIGINAL INDENTURE AND ORIGINAL NOTES

Section 2.1 Amendment and Restatement of the Indenture.

The Original Indenture is hereby amended and restated as set forth in the First Amended and Restated Indenture attached hereto as EXHIBIT A, and all references to "Indenture" contained in the Amended Notes, any subsequent supplemental indenture, in the Parent Guaranty, in the Security Documents or in any related documents, shall for all purposes refer to the First Amended and Restated Indenture.

Section 2.2 Amendment and Restatement of Original Notes.

The Original Notes are hereby amended and restated as set forth on Exhibit "A" to the First Amended and Restated Indenture.

ARTICLE THREE
MISCELLANEOUS PROVISIONS

Section 3.1 Severability.

If any provision of this First Supplemental Indenture shall be held or deemed to be or shall, in fact, be inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions or in all jurisdictions or in all cases because it conflicts with any other provisions of any constitution or statute or rule of public policy, or for any other reason, such circumstances shall not

-2-

have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provisions herein contained invalid, inoperative of unenforceable to any extent whatever.

Section 3.2 Counterparts.

This First Supplemental Indenture may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

-3-

IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed and attested by their respective officers thereunto duly authorized, all as of the day and year first written above.

Attest:                                 CASTLE BRANDS (USA) CORP.


/s/ Amelia Gary                         By: /s/ Mark E. Andrews
-------------------------------------       ------------------------------------
                                        Name: Mark E. Andrews
                                        Title: Chairman & CEO


Attest:                                 JPMORGAN CHASE BANK, NATIONAL
                                        ASSOCIATION, as Trustee


/s/ Mary Jane Henson                    By: /s/ Carol Logan
-------------------------------------       ------------------------------------
                                        Name: Carol Logan
                                        Title: Vice President


Joined in by MHW, LTD.,
as Collateral Agent:


By: /s/ John F. Beaudette
    ---------------------------------
Name: John F. Beaudette
Title: President

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Exhibit 10.41


CASTLE BRANDS (USA) CORP.

9 % SENIOR SECURED NOTES, SERIES 2004

DUE MAY 31, 2009

FIRST AMENDED AND RESTATED
TRUST INDENTURE

ORIGINAL DATED AS OF JUNE 1 , 2004

AMENDED AND RESTATED AS OF AUGUST 15, 2005



TABLE OF CONTENTS

                                                                            Page
                                                                            ----
ARTICLE 1  DEFINED TERMS.................................................     3
   1.1     Special Definitions...........................................     3

ARTICLE 2  FORM, EXECUTION, ISSUE AND DELIVERY OF NOTES..................     9
   2.1     Issue of Notes................................................     9
   2.2     Authentication of Physical Notes; Denominations of Notes;
              Form; Custody..............................................     9
   2.3     Registration of Owners........................................     9
   2.4     Exchange of Physical Notes....................................     9
   2.5     Pledges.......................................................    10
   2.6     Proof of Ownership............................................    10
   2.7     Transfer of Beneficial Interest in the Notes..................    10
   2.8     Valid Obligations.............................................    10
   2.9     Execution and Delivery........................................    11
   2.10    Payments......................................................    11

ARTICLE 3  PAYMENTS OF INTEREST AND PRINCIPAL............................    11
   3.1     Payment by Issuer.............................................    11
   3.2     Issue Taxes...................................................    11
   3.3     Required Payments.............................................    11
   3.4     Registered Owner List.........................................    12

ARTICLE 4  ACCOUNTS......................................................    13
   4.1     Payment Account...............................................    13
   4.2     Collection Account............................................    13

ARTICLE 5  RECEIPT, DISTRIBUTION AND APPLICATION OF TRUST ESTATE.........    13
   5.1     Application of the Payment Account When No Event of Default
              is Continuing..............................................    13
   5.2     Application of Payments During Continuance of an Event of
              Default....................................................    13
   5.3     Amounts Held by Trustee.......................................    14
   5.4     Allocation of Payments........................................    14
   5.5     Method of Payment to Owners...................................    14

ARTICLE 6  EVIDENCE OF ACTS OF OWNERS....................................    15
   6.1     Execution by Note Owners or Agents............................    15
   6.2     Future Owners Bound...........................................    15

ARTICLE 7  INDENTURE DEFAULTS - REMEDIES.................................    15
   7.1     Indenture Events of Default...................................    15
   7.2     Acceleration of Notes.........................................    16
   7.3     Annulment of Acceleration of Notes............................    16
   7.4     Default Remedies..............................................    16
   7.5     Other Enforcement Rights......................................    17
   7.6     Effect of Sale, etc...........................................    18

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   7.7     Restoration of Rights and Remedies............................    18
   7.8     Application of Sale Proceeds and Deficiency...................    19
   7.9     Cumulative Remedies...........................................    19
   7.10    Limitations on Suits..........................................    19

ARTICLE 8  AFFIRMATIVE COVENANTS.........................................    20
   8.1     Financial Statements..........................................    20
   8.2     Existence, Compliance and Insurance...........................    20
   8.3     Further Assurances............................................    21
   8.4     Performance of Obligations....................................    21
   8.5     Filings to Perfect Security Interests.........................    21

ARTICLE 9  NEGATIVE COVENANTS............................................    21
   9.1     Mergers, Etc..................................................    21
   9.2     Proceeds of Notes.............................................    21
   9.3     Transactions with Affiliates..................................    22
   9.4     Jurisdiction of Incorporation.................................    22

ARTICLE 10 THE TRUSTEE...................................................    22
   10.1    Certain Duties and Responsibilities of Trustee................    22
   10.2    Trustee's Compensation and Expenses...........................    23
   10.3    Certain Rights of Trustee.....................................    24
   10.4    Status of Monies Received.....................................    25
   10.5    Resignation of Trustee........................................    26
   10.6    Removal of Trustee............................................    26
   10.7    Successor Trustee.............................................    26
   10.8    Appointment of Successor Trustee..............................    26
   10.9    Merger or Consolidation of Trustee............................    26
   10.10   Acceptance of Appointment by Successor Trustee................    27
   10.11   Conveyance upon Request of Successor Trustee..................    27
   10.12   Co-Trustee and Collateral Agent...............................    27
   10.13   Registrar.....................................................    28

ARTICLE 11 SUPPLEMENTAL INDENTURES, WAIVERS..............................    28
   11.1    Supplemental Indentures Without Note Owners' Consent..........    28
   11.2    Waivers and Consents by Owners; Supplemental Indentures with
              Consent....................................................    28
   11.3    Notice of Supplemental Indenture..............................    29
   11.4    Solicitation of Note Owners...................................    29
   11.5    Opinion of Counsel Conclusive as to Supplemental Indentures...    29
   11.6    Effect of Supplemental Indentures.............................    29

ARTICLE 12 DISCHARGE AND UNCLAIMED FUNDS.................................    30
   12.1    Satisfaction and Discharge of Agreement.......................    30
   12.2    Return of Unclaimed Monies....................................    30

ARTICLE 13 MISCELLANEOUS.................................................    30
   13.1    Successors and Assigns........................................    30

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   13.2    Unenforceability of Provision.................................    31
   13.3    Communications................................................    31
   13.4    Governing Law.................................................    33
   13.5    Limitation on Interest........................................    33
   13.6    Counterparts..................................................    33
   13.7    Headings, etc.; Gender........................................    33
   13.8    Amendments....................................................    34
   13.9    Benefits of Agreement Restricted to Parties and Owners........    34
   13.10   Waiver of Notice..............................................    34
   13.11   Non-Recourse Persons..........................................    34
   13.12   Additional Financing Statement Filings........................    34
   13.13   Officers' Certificate and Opinions of Counsel; Statements to
              be Contained Therein.......................................    34
   13.14   No Oral Agreements............................................    35

Exhibit A  Form of Note

Exhibit B  Instruction for Transfer of Registration Request

TRUST INDENTURE

FIRST AMENDED AND RESTATED TRUST INDENTURE dated as of August 15, 2005 (the "Indenture"), between CASTLE BRANDS (USA) CORP., a Delaware corporation (the "Issuer"), and JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, a national banking association and the indenture trustee hereunder (the "Trustee"; including any other Person serving as a successor or co-trustee hereunder), and is joined in by MHW, LTD., a New York corporation as the Collateral Agent hereunder and under the Security Documents (as defined herein).

RECITALS:

WHEREAS, the defined terms used in this Indenture shall have the respective meanings set forth in Section 1.1 unless elsewhere defined or the context shall otherwise require;

WHEREAS, the Issuer and Trustee, joined by the Collateral Agent, have entered into a First Supplemental Indenture dated of even date herewith ("First Supplemental Indenture") which amends and restates, as set forth below, the Trust Indenture entered into as of June 1, 2004.

WHEREAS, the Issuer is authorized by law, and deems it necessary to borrow money for its proper legal purposes and to grant a continuing security interest in certain of its Property to secure the payment thereof, and to that end, in the exercise of said authority, has duly authorized the execution and delivery of this Indenture providing for the issue of senior secured promissory notes;

WHEREAS, the Issuer has executed and delivered the Security Documents thereby granting continuing security interests in the Collateral;

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WHEREAS, the Issuer has duly authorized the issuance from time to time of its Ten Million Dollars ($10,000,000) of its 9% Senior Secured Notes, Series 2004 on the terms herein provided and to be secured by the Collateral pursuant to the Security Documents;

WHEREAS, the Notes will be issued in the form set forth as Exhibit A in the aggregate amount not to exceed $10,000,000, and the Issuer will sell uncertificated beneficial interests in the Notes to Persons who will become the Owners thereof and the beneficiaries under this Indenture; and

WHEREAS, all acts and proceedings required by law and by the Certificate of Incorporation and Bylaws of the Issuer necessary to make the Notes, when executed by the Issuer and authenticated and delivered by the Trustee, the legal, valid and binding obligations of the Issuer, and all acts and proceedings required by law and by the Certificate of Incorporation and Bylaws of the Issuer necessary to constitute this Indenture a legal, valid and binding agreement for the uses and purposes herein set forth, in accordance with its terms, have been done and taken; and the Issuer has duly authorized, executed and delivered this Indenture;

NOW, THEREFORE, THIS INDENTURE WITNESSETH, that to secure the prompt and complete payment of the principal of and interest on the Notes, the payment of all other sums owing hereunder and under all Security Documents and the performance of the covenants contained herein and in all Security Documents, and in consideration of the premises and of the covenants contained herein, and the purchase of beneficial interests in the Notes by the Owners, the Issuer has hereby granted, bargained, sold, conveyed, assigned, transferred, mortgaged, affected, pledged, set over, confirmed, granted a continuing security interest in, and does hereby grant, bargain, sell, convey, assign, transfer, mortgage, affect, pledge, set over, confirm, grant a continuing security interest to the Trustee (subject to Section 12.1), all of its right, title and interest in, to and under (i) all accounts and subaccounts established under this Indenture and
(ii) all funds now or hereafter paid or deposited or required to be paid or deposited to or with the Trustee pursuant to any term hereof or any term of the Security Documents or the Parent Guaranty (all such Properties, including without limitation all properties hereafter specifically subjected to the lien of this Indenture by any indenture supplement hereto, being hereinafter collectively referred to as the "Trust Estate").

TO HAVE AND TO HOLD, all and singular, the Trust Estate for the uses and purposes, and subject to the terms and provisions set forth in this Indenture, unto the Trustee and its successors and assigns in trust forever.

IN TRUST NEVERTHELESS, under and subject to the terms and conditions herein set forth and for the equal and proportionate, unless otherwise stated herein, benefit and security of the Owners from time to time of the Outstanding Notes and for the enforcement of the prompt and complete payment when due of all sums due in connection with the Outstanding Notes from time to time, this Indenture and each of the Security Documents and for the performance and observance by the Issuer of the covenants, obligations and conditions to be performed and observed by the Issuer;

PROVIDED, HOWEVER, that these presents are upon the condition that if the Issuer, its successors or assigns, shall satisfy the conditions set forth in
Section 12.1 for a release of the Trust Estate in full, then this Indenture, and the estates and rights assigned to the Trustee and in the Security Documents, shall cease, terminate and be void; otherwise they shall remain and be in full force and effect;

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IT IS HEREBY FURTHER COVENANTED AND AGREED that the Trust Estate is to be held and applied by the Trustee for the benefit of the Owners, subject to the further covenants, agreements, conditions, uses and trust hereafter set forth. The Issuer, for itself and its successors and assigns, does hereby covenant and agree with the Trustee for the benefit of all present and future Owners, or any of them, as follows:

ARTICLE 1
DEFINED TERMS

1.1 Special Definitions. For purposes of this Indenture, capitalized terms shall have the respective meanings (i) set forth below, (ii) set forth in the
Section or other part of this Indenture following such term, or (iii) provided for in the Security Documents (such definitions to be equally applicable to both the singular and plural forms of the terms defined):

Affiliate -- at any time, and with respect to any Person, any other Person that at such time directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with, such first Person. As used in this definition, "Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise (and "Controlled" shall be construed accordingly). Unless the context otherwise clearly requires, any reference to an "Affiliate" is a reference to an Affiliate of the Issuer.

Amended Note - has the meaning set forth in the First Supplemental Indenture.

Business Day -- means any day other than a Saturday, Sunday, legal holiday or a day on which banking institutions in the City of New York, New York and any other city where the Trustee shall have a corporate trust office administering any of its duties under this Indenture are authorized to close by law or executive order of a regulatory or administrative issuer having jurisdiction in connection therewith.

Closing Date -- the date of the initial issuance of a Note (but excluding a Note issued in substitution for an outstanding Note). One or more Notes may be issued from time to time hereunder.

Collateral - as defined in the Security Documents.

Collateral Agent - as defined in the Security Documents; initially, MHW, Ltd.

Collection Account -- has the meaning set out in Section 4.2.

Contested in Good Faith -- actively contested in good faith by appropriate actions or proceedings provided that the action to be taken will not result in any risk of imposition of civil or criminal penalties on the Trustee or the Owners of the Notes or substantial danger of sale, forfeiture or loss of a material part of the Collateral.

Debt -- for any Person the sum of the following (without duplication):
(i) all obligations of such Person for borrowed money or evidenced by bonds, debentures, notes or other similar instruments (including principal, interest, fees and charges); (ii) all obligations

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of such Person (whether contingent or otherwise) in respect of bankers' acceptances, letters of credit, surety or other bonds and similar instruments; (iii) all obligations of such Person to pay the deferred purchase price of Property; (iv) all obligations under leases which shall have been, or should have been, in accordance with GAAP, recorded as capital leases in respect of which such Person is liable; (v) all Debt (as described in the other clauses of this definition) and other obligations of others secured by a Lien on any asset of such Person, whether or not such Debt or other obligation is assumed by such Person; and (vi) all Debt (as described in the other clauses of this definition) and other obligations of others guaranteed by such Person or in which such Person otherwise assures a creditor against loss of the debtor or obligations of others.

Default Rate - ten percent (10%) per annum.

Event of Default -- has the meaning set out in Section 7.1.

Excepted Liens -- (i) Liens for taxes, assessments or other governmental charges or levies not yet due or which are being Contested In Good Faith; (ii) Liens in connection with workmen's compensation, unemployment insurance or other social security, old age pension or public liability obligations not yet due or which are being Contested In Good Faith; (iii) operators', vendors', carriers', warehousemen's, repairmen's, mechanics', workmen's, materialmen's, or other like Liens arising by operation of law in the ordinary course of business or statutory landlord's liens (so long as no action has been taken to file or enforce such Liens) or which are being Contested In Good Faith; (iv) deposits of cash or securities to secure the performance of bids, trade contracts, leases, statutory obligations and other obligations of a like nature incurred in the ordinary course of business; and (v) other Liens expressly permitted by the Security Documents.

First Supplemental Indenture - has the meaning set forth in the second recital to this Agreement.

GAAP -- generally accepted accounting principles and practices which are recognized as such in the United States by the Financial Accounting Standards Board (or any generally recognized successor) as in effect from time to time.

Governmental Authority -- the country, the state, county, city and political subdivisions in which any Person or such Person's Property is located or which exercises jurisdiction over any such Person or such Person's Property, and any court, agency, department, commission, board, body, bureau or instrumentality of any of them including monetary authorities which exercises jurisdiction over any such Person or such Person's Property. Unless otherwise specified, all references to Governmental Authority herein shall mean a Governmental Authority having jurisdiction over, where applicable, the Issuer, the Parent or any of their Property or the Trustee or any Note Owner.

Governmental Requirements - meaning any applicable law, statute, code, ordinance, order, determination, rule, regulation, publication, judgment, decree, injunction, franchise, permit, registration, consent, approval, certificate, license, authorization or other directive or requirement (whether or not having the force of law), of any Governmental Authority.

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Indenture -- this Indenture, as originally executed or as it may from time to time be supplemented or amended in accordance with the provisions hereof.

Interest Payment Date - each May 31st and November 30th of each year, with the first Interest Payment Date being November 30, 2004 and the last Interest Payment Date being the Maturity Date.

Issuer -- has the meaning set out in the first paragraph of this Indenture and includes any successor to the Issuer by way of merger, consolidation, conversion or transfer of all or substantially all assets of the Issuer.

Investment Grade -- a rating equal to or higher than "BBB-" by Standard & Poor's Rating Services, a division of The McGraw Hill Companies, Inc. or any successor thereto or equal to or higher than "Baa3" by Moody's Investors Service, Inc. or any successor thereto and equal to or higher than "BBB-" by Duff & Phelps Credit Rating Co. or any successors thereto
(if Duff & Phelps Credit Rating Co. is then rating the applicable security)
or a comparable rating by another nationally recognized statistical rating organization, which rating and organization are approved by the Issuer.

Lien -- any interest in Property securing an obligation owed to, or a claim by, a Person other than the owner of the Property, whether such interest is based on the common law, statute or contract, and including but not limited to the security interest or lien arising from a mortgage, encumbrance, pledge, conditional sale or other title retention agreement, trust receipt or a lease, consignment or bailment for security purposes.

Majority of Owners -- at any time, Owners of more than fifty percent (50%) of the beneficial interest in the aggregate principal amount owed by the Issuer pursuant to all Notes then Outstanding.

Maturity Date - May 31, 2009.

Notes - any or all of the Notes executed by the Issuer and authenticated by the Trustee in the form of Exhibit A attached hereto.

Opinion of Counsel -- an opinion of outside counsel (which may from time to time serve as counsel for the Issuer, for the Trustee or for an Owner) reasonably acceptable to the Trustee, which opinion is in scope, form and substance reasonably satisfactory to the Trustee.

Original Note - has the meaning as set forth in the First Supplemental Indenture.

Outstanding -- when used with reference to Notes shall mean, as of any particular time, all Notes executed by the Issuer and authenticated and delivered by Trustee to the Depository under this Indenture, except:

(a) Notes theretofore cancelled;

(b) Notes for the payment or prepayment of which moneys in the necessary amount shall have been deposited in trust with the Trustee; and

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(c) Notes in lieu of or in substitution for which other Notes shall have been delivered pursuant to the terms of this Indenture.

Owner - A Person who is the owner of a beneficial interest in the Notes and who is registered as such with the Registrar as provided in
Section 2.3.

Owner Register - as defined in Section 2.3.

Parent - Castle Brands, Inc., a Delaware corporation and owner of all the capital stock of Issuer.

Parent Guaranty - Guaranty of even date herewith executed by the Parent to the Trustee for the benefit of the Owners.

Payment Account - has the meaning set out in Section 4.1.

Permitted Investments -- (a) direct obligations of the United States of America (including obligations issued or held in book-entry form on the books of the Department of the Treasury of the United States of America and certificates or other instruments evidencing ownership interests in such direct obligations of the United States of America such as CATS, TIGRS, Treasury Receipts and Stripped Treasury Coupons) which mature within one
(1) year after the acquisition thereof; (b) obligations for which the timely payment of the principal thereof are fully guaranteed by the United States of America or the Federal Deposit Insurance Corporation, which mature within one (1) year after the acquisition thereof; (c) certificates of deposit of, or time deposits in, any bank (including any Trustee) or trust company organized under the laws of the United States of America or any state thereof whose unsecured obligations are accorded one of the two highest ratings by Standard & Poor's Ratings Services, a division of The McGraw Hill Companies, Inc. or Moody's Investors Service, Inc. and by Duff & Phelps Credit Rating Co. (if such unsecured obligations are rated by Duff & Phelps Credit Rating Co.) and which have at least Five Hundred Million Dollars ($500,000,000) of stated capital and surplus, maturing within ninety (90) days after the acquisition thereof; (d) readily marketable commercial paper of corporations doing business in and incorporated under the laws of the United States of America or any State thereof given on the date of the investment a credit rating of at least P-l by Moody's Investor Services, Inc., or A-1 by Standard & Poor's Ratings Services, a division of The McGraw Hill Companies, Inc. and D-1 by Duff & Phelps Credit Rating Co.
(if Duff & Phelps Credit Rating Co. is then rating such commercial paper) in each case due within 90 days after the date of the making of the investment; and (e) investments in a money-market fund (including any fund for which a Trustee or any Affiliate of a Trustee serves as adviser or sponsor or otherwise receives compensation with respect to such fund) rated AAA or better by Standard & Poor's Ratings Services, a division of The McGraw Hill Companies, Inc. or Aaa by Moody's Investors Services, Inc. and having the equivalent rating from Duff & Phelps Credit Rating Co., if such investments are then rated by Duff & Phelps Rating Co. (or equivalent categories that may be established by such rating services).

Person -- an individual, partnership, corporation, limited liability company, trust, unincorporated association or organization, government, governmental agency or governmental subdivision.

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Pledge Creditors -- has the meaning set out in Section 2.5

Property -- any interest in any kind of property or asset, whether real, personal or mixed, and whether tangible or intangible.

Registered Owner List - a list as of any day, certified by a Responsible Officer of the Registrar, setting forth the name, address, tax identification number, principal amount of Notes beneficially owned, amount of interest and principal payment due or coming due (if applicable), wire transfer instructions (if applicable) and any other information reasonably requested by the Trustee, with respect to each Owner of a Note.

Registrar - the Person serving as registrar and transfer agent of the Issuer under Article 2 of this Indenture. Initially, the Parent shall be the Registrar. The provisions regarding resignation, removal and succession of the Trustee shall also apply to the resignation, removal and succession of the Registrar.

Responsible Officer -- with respect to any corporation, the president, the chief executive officer, the chief financial officer, or the chief operating officer; and with respect to any Trustee which is a corporation or banking association, any vice president, corporate trust officer or other officer, in each case employed within the corporate trust department of such Trustee and who has direct supervisory responsibility for the administration of this Indenture.

Security -- has the same meaning as in Section 2(1) of the Securities Act of 1933, as amended.

Security Documents - means the (i) Collateral Agreement among the Company, the Collateral Agent and the Trustee, (ii) the Security Agreement (MHW, Ltd) between the Trustee and the Collateral Agent, and (iii) the General Security Agreement (Castle Brands [USA], Corp.) among the Company, the Collateral Agent and the Trustee, each originally dated as of June 1, 2004, and each being amended by a First Amendment of even date herewith.

Stub Interest - interest accrued on a Note from the Closing Date on which it is first issued to but not including the next regularly scheduled Interest Payment Date of such Note.

Supermajority of Owners -- at any time, Owners of sixty-six and 2/3 percent (66 2/3%) or more of the beneficial interest in the aggregate principal amount owed by the Issuer pursuant to all Notes then Outstanding.

Trust Estate -- has the meaning set out in the granting clause hereof.

Trustee -- has the meaning set out in the first paragraph of this Indenture. The Trustee shall also serve as paying agent.

UCC -- the Uniform Commercial Code as in effect from time to time in the State of New York or in any other jurisdiction the laws of which are applicable to the Collateral.

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Written Request -- with respect to any Person a written order or request signed in the name of such Person by a Responsible Officer of such Person (if a corporation) or by a general or managing partner of such Person (if a partnership) or by the manager of such Person (if a limited liability company) or by the individual (if such Person is an individual).

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ARTICLE 2
FORM, EXECUTION, ISSUE AND DELIVERY OF NOTES

2.1 Issue of Notes. The Issuer has authorized the issue and sale from time to time of a maximum of Ten Million Dollars ($10,000,000) aggregate original principal amount of its 9% Senior Secured Notes, Series 2004 due May 31, 2009. Physical Notes shall be issuable as fully registered Notes in the name of the Trustee for the benefit of the Owners. The Owners' beneficial interests in the Notes shall not be evidenced by physical certificates, but shall be registered and maintained by the Registrar in book-entry form.

2.2 Authentication of Physical Notes; Denominations of Notes; Form; Custody.

(a) Authentication. Only such of the physical Notes as shall have been executed by a Responsible Officer of the Issuer and which bear thereon a certificate in the form of authentication set forth in Exhibit A executed by the Trustee, shall be valid, and the authentication by the Trustee upon any such Note executed on behalf of the Issuer as aforesaid shall be conclusive evidence that the Note so authenticated has been duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture.

(b) Denominations. The Notes and the beneficial interests therein shall be issued from time to time in denominations of Five Thousand Dollars ($5,000) and multiples thereof.

(c) Form. All physical Notes shall be issued in the form of the Notes attached hereto as Exhibit A, duly executed by the Issuer and authenticated by the Trustee as hereinabove provided. Each Note shall be dated its respective Closing Date.

(d) Custody. The Trustee shall maintain custody of the physical Notes, and no physical Notes shall ever be issued other than in the name of the Trustee.

2.3 Registration of Owners. The Registrar shall maintain a register (the "Owner Register"), showing the name, address, tax identification number, and the principal amount of the Notes beneficially owned (in denominations of $ 5,000 or multiples thereof) by (i) each Person to whom the Issuer has sold a beneficial interest in the Notes as certified to the Registrar by a Responsible Officer of the Issuer and (ii) each Person who is a transferee of a beneficial interest in the Notes pursuant to Section 2.7. The Person shown as an Owner on the Owner Register, as certified to the Trustee by the Registrar, shall be deemed and treated as the owner and holder of a Note for all purposes of this Indenture, and the Trustee shall not be affected by any notice or knowledge to the contrary.

2.4 Exchange of Physical Notes. The Issuer shall execute and the Trustee shall authenticate and deliver, one or more new Notes payable to the Trustee in exchange therefor, of like tenor for a like aggregate principal amount in authorized denominations, such that the outstanding aggregate principal amount of physical Notes held by the Trustee is at all times equal to the outstanding aggregate principal amount of beneficial interests in the Notes owned by Owners. All physical Notes surrendered for exchange or replacement shall be canceled by the Trustee and delivered to the Issuer. If an Amended Note is issued in substitution and cancellation of an Original Note on any date other than an Interest Payment Date, the interest payable on such Amended Note on the next succeeding Interest Payment Date shall include all unpaid interest on the Original Note at

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the rate provided for in the Original Note accrued through the date of such Original Note's cancellation as well as interest accrued on the Amended Note issued in replacement therefor at the rate provided for in the Amended Note from the date of its issuance to but not including such next succeeding Interest Payment Date.

2.5 Pledges. With the permission of the Issuer which will not be unreasonably withheld, Owners may grant security interests in and pledge their beneficial interest in the Notes to secure obligations owed to third Persons ("Pledge Creditors"). Upon receiving a Written Request from the Issuer and the Owner to register a grant of a security interest in the Owner's beneficial interest in the Notes, the Registrar shall note in the Owner Register the name of the Pledge Creditor, its address and tax identification number, the name of the Owner and principal amount of beneficial interest in the Notes owned by Owner and which have been pledged to the Pledge Creditor. Upon acceptance of such Written Request and, except to the extent that the Owner, Pledge Creditor, Issuer and Registrar have otherwise agreed in writing, the Pledge Creditor shall be treated as the registered owner for all purposes of this Indenture and shall be in control of the Notes so noted on the Owner Register.

