<SUBMISSION>
<ACCESSION-NUMBER>0000950123-08-012822
<TYPE>8-K
<PUBLIC-DOCUMENT-COUNT>6
<PERIOD>20081011
<ITEMS>1.01
<ITEMS>1.02
<ITEMS>2.03
<ITEMS>3.02
<ITEMS>3.03
<ITEMS>5.01
<ITEMS>5.02
<ITEMS>5.03
<ITEMS>9.01
<FILING-DATE>20081014
<DATE-OF-FILING-DATE-CHANGE>20081014
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>Castle Brands Inc
<CIK>0001311538
<ASSIGNED-SIC>2080
<IRS-NUMBER>000000000
<FISCAL-YEAR-END>0331
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>8-K
<ACT>34
<FILE-NUMBER>001-32849
<FILM-NUMBER>081123401
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>570 LEXINGTON AVE
<CITY>NEW YORK
<STATE>NY
<ZIP>10022
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>570 LEXINGTON AVE
<CITY>NEW YORK
<STATE>NY
<ZIP>10022
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>y00297e8vk.htm
<DESCRIPTION>FORM 8-K
<TEXT>
<HTML>
<HEAD>
<TITLE>8-K</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
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<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 1pt solid black; font-size: 1pt">&nbsp;</DIV>




<DIV align="center" style="font-size: 14pt; margin-top: 12pt"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>Washington, D.C. 20549</B>
</DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 12pt"><B>FORM 8-K</B>
</DIV>


<DIV align="center" style="font-size: 12pt; margin-top: 12pt"><B>CURRENT REPORT<BR>
Pursuant to Section&nbsp;13 or 15(d) of the<BR>
Securities Exchange Act of 1934</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>Date of Report (Date of earliest event reported)<BR>
October&nbsp;11, 2008</B></DIV>

<DIV align="center" style="font-size: 24pt; margin-top: 12pt"><B>CASTLE BRANDS INC.</B>
</DIV>

<DIV align="center" style="font-size: 10pt">(Exact Name of Registrant as Specified in its Charter)</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
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<TR valign="bottom">
    <TD width="31%">&nbsp;</TD>
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    <TD width="3%">&nbsp;</TD>
    <TD width="31%">&nbsp;</TD>
</TR>
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<TR valign="bottom">
    <TD align="center" valign="top"><B>DELAWARE</B><BR>
(State or Other Jurisdiction of <BR>
Incorporation)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>001-32849</B><BR>
(Commission File Number)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>41-2103550</B><BR>
(IRS Employer Identification<BR>
Number)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
</TR>
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<TR valign="bottom">
    <TD colspan="3" align="center" valign="top"><B>570 Lexington Avenue, 29</B><SUP style="font-size: 85%; vertical-align: text-top"><B>th</B></SUP> <B>Floor, New York NY 10022</B></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" align="center" valign="top">(Address of Principal
Executive Offices) (Zip Code)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt">Registrant&#146;s telephone number, including area code <B>(646)&nbsp;356-0200</B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions (<I>see </I>General
Instruction A.2. below):
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Written communications pursuant to Rule&nbsp;425 under the Securities Act (17 CFR 230.425)</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><FONT face="Wingdings">&#254;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Soliciting material pursuant to Rule&nbsp;14a-12 under the Exchange Act (17 CFR 240.14a-12)</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
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    <TD width="1%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Pre-commencement communications pursuant to Rule&nbsp;14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Pre-commencement communications pursuant to Rule&nbsp;13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))</TD>
</TR>

</TABLE>
</DIV>

<DIV style="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>





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<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

<P><CENTER>
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<TR><TD colspan="9"><A HREF="#000">Item&nbsp;1.01 Entry into a Material Definitive Agreement</A></TD></TR>
<TR><TD colspan="9"><A HREF="#001">Item&nbsp;1.02 Termination of a Material Definitive Agreement</A></TD></TR>
<TR><TD colspan="9"><A HREF="#002">Item&nbsp;2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant</A></TD></TR>
<TR><TD colspan="9"><A HREF="#003">Item&nbsp;3.02 Unregistered Sales of Equity Securities</A></TD></TR>
<TR><TD colspan="9"><A HREF="#004">Item&nbsp;3.03 Material Modification to Rights of Security Holders</A></TD></TR>
<TR><TD colspan="9"><A HREF="#005">Item&nbsp;5.01 Changes in Control of Registrant</A></TD></TR>
<TR><TD colspan="9"><A HREF="#006">Item&nbsp;5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Principal Officers; Compensatory Arrangements of Certain Officers</A></TD></TR>
<TR><TD colspan="9"><A HREF="#007">Item&nbsp;5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year</A></TD></TR>
<TR><TD colspan="9"><A HREF="#008">Item&nbsp;9.01 Financial Statements and Exhibits</A></TD></TR>
<TR><TD colspan="9"><A HREF="#009">SIGNATURES</A></TD></TR>
<TR><TD colspan="9"><A HREF="#010">EXHIBIT INDEX</A></TD></TR>
<TR><TD colspan="9"><A HREF="y00297exv3w1.htm">EX-3.1: CERTIFICATE OF DESIGNATION</A></TD></TR>
<TR><TD colspan="9"><A HREF="y00297exv10w1.htm">EX-10.1: SERIES A PREFERRED STOCK PURCHASE AGREEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="y00297exv10w2.htm">EX-10.2: PROMISSORY NOTE</A></TD></TR>
<TR><TD colspan="9"><A HREF="y00297exv10w3.htm">EX-10.3: FORM OF INDEMNIFICATION AGREEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="y00297exv99w1.htm">EX-99.1: PRESS RELEASE</A></TD></TR>
</TABLE>
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<!-- link1 "Item&nbsp;1.01 Entry into a Material Definitive Agreement" -->
<DIV align="left"><A NAME="000"></A></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;1.01 Entry into a Material Definitive Agreement.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Purchase Agreement</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>General</I>. On October&nbsp;11, 2008, Castle Brands Inc., a Delaware corporation (the &#147;Company&#148;),
entered into a Series&nbsp;A Preferred Stock Purchase Agreement (the &#147;Purchase Agreement&#148;) with Frost
Gamma Investments Trust, Vector Group Ltd., I.L.A.R. S.p.A., Halpryn
Group IV, LLC, Lafferty Limited,
Jacqueline Simkin Trust As Amended and Restated 12/16/2003, Hsu Gamma Investment, L.P., MZ Trading
LLC and Richard J. Lampen (collectively, the &#147;Purchasers&#148;), providing for the issuance and sale of
$15,000,000 (the &#147;Purchase Price&#148;) of the Company&#146;s Series&nbsp;A Convertible Preferred Stock (the
&#147;Series&nbsp;A Preferred Stock&#148;), an aggregate of 1,200,000
shares, at a purchase price of $12.50 per share (which is, in effect upon
conversion, $0.35 per share of the Company&#146;s common stock (&#147;Common Stock&#148;)). Each share of Series&nbsp;A
Preferred Stock will, as described below, be automatically converted into shares of Common Stock at
a rate of 35.7143 shares of Common Stock for each share of Series&nbsp;A Preferred Stock, subject to
adjustment as set forth in the Certificate of Designation of the Series&nbsp;A Preferred Stock (the
&#147;Certificate of Designation&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>$2
Million Promissory Note</I>. On or about October&nbsp;15, 2008, Frost
Gamma Investments Trust will advance
$2,000,000 to the Company under a Promissory Note issued by the Company to Frost Gamma Investments
Trust (the &#147;Note&#148;). The entire amount of this advance and all accrued interest thereon will be
offset against the portion of the Purchase Price payable by Frost Gamma Investments Trust at the
closing of the transactions contemplated by the Purchase Agreement (the &#147;Closing&#148;), which will
occur on Monday, October&nbsp;20, 2008. The Note bears interest at a rate equal to 10% per annum,
calculated on the basis of a 360-day year based on the number of days elapsed including the first
day. The Note is due and payable at Closing, but would become immediately due and payable in full
upon the Company&#146;s (i)&nbsp;failure to pay in full the outstanding balance plus accrued interest by
maturity, (ii)&nbsp;breach of any representation, warranty or covenant contained in the Purchase
Agreement or any other agreements executed by the Company in connection therewith or (iii)
bankruptcy, insolvency, liquidation, dissolution or winding up, readjustment of its debts or other
similar proceedings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Release from Escrow</I>. All transaction deliverables are being held in escrow until Closing. At
Closing, all transaction deliverables will be released from escrow and delivered to the appropriate
parties, and the Purchasers will deliver the Purchase Price to the Company and receive the shares
of Series&nbsp;A Preferred Stock purchased. The issuance of the shares of Series&nbsp;A Preferred Stock will
be made pursuant to Section&nbsp;4(2) of the Securities Act of 1933, as amended.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Board Composition</I>. As described in more detail in Items 5.01 and 5.02 hereof, in connection
with and as required by the Purchase Agreement, upon execution of the Purchase Agreement, four of
the Company&#146;s nine directors resigned and were replaced with four directors designated by the
Purchasers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Stockholder Meeting</I>. As provided by the Purchase Agreement, the Company&#146;s stockholders will
be asked to vote on the following at a special meeting that will be held on a date to be announced
(the &#147;Stockholder Proposals&#148;):
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>amendments to the Company&#146;s charter to increase the authorized shares of the Company
to 250,000,000 shares, 225,000,000 shares of which will be designated as Common Stock
and
25,000,000 shares of which will be designated as preferred stock, and to permit
stockholders to act by written consent and</TD>
</TR>

