CASTLE BRANDS INC.
5% Subordinated Convertible Notes Due 2018
PURCHASE AGREEMENT

This 5% Subordinated Convertible Note Purchase Agreement (the “ Agreement ”) is made as of October 21, 2013 by and among Castle Brands Inc., a Florida corporation (the “ Issuer ”), and each person or entity named on the Schedule of Purchasers hereto (individually, a “ Purchaser ” and collectively, the “Purchasers”).

NOW , THEREFORE , IN CONSIDERATION of the mutual covenants contained in this Agreement, and for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Issuer and each Purchaser agree as follows:

1.  Issuance of Notes . Subject to the terms and conditions set forth in this Agreement, the Issuer agrees to issue and sell to each Purchaser its 5% Subordinated Convertible Notes due 2018, substantially in the form attached hereto as Exhibit A , in a principal amount set forth below such Purchaser’s name on the Schedule of Purchasers hereto (such notes, and all notes from time to time replacing such notes from time to time outstanding, in an aggregate outstanding principal amount not to exceed at any time $2,125,000 (the “ Initial Aggregate Principal Amount ”), being the “ Notes ”; and this Agreement and the Notes, being collectively, the “ Operative Documents ”). The Notes will be convertible into shares of the Issuer’s common stock, par value $0.01 per share (the “ Common Stock ”; the Common Stock into which the Notes may be so converted, the “ Conversion Stock ”; and the Conversion Stock and the Notes being, collectively, the “ Securities ”), in accordance with the terms of the Notes. Upon each such conversion, the Initial Aggregate Principal Amount shall be automatically reduced by the principal amount of the Notes subject to such conversion. Capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Notes.

The Notes will be offered and sold to the Purchasers pursuant to an exemption from the registration requirements under the Securities Act of 1933, as amended (the “ Act ”). Upon original issuance thereof, and so long as required under applicable requirements of the Act, the Notes shall bear the legend regarding transfer restrictions under the Act set forth in Section 6(i) hereof.

2.  Agreement to Sell and Purchase . On the basis of the representations, warranties and covenants contained in this Agreement, and subject to its terms and conditions, the Issuer agrees to issue and sell to the Purchasers, and each Purchaser agrees to purchase from the Issuer, the Notes in the principal amount set forth below such Purchaser’s name on the Schedule of Purchasers hereto (the “ Purchase Price ”).

3.  Delivery and Payment .

(a) Delivery of, and payment of the Purchase Price for, the Notes (the “ Closing ”), shall be made at 10:00 a.m., Eastern Time, on such other date as may be agreed upon by the Purchasers and the Issuer (the “ Closing Date ”) in accordance with Section 3(b) hereof.

(b) At the Closing, the Issuer shall deliver to each Purchaser (or to such other designee(s) as each Purchaser shall direct at least one business day prior to the Closing) one or more original Notes against payment by such Purchaser of the Purchase Price by wire transfer in same day funds to the order of the Issuer.

4.  Agreements of the Issuer . The Issuer hereby agrees with the Purchasers as follows:

(a) So long as the Notes remain outstanding, to reserve and keep available at all times, free of preemptive rights, a sufficient number of authorized shares of its Common Stock for the purpose of enabling the Issuer to satisfy its obligations to issue such Common Stock as Conversion Stock upon conversion of the Notes.

(b) To use commercially reasonable efforts to cause all shares of Conversion Stock issuable upon conversion of the Notes to be listed on the NYSE MKT LLC (“ NYSE MKT Approval ”) or on such other national securities exchange or automated quotation system on which the Issuer’s Common Stock may then be traded or listed so long as such Conversion Stock remains registered under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”).

(c) To the extent permitted by applicable law, not to voluntarily claim, and to actively resist any attempts to claim, the benefit of any usury laws against the holders of any Notes.

(d) To pay all stamp, documentary and transfer taxes and other duties, if any, which may be imposed by the United States or any political subdivision thereof or taxing authority thereof or therein with respect to the issuance of the Notes or the sale thereof to the Purchasers.

5.  Representations and Warranties of the Issuer . As of the date hereof and as of the Closing Date, the Issuer represents and warrants to each Purchaser that:

(a)  Organization and Qualification . The Issuer and its “ Subsidiaries ” (which for purposes of this Agreement means any entity in which the Issuer, directly or indirectly, owns capital stock or holds an equity or similar interest that exceeds 50% of the aggregate outstanding equity or similar interests of such entity) are entities duly organized and validly existing in good standing under the laws of the jurisdiction in which they are formed, and have the requisite power and authority to own their material properties and to carry on their business as now being conducted in all material respects.

(b)  Authorization; Enforcement; Validity . The Issuer has the requisite corporate power and authority to enter into and perform its obligations under each of the Operative Documents and to issue the Notes in accordance with the terms hereof. The execution and delivery of this Agreement and the other Operative Documents by the Issuer and the consummation by the Issuer of the transactions contemplated hereby and thereby, including, without limitation, the issuance of the Notes, the reservation for issuance, and the issuance of the Conversion Stock issuable upon conversion of any Notes, have been duly authorized by the Issuer’s board of directors or a duly authorized committee thereof (the “ Board ”) and (other than such filings as may be required by and with the NYSE MKT LLC with respect to the transactions contemplated hereby), no further consent or authorization by the Issuer, its Board, or its shareholders is required. This Agreement has been duly executed and delivered by the Issuer and is, and upon execution and delivery of the other Operative Documents by the Issuer, each of the Operative Documents will be, the legal, valid and binding obligations of the Issuer, enforceable against the Issuer in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting creditors’ rights and remedies generally.