2.6 Proof of Ownership. Beneficial ownership interests in the Notes will not be certificated or represented by negotiable instruments, but will be maintained by the Registrar and transferred by book-entry procedures in accordance with Article 8 of the UCC and the Securities Transfer Association Rules. The Registrar shall mail a statement of ownership to each initial Owner and to each Person who subsequently becomes an Owner within three (3) Business Days following entry of such Owner's name on the Owner Registry. If any Owner or Pledge Creditor desires proof of ownership of its beneficial interest or of the registration of its security interest in the Notes, the Registrar shall, upon receiving a Written Request therefor from the Owner or Pledge Creditor, certify as of the date requested the principal amount of beneficial interest in the Notes owned by such Owner or pledged to such Pledge Creditor.

2.7 Transfer of Beneficial Interest in the Notes. Any Owner of a Note may transfer all or part of its beneficial interest in the Notes in increments of $5,000 by delivering to the Issuer, with a copy to the Registrar, a written instruction requesting registration of transfer in the form attached hereto as Exhibit B ("Transfer of Registration Request"), appropriately completed and duly executed by the Owner and its proposed transferee. Upon receiving such Transfer of Registration Request approved by a Responsible Officer of the Issuer, the Registrar shall amend the Owner Register by deducting from the transferor Owner's account the principal amount of beneficial interest in the Notes to be transferred pursuant to the Transfer of Registration Request and crediting the account of the transferee Owner with such principal amount so transferred.
NEITHER THE ISSUER NOR THE REGISTRAR SHALL BE REQUIRED TO REGISTER THE TRANSFER OF ANY BENEFICIAL INTEREST IN THE NOTES UNLESS, IN THE REASONABLE JUDGMENT OF THE ISSUER AND (UNLESS WAIVED) IN RELIANCE UPON AN OPINION OF COUNSEL ACCEPTABLE TO IT, SUCH TRANSFER IS NOT IN VIOLATION OF ANY SECURITIES, ALCOHOLIC BEVERAGE OR OTHER APPLICABLE LAWS.

2.8 Valid Obligations. All Notes executed, authenticated and delivered in exchange for, or in replacement of, other Notes as provided in this Indenture shall be the valid obligations of the Issuer, evidencing the same debt as such other Notes, shall be entitled to the benefits of this Indenture and Security Documents to the same extent as the Notes in exchange for or replacement of which they were executed and delivered, and the rights of Owners of the beneficial interests in the Notes to payments with respect thereto and to the benefits and privileges of this Indenture and the Security Documents shall not be affected by such exchange or replacement.

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2.9 Execution and Delivery. The Notes may be typewritten, printed or lithographed or produced by any other means acceptable to the Trustee, and shall be signed on behalf of the Issuer by the manual signature of one of its Responsible Officers. In the case that any of the officers who shall have signed or sealed any of the Notes shall cease to be such officer or officers of the Issuer before the Notes so signed shall have been delivered by or on behalf of the Issuer, such Notes may nevertheless be delivered and issued and, upon such delivery and issue, shall be binding upon the Issuer as though those who signed or sealed the same had continued to be such officer or officers.

2.10 Payments. All payments of interest, principal and other amounts due on the Notes shall be made by the Issuer to the Trustee, and by the Trustee in turn to the Owners, proportionate to the principal amount of Notes owned by each as shown on the Owner Register; provided however, if more than one Note shall be issued on different Closing Dates, then the Stub Interest due on each Note shall be paid only to those Owners certified by the Registrar as the Owners of each such Note. All payments of interest and principal on the Notes shall be made by the Issuer to or upon the order of the Trustee on the dates and at the times provided for such payment under this Indenture and the Notes by transfer of immediately available funds. Provided that the Trustee has received timely sufficient funds from the sources described in this Indenture to make such payment and a Registered Owner List, each such payment to the Trustee shall be valid and effective to fully satisfy and discharge all liability of the Issuer with respect to its liability on the Notes to the extent of the sum or sums so paid.

ARTICLE 3
PAYMENTS OF INTEREST AND PRINCIPAL

3.1 Payment by Issuer. The Issuer shall pay all amounts due with respect to the Notes (without any presentment of any such Notes and without any notation of such payment being made thereon) in lawful money of the United States of America to the Trustee as provided for in this Indenture. In any case where the date of maturity of principal of, and interest on, the Notes or the date fixed for any prepayment (in whole or in part) of the Notes is not a Business Day, then payment of such principal of, and interest on, the Notes need not be made on such date but in no event shall be made later than the next succeeding Business Day with the same force and effect as if made on the Interest Payment Date, Maturity Date or the date fixed for such prepayment. Each Owner agrees that the Trustee, in its individual capacity, shall not be liable to the Owner of any Note for any amounts payable under any Note or this Indenture. The Notes may be prepaid at any time without premium or penalty.

3.2 Issue Taxes. The Issuer will pay all taxes, assessments and charges in connection with the issuance and sale of the Notes by the Issuer and in connection with any modification of the Notes and will save the Trustee and each holder of any Note harmless without limitation as to time against any and all liabilities with respect to all such taxes. The obligations of the Issuer under this Section 3.2 shall survive the payment or prepayment of the Notes and the termination of this Indenture.

3.3 Required Payments.

(a) Principal and Interest. Accrued interest on the Notes shall be due and payable (i) on each Interest Payment Date, (ii) on the date of any prepayment of any Note being prepaid, (iii)

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on the Maturity Date and (iv) upon acceleration of the Notes pursuant to Article
7. If not earlier prepaid at the discretion of the Issuer, all principal on the Notes is due on the Maturity Date.

(b) Amortization Schedules. No principal on the Notes is required to be paid, deposited or reserved by the Issuer pursuant to any amortization or sinking fund schedule, all principal on the Notes being due on the Maturity Date.

(c) Record Dates for Payments to Owners. All payments of principal and interest shall be made to Persons who are Owners as set out on the Owner Register on the fifteenth (15th) day, whether or not a Business Day, preceding the date when such payment is due (each such date being a "Record Date").

3.4 Registered Owner List. The Registrar shall deliver a Registered Owner List to the Trustee at least ten (10) days prior to the date on which any payment is to be made, any communication is to be delivered, or any other action or thing is to be taken, by the Trustee with respect to the Owners. With respect to any payments, the Registered Owner List shall reflect the Owners of the Notes as of the pertinent Record Date, and the Trustee shall be entitled to rely conclusively upon such Registered Owner List in effecting payment. Upon receiving a Written Request from the Trustee, the Registrar shall deliver a Registered Owner List to the Trustee on the next succeeding Business Day.

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ARTICLE 4
ACCOUNTS

4.1 Payment Account. The Trustee shall establish an account styled the "Payment Account" (the "Payment Account") subject to the Trustee's sole dominion and control. All funds representing payments for interest and principal on the Notes received by the Trustee from the Issuer and by transfers from the Collection Account pursuant to Section 4.2 below shall be credited to the Payment Account and shall be applied toward payment of interest and principal on the Notes. The Issuer shall have no obligation to maintain any minimum or reserve amounts in the Payment Account.

4.2 Collection Account. Upon the occurrence of an Event of Default and the exercise by the Trustee of any rights or remedies under Article 7 of this Indenture, the Trustee shall establish an account styled the "Collection Account" (the "Collection Account") subject to the Trustee's sole dominion and control. Each payment received by the Trustee pursuant to any of the provisions of the Security Documents, in connection with the Collateral or the Parent Guaranty shall be deposited by the Trustee in the Collection Account, shall be held in trust by it as part of the Trust Estate and shall be applied pursuant to the provisions of Section 5.2 below. From time to time the Trustee may, and upon receiving written direction from a Supermajority of Owners shall, transfer all or part of funds credited to the Collection Account to the Payment Account to effect payment to Owners.

ARTICLE 5
RECEIPT, DISTRIBUTION AND APPLICATION OF TRUST ESTATE

5.1 Application of the Payment Account When No Event of Default is Continuing. So long as no Event of Default shall have occurred and be continuing, the Trustee shall apply any amounts in the Payment Account as follows:

first, to the accrued unpaid interest due and payable to the Owners allocated pursuant to Section 5.4; and

second, to the principal due at maturity and upon prepayments of principal, if any, allocated pursuant to Section 5.4, and

third, the balance, if any, of such payment remaining shall be distributed to the Issuer or its assigns.

5.2 Application of Payments During Continuance of an Event of Default. All monies held or realized in connection with the Security Documents, the Collateral or the Parent Guaranty, or otherwise by the Trustee or the Collateral Agent after an Event of Default shall have occurred and be continuing, as well as all payments or amounts thereafter received by the Trustee as part of the Trust Estate while any such Event of Default shall be continuing, shall be applied by the Trustee as follows:

first, so much of such monies, payments or amounts as shall be required to reimburse the Trustee and the Collateral Agent for their services and the costs and expenses of foreclosure or suit, if any, and the retaking, holding, preparing for sale, liquidation or other disposition of the Collateral and reasonable attorneys fees and legal expenses incurred by the Trustee;

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second, to any Owners for all theretofore unreimbursed payments paid by the then existing or prior Owners pursuant to any indemnity or security furnished to the Trustee shall be distributed to such Owners ratably, without priority of one over the other, in the proportion that the amount of each such unreimbursed payment of each such Owner bears to the aggregate amount of all such unreimbursed payments by all such Owners;

third, so much of such monies, payments or amounts remaining as shall be required to pay the unpaid principal balance due on all Outstanding Notes, plus all accrued and unpaid interest thereon, shall be distributed to the Owners of such Notes without priority of one such Owner over another, and allocated pursuant to Section 5.4; and

fourth, the balance, if any, of such monies, payments or amounts shall be distributed to the Issuer or its assigns.

5.3 Amounts Held by Trustee. Any amounts held by the Trustee in the Payment Account or Collection Account, or pursuant to any other provision hereof or any provision of any Security Document and which have not been applied or distributed pursuant to the other provisions of this Indenture, may, upon Written Request of the Issuer (or upon oral request of the Issuer, promptly confirmed in writing), be invested by the Trustee from time to time in Permitted Investments. All Permitted Investments shall be held in the name of the Trustee and control thereof shall be maintained by the Trustee as provided in Section 8-106 of the UCC. Unless otherwise expressly provided in this Indenture, any income realized as a result of any such Permitted Investment, net of the Trustee's reasonable fees and expenses in making such Permitted Investment, shall be held and applied by the Trustee in the same manner as the principal amount of such Permitted Investment is to be applied and any losses, net of earnings and such reasonable fees and expenses, shall be charged against the principal amount invested. The Trustee shall not be liable for any loss resulting from any investment required to be made by it under this Indenture other than by reason of its willful misconduct or negligence, and any such investment may be sold (without regard to its maturity or whether it is sold at a loss) by the Trustee without instructions whenever the Trustee reasonably believes that such sale is necessary to make a payment required by this Indenture.

5.4 Allocation of Payments. Except for Stub Interest which shall be paid as set forth in Section 2.10, each payment applied to the Outstanding Notes pursuant to Articles 3, 4 or 5 shall be allocated among the Owners in proportion to the respective outstanding principal amounts owed to each such Owner by the Issuer. Following an Event of Default, to the extent permitted by applicable law, the Trustee shall report all payments to Owners as first being applied to reduce principal, and if all principal due on the Notes has been paid, as next being applied to reduce accrued interest due on the Notes.

5.5 Method of Payment to Owners. The principal of and interest on the Notes and all other amounts payable to the Owners of the Notes pursuant to this Indenture will be payable at the office of the Trustee in United States dollars in immediately available funds on the due date thereof. Owners of Notes aggregating $500,000 or more in principal amount desiring payment in immediately available funds may provide wire transfer information to the Registrar in writing on or prior to the record date for such payment. The Registrar shall be responsible for timely communicating wire transfer instructions to the Trustee along with the Registered Owner List. Otherwise, the Trustee will effect delivery, unless the Owner otherwise requests in writing to accept payment at the office of the Trustee, of all amounts payable to such Owner by means of a check or

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draft from a depository banking account maintained with the Trustee in its individual capacity, mailed first class to such Owner to its address shown on the Registered Owner List.

ARTICLE 6
EVIDENCE OF ACTS OF OWNERS

6.1 Execution by Note Owners or Agents. Any request, consent, demand, authorization, direction, notice, waiver or other action provided by this Indenture to be given or taken by Owners of the Notes may be embodied in and evidenced by one or more instruments of substantially similar tenor and may be signed or executed by such Owners in person or by agent or agents duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Issuer.

6.2 Future Owners Bound. Any request, consent, demand, authorization, direction, notice, waiver or other action of Owners shall bind every future Owner in respect of anything done or suffered to be done by the Trustee or the Issuer in pursuance of such action irrespective of any representations made to or information received by such future Owner from any Person.

ARTICLE 7
INDENTURE DEFAULTS - REMEDIES

7.1 Indenture Events of Default. One or more of the following events shall constitute an " Event of Default":

(a) the Issuer shall default in the payment or prepayment when due of any principal of or interest on any Note and such default shall continue unremedied for a period of twenty (20) Business Days; or

(b) any representation, warranty or certification at any time made herein or in any Security Document or any certificate furnished to the Trustee or Collateral Agent pursuant to the provisions hereof or any Security Document, shall prove to have been materially false or misleading as of the time made or furnished, or the Issuer shall default in the performance of any of its other material obligations hereunder or under the Security Documents, and such misstatement, breach or default shall continue unremedied by Issuer (or shall continue unwaived by the Majority of Owners) for a period of sixty (60) days after notice thereof has been given by the Trustee to the Issuer; or

(c) the Issuer shall admit in writing its inability to pay its debts as such debts become due; or

(d) the Issuer shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its Property, (ii) make a general assignment for the benefit of its creditors, (iii) commence a voluntary case under the United States Bankruptcy Code (as now or hereafter in effect), (iv) file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, winding-up, liquidation or composition or readjustment of debts, or (v) fail to oppose in a timely and appropriate manner, or acquiesce in writing to, any petition filed against it in an involuntary case under the United States Bankruptcy Code, or (vi) take any corporate action for the purpose of effecting any of the foregoing; or

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(e) a proceeding or case shall be commenced, without the application or consent of the Issuer, in any court of competent jurisdiction, seeking (i) its liquidation, reorganization, dissolution or winding-up, or the composition or readjustment of its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of the Issuer of all or any substantial part of its assets, or (iii) similar relief in respect of the Issuer under any law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts, and such proceeding or case shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing shall be entered and continue unstayed and in effect, for a period of ninety (90) days; or (iv) an order for relief against the Issuer shall be entered in an involuntary case under the United States Bankruptcy Code.

7.2 Acceleration of Notes.

(a) Acceleration by Trustee. If an Event of Default has occurred and is continuing, the Trustee may, and at the written direction of a Supermajority of Owners shall, declare the entire principal of and all interest accrued on all the Notes then Outstanding to be, and such Notes shall thereupon become, immediately due and payable together with all interest accrued thereon. In such case, all Outstanding Notes shall become due and payable without any presentment, demand, protest, notice of protest, notice of acceleration or intention to accelerate or any other notice or declaration of any kind, all of which are hereby expressly waived by the Issuer, and the Issuer will forthwith pay to the Trustee for the benefit of all Owners of the Notes then Outstanding the entire principal of and interest accrued on the Notes.

(b) Nonwaiver and Expenses. No course of dealing on the part of the Owners or Trustee or any delay or failure on the part of any Owner or the Trustee to exercise any right shall operate as a waiver of such right or otherwise prejudice any of their rights, powers and remedies.

7.3 Annulment of Acceleration of Notes. If a declaration of acceleration is made pursuant to Section 7.2 by the Trustee, then a Majority of Owners may, by written instrument filed with the Issuer and the Trustee, rescind and annul such declaration. If a declaration of acceleration is made pursuant to Section 7.2 at the written direction of a Supermajority of Owners, then a Supermajority of Owners may, by written instrument filed with the Issuer and the Trustee, rescind and annul such declaration, and the consequences thereof; provided, that no such rescission and annulment shall (i) extend to or affect any subsequent Event of Default or (ii) impair any right in connection therewith.

7.4 Default Remedies. If an Event of Default exists,

(a) the Trustee may, and upon receiving a written direction of a Supermajority of Owners shall, (i) exercise all of the rights and remedies granted to such Trustee hereunder, and/or (ii) by itself, or by direction given to the Collateral Agent cause it to, exercise all of the rights and remedies granted under each of the Security Documents, and/or (iii) by itself, or by direction given to the Collateral Agent cause it to, exercise all of the rights and remedies of a secured party under the Uniform Commercial Code. The Trustee or the Collateral Agent on behalf of the Trustee may take possession of all or any part of the Collateral to the exclusion of the Issuer and all Persons claiming under the Issuer; and

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(b) the Trustee may itself or by direction given to the Collateral Agent exercise all other rights and remedies permitted by law or in equity.

7.5 Other Enforcement Rights.

(a) The Trustee may, but unless first requested so to do by a Supermajority of Owners and furnished with indemnity reasonably satisfactory to it pursuant to Article 10 hereof shall not (subject to the provisions of Section 10.1) be under any obligation to, proceed to protect and enforce this Indenture, the Notes, the Parent Guaranty and any Security Document by suit or suits or proceedings in equity, at law or in bankruptcy, and whether for the specific performance of any covenant or agreement herein or therein provided, or for foreclosure or orderly liquidation thereunder, or for the appointment of a receiver or receivers for the foreclosure thereunder, or for the appointment of a receiver or receivers for the Trust Estate or other Collateral or any part thereof, for the recovery of judgment for the obligations hereby secured or for the enforcement of any other proper, legal or equitable remedy available under applicable law.

(b) In case an Event of Default has occurred and is continuing and there shall be pending any case or proceedings for the bankruptcy or for the reorganization or arrangement of the Issuer, the Trustee may file such proof of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and of the Owners allowed in any judicial proceedings relative to the Issuer, irrespective of whether the principal of all of the Notes shall then be due and payable as therein expressed, by proceedings for the prepayment thereof, by declaration or otherwise, the Trustee shall be entitled and empowered to file and prove a claim for the whole amount of principal and interest owing and unpaid in respect of the Notes, and any other sum or sums owing thereon or pursuant thereto or pursuant hereto, and to collect and receive any or other Property payable or deliverable on any such claim, and to distribute the same as provided in Section 5.3; and any receiver, custodian, assignee or trustee in bankruptcy, trustee or debtor in reorganization or trustee or debtor in any proceedings for the adoption of an arrangement is hereby authorized by each Owner, to make such payments to the Trustee, and, in the event that the Trustee shall consent to the making of such payments directly to the Owners, to pay to the Trustee any amount due it for compensation and expenses, including reasonable external counsel fees, incurred by it up to the date of such distribution; provided, however, that nothing herein contained shall be deemed to authorize or empower the Trustee to consent to accept or adopt, on behalf of any Owner, any plan of reorganization or readjustment of the Issuer affecting the Notes or the rights of any Owner, or to authorize or empower the Trustee to vote in respect of the claim of any Owner in any such proceedings.

(c) The Issuer hereby irrevocably appoints the Trustee and the Collateral Agent as the Issuer's attorney-in-fact and proxy, with full authority in the place and stead of the Issuer and in the name of the Issuer or otherwise, from time to time during the continuance of an Event of Default in the Trustee's discretion, to take any action and to execute any instrument which the Trustee may deem necessary or advisable to accomplish the purposes of this Indenture or the Security Documents, including, without limitation: (a) to ask, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for monies due and to become due under or in respect of any of the Collateral; and (b) to file any claims or take any action or institute any proceedings which the Trustee may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of the Trustee with respect to any of the Collateral. Without limiting the generality of the foregoing, the Trustee and the Collateral Agent shall have the

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right to receive, collect and endorse all checks made payable to the Issuer or the Issuer's order. If the Issuer fails to perform any act or to take any action which hereunder or under any Security Document the Issuer is required (or has the right) to perform or take, or to pay any money which hereunder or under any other Security Document the Issuer is required to pay, the Trustee and\or the Collateral Agent, in the Issuer's name or in its own name, may (but shall not be obligated to) following notice to the Issuer perform or cause to be performed such act or take such action or pay such money, and any expenses so incurred, and any money so paid by the Trustee and\or the Collateral Agent, shall be a demand obligation owing by the Issuer and shall bear interest from the date of making such payment until paid at the Default Rate. Upon making any such payment, the Trustee and\or Collateral Agent shall be subrogated to all of the rights of the Person receiving such payment, which rights will be held by the Trustee and\or Collateral Agent to secure the obligations secured hereby.

(d) Anything in this Indenture to the contrary notwithstanding, a Supermajority of Owners shall have the right, at any time, by an instrument or instruments in writing, executed and delivered to Trustee and\or Collateral Agent, after providing indemnity satisfactory to the Trustee and Collateral Agent, to direct the method and place of conducting all proceedings to be taken by the Trustee and\or Collateral Agent in connection with the enforcement of the terms and conditions of this Indenture and the Security Documents; provided, however, that such direction shall not violate the express provisions of this Indenture or applicable law.

7.6 Effect of Sale, etc.

(a) Any sale or sales pursuant to the provisions hereof or of any other Security Document, whether under the power of sale granted hereby or thereby or pursuant to any legal proceedings, shall operate to divest the Issuer of all right, title, interest, claim and demand whatsoever, either at law or in equity, of, in and to the Trust Estate or other Collateral, or any part thereof, so sold, and any Property so sold shall be free and clear of any and all rights of redemption by, through or under the Issuer. At any such sale, any Owner may bid for and purchase the Property sold and may make payment therefor as set forth below, and any Owner so purchasing any such Property, upon compliance with the terms of sale may hold, retain and dispose of such Property without further accountability.

(b) The receipt by any Trustee, or by any Person authorized under any judicial proceedings to make any such sale, of the proceeds of any such sale shall be a sufficient discharge to any purchaser of the Trust Estate or other Collateral, or of any part thereof, sold as aforesaid; and no such purchaser shall be bound to see to the application of such proceeds, or be bound to inquire as to the authorization, necessity or propriety of any such sale.

7.7 Restoration of Rights and Remedies. If the Trustee shall have instituted any proceeding to enforce any right or remedy under this Indenture or under any other Security Document and such proceeding shall have been discontinued or abandoned for any reason, or shall have been determined adversely to such Trustee, then and in every such case such Trustee, the Issuer and the Owners of the Notes shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder or under any Security Document, and thereafter all rights and remedies of such Trustee shall continue as though no such proceeding had been instituted.

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7.8 Application of Sale Proceeds and Deficiency. The proceeds of any exercise of rights with respect to the Trust Estate or any other Collateral, or any part thereof, and the proceeds and the avails of any remedy hereunder shall be deposited with the Trustee and applied as described in Sections 4.2 and 5.2. In the event that at any time and from time to time the payments then collected by the Trustee and the proceeds of any sale, collection or realization of or upon Collateral are insufficient to pay all the obligations secured by this Indenture, the Issuer shall be liable for the deficiency, together with interest thereon at the Default Rate, together with the costs of collection and the reasonable fees and disbursements of any attorneys employed to collect such deficiency.

7.9 Cumulative Remedies. No delay or omission of the Trustee, the Collateral Agent or of any one or more of the Owners to exercise any right or power hereunder or under any Security Document in connection with any Event of Default or failure of performance on the part of the Issuer shall exhaust or impair any such right or power or prevent its exercise during the continuance of Event of Default. No waiver by any Trustee, the Collateral Agent, or the Owners, of any such Event of Default, whether such waiver be full or partial, shall extend to or be taken to affect any subsequent default, or to impair the rights resulting therefrom except as may be otherwise expressly provided herein. No remedy hereunder or under any Security Document is intended to be exclusive of any other remedy but each and every remedy shall be cumulative and in addition to any and every other remedy given hereunder or under any Security Document or otherwise existing; nor shall the giving, taking or enforcement of any other or additional security, any guarantees or the Collateral for the payment of the obligations secured under this Indenture operate to prejudice, waive or affect the security of this Indenture or any Security Document or any rights, powers or remedies hereunder or under any Security Document, nor shall the Trustee, the Collateral Agent or any Owner be required to first look to, enforce or exhaust such other or additional security, Collateral or guaranties. All covenants, conditions, provisions, warranties, guaranties, indemnities and other undertakings of the Issuer contained in this Indenture, or in any document referred to herein or in any agreement supplementary hereto or in any Security Documents shall be deemed cumulative to and not in derogation or substitution of any of the terms, covenants, conditions, or agreements of the Issuer herein contained. To the extent of overlap of any security interest or lien granted hereunder or under any Security Document on any particular Collateral, the Trustee may elect to exercise or cause the Collateral Agent to exercise rights and remedies under either or, if appropriate, both of such security interests or liens.

7.10 Limitations on Suits. No Owner shall have the right to institute any suit, action or proceeding at law or in equity, for the enforcement of any trust or power granted to the Trustee under this Indenture or any Security Document or for any other remedy under or upon this Indenture, the Notes, or any Security Document, unless (a) a Supermajority of Owners shall have made Written Request upon the Trustee to exercise the powers herein granted or to institute such action, suit or proceeding in its own name; (b) such Owners shall have offered to the Trustee the security and indemnity reasonably satisfactory to it as provided under Section 10.3(f); and (c) the Trustee shall have refused or failed to comply with such Written Request for a period of thirty (30) days after such Written Request shall have been received by it. Such notification, request, offer of indemnity and refusal or failure are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of any remedy hereunder; it being understood and intended that no one or more Owners of Notes shall have any right in any manner whatever by its or their action to enforce any right under this Indenture, the Notes or any Security Document, except in the manner herein provided, and that all judicial proceedings to enforce any provision of this Indenture, the Notes or any other Security Document shall be instituted, had and maintained in the manner herein or any other Security

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Document provided and for the equal and proportionate benefit of all Owners of the Outstanding Notes.

ARTICLE 8
AFFIRMATIVE COVENANTS

The Issuer covenants and agrees that until payment in full of all Notes issued hereunder:

8.1 Financial Statements. The Issuer shall, at its sole expense, deliver, or shall cause to be delivered, to the Registrar for distribution to the Owners, as reflected on the most recent Registered Owners List, with a copy to the Trustee:

(a) Within 120 days after the end of each fiscal year of the Issuer the audited statements of operations, stockholders' equity and cash flow, of the Issuer for such fiscal year, and the related balance sheet of the Issuer as at the end of such fiscal year, and setting forth in each case in comparative form the corresponding figures for the preceding fiscal year, accompanied by (i) the related opinion of independent public accountants then engaged by the board of directors of the Company to conduct its annual audit.

(b) Within 60 days after the end of each of the first three fiscal quarterly periods of each fiscal year of the Issuer the unaudited statements of operations and cash flows of the Issuer for such period and for the period from the beginning of the respective fiscal year to the end of such period, and the related balance sheets as at the end of such period, and setting forth in each case in comparative form the corresponding figures for the corresponding period in the preceding fiscal year, prepared in accordance with GAAP, as at the end of, and for, such period (subject to normal year-end audit adjustments).

(c) The Trustee shall not be under any duty to check or verify any financial statements, cash flows, balance sheets or other reports furnished pursuant to this section, or to check, verify or compare any of such statements or reports previously or subsequently furnished, its sole duty with respect thereto being to distribute same to the Owners upon Written Request.

8.2 Existence, Compliance and Insurance. The Issuer shall: (i) preserve and maintain its corporate existence and all of its material rights, privileges, licenses and franchises reasonably necessary for the conduct of its business as determined in good faith by its board of directors; (ii) keep proper books of record and account; (iii) comply with relevant Governmental Requirements if failure to comply with such requirements would have a material adverse effect on the financial condition of the Issuer; (iv) pay and discharge, or make appropriate reserves for, all material taxes, Liens, assessments and governmental charges or levies imposed on it or on its income or profits or on any material part of its Property except for any such tax, Lien, assessment, charge, levy, account payable or claim, the payment of which is being Contested In Good Faith; (v) permit the Trustee or a representative of a Majority of Owners to visit and inspect, under the Issuer's guidance, any of the material Properties of the Issuer, and to examine all of its books of account, records, reports and other relevant papers; and (vi) keep, or cause to be kept, insured all material Property of a character usually insured by Persons engaged in the same or similar business similarly situated against loss or casualty.