</TABLE>
</DIV>
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</DIV>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the election of a to be determined number of directors designated by the Purchasers
as the sole directors comprising the Board of Directors of the
Company (the &#147;Board&#148;).</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Conversion of Series&nbsp;A Preferred Stock</I>. The Purchasers will vote in favor of the foregoing
proposals. After the amendment to the Company&#146;s charter to increase its authorized shares is
approved by stockholders, each outstanding share of Series&nbsp;A Preferred Stock will be automatically
converted into 35.7143 shares of Common Stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Conversion and/or Amendment of Notes</I>. In addition, concurrently with the Closing, (a)&nbsp;all of
the Company&#146;s 6% convertible notes, in the principal amount of $9&nbsp;million, due March&nbsp;1, 2010, plus
accrued interest, will be converted into shares of Series&nbsp;A Preferred Stock at a per share price of
$23.21 (which is, in effect upon conversion, $0.65 per share of Common Stock) and (b)&nbsp;substantially
all of the outstanding principal of the Company&#146;s 9% senior secured notes, in the principal amount
of $10&nbsp;million, due May&nbsp;31, 2009, plus accrued interest, will be converted into shares of Series&nbsp;A
Preferred Stock at a per share price of $12.50 (which is, in effect upon conversion, $0.35 per
share of Common Stock), and the remaining unconverted notes (in the principal amount of $300,000)
will be amended so that, among other things, (i)&nbsp;the maturity date will be extended to May&nbsp;31,
2014, (ii)&nbsp;the interest rate will be reduced to 3%, payable at maturity, and (iii)&nbsp;the security
interest in the collateral of the Company will be terminated. Following the Closing, holders of
Series&nbsp;A Preferred Stock (comprised of the investors and the converting note holders, many of which
are current stockholders of the Company) will own, excluding present ownership, approximately 85%
of the Common Stock on an as-converted basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Board and Special Committee Approval</I>. The Purchase Agreement was unanimously approved by the
members of the&nbsp;Board, upon the recommendation of a
Special Committee thereof comprised of independent directors. The Company engaged Miller Buckfire
&#038; Co., LLC to conduct a broad and comprehensive search for financing and strategic transactions.
Over the course of that search, more than 140 contacts were made with strategic investors, industry
participants and alternate financing sources, and the company reviewed and analyzed a number of
potential transactions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Representations and Warranties; Covenants</I>. The Purchase Agreement contains customary
representations and warranties by the Company and the Purchasers. The Purchase Agreement also
contains customary covenants and agreements, including with respect to the operation of the
business of the Company and its subsidiaries between signing and the conversion of the Series&nbsp;A
Preferred Stock, governmental filings and approvals, public disclosures and similar matters. Until
the conversion of the Series&nbsp;A Preferred Stock into Common Stock, the Company must conduct its
business in the ordinary course and use its best efforts to preserve its business organization and
significant business relationships. In addition, the Company cannot (except in certain cases in
the ordinary course and consistent with past practice) take a number of specified actions that are
customarily prohibited pending a closing.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Purchase Agreement contains representations and warranties that the parties have made to
each other as of specific dates. The assertions embodied in those representations and warranties
were made solely for purposes of the contract between the parties, and may be subject to important
qualifications and limitations agreed to by the parties in connection with negotiating its terms.
Moreover, the representations and warranties are subject to a contractual standard of materiality
that may be different from what may be viewed as material to stockholders, and the representations
and warranties may have been intended not as statements of fact, but rather as a way of allocating
risk among the parties. Accordingly, they should not be relied on as statements of factual
information. Stockholders are not third-party beneficiaries under the Purchase Agreement and
should not rely on the representations, warranties and covenants or any descriptions thereof as
characterizations of the actual state of facts or condition of the Company or its subsidiaries.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Indemnification</I>. The Company must indemnify each Purchaser against losses relating to (i)&nbsp;any
breach of the Company&#146;s representations or covenants or (ii)&nbsp;any claim brought against the
Purchasers by a third party, arising out of or resulting from the execution, delivery, performance
or enforcement of the transaction documents or the status of the Purchasers as holders of the
Company&#146;s shares. No Purchaser will be entitled to indemnification unless the amount of loss
exceeds $50,000, and the Company&#146;s maximum liability will not exceed the Purchase Price.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Fees and Expenses</I>. The Company must pay the Purchasers&#146; expenses incurred in connection with
the transactions contemplated by the Purchase Agreement, including $250,000 plus out-of-pocket
expenses payable to Ladenburg Thalmann &#038; Co. Inc. (&#147;Ladenburg&#148;), the financial adviser to the
Purchasers. In addition, the Company must pay the fees of Miller Buckfire
&#038; Co., LLC, which acted as financial advisor to the Company in
connection with the transaction, which fees consist of $500,000 plus
out-of-pocket expenses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Certificate of Designation of Series&nbsp;A Preferred Stock</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Certificate of Designation, which was filed with and accepted by the Secretary of State of
the State of Delaware on October 9, 2008, establishes the rights,
designations, preferences, qualifications, privileges, limitations and restrictions of the Series&nbsp;A
Preferred Stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Dividends</I>. Dividends may be paid on the Common Stock only if dividends are paid on the Series
A Preferred Stock in an amount for each such share of Series&nbsp;A Preferred Stock equal to or greater
than the aggregate amount of such dividends for all shares of the Common Stock into which each such
share of Series&nbsp;A Preferred Stock could then be converted.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Preference on Liquidation</I>. In the event of any liquidation, dissolution or winding-up of the
Company, the assets of the Company available for distribution to stockholders will be distributed
as follows:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>First, the holders of the Series&nbsp;A Preferred Stock will be entitled to receive,
before any payment is made to holders of the Common Stock or any other junior
securities, $0.01 per share of Series&nbsp;A Preferred Stock.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If the foregoing is insufficient to permit the payment to such holders of the full
preferential amounts described above, then all of the Company&#146;s assets will be
distributed ratably among the holders of the Series&nbsp;A Preferred Stock in proportion to
the amount of such Series&nbsp;A Preferred Stock owned by each such holder.</TD>
</TR>