(c)  Issuance of Notes . The Notes are duly authorized and upon issuance, shall be free from all taxes, liens and charges with respect to the issue thereof. As of the Closing Date, a number of shares of Common Stock shall have been duly authorized and reserved for issuance, free of pre-emptive rights, and sufficient for the purpose of enabling the Issuer to satisfy all obligations to issue the Conversion Stock upon conversion of all of the Notes. Upon conversion of Notes into Conversion Stock in accordance with their terms, the Conversion Stock will be validly issued, fully paid and nonassessable and free from all preemptive or similar rights, taxes, liens and charges with respect to the issue thereof, with the holders thereof being entitled to all rights accorded to a holder of Common Stock.

(d)  No Broker’s Fees . The Issuer has not engaged any broker, finder, commission agent or other person in connection with the transactions contemplated in the Operative Documents, and the Issuer is not under any obligation to pay any broker’s fee or commission in connection with such transactions.

(e)  SEC Reports . Each report, registration statement and definitive proxy statement (the “ SEC Reports ”) filed by Issuer with the Securities and Exchange Commission (the “ SEC ”) during the last two fiscal years and the interim period prior to the date of this Agreement, which are all the forms, reports and documents required to be filed by the Issuer with the SEC during such time period, are publicly available to the Purchasers on the SEC’s website. As of their respective dates the SEC Reports: (i) were prepared in accordance, and complied in all material respects, with the requirements of the Act or the Exchange Act, as the case may be, and the rules and regulations of the SEC thereunder applicable to such SEC Reports, and (ii) did not at the time they were filed (and if amended or superseded by a filing prior to the date of this Agreement then on the date of such filing and as so amended or superseded) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Except to the extent set forth herein, the Issuer makes no representation or warranty whatsoever concerning any SEC Report as of any time other than the date or period with respect to which it was filed.

(f)  Financial Statements . Each set of financial statements (including, in each case, any related notes thereto) contained in the SEC Reports complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto, was prepared in accordance with U.S. generally accepted accounting principles applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto or, in the case of unaudited statements, do not contain footnotes as permitted by Form 10-Q under the Exchange Act) and each fairly presents in all material respects the financial position of Issuer at the respective dates thereof and the results of its operations and cash flows for the periods indicated, except that the unaudited interim financial statements were subject to normal adjustments.

The Issuer acknowledges that each Purchaser will rely upon the accuracy and truth of the foregoing representations and hereby consents to such reliance.

6.  Representations, Warranties and Agreements of the Purchasers . Each Purchaser, for itself and for no other Purchaser, represents and warrants to, and agrees with, the Issuer that:

(a)  Authorization; Enforcement; Validity . Such Purchaser has the requisite power and authority to enter into and perform its obligations under each of the Operative Documents to which it is a party. The execution and delivery by such Purchaser of this Agreement and the other Operative Documents to which it is a party, and the consummation by such Purchaser of the transactions contemplated hereby and thereby, have been duly authorized by such Purchaser and no further consent or authorization is required by such Purchaser or its beneficiary or beneficiaries, as the case may be. This Agreement has been duly executed and delivered by such Purchaser and is, and upon execution and delivery by such Purchaser of the other Operative Documents to which it is a party, such Operative Documents will be, the legal, valid and binding obligations of such Purchaser, enforceable against such Purchaser in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting creditors’ rights and remedies generally.

(b)  Consents . Except for (i) compliance with any filings and notifications under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “ HSR Act ”) which may be required in the future in connection with conversion of the Notes and (ii) any filings required under the Exchange Act, such Purchaser is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental agency or any regulatory or self-regulatory agency or any other person in order for it to execute, deliver or perform any of its obligations under or contemplated by this Agreement or the other Operative Documents to which it is a party, in each case in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations which such Purchaser is required to obtain or make pursuant to the preceding sentence have been (or will be) obtained or made on or prior to the Closing Date.

(c)  Sufficiency of Funds . Such Purchaser has, and will have at the Closing, sufficient funds available to pay the Purchase Price for such Purchaser’s Notes.

(d)  No Broker’s Fees . Such Purchaser has not engaged any broker, finder, commission agent or other person in connection with the transactions contemplated in the Operative Documents, and such Purchaser is not under any obligation to pay any broker’s fee or commission in connection with such transactions.

(e)  Investor Status . Such Purchaser is an “accredited investor” within the meaning of Rule 501 of Regulation D under the Act with such knowledge and experience in financial and business matters as are necessary in order to evaluate the merits and risks of an investment in the Securities. Such Purchaser is acquiring the Securities for its own account and is not acquiring the Securities with a view to any distribution thereof or with any present intention of offering or selling any of the Securities in a transaction that would violate the Act or the securities laws of any state of the United States or any other applicable jurisdiction.

(f)  Reliance on Exemptions . Such Purchaser understands that the Securities are being offered and issued in reliance on specific exemptions from the registration requirements of the United States federal and state securities laws and the Issuer is relying in part upon the truth and accuracy of, and such Purchaser’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of such Purchaser to acquire the Securities. Such Purchaser also understands that the Securities may not be offered or sold except pursuant to an effective registration statement under the Act or pursuant to an applicable exemption from registration under the Act. Such Purchaser further understands that the exemption from registration afforded by Rule 144 promulgated under the Act depends on the satisfaction of various conditions, and that, if applicable, Rule 144 may afford the basis for sales only in limited amounts.

(g)  Information . Such Purchaser and its advisors, if any, have had access to and reviewed the Issuer’s reports under the Exchange Act filed with the U.S. Securities and Exchange Commission (collectively, the “ Public Reports ”) and such Purchaser acknowledges that the information contained in the Public Reports is sufficient to allow such Purchaser to make an investment decision with respect to its acquisition of the Securities. Such Purchaser understands that its investment in the Securities involves a high degree of risk. Such Purchaser has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities.