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8.3 Further Assurances. The Issuer will cure promptly any defects in the creation and issuance of the Notes and the execution and delivery of the Security Documents and this Indenture. The Issuer at its expense will promptly execute and deliver or cause to be executed or delivered to the Trustee upon request all such other documents, agreements (including, without limitation, account control agreements) and instruments to comply with or accomplish the covenants and agreements of the Issuer in the Security Documents and this Indenture, or to further evidence and more fully describe the Collateral intended as security for the Notes, or to correct any omissions in the Security Documents, or to state more fully the security obligations set out herein or in any of the Security Documents, all as may be necessary or appropriate in connection therewith.

8.4 Performance of Obligations. The Issuer will pay the Notes according to the reading, tenor and effect thereof; and the Issuer will perform every act and discharge all of the obligations to be performed and discharged by it under the Security Documents.

8.5 Filings to Perfect Security Interests. The Issuer will cause this Indenture, any and all supplemental indentures, mortgages, security agreements, instruments of further assignment, financing statements and continuation statements at all times to be kept recorded and filed in such manner and in such places as may be required by law to fully preserve and protect the rights of the Owners and the Trustee hereunder and of the Trustee and Collateral Agent under the Security Documents. The Issuer will, at its expense and at any time and from time to time, promptly execute and deliver or cause to be executed or delivered all further instruments and documents and take all further action that may be necessary or desirable or that the Trustee may request in order to (a) perfect and protect the Liens and other rights created or purported to be created by the Security Documents; (b) enable the Trustee and/or Collateral Agent to exercise and enforce its rights and remedies hereunder in respect of the Collateral; or
(c) otherwise effect the purposes of this Indenture and the Security Documents, including, without limitation: (i) executing and filing such supplements to this Indenture and such financing or continuation statements (or amendments thereto) as may be necessary or desirable or that the Trustee may reasonably request in order to perfect and preserve the Liens created or purported to be created hereby or thereby; and (ii) furnishing to the Trustee from time to time such other information in connection with the Collateral as the Trustee may reasonably request, all in reasonable detail.

ARTICLE 9
NEGATIVE COVENANTS

The Issuer covenants and agrees that, until payment in full of Notes issued hereunder, all interest thereon and all other amounts payable by the Issuer hereunder, without the prior written consent of the Required Owners:

9.1 Mergers, Etc. The Issuer will not merge into or with or consolidate with any other Person, or sell, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its Property to any other Person unless (i) such Person is an entity created under the laws of the United States of America or one of its states, (ii) such Person assumes in writing all obligations of the Issuer under this Indenture, the Notes and the Security Documents, and (iii) this Indenture and the Notes continue to be in full force and effect.

9.2 Proceeds of Notes. Neither the Issuer nor any Person acting on behalf of the Issuer has taken or will take any action which might cause any of the Security Documents to violate

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Regulation T, U or X or any other regulation of the Board of Governors of the Federal Reserve System.

9.3 Transactions with Affiliates. The Issuer will not enter into any transaction, including, without limitation, any purchase, sale, lease or exchange of Property or the rendering of any service, with any Affiliate unless such transactions are otherwise permitted under this Indenture or the Security Documents and are upon fair and reasonable terms no less favorable to it than it would obtain in a comparable arm's length transaction with a Person not an Affiliate.

9.4 Jurisdiction of Incorporation. The Issuer shall not change the jurisdiction of its incorporation to another jurisdiction unless the Issuer has given the Trustee not less than 60 days prior written notice and the Issuer has complied with Section 8.5 above and the Security Documents to continue the perfection of the security interests in the Collateral in such other jurisdiction.

ARTICLE 10
THE TRUSTEE

10.1 Certain Duties and Responsibilities of Trustee.

(a) Except during the continuance of an Event of Default of which the Trustee has or is deemed to have notice hereunder:

(i) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

(ii) in the absence of bad faith on its part, the Trustee may conclusively rely as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to such Trustee and conforming to the requirements of this Indenture or Security Documents; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture.

(b) In case an Event of Default has occurred and is continuing of which the Trustee has or is deemed to have notice, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and under each of the Security Documents for the benefit of the Owners, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs.

(c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligence or its own willful misconduct, except that:

(i) the Trustee shall not be liable for any error of judgment made in good faith by an officer of the Trustee unless it shall be proved that the Trustee was negligent in ascertaining material facts; and

(ii) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith after an Event of Default shall have occurred in

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accordance with the direction of a Majority or Supermajority of Owners, as applicable, relating to the method and place of conducting any proceeding for any remedy available to the Trustee.

(d) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

(e) Whether or not therein expressly so provided, every provision of this Indenture and any Security Documents relating to the conduct or affecting the liability of or affording protection to any Trustee shall be subject to the provisions of this Section 10.1.

10.2 Trustee's Compensation and Expenses. The Issuer hereby covenants and agrees:

(a) to pay to the Trustee compensation for all services rendered by it hereunder and under the Security Documents to which the Trustee is a party in accordance with terms agreed to from time to time (which compensation shall not be limited by any provision of law regarding compensation of a trustee of an express trust);

(b) to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture, any other agreement relating to the Notes to which it is a party or in complying with any request by the Borrower with respect to the Notes, including the reasonable compensation, expenses and disbursements of its agents and counsel, except any such expense, disbursement or advance attributable to the Trustee's negligence or bad faith; and

(c) to indemnify, defend and hold the Trustee and its directors, officers, employees and agents (collectively with the Trustee, the "Indemnitees") harmless from and against every loss, liability or expense, including without limitation damages, fines, suits, actions, demands, penalties, costs, out-of-pocket or incidental expenses, legal fees and expenses, the allocated costs and expenses of in-house counsel and legal staff and the costs and expenses of defending or preparing to defend against any claim (collectively, "Losses"), that may be imposed on, incurred by, or asserted against, any Indemnitee for or in respect of the Trustee's (1) execution and delivery of this Indenture and the Security Documents, (2) compliance or attempted compliance with or reliance upon any instruction or other direction upon which the Trustee is authorized to rely pursuant to the terms of this Indenture, and (3) performance of any act or duty under this Indenture or the Security Documents, except in the case of such performance only and with respect to any Indemnitee to the extent that such Losses resulted from such Indemnitee's negligence or willful misconduct.

In the event the Trustee incurs expenses or renders services in any proceedings which result from the occurrence or continuance of an Event of Default under Sections 7.1(d) or 7.1(e), the expenses so incurred and compensation for services so rendered are intended to constitute expenses of administration under the United States Bankruptcy Code or equivalent law.

As security for the performance of the obligations of the Borrower under this Section, the Trustee shall have a lien prior to the lien securing the Notes, which it may exercise through a right of

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setoff, upon all property or funds held or collected by the Trustee pursuant to this Indenture. The obligations of the Borrower to make the payments described in this Section shall survive discharge of this Indenture, the resignation or removal of the Trustee and payment in full of the Notes.

10.3 Certain Rights of Trustee. Except as otherwise provided in Section 10.1:

(a) The Trustee shall not be responsible for any recitals herein or for insuring all or any portion of the Trust Estate nor shall the Trustee be bound to ascertain or inquire as to the performance or observance of any covenants, conditions or agreement contained herein. Except in the case of an Event of Default of which a Responsible Officer of the Trustee has actual knowledge, the Trustee shall be deemed to have knowledge of an Event of Default only upon receipt of written notice thereof from the Issuer or any Owner.

(b) The Trustee makes no representation, or warranty as to the validity, sufficiency or enforceability of this Indenture, the Notes, or any Security Documents, or as to the title, operation, merchantability or fitness for use, value of the Collateral or any substitute therefor. The Trustee shall not be accountable to any Person for the use or application of any of the Notes of the proceeds thereof or for the use or application of any Collateral or the proceeds thereof which shall be released from the Lien and security interest in accordance with the provisions of this Indenture and the Security Documents.

(c) The Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice request, direction, consent, order, bond, note or other paper or document believed by it, in good faith, to be genuine and to have been signed or presented by the proper party or parties.

(d) Any request, direction or authorization by the Issuer shall be sufficiently evidenced by a request, direction or authorization in writing, delivered to the Trustee, and signed in the name of such party by a Responsible Officer; and any resolution of the Board of Directors of the Issuer or any committee thereof shall be sufficiently evidenced by a copy of such resolution certified by its Secretary or an Assistant Secretary to have been duly adopted and to be in full force and effect on the date of such certification, and delivered to such Trustee.

(e) The Trustee may consult with counsel, appraisers, accountants and other skilled persons to be selected by such Trustee, and the written advice of any thereof shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.

(f) The Trustee shall not be under any obligation to take any action to protect, preserve or enforce any rights or interests in the Collateral or to take any action towards the execution or enforcement of the trusts hereunder or under the Security Documents or the Parent Guaranty, whether on its own motion or on the request or direction of any other Person, unless the Issuer or one or more Owners shall offer and furnish security or indemnity reasonably satisfactory to the Trustee as to its terms, coverage, duration, amount and otherwise with respect to the costs, expenses and liabilities which may be incurred by it in compliance with such request or direction.

(g) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request,

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direction, consent, order, bond, note or other paper or document, unless requested in writing to do so by a Majority of Owners and such Owners shall have tendered funds to pay expenses to be incurred in performing such duties.

(h) The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents (including without limitation the Collateral Agent) or attorneys, and such Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed by it with due care.

(i) The Trustee need not post any bond for the performance of its duties or any action taken under this Indenture.

(j) In the event the Trustee receives inconsistent or conflicting requests and indemnity from two or more groups of Owners, each representing less than a Majority of Owners, pursuant to the provisions of this Indenture, the Trustee, in its sole discretion, may determine what action, if any, shall be taken.

(k) The Trustee's immunities and protections from liability and its right to indemnification in connection with the performance of its duties under this Indenture shall extend to the Trustee's officers, directors, agents, attorneys and employees. Such immunities and protections and right to indemnification, together with the Trustee's right to compensation, shall survive the Trustee's resignation or removal, the defeasance or discharge of this Indenture and final payment of the Notes.

(l) The permissive right of the Trustee to take the actions permitted by this Indenture shall not be construed as an obligation or duty to do so.

(m) Except for information provided by the Trustee concerning the Trustee, the Trustee shall have no responsibility for any information in any offering memorandum or other disclosure material distributed with respect to the offer and sale of the Notes, and the Trustee shall have no responsibility for compliance with any state or federal securities laws in connection with the Notes or such offering.

(n) The Trustee shall have no duty to collect, preserve, exercise or enforce rights in the Collateral (against prior parties or otherwise), except as expressly provided herein or in the Security Documents.

10.4 Status of Monies Received. All monies received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but, if the Trustee is a bank, need not be segregated in any manner from any other monies, except to the extent required by law, and may be deposited by such Trustee under such general conditions as may be (if Trustee is a bank) prescribed by law and Trustee's trust department, and Trustee shall be under no liability for interest on any monies received by it hereunder. The Trustee may, in its individual banking capacity, become an Owner of the Notes and may join in any action which any Owner may be entitled to take with like effect as if it were not Trustee. The Trustee may, in its individual banking capacity, be interested in any financial transaction with the Issuer or any of its Affiliates; and the Trustee may act as an indenture trustee, collateral agent, escrow agent, depository or

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otherwise in respect of the Issuer or any of its Affiliates, or as trustee or agent for any committee of Owners, all with the same rights which it would have if not were not the Trustee hereunder.

10.5 Resignation of Trustee. The Trustee may resign and be discharged of the trusts hereby created by mailing notice to the Issuer and to all Owners of Notes specifying the time and date (not earlier than thirty (30) days after the date of such notice) when such resignation shall take effect. Such resignation shall take effect upon the appointment, qualification and acceptance of a successor trustee as herein provided.

10.6 Removal of Trustee. Prior to the occurrence and continuance of an Event of Default hereunder, or after the curing or waiver of any such Event of Default, the Issuer may remove the Trustee, with or without cause, and shall appoint a successor Trustee. In the event there shall have occurred and be continuing an Event of Default hereunder, a Majority of Owners may remove the Trustee, with or without cause, and shall appoint a successor Trustee. In each instance such removal and appointment shall be accomplished by an instrument or concurrent instruments in writing signed by the Issuer or a Majority of Owners, as the case may be, and delivered to the Trustee, the Issuer and all Owners. No such resignation shall take effect until the appointment, qualification and acceptance of a successor trustee as herein provided.

10.7 Successor Trustee. Each Trustee appointed in succession of the Trustee named in this Indenture shall be a trust company, banking corporation, bank or banking association organized under the laws of the United States of America or any state thereof, in good standing and having unimpaired capital and surplus aggregating at least $100,000,000, if there be such a trust company, banking corporation or banking association qualified, able and willing to accept the trusts upon reasonable or customary terms.

10.8 Appointment of Successor Trustee. If the Trustee shall have given notice of resignation pursuant to Section 10.5 or if notice of removal shall have been given to the Trustee pursuant to Section 10.6 and such notice does not appoint a successor Trustee or if such notice of removal appointed a successor Trustee and such successor shall not have accepted such appointment within fifteen (15) days after the giving of such notice of removal, a successor Trustee may be appointed by a Majority of Owners with the consent of the Issuer not to be unreasonably withheld. If no such appointment shall have been made within twenty-five (25) days after the giving of such notice of resignation or the giving of such notice of removal, a successor Trustee may be appointed by application of the retiring Trustee, at the expense of the Issuer, to any court of competent jurisdiction. The Issuer shall give written notice of each resignation or removal of the Trustee and each appointment of a successor Trustee to each Owner. Each such notice shall include the name and address of the applicable corporate trust office of the successor Trustee.

10.9 Merger or Consolidation of Trustee. Any corporation into which the Trustee or any successor to it in the trusts created by this Indenture, may be merged or consolidated or with which it or any successor to it may be consolidated or any corporation resulting from any merger or consolidation to which such Trustee or any successor to it shall be a party or any state or national bank or trust company succeeding to the corporate trust business of the Trustee as a whole or substantially as a whole (provided such corporation which is a successor to the Trustee shall be a corporation bank or banking association organized under the laws of the United States or any state thereof, having unimpaired capital and surplus aggregating at least $100,000,000 and such corporation which is a successor to any other Trustee shall be permitted by law to perform its

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obligations hereunder), shall be the successor to such Trustee under this Indenture without the execution or filing of any paper or any further act on the part of any of the parties hereto. The Issuer covenants that in case of any such merger, consolidation or transfer of the corporate trust business it will, upon the request of the merged, consolidated or transferred corporation, execute, acknowledge and cause to be recorded or filed suitable instruments in writing to confirm the estates, rights and interests of such corporation as such Trustee under this Indenture.

10.10 Acceptance of Appointment by Successor Trustee. Any new Trustee appointed pursuant to any of the provisions hereof shall execute, acknowledge and deliver to the Issuer and the retiring Trustee an instrument accepting such appointment; and thereupon such new Trustee, without any further act, deed or conveyance, shall become vested with all the estates, Properties, rights, powers and trusts of its predecessor in the rights hereunder with like effect as if originally named as Trustee herein (including possession of the Notes as Depository); but, nevertheless upon the Written Request of the Issuer or the successor Trustee, the Trustee ceasing to act, upon payment of fees and expenses due to it, shall execute and deliver an instrument transferring to such successor Trustee, upon the trusts herein expressed, all the estates, Properties, rights, powers, and trusts of the Trustee so ceasing to act, and shall duly assign, transfer and deliver any of the Property of the Trust Estate Notes and monies held by such Trustee to the successor Trustee so appointed in its or his place. Upon acceptance of appointment by a successor Trustee as provided in this Section 10.9, the successor Trustee shall give to the Owners written notice of the succession of such Trustee to the trusts hereunder. Neither failure so to mail nor any defect in the notice so mailed shall affect the sufficiency of the proceedings in question.

10.11 Conveyance upon Request of Successor Trustee. Should any deed, conveyance or instrument in writing from the Issuer be required by any successor Trustee for more fully and certainly vesting in and confirming to such new Trustee such estates, Properties, rights, powers and trusts, then upon request of such successor Trustee any and all such deeds, conveyances and instruments in writing shall be made, executed, acknowledged and delivered, and, if and where appropriate, shall be caused to be recorded and filed by the Issuer.

10.12 Co-Trustee and Collateral Agent.

(a) Delivery of Documents. Anything herein contained to the contrary notwithstanding, if, at any time or times, in order to conform with any law of any jurisdiction in which the Issuer or Collateral Agent shall then own or hold any Collateral, the Trustee shall be advised by counsel satisfactory to it that it is necessary or prudent in the interest of the Owners so to do, the Trustee shall execute and deliver any and all instruments and agreements necessary or proper to appoint, on behalf of the Trustee, the Owners and the Issuer, another trust company, banking corporation or banking association, or one or more other Persons approved by the Trustee, to act as co-trustee hereunder, jointly with the Trustee, or as Collateral Agent; and the trust company, banking corporation or banking association, or the Person or Persons so appointed shall be such co-trustee or Collateral Agent, with such powers, duties and discretion as shall be specified in the said instruments or agreements of appointment, executed as aforesaid. It shall not be necessary for any Owner or the Issuer or any other Person other than the Trustee to execute and deliver any such instruments or agreements.

(b) Exercise of Powers. The rights, powers, duties and obligations conferred or imposed upon the Trustee, any co-trustee and Collateral Agent shall be conferred and imposed upon,

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and exercised or performed jointly or separately by the Trustee and any co-trustee, or jointly or separately by the Trustee (and any co-trustee) and Collateral Agent.

(c) Resignation of Co-Trustee or Separate Trustee. Each co-trustee or Collateral Agent may resign and may be removed by the Trustee, and the successors to such co-trustee or Collateral Agent may be appointed by the Trustee as set forth in subsection (a) of this Section 10.12.

10.13 Registrar. The provision of this Article 10 (other than the provisions of Sections 10.7 and 10.9), including without limitation the right to indemnification, shall govern the rights, duties, responsibilities and immunities of the Registrar to the maximum extent applicable.

ARTICLE 11
SUPPLEMENTAL INDENTURES, WAIVERS

11.1 Supplemental Indentures Without Note Owners' Consent. The Issuer and the Trustee from time to time and at any time, subject to the restrictions in this Indenture contained, may, without consent from Owners, enter into an indenture or indentures supplemental hereto and which thereafter shall form a part hereof for any one or more or all of the following purposes:

(a) to add to the Trust Estate held by the Trustee pursuant to the terms hereof additional Property hereafter acquired by the Issuer and intended to be subjected to this Indenture, and to correct and amplify the description of any Property subject to this Indenture; and

(b) to cure any ambiguity or cure, correct or supplement any defective provisions of this Indenture or any supplement hereto, provided, that the same shall in no respect be materially adverse to the interests of the Owners.

The Issuer covenants to perform all requirements of any such supplemental indenture. No restrictions or obligations imposed upon the Issuer may, except as otherwise proved in this Indenture, be waived or modified by such supplemental indentures or otherwise.

11.2 Waivers and Consents by Owners; Supplemental Indentures with Consent. Except as provided in Section 11.1 above or this Section 11.2, no waivers may be granted with respect to any provision hereof or any of the Security Documents nor may any amendments be made to this Indenture or any of the Security Documents without the express written consent of a Majority of Owners. Upon the waiver or consent of a Majority of Owners: (i) the Trustee shall execute an appropriate instrument permitting any Person to take any action prohibited, or omit the taking of any action required, by any of the provisions of this Indenture or any indenture supplemental hereto, or (ii) the Issuer and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding, changing or eliminating any provisions of this Indenture or of any indenture supplemental hereto or modifying in any manner the rights of the Owners of the Notes or the rights and obligations of the Issuer hereunder; provided, that no such waiver, consent or supplemental indenture or amendment shall (A) impair or affect the right of any Owner to receive payments of the principal of and payments of the interest with respect to any Note, as herein provided including, without limitation, the timing of any such payment or the principal amount of any Note or rate of interest thereon, without the consent of a Supermajority of Owners, (B) permit the creation of any Lien with respect to any of the Trust Estate without the consent of a Supermajority of Owners, (C) deprive any Owner of the benefit of the Liens held by the Trustee and Collateral Agent pursuant

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to the terms of this Indenture or any Security Document without the consent of a Supermajority of Owners, (D) reduce the percentage of the aggregate principal amount of Notes the Owners of which are required by this Section 11.2 or any other provision of this Indenture to consent to any action, waiver or supplemental indenture or amendment without the consent of a Supermajority of Owners, or (E) modify the rights, duties, privileges or immunities of the Trustee, without the written consent of the Trustee. Notwithstanding the foregoing, unless every affected Owner consents, no supplemental Indenture shall create any preference or priority of any Owner over any other Owner with respect to right of payment or right to participate on a proportional basis in any payments or benefits under this Indenture, the Notes or the Security Documents, or in any other way deprive an Owner of the right of parity with all other Owners with respect to right of payment or security therefor.

11.3 Notice of Supplemental Indenture. Promptly after the execution by the Issuer and the Trustee of any supplemental indenture or promptly after the execution by the Trustee of an appropriate instrument or permission pursuant to the provisions of Section 11.2, the Trustee shall give written notice, setting forth in general terms the substance of such supplemental indenture or instrument, together with a conformed copy thereof, to each Owner. Any failure of the Trustee to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture or instrument.

11.4 Solicitation of Note Owners. So long as there are any Notes Outstanding, the Issuer will not solicit, request or negotiate for or with respect to any proposed waiver or amendment of any of the provisions of this Indenture or the Notes unless each Owner shall be informed thereof by the Issuer and shall be afforded the opportunity of considering the same and shall be supplied by the Issuer with sufficient information to enable it to make an informed decision with respect thereto. The Issuer will not, directly or indirectly, pay or cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise, to any Owner as consideration for or as an inducement to entering into by any Owner of any waiver or amendment of any of the provisions of this Indenture or of any Note unless such remuneration is concurrently offered to be paid, on the same terms, ratably to the Owners of all Notes then Outstanding even if such holder did not consent to such waiver or amendment. Such remuneration will not be inferred from the participation by a holder of the Notes in an existing or future loan to or investment in or with the Issuer or any of its Affiliates.

11.5 Opinion of Counsel Conclusive as to Supplemental Indentures. The Trustee is hereby authorized to join with the Issuer in the execution of any such supplemental indenture authorized or permitted by the terms of this Indenture and to make the further agreements and stipulations which may be therein contained, and the Trustee may receive an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant to the provisions of this Article 11 complies with the requirements of this Article 11.

11.6 Effect of Supplemental Indentures. Upon the execution of any supplemental indenture pursuant to the provisions of this Article 11, this Indenture shall be deemed to be modified and amended in accordance therewith and the respective rights, duties and obligations under this Indenture of the Issuer, the Trustee and all Owners shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendment, and all the terms and conditions of any such supplemental indenture shall be deemed to be part of the terms and conditions of this Indenture for any and all purposes.

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ARTICLE 12
DISCHARGE AND UNCLAIMED FUNDS

12.1 Satisfaction and Discharge of Agreement. If at any time (a) the Issuer shall pay and discharge the entire indebtedness on all Notes hereunder by paying or causing to be paid as provided in Articles 4 and 5 the principal of and interest on all Notes issued hereunder, as and when the same become due and payable or (b) all Owners' interests in the Notes shall have been repurchased by the Issuer or an Affiliate of the Issuer and the Notes canceled as herein provided; and if the Issuer shall also pay or cause to be paid all other sums payable hereunder by the Issuer (including, without limitation, fees and expenses of the Trustee), and the Issuer shall fully and faithfully discharge, and cause to be faithfully discharged, every other obligation herein and in each of the Security Documents (including, without limitation, the Parent Guaranty) contained, then and in that case this Indenture shall cease, determine, and become null and void, and thereupon the Trustee shall, upon Written Request of the Issuer forthwith execute or cause to be executed proper instruments acknowledging satisfaction of and discharging this Indenture and releasing all Liens held by it pursuant to the terms hereof and any Security Document. The satisfaction and discharge of this Indenture shall be without prejudice to the rights of the Trustee under Section 10.2 to charge and be reimbursed by the Issuer for any expenditures which it may thereafter incur in connection herewith.

12.2 Return of Unclaimed Monies. Notwithstanding any provisions of this Indenture, any monies deposited with any Trustee in trust for the payment of the principal of or interest on any Notes and remaining unclaimed for two (2) years after the last date on which any such principal or interest payment shall have become due and payable (whether monthly, at maturity or upon optional or required prepayment or by declaration as provided in this Indenture), shall then be repaid to the Issuer upon its Written Request, unless otherwise required by mandatory provisions of applicable escheat or abandoned property laws, and the Owners, unless otherwise required by mandatory provisions of applicable escheat or abandoned property laws, shall thereafter be entitled to look only to the Issuer for repayment thereof, and all liability of such Trustee with respect to such monies shall thereupon cease; provided, however, that before the repayment of such monies to the Issuer, as aforesaid, such Trustee shall (at the cost of the Issuer) first mail to all Owners at their addresses as set forth in the notice that said monies remain unclaimed and that, after a date named in said notice, which date shall not be less than ten (10) or more than twenty (20) days after the date of the first mailing of such notice, the balance of such monies then unclaimed will be returned to the Issuer. In the event of the repayment of any such monies to the Issuer as aforesaid, the Owners in respect of which such monies were deposited shall thereafter be deemed to be unsecured creditors of the Issuer for amounts equivalent to the respective amounts deposited for the payment of such Notes and so repaid to the Issuer (without interest thereon and subject to applicable escheat and abandoned property laws).

ARTICLE 13
MISCELLANEOUS

13.1 Successors and Assigns. Whenever any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party; and all the covenants, promises and agreements in this Indenture contained by or on behalf of the Issuer, by or on behalf of the Trustee or by or on behalf of an Owner, shall bind and inure to the benefit of the respective successors and assigns of such parties whether so expressed or not.

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13.2 Unenforceability of Provision.

(a) Partial Invalidity. Any provision of this Indenture that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall (to the full extent permitted by law) not invalidate or render unenforceable such provision in any other jurisdiction.

(b) Trustee Rights and Issuer Obligations. All rights of the Trustee and all obligations of the Issuer hereunder shall be absolute and unconditional irrespective of any lack of validity or enforceability of any of the Security Documents or any other agreement or instrument relating thereto or any change in the terms of or any amendment or waiver of or any consent to any departure from the Security Documents or any other agreement or instrument relating thereto.

13.3 Communications. All communications provided for herein shall be in writing or by telecommunication device capable of creating a written record and shall be deemed to have been given when delivered by courier or actually received by such Person listed below at its address set forth below:

If to the Issuer:

If by mail:

Castle Brands (USA) Corp.

85-47 Eliot Avenue
Rego Park, New York 11374

Attn: Mark Andrews, President

If by telecopier: (718) 533-7610

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If to the Trustee:

If by mail:

JPMorgan Chase Bank
700 Lavaca, 2nd Floor
Austin, Texas 78701
Telephone: (512) 479-2575 Attn: Cary Gilliam

If by telecopier: (512) 479-2553

If to the Registrar:

If by mail:

Castle Brands, Inc.
85-47 Eliot Avenue
Rego Park, New York 11374 Attn: Mark Andrews, President

If by telecopier: (718) 533-7610

If to the Collateral Agent:

If by mail:

MHW, Ltd.