</TABLE>
</DIV>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>After paying in full the preferential amounts due the holders of Series&nbsp;A Preferred
Stock, the remaining assets of the Company, if any, will be distributed among the
holders of the shares of Series&nbsp;A Preferred Stock and Common Stock, pro rata based on
the number of shares held by each such holder, on an as-converted basis.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Voting</I>. Holders of shares of Series&nbsp;A Preferred Stock are entitled to vote on all matters
submitted to a vote of the Company&#146;s stockholders on an as-converted basis. Except as otherwise
required by law, the holders of shares of Series&nbsp;A Preferred Stock and Common Stock will vote
together as a single class, and not as separate classes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Automatic Conversion</I>. Each share of Series&nbsp;A Preferred Stock will automatically be converted
into shares of Common Stock, at the then effective conversion rate, upon the filing of an amendment
to the Company&#146;s charter, which, once effective, makes available a sufficient number of authorized
but unissued and unreserved shares of the Common Stock to permit all then outstanding shares of
Series&nbsp;A Preferred Stock to be converted. The conversion rate is 35.7143 shares of Common Stock
for each share of Series&nbsp;A Preferred Stock, and is subject to customary adjustment for dilutive
issuances.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Indemnification Agreements</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Also on October&nbsp;11, 2008, the Company entered into an identical indemnification agreement with
each member of the Board  (the &#147;Indemnification Agreements&#148;). The
Indemnification Agreements provide that the Company will indemnify each such director to the
fullest extent permitted by Delaware law if he becomes a party to or is threatened with any action,
suit or proceeding arising out of his service as a director of the Company. The Indemnification
Agreements also provide that the Company will advance, if requested by an indemnified person, any
and all expenses incurred in connection with any such proceeding, subject to reimbursement by the
indemnified person should a final judicial determination be made that indemnification is not
available under applicable law. The Indemnification Agreements further provide that if the Company
maintains directors&#146; and officers&#146; liability coverage, each indemnified person shall be included in
such coverage to the maximum extent of the coverage available for the Company&#146;s directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Other Matters</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;According to the Company Guide of the NYSE Alternext US LLC (formerly known as the American
Stock Exchange), consummating the proposed transaction would ordinarily require the approval of the
Company&#146;s stockholders. Pursuant to Section 710(b) of the NYSE Alternext US LLC&#146;s Company Guide,
the Company has sought and received from NYSE Alternext US LLC a financial viability exception from
obtaining such stockholder approval. The Audit Committee of the Board, which is comprised solely
of independent directors, has expressly approved the Company&#146;s reliance on this exception, and the
proposed transaction has been unanimously approved by the Board.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The foregoing description of each of the Purchase Agreement, the Note, the Certificate of
Designation and the Indemnification Agreements does not purport to be complete and is qualified in
its entirety by reference to the Purchase Agreement, the Note, the Certificate of Designation and
the Indemnification Agreements, as applicable, copies of which are filed as Exhibits 10.1, 10.2,
3.1 and 10.3 hereto, respectively, and are incorporated in this report by reference. The Company&#146;s
press release
announcing the above transactions, issued on October&nbsp;13, 2008, is filed herewith as Exhibit
99.1 and is incorporated herein by reference.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->5<!-- /Folio -->
</DIV>