(h)  Transfer or Resale . Such Purchaser understands that the Securities have not been and are not being registered under the Act or any state securities laws (except as provided in the Notes), and may not be offered for sale, sold, assigned or transferred unless (a) (i) subsequently registered thereunder, (ii) such Purchaser shall have delivered to the Issuer an opinion of counsel, in a generally acceptable form, to the effect that such Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (iii) such Purchaser provides the Issuer with reasonable assurance that such Securities can be sold, assigned or transferred pursuant to Rule 144 promulgated under the Act (or, in each case, a successor rule thereto) and (b) such Purchaser otherwise complies with the restrictions on transfer set forth in the Notes.

(i)  Legends . Such Purchaser understands that the certificates or other instruments representing the Securities shall bear any legend as required by the “blue sky” laws of any state and a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates):

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS NOTE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, OR (B) AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS.

Such Purchaser acknowledges that the Issuer will rely upon the accuracy and truth of the foregoing representations and such Purchaser hereby consents to such reliance.

7.  Conditions of Obligations .

(a) The obligations of each Purchaser to purchase the Notes under this Agreement on the Closing Date are subject to the satisfaction of each of the following conditions:

(i) All the representations and warranties of the Issuer contained in this Agreement that are not modified by materiality shall be true and correct in all material respects, and all of the representations and warranties of the Issuer contained in this Agreement that are modified by materiality shall be true and correct, in each case, as of the date hereof and on the Closing Date with the same force and effect as if made on and as of the Closing Date. The Issuer shall have performed all covenants and agreements, in all material respects, and satisfied all conditions, in all material respects, on its part to be performed or satisfied at or prior to the Closing Date.

(ii) The Issuer shall have executed and delivered the Operative Documents, and the Purchasers shall have received fully executed copies thereof. The Operative Documents shall be in full force and effect as of the Closing Date. The Issuer shall have received the requisite governmental and regulatory approval in connection with each of the Operative Documents to be completed on or before the Closing Date.

(iii) No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any federal, state or local or any foreign government, or political subdivision thereof, or any authority, agency or commission entitled to exercise any administrative, executive, judicial, legislative or regulatory authority (a “ Governmental Authority ”) which would, as of the Closing Date, prevent the issuance of the Notes or the consummation of any of the other transactions contemplated by the Operative Documents; no action, suit or proceeding shall have been commenced and be pending against or affecting or, to the knowledge of the Issuer, threatened against, the Issuer before any court or arbitrator or any Governmental Authority or an official thereof that, if adversely determined, would be expected to result in a Material Adverse Effect. As used in this Agreement, “ Material Adverse Effect ” means any material adverse effect on the business, assets, results of operations, or condition (financial or otherwise) of the Issuer and its Subsidiaries, taken as a whole, or on the transactions contemplated hereby and by the other Operative Documents taken as a whole or by the agreements and instruments to be entered into in connection herewith or therewith, or on the authority or ability of the Issuer to perform its obligations under the Operative Documents.

(b) The obligations of the Issuer to sell and deliver the Notes to the Purchasers under this Agreement on the Closing Date are subject to the satisfaction of each of the following conditions:

(i) All the representations and warranties of the Purchasers contained in this Agreement that are not modified by materiality shall be true and correct in all material respects, and all of the representations and warranties of the Purchasers contained in this Agreement that are modified by materiality shall be true and correct, in each case, as of the date hereof and on the Closing Date with the same force and effect as if made on and as of the Closing Date. The Purchasers shall have performed all covenants and agreements, in all material respects, and satisfied all conditions, in all material respects, on its part to be performed or satisfied at or prior to the Closing Date.

(ii) Each Purchaser shall have executed and delivered (a) the Operative Documents to which it is a party and (b) a joinder to that certain Subordination Agreement, dated as of August 7, 2013, between Keltic Financial Partners II, LP, a Delaware limited partnership, and certain junior lenders to the Issuer, and the Issuer shall have received fully executed copies thereof. The Operative Documents shall be in full force and effect as of the Closing Date. Each Purchaser shall have received the requisite governmental and regulatory approval in connection with each of the Operative Documents to be completed on or before the Closing Date.

(iii) No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any Governmental Authority which would, as of the Closing Date, prevent the issuance of the Notes or the consummation of any of the other transactions contemplated by the Operative Documents; no action, suit or proceeding shall have been commenced and be pending against or affecting or, to the knowledge of such Purchaser, threatened against, such Purchaser before any court or arbitrator or any Governmental Authority or an official thereof that, if adversely determined, would be expected to result in a material adverse effect on the authority or ability of such Purchaser to perform its obligations under the Operative Documents.

(iv) The Issuer shall have received the Purchase Price, in accordance with Section 3(b) hereof.

(v) NYSE MKT Approval shall have been obtained.

8.  Notices . All statements, requests, notices and agreements (each, a “ Notice ”) hereunder shall be in writing, and:

(a) If to the Purchasers, Notices shall be delivered or sent by mail, facsimile transmission or overnight courier to a Purchaser as set forth on the Schedule of Purchasers or to such other address as such Purchaser may designate in writing:

(b) If to the Issuer, Notices shall be delivered or sent by mail, facsimile transmission or overnight courier to the address of the Issuer as follows:

Castle Brands Inc.
122 East 42 ^nd Street, Suite 4700
New York, NY 10168
Attention: Alfred J. Small
Facsimile: (646) 356.0222

or to such other address as the Issuer may designate in writing,

Any such statements, requests, notices or agreements shall take effect upon receipt thereof.

9.  Applicable Law . THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.

10.  Submission to Jurisdiction . EACH PARTY HEREBY EXPRESSLY AND IRREVOCABLY (I) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE FEDERAL, TO THE EXTENT PERMITTED BY APPLICABLE LAW, AND STATE COURTS SITTING IN NEW YORK COUNTY, NEW YORK IN ANY SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY; AND (II) WAIVES (A) ITS RIGHT TO A TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PURCHASER AND FOR ANY COUNTERCLAIM RELATED TO ANY OF THE FOREGOING AND (B) ANY OBLIGATION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

11.  Counterparts . This Agreement may be signed in various counterparts, and by each party in several counterparts, all of which together shall constitute one and the same instrument. Delivery of an executed signature page of this Agreement by electronic or facsimile transmission shall be as effective as delivery of a manually executed counterpart hereof.