272 Plandome Road, Suite 100
Manhasset, New York 11030

Attn: John F. Beaudette, President

If by telecopier: (516) 869-9171

or to any such party at such other address as such party may designate by notice duly given in accordance with this Section to the other party.

Where this Indenture provides for any communication or delivery to Owners, such communication or delivery shall be deemed to have been given when actually received or on the second Business Day after such communication or delivery is deposited as first class mail with the U.S. Postal Service, addressed to such Owner at its last address as it appears in the Owner Register.

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13.4 Governing Law. This Indenture and the Notes (including, but not limited to, the validity and enforceability hereof and thereof) shall be governed by, and construed in accordance with, the laws of the state of New York other than conflict of law rules thereof that would require the application of the laws of a jurisdiction other than such state.

13.5 Limitation on Interest. It is the intent of the parties hereto to comply strictly with applicable usury laws, and the parties hereto stipulate and agree that none of the terms and provisions contained in this Indenture, the Notes or any Security Documents shall ever be construed to create a contract to pay, for the use, forbearance or detention of money, interest in excess of the maximum amount of interest permitted to be charged by applicable law from time to time in effect. If any excess of interest in such respect is hereby provided for or shall be adjudicated to be so provided, in this Indenture, in any Note or otherwise in connection with the Security Documents, the provisions of this
Section 13.5 shall govern and prevail, and neither the Issuer nor any present or future guarantors, endorsers, or other Persons hereafter becoming liable for payment of the Notes shall ever be obligated to pay the excess amount of such interest. Each of the Trustee and the Owners of the Notes expressly disavows any intention to charge, collect or contract for excessive unearned interest or finance charges. If the Trustee or any Owner shall receive, collect or apply monies which are deemed to constitute interest which would otherwise increase the interest on such Note to an amount in excess of that permitted to be charged by applicable law then in effect, all such sums deemed to constitute interest in excess of such legal limit shall be applied to reduce the principal balance thereof then outstanding or immediately returned to the Issuer or the other payor thereof upon such determination. All sums paid or agreed to be paid to the Trustee or any Owner for the use, forbearance or detention of sums due hereunder shall, to the extent permitted by law applicable to such party, be amortized, prorated, allocated and spread throughout the full term of the indebtedness evidenced by the Notes until payment in full so that the rate or amount of interest on account of any indebtedness hereunder does not exceed the maximum amount allowed by such applicable law. If at any time and from time to time (i) the amount of interest payable to any holder of a Note on any date shall be pursuant to this Section 13.5 be limited and (ii) in respect of any subsequent interest computation period the amount of interest otherwise payable to such holder would be less than the amount of interest payable to such holder computed at the maximum lawful rate applicable to such holder, then the amount of interest payable to such holder in respect to such subsequent interest computation period shall continue to be computed at the maximum lawful rate applicable to such holder until the total amount of interest payable to such holder shall equal the total amount of interest which would have been payable to such holder if the total amount of interest had been computed without giving effect to this Section 13.5. As used in this section the term "applicable law" means the laws of the State of New York or the laws of the United States of America, whichever laws allow the greater rate of interest, as such laws now exist or may be changed or amended or come into effect in the future.

13.6 Counterparts. This Indenture and any supplements hereto may be executed, acknowledged and delivered in any number of counterparts, each of such counterparts constituting an original but all together only one Indenture; provided, however, that this Indenture shall not be deemed to be delivered until at least one counterpart shall have been executed by the Issuer and the Trustee and a counterpart so executed shall have been delivered to the Trustee at its principal place of business specified in Section 13.3.

13.7 Headings, etc.; Gender. Any headings or captions preceding the text of the several sections hereof are intended solely for convenience of reference and shall not constitute a part of this

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Indenture nor shall they affect its meaning, construction or effect. Each covenant contained in this Indenture shall be construed (absent an express contrary provision therein) as being independent of each and every other covenant contained herein and compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with any and all other covenants. All references herein or in any Security Document to the masculine, feminine or neuter gender shall also include and refer to each other gender not so referred to.

13.8 Amendments. This Indenture may, subject to the provisions of Article 11 hereof, from time to time and at any time, be amended or supplemented by an instrument or instruments in writing executed by the parties hereto.

13.9 Benefits of Agreement Restricted to Parties and Owners. Nothing in this Indenture expressed or implied is intended or shall be construed to give to any Person other than the Issuer, the Trustee, and the Owners, any legal or equitable right, remedy or claim under or in respect of this Indenture or any covenant, condition or provision therein or herein contained; and all such covenants, conditions and provisions are and shall be held to be for the sole and exclusive benefit of the Issuer, the Trustee, and the Owners.

13.10 Waiver of Notice. Whenever in this Indenture the giving of notice is required, the giving of such notice may be waived in writing by the Person or Persons entitled to receive such notice.

13.11 Non-Recourse Persons. No recourse shall be had for the payment of any amount owing in respect of any obligation of, or claim hereunder or in connection herewith against, any employee, officer, director, or agent of the Issuer, Trustee, any co-trustee or Collateral Agent; provided, however, that the foregoing shall not relieve any such person or entity from any liability they might otherwise have under applicable law.

13.12 Additional Financing Statement Filings. The Issuer hereby authorizes the Trustee and Collateral Agent to file, without the signature of the Issuer where permitted by law, one or more financing or continuation statements, and amendments thereto, relating to the Collateral. The Issuer further agrees that a carbon, photographic or other reproduction of any Security Document or any financing statement describing any Collateral is sufficient as a financing statement and may be filed in any jurisdiction the Trustee or Collateral Agent may deem appropriate.

13.13 Officers' Certificate and Opinions of Counsel; Statements to be Contained Therein.

(a) Upon any request, application or demand by the Issuer to the Trustee to take any action under any of the provisions of this Indenture, the Issuer shall furnish to the Trustee a certificate signed by one of its Responsible Officers stating that all conditions precedent provided for in this Indenture relating to the proposed action have been complied with, that no Event of Default has occurred and is continuing, and shall be accompanied by an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent (to which a legal opinion is reasonably appropriate) have been complied with, except that in the case of any such request, application or demand as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular request, application or demand, no additional certificate or opinion need be furnished.

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(b) Each certificate or opinion provided for in this Indenture and delivered to the Trustee with respect to compliance with a condition or covenant provided for in this Indenture shall include (i) a statement that the person making such certificate or opinion has read such covenant or condition, (ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based, (iii) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with, and (iv) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with.

(c) Any certificate, statement or opinion of an officer of the Issuer may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer has actual knowledge that the certificate or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous. Any certificate, statement or opinion of counsel may be based, insofar as it relates to factual matters, upon information with respect to which is in the possession of the Issuer, upon the certificate, statement or opinion of or representations by a Responsible Officer or Officers of the Issuer, unless such counsel has actual knowledge that the certificate, statement or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous.

13.14 No Oral Agreements. THE INDENTURE, NOTES, PARENT GUARANTY AND SECURITY DOCUMENTS EMBODY THE ENTIRE AGREEMENT AND UNDERSTANDING AMONG THE PARTIES AND SUPERSEDE ALL OTHER AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF. THE SECURITY DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

[REMAINDER OF PAGE INTENTIONALLY BLANK]

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IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated Indenture to be duly executed and attested by their respective officers thereunto duly authorized, all as of the day and year first written above.

Attest:                                 CASTLE BRANDS (USA) CORP.


/s/ Amelia Gary                         By: /s/ Mark E. Andrews
-------------------------------------       ------------------------------------
                                        Name: Mark E. Andrews
                                        Title: Chairman & CEO


Attest:                                 JPMORGAN CHASE BANK, NATIONAL
                                        ASSOCIATION, as Trustee


/s/ Mary Jane Henson                    By: /s/ Carol Logan
-------------------------------------       ------------------------------------
                                        Name: Carol Logan
                                        Title: Vice Pesident


Joined in by MHW, LTD.,
as Collateral Agent:


By: /s/ John F. Beaudette
    ---------------------------------
Name: John F. Beaudette
Title: President

-36-

EXHIBIT A

CASTLE BRANDS (USA) CORP.

No. ___________

9 % SENIOR SECURED NOTE, SERIES 2004, DUE MAY 31, 2009
NON-NEGOTIABLE

$_______________ _______________

THE SECURITY EVIDENCED HEREBY AND BENEFICIAL INTERESTS HEREIN WERE ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT ), AND THE SECURITY EVIDENCED HEREBY AND BENEFICIAL INTERESTS HEREIN MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. THE OWNER OF THIS NOTE AND ANY BENEFICIAL INTERESTS HEREIN ARE HEREBY NOTIFIED THAT THE ISSUER HAS NOT REGISTERED THIS SECURITY UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS. THE OWNER OF THIS NOTE AND ANY BENEFICIAL INTEREST HEREIN AGREES FOR THE BENEFIT OF THE ISSUER THAT SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) IN ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION.

Castle Brands (USA) Corp., a Delaware corporation (the Issuer), for value received, hereby promises to pay to JPMorgan Chase Bank, National Association, its successors and assigns (the Trustee), for the benefit of registered owners of beneficial interests in this Note under Amended and Restated Trust Indenture dated as of ___ ___ , 2005 (the Indenture), the principal sum of
[_______________________] Dollars ($___________) on May 31, 2009 (the Maturity Date), and to pay interest accrued (computed on the basis of a 360-day year of twelve 30-day months) on the unpaid principal balance from the date of this Note at the rate of 9.00 % per annum, semi-annually, on the 31st day of each May and the 30th day November of each year, and on the Maturity Date, with the first payment of interest being due on November 30, 2004. The Issuer further promises to pay on demand interest on any overdue principal, including any overdue prepayment of principal, and or overdue installment of interest, at a rate of interest per annum equal to the Default Rate as defined in the Indenture; provided that interest on this Note shall in no event exceed the maximum rate permitted by applicable law, and this Note is expressly made subject to the interest rate limitation provisions of Section 13.5 of the Indenture.

This Note is secured as set forth in the Indenture and in the Security Documents and is entitled to the benefits of the Parent Guaranty (as defined in the Indenture).

Trust Indenture Exhibit A, p. 1


This Note is transferable only by surrender thereof to a successor Trustee and Depository under the Indenture, duly endorsed or accompanied by a written instrument of transfer duly executed by the registered holder of this Note or its attorney duly authorized in writing.

Following any partial prepayment of this Note, this Note shall be made available to the Trustee for notation hereon of the amount of principal so prepaid. In case the entire principal amount on this Note is prepaid or paid, this Note shall be marked paid in full by the Trustee, cancelled and returned to the Issuer. This Note may be prepaid in whole or in part at any time without penalty.

In any case where the date of maturity of any interest or principal owed with respect to this Note or the date fixed for any prepayment (in whole or in part) of this Note will not be a Business Day, then payment of such interest, or principal need not be made on such date but may be made on the next succeeding Business Day with the same force and effect as if made on the date of maturity or the date fixed for such prepayment.

Under certain circumstances, as specified in the Indenture, the entire principal amount of this Note may be declared due and payable in the manner and with the effect provided in the Indenture.

This Note and the Indenture shall be governed by, and construed in accordance with, the laws of the state of New York other than conflict of law rules thereof that would require the application of the laws of a jurisdiction other than such state.

     Dated ________________, 200__

ATTEST:                                 CASTLE BRANDS (USA) CORP.


                                        By:
-------------------------------------       ------------------------------------
Secretary                               Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

This is one of the Notes referred to in the Indenture referred to herein and has been duly authenticated by the Trustee as witnessed below.

JPMORGAN CHASE BANK, NATIONAL

                                        ASSOCIATION, as Trustee

                                        By:
                                            ------------------------------------
Date of authentication:                 Name:
                        -------------         ----------------------------------
                                        Title:
                                               ---------------------------------

Trust Indenture Exhibit A, p. 2


EXHIBIT B

INSTRUCTION

REQUESTING REGISTRATION OF TRANSFER

Castle Brands, Inc.
85-47 Eliot Avenue
Rego Park, New York 11374
Attn: Mark Andrews, President

Gentlemen:

TRANSFER OF NOTES. The undersigned Transferor, being a beneficial owner of Castle Brands (USA) Corp. 9% Senior Secured Notes, Series 2004 due May 31, 2009 (the "Notes") issued in uncertificated form, hereby requests that registration of the beneficial ownership of $____________________ principal amount of such Notes be transferred, conveyed and assigned by book-entry from the undersigned to the following named transferee ("Transferee"):

1.   Print Full Name of Transferee:     Individual:

                                        ________________________________________
                                        First, Middle, Last

                                        Entities: Partnership, ,Corporation,
                                        Trust, Custodial Account, Others:

                                        ________________________________________
                                        Legal Name of Entity

2.   Mailing Address for Payment and
     Notices:                           ________________________________________

                                        ________________________________________

3.   Name of Primary Contact Person:    ________________________________________

4.   Telephone Number:                  ________________________________________

5.   Facsimile Number:                  ________________________________________

6.   Tax Identification Number          ________________________________________

Trust Indenture Exhibit B, p. 1


REPRESENTATIONS AND WARRANTIES OF THE TRANSFEREE. To induce the Company and the Registrar to accept this transfer, the Transferee represents and warrants as follows:

The undersigned acknowledges and agrees that no transfer of the Notes or any interest therein will become effective until the Registrar has, on behalf of the Company, entered the name of the Transferee in the Owner Registry.

The undersigned has the financial ability to bear the economic risk of an investment in the Notes, has adequate means for providing for his current needs and possible contingencies and has no need for the liquidity in this investment.

The Notes are being acquired by the Transferee for the Transferee's own account for investment purposes only and not with a view to resale or distribution.

The Transferee understands that the Notes have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), the securities laws of any state thereof or the securities laws of any other jurisdiction, nor is such registration contemplated. The Transferee understands and agrees further that the Notes must be held indefinitely unless they are subsequently registered under the Securities Act and these laws or an exemption from registration under the Securities Act and these laws covering the sale of Notes is available.

If the Transferee is not a natural person, (i) the Transferee has the power and authority to execute and deliver this Transfer Request and (ii) the person signing this Transfer Request on behalf of the Transferee has been duly authorized to execute and deliver this Transfer Request.

The undersigned acknowledges that the Company's principal business is in beverage alcohol and the Company is obligated to make certain disclosures to regulatory authorities regarding its management, ownership and financing. In the event such a disclosure is to be made, the undersigned consents to disclosure of such data on the Transferee Questionnaire as is required by the authorities. The undersigned further acknowledges that the laws of certain U.S. states may preclude the holder of an interest in a US wholesaler or retailer of beverage alcohol from also owning the Notes and/or an interest in the Company and agrees to conform to any legal requirements that may be applicable.

INDEMNITY. To the extent permitted under applicable law, the undersigned agrees to indemnify and hold harmless the Company, the Registrar and the Trustee, and their respective officers and directors, employees and agents and each other person, if any, who controls any of them, against any loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all expenses whatsoever reasonably incurred in investigating, preparing or defending against any litigation commenced or threatened or any claim whatsoever) arising out of or based upon any false information, representation or warranty delivered or made by the undersigned herein or in any other document furnished by the undersigned to any of the foregoing in connection with this transaction.

Trust Indenture Exhibit B, p. 2


IN WITNESS WHEREOF, the undersigned have executed this Instruction on the _____ day of _________________, 200__.

INDIVIDUAL TRANSFEROR:                  INDIVIDUAL TRANSFEREE:

-------------------------------------   ----------------------------------------
             (Print Name)                             (Print Name)


-------------------------------------   ----------------------------------------
             (Signature)                               (Signature)


PARTNERSHIP, CORPORATION, TRUST,        PARTNERSHIP, CORPORATION, TRUST,
CUSTODIAL ACCOUNT, OTHER TRANSFEROR     CUSTODIAL ACCOUNT, OTHER TRANSFEREE

-------------------------------------   ----------------------------------------
        (Print Name of Entity)                   (Print Name of Entity)


By:                                     By:
    ---------------------------------       ------------------------------------
             (Signature)                               (Signature)

-------------------------------------   ----------------------------------------
        (Print Name and Title)                   (Print Name and Title)


Approved by CASTLE BRANDS (USA)         Receipt acknowledged by CASTLE BRANDS,
CORP.                                   INC., as Registrar


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

Date:                                   Date:
      -------------------------------         ----------------------------------

Trust Indenture

Exhibit B, p. 3


Exhibit 10.42

CASTLE BRANDS (USA) CORP.

No. 053109-001

9 % SENIOR SECURED NOTE, SERIES 2004, DUE MAY 31, 2009
NON-NEGOTIABLE

$4,660,000 August 15, 2005

THE SECURITY EVIDENCED HEREBY AND BENEFICIAL INTERESTS HEREIN WERE ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT ), AND THE SECURITY EVIDENCED HEREBY AND BENEFICIAL INTERESTS HEREIN MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. THE OWNER OF THIS NOTE AND ANY BENEFICIAL INTERESTS HEREIN ARE HEREBY NOTIFIED THAT THE ISSUER HAS NOT REGISTERED THIS SECURITY UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS. THE OWNER OF THIS NOTE AND ANY BENEFICIAL INTEREST HEREIN AGREES FOR THE BENEFIT OF THE ISSUER THAT SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) IN ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION.

Castle Brands (USA) Corp., a Delaware corporation (the Issuer), for value received, hereby promises to pay to JPMorgan Chase Bank, National Association, its successors and assigns (the Trustee), for the benefit of registered owners of beneficial interests in this Note under Amended and Restated Trust Indenture dated as of August 15, 2005 (the Indenture), the principal sum of Four Million Six Hundred Sixty Thousand Dollars ($4,660,000.00) on May 31, 2009 (the Maturity Date), and to pay interest accrued (computed on the basis of a 360-day year of twelve 30-day months) on the unpaid principal balance from the date of this Note at the rate of 9.00 % per annum, semi-annually, on the 31st day of each May and the 30th day November of each year, and on the Maturity Date, with the first payment of interest being due on November 30, 2004. The Issuer further promises to pay on demand interest on any overdue principal, including any overdue prepayment of principal, and or overdue installment of interest, at a rate of interest per annum equal to the Default Rate as defined in the Indenture; provided that interest on this Note shall in no event exceed the maximum rate permitted by applicable law, and this Note is expressly made subject to the interest rate limitation provisions of Section 13.5 of the Indenture.

This Note is secured as set forth in the Indenture and in the Security Documents and is entitled to the benefits of the Parent Guaranty (as defined in the Indenture).


This Note is transferable only by surrender thereof to a successor Trustee and Depository under the Indenture, duly endorsed or accompanied by a written instrument of transfer duly executed by the registered holder of this Note or its attorney duly authorized in writing.

Following any partial prepayment of this Note, this Note shall be made available to the Trustee for notation hereon of the amount of principal so prepaid. In case the entire principal amount on this Note is prepaid or paid, this Note shall be marked paid in full by the Trustee, cancelled and returned to the Issuer. This Note may be prepaid in whole or in part at any time without penalty.

In any case where the date of maturity of any interest or principal owed with respect to this Note or the date fixed for any prepayment (in whole or in part) of this Note will not be a Business Day, then payment of such interest, or principal need not be made on such date but may be made on the next succeeding Business Day with the same force and effect as if made on the date of maturity or the date fixed for such prepayment.

Under certain circumstances, as specified in the Indenture, the entire principal amount of this Note may be declared due and payable in the manner and with the effect provided in the Indenture.

This Note and the Indenture shall be governed by, and construed in accordance with, the laws of the state of New York other than conflict of law rules thereof that would require the application of the laws of a jurisdiction other than such state.

     Dated as of August 15, 2005

ATTEST:                                 CASTLE BRANDS (USA) CORP.


/s/ Amelia Gary                         By: /s/ Mark E. Andrews
-------------------------------------       ------------------------------------
Secretary                               Name: Mark E. Andrews
                                        Title: Chairman & CEO

This is one of the Notes referred to in the Indenture referred to herein and has been duly authenticated by the Trustee as witnessed below.

JPMORGAN CHASE BANK, NATIONAL
ASSOCIATION, as Trustee

                                        By: /s/ Carol Logan
                                            ------------------------------------
Date of authentication: 8/9/05          Name: Carol Logan

                                        Title: Vice President


Exhibit 10.43

GENERAL SECURITY AGREEMENT
(CASTLE BRANDS [USA] CORP.)

This General Security Agreement ("Agreement") is made this 1st day of June, 2004, between CASTLE BRANDS (USA) CORP., ("Debtor"), a Delaware corporation, having an address at 85-47 ELIOT AVENUE, SUITE G, REGO PARK, NY 11374, and JPMORGAN CHASE BANK, a New York banking organization, as Trustee, ("Trustee"), with a corporate trust office located at 700 Lavaca, 2nd Floor, Austin, Texas 78701.

ARTICLE I

DEFINITIONS

SECTION 1.1. DEFINITIONS OF GENERAL APPLICABILITY. All words and terms used in this Agreement shall have the meanings as set forth herein as follows and where not otherwise defined herein shall be deemed to have the meanings as accorded to them in the Uniform Commercial Code as in effect from time to time in the State of New York ("UCC").

"Account Debtor" shall mean any Person who is or may become obligated under or on account of any Receivable.

"Agreement" shall mean this Security Agreement.

"Alcoholic Beverages" shall mean those certain alcoholic products imported by Debtor into the United States (as identified in Exhibit "A" hereto, as such exhibit may be amended from time to time).

"Collateral" shall mean all the following, wherever located and whether now existing or hereafter created or arising and whether now owned or hereafter acquired by CB-US or Grantor: (i) Accounts arising from the sale of the Alcoholic Beverages; (ii) Inventory of the Alcoholic Beverages, and shall include, without limitation; (a) all documents of title, policies or certificates of insurance, securities, chattel paper and other documents and instruments evidencing or pertaining to any thereof; all claims of CB-US or Grantor against third parties for loss of or damage to, or otherwise relating to, any of the Collateral; (b) all moneys, drafts, notes, items, leases, general or special deposits, balances, sums, proceeds and credits of CB-US or Grantor arising from the Collateral; (iii) the rights, duties and obligations of Grantor under the Services Agreement; (iv) all rights and remedies which CB-US or Grantor might exercise with respect to any of the Collateral; and (v) all accessions and additions to, replacement and substitutions for, and proceeds and products of, the Collateral.

"Inventory" shall have the meaning given to such term in the UCC.

"MHW" shall mean MHW, Ltd., a New York corporation.

"MHW Account" shall mean the depository account established by MHW, into which the proceeds of Collateral are to be deposited and disbursed to the Trustee, all pursuant to the MHW Collateral Agreement.


"MHW Collateral Agreement" shall mean that certain Collateral Agreement of even date herewith by and among MHW, Borrower and Trustee.

"MHW Interest" shall mean the legal or beneficial ownership interest that MHW has or may have from time to time in and to the Receivables and the Inventory in its capacity as Collateral Agent, as is more fully described in the MHW Collateral Agreement.

"MHW Security Agreement" shall mean that certain Security Agreement of even date herewith by and among MHW and Trustee.

"Obligations" shall mean and include all loans, advances, debts, liabilities, obligations, covenants and duties owing by Debtor under the Trust Indenture of any kind or nature, present or future, whether or not evidenced by any note, guaranty or other instrument, whether arising under this Agreement, the other Secured Notes Documents or under any other agreement or by operation of law, whether or not for the payment of money, whether arising by reason of an extension of credit, loan, guaranty, indemnification or in any other manner, whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now due or hereafter arising and however acquired, including, without limitation, all interest, charges, expenses, commitment, facility, collateral management or other fees, reasonable attorneys' fees and expenses, and any other sum chargeable to Debtor under this Agreement, the other Secured Notes Documents the Trust Indenture.

"Person" shall mean an individual, partnership, limited liability company, corporation, or unincorporated association or organization, government or governmental agency or governmental subdivision,

"Property" shall mean any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.

"Receivables" shall mean and include all present and future Accounts, including, without limitation, contract rights, promissory notes, Chattel Paper, Electronic Chattel Paper, Instruments and Documents, all tax refunds and rights to receive tax refunds, bonds, certificates, rights to payment for the sale, lease or license of equipment and policies of insurance and insurance proceeds, investment securities, notes and instruments, deposit accounts, book accounts, credits and reserves and all forms of obligations whatsoever owing, together with all instruments, all documents of title representing any of the foregoing, and all rights in any merchandise or goods which any of the same may represent, all files and records with respect to any collateral or security given by Debtor to the Trustee, together with all right, title, security and guaranties with respect to each Receivable, including any right of stoppage in transit, whether now owned or hereafter created or acquired by Debtor or in which Debtor now has or hereafter acquires any interest.

"Secured Notes Documents" shall mean this Agreement, the MHW Security Agreement, the MHW Collateral Agreement and the Trust Indenture, together with promissory notes issued thereunder, and any and all other documents, instruments or agreements executed in connection therewith or herewith as the same may be modified, amended, restated or replaced from time to time.

2

"Services Agreement" shall mean the distribution services letter agreement restated as of December 1, 2003 between Debtor and MHW.

"Trust Indenture" shall mean the Trust Indenture dated the date hereof between the Debtor and the Trustee, as the same may be modified, amended, restated or replaced from time to time.

SECTION 1.2. MHW INTEREST. It is understood that all of Debtor's representations, warranties, covenants and agreements to perform hereunder are subject to the MHW Interest and that, in addition to the MHW Collateral Agreement, MHW is independently entering into the MHW Security Agreement with respect to the Receivables and Inventory which comprise the MHW Interest.

ARTICLE II

SECURITY INTEREST

SECTION 2.1. GRANT OF SECURITY INTEREST. To secure the prompt payment and performance of all of the Obligations to the Trustee, Debtor hereby grants to the Trustee a first priority lien and security interest in all of the Collateral of Debtor.

SECTION 2.2. PERFECTION. Debtor will execute and deliver to the Trustee and/or MHW such security agreements, assignments (including, without limitation, assignments of specific Receivables), and other papers as the Trustee may at any time or from time to time reasonably request that are required to perfect or protect the security interest granted hereby. Debtor shall also cooperate with the Trustee in obtaining appropriate waivers or subordinations of interests from such third parties in any Collateral. Debtor authorizes the Trustee to execute alone any financing statements or other documents or instruments that the Trustee may require to perfect, protect or establish any lien or security interest granted to the Trustee by Debtor and further authorizes the Trustee to sign Debtor's name on the same and/or to file or record the same without Debtor's signature thereon. Debtor will perform any and all steps that the Trustee may request to perfect the Trustee's security interest in Inventory, including, but without limitation, placing and maintaining signs, appointing custodians, executing and filing financing or continuation statements in form and substance satisfactory to the Trustee, maintaining stock records and transferring of Inventory to warehouses. If any Inventory is in the possession or control of any third party other than a purchaser in the ordinary course of business or a public warehouseman where the warehouse receipt is in the name of or held by the Debtor, Debtor shall notify such person of the Trustee's security interest therein and, instruct such person or persons to hold all such Inventory for the account and benefit of the Trustee and subject to the Trustee's instructions. Upon the written request of the Trustee, Debtor will deliver to the Trustee warehouse receipts covering any Inventory located in warehouses showing the Trustee as the beneficiary thereof and will also deliver to the warehouseman such agreements relating to the release of warehouse Inventory as the Trustee may request. Debtor hereby appoints the Trustee as its attorney in fact to execute and deliver notices of lien, financing statements, assignments, and any other documents, notices, and agreements necessary for the perfection of the Trustee's security interests in the Collateral. Debtor appoints such person or persons as the Trustee may designate as Debtor's attorney-in-fact to endorse the name of Debtor on any checks, notes, drafts

3

or other forms of payment or security that may come into the possession of the Trustee, to sign Debtor's name on invoices or bills of lading, drafts against customers, notice of assignment, verifications and schedules and, generally, to do all things necessary to carry out this Agreement. Such attorney-in-fact may, upon the occurrence of an Event of Default (as defined below), notify the Post Office authorities to change the address of delivery of mail to an address designated by the Trustee, and open and dispose of mail addressed to Debtor. The powers granted herein, being coupled with an interest, are irrevocable, and Debtor approves and ratifies all acts of the attorney-in-fact. Debtor agrees to pay the costs of the continuation of the Trustee's security interests and releases or assignments of the Trustee's interests.