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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>IMPORTANT ADDITIONAL INFORMATION WILL BE FILED WITH THE SEC</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the Stockholder Proposals described above, the Company intends to file a
proxy statement and other relevant documents with the Securities and Exchange Commission (the
&#147;SEC&#148;). STOCKHOLDERS OF THE COMPANY ARE URGED TO READ THE PROXY STATEMENT AND ANY OTHER RELEVANT
DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE STOCKHOLDER PROPOSALS.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investors and security holders will be able to obtain free copies of the proxy statement and
other documents filed with the SEC by the Company through the web site maintained by the SEC at
<U>www.sec.gov</U>. Free copies of the proxy statement, when it becomes available, also may be
obtained from the Company by directing a request to Castle Brands Inc., 570 Lexington Avenue,
29<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> Floor, New York, NY 10022, Attn: Investor Relations, or ir@castlebranndsinc.com.
Investors and security holders may access copies of the documents filed with the SEC by the Company
on its web site at www.castlebrandsinc.com.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company, its executive officers and directors may be deemed to be participants in the
solicitation of proxies from the Company&#146;s stockholders with respect to the Stockholder Proposals.
Information regarding the Company&#146;s directors and executive officers is available in its Amendment
No.&nbsp;1 to the Annual Report on Form 10-K filed with the SEC on July&nbsp;29, 2008.&nbsp;&nbsp;
</DIV>
<!-- link1 "Item&nbsp;1.02 Termination of a Material Definitive Agreement" -->
<DIV align="left"><A NAME="001"></A></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;1.02 Termination of a Material Definitive Agreement</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simultaneous with the funding of the Note, the Credit Agreement, dated October&nbsp;22, 2007, by
and between the Company and Frost Nevada Investments Trust (the
&#147;Frost Credit Agreement&#148;) will be
terminated. The terms of the Frost Credit Agreement enabled the Company to borrow up to $5.0
million. As of the execution of the Purchase Agreement, no amounts were outstanding under the
Frost Credit Agreement. Dr.&nbsp;Phillip Frost controls Frost Gamma Investments Trust, a Purchaser, and
Frost Nevada Investments Trust. Prior to the execution of the Purchase Agreement, affiliates of
Dr.&nbsp;Frost beneficially owned in excess of 5% of the Company&#146;s outstanding shares of Common Stock,
and, effective upon the execution of the Purchase Agreement, Dr.&nbsp;Frost was appointed as a member of
the Board (see Item&nbsp;5.02 below). The Frost Credit Agreement was terminated in partial
consideration of the Purchasers&#146; execution and delivery of the Purchase Agreement and the
performance of the transactions contemplated thereby.
</DIV>
<!-- link1 "Item&nbsp;2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant" -->
<DIV align="left"><A NAME="002"></A></DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>Item&nbsp;2.03</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The information contained in Item&nbsp;1.01 of this Current Report on Form 8-K with respect to the
Note is hereby incorporated by reference.
</DIV>
<!-- link1 "Item&nbsp;3.02 Unregistered Sales of Equity Securities" -->
<DIV align="left"><A NAME="003"></A></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;3.02 Unregistered Sales of Equity Securities</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The information contained in Item&nbsp;1.01 of this Current Report on Form 8-K with respect to the
securities to be issued in the private placement is hereby incorporated by reference.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->6<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<!-- link1 "Item&nbsp;3.03 Material Modification to Rights of Security Holders" -->
<DIV align="left"><A NAME="004"></A></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;3.03 Material Modification to Rights of Security Holders.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The information contained in Item&nbsp;1.01 of this Current Report on Form 8-K with respect to the
Company&#146;s filing of the Certificate of Designation is hereby incorporated by reference.
</DIV>
<!-- link1 "Item&nbsp;5.01 Changes in Control of Registrant" -->
<DIV align="left"><A NAME="005"></A></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;5.01 Changes in Control of Registrant</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The information contained in Item&nbsp;1.01 of this Current Report on Form 8-K is hereby
incorporated by reference. The consummation of the investment and the conversion of the 6%
convertible notes and the 9% senior secured notes (and subsequent automatic conversion of the
Series&nbsp;A Preferred Stock issued in connection therewith) will result in the Company&#146;s issuance of
approximately 86&nbsp;million shares of Common Stock. Holders of Series&nbsp;A Preferred Stock (comprised of
the investors and the converting note holders, many of which are current stockholders of the
Company) will own, excluding present ownership, approximately 85% of the Common Stock on an
as-converted basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To the knowledge of the Company, each Purchaser used personal funds or working capital to fund
its portion of the purchase price of the shares of Series&nbsp;A Preferred Stock purchased.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon execution of the Purchase Agreement, four of the Company&#146;s current directors, Keith
Bellinger, Colm Leen, Kevin Tighe and Robert Flanagan (the &#147;Former Directors&#148;) resigned, and the
remaining five members of the Board appointed Dr.&nbsp;Frost, Glenn Halpryn, Richard J. Lampen and
Micaela Pallini (the &#147;New Directors&#148;) to serve on the Board to fill such vacancies.
</DIV>
<!-- link1 "Item&nbsp;5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Principal Officers; Compensatory Arrangements of Certain Officers" -->
<DIV align="left"><A NAME="006"></A></DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>Item&nbsp;5.02</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>Departure of Directors or Certain Officers; Election of Directors; Appointment of Principal Officers; Compensatory Arrangements of Certain Officers.</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
connection with the transaction, effective October 11, 2008, the Board has appointed new management to replace Donald
L. Marsh, who had acted as the Company&#146;s President and Chief
Operating Officer, effective October 11, 2008. Mr.&nbsp;Lampen, who is
54&nbsp;years old, was appointed to serve as the Company&#146;s interim President and Chief Executive
Officer, and John Glover, the Company&#146;s Senior Vice President
&#151; Marketing since February 20, 2008, has been promoted to the
position of Chief Operating Officer of US Operations. Mr.&nbsp;Lampen will remain Executive Vice
President of Vector Group Ltd. and President and Chief Executive Officer of Ladenburg Thalmann
Financial Services Inc. Prior to joining the Company, Mr. Glover, age
54, most recently served as Senior Vice President Commercial
Management for Remy Cointreau USA, where he was responsible for
business development and analysis, strategic planning, marketing
services and sales strategy.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the Purchase Agreement, on October&nbsp;11, 2008, each of the Former Directors resigned
from the Board, and each of the New Directors was appointed to serve on the Board to fill such
vacancies. Biographical information regarding each New Director is set forth below:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Dr.&nbsp;Phillip Frost</I>. Dr.&nbsp;Frost served as a director of the Company from September&nbsp;2005 to
September&nbsp;2006. Dr.&nbsp;Frost has served as the Chief Executive Officer and Chairman of the Board of
Directors of OPKO Health, Inc., a specialty pharmaceutical company that researches and develops
treatments for ophthalmic diseases, since March&nbsp;2007. Since July&nbsp;2006, Dr.&nbsp;Frost has served as the
Chairman of the Board of Directors of Ladenburg Thalmann Financial Services Inc., the parent of
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Ladenburg, which served as an underwriter in the Company&#146;s initial public offering in April&nbsp;2006,
the placement agent in connection with the sale of the Company&#146;s Series&nbsp;C convertible preferred
stock in 2004 and 2005 and as the financial advisor to the Purchasers. Dr.&nbsp;Frost has been a
director of Ladenburg
Thalmann Financial Services Inc. since March&nbsp;2005. From 1987 to January&nbsp;26, 2006, Dr.&nbsp;Frost 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. On January&nbsp;26, 2006, IVAX completed a
merger with Teva Pharmaceutical Industries Ltd. (&#147;Teva&#148;). Dr.&nbsp;Frost now serves as the Vice
Chairman of the Board of Directors of Teva. Dr.&nbsp;Frost was Chairman of the Department of Dermatology
at Mt. Sinai Medical Center of Greater Miami, Miami Beach, Florida from 1972 to 1986. He was also
Chairman of the Board of Directors of Key Pharmaceuticals, Inc. from 1972 until the acquisition of
Key Pharmaceuticals by Schering Plough Corporation in 1986. He serves on the Board of Regents of