12.  Headings . The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

13.  Third Parties . This Agreement shall inure to the benefit of and be binding upon the Purchasers and the Issuer and their respective successors, permitted assigns and legal representatives, and nothing expressed or mentioned in this Agreement is intended or shall be construed to give any other person any legal or equitable right, remedy or claim under or in respect of this Agreement, or any provisions herein contained; this Agreement and all conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of such persons and for the benefit of no other person. No purchaser of the Notes from any Purchaser will be deemed a successor because of such purchase.

14.  Invalidity . If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

15.  Amendments, Modifications, Waivers, etc . This Agreement may be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may be given, provided that the same are in writing and signed by all of the signatories hereto.

16.  HSR Fees and Expenses . The Issuer agrees to reimburse the Purchasers for any fees in connection with filings and notifications required under the HSR Act in order to permit the Purchasers to convert any or all of the Notes.

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

CASTLE BRANDS INC.

Title: Senior Vice President and Chief Financial Officer

[Signatures continue on following pages]

SCHEDULE OF PURCHASERS

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

Name of Purchaser:
Signature of Authorized Signatory of Purchaser :
Name of Authorized Signatory:
Title of Authorized Signatory:
Email Address of Authorized Signatory:
Facsimile Number of Authorized Signatory:
Address for Notice of Purchaser:

Address for Delivery of Notes for Purchaser (if not same as address for notice):

Principal Amount: $      

EIN Number: [PROVIDE THIS UNDER SEPARATE COVER]

[SIGNATURE PAGES CONTINUE]

EXHIBIT A

FORM OF NOTE
(see attached)

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS NOTE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, OR (B) AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS.

CASTLE BRANDS INC.

5% SUBORDINATED CONVERTIBLE NOTE DUE 2018
(this “ Note ”)

FOR VALUE RECEIVED, the undersigned, Castle Brands Inc., a Florida corporation (the “ Company ”), promises to pay to the order of [ ? ] (the “ Holder ”), the principal sum of $[?] plus interest to the extent and at the rate specified in Section 1 below from and after the date hereof. This Note is issued pursuant to the terms of that certain 5% Subordinated Convertible Notes Purchase Agreement, made as of October 21, 2013, by and among the Company and each person or entity named on the Schedule of Purchasers thereto (the “ Agreement ”).

1.  Payments; Subordination .

a) The unpaid principal balance of this Note, and all accrued but unpaid interest earned hereon, shall be due and payable, without demand or notice, on December 15, 2018 (the “ Maturity Date ”). The Company will pay interest quarterly on the unpaid balance of this Note in arrears on December 15, March 15, June 15 and September 15 of each year, or if any such day is not a business day, on the next succeeding business day. Interest on this Note will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that the first interest payment date shall be December 15, 2013. Interest shall be due and payable, without demand or notice, on such dates, at a rate of five percent (5.00%) per annum, (computed on the basis of a 360-day year of twelve (12) thirty (30)-day months) from the date hereof until paid in full.

b) All payments (including payments) of principal or interest made by the Company hereunder shall be made without set off, deduction, or counterclaim on the due date thereof by wire transfer of immediately available funds to the Holder at such account as shall be specified in writing by the Holder to the Company. If payment hereunder becomes due and payable on a day that is not a business day, the payment due date shall be extended to the next succeeding business day.

c) Optional Prepayment . This Note may be prepaid by the Company, in whole or in part, without penalty, at any time.

d) Subordination . All claims of the Holder to principal, interest and any other amounts owed under this Note are hereby subordinated in right of payment to all indebtedness of the Company existing as of the date hereof.

2.  Conversion .

a) Conversion by Holder . This Note and any accrued but unpaid interest thereon shall be convertible, in whole or in part, at the option of the Holder at any time prior to the Maturity Date, into the number (rounded to the nearest whole) of fully paid shares of Common Stock of the Company (the “ Common Stock ”) equal to (i) the aggregate principal amount of this Note and any accrued but unpaid interest thereon being converted through the Date of Conversion (as defined below), divided by (ii) $0.90 (the “ Conversion Price ”). If the Company, at any time while this Note is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any other Common Stock Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon conversion of this Note), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Company) outstanding immediately before such event, and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this ýSection 2(a) shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or reclassification. For purposes hereof, “ Common Stock Equivalents ” shall mean any securities of the Company or its subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

b) Conversion Procedures . In order to convert this Note and/or accrued but unpaid interest thereon, or a portion thereof, into Common Stock, the Holder shall deliver prior to 5:00 p.m., New York time, on any business day, a copy of the fully executed notice of conversion in the form attached hereto as Exhibit A (the “ Notice of Conversion ”) to the Company at its principal office, which notice shall specify the principal amount of this Note and/or accrued but unpaid interest thereon to be converted on the date the Notice of Conversion is delivered to the Company (the “ Date of Conversion ”), duly completed as appropriate.

c) Share Issuance . The Company shall issue and deliver, within ten (10) business days after delivery to the Company of the Notice of Conversion, to the Holder or to the nominee of such Holder, at the address of the Holder on the books of the Company or as otherwise directed by such Holder on the Notice of Conversion, a certificate evidencing the shares of Common Stock to which the Holder shall be entitled. The person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder of such Common Stock on the Date of Conversion. The Company shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon conversion unless this Note is delivered to the Company or the Holder notifies the Company that this Note has been lost, stolen or destroyed and executes an agreement satisfactory to the Company to indemnify the Company from any loss incurred by it in connection with this Note. The Company shall, within ten (10) business days after such delivery, or such agreement and indemnification, issue and deliver a certificate representing the number of fully paid shares of Common Stock into which the Note converts in accordance with the provisions herein.