ARTICLE III

REPRESENTATIONS, WARRANTIES AND COVENANTS

Debtor represents, warrants and covenants to the Trustee, and shall be deemed to continually do so, as long as this Agreement shall remain in force, that:

SECTION 3.1. INVENTORY.

(A) WARRANTIES WITH RESPECT TO INVENTORY. Debtor represents and warrants to the Trustee that (i) all representations made by Debtor to the Trustee and all documents and schedules given by Debtor to the Trustee, relating to the description, quantity, quality, condition and valuation of Inventory are true and correct, and (ii) Debtor has not received any Inventory on consignment or approval unless Debtor has notified the Trustee thereof in a Record, has marked such Inventory on consignment or approval or has segregated it from all other Inventory, and has appropriately marked its records to reflect that such Inventory is held on consignment or approval.

(B) THE TRUSTEE'S RIGHTS IN INVENTORY. The Trustee's security interests in the Inventory shall continue through sale and attach after importation of the Inventory into the U.S. and without further act to returned goods, documents of title, warehouse receipts, and to proceeds resulting from sale or disposition of Inventory. Until all Obligations of Debtor under the Trust Indenture have been satisfied, the Trustee's security interest in Inventory and in all proceeds thereof shall continue in full force and effect. Upon the occurrence of an Event of Default (as defined below), the Trustee shall have, in its discretion and at any time, the right to take physical possession of the Inventory and to maintain it on Debtor's premises, in a public warehouse, or at such place as the Trustee may remove the Inventory or any part thereof. If the Trustee exercises its right to take possession of Inventory, Debtor will, upon demand, and at Debtor's own cost and expense assemble the Inventory and make it available to the Trustee at a place or places reasonably convenient to the Trustee.

(C) DEBTOR'S OBLIGATION WITH RESPECT TO INVENTORY. All Inventory is and shall be maintained at the locations shown on Schedule 3.1(c) hereof. No Inventory shall be removed therefrom, except for the purpose of sale or in the ordinary course of Debtor's business, and except for such sales, Debtor will not sell, encumber, grant a security interest in, dispose of or permit the sale, encumbrance, return or disposal of any Inventory without the Trustee's prior consent contained in an Authenticated Record (as defined in the UCC).

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(D) MAINTENANCE OF INVENTORY RECORDS. Debtor shall maintain full, accurate and complete records respecting Inventory, including a perpetual inventory, and all other Collateral at all times. Debtor will pay all costs to be paid on taxes, assessments, governmental charges or private encumbrances levied, assessed, imposed or payable upon or with respect to the Inventory or other Collateral or any part thereof.

(E) INVENTORY REPORTING SYSTEM. Debtor shall maintain full, accurate and complete records respecting Inventory, including a perpetual inventory.

SECTION 3.2. RECEIVABLES.

(A) Debtor represents and warrants to the Trustee that each Receivable created by it (i) will cover a bona fide sale and delivery of merchandise usually dealt in by Debtor in the ordinary course of its business or will cover the rendition of services by Debtor to customers of a kind ordinarily rendered in the ordinary course of Debtor's business, (ii) will be for a liquidated amount from a customer competent to contract therefor, (iii) is not subject to renegotiation, (iv) is not subject to any prepayment or credit and will not be subject to any deduction, offset, counterclaim, lien or other condition other than in the ordinary course of Debtor's business, and (v) is generally enforceable in accordance with its terms. Debtor further represents and warrants that all services to be performed by Debtor in connection with each Receivable have been performed.

(B) CONFIRMATORY WRITTEN ASSIGNMENTS. Promptly after the creation of any Receivable, if the Trustee shall so request, Debtor shall execute and deliver confirmatory written assignments to the Trustee of Receivables, but the failure to execute or deliver any schedule or assignment shall not affect or limit any lien or other right of the Trustee in and to any Receivable.

(C) COMMUNICATION WITH ACCOUNT DEBTORS. Upon the Trustee's request, before or after the occurrence of an Event of Default, Debtor shall provide the Trustee with a list of the addresses of its Account Debtors.

SECTION 3.3. OWNERSHIP OF COLLATERAL. Subject only to the MHW Interest, Debtor is the owner of the Collateral with good, marketable and indefeasible title thereto, free and clear of all liabilities, mortgages, security interests, leases, liens, pledges, encumbrances, restrictions, charges, claims or imperfections of title whatsoever.

SECTION 3.4. MAINTENANCE OF COLLATERAL. Debtor shall continually take such steps as are necessary and prudent to protect the interest of the Trustee in the Collateral including, but not limited to, the following:

(a) Maintain books and records relating to the Collateral satisfactory to the Trustee and shall allow the Trustee or its representatives access to such records and the Collateral at all reasonable times for the purpose of examination, inspection, verification, copying, extracting and other reasonable purposes as the Trustee may require;

(b) Maintain the Collateral and the books and records relating to the Collateral at Debtor's address indicated above, at any address listed on Schedule 3.1(c) or at such other

5

address as the Trustee shall permit, in its sole discretion, upon the request to the Trustee contained in an Authenticated Record from Debtor;

(c) Execute and deliver to the Trustee such other and further documentation necessary to evidence, effectuate or perfect its security interest in the Collateral;

(d) Defend the Collateral against all claims and demands of third parties at any time claiming the same or any interest therein, except buyers of Inventory in the ordinary course of Debtor's business;

(e) Keep the Collateral free of all liens and encumbrances, except for the security interest of the Trustee, and Debtor will not, without prior consent of the Trustee contained in an Authenticated Record, sell, transfer or otherwise dispose of the Collateral or any interest therein, in bulk or otherwise, except for the sale of Inventory in the ordinary course of business;

(f) Notify the Trustee in the event of material loss or damage to the Collateral or of any material adverse change in Debtor's business or the Collateral, or of any other occurrences which could materially and adversely affect the security of the Trustee;

(g) Pay all expenses incurred in the manufacture, delivery, storage or other handling of the Collateral and all taxes which are or may become a lien on the Collateral, promptly when due, and in any event reimburse the Trustee, on demand, for any expenses which the Trustee might incur following the occurrence of an Event of Default, in satisfying such expenses or taxes, which the Trustee, in its sole discretion, deems necessary in order to protect the Collateral;

(h) Maintain insurance on the Collateral from carriers acceptable to Trustee of such types, coverage, form and amount as is usually carried on similar goods by similar enterprises. In the event Debtor fails to maintain such insurance, the same may be maintained by the Trustee, at its option, and Debtor shall reimburse the Trustee for the cost thereof, on demand; and

(i) If requested by the Trustee: (i) mark its records evidencing the Collateral in a manner satisfactory to the Trustee so as to indicate the security interest of the Trustee hereunder; and (ii) fully cooperate with the Trustee in the exercising of its rights and methods for verification of the Collateral.

SECTION 3.5. AUTHORITY. Debtor is authorized to enter into and implement this Agreement and has taken all necessary actions, corporate or otherwise, in relation to such authorization.

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ARTICLE IV

EVENTS OF DEFAULT

The occurrence of any Event of Default under, and the acceleration of the Secured Notes then outstanding as provided for in, the Trust Indenture shall constitute an "Event of Default" under this Agreement.

ARTICLE V

RIGHTS OF THE TRUSTEE

SECTION 5.1. GENERAL RIGHTS. The rights of the Trustee shall at all times be those of a secured party under the UCC. Without limiting the generality of the foregoing, the Trustee shall have the additional rights set forth in this Agreement.

SECTION 5.2. THE TRUSTEE'S RIGHT TO PERFORM DEBTOR'S OBLIGATIONS. In the event that Debtor shall fail to purchase or maintain insurance, or to pay any tax, assessment, government charge or levy, except as the same may be otherwise permitted hereunder, or in the event that any lien, encumbrance or security interest prohibited hereby shall not be paid in full or discharged, or in the event that Debtor shall fail to perform or comply with any other covenant, promise or Obligation to the Trustee hereunder or under any other Loan Document, the Trustee may, but shall not be required to, perform, pay, satisfy, discharge or bond the same for the account of Debtor, and all monies so paid by the Trustee, including reasonable attorneys' fees and expenses, shall be treated as part of the Obligations.

SECTION 5.3. COLLECTIONS; MODIFICATION OF TERMS. Without limiting any rights the Trustee may have pursuant to this Agreement or otherwise, upon the occurrence and during the continuance of an Event of Default, the Trustee may demand, sue for, collect and give receipts for any money, Instruments or property payable or receivable on account of or in exchange for any of the Collateral, or make any compromises it deems necessary or proper, including without limitation, extending the time of payment, permitting payment in installments, or otherwise modifying the terms or rights relating to any of the Collateral, all of which may be effected without notice to or consent by Debtor and without otherwise discharging or affecting the Obligations, the Collateral or the security interest granted under this Agreement or any of the Secured Notes Documents.

SECTION 5.4. NOTIFICATION OF ACCOUNT DEBTORS. Without limiting any rights of pursuant to this Agreement or under applicable law, after an Event of Default has occurred, (i) Debtor, at the request of the Trustee, shall notify the Account Debtors of the Trustee's security interest in Debtor's Receivables; and
(ii) the Trustee may notify the Account Debtors on any of the Receivables to make payment directly to the Trustee, and the Trustee may endorse all items of payment received by it that are payable to Debtor. Debtor authorizes such parties to make such payments directly to the Trustee and to rely on notice from the Trustee without further inquiry. The Trustee may demand and take all necessary or desirable steps to collect such Collateral in either its or Debtor's, name, with the right to enforce, compromise, settle, or discharge any of the foregoing.

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SECTION 5.5. INSURANCE. Without limiting any rights of the Trustee pursuant to this Agreement or under applicable law, after a Default or Event of Default has occurred, the Trustee may file proofs of loss and claim with respect to any of the Collateral with the appropriate insurer, and may endorse in its own and Debtor's name any checks or drafts constituting insurance proceeds. Any insurance proceeds received by the Trustee may be applied by it against Debtor's obligations under the Secured Notes Documents.

SECTION 5.6. WAIVER OF RIGHTS BY DEBTOR. Except as may be otherwise specifically provided herein, Debtor waives, to the extent permitted by law, any bonds, security or sureties required by any statute, rule or otherwise by law as an incident to any taking of possession by the Trustee of any Collateral. Debtor authorizes the Trustee, upon the occurrence of an Event of Default, to enter upon any premises owned by or leased to Debtor where the Collateral is kept, without obligation to pay rent or for use and occupancy, through self help, without judicial process and without having first given notice to Debtor or obtained an order of any court, and peacefully retake possession thereof by securing at or removing same from such premises.

SECTION 5.7. THE TRUSTEE'S RIGHTS. Debtor agrees that the Trustee shall not have any obligation to preserve rights to any Collateral against prior parties or to marshall any Collateral of any kind for the benefit of any other creditor of Debtor or any other Person. After the occurrence of an Event of Default, the Trustee is hereby granted a license or other right to use, without charge, Debtor's labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks and advertising matter, or any property of a similar nature, as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and Debtor's rights under all licenses and any franchise, sales or distribution agreements shall inure to the Trustee's benefit for such purpose.

SECTION 5.8. RIGHTS ON DEFAULT. Upon the occurrence of any Event of Default, and after giving effect to any applicable grace period, in addition to and without limiting any rights the Trustee may have under any agreement, document or instrument evidencing or representing any obligation of Debtor to the Trustee or executed in connection with any such obligation, the Trustee is hereby authorized to declare any or all of the Obligations to be immediately due and payable, and the rights and remedies of the Trustee with respect to the Collateral shall be as set forth herein, in the UCC and as otherwise available under applicable law.

The Trustee may, without demand, advertising or notice, all of which Debtor hereby waives (except as the same may be required by law), sell, lease, license, dispose of, deliver and grant options to a third party to purchase, lease or otherwise dispose of any and all Collateral held by it or for its account at any time or times in one or more public or private sales or other dispositions, for cash, on credit or otherwise, as such prices and upon such terms as the Trustee, in its sole discretion, deems advisable. Without requiring notice to Debtor, all requirements of reasonable notice under this section shall be met if such notice is mailed, postage prepaid, to Debtor at its address set forth herein or such other address as Debtor may have provided to the Trustee, in a Record, at least ten (10) days before the time of such sale or disposition. The Trustee may, if it deems it reasonable, postpone or adjourn any sale of any Collateral from time to time by an announcement at the time and place of the sale to be so postponed or adjourned without being required to give a new notice of sale, provided, however, that the Trustee shall provide Debtor with written notice of the time and place of such postponed

8

or adjourned sale. The Trustee may be the purchaser at any such sale, and payment may be made, in whole or in part, in respect of such purchase price by the application of Obligations due from Debtor to the Trustee. Debtor shall be obligated for, and the proceeds of sale shall be applied first to, the costs of retaking, refurbishing, storing, guarding, insuring, preparing for sale, and selling the Collateral, including the fees and disbursements of attorneys, auctioneers, appraisers, consultants and accountants employed by the Trustee. Proceeds from the Sale or other disposition or Collateral shall be applied to the payment, in whatever order the Trustee may elect, of all Obligations of Debtor. The Trustee shall return any excess to Debtor and Debtor shall remain liable for any deficiency. Collateral securing purchase money security interests also secures non-purchase money security interests. To the extent Debtor uses an advance under the Secured Notes Documents to purchase Collateral, Debtor's repayment of such advance shall apply on a "first-in-first-out" basis so that the portion of the advance used to purchase a particular item of Collateral shall be paid in the chronological order the Debtor purchased the Collateral. Upon request of the Trustee, Debtor will assemble and make the Collateral available to the Trustee, at a reasonable place and time designated by the Trustee. Debtor's failure to take possession of any Collateral at any time and place reasonably specified by the Trustee in a Record to the Debtor shall constitute an abandonment of such Property. Notwithstanding the foregoing, the Trustee shall not be required to take possession of the Collateral if and in the event the possession thereof would, in the reasonable judgment of the Trustee, require the Trustee to observe or comply with any federal or state law or regulation relating to the sale or distribution of alcoholic beverages.

The Trustee shall not be responsible to Debtor for loss or damage resulting from the Trustee's failure to enforce or collect any Collateral or any monies due or to become due under any liability of Debtor to the Trustee.

After an Event of Default, Debtor (i) will make no change in any Receivable and (ii) shall receive as the sole property of the Trustee and hold in trust for the Trustee all monies, checks, notes, drafts, and other property (collectively called "items of payment") representing the proceeds of any Collateral. After an Event of Default, the Trustee may but shall be under no obligation to: (a) notify all appropriate parties that the Collateral, or any part thereof, has been assigned to the Trustee; (b) collect any Receivables or General Intangibles in its or Debtor's name, and apply any such collections against such obligations of Debtor to the Trustee as the Trustee may select; (c) take control of any cash or non-cash proceeds of any item of the Collateral; (d) compromise, extend or renew any Receivables, General Intangible, or Document, or deal with the same as it may deem advisable; and (e) make exchanges, substitutions or surrender of items comprising the Collateral.

To the full extent not otherwise provided herein, in performing its duties and discharging its obligations under this Agreement, the Trustee shall be entitled to all of the rights, protections and immunities accorded to it as Trustee under the Indenture, including but not limited to the right of indemnification.

SECTION 5.9. EXPENSE OF COLLECTION AND SALE. Debtor agrees to pay all costs and expenses incurred by the Trustee in connection with the negotiation and preparation of this Agreement or any other document, or any other Secured Notes Documents executed in connection herewith, in determining the Trustee's rights under, and in enforcing and collecting

9

the indebtedness represented by the guaranty and in determining its rights under and enforcing the security interests created by this Agreement, including, without limitation, costs and expenses relating to taking, holding, insuring, preparing for sale, appraising, selling or otherwise realizing on the Collateral, and reasonable attorneys' fees and expenses in connection with any of the foregoing. All such reasonable costs and expenses shall be payable on demand, and shall bear interest, payable on demand, from the date of the Trustee's payment of such costs and expenses until payment in full is made by Debtor, at the highest rate of interest permitted by law.

SECTION 5.10. COMPLIANCE WITH OTHER LAWS. The Trustee may comply with any applicable law requirements in connection with a disposition of the Collateral, and compliance will not be considered adversely to effect the commercial reasonableness of any sale of the Collateral.

SECTION 5.11. SALES ON CREDIT. If the Trustee sells any of the Collateral on credit, Debtor will be credited only with payments actually made by the purchaser, received by Secured Party and applied to the Indebtedness. If the purchaser fails to pay for the Collateral, Secured Party may resell the Collateral, and Debtor shall be credited with the proceeds of the sale.

ARTICLE VI

MISCELLANEOUS

SECTION 6.1. WAIVERS. Debtor expressly waives notice of nonpayment, demand, presentment, protest or notice of protest in relation to the Secured Notes Documents or the Collateral. No delay or omission of the Trustee in exercising or enforcing any of its rights, powers, privileges, options or remedies under this Agreement shall constitute a waiver thereof, and no waiver by the Trustee of any default by Debtor shall operate as a waiver of any other default.

SECTION 6.2. REMEDIES NOT EXCLUSIVE. All rights and remedies of the Trustee under this Agreement shall be cumulative and not alternative or exclusive, irrespective of any other collateral guaranty, right or remedy and may be exercised by the Trustee at such time or times and in such order as the Trustee, in its sole discretion, may determine, and are for the sole benefit of the Trustee. The exercise or failure to exercise such rights and remedies shall not result in liability to Debtor or others except in the event of willful misconduct or bad faith by the Trustee, and in no event shall the Trustee be liable for more than it actually receives as a result of the exercise or failure to exercise such rights and remedies.

SECTION 6.3. SUCCESSORS AND SURVIVAL. This Agreement is entered into for the benefit of the parties hereto and their successors and assigns. It shall be binding upon and shall inure to the benefit of said parties, their successors and assigns, and shall remain in force and effect until terminated as to future transactions by a Record Authenticated by the parties. All representations, warranties and covenants shall survive the execution hereof

SECTION 6.4. NOTICES. Wherever this Agreement provides for notice to any party (except as expressly provided to the contrary), it shall be given by messenger, facsimile, certified U.S. Mail with return receipt requested, or nationally recognized overnight courier with receipt

10

requested, effective when received by the party to whom addressed, and shall be addressed as follows, or to such other address as the party affected may hereafter designate:

If to the Trustee: JP Morgan Chase Bank

                   700 Lavaca 2nd Floor
                   Austin, Texas 78701
                   Attn: Cary Gilliam
                   Tel: (512) 479-2575
                   Fax: (512) 479-2553

With a copy:       Charles H. Waters, Jr.
                   600 Travis Street
                   Suite 1150
                   Houston, Texas 77002-3009
                   Tel.: (713) 216-8507
                   Fax: (973) 577-5216

If to debtor:      Castle Brands (USA) Corp.
                   85-47 Eliot Avenue
                   Suite G
                   Rego Park, New York 11374
                   Attn: Mark Andrews, President
                   Tel: (718) 533-7717
                   Fax: (718) 553-7610

With a copy to:    Jackson Walker L.L.P.
                   1401 McKinney, Suite 1900
                   Houston, Texas 77010
                   Attn: Douglas A. Paisley II
                   Tel: (713) 752-4316
                   Fax: (713) 752-4221

SECTION 6.5. ENTIRE AGREEMENT; AMENDMENTS; TRUSTEE'S CONSENT. This
Agreement (including the Exhibits and Schedules thereto) and the other Secured Notes Documents supersede, with respect to their subject matter, all prior and contemporaneous agreements, understandings, inducements or conditions between the respective parties, whether express or implied, oral or written. No amendment or waiver of any provision of this Agreement or any of the Secured Notes Documents, nor consent to any departure by Debtor therefrom, shall in any event be effective unless the same shall be in a Record Authenticated by the Trustee, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

SECTION 6.6. CROSS DEFAULT; CROSS COLLATERAL. Debtor hereby agrees that (a) all other agreements between Debtor and the Trustee are hereby amended so that a default under this Agreement is a default under all such other agreements and a default under any of such other agreements is a default under this Agreement, and (b) the Collateral under this Agreement secures the Obligations now or hereafter outstanding under all other agreements between Debtor

11

and the Trustee and the Collateral pledged under any other agreement with the Trustee secures the Obligations under this Agreement.

SECTION 6.7. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement.

SECTION 6.8. SEVERABILITY OF PROVISIONS. Any provision of this Agreement or any of the other Secured Notes Documents that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement or the other Secured Notes Documents or affecting the validity or enforceability of such provision in any other jurisdiction.

SECTION 6.9. TABLE OF CONTENTS; HEADINGS. The table of contents and headings preceding the text of this Agreement are inserted solely for convenience of reference and shall not constitute a part of this Agreement or affect its meaning, construction or effect.

SECTION 6.10. EXHIBITS AND SCHEDULES. All of the Exhibits and Schedules to this Agreement are hereby incorporated by reference herein and made a part hereof

SECTION 6.11. CONFLICTS OF LAW. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York; provided, however, that if any of the Collateral shall be located in any jurisdiction other than New York, the laws of such jurisdiction shall govern the method, manner and procedure for foreclosure of the Trustees' lien upon such Collateral and the enforcement of the Trustee's other remedies in respect of such Collateral to the extent that the laws of such jurisdiction are different from or inconsistent with the laws of New York.

SECTION 6.12. TERM. This Agreement shall commence on the date first set forth above and continue through May 31, 2007 and, thereafter, automatically shall continue on a month to month basis. Provided, however, that any termination of this Agreement shall be on not less than four (4) months' prior written notice from Trustee.

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

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IN WITNESS WHEREOF, this Agreement has been executed as of the day and year first above written.

CASTLE BRANDS (USA) CORP.

By: /s/ Mark Andrews
    ------------------------------------
    MARK ANDREWS
    President

JPMORGAN CHASE BANK, AS TRUSTEE

By:  /s/ Cary W. Gilliam
     -----------------------------------
Name: Cary W. Gilliam
Title: Vice President

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SCHEDULE 3.1 (C)
INVENTORY LOCATIONS
(ALL ARE THIRD PARTY LOCATIONS)

WESTERN CARRIERS                              Contact
2220 91st Street                              Lisa Sims
North Bergen, NJ 07047                        X 7247
201.869.3300

WESTERN WINE SERVICES
875 Hanna Drive
American Canyon, CA 94589
800.999.8463

WASHINGTON STATE LIQUOR BOARD
Dist. Ctr./Valley Ctr. Corp. Park
2302B Street NW, Bldg. 4, #104
Auburn, WA 98002-1743
360.664.1669

VERMONT DEPT OF LIQUOR CONTROL
Green Mountain Drive, Drawer 20
Montpelier, VT 05620-4501
802.828.2345

VIRGINIA DEPT OF ALCOHOLIC BEVERAGE CONTROL
2901 Hermitage Road
Richmond, VA 23220
804.213.4400

OHIO DEPT OF LIQUOR                           Ship To:
Bill To:                                      Universal Marketing/Handl-It
Ohio Dept of Taxation                         20001 Euclid Avenue
Excise Tax Division                           Euclid, OH 44117
P.O. Box 530
Columbus, OH 43266                            Universal Marketing / Lewis & Michael
                                              2940 Highland Avenue
                                              Cincinnati, OH 45212

                                              Universal Marketing / North Coast Logistics
                                              6606 Tussing Road
                                              Reynoldsburg, OH 43068

NEW HAMPSHIRE STATE LIQUOR COMMISSION
Bill To:                                      Ship To:
P.O. Box 503                                  Law Warehouse

14

Concord, NH 03301                             27 Airport Road
803.271.2167                                  Nashua, NH 03063

MICHIGAN LIQUOR CONTROL COMMISSION
Bill To:                                      Ship To:
7150 Harris Drive                             Encore Services Inc
P.O. Box 30005                                9900 Volte
Lansing, MI 48909-7505                        Detroit, MI 48227
517.322.1345

OREGON LIQUOR CONTROL COMMISSION
Bill To:                                      Ship To:
P.O. Box 22297                                9079 SE McLoughlin Blvd
Milwauki, OR 97269                            Milwauki, OR 97222
503.872.5091

NORTH CAROLINA ABC BOARD
Bill To: Various Locations                    Ship To:
Cumberland Co                                 J A Jones Management
Gastonia ABC                                  3324 Gamer Road
Forsyth Municipal ABC                         Raleigh, NC 27611
High Point ABC
Sylva ABC
Town of Bryson City ABC

ALABAMA ABC BOARD
2715 Gunter park Drive West
Montgomery, AL 26109

IDAHO LIQUOR DISPENSARY
Bill To:                                      Ship To:
P.O. Box 179001                               7185 Bethel
Boise, ID 83717-9001                          Boise, ID 83704
208.334.2524

MONTANA LIQUOR DIVISION
Bill To:                                      Ship To:
P.O. Box 1712                                 2517 Airport Road
Helena, MT 59624                              Helena, MT 59624
406.444.0700

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EXHIBIT A
Alcoholic Beverages

Castle Brands (USA) Corp. Alcoholic Beverages

Knappogue Castle Whiskey

Celtic Crossing Liqueur

Born Vodka

Sea Wynde Rum

British Royal Navy Imperial Rum

Brady's Irish Cream

Clontarf Irish Whiskey and related Clontarf brands

Schedule 3.3(a)


Exhibit 10.44

FIRST AMENDMENT TO GENERAL SECURITY AGREEMENT
(CASTLE BRANDS [USA] CORP.)

THIS FIRST AMENDMENT TO GENERAL SECURITY AGREEMENT (this "AMENDMENT"), dated effective as of August 15, 2005, between CASTLE BRANDS [USA] CORP., a New York corporation, having an office at 570 Lexington Avenue, 29th Floor, New York, NY 10022 (together with its successors and/or assigns, "DEBTOR") and JPMORGAN CHASE BANK, a New York corporation,, having an address at 700 Lavaca, 2nd Floor, Austin, TX 78701 (together with its successors and assigns, "TRUSTEE").

WITNESSETH:

WHEREAS, Debtor and the Trustee, joined by the Collateral Agent, have heretofore entered into a Trust Indenture dated as June 1, 2004 (the "ORIGINAL INDENTURE") authorizing the issuance of up to Five Million Dollars ($5,000,000) of the Issuer's 8% Senior Secured Notes, Series 2004, due May 31, 2007 (the
"ORIGINAL NOTES");

WHEREAS, Debtor has heretofore issued Four Million Six Hundred Sixty Thousand Dollars ($4,660,000) of Original Notes;

WHEREAS, Debtor desires to amend the terms of the Original Notes (i) to extend the maturity date from May 31, 2007 to May 31, 2009, and (ii) to increase the interest rate payable on the Original Notes from eight percent (8%) to nine percent (9%) (hereinafter referred to as the "AMENDED NOTES");

WHEREAS, Debtor desires to amend the terms of the Original Indenture
(i) to authorize a maximum of Ten Million Dollars ($10,000,000) of Amended Notes to be issued thereunder (inclusive of the $4,660,000 of outstanding Original Notes being amended hereby) and (ii) to amend and restate the Original Indenture to conform to the terms of the Amended Notes;

WHEREAS, Debtor's obligations under the Original Notes are secured by, among other things, a General Security Agreement executed by Debtor and dated as of June 1, 2004 (as may be further amended, supplemented, modified, restated, renewed or extended from time to time, the "SECURITY AGREEMENT"), covering certain Alcoholic Beverages, Receivables, Inventory and other assets of Debtor, as more particularly described and as such terms are defined therein;

WHEREAS, Debtor and Trustee desire to make certain modifications to the Security Agreement in connection with the issuance of the Amended Notes; and

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is acknowledged, the parties hereto hereby covenant, agree, represent and warrant that the Security Agreement is hereby amended as follows:

1. AMENDMENT: The definition of "OBLIGATIONS" of the Security Agreement is hereby deleted in its entirety and replaced with the following:

Page 1 of 4

"Obligations" shall mean and include all loans, advances, debts, liabilities, obligations, covenants and duties owing by Debtor under the Trust Indenture, as amended, of any kind or nature, present or future, whether or not evidenced by any note, guaranty or other instrument, whether arising under this Agreement the other Secured Notes Documents, the Amended Notes, or under any agreement or by operation of law, whether or not for the payment of money, whether arising by reason of an extension of credit loan, guaranty, indemnification or in any other manner, whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now due or hereafter arising and however acquired, including, without limitation, all interest, charges, expenses, commitment, facility, collateral management or other fees, reasonable attorneys' fees and expenses, and any other sum chargeable to Debtor under this Security Agreement, the other Secured Notes Documents or the Trust Indenture, as amended.