the Smithsonian Institution, as a member of the Board of Trustees of the University of Miami, as a
Trustee of each of the Scripps Research Institutes, the Miami Jewish Home for the Aged, and the
Mount Sinai Medical Center, and was Vice Chairman of the Board of Governors of the American Stock
Exchange until its acquisition by NYSE Alternext US on October&nbsp;1, 2008. Dr.&nbsp;Frost is also a
director of Continucare Corporation, a provider of outpatient healthcare and home healthcare
services, Northrop Grumman Corp., a global defense and aerospace company, Ideation Acquisition
Corp, a special purpose acquisition company formed for the purpose of acquiring businesses in
digital media, and Modigene Inc., a development stage biopharmaceutical company. Dr.&nbsp;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.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Glenn L. Halpryn</I>. Mr.&nbsp;Halpryn served as a director of Ivax Diagnostics, Inc., a publicly held
corporation from October&nbsp;2002 until October&nbsp;10, 2008. Mr.&nbsp;Halpryn has been the Chairman of the
Board and Chief Executive Officer of QuikByte Software, Inc., a publicly held shell corporation,
since July&nbsp;2008. Mr.&nbsp;Halpryn was Chairman of the Board and Chief Executive Officer of Orthodontix,
Inc., a publicly held corporation, from April&nbsp;2001 until Orthodontix merged with Protalix
BioTherapeutics, Inc. in December&nbsp;2006. Mr.&nbsp;Halpryn also serves as a director of Getting Ready
Corporation, a public shell company that recently completed a merger with Winston Laboratories,
Inc. Mr.&nbsp;Halpryn served as the Chairman of the Board and Chief Executive Officer of Getting Ready
from December&nbsp;2006 until its merger with Winston Laboratories in September&nbsp;2008. Mr.&nbsp;Halpryn
served as the Chairman of the Board, Chief Executive Officer and President of clickNsettle.com,
Inc., a publicly held shell corporation, from October&nbsp;2007 until September&nbsp;2008, following its
merger with Cardo Medical, LLC. Mr.&nbsp;Halpryn was the President and Secretary and a director of
Longfoot Communications Corp., a publicly held shell corporation, from March&nbsp;2008 until its merger
with Kidville Holdings, LLC in August&nbsp;2008. Mr.&nbsp;Halpryn is also Chief Executive Officer and a
director of Transworld Investment Corporation (&#147;TIC&#148;), serving in such capacity since June&nbsp;2001.
From 1984 to June&nbsp;2001, Mr.&nbsp;Halpryn served as Vice President/Treasurer of TIC. Since 2000, Mr.
Halpryn has been an investor and the managing member of investor groups that were joint venture
partners in 26 land acquisition and development projects with one of the largest home builders in
the country. In addition, since 1984, Mr.&nbsp;Halpryn has been engaged in real estate investment and
development activities. From April&nbsp;1988 through June&nbsp;1998, Mr.&nbsp;Halpryn was Vice Chairman of
Central Bank, a Florida state-chartered bank. Since June&nbsp;1987, Mr.&nbsp;Halpryn has been the President
of and beneficial holder of stock of United Security Corporation, a broker-dealer registered with
FINRA. From June&nbsp;1992 through May&nbsp;1994, Mr.&nbsp;Halpryn served as the Vice President,
Secretary-Treasurer of Frost Hanna Halpryn Capital Group, Inc., a &#147;blank check&#148; company whose
business combination was effected
in May&nbsp;1994 with Sterling Healthcare Group, Inc. From June&nbsp;1995 through October&nbsp;1996, Mr.
Halpryn served as a member of the Board of Directors of Sterling Healthcare Group, Inc.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Richard J. Lampen</I>. Mr.&nbsp;Lampen has served as Executive Vice President of Vector Group Ltd.
since July&nbsp;1996. From October&nbsp;1995 to December&nbsp;2005, Mr.&nbsp;Lampen served as the Executive Vice
President and General Counsel and a director of New Valley LLC, now a subsidiary of Vector Group
Ltd. Since September&nbsp;2006, he has served as President and Chief Executive Officer of Ladenburg
Thalmann Financial Services Inc., the parent of Ladenburg. Mr.&nbsp;Lampen has served as a director of
Ladenburg Thalmann Financial Services Inc. since January&nbsp;2002. Since November&nbsp;1998, he has served
as President and Chief Executive Officer of CDSI Holdings Inc., an affiliate of New Valley LLC
seeking acquisition or investment opportunities. Mr.&nbsp;Lampen has served as a director of CDSI
Holdings since January&nbsp;1997. From May&nbsp;1992 to September&nbsp;1995, Mr.&nbsp;Lampen was a partner at Steel
Hector &#038; Davis, a law firm located in Miami, Florida. From January&nbsp;1991 to April&nbsp;1992, Mr.&nbsp;Lampen
was a Managing Director at Salomon Brothers Inc, an investment bank, and was an employee at
Salomon Brothers Inc from 1986 to April&nbsp;1992. Mr.&nbsp;Lampen has served as a director of a number of
other companies, including U.S. Can Corporation, The International Bank of Miami, N.A. and Spec&#146;s
Music Inc., as well as a court-appointed independent director of Trump Plaza Funding, Inc.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Micaela Pallini</I>. Ms.&nbsp;Pallini has served since May&nbsp;1997 as a director and the head of
production of I.L.A.R. S.p.A., a producer of alcoholic beverages located in Rome, Italy and a
supplier to the Company pursuant to an exclusive marketing agreement. Ms.&nbsp;Pallini is the daughter
of Virgilio Pallini, the President of I.L.A.R. S.p.A. Ms.&nbsp;Pallini is also a member of the board of
directors of Unione Industriali di Roma, an association of Roman industrial entrepreneurs; a member
of the board of directors and the audit committee of Federvini, the national association of Italian
wine, spirit and liquer providers; and a Vice President of B52, a national association for the
promotion of women in business in Italy. Ms.&nbsp;Pallini holds a doctoral degree from Roma Tor Vergata
University in Rome, Italy and was engaged in research activities before assuming her position with
I.L.A.R. S.p.A.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dr.&nbsp;Frost
controls Frost Gamma Investments Trust, which agreed to purchase
$4,965,000 of the
Series&nbsp;A Preferred Stock pursuant to the Purchase Agreement and advanced $2,000,000 to the Company
under the Note. Dr.&nbsp;Frost also controls Frost Nevada Investment Trust, which is a party to the
Frost Credit Agreement which was terminated as described in Item&nbsp;1.02 above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Halpryn is a member of Halpryn Group IV, LLC, which agreed to purchase $1,000,000 of the
Series&nbsp;A Preferred Stock pursuant to the Purchase Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Lampen agreed to purchase $17,500 of the Series&nbsp;A Preferred Stock pursuant to the Purchase
Agreement, and is the Executive Vice President of Vector Group Ltd., which agreed to purchase
$4,000,000 of the Series&nbsp;A Preferred Stock pursuant to the Purchase Agreement, and the President
and Chief Executive Officer of Ladenburg, which acted as financial adviser to the Purchasers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ms.&nbsp;Pallini is a director and the head of production of I.L.A.R. S.p.A., which agreed to
purchase $3,000,000 of the Series&nbsp;A Preferred Stock pursuant to the Purchase Agreement and is a
supplier to the Company pursuant to an exclusive marketing agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The committee assignments of the New Directors have not yet been determined. Committee
assignments will be determined within several weeks.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The New Directors will
be compensated as directors as described in the Company&#146;s Annual Report
on Form 10-K, as amended by Amendment No. 1 filed on July&nbsp;29, 2008.
</DIV>
<!-- link1 "Item&nbsp;5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year" -->
<DIV align="left"><A NAME="007"></A></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the Purchase Agreement, the Company designated a new series of preferred
stock, the Series&nbsp;A Preferred Stock. A copy of the Certificate of Designation, as filed with the
Secretary of State of the State of Delaware on October&nbsp;9, 2008, is attached hereto as Exhibit&nbsp;3.1
and incorporated herein by reference.
</DIV>
<!-- link1 "Item&nbsp;9.01 Financial Statements and Exhibits" -->
<DIV align="left"><A NAME="008"></A></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;9.01 Financial Statements and Exhibits.</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="92%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Exhibit No.</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Description</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">3.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certificate of Designation of Series&nbsp;A Convertible Preferred Stock of Castle Brands Inc.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Series&nbsp;A Preferred Stock Purchase Agreement, dated October&nbsp;11, 2008.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Promissory Note issued to Frost Gamma Investments Trust, dated October&nbsp;14, 2008.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.3
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Indemnification Agreement.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">99.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Press release dated October&nbsp;13, 2008.</TD>
</TR>
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</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->10<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