d) Adjustment of Principal and Accrued Interest Upon Conversion . Following any conversion, the principal amount of this Note and accrued but unpaid interest thereon shall be reduced in an amount equal to the portion of the principal amount of this Note and accrued but unpaid interest thereon so converted. Within ten (10) business days after delivery to the Company of the Notice of Conversion and this Note, the Company shall issue and deliver to the Holder or to the nominee of such Holder, at the address of the Holder on the books of the Company or as otherwise directed by such Holder, a replacement note otherwise identical to this Note evidencing the principal amount of this Note and accrued but unpaid interest thereon that has not been converted.

e) Reserved Shares . The Company shall at all times keep authorized and approved under its Articles of Incorporation, as amended, solely for the purpose of effecting the conversion, the number of shares of Common Stock issuable upon the conversion of the outstanding principal amount of this Note and accrued but unpaid interest thereon and shall take all such action as may be required from time to time in order that it may, subject to the surrender of this Note, validly and legally issue shares of Common Stock upon such conversion.

f) Adjustment for Reorganizations . If, prior to the Maturity Date or the conversion of the entire principal amount of this Note and accrued but unpaid interest thereon, there shall be any merger, consolidation, share exchange, business combination, issuance of securities, direct or indirect acquisition of securities, recapitalization, tender offer, exchange offer, sale of all or substantially all of the Company’s assets or other similar transaction as a result of which the shares of Common Stock shall be changed into the same or a different amount of equity interests, shares of a class or classes of stock or securities of the Company or another entity, or other property, then the Holder shall thereafter have the right to purchase and receive upon conversion of this Note, upon the basis and upon the terms and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore issuable upon conversion, such equity interests, shares of stock, securities and/or other property as may be issued or payable with respect to or in exchange for the shares of Common Stock immediately theretofore purchasable and receivable upon the conversion of this Note held by such Holder had such merger, consolidation, share exchange, business combination, issuance of securities, direct or indirect acquisition of securities, recapitalization, tender offer, exchange offer, sale of all or substantially all of the Company’s assets or other similar transaction not taken place, and in any such case appropriate provisions shall be made with respect to the rights and interests of the Holder to the end that the provisions hereof (including, without limitation, provisions for adjustment of the Conversion Price and of the number of shares issuable upon conversion of this Note) shall thereafter be applicable, as nearly as may be practicable in relation to any shares of stock or securities thereafter deliverable upon the exercise hereof.

g) Legend . All certificates representing shares of Common Stock issued hereunder shall bear on the face thereof a legend substantially in the form set forth below:

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR APPLICABLE STATE SECURITIES LAW. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, OR (B) AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS.

h) Forced Conversion . Notwithstanding anything herein to the contrary, if (a) the average daily volume of the Common Stock (as reported on the principal market or exchange on which the Common Stock is listed or quoted for trading (the “ Principal Trading Market ”) exceeds $50,000 per Trading Day and (b) the volume weighted average price of the Common Stock for at least twenty (20) Trading Days during any thirty (30) consecutive Trading Day period exceeds 250% of the then-current Conversion Price, the Company may, within five (5) Trading Days after the end of any such thirty (30) consecutive Trading Day period, deliver a written notice to holders of all notes issued pursuant to the Agreement (a “ Forced Conversion Notice ” and the date such notice is delivered to all such holders, the “ Forced Conversion Notice Date ”) to cause each holder to convert all or part of such holder’s notes (as specified in such Forced Conversion Notice) plus all accrued but unpaid interest thereon, it being agreed that the “ Conversion Date ” shall be deemed to occur on the third Trading Day following the Forced Conversion Notice Date (such third Trading Day, the “ Forced Conversion Date ”). Any Forced Conversion Notices shall be applied ratably to the holders of all notes issued pursuant to the Agreement based on each holder’s then-current note holdings. For purposes hereof, “ Trading Day ” shall mean a day on which the Principal Trading Market is open for trading.

3.  Representations and Warranties . The Company represents and warrants to the Holder that:

a) It is duly organized, validly existing and in good standing under the laws of the State of Florida;

b) It has full power and legal right to execute and deliver this Note and to perform its obligations hereunder, and its execution and delivery of this Note, and the performance by it of its obligations hereunder, have been duly authorized by all necessary corporate action and do not conflict with any law or contractual restriction binding upon or affecting it or any of its property or assets, except where such conflict, individually or in the aggregate, could not reasonably be expected to result in a material adverse effect;

c) This Note constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as the enforcement hereof may be limited by bankruptcy, insolvency, or other laws affecting the enforcement of creditors’ rights generally and subject to the applicability of general principles of equity;

d) No consent, approval or authorization of, or registration, declaration or filing with, any governmental authority or other person or entity is required as a condition to or in connection with the due and valid execution, delivery and performance by the Company of this Note that has not been received or made, as applicable; and

e) There are currently no material judgments entered against the Company, and the Company is not in default with respect to any judgment, writ, injunction, order, decree or consent of any court or other judicial authority.