2. NO OTHER AMENDMENTS. Except as expressly amended hereby, the Security Agreement shall remain in full force and effect in accordance with its terms, without any waiver, amendment or modification of any provision thereof.

3. COUNTERPARTS. This Amendment may be executed in any number of counterparts, each of which, when executed and delivered, will be deemed an original and all of which taken together, will be deemed to be one and the same instrument.

4. DEFINITIONS. All references herein or in the Secured Notes Documents to the Security Agreement shall be deemed to include the Security Agreement, as modified by this Amendment. Terms used but not otherwise defined herein shall have the meaning set forth in the Security Agreement.

5. SUCCESSORS AND ASSIGNS. The terms and provisions of this Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors, heirs, and assigns.

6. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their duly authorized representatives, all as of the day and year first above written.

Page 2 of 4

DEBTOR:

CASTLE BRANDS [USA] CORP., a
Delaware corporation

By: /s/ Mark E. Andrews
    ------------------------------------
Name: Mark E. Andrews
Title: Chairman & CEO

Page 3 of 4

TRUSTEE:

JPMORGAN CHASE BANK., a New York
corporation

By: /s/ Carol Logan
    ------------------------------------
Name: Carol Logan
Title: Vice President

Page 4 of 4

Exhibit 10.45

GUARANTY OF PAYMENT AND PERFORMANCE

THIS GUARANTY OF PAYMENT AND PERFORMANCE dated as of June 1, 2004 (the "Guaranty"), from CASTLE BRANDS INC, a Delaware corporation (the "Guarantor"), to JPMORGAN CHASE BANK, a New York banking organization, as Trustee, with a corporate trust office located at 700 Lavaca, 2nd Floor, Austin, Texas 78701 (the "Trustee").

RECITALS:

WHEREAS, Castle Brands (USA) Corp. ("CB-US") executed and delivered a Trust Indenture (the "Trust Indenture") with the Trustee for the purpose of issuing 8% Senior Secured Notes, 2004 Series (the "Secured Notes"), and other documents, instruments and agreements in connection with the Secured Notes (as the same have been and may be modified, amended, restated or replaced from time to time, collectively, the "Senior Notes Documents"); and

WHEREAS, the Guarantor is willing to enter into this Guaranty in order to induce CB-US to issue the Secured Notes under the Trust Indenture and the Guarantor has approved the form and substance of the Secured Notes Documents.

NOW, THEREFORE, in order to induce CB-US to issue the Secured Notes and to execute the Trust Indenture and in consideration of the premises and of other good and valuable consideration, the Guarantor intends to guarantee absolutely and unconditionally for the benefit of the holders of the Secured Notes under the Trust Indenture the punctual payment of the Obligations and such further payment and performance as may be set forth in Article 2 hereof

ARTICLE I
REPRESENTATIONS AND WARRANTIES OF THE GUARANTOR

The Guarantor hereby represents and warrants to Trustee (if the Guarantor is more than one party, said representations and warranties are made only with respect to the particular party) that:

SECTION 1.1. CAPACITY OF THE GUARANTOR. Guarantor:

(A) Has the capacity to enter into this Guaranty.

(B) Has its address at the address set forth at the head of this Guaranty.

SECTION 1.2. NO VIOLATION OF RESTRICTIONS. Neither the execution and delivery of this Guaranty, the consummation of the transactions contemplated hereby nor the fulfillment of or compliance with the provisions of this Guaranty will conflict with or result in a breach of any of the terms, covenants, conditions or provisions of Guarantor's organizational documents or any material agreement, judgment or order to which the Guarantor is a party or by which the Guarantor is bound, or will constitute a default under any of the foregoing, or result in the creation or imposition of any lien of any nature whatsoever.


SECTION 1.3. COMPLIANCE WITH LAW. The Guarantor is not in violation of any law, ordinance, governmental rule, regulation, order or judgment to which the Guarantor may be subject which is likely to materially affect the financial condition of the Guarantor.

SECTION 1.4. FINANCIAL STATEMENTS. The financial statements submitted by the Guarantor to the Trustee fairly represent the financial condition as of the date of each statement and there has been no material adverse change in the financial condition of the Guarantor since the date of the respective statements submitted to the Trustee.

SECTION 1.5. TAX RETURNS. Guarantor has paid all taxes that Guarantor is responsible for and has filed all requisite federal and state tax returns, including all estimated tax returns and shall continue to do so while this Guaranty remains in effect.

SECTION 1.6. SOLVENCY OF GUARANTOR AND CB-US. The Guarantor is solvent and has made an appropriate financial investigation of CB-US and has determined that CB-US is able to pay its indebtedness as such indebtedness matures and has capital sufficient to carry on its business at the time of execution of this Guaranty.

ARTICLE II
COVENANTS AND AGREEMENTS

SECTION 2.1. GUARANTY OF PAYMENT. The Guarantor irrevocably, absolutely and unconditionally guarantees to the Trustee:

(A) The punctual payment of the Obligations. The term "Obligations" shall mean and include all loans, advances, debts, liabilities, obligations, covenants and duties owing by CB-US under the Trust Indenture of any kind or nature, present or future, whether or not evidenced by any note, guaranty or other instrument, whether arising under the Senior Notes Documents or under any other agreement or by operation of law, whether or not for the payment of money, whether arising by reason of an extension of credit, opening, guaranteeing or confirming of a letter of credit, loan, guaranty, indemnification or in any other manner, whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now due or hereafter arising and however acquired, including, without limitation, all interest, charges, expenses, commitment, facility, collateral management or other fees, reasonable attorneys' fees and expenses, and any other sum chargeable to CB-US under the Secured Notes Documents or any other agreement with the Trustee.

(B) The full and prompt performance of any and all obligations of CB-US to the Trustee under the Senior Notes Documents.

SECTION 2.2. OBLIGATIONS UNCONDITIONAL. This Guaranty shall remain in full force and effect until the Obligations and all sums due hereunder are paid in full, irrespective of any interruptions in the business relationships of CB-US and the Guarantor with the Trustee. The Guarantor's obligation hereunder shall not be affected, modified or impaired by any state of facts or the happening from time to time of any event, including, without limitation, any of the following, whether or not with notice to or the consent of the Guarantor:

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(A) The invalidity, irregularity, illegality or unenforceability of, or any defect in any Senior Notes Documents or any collateral security for the Loans (the "Collateral").

(B) Any present or future law or order of any government (de jure or de facto) or of any agency thereof purporting to reduce, amend or otherwise affect any Senior Notes Documents or any other obligation of CB-US or any other obligor or to any other terms of payment.

(C) The waiver, compromise, settlement, release or termination of any or all of the obligations, covenants or agreements of CB-US under any Senior Notes Documents or any waiver, compromise, settlement, or release of any of the obligations, covenants or agreements of the Guarantor under this Guaranty (that do not result in the termination of this Guaranty), or of any other party who has given collateral as security for the payment under the Secured Notes Documents or any part thereof.

(D) The failure to give notice to the Guarantor of the occurrence of an event of default under any Senior Notes Documents.

(E) The loss, release, sale, exchange, surrender or other change in any Collateral.

(F) The extension of the time for payment of any principal of or interest on the Obligations or of the time for performance of any other obligations, covenants or agreements under or arising out of any Senior Notes Documents or the extension or the renewal of any thereof

(G) The modification or amendment (whether material or otherwise)
of any obligation, covenant or agreement set forth in any Senior Notes Documents.

(H) The performance of, or the omission to perform, any of the actions referred to in any Senior Notes Documents.

(I) Any failure, omission or delay on the part of the Trustee to enforce, assert or exercise any right, power or remedy conferred on the Trustee in any Senior Notes Documents.

(J) The voluntary or involuntary liquidation, dissolution, sale or other disposition of all or substantially all the assets, marshaling of assets and liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition with creditors or readjustment of, or other similar proceedings affecting the Guarantor or CB-US or either of their assets, or any allegation or contest of the validity of any Senior Notes Documents.

(K) The default or failure of the Guarantor to fully perform any obligations set forth in this Guaranty.

(L) Any event or action that would, in the absence of this paragraph, result in the release or discharge of the Guarantor from the performance or observance of any

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obligation, covenant or agreement contained in this Guaranty (other than payment in full of the Obligations or a written release provided by Trustee to the Guarantor).

(M) Any other circumstances which might otherwise constitute a legal or equitable discharge or defense of a surety or a guarantor.

SECTION 2.3. WAIVER BY GUARANTOR. The Guarantor hereby waives:

(A) Notice of acceptance of this Guaranty.

(B) Diligence, presentment and demand for payment of the Obligations.

(C) Protest and notice of protest, dishonor or default to the Guarantor or to any other party with respect to the Loans.

(D) Any and all notices to which the Guarantor might otherwise be entitled.

(E) Any demand for payment under this Guaranty.

(F) Any and all defenses to payment including, without limitations any defenses and counterclaims of the Guarantor or CB-US based upon fraud, negligence or the failure of any condition precedent or claims of offset or defenses involving the invalidity, irregularity or unenforceability of all or any part of the liabilities herein guaranteed or any defense otherwise available to the Guarantor or CB-US.

(G) Until such time as the Obligations are paid in full and the Trustee has received all other sums due under the terms of the Senior Notes Documents, any and all rights of subrogation, reimbursement, indemnity, exoneration, contribution or any other claim which the Guarantor may now or hereafter have against CB-US or any other person directly or contingently liable for the Obligations guaranteed hereunder, or against or with respect to any of CB-US's property (including, without limitation, property collateralizing the Obligations), arising from the existence or performance of this Guaranty and whether or not such claim, right or remedy arises in equity, under contract, by statute, under common law or otherwise.

SECTION 2.4. NATURE OF GUARANTY. This Guaranty is a guaranty of payment and not of collection and the Guarantor hereby waives the right to require that any action be brought first against CB-US or any other guarantor, or to require that resort be made to the Collateral or any security or to any balance of any deposit account or credit on the books of the Trustee in favor of CB-US or of the Guarantor.

SECTION 2.5. CONTINUATION OF GUARANTY. The Guarantor further agrees that the obligations hereunder shall continue to be effective or reinstated, as the case may be, if at any time payment or any part thereof of the Secured Notes is rescinded or must otherwise be restored by the Trustee upon the bankruptcy or reorganization of CB-US, the Guarantor or otherwise.

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SECTION 2.6. SUBORDINATION OF DEBT. The Guarantor hereby subordinates any and all indebtedness of CB-US now or hereafter owed to the Guarantor (which shall not be deemed to include salary or business expense reimbursements paid in the ordinary course) to all indebtedness of CB-US to holders of the Secured Notes and/or the Trustee and agrees with the Trustee that, from and after the date whereon the Trustee notifies Guarantor that an Event of Default under the Trust Indenture has occurred and is continuing, Guarantor shall not demand or accept any payment from CB-US of any such indebtedness, shall not claim any offset or other reduction of Guarantor's obligations hereunder because of any such indebtedness and shall not take any action to obtain any interest in any of the Collateral described in and encumbered by the Senior Notes Documents; provided, however, that, if the Trustee so requests, such indebtedness shall be collected, enforced and received by Guarantor as trustee for the Trustee and paid over to the Trustee on account of the Obligations, but without reducing or affecting in any manner the liability of Guarantor under the other provisions of this Guaranty except to the extent the Obligations shall have been reduced by such payment.

SECTION 2.7. FINANCIAL STATEMENTS. Guarantor agrees to deliver to the Trustee: (a) within one hundred twenty (120) days after the close of each fiscal year of Guarantor, a copy of the annual financial statements of Guarantor, on a consolidated and consolidating basis, prepared by an independent certified public accountant, selected by Guarantor and reasonably acceptable to the Trustee, consisting of a balance sheet, statements of operations and retained earnings and accompanying footnotes and statements of cash flow; (b) within thirty (30) days after the filing of Federal and State tax returns, such returns and any notes and schedules relating thereto; and (c) promptly upon request by the Trustee, such other documentation and information relating to Guarantor's financial condition as reasonably requested by the Trustee. Within ten (10) days after Guarantor becomes aware of an Event of Default under any Senior Notes Documents, Guarantor will furnish Trustee with financial statements and any additional information applicable to Guarantor's financial condition dated no earlier than thirty (30) days prior to the Event of Default.

ARTICLE III
EVENTS OF DEFAULT

SECTION 3.1. EVENTS OF DEFAULT DEFINED. An "Event of Default" shall exist if any of the following events occurs:

(A) The Guarantor fails to perform or observe any covenant contained herein.

(B) Any warranty, representation or other statement by or on behalf of the Guarantor contained in this Guaranty is false or misleading in any material respect when made.

(C) The Guarantor purports to terminate this Guaranty.

(D) A receiver, liquidator or trustee of the Guarantor or any of his or its property is appointed by court order, or any party named as a Guarantor is adjudicated bankrupt or insolvent or any of his or its property is sequestered by court order and such order remains in

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effect for more than sixty (60) days, or a petition is filed against the Guarantor under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect, and is not dismissed within ninety (90) days of such filing.

(E) The Guarantor files a petition in voluntary bankruptcy or seeks relief under any provision of any reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect, or consents to the filing of any petition against it under any such law.

(F) The Guarantor makes an assignment for the benefit of creditors or admits in writing inability to pay debts generally as they become due, or consents to the appointment of a receiver, trustee or liquidator of all or any part of his or its property. (G) The occurrence of an Event of Default under the Trust Indenture.

SECTION 3.2. REMEDIES ON DEFAULT. If an Event of Default exists, the Trustee may proceed to enforce the provisions hereof and to exercise any other rights, powers and remedies available to the Trustee.

SECTION 3.3. WAIVER AND NOTICE.

(A) No remedy herein conferred upon or reserved to the Trustee is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Guaranty now or hereafter existing at law or in equity or by statute.

(B) No delay or omission to exercise any right or power accruing upon the occurrence of any Event of Default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right or power may be exercised from time to time and as often as may be deemed expedient.

(C) In order to entitle the Trustee to exercise any remedy reserved to it in this Guaranty, it shall not be necessary to give any notice, other than such notice as may be expressly required in this Guaranty.

(D) No waiver, amendment, release or modification of this Guaranty shall be established by conduct, custom or course of dealing.

ARTICLE IV
MISCELLANEOUS

SECTION 4.1. GOVERNING LAW. This Guaranty shall be governed by and construed in accordance with the internal laws of the State of New York without regard to principles of conflicts of laws.

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SECTION 4.2. SUCCESSORS AND ASSIGNS. This Guaranty is entered into for the benefit of the parties hereto and their successors and assigns. It shall be binding upon and shall inure to the benefit of the said parties, their successors and assigns.

SECTION 4.3. NOTICES. Wherever this Guaranty provides for notice to any party (except as expressly provided to the contrary), it shall be given by messenger, facsimile, certified U.S. mail with return receipt requested, or nationally recognized overnight courier with receipt requested, effective when received by the party to whom addressed, and shall be addressed as follows, or to such other address as the party affected may hereafter designate:

If to the Trustee:   JP Morgan Chase Bank
                     700 Lavaca 2nd Floor
                     Austin, Texas 78701
                     Attn: Cary Gilliam
                     Tel: (512) 479-2575
                     Fax: (512) 479-2553

With a copy to:      Charles H.  Waters, Jr.
                     600 Travis Street
                     Suite 1150
                     Houston, Texas 77002-3009
                     Tel.: (713) 216-8507
                     Fax: (973) 577-5216

If to Guarantor:     Castle Brands Inc.
                     85-47 Eliot Avenue
                     Rego Park, New York 11374
                     Attn: Mark Andrews
                     Tel: (718) 533-7717
                     Fax: (718) 533-7610

SECTION 4.4. ENTIRE AGREEMENT. This Guaranty supersedes, with respect to the subject matter hereof, all prior and contemporaneous agreements, understandings, inducements or conditions between the respective parties, whether express or implied, oral or written. No amendment or waiver of any provision of this Guaranty, nor consent to any departure by Guarantor from the terms hereof shall in any event be effective unless the same shall be in a written consent signed by Trustee, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

SECTION 4.5. PARTIAL INVALIDITY. Any provision of this Guaranty that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Guaranty affecting the validity or enforceability of such provision in any other jurisdiction

SECTION 4.6. CONSENT TO JURISDICTION. AS PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF

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GUARANTOR OR TRUSTEE, GUARANTOR HEREBY CONSENTS AND AGREES THAT ANY FEDERAL OR STATE COURT LOCATED IN MANHATTAN OR THE SOUTHERN DISTRICT IN NEW YORK STATE SHALL HAVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN GUARANTOR AND TRUSTEE PERTAINING TO THIS GUARANTY OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS GUARANTY; PROVIDED, HOWEVER, TRUSTEE MAY, AT ITS OPTION, COMMENCE ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION TO OBTAIN POSSESSION OF OR FORECLOSE UPON ANY COLLATERAL, TO OBTAIN EQUITABLE RELIEF OR TO ENFORCE ANY JUDGMENT OR ORDER OBTAINED BY TRUSTEE AGAINST GUARANTOR OR WITH RESPECT TO ANY COLLATERAL, IF ANY, TO ENFORCE ANY OTHER RIGHT OR REMEDY UNDER THIS GUARANTY OR TO OBTAIN ANY OTHER RELIEF DEEMED APPROPRIATE BY TRUSTEE. GUARANTOR EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND GUARANTOR HEREBY WAIVES ANY OBJECTION WHICH HE MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. GUARANTOR REPRESENTS AND WARRANTS THAT HE HAS REVIEWED THIS CONSENT TO JURISDICTION PROVISION WITH HIS LEGAL COUNSEL, AND HAS MADE THIS WAIVER KNOWINGLY AND VOLUNTARILY.

SECTION 4.7. WAIVER OF JURY TRIAL. GUARANTOR WAIVES THE RIGHT TO TRIAL BY JURY IN THE EVENT OF ANY ACTION, SUIT, PROCEEDING, COUNTERCLAIM OR OTHER LITIGATION TO WHICH TRUSTEE AND GUARANTOR ARE PARTIES IN RESPECT OF ANY MATTER ARISING UNDER THIS GUARANTY OR ANY OTHER MATTER INVOLVING GUARANTOR AND TRUSTEE, WHETHER OR NOT OTHER PERSONS ARE ALSO PARTIES THERETO. GUARANTOR ACKNOWLEDGES THAT THE FOREGOING WAIVER IS A MATERIAL INDUCEMENT TO TRUSTEE'S ACCEPTANCE OF THIS GUARANTY AND MAKING LOANS TO CB-US AND THAT TRUSTEE IS RELYING ON THE FOREGOING WAIVER IN ITS FUTURE DEALINGS WITH GUARANTOR. GUARANTOR REPRESENTS AND WARRANTS THAT GUARANTOR REVIEWED THIS JURY WAIVER PROVISION WITH HIS LEGAL COUNSEL, AND HAS MADE THIS WAIVER KNOWINGLY AND VOLUNTARILY.

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IN WITNESS WHEREOF, the Guarantor has executed this Guaranty as of the day and year first above written.

CASTLE BRANDS INC.

By: /s/ Mark Andrews
    ------------------------------------
    MARK ANDREWS
    President

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STATE OF NEW YORK   )
                    : ss.:
COUNTY OF HARRIS    )

On the 1st day of June in the year 2004 before me, the undersigned, a notary public in and for said State, personally appeared Mark Andrews, and he executed the foregoing instrument for the purposes therein contained as President of Castle Brands Inc., a Delaware corporation, on behalf of said corporation.

/s/ Jackie Turk
----------------------------------------
Notary Public in and for the State of

Texas


Exhibit 10.46

FIRST AMENDMENT TO GUARANTY OF PAYMENT AND PERFORMANCE

THIS FIRST AMENDMENT TO GUARANTY OF PAYMENT AND PERFORMANCE (this "AMENDMENT"), dated effective as of August 15, 2005, between CASTLE BRANDS, INC., a Delaware corporation, with its principal place of business located at 570 Lexington Avenue, 29th Floor, New York, NY 10022 ("GUARANTOR") and JPMORGAN CHASE BANK, a New York corporation,, having an address at 700 Lavaca, 2nd Floor, Austin, TX 78701 (together with its successors and assigns, "TRUSTEE").

WITNESSETH:

WHEREAS, Castle Brands [USA] Corp. ("CB-US") and the Trustee, joined by the Collateral Agent, have heretofore entered into a Trust Indenture dated as June 1, 2004 (the "ORIGINAL INDENTURE") authorizing the issuance of up to Five Million Dollars ($5,000,000) of the Issuer's 8% Senior Secured Notes, Series 2004, due May 31, 2007 (the "ORIGINAL NOTES");

WHEREAS, CB-US has heretofore issued Four Million Six Hundred Sixty Thousand Dollars ($4,660,000) of Original Notes;

WHEREAS, CB-US desires to amend the terms of the Original Notes (i) to extend the maturity date from May 31, 2007 to May 31, 2009, and (ii) to increase the interest rate payable on the Original Notes from eight percent (8%) to nine percent (9%) (hereinafter referred to as the "AMENDED NOTES");

WHEREAS, CB-US desires to amend the terms of the Original Indenture
(i) to authorize a maximum of Ten Million Dollars ($10,000,000) of Amended Notes to be issued thereunder (inclusive of the $4,660,000 of outstanding Original Notes being amended hereby) and (ii) to amend and restate the Original Indenture to conform to the terms of the Amended Notes;

WHEREAS, CB-US's obligations under the Original Notes are secured by, among other things, a Guaranty of Payment and Performance executed by Guarantor and CB-US and dated as of June 1, 2004 (as may be further amended, supplemented, modified, restated, renewed or extended from time to time, the "GUARANTY") in favor of Trustee;

WHEREAS, Guarantor and Trustee desire to make certain modifications to the Guaranty in connection with the issuance of the Amended Notes; and

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is acknowledged, the parties hereto hereby covenant, agree, represent and warrant that the Guaranty is hereby amended as follows:

1. AMENDMENT: The definition of "OBLIGATIONS" contained in Section 2.1(A) of the Guaranty is hereby deleted in its entirety and replaced with the following:

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"Obligations" shall mean and include all loans, advances, debts, liabilities, obligations, covenants and duties owing by CB-US under the Trust Indenture, as amended, or any Affiliate of Trustee of any kind or nature, present or future, whether or not evidenced by any note, guaranty or other instrument, whether arising under the Secured Notes Documents, the Amended Notes, or under any agreement or by operation of law, whether or not for the payment of money, whether arising by reason of an extension of credit, loan, guaranty, indemnification or in any other manner, whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now due or hereafter arising and however acquired, including, without limitation, all interest, charges, expenses, commitment, facility, collateral management or other fees, reasonable attorneys' fees and expenses, and any other sum chargeable to CB-US under the Secured Notes Documents or the Trust Indenture, as amended, or any other agreement with the Trustee.

2. NO OTHER AMENDMENTS. Except as expressly amended hereby, the Guaranty shall remain in full force and effect in accordance with its terms, without any waiver, amendment or modification of any provision thereof.

3. COUNTERPARTS. This Amendment may be executed in any number of counterparts, each of which, when executed and delivered, will be deemed an original and all of which taken together, will be deemed to be one and the same instrument.

4. DEFINITIONS. All references herein or in the Secured Notes Documents to the Guaranty shall be deemed to include the Guaranty, as modified by this Amendment. Terms used but not otherwise defined herein shall have the meaning set forth in the Guaranty.

5. SUCCESSORS AND ASSIGNS. The terms and provisions of this Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors, heirs, and assigns.

6. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their duly authorized representatives, all as of the day and year first above written.

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GUARANTOR:

CASTLE BRANDS INC., a Delaware
corporation

By: /s/ Mark E. Andrews
    ------------------------------------
Name: Mark E. Andrews
Title: Chairman & CEO

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TRUSTEE:

JPMORGAN CHASE BANK., a New York
corporation

By: /s/ Carol Logan
    --------------------------------
Name: Carol Logan
Title: Vice President

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Exhibit 10.47

COLLATERAL AGREEMENT
(MHW, LTD.)

THIS AGREEMENT made as of the 1st day of June, 2004 by and among MHW, LTD., a New York corporation ("Collateral Agent") with its principal place of business located at 272 Plandome Road, Manhasset, New York 11030, CASTLE BRANDS (USA) CORP., a Delaware corporation ("CB-US"), with its principal place of business located at 85-47 Eliot Avenue, Suite G, Rego Park, NY 11374 and JPMORGAN CHASE BANK, a New York banking organization, as Trustee, ("Trustee"), with a corporate trust office located at 700 Lavaca, 2nd Floor, Austin, Texas 78701.

WITNESSETH:

WHEREAS, Collateral Agent is an importer, marketer and distributor of distilled spirits, wines and malt beverages throughout the United States of America and holds such regulatory licenses as are necessary in each of the States in or into which it conducts business; and

WHEREAS, CB-US possesses the exclusive rights to import and market certain beverage alcohol products in the United States (as identified in Exhibit "A" hereto as such exhibit may be amended from time to time, hereinafter the "Alcoholic Beverages") and utilizes the services of Collateral Agent to distribute the Alcoholic Beverages in the United States of America; and

WHEREAS, CB-US and Collateral Agent have entered into a "Distribution Services Agreement" restated as of December 1, 2003, by letter agreement of even date herewith ("Services Agreement"), a true copy of which is attached hereto as Exhibit "B", and

WHEREAS, pursuant to the terms of the Services Agreement, Collateral Agent sells the Alcoholic Beverages beneficially owned by CB-US to CB-US's customers;

WHEREAS, Collateral Agent takes or may take title to the Inventory of Alcoholic Beverages, exercises custody and control over the accounts arising from the sale thereof and collects the proceeds thereof (the "Accounts"); and

WHEREAS, CB-US seeks to enter into a Trust Indenture (the "Trust Indenture") of even date herewith with Trustee for the purpose of issuing certain 8% Senior Secured Notes, Series 2004 (the "Secured Notes") of CB-US thereunder, pursuant to which CB-US's inventory and accounts receivable shall be pledged to Trustee as collateral for CB-US's indebtedness and other obligations; and

WHEREAS, it is in the best interest of Collateral Agent that CB-US cause the issuance of the Secured Notes under the Trust Indenture in order that CB-US may continue and expand its business, in general, and specifically with Collateral Agent; and

WHEREAS, as a condition to the issuance of the Secured Notes, the Trust Indenture contemplates that Trustee shall have a first priority and sole security interest in the Alcoholic Beverages, Accounts and other assets of CB-US in the possession or under the control of Collateral Agent; and


WHEREAS, in order to provide Trustee with the required security interest, Collateral Agent has agreed to consent to the assignment of the Services Agreement with CB-US and, to and for the benefit of Trustee and the owners from time to time of the Secured Notes, to enter into this Agreement; and

NOW, THEREFORE, for and in consideration of the one dollar and other valuable consideration, receipt of which is hereby acknowledged, it is hereby agreed as follows:

I. DEFINITIONS:

"Accounts" for the purposes of this Agreement, shall mean all items described in the UCC definition thereof and all of the following, whether or not so described (in all cases whether now existing or hereafter created), solely to the extent to which they arise from the sale of the Alcoholic Beverages by Collateral Agent: all obligations of any kind at any time due or owing to CB-US or Collateral Agent and all rights of CB-US or Collateral Agent to receive payment or any other consideration (whether classified under the UCC or the law of any other state as accounts, Accounts, contract rights, chattel paper, General Intangibles, or otherwise) including without limitation invoices, contract rights, Accounts, general intangibles, choses-in-action, notes, drafts, acceptances, instruments and all other debts, obligations and liabilities in whatever form owing to CB-US or Collateral Agent from any person, firm, corporation, governmental authority or other entity, together with all security for any thereof, and all of CB-US's or Collateral Agent's rights to goods sold (whether delivered, undelivered, in transit or returns), represented by any thereof, together with all proceeds and products of any of the foregoing.