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<DIV align="left"><A NAME="009"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SIGNATURES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="53%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">CASTLE BRANDS INC.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:<BR>
Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Seth Weinberg
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Seth Weinberg
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Vice President</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Dated: October&nbsp;14, 2008
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->11<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



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<DIV align="left"><A NAME="010"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">EXHIBIT INDEX
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
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<TR valign="bottom">
    <TD width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="92%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Exhibit</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Description</TD>
</TR>

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<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">3.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certificate of Designation of Series&nbsp;A Convertible Preferred Stock of Castle Brands Inc.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Series&nbsp;A Preferred Stock Purchase Agreement, dated October&nbsp;11, 2008.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Promissory Note issued to Frost Gamma Investments Trust, dated October&nbsp;14, 2008.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.3
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Indemnification Agreement.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">99.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Press release dated October&nbsp;13, 2008.</TD>
</TR>
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</TABLE>
</DIV>



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</BODY>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.1
<SEQUENCE>2
<FILENAME>y00297exv3w1.htm
<DESCRIPTION>EX-3.1: CERTIFICATE OF DESIGNATION
<TEXT>
<HTML>
<HEAD>
<TITLE>EX-3.1</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
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<DIV style="font-family: 'Times New Roman',Times,serif">

 <DIV align="right" style="font-size: 10pt; margin-top: 12pt">Exhibit
3.1
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CERTIFICATE OF DESIGNATION</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>OF THE</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>SERIES A CONVERTIBLE PREFERRED STOCK</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>OF</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>CASTLE BRANDS INC.</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>(Pursuant to Section 151(g) of the General Corporation Law of the State of Delaware)</B>