4.  Events of Default .

a) The occurrence of any of the following events shall constitute an “ Event of Default ” under this Note:

i) Failure by the Company to pay when due an installment of principal, interest or other amount owing under this Note on or before the date such payment is due, and such failure continues for five (5) days following written notice of such default to the Company;

ii) The Company fails to comply with or perform any other term, obligation, covenant or condition contained in this Note and which failure shall continue for five (5) consecutive days following written notice of such default to the Company;

iii) The Company or Castle Brands (USA) Corp., a Delaware corporation and wholly-owned subsidiary of the Company (“ CBUSA ”), shall (a) commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect; (b) consent to the entry of an order for such relief in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect; (c) consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official for either the Company or CBUSA, or for all or substantially all of the assets of the Company or CBUSA; or (d) make any general assignment for the benefit of creditors;

iv) There shall have occurred a default by the Company or CBUSA in the payment of principal or interest on any obligation in excess of $50,000 for borrowed money beyond the period of grace, if any, provided with respect thereto or default in the performance or observance of any other term, condition or agreement contained in any such obligation or in any agreement relating thereto, if the effect thereof is to cause, or permit the holder or holders of such obligation (or a trustee on behalf of such holder or holders) to cause such obligation to become due prior to its stated maturity and such default remains unremedied for a period of 10 days;

v) A final judgment for the payment of money in excess of $50,000 shall be rendered against the Company or CBUSA and the same shall remain undischarged for a period of thirty (30) days during which execution of such judgment shall not be effectively stayed; or

vi) The non-payment, for any reason, of any check tendered to Holder by the Company.

b) Upon the occurrence of an Event of Default, all amounts due hereunder, including, without limitation, the unpaid principal balance and accrued and unpaid interest thereon, shall, at the Holder’s option, become immediately due and payable upon written notice to the Company; provided, however, that upon the occurrence of an Event of Default described in Section 4.a)iii) , all such amounts shall be immediately due and payable automatically and without written notice or demand by the Holder. Upon the occurrence of an Event of Default, the Holder may additionally exercise any of its other rights and remedies granted hereunder or under applicable law. Such remedies shall be cumulative and concurrent and may be pursued singly, successively or together, at the Holder’s option, and as often as the occasion therefore arises.

5.  Miscellaneous .

a) Governing Law . The validity and interpretation of this Note, and the terms and conditions set forth herein, shall be governed by and construed in accordance with the laws of the State of New York, without regard to any choice of law or conflict of law provision or rule that would cause the application of the laws of any jurisdiction other than the state of New York.

b) Submission to Jurisdiction . THE COMPANY, AND THE HOLDER BY ITS ACCEPTANCE HEREOF AND AS SET FORTH IN THE AGREEMENT, HEREBY EXPRESSLY AND IRREVOCABLY (I) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE FEDERAL, TO THE EXTENT PERMITTED BY APPLICABLE LAW, AND STATE COURTS SITTING IN NEW YORK COUNTY, NEW YORK IN ANY SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY; AND (II) WAIVES (A) ITS RIGHT TO A TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS NOTE, THE TRANSACTIONS CONTEMPLATED HEREBY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PURCHASER AND FOR ANY COUNTERCLAIM RELATED TO ANY OF THE FOREGOING AND (B) ANY OBLIGATION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

c) Costs . The Company agrees to pay all cost of collection, including reasonable attorney’s fees (including attorney’s fees on appeal) in case the principal of this Note or any payment on the principal or interest thereon is not paid at the respective maturity thereof, whether suit be brought or not.

d) Presentment . The Company hereby waives presentment, demand for payment (except as expressly required herein), protest, notice of protest, notice of dishonor and any and all other notices or demands in connection with the delivery, acceptance, performance, default or enforcement of this Note. No delay on the part of the Holder in exercising any right hereunder shall operate as a waiver of such right or any other right.

e) Lost, Stolen, Destroyed or Mutilated Note . Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note, the Company will issue a new Note of like tenor and amount and dated the date to which interest has been paid, in lieu of such lost, stolen, destroyed or mutilated Note, and in such event the Holder agrees to indemnify and hold the Company harmless in respect of any such lost, stolen, destroyed or mutilated Note.

f) Notices . All notices and other communications required or permitted hereunder shall be in writing and shall be deemed given or delivered when delivered personally or sent by telecopy with confirmation of transmission by the transmitting equipment, four days after being mailed by registered or certified mail, return receipt requested, or one day after being sent by private overnight courier, addressed as follows:

If to the Holder: To the address listed in the Purchase Agreement

g) Severability . If any provision of this Note is held to be invalid and unenforceable in any jurisdiction, then, to the fullest extent permitted by law, (i) the other provisions hereof shall remain in full force and effect in such jurisdiction and (ii) the invalidity or unenforceability of any provision hereof in any jurisdiction shall not affect the validity or enforceability of such provision in any other jurisdiction.

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

COMPANY:

CASTLE BRANDS INC.

By:
Name:
Title:

Exhibit A

Notice of Conversion

       (“ Holder ”) hereby elects to convert $       principal amount and $       accrued but unpaid interest thereon of the 5% Subordinated Convertible Note due 2018, dated        (the “ Note ”), issued by Castle Brands Inc., a Florida corporation (the “ Company ”), into        shares of        Common Stock of the Company (the “ Shares ”) at a Conversion Rate of        according to the conditions set forth in the Note as of the date written below. No fee will be charged to Holder for any conversion.

Date of Conversion:

Name of Holder:

Signature:

Title:

Address for delivery of stock certificate:

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_________________________________________________________________

FOURTH AMENDMENT, WAIVER AND CONSENT

TO THE

LOAN AND SECURITY AGREEMENT

BETWEEN

CASTLE BRANDS INC.,
CASTLE BRANDS (USA) CORP.

AND

KELTIC FINANCIAL PARTNERS II, LP

DATED AS OF AUGUST 19, 2011

Effective Date: October 21, 2013

FOURTH AMENDMENT, WAIVER AND CONSENT TO LOAN AND SECURITY AGREEMENT

RECITALS :

CASTLE BRANDS INC. , a corporation organized under the laws of the State of Florida (“ CBI ”) and CASTLE BRANDS (USA) CORP. a corporation organized under the laws of the State of Delaware (“ CBUSA ”) (individually and collectively, “ Borrower ”) and KELTIC FINANCIAL PARTNERS II, LP , a Delaware limited partnership (“ Lender ”), are parties to a Loan and Security Agreement dated as of August 19, 2011, as amended by a First Amendment dated as of July 23, 2012, by a Second Amendment dated as of March 11, 2013, and by a Third Amendment dated as of August 7, 2013 (as so amended, the “ Credit Agreement ”), in connection with which Borrower delivered an Amended and Restated Revolving Credit Note dated March 11, 2013 in a maximum principal amount of $8,000,000 (the “ Revolving Credit Note ”), an Amended and Restated Term Note dated August 7, 2013 in the original principal amount of $4,000,000 (the “ Term Note ”), a Subordination Agreement dated August 7, 2013 between Lender and the parties executing the same (the “ Subordination Agreement ”) and other agreements, documents and instruments in connection therewith (all of the foregoing, as the same may be amended, restated, or otherwise modified from time to time to be collectively referred to as the “ Loan Documents ”).