"Agreement" shall mean this Agreement together with any and all amendments, modifications, and supplements hereto as same are executed among the parties from time to time.

"Alcoholic Beverages" shall have the same meaning as set forth in the preamble of this Agreement, together with all packing materials, labels and the like related thereto and paid tax stamps affixed thereto.

"Business Day" or "Business Days" shall mean any day except Saturdays, Sundays or legal holidays for banks in the State of New York on which commercial banks located in the State of New York are open and conducting business.

"CB-US Security Agreement" shall mean that certain General Security Agreement of even date herewith by and among CB-US and Trustee.

"Collateral" shall mean all the following, wherever located and whether now existing or hereafter created or arising and whether now owned or hereafter acquired by CB-US or Collateral Agent: (i) Accounts arising from the sale of the Alcoholic Beverages; (ii) Inventory of the Alcoholic Beverages, and shall include, without limitation: (a) all documents of title, policies or certificates of insurance, securities, chattel paper and other documents and instruments evidencing or pertaining to any thereof; all claims of CB-US or Collateral Agent against third parties for loss of or damage to, or otherwise relating to, any of the Collateral; (b) any moneys, drafts, notes, items, leases, general or special deposits, balances, sums, proceeds and credits of CB-US or Collateral Agent arising from the Collateral; (iii) all rights and remedies which CB US

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or Collateral Agent might exercise with respect to any of the Collateral; and
(iv) all accessions and additions to, replacements and substitutions for, and proceeds and products of, the Collateral.

"MHW Security Agreement" shall mean that certain Security Agreement of Even date herewith by and among Collateral Agent and Trustee.

"Obligations" shall mean and include the Secured Notes, together with all loans, advances, debts, liabilities, obligations, covenants and duties owing by CB-US to Trustee or any Affiliate of Trustee of any kind or nature, present or future, whether or not evidenced by any note, guaranty or other instrument, arising under any agreement or by operation of law, whether or not for the payment of money, whether arising by reason of an extension of credit, loan, guaranty, indemnification or in any other manner, whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now due or hereafter arising and however acquired, including, without limitation, all interest, charges, expenses, commitment, facility, collateral management or other fees, reasonable attorneys' fees and expenses, consulting fees and expenses and any other sum chargeable to CB-US under this Agreement, the other Secured Notes Document, or the Trust Indenture.

"Secured Notes Documents" shall mean this Agreement, the MHW Security Agreement, the CB-US Security Agreement and the Trust Indenture, together with promissory notes issued thereunder, and any and all other documents, instruments or agreements executed in connection therewith or herewith as the same may be modified, amended, restated or replaced from time to time.

"Services Agreement" shall have the same meaning as set forth in the preamble to this Agreement.

"UCC" shall mean the Uniform Commercial Code as in effect in the State of New York, and, as to issues of perfection and exercise of remedies only, the Uniform Commercial Code as in effect from time to time in the jurisdiction (i) wherein any of the Collateral is located or (ii) governing the Collateral.

II. INTEREST OF COLLATERAL AGENT IN COLLATERAL:

It is hereby understood, agreed, and acknowledged that:

(a) Collateral Agent and CB-US have entered into the Services Agreement;

(b) pursuant to the Services Agreement Collateral Agent shall sell Alcoholic Beverages beneficially owned by CB-US to customers of and at the request of CB-US;

(c) Collateral Agent's interest in the Inventory of Alcoholic Beverages, the Accounts, the proceeds thereof or other assets of CB-US coming into Collateral Agent's possession shall be for the benefit of itself; CB-US and Trustee;

(d) to the extent Collateral is in the possession, custody, dominion or control of Collateral Agent, all such Collateral shall at all times beneficially be, and equitably be deemed to

3

be, property of CB-US which is held by Collateral Agent, in its capacity as agent for, and in trust for the benefit of, CB-US and Trustee;

(e) Collateral Agent shall hold no rights in the Collateral and no interest therein which may be pledged, transferred, conveyed, encumbered or otherwise delivered to third parties without the express, prior, written consent of both CB-US and Trustee, except as may be provided herein or required by law;

(f) Collateral Agent hereby waives any right of setoff, claim, lien, encumbrance or security interest it may have or hereafter claim to have with respect to any Collateral or proceeds thereof coming into its possession, and further, waives any claim it may now or hereafter have to seek reimbursement from the proceeds of the Accounts or Collateral, except the right to the "Collateral Agent Profits Security" as provided in Article VI.

III. SECURITY INTEREST OF TRUSTEE:

(a) CB-US and Collateral Agent hereby acknowledge that this Agreement constitutes written notification, receipt of which is hereby acknowledged by Collateral Agent, that CB-US has granted to Trustee a first priority security interest in the Collateral and that for the limited purpose of perfecting the Trustee's security interest in the Collateral in accordance with the provisions of the UCC, Collateral Agent shall serve as the agent of CB-US and Trustee in the possession, custody, dominion and control over the Collateral.

(b) In furtherance of the agreements set forth in subsection III(a), Collateral Agent hereby agrees:

(i) to promptly make all necessary entries or notations in its books and records to reflect the interest of CB-US and Trustee in the Collateral;

(ii) to include a specific reference to CB-US's trade name, "Castle Brands," on each invoice arising from the sale of the Alcoholic Beverages;

(iii) that Trustee's interest, liens, security interests and rights in the Collateral shall at all times be prior to and superior to any rights, claims and interests which Collateral Agent may have in or with respect to the Collateral;

(iv) to execute and deliver such other instruments and agreements, including, but without limitation, a security agreement with respect to the Accounts and Alcoholic Beverages, as Trustee shall deem reasonably necessary to effectuate the intent and purpose of this Agreement;

(v) that Collateral Agent will file a form UCC-1 financing statement with respect to Collateral Agent and describing the Accounts and the Alcoholic Beverages as collateral; and

(vi) in the event Collateral Agent determines to file a petition or proceeding under the United States Bankruptcy Code or any other analogous state or federal statute for the relief of debtors or has filed against it any such petition or proceeding, to forthwith, and without

4

the necessity of demand, turn over all proceeds of the Accounts and the Alcoholic Beverages to Trustee in the form received.

IV. RETENTION OF COLLATERAL:

With respect to Collateral delivered to or under the custody and control of Collateral Agent, Collateral Agent agrees that it shall take no action with respect to such Collateral, except as provided in the Services Agreement, and shall deliver all proceeds from the sale of the Alcoholic Beverages or other Collateral to the Designated Account (as defined below) and further agrees that, except as provided herein or in the Services Agreement, it shall not, without the written consent of Trustee, sell, dispose of, liquidate or otherwise release the Collateral, but shall hold same in trust for the benefit of Trustee.

V. PROVISION OF REPORTS:

(a) At the expense of CB-US, Collateral Agent shall provide Trustee with such reports and with such access to Collateral Agent's books and records and permit Trustee to copy and inspect such reports and books and records, all as Trustee deems necessary or desirable to enable Trustee to monitor the Collateral. Collateral Agent shall give Trustee access to the premises where the Collateral is located and Trustee may enter thereon and examine and inspect the Collateral and may examine, inspect and copy all books and records with respect thereto at any time during Collateral Agent's normal business hours. Collateral Agent shall maintain full, accurate and complete records respecting all Collateral at all times.

(b) At the expense of CB-US, Collateral Agent shall simultaneously send to Trustee copies of all notices, reports, statements or other information given or rendered to CB-US pursuant to the Services Agreement and shall notify Trustee, in writing, not less than thirty (30) Business Days prior to any termination, amendment, modification or change to the Services Agreement.

VI. DESIGNATED ACCOUNT

(a) Collateral Agent hereby agrees to establish and maintain a special bank account (the "Designated Account") at Citibank, Inc. (the "Depository Bank") and to provide Trustee with all information necessary to identify such account. The Designated Account shall be in the name of Collateral Agent and shall refer to Collateral Agent's federal tax identification number. Collateral Agent shall utilize its best efforts to cause the Designated Account to bear a title suggesting the "in-trust" nature of the funds on deposit in such account. All original remittances for payment of sales of Alcoholic Beverages or Accounts or other proceeds of Collateral received by Collateral Agent shall be deposited into the Designated Account. All such amounts shall be deposited into the Designated Account, in kind, within one Business Day of receipt by Collateral Agent.

(b) Collateral Agent shall have sole dominion and control over the Designated Account; provided, however, that with the consent of CB-US (which is hereby granted), Collateral Agent shall give the Depository Bank an irrevocable direction (receipt of which shall be acknowledged in writing by the Depository Bank) to sweep from the Designated Account on a daily basis all sums on deposit therein in excess of $27,000.00 (the balance being the

5

"Collateral Agent Profits Security"); and direct that all swept sums be sent via wire transfer to the following account of CB-US: JPMorgan Chase Bank, ABA No. 113000609, Account 00113354238, Account Name: Castle Brands (USA) Corp.

(c) Upon the occurrence and continuance of any Event of Default under the Trust Indenture and upon the written instruction of Trustee, Collateral Agent shall give the Depository Bank an irrevocable direction (receipt of which shall be acknowledged in writing by the Depository Bank) to direct that all sums (in excess of the Collateral Agent Profits Security) to be swept under subsection VI(b) above, be instead sent by wire transfer to an account for the benefit of the Trustee, as instructed by Trustee.

(d) Except as permitted in the following sentence, Collateral Agent shall not change any direction given to the Depository Bank with respect to the sweep of the Designated Account required under subsections VI(b) and (c) without the prior written consent of Trustee and CB-US, which consent shall not be unreasonably withheld. Provided also, however, the amount of the Collateral Agent Profits Security maintained in the Designated Account may increase to an amount which (i) is consistent with the terms of the Services Agreement, (ii) is documented to the reasonable satisfaction of Trustee, and (ii) does not exceed the sum of Fifty Thousand Dollars ($50,000) at any time without the mutual written agreement of all parties to this Agreement.

(e) In the event that any remittance or portion of a remittance which does not arise out of the sale of the Alcoholic Beverages, or other service performed for the benefit of CB-US under the Service Agreement, is deposited to the Designated Account and wired to CB-US or Trustee, Collateral Agent shall notify the recipient of such deposit and the recipient shall promptly remit all funds which are not related to CB-US to Collateral Agent via wire transfer to such account as Collateral Agent shall direct.

(f) All costs and expenses of the Designated Account shall be borne by CB-US and CB-US agrees to indemnify and hold Collateral Agent and Trustee harmless from and against any charges, setoff for returned checks or otherwise and other reimbursements due to the Depository Bank, which the Depository Bank may charge against the Designated Account or seek reimbursement for from Collateral Agent or Trustee.

VII. TRUSTEE AND CB-US AGREEMENTS:

(a) Trustee and CB-US acknowledge that Collateral Agent has made no representations or claims regarding CB-US to induce Trustee to enter into the Trust Indenture with CB-US, and Collateral Agent has no responsibility or liability to Trustee for the Obligations of CB-US.

(b) Trustee and CB-US acknowledge that Collateral Agent's duties with respect to uncollected Accounts are limited to the provisions of the Services Agreement and the Collateral Agreement has no obligation to pay the foreign or domestic suppliers for the Alcoholic Beverages sold for the benefit of the Trustee and/or CB-US.

(c) In the event that Trustee accelerates the Obligations and makes demand for payment, Trustee will promptly provide Collateral Agent with written notice.

6

(d) Trustee shall reimburse Collateral Agent out of the Trust Estate (as defined in the Trust Indenture) for all warehouse charges, taxes and Customs duties applicable to the Alcoholic Beverages that have not been reimbursed by CB-US and (i) have been paid by Collateral Agent or (ii) are or become determined under law or contract to be an obligation of Collateral Agent.

To the fullest extent not otherwise provided herein, in performing its duties and discharging its obligations under this Agreement, the Trustee shall be entitled to all of the rights, protections and immunities accorded to it as Trustee under the Trust Indenture, including but not limited to the right of indemnification from parties other than the Collateral Agent.

VIII. NOTICES:

All notices, demands, requests, consents, approvals and other communications required or permitted hereunder must be in writing and will be effective upon receipt if delivered personally, or if sent by facsimile transmission with confirmation of delivery, or by nationally recognized overnight courier service, to Collateral Agent's, CB-US's and Trustee's addresses as set forth below or to such other address as any party may give to the others, in writing, for such purpose.

Collateral Agent:   MHW, Ltd.
                    272 Plandome Road, Suite 100
                    Manhasset, New York 11030
                    Attn: John F. Beaudette, President
                    Telephone: (516) 869-9170
                    Facsimile: (516) 869-9171

CB-US:              Castle Brands (USA) Corp.
                    85-47 Eliot Avenue
                    Suite G
                    Rego Park, New York 11374
                    Attn: Mark Andrews, President
                    Telephone: (718) 533-7717
                    Facsimile: (718) 533-7610

with a copy to:     Jackson Walker L.L.P.
                    1400 McKinney, Suite 1901
                    Houston, Texas 77010
                    Attn: Douglas A. Paisley II
                    Telephone: (713) 752-4316
                    Facsimile: (713) 752-4221

Trustee:            JPMorgan Chase Bank
                    700 Lavaca, 2nd Floor
                    Austin, Texas 78701
                    Attn: Cary Gilliam
                    Telephone: (512) 479-2575
                    Facsimile: (512) 479-2553

7

with a copy to:     Charles H. Waters, Jr.
                    600 Travis Street
                    Suite 1150
                    Houston, Texas 77002-3009
                    Telephone: (713) 216-8507
                    Facsimile: (713) 577-5216

IX. CHANGES IN WRITING:

No modification, amendment or waiver of any provision of this Agreement nor consent to any departure by any party therefrom will be effective unless made in a writing signed by the parties hereto, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.

X. ENTIRE AGREEMENT:

This Agreement, including any Exhibits, the Services Agreement and the Security Agreement (the "MHW Security Agreement") of even date herewith from the Collateral Agent in favor of the Trustee constitute the entire agreements and supersede all other prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof. In the event of any conflicts between this Agreement and the Services Agreement and/or the MHW Security Agreement, the provisions of this Agreement shall control.

XI. Counterparts:

This Agreement may be signed in any number of counterpart copies and by the parties hereto on separate counterparts, but all such copies shall constitute one and the same instrument.

XII. SUCCESSORS AND ASSIGNS:

This Agreement will be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors and assigns.

XIII. GOVERNING LAW AND JURISDICTION:

This Agreement has been delivered to and accepted by the Trustee and will be deemed to be made in the State of New York. THIS AGREEMENT WILL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCLUDING ITS CONFLICT OF LAWS RULES. Each of the parties hereby irrevocably consents to the exclusive jurisdiction and venue of any state or federal court located within Manhattan, New York.

XIV. WAIVER OF JURY TRIAL:

EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY NATURE RELATING TO THIS AGREEMENT, ANY DOCUMENTS EXECUTED IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION

8

CONTEMPLATED IN ANY OF SUCH DOCUMENTS. EACH PARTY HERETO ACKNOWLEDGES THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.

XV. TERM:

This Agreement shall commence on the date first set forth above and continue through May 31, 2007 and, thereafter, automatically shall continue on a month to month basis. Provided, however, that any termination of this Agreement shall be on not less than four (4) months' prior written notice from either Trustee or Collateral Agent.

XVI. SEVERABILITY OF PROVISIONS:

Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

XVII. TABLE OF CONTENTS; HEADINGS:

The headings preceding the text of this Agreement are inserted solely for convenience of reference and shall not constitute a part of this Agreement or affect its meaning, construction or effect.

XVIII. EXHIBITS AND SCHEDULES:

All of the Exhibits to this Agreement are hereby incorporated by reference herein and made a part hereof.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

9

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement on day and year first written above.

MHW, LTD.

By: /s/ John Beaudette
    ------------------------------------
    JOHN BEAUDETTE
    President

CASTLE BRANDS (USA) CORP.

By: /s/ Mark Andrews
    ------------------------------------
    MARK ANDREWS
    President

JPMORGAN CHASE BANK, TRUSTEE

By: /s/ Cary W. Gilliam
    ------------------------------------
Name: Cary W. Gilliam
Title: Vice President

10

EXHIBIT "A"
THE "ALCOHOLIC BEVERAGES"

Knappogue Castle Whiskey

Celtic Crossing Liquor

Boru Vodka

Sea Wynde Rum

British Royal Navy Imperial Rum

Brady's Irish Cream

Clontarf Irish Whiskey and related Clontarf brands

EXHIBIT A


EXHIBIT "B"
TRUE COPY OF SERVICES AGREEMENT

EXHIBIT B


Exhibit 10.48

FIRST AMENDMENT TO COLLATERAL AGREEMENT
(MHW, LTD.)

THIS FIRST AMENDMENT TO COLLATERAL AGREEMENT (this "AMENDMENT"), dated effective as of August 15, 2005, between MHW, LTD, a New York corporation, having an office at 272 Plandome Road, Manhasset, New York 11030 (together with its successors and/or assigns, "COLLATERAL AGENT"), CASTLE BRANDS (USA) CORP., a Delaware corporation, with its principal place of business located at 570 Lexington Avenue, 29th Floor, New York, NY 10022 ("CB-US") and JPMORGAN CHASE BANK, a New York corporation,, having an address at 700 Lavaca, 2nd Floor, Austin, TX 78701 (together with its successors and assigns, "TRUSTEE").

WITNESSETH:

WHEREAS, CB-US and the Trustee, joined by the Collateral Agent, have heretofore entered into a Trust Indenture dated as June 1, 2004 (the "ORIGINAL INDENTURE") authorizing the issuance of up to Five Million Dollars ($5,000,000) of the Issuer's 8% Senior Secured Notes, Series 2004, due May 31, 2007 (the
"ORIGINAL NOTES");

WHEREAS, CB-US has heretofore issued Four Million Six Hundred Sixty Thousand Dollars ($4,660,000) of Original Notes;

WHEREAS, CB-US desires to amend the terms of the Original Notes (i) to extend the maturity date from May 31, 2007 to May 31, 2009, and (ii) to increase the interest rate payable on the Original Notes from eight percent (8%) to nine percent (9%) (hereinafter referred to as the "AMENDED NOTES");

WHEREAS, CB-US desires to amend the terms of the Original Indenture
(i) to authorize a maximum of Ten Million Dollars ($10,000,000) of Amended Notes to be issued thereunder (inclusive of the $4,660,000 of outstanding Original Notes being amended hereby) and (ii) to amend and restate the Original Indenture to conform to the terms of the Amended Notes;

WHEREAS, CB-US's obligations under the Original Notes are secured by, among other things, a Collateral Agreement executed by Collateral Agent and CB-US and dated as of June 1, 2004 (as may be further amended, supplemented, modified, restated, renewed or extended from time to time, the "COLLATERAL AGREEMENT"), covering certain Alcoholic Beverages, Accounts and other assets of CB-US in the possession or under the control of Collateral Agent, as more particularly described and as such terms are defined therein;

WHEREAS, Collateral Agent, CB-US and Trustee desire to make certain modifications to the Collateral Agreement in connection with the issuance of the Amended Notes; and

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is acknowledged, the parties hereto hereby covenant, agree, represent and warrant that the Collateral Agreement is hereby amended as follows:

Page 1 of 5

1. AMENDMENT: The definition of "OBLIGATIONS" of the Collateral Agreement is hereby deleted in its entirety and replaced with the following:

"Obligations" shall mean and include the Amended Notes, together with all loans, advances, debts, liabilities, obligations, covenants and duties owing by CB-US to Trustee or any Affiliate of Trustee of any kind or nature, present or future, whether or not evidenced by any note, guaranty or other instrument, whether arising under this Agreement the other Secured Notes Documents, the Amended Notes, or under any agreement or by operation of law, whether or not for the payment of money, whether arising by reason of an extension of credit loan, guaranty, indemnification or in any other manner, whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now due or hereafter arising and however acquired, including, without limitation, all interest, charges, expenses, commitment, facility, collateral management or other fees, reasonable attorneys' fees and expenses, and any other sum chargeable to CB-US under this Agreement, the other Secured Notes Documents or the Trust Indenture, as amended.

2. NO OTHER AMENDMENTS. Except as expressly amended hereby, the Collateral Agreement shall remain in full force and effect in accordance with its terms, without any waiver, amendment or modification of any provision thereof.

3. COUNTERPARTS. This Amendment may be executed in any number of counterparts, each of which, when executed and delivered, will be deemed an original and all of which taken together, will be deemed to be one and the same instrument.

4. DEFINITIONS. All references herein or in the Secured Notes Documents to the Collateral Agreement shall be deemed to include the Collateral Agreement, as modified by this Amendment. Terms used but not otherwise defined herein shall have the meaning set forth in the Collateral Agreement.

5. SUCCESSORS AND ASSIGNS. The terms and provisions of this Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors, heirs, and assigns.

6. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their duly authorized representatives, all as of the day and year first above written.

Page 2 of 5

COLLATERAL AGENT:

MHW, LTD., a New York corporation

By: /s/ John F. Beaudette
    ------------------------------------
Name: John F. Beaudette
Title: President

Page 3 of 5

CB-US:

CASTLE BRANDS (USA) CORP., a
Delaware corporation

By: /s/ Mark E. Andrews
    ------------------------------------
Name: Mark E. Andrews
Title: Chairman & CEO

Page 4 of 5

TRUSTEE:

JPMORGAN CHASE BANK., a New York
corporation

By: /s/ Carol Logan
    ------------------------------------
Name: Carol Logan
Title: Vice President

Page 5 of 5

Exhibit 10.49

16 December 2004

PRIVATE AND CONFIDENTIAL                           College Green Business Centre
------------------------                           P.O. Box 145
The Directors                                      33 College Green
Castle Brands Spirits Company Limited              Dublin 2
1st Floor
Victoria House                                     Telephone:  01 7025400
Haddington Rd                                      Facsimile:  01 7025235
Dublin 4

                                                   www.ulsterbank.com

Dear Sirs,

Further to our recent discussions, I am pleased to advise the following facilities have been approved for your Company. The agreement is between Ulster Bank Ireland Limited ("UBIL") and Ulster Bank Ltd ("UB"), (together, the "bank") and the Borrower specified below whereby the Bank agrees to make available to the Borrower the following facility/ies on the terms and subject to the conditions herein contained:

BORROWER:         CASTLE BRANDS SPIRITS CO LTD.                         LENDER
--------          -----------------------------                         ------
FACILITY A:       OVERDRAFT                                             UBIL
FACILITY B:       LOAN                                                  UBIL
FACILITY C:       C & E GUARANTEE                                       UBIL
FACILITY D:       FORWARD CURRENCY DEALING RISK FACILITY                UBIL

BORROWER:         THE ROARING WATER BAY SPIRITS COMPANY (GB) LTD
--------          ----------------------------------------------

FACILITY E:       OVERDRAFT                                             UBL
FACILITY F:       LOAN                                                  UBL
FACILITY G:       C & E GUARANTEE                                       UBL

CASTLE BRANDS SPIRITS CO LTD

FACILITY A                                    OVERDRAFT
----------                                    ---------
AMOUNT:                                       EUR E400,000 (Four Hundred Thousand Euro)

NATURE & PURPOSE:                             Working capital.

INTEREST:                                     Interest is payable on all Bank accounts at regular intervals to be
                                              decided upon by the Bank.  The present charging period is quarterly in
                                              August, November, February and May at a rate subject to variation at
                                              the discretion of the


2

                                              Bank.  The present rate applicable for this facility is the Bank's AA2
                                              rate less .5%, currently 7.25% per annum variable.

REPAYMENT:                                    This Facility is repayable on demand.  However, in the absence of
                                              demand this facility is available until the review date 14th December
                                              2005.  Renewal of overdraft status will be conditional upon the
                                              current account showing regular fluctuations to credit during the
                                              period of sanction subject to a minimum of 30 days in any 12-month
                                              period.  An account which operates in debit at or near the sanctioned
                                              limit for the greater part of the year and then turns to credit for a
                                              short period does not comply with Bank's concept of overdraft.

                                              Accounts which exceed an agreed overdraft facility without prior
                                              arrangement with the Bank incur surcharge interest of 0.75% per
                                              month (minimum E1 per month on the excess).

FACILITY B                                    LOAN
----------                                    ----
AMOUNT:                                       EUR E190,000 (One Hundred and Ninety Thousand Euro).

NATURE & PURPOSE:                             Continuation of existing Loan account at reduced level, repayable on
                                              demand

INTEREST:                                     Interest is payable on all Bank accounts at regular intervals to be
                                              decided upon by the Bank.  The present charging period is quarterly in
                                              August, November, February and May at a rate subject to variation at
                                              the discretion of the Bank.  The present rate applicable to this
                                              facility is the Bank's Prime 5 rate, minus 0.125% equating to a rate
                                              of 4.835% per annum variable as at today's date.

                                              The under mentioned repayment includes an allowance for interest and
                                              in the event of a large upward movement in the interest rate the Bank,
                                              at its discretion will alter the repayments or alternatively make any
                                              adjustment necessary at the end of the term.

REPAYMENT:                                    In the absence of demand and assuming full drawdown, repayments will
                                              continue at E6,377 per month for five years from original draw down in
                                              September 2002.

                                              You have the option of repaying the outstanding balance at any time
                                              during the term of the loan.  Also, this facility is subject to formal
                                              review in line with the annual review of your overdraft facility.


3

FACILITY C                                    CUSTOMS & EXCISE GUARANTEE
---------
AMOUNT:                                       While the nominal amount of the Guarantee is for E35,000 it is
                                              understood that the Banks risk is double this amount i.e., E70,000.
                                                                                                   ----
NATURE & PURPOSE:                             Continuation of existing Guarantee facility in respect of the
                                              deferment of duties, taxes, levies and charges or any amounts due the
                                              Revenue Commissioners.

REVIEW/EXPIRY:                                This facility may be withdrawn on the demand being made by the Bank
                                              subject to 7 days written notice being given by the Bank to The
                                              Revenue Commissioners.

FEE:                                          A fee of 1% per annum on the nominal amount of the Guarantee is
                                              applicable.  This charge will continue to be debited to your account
                                              in four quarterly tranches of E87.5 with the next payment falling due
                                              28.02.05.

CLAIMS ON THE BANK:                           In the event of any claim being made by The Revenue Commissioners on
                                              the Bank in respect of this Guarantee, Ulster Bank Ireland Ltd shall
                                              debit your account the full amount of such a claim in accordance with
                                              the counter indemnity held.  There will be no obligation on the Bank
                                              to verify the validity of such a claim.

FACILITY D                                    FORWARD CURRENCY DEALING RISK FACILITY
----------
AMOUNT:                                       The equivalent of E25,000 (Twenty five thousand Euro) on the basis
                                              that the Bank assesses the risk on Forward Currency Dealing contracts
                                              for administration purposes at 10% of the maximum permitted level of
                                              outstanding contracts.  On this basis your company will be in a
                                              position to undertake Forward Currency Dealing Contracts subject to an
                                              aggregate value of such contracts at any given time not exceeding the
                                              equivalent of E250,000

AVAILABILITY:                                 This facility is available at the discretion of the Bank and is
                                              subject to annual review as outlined at General Condition No. 1
                                              overleaf.