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Castle Brands Inc., a corporation organized and existing under the laws of the State of Delaware
(the &#147;<U>Corporation</U>&#148;), hereby certifies that the following resolutions were adopted by its
Board of Directors (the &#147;<U>Board</U>&#148;) pursuant to authority conferred upon the Board by its
Amended and Restated Certificate of Incorporation:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">RESOLVED, that:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">1. There is hereby established a series of the preferred stock of the Corporation designated
&#147;Series&nbsp;A Convertible Preferred Stock, par value $0.01 per share&#148; (the &#147;<U>Series&nbsp;A Preferred
Stock</U>&#148;), consisting of 5,000,000 shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">2. The Series&nbsp;A Preferred Stock shall have the relative rights, designations, preferences,
qualifications, privileges, limitations, restrictions, options, conversion rights and other special
or relative rights applicable thereto as follows:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Dividends</U>. Dividends may be declared and paid upon the Corporation&#146;s common stock
(the &#147;<U>Common Stock</U>&#148;) in any fiscal year of the Corporation only if dividends shall have
been paid or declared and set apart with respect to all outstanding shares of Series&nbsp;A Preferred
Stock in an amount for each such share of Series&nbsp;A Preferred Stock equal to or greater than the
aggregate amount of such dividends for all shares of Common Stock into which each such share of
Series&nbsp;A Preferred Stock could then be converted. Dividends declared and paid upon each share of
Series&nbsp;A Preferred Stock shall not exceed the aggregate amount of such dividends as are paid or
declared and set apart with respect to all shares of Common Stock into which each such share of
Series&nbsp;A Preferred Stock could then be converted.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Preference on Liquidation</U>.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) In the event of any voluntary or involuntary liquidation, dissolution or winding up
of the Corporation, the assets of the Corporation available for distribution to stockholders
shall be distributed as follows:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) First, the holders of the Series&nbsp;A Preferred Stock then outstanding
shall be entitled to receive, out of the assets of the Corporation available
for distribution to its stockholders, before any payment shall be made in
respect of the Common Stock or any other series of capital stock ranking
junior to the Series&nbsp;A Preferred Stock, with
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">respect to payments upon liquidation, dissolution or winding up of the
Corporation $0.01 per share of Series&nbsp;A Preferred Stock.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) If the assets to be distributed among the holders of the Series&nbsp;A
Preferred Stock pursuant to <U>Section&nbsp;2(b)(1)(i)</U> shall be insufficient
to permit the payment to such holders of the full aforesaid preferential
amounts, then the entire assets of the Corporation legally available for
distribution shall be distributed ratably among the holders of the Series&nbsp;A
Preferred Stock in proportion to the amount of such Series&nbsp;A Preferred Stock
owned by each such holder.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) After setting apart or paying in full the preferential amounts
due the holders of Series&nbsp;A Preferred Stock, the remaining assets of the
Corporation available for distribution to its stockholders, if any, shall be
distributed among the holders of the shares of Series&nbsp;A Preferred Stock and
Common Stock, pro rata based on the number of shares held by each such
holder, treating for this purpose all such securities as if they had been
converted to Common Stock pursuant to the terms hereof immediately prior to
such dissolution, liquidation or winding up of the Corporation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;In the event of any voluntary or involuntary liquidation, dissolution or winding up
of the Corporation, the Corporation shall, within ten (10)&nbsp;days after the date the Board
approves such action, or twenty (20)&nbsp;days prior to any stockholders&#146; meeting called to
approve such action, or ten (10)&nbsp;days after the commencement of any involuntary proceeding,
whichever is earlier, give each holder of shares of Series&nbsp;A Preferred Stock written notice
of the proposed action. Such written notice shall describe the material terms and
conditions of such proposed action, including a description of the stock, cash and property
to be received by the holders of shares of Series&nbsp;A Preferred Stock upon consummation of the
proposed action and the date of delivery thereof. If any material change in the facts set
forth in the initial notice shall occur, the Corporation shall promptly give written notice
to each holder of shares of Series&nbsp;A Preferred Stock of such material change.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)&nbsp;In the event of any voluntary or involuntary liquidation, dissolution or winding up
of the Corporation which will involve the distribution of assets other than cash, the
Corporation shall promptly engage a competent independent appraiser to determine the fair
market value of the assets to be distributed to the holders of shares of its capital stock.
The Corporation shall, upon receipt of such appraiser&#146;s valuation, give prompt written
notice to each holder of shares of Series&nbsp;A Preferred Stock of the appraiser&#146;s valuation.
Any equity securities of other entities to be distributed shall be valued as follows:
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Securities not subject to investment letter or other similar restrictions
on free marketability:
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) If traded on a securities exchange, the value shall be deemed to be
the average of the closing prices of the securities on such exchange over
the thirty-day period ending three (3)&nbsp;days prior to the distribution; If
actively traded over-the-counter, the value shall be deemed to be the
average of the closing bid or sale prices (whichever is applicable) over the
thirty-day period ending three (3)&nbsp;days prior to the distribution; and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) If there is no active public market, the value shall be the fair
market value thereof, as mutually determined by the Corporation and the
holders of at least a majority of the voting power of all then outstanding
shares of Series&nbsp;A Preferred Stock.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The method of valuation of securities subject to investment letter or
other restrictions on free marketability (other than restrictions arising solely by
virtue of a stockholder&#146;s status as an affiliate or former affiliate) shall be to
make an appropriate discount from the value determined as above in <U>Section
2(b)(3)(i)(A)</U> or <U>(B)</U>, as applicable, to reflect the approximate fair
market value thereof, as mutually determined by the Corporation and the holders of
at least a majority of the voting power of all then outstanding shares of Series&nbsp;A
Preferred Stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;<U>Voting</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except as otherwise required by law or expressly provided herein, the holders of shares
of Series&nbsp;A Preferred Stock shall be entitled to vote on all matters submitted to a vote of
the stockholders of the Corporation and shall have such number of votes equal to the number
of shares of Common Stock into which such holders&#146; shares of Series&nbsp;A Preferred Stock are
convertible pursuant to the provisions hereof at the record date for the determination of
stockholders entitled to vote on such matters or, if no such record date is established, at
the date such vote is taken. Except as otherwise required by law or expressly provided
herein, the holders of shares of Series&nbsp;A Preferred Stock and Common Stock shall vote
together as a single class, and not as separate classes.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;<U>Conversion</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) <U>Automatic Conversion</U>. Each share of Series&nbsp;A Preferred Stock shall
automatically be converted into shares of Common Stock without any further action on the
part of any holder of such shares, at the then effective Series&nbsp;A Conversion Rate (as
defined below), upon the filing of an amendment to the Corporation&#146;s Amended and Restated
Certificate of Incorporation, which, once effective, makes available a sufficient number of
authorized but unissued and unreserved shares of Common Stock to permit all then outstanding
shares of Series&nbsp;A Preferred Stock to be so converted. The &#147;<U>Series&nbsp;A Conversion
Rate</U>&#148; shall be a rate of &#091;35.7143&#093; shares of Common Stock for each share of Series&nbsp;A
Preferred Stock, subject to adjustment in accordance with <U>Section&nbsp;2(e)</U> below.
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;As promptly as practicable after such conversion, the Corporation shall deliver to
each holder of Series&nbsp;A Preferred Stock a notice stating that such conversion shall have
become effective. The Corporation shall thereafter issue and deliver to, or upon the
written order of such holder, a certificate or certificates for the number of full shares of