Borrower has requested that the Lender permit CBI to incur indebtedness in an aggregate original principal amount of $2,125,000 (the “ 2018 Subordinated Debt ”) pursuant to the terms of the Castle Brands Inc. 5% Subordinated Convertible Notes due 2018 Purchase Agreement dated on or about the date of this Amendment (the “ 2018 Notes Purchase Agreement ”), the Castle Brands Inc. 5% Subordinated Convertible Notes due 2018 dated on or about the date of this Amendment and issued to the “Purchasers” described in the 2018 Notes Purchase Agreement (collectively, the “ 2018 Subordinated Notes ”), and the other agreements, documents and instruments executed and/or delivered to CBI in connection therewith (collectively, the “ 2018 Subordinated Debt Documents ”). The Loan Documents prohibit Borrower from incurring additional indebtedness in such amount without Lender’s consent.

Borrower has requested that Lender consent to CBI’s incurrence of the 2018 Subordinated Debt, waive all Defaults and Events of Default occurring as a result of CBI’s execution and delivery of the 2018 Subordinated Debt Documents and incurrence of the 2018 Subordinated Debt, and amend the “EBITDA” covenant contained in the Credit Agreement in connection therewith. Upon the terms and conditions contained in this Amendment Lender has agreed to provide such consent, waive such Defaults and Events of Default and amend the Credit Agreement as provided below.

AGREEMENT :

1.  Defined Terms . Unless otherwise defined in the Recitals or in the body of this Amendment, all capitalized terms shall have the meanings ascribed to such terms in the Loan Documents.

2.  Consent; Waiver . Subject to the terms, conditions, representations and warranties contained herein, Lender hereby consents to CBI’s execution and delivery of the 2018 Subordinated Debt Documents and CBI’s incurrence of the 2018 Subordinated Debt in an original principal amount equal to Two Million One Hundred Twenty Five Thousand and 00/100 Dollars ($2,125,000.00), and hereby agrees to waive all Defaults and Events of Default under the Loan Agreement specifically caused by CBI’s execution and delivery of the 2018 Subordinated Debt Documents and incurrence of the 2018 Subordinated Debt.

3.  Amendment of Subordination Agreement . As a condition precedent to the effectiveness of this Amendment and specifically the incurrence of the 2018 Subordinated Debt described herein, the Subordination Agreement shall be amended, in form and content acceptable to Lender in Lender’s sole discretion, to reflect the addition of the 2018 Subordinated Debt as “Junior Obligations” as defined therein, the addition of the 2018 Subordinated Debt Documents as “Junior Creditor Loan Documents” as described therein, and the addition of each holder of a 2018 Subordinated Note as a “Junior Creditor” for all purposes of the Subordination Agreement, and containing such other terms and conditions thereto as Lender deems reasonable, necessary and/or appropriate in Lender’s sole discretion.

4.  Dividends and Distributions; Payment of Indebtedness . Paragraphs (a) and (b) of Section 8.6 of the Credit Agreement are hereby deleted in their entirety and replaced with the following:

“ (a) Permitted Payments . Subject to the terms and conditions hereof, CBI shall be permitted to make (i) regularly scheduled payments of principal and interest due and payable under the terms of the Loan Agreement between Castle Brands Inc. and the lending parties named therein dated on or about August 7, 2013 (the “ CBI August 2013 Subordinated Loan Agreement ”) and the Promissory Notes dated on or about August 7, 2013 in an aggregate original principal amount equal to One Million Two Hundred Fifty Thousand and 00/100 Dollars ($1,250,000.00) issued by CBI (“ CBI August 2013 Subordinated Notes ”) to the lending parties named therein (collectively, the “ CBI August 2013 Subordinated Noteholders ”) and such other agreements, documents and instruments executed and/or delivered to the CBI August 2013 Subordinated Noteholders in connection therewith (all such agreements, documents and instruments, together with any amendments, restatements, extensions or other modifications made from time to time, shall be collectively referred to herein as the “ CBI August 2013 Subordinated Loan Documents ”), as the CBI August 2013 Subordinated Loan Documents are in effect on the date hereof, and voluntary prepayments of principal and interest permitted under the terms of the CBI August 2013 Subordinated Loan Documents as the CBI August 2013 Subordinated Loan Documents are in effect on the date hereof, but not any mandatory, voluntary, discretionary or optional payment, distribution, or other amount in repayment or prepayment of the CBI August 2013 Subordinated Notes or under the CBI August 2013 Subordinated Loan Documents, whether required or permitted pursuant to the terms of the CBI August 2013 Subordinated Loan Documents, due to the acceleration of maturity of the CBI August 2013 Subordinated Notes, in whole or in part, or any other CBI August 2013 Subordinated Loan Document, in whole or in part, for any reason, and (ii) regularly scheduled payments of interest due and payable under the terms of the Castle Brands Inc. 5% Subordinated Convertible Notes due 2018 Purchase Agreement dated on or about October 21, 2013 (the “ 2018 Subordinated Notes Purchase Agreement ”), the Castle Brands Inc. 5% Subordinated Convertible Notes due 2018 dated on or about October 21, 2013 (collectively, the “ 2018 Subordinated Notes ”) and issued to the “Purchasers” (the “ 2018 Subordinated Noteholders ”) executing the 2018 Subordinated Notes Purchase Agreement, and the other agreements, documents and instruments executed and/or delivered to CBI in connection therewith (all such agreements, documents and instruments, together with any amendments, restatements, extensions or other modifications made from time to time, shall be collectively referred to herein as the, the “ 2018 Subordinated Debt Documents ”), as the 2018 Subordinated Debt Documents are in effect on the date hereof, but not any mandatory, voluntary, discretionary or optional payment, distribution, or other amount in repayment or prepayment of the 2018 Subordinated Notes or under the 2018 Subordinated Debt Documents, whether required or permitted pursuant to the terms of the 2018 Subordinated Debt Documents, due to the acceleration of maturity of 2018 Subordinated Notes, in whole or in part, or any other 2018 Subordinated Debt Document, in whole or in part, for any reason. For purposes of this Agreement the CBI August 2013 Subordinated Noteholders and the 2018 Subordinated Noteholders shall be collectively referred to as the “ Junior Creditors ”, the CBI August 2013 Subordinated Loan Documents and the 2018 Subordinated Debt Documents shall be referred to as the “ Junior Creditor Loan Documents ”, each payment permitted pursuant to the provisions of this Section 8. 6(a) shall be referred to as a “ Permitted Payment ”, and any amendment, modification, restatement, extension or replacement of any Junior Creditor Loan Document after the date of this Agreement shall be disregarded for purposes of determining Permitted Payments.