LOSSES:                                       Any losses incurred by the Bank under Forward Currency Dealing
                                              Contracts undertaken on your behalf will be charged to the company's
                                              working account.


4

THE ROARING WATER BAY SPIRITS COMPANY (GB) LTD

FACILITY E                                    OVERDRAFT ON CURRENT ACCOUNT
----------
AMOUNT:                                       Stg L20,000 (Twenty thousand pounds sterling)

NATURE/PURPOSE:                               Overdraft on current account to meet working capital requirements.

INTEREST:                                     Interest accrues on the daily cleared debit balance at the Bank's base
                                              rate + 2.25% per annum and is calculated on a 365-day basis.  Interest
                                              is compoundable and is payable at the Bank's normal interest rests now
                                              quarterly in February, May, August and November at a rate subject to
                                              variation at the discretion of the Bank.

                                              In the event of any change in rate, the Bank may notify the Borrower
                                              of the change by way of narrative in a statement relating to the
                                              account.

REPAYMENTS:                                   The facility, including any implied overdraft facility, is at the
                                              pleasure of the Bank and the Bank may at any time demand repayment or
                                              reduce or restrict the overdraft facility as it sees fit without prior
                                              notice.  It is a condition of agreement that the balance of the
                                              account fluctuates regularly to credit, in the normal course of
                                              trading and that such credit periods total a minimum of 30 days in
                                              aggregate in any one-year period.

SUBCHARGES:                                   Overdrafts must operate within the authorised limit.  Unauthorised
                                              borrowings or excesses on agreed facilities, which occur or continue
                                              without formal arrangements carry an interest surcharge on the amount
                                              of the excess and for the duration thereof.  This excess will be
                                              charged in addition to normal interest charges.  The current interest
                                              surcharge rate on such excesses is 1% per month (12% per annum) for
                                              the period of such excesses, subject to a minimum charge of L1 per
                                              month.

FACILITY F                                    LOAN
----------                                    ----
AMOUNT:                                       EUR E11,900 (Eleven thousand nine hundred pounds sterling)


5

NATURE & PURPOSE:                             Continuation of existing Loan account at reduced level, repayable on
                                              demand

INTEREST:                                     Interest is payable on all Bank accounts at regular intervals to be
                                              decided upon by the Bank.  The present charging period is quarterly in
                                              August, November, February and May at a rate subject to variation at
                                              the discretion of the Bank.  The present rate applicable to this
                                              facility is the Bank's Base rate, plus 2.25% equating to a rate of
                                              7.15% per annum variable as at today's date.

                                              The under mentioned repayment includes an allowance for interest and
                                              in the event of a large upward movement in the interest rate the Bank,
                                              at its discretion will alter the repayments or alternatively make any
                                              adjustment necessary at the end of the term.

REPAYMENT:                                    In the absence of demand and assuming full drawdown, repayments will
                                              continue at L607.74 per month.

                                              You have the option of repaying the outstanding balance at any time
                                              during the term of the loan.  Also, this facility is subject to formal
                                              review in line with the annual review of your overdraft facility.

FACILITY G                                    CUSTOMS & EXCISE GUARANTEE
----------
AMOUNT:                                       While the nominal amount of the Guarantee is for L45,000 it is
                                              understood that the Bank's risk is double this amount i.e., L90,000.

NATURE & PURPOSE:                             Continuation of existing Guarantee facility in respect of the
                                              deferment of duties, taxes, levies and charges or any amounts due to
                                              HM Customs & Excise.

REVIEW/EXPIRY:                                This facility may be withdrawn on the demand being made by the Bank
                                              subject to 7 days written notice being given by the Bank to HM Customs
                                              & Excise.

FEE:                                          A fee of 1% per annum on the nominal amount of the Guarantee is
                                              applicable.  This charge will continue to be debited to your account
                                              in four quarterly tranches of L112.50 with the next payment falling
                                              due 28.02.05.

CLAIMS ON THE BANK:                           In the event of any claim being made by HM Customs & Excise on the
                                              Bank in respect of this Guarantee, Ulster Bank Ireland Ltd shall debit
                                              your account the full amount of such a claim in accordance with the
                                              counter indemnity held.  There will be no obligation on the Bank to
                                              verify the validity of such a claim.


6

SECURITY

It is understood that the following securities will be held for all the Company's liabilities to the Bank whether present or future, direct or contingent.

HELD AT PRESENT

1. All Monies Debenture dated the 4th February 2000 giving a first Floating Charge over the assets of the Company including all intellectual property rights i.e., the brand name, patents etc. A Letter of Waiver over the trade debtors dated the 31st October 2000 was issued to Ulster Bank Commercial Services Ltd in respect of facilities maintained with them.

2. Deed of Postponement dated the 19th September 1999 over shareholders loans in the amount of IEPL 200,000 (E253,947.61)**.

3. Joint Several Letter of Guarantee in the amount of IEP L125,000 (E158,717.25) signed by David Phelan and Patrick Rigney (Company Directors)**.

4. All Monies general counter indemnity dated the 29th January 2001 together with supporting resolution from the Roaring Water Bay Spirits Company Ltd.

**AMENDMENT TO SECURITY

It is agreed that security lots 2 and 3 above will be released on completion of the following replacement security:

2. A Composite inter company guarantee to be completed by the company's ultimate parent company Castle Brands Inc., Castle Brands Spirits Co Ltd and Roaring Water Bay Spirits Co (GB) Ltd in the sum of E860,000

3. A letter of Lien to be completed by Castle Brands Spirits Co Ltd in respect of a separate account containing E300,000, which sum to be held for the direct and contingent liabilities of Castle Brands Spirits Co Ltd.

INTELLECTUAL PROPERTY RIGHTS

In signing this facility letter the directors undertake on behalf of the company that it will not charge its Irish intellectual property rights (e.g., brands such as "Boru Vodka, Clontarf Whiskey, Old Head Gin, O'Shea's Irish Cream Liqueur, etc. or patents), to any other entity without the Bank's prior consent.

FEES & CHARGES

ARRANGEMENT FEE

An arrangement fee of E1,000 will be applied to your account on acceptance of this facility letter.


7

TRANSMISSION FEES

Bank Charges will apply in accordance with the Bank's standard scale as published from time to time.

GENERAL CONDITIONS,

1. Financial - Audited Accounts for this company and Castle Brands Inc are to be made available to the Bank within three months of the Company's financial year-end together with confirmation from your auditors that the Company's taxation affairs are up to date.

2. Management Accounts are to be provided quarterly within one-month of the quarter end.

3. All fees incurred in the taking of the security referred to above will be payable by the borrower.

4. In the event of the Bank being made aware that there has been a material adverse change in the financial position of the company so as to prejudice repayment capacity, the Bank reserves the right to cancel these facilities and in such events all amounts due plus interest would be payable immediately.

5. In the event that any or all of these facilities shall become due and payable to the Bank, whether following formal demand by the Bank or otherwise, interest shall accrue and be payable on such liabilities on a compound basis until fully discharged,

I am pleased to have the opportunity to arrange these facilities for you and hope that the terms and conditions I have outlined are acceptable to the Company. If so, please confirm this by signing and returning the enclosed copy of this letter at your earliest convenience. I would like to take this opportunity to with the company continued success in the development of your business.

Yours faithfully,

/s/ Brian Hunt

BRIAN HUNT
SENIOR MANAGER


8

ACCEPTANCE

WE CONFIRM ACCEPTANCE OF THE FACILITIES OUTLINED IN YOUR LETTER DATED THE 16TH DECEMBER 2004 UNDER THE TERMS AND CONDITIONS STATED THEREIN.

/s/ Mark Andrews                                          2/7/05
------------------------------                            ------
Director                                                   Date


/s/ Matthew F. MacFarlane, CFO                            2/7/05
------------------------------                            ------
Director                                                   Date


                                                                   Exhibit 10.50

4th April 2005                                            Ulster Bank

PRIVATE & CONFIDENTIAL                             College Green Business Centre
----------------------                             P.O. Box 145
The Directors                                      33 College Green
Castle Brands Spirits Company Limited              Dublin 2
1st Floor
Victoria House
Haddington Rd                                      Telephone:  01 7025400
Dublin 4                                           Facsimile:  01 7025235

                                                   WWW.ULSTERBANK.COM

Dear Sirs,

Further to our recent discussions, I am pleased to advise the following facilities have been approved for your Company. The agreement is between Ulster Bank Ireland Limited ("UBIL") and Ulster Bank Ltd ("UB"), (together the "bank") and the Borrower specified below whereby the Bank agrees to make available to the Borrower the following facility/ies on the terms and subject to the conditions herein contained:

BORROWER:         THE ROARING WATER BAY SPIRITS COMPANY (GB) LTD
--------          ----------------------------------------------
FACILITY E:       OVERDRAFT                              UBL
FACILITY F:       LOAN                                   UBL
FACILITY G:       C&E GUARANTEE                          UBL

FACILITY E        OVERDRAFT ON CURRENT ACCOUNT
----------

AMOUNT:           Stg(pound)70,000 (Seventy thousand pounds sterLing)

NATURE/PURPOSE:   Overdraft on current account to meet working capital
                  requirements.

REVIEW DATE:      14th December 2005

INTEREST:         Interest accrues on the daily cleared debit balance at the
                  Bank's base rate + 2.25% per annum and is calculated on a
                  365-day basis. Interest is compoundable and is payable at the
                  Bank's normal interest rests now quarterly in February, May,
                  August and November at a rate subject to variation at the
                  discretion of the Bank.

                  In the event of any change in rate, the Bank may notify the
                  Borrower of the change by way of narrative in a statement
                  relating to the account.

REPAYMENTS:       The facility, including any implied overdraft facility, is at
                  the pleasure of the Bank and the Bank may at any time demand
                  repayment or reduce or restrict the overdraft facility as it
                  sees fit without prior notice. It is a condition of agreement
                  that the balance of the account fluctuates regularly to
                  credit, in the normal course of trading and that such credit
                  periods total a minimum of 30 days in aggregate in any
                  one-year period.

SURCHARGES:       Overdrafts must operate within the authorized limit.
                  Unauthorized borrowings or excesses on agreed facilities,
                  which occur or continue without formal arrangements carry an
                  interest surcharge on the amount of the excess and for the
                  duration thereof. This excess will be charged in addition to
                  normal interest charges. The current interest surcharge rate
                  on such excesses is 1% per month (12% per annum) for the
                  period of such excesses, subject to a minimum charge
                  of(pound)1 per month.

FACILITY F        LOAN
----------        ----

AMOUNT:           EUR(pound)11,900 (Eleven thousand nine hundred pounds
                  sterling).

NATURE & PURPOSE: Continuation of existing Loan account at reduced level,
                  repayment on demand

REVIEW DATE:      14th December 2005

INTEREST:         Interest is payable on all Bank accounts at regular intervals
                  to be decided upon by the Bank. The present charging period is
                  quarterly in August, November, February and May at a rate
                  subject to variation at the discretion of the Bank. The
                  present rate applicable to this facility is the Bank's rate,
                  plus 2.25% equating to a rate of 7.15% per annum variable as
                  at today's date.

                  The under mentioned repayment includes an allowance for
                  interest and in the event of a large upward movement in the
                  interest rate the Bank, at its discretion will alter the
                  repayments or alternatively make any adjustment necessary at
                  the end of the term.

REPAYMENT:        In the absence of demand and assuming full drawdown,
                  repayments will continue at(pound)607.74 per month.

                  You have the option of repaying the outstanding balance at any
                  time during the term of the loan. Also, this facility is
                  subject to formal review in line with the annual review of
                  your overdraft facility.

                                       2

FACILITY G        CUSTOMS & EXCHANGE GUARANTEE
----------        ----------------------------

AMOUNT:           While the nominal amount of the Guarantee is for(pound)45,000
                  it is understood that the Bank's risk is double this amount
                  i.e.(pound)90,000.

NATURE & PURPOSE: Continuation of existing Guarantee facility in respect of the
                  deferment of duties, taxes, levies and charges or any amounts
                  due to HM Customs & Excise

REVIEW/EXPIRY:    This facility may be withdrawn on the demand being made by the
                  Bank subject to 7 days' written notice given by the Bank to HM
                  Customs & Excise. Alternatively the facility will be reviewed
                  by 14th December 2005.

FEE:              A fee of 1% per annum on the nominal amount of the Guarantee
                  is applicable. This charge will continue to be debited to your
                  account in four quarterly tranches of(pound)112.50 with the
                  next payment falling due 28.02.05.

GENERAL CONDITIONS

1. Financial - Audited Accounts for this company and Castle Brands Inc. are to be made available to the Bank within three months of the Company's financial year-end together with confirmation from your auditors that the Company's taxation affairs are up to date.

2. Management Accounts are to be provided quarterly within one-month of the quarter end.

3. All fees incurred in the taking of the security referred to above will be payable by the borrower.

4. In the event of the Bank being made aware that there has been a material adverse change in the financial position of the company so as to prejudice repayment capacity, the Bank reserves the right to cancel these facilities and in such events all amounts due plus interest would be payable immediately.

5. In the event that any or all of these facilities shall become due and payable to the Bank, whether following formal demand by the Bank or otherwise, interest shall accrue and be payable on such liabilities on a compound basis until fully discharged.

3

I am pleased to have the opportunity to arrange these facilities for you and hope that the terms and conditions I have outlined are acceptable to the Company. If so, PLEASE CONFIRM THIS BY SIGNING AND RETURNING THE ENCLOSED COPY OF THIS LETTER AT YOUR EARLIEST CONVENIENCE. I would like to take this opportunity to wish the company continued success in the development of your business.

Yours faithfully

/s/ Brian Hunt
Brian Hunt
Senior Manager


ACCEPTANCE
We confirm acceptance of the facilities outlined in your letter dated the 4th April 2005 under the terms and conditions stated therein.

/S/ DAVID PHELAN                                               7/4/05
----------------------------                                ------------
Director                                                        Date

/s/ MARK MURPHY                                                7/4/05
----------------------------                                ------------
Director                                                        Date
Financial Controller

4

Exhibit 10.51

CASTLE BRANDS INC.

BUSINESS DEVELOPMENT CONSULTING CONTRACT


CASTLE BRANDS INC.

This Contract is made effective April 1, 2005 by and between CASTLE BRANDS INC. having its office at 570 Lexington Avenue, 29th Floor, New York, NY 10022 (hereinafter referred to as "CBI") and BPW LLC having its place of business at c/o MHW Ltd., 272 Plandome Road, Suite 100, Manhasset, NY 11030 (hereinafter referred to as the "Consultant").

ARTICLE 1. TERM

1.01 The Performance under this Contract shall commence on April 1, 2005 and continue up to and including September 30, 2005.

ARTICLE 2. CONTRACT DOCUMENTS AND SCOPE OF WORK

2.01 The work to be performed under this Contract is set out in Addendum A of the Contract.

2.02 The Contract Documents consist of: (a) this Contract document and (b) Statement of Work (Addendum A).

2.03 In the event of a conflict between the terms of the Contract and any other of the Contract documents, the provisions of this Contract shall govern, unless otherwise agreed by CBI in writing.

2.04 As this Contract is modified or changed during its term, the Contract Documents shall include all modifications or changes to said documents agreed upon between the parties and issued after the execution of the Contact. Any such modification or change shall supersede the original Contract Documents, where modified or changed.

ARTICLE 3. CONTRACT ADMINISTRATION

3.01 CBI:

CBI designates Mark Andrews Project Manager ("PM") for this Contract. He shall monitor administration and completion of the Contract according to its terms and conditions as described below:

(i) The PM will be CBI's authorized representative during the Contract and shall be responsible for the coordination of activities between CBI and the Consultant under this Contract.


(ii) The PM will receive all communications of whatever nature which the Consultant is obligated to submit to CBI under the Contract, including but not limited to changes to the Contract involving the quality level, Statement of Work, price, rates, delivery and/ or completion dates / schedules.

(iii) The PM's responsibilities include but are not limited to receiving and approving the Consultant's invoices for payment, and accepting the work and/or deliverables on behalf of CBI.

3.02 CONSULTANT:

John Beaudette is designated the Consultant's Representative ("CR"). He shall be responsible for the coordination of all contract activities between CBI and the Consultant under this Contract.

(i) Consultant agrees to provide the services required hereunder in accordance with the requirements set forth in the Contract Documents. Consultant undertakes to perform the services hereunder in accordance with the highest standards of professional and ethical competence and integrity in Consultant's industry. The Services will be rendered by the Consultant in 1) an efficient, safe, courteous, and businesslike manner and 2) in accordance with any specific instructions issued from time to time by the PM.

(ii) Consultant shall provide the services of qualified personnel through all stages of this Contract. Consultant represents and warrants that he is in compliance with all the Applicable laws of the United States and any other jurisdiction in which the services shall be performed.

(iii) Consultant shall perform the Services as an Independent Contractor under the general guidance of the PM.

ARTICLE 4. CONFIDENTIALITY

4.01 Consultant shall keep all work and services carried out hereunder for CBI entirely confidential, and not use, publish, or make known, without CBI's written approval, any information, developed by the Consultant or by CBI, to any persons other than personnel of the parties to the Contract. However, the forgoing obligations shall not apply to any information that was in Consultant's possession prior to commencement of work under this Contract, or which is or shall become available to the general public in a printed publication, but not by the Consultant, and provided further that this obligation shall in no way limit Consultant's internal use of such work. Any public representation regarding CBI shall be made by CBI and any requests for information made to the Consultant by the news media, or others, shall be referred to CBI. Additionally, the Consultant shall not reference CBI nor the work performed for


CBI without prior written approval. Information Consultant considers as proprietary or confidential and which it has indicated/marked as proprietary or confidential will be treated by CBI in the same manner as CBI treats its own proprietary or confidential information.

4.02 Consultant further agrees to include the contents of this Article in all subcontracts and consulting agreements entered into by Consultant for the performance of work under this Contract.

ARTICLE 5. ASSIGNMENT

5.01 Neither this Contract nor any duty or right under it shall be delegated, subcontracted or assigned by Consultant, except for the subsidiaries of the Consultant; without the prior written consent of CBI, except that claims for monies due or to become due under this Contract may be assigned to CBI, trust company, or other financial institution, including any Federal lending agency as provided below, by Consultant without such consent.

ARTICLE 6. CBI NAME / LOGO

6.01 Consultant may not use CBI's name and/or logo in any manner other than as identified below without first obtaining written permission from the PM.

6.02 Consultant further agrees to include the contents of this Article in all subcontracts and consulting agreements entered into by Consultant for the performance of work under this Contract.

6.03 Consultant may use CBI's name only, with no use of CBI's logo or discussion of the work performed by the Consultant for CBI, among its references, in its customer lists or resumes without prior approval of CBI.

ARTICLE 7. TERMINATION FOR CONVENIENCE

7.01 Either party may terminate the Contract, by thirty (30) days written notice sent to Consultant, in whole or in part, at any time for its convenience. Notice of such termination shall state that termination is for CBI's convenience, the extent to which performance of services under the Contract is terminated, and the termination date. Unless otherwise instructed by CBI, Consultant shall stop work immediately on receipt of notice.

7.02 For services that have been performed by Consultant in accordance with the Contract terms, prior to the effective date of termination, CBI shall pay Consultant at the Contract prices and in accordance with the Contract.


ARTICLE 8. TERMINATION FOR DEFAULT

8.01 If Consultant fails to deliver any or all goods, services, equipment, materials or work ("Contract Work") within the time period(s) specified in the Contract or any work order issued thereunder, and/or if the Contract Work does not conform, in all respects, to the requirements listed in Addendum A, CBI will give Consultant written notice describing the reasons for default and an opportunity to cure.

8.02 If the Consultant does not cure the default to the satisfaction of CBI within the period specified, CBI may terminate the Contract for default by written notice, specifying the reason for the default, the portion(s) of the Contract defaulted and the effective date of default.

ARTICLE 9. SEVERABILITY

9.01 If any term or provision of this Contract shall to any extent be invalid and unenforceable, the remainder of the Contract shall be valid and shall be enforced to the extent permitted by law.

ARTICLE 10. COMPENSATION

10.01 Consultant shall receive a monthly retainer of $3,500 and shall invoice same to CBI at the end of the month for which services have been rendered. Invoices shall be submitted to the PM.

10.02 CBI shall make payment to the Consultant within fifteen (15) days of invoice submission to the PM.

10.03 Consultant shall receive a bonus upon the finalization of those agency brand agreements for which it represented CBI, either by providing the initial introduction of the agency brand principal(s) to Castle Brands' management and/or assisting CBI in the negotiation of the final agency brand agreement. This bonus shall be based upon the approximate annual case sales of the agency brand at the time CBI becomes the agent. The payment will be $1 per 9 liter case of volume, less any retainer amounts previously paid. The bonus shall be payable to the Consultant in four equal quarterly installments commencing with the execution of the underlying agency brand agreement.

10.04 Consultant shall also be entitled to a commission based upon actual future sales of the agency brand. The guideline for this commission will be the higher of 5% of net margins generated by the brand (gross margin less all costs incurred by CBI relative to the brand) or 2.5% of gross margin and will be payable on actual cases sold during the initial term of the agency agreement. The actual formula for this commission may


vary from this guideline on a brand-by-brand basis, since the volumes and margins of agency brands will vary based upon specific product characteristics.

10.05 Commissions earned by the Consultant will be in addition to the aforementioned bonus and retainer payments.

ARTICLE 11. COPYRIGHT

11.01 The deliverable report(s) and other creative work of Consultant called for by this Contract, including all written, graphic, audio, visual and any other materials, contributions, applicable work product and production elements contained therein, whether on paper, disk tape, digital file or any other media, (the "Deliverable Work") is being specially commissioned as work made for hire in accordance with the copyright laws of the United States. CBI is the proprietor of the Deliverable Work from the time of its creation and owns all right, title and interest therein throughout the world including, without limitation, the copyright and all related rights.

11.02 To the extent that it is determined that the Deliverable Work does not qualify as a work made for hire within the meaning of the copyright laws of the United States, then Consultant hereby irrevocably transfers and assigns to CBI all of its right, title and interest, throughout the world and in perpetuity, in and to the Deliverable Work, including without limitation all of its right, title and interest in copyright and related rights free of any claim by Consultant or any other person or entity.

ARTICLE 12. NOTICES

12.01 A written notice shall be deemed to have been given if 1) sent by registered or certified mail or 2) transmitted by any other means if and when receipt is acknowledged by the person identified below:

12.02 CBI:

Castle Brands Inc.
570 Lexington Avenue, 29th Floor New York, NY 10022
Attn: Mark Andrews

12.03 CONSULTANT:

Mr. John Beaudette
BPW LLC

c/o MHW Ltd.

272 Plandome Road, Suite 100
Manhasset, NY 11030


ARTICLE 13. SIGNATURE REQUIRED

13.01 This Contract shall not become binding unless and until signed by CBI's Authorized Representative and the Consultant's Authorized Representative.

ARTICLE 14. ENTIRE CONTRACT

14.01 This Contract, including the Contract Documents attached hereto and referenced herein, constitutes the entire, integrated understanding and agreement between the parties and supercedes any oral or prior written agreements with respect to the subject matter of this Contract.

IN WITNESS WHEREOF the parties have caused this Contract to be executed.

CASTLE BRANDS INC.

/s/ Mark Andrews
----------------------------------------
Name: Mark Andrews
Title: Chairman and CEO

BPW LLC

/s/ John Beaudette
----------------------------------------
Name: John Beaudette
Title: President


ADDENDUM A

STATEMENT OF WORK

Consultant shall represent Castle Brands Inc. as its "advocate" in connection with developing a successful agency brand business. Specifically, Consultant shall assist CBI's management in identifying and recruiting appropriate agency brand candidates. In this connection, Consultant shall facilitate introductions of agency brand principals to CBI management based upon Consultant's extensive contacts in the wine and spirits industry. Consultant shall also assist CBI's management by making agency brand presentations to prospective candidates, assisting CBI during agency brand negotiations, and by providing tactical and strategic advice regarding how agency brands might be managed and promoted by

CBI to maximum advantage of both.


Exhibit 16.1

GRODSKY CAPORRINO & KAUFMAN, PC
CERTIFIED PUBLIC ACCOUNTANTS

Members AICPA and NYSSCPA

ANTHONY CAPORRINO, CPA GREG DeCASTROS, CPA
WILLIAM J. KAUFMAN, CPA ANTHONY GRACI, CPA

September 20, 2005

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549

Ladies and Gentlemen:

We have read the statements contained in "Changes in and disagreements with accountants on accounting and financial disclosure" of the Form S-1 of Castle Brands Inc. to be filed with the Securities and Exchange Commission on or around September 23, 2005 and are in agreement with the statements contained therein.

Very truly yours,

/s/ Greg DeCastros, CPA
----------------------------------------
Greg DeCastros, CPA

Grodsky Caporrino & Kaufman, PC


.

.
.
Exhibit 21.1

CASTLE BRANDS INC. SUBSIDIARIES

                                        STATE/COUNTRY OF
                 NAME                     INCORPORATION                   JURISDICTION(S)
-------------------------------------   ----------------   --------------------------------------------
Castle Brands (USA) Corp.                 Delaware, USA    New York
                                                           Texas (d/b/a "Delaware Great Spirits Corp.")
Gosling-Castle Partners Inc.              Delaware, USA
Castle Brands Spirits Group Limited          Ireland
Castle Brands Spirits Company Limited        Ireland
The Boru Vodka Company Limited               Ireland
The Clontarf Irish Whiskey Company           Ireland
Limited
Castle Brands Whiskey Company Limited        Ireland
Castle Brands Spirits Marketing and          Ireland
Sales Company Limited
Castle Brands Spirits Company (GB)       United Kingdom
Limited
The Roaring Water Bay Spirits Company   Northern Ireland
(NI) Limited




EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the reference to our firm under the caption "Experts" and to the inclusion of our report dated September 9, 2005 on our audits of the consolidated financial statements of Castle Brands Inc. in the Registration Statement on Form S-1 and related Prospectus of Castle Brands Inc. and Subsidiaries for the registration of shares of its common stock.

In addition, we consent to our report dated September 21, 2005, on our examination of Castle Brands Spirits Company Limited's and The Roaring Water Bay Spirits Company (GB) Limited's schedules reconciling their historical financial statements to U.S. generally accepted accounting principles.

/s/ Eisner LLP

Eisner LLP

New York, New York


September 28, 2005


Exhibit 23.2

Consent of Independent Registered Public Accounting Firm

The Castle Brands Spirits Company Limited, Dublin, Ireland.

We hereby consent to the use in the Prospectus constituting a part of this Registration Statement of our report dated June 3, 2004, relating to the financial statements of The Castle Brands Spirits Company Limited (formerly known as The Roaring Water Bay Spirits Company Limited), which is contained in that Prospectus.

We also consent to the reference to us under the caption "Experts" in the Prospectus.

/s/ BDO Simpson Xavier
----------------------
BDO Simpson Xavier
Dublin, Ireland



September 29, 2005


Exhibit 23.3

Consent of Independent Registered Public Accounting Firm

The Roaring Water Bay Spirits Company (GB) Limited, London, England.

We hereby consent to the use in the Prospectus constituting a part of this Registration Statement of our report dated June 3, 2004, relating to the financial statements of The Roaring Water Bay Spirits Company (GB) Limited, which is contained in that Prospectus.

We also consent to the reference to us under the caption "Experts" in the Prospectus.

/s/ BDO Simpson Xavier
----------------------
BDO Simpson Xavier
Dublin, Ireland



September 29, 2005