(b)  Termination of Permitted Payments . Notwithstanding anything of this Section 8.6 to the contrary (specifically including paragraph (a) immediately above), or anything to the contrary in the Junior Creditor Loan Documents, no Junior Creditor shall demand, take, accept, or receive from or on behalf of CBI, Borrower or any Person that is a co-borrower with Borrower of the Obligations, or that has guaranteed the repayment of the Obligations or the performance by the Borrower of the terms and conditions of the Loan Documents in whole or in part or that has provided any letter of credit, pledge, financial instrument or other accommodation to Lender as security for or in support of the Obligations, any Permitted Payment:

(i) if any payment of principal or interest then due with respect to the Obligations shall not have been paid to Lender in full; or

(ii) if after giving effect to such Permitted Payment the remainder of the Borrowing Capacity less the aggregate amount of all Obligations then outstanding would not exceed One and 00/100 Dollar ($1.00) (as determined on a pro forma basis); or

(iii) if after giving effect to such Permitted Payment a Default or Event of Default would occur (as determined on a pro forma basis); or

(iv) during any period in which a Default or Event of Default has occurred and is continuing.”

5.  EBITDA Covenant . Section 8.19 of the Credit Agreement shall be deleted in its entirety and replaced with the following:

“ 8.19. EBITDA. Permit EBITDA as of and for:

(a) The twelve (12) consecutive calendar month period ending on September 30, 2013, to be a negative number greater than negative Two Hundred Fifty Thousand and 00/100 Dollars (-$250,000.00); and

(b) The twelve (12) consecutive calendar month period ending on December 31, 2013, to be less than Zero and 00/100 Dollars ($0.00); and

(c) The twelve (12) consecutive calendar month period ending on March 31, 2014, to be less than Five Hundred Thousand and 00/100 Dollars ($500,000.00); and

(d) The twelve (12) consecutive calendar month period ending on June 30, 2014, and for each period of twelve (12) consecutive calendar months ending on a Fiscal Quarter thereafter, to be less than Seven Hundred Fifty Thousand and 00/100 Dollars ($750,000.00).”

6.  Reimbursement of Lender . As consideration for Lender’s increase of the Revolving Credit and amendment of the Credit Agreement described above, and pursuant to Sections 3.4 and 10.9 of the Credit Agreement, Borrower shall reimburse, indemnify and hold Lender harmless for the reasonable fees and costs and expenses incurred by Lender for the services of legal professionals engaged by Lender in connection with the negotiation and preparation of this Agreement. With respect to any amount required to be paid or reimbursed by Borrower pursuant to the foregoing provisions of this paragraph 9, it is hereby agreed that Lender may charge any such amount to the Revolving Credit on the dates such payment is due or such reimbursement is made. Borrower acknowledges and agrees that on and after the Effective Date of this Amendment the Facility Fee shall be calculated based on the Revolving Credit Limit as amended by the terms hereof.

7.  Effective Date . This Amendment shall be effective as of October 21, 2013.

8.  Specificity of Provisions . The amendments set forth herein are limited precisely as written and shall not be deemed to (a) be a consent to or a waiver of any other term or condition of the Credit Agreement or any of the documents referred to therein, or (b) prejudice any right or rights which Lender may now have or may have in the future under or in connection with the Credit Agreement or any or any other Loan Document. From and after the effective date of this Amendment, whenever the Credit Agreement is referred to in the Credit Agreement or in any of the other Loan Documents, it shall be deemed to mean the Credit Agreement as modified by this Amendment.

9.  Binding Effect of Loan Documents . Borrower hereby acknowledges and agrees that upon giving effect to this Amendment, the Credit Agreement, the Revolving Credit Note and each Loan Document shall continue to be binding upon such Borrower and shall continue in full force and effect.

10.  No Other Events of Default . Borrower hereby represents and warrants that upon giving effect to the terms and provisions of this Amendment no default or Event of Default shall have occurred and be continuing under the terms of the Credit Agreement.

11.  Choice of Law . This Amendment and the legal relations among the parties hereto shall be governed by and construed in accordance with the internal laws of the State of New York without regard to conflicts of law principles.

12.  Counterparts . This Amendment may be executed by one or more the parties to this Amendment on any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective duly authorized officers.

LENDER:

KELTIC FINANCIAL PARTNERS II, LP
By: Keltic Financial Services, LLC, its general partner

Its: Chief Credit Officer

BORROWER:

CASTLE BRANDS INC.

CASTLE BRANDS (USA) CORP.

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