Common Stock to which such holder is entitled against receipt of such holder&#146;s certificate
representing Series&nbsp;A Preferred Stock at such office or other place designated by the
Corporation. The holder shall be deemed to have become a stockholder of record of Common
Stock on the date that such conversion became effective (the &#147;<U>Conversion Date</U>&#148;),
unless the transfer books of the Corporation are closed on that date, in which event it
shall be deemed to have become a stockholder of record on the next succeeding date on which
the transfer books are open, but the Conversion Rate shall be that in effect on the
Conversion Date.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)&nbsp;The Corporation shall pay any and all issue and other taxes that may be payable in
respect of any issue or delivery of shares of Common Stock on conversion of Series&nbsp;A
Preferred Stock pursuant hereto. The Corporation shall not, however, be required to pay any
tax which may be payable in respect of any transfer involved in the issue and delivery of
shares of Common Stock in a name other than that in which the shares of Series&nbsp;A Preferred
Stock so converted were registered, and no such issue or delivery shall be made unless and
until the person requesting such issue has paid to the Corporation the amount of any such
tax, or has established, to the satisfaction of the Corporation, that such tax has been
paid.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4)&nbsp;The Corporation shall as promptly as possible (subject to obtaining necessary board
and stockholder approval), in accordance with the laws of the State of Delaware, file a
certificate of amendment to its certificate of incorporation to increase the authorized
amount of its Common Stock so that the authorized number of shares of its authorized and
unissued Common Stock shall be sufficient to permit the conversion of all of the shares of
Series&nbsp;A Preferred Stock at the time outstanding.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5)&nbsp;If any shares of Common Stock to be reserved for the purpose of conversion of
shares of Series&nbsp;A Preferred Stock require registration or listing with, or approval of, any
governmental authority, stock exchange or other regulatory body under any federal or state
law or regulation or otherwise, before such shares may be validly issued or delivered upon
conversion, the Corporation will in good faith and as expeditiously as possible endeavor to
secure such registration, listing or approval, as the case may be.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6)&nbsp;All shares of Common Stock which may be issued upon conversion of the shares of
Series&nbsp;A Preferred Stock will upon issuance by the Corporation be validly issued fully paid
and non-assessable and free from all taxes, liens and charges with respect to the issuance
thereof.
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7)&nbsp;Until conversion of the Series&nbsp;A Preferred Stock into Common Stock, the Corporation
shall not, without the approval of holders of a majority of the outstanding shares of Series
A Preferred Stock:
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) distribute upon or with respect to the then outstanding Common Stock, a
dividend, or any other distribution, or any right to subscribe for or purchase any
shares of stock of any class or to receive any other rights; or
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) undertake any capital reorganization of the Corporation, reclassification
of the capital stock of the Corporation (other than a subdivision or combination of
its outstanding shares of Common Stock), consolidation or merger of the Corporation
with or into another Corporation or conveyance of all or substantially all of the
assets of the Corporation to another Corporation; or
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) undertake any voluntary dissolution, liquidation or winding up of the
Corporation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;<U>Adjustments to Conversion Rate</U>.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) (i) <U>Subdivisions, Combinations, or Consolidations of Common Stock</U>.
In the event the outstanding shares of Common Stock shall be subdivided, combined or
consolidated, by stock split, stock dividend, combination or like event, into<SUP style="font-size: 85%; vertical-align: text-top">
</SUP>a greater or lesser number of shares of Common Stock after the effective date
of this Certificate of Designation, the Series&nbsp;A Conversion Rate in effect
immediately prior to such subdivision, combination, consolidation or stock dividend
shall, concurrently with the effectiveness of such subdivision, combination or
consolidation, be proportionately adjusted as more fully set forth in <U>Section
2(e)(1)(ii)</U> below.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <U>Adjustment for Common Stock Dividends and Distributions</U>. If the
Corporation at any time subdivides, combines or consolidates the outstanding shares
of Common stock as contemplated by <U>Section&nbsp;2(e)(1)(i)</U>, in each such event
the Series&nbsp;A Conversion Rate that is then in effect shall be adjusted as of the time
of such event by multiplying the Series&nbsp;A Conversion Rate then in effect by a
fraction (x)&nbsp;the numerator of which is the total number of shares of Common Stock
issued and outstanding immediately after the time of such subdivision, combination
or consolidation, and (y)&nbsp;the denominator of which is the total number of shares of
Common Stock issued and outstanding immediately prior to such subdivision,
combination or consolidation.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) <U>Reclassifications and Reorganizations</U>. In the case, at any time
after the date hereof, of any capital reorganization or any reclassification of the
stock of the Corporation (other than solely as a result of a stock dividend or
subdivision, split-up or combination of shares), the Series&nbsp;A Conversion Rate then
in effect shall, concurrently with the effectiveness of such reorganization or
reclassification, be proportionately adjusted and the terms of the Series&nbsp;A
Preferred Stock shall be deemed amended such that the shares of the Series&nbsp;A
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">Preferred Stock shall, after such reorganization or reclassification, be
convertible into the kind and number of shares of stock or other securities or
property of the Corporation or otherwise to which such holder would have been
entitled if immediately prior to such reorganization or reclassification, the
holder&#146;s shares of the Series&nbsp;A Preferred Stock had been converted into Common
Stock. The provisions of this <U>Section&nbsp;2 (e)(2)(iii)</U> shall similarly apply to
successive reorganizations or reclassifications.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) <U>Distributions Other Than Cash Dividends Out of Retained Earnings</U>.
In case the Corporation shall declare a cash dividend upon its Common Stock payable
otherwise than out of retained earnings or shall distribute to holders of its Common
Stock shares of its capital stock (other than shares of Common Stock and other than
as otherwise would result in an adjustment pursuant to this <U>Section&nbsp;2(e)</U>),
stock or other securities of other persons, evidences of indebtedness issued by the
Corporation or other persons, assets (excluding cash dividends) or options or rights
(excluding options to purchase and rights to subscribe for Common Stock or other
securities of the Corporation convertible into or exchangeable for Common Stock),
then, in each such case, provision shall be made so that the holders of Series&nbsp;A
Preferred Stock shall receive upon conversion thereof, in addition to the number of
shares of Common Stock receivable thereupon, the amount of securities of the
Corporation and other property which they would have received had their Series&nbsp;A
Preferred Stock been converted into Common Stock on the date of such event and had
they thereafter, during the period from the date of such event to and including the
date of conversion, retained such securities and other property receivable by them
as aforesaid during such period, subject to all other adjustments called for during
such period under this <U>Section&nbsp;2</U> with respect to the rights of the holders
of the Series&nbsp;A Preferred Stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <U>Certificate as to Adjustments</U>. Upon the occurrence of each adjustment or
readjustment of the Series&nbsp;A Conversion Rate pursuant to <U>Section&nbsp;2(e)</U>, the Corporation at
its expense shall promptly compute such adjustment or readjustment in accordance with the terms
hereof and furnish to each holder of the Series&nbsp;A Preferred Stock a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written request at any time of any holder of
Series&nbsp;A Preferred Stock, furnish or cause to be furnished to such holder a like certificate
setting forth (i)&nbsp;such adjustments and readjustments, (ii)&nbsp;the Series&nbsp;A Conversion Rate at the time
in effect and (iii)&nbsp;the number of shares of Common Stock and the amount, if any, of other property
which at the time would be received upon the conversion of the Series&nbsp;A Preferred Stock.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <U>Fractional Shares</U>. Fractional shares of Series&nbsp;A Preferred Stock may be issued
and all conversion, voting and other rights shall be applied to such fractional shares on a
proportional basis; provided, however, that in lieu of any fractional shares of Common Stock to
which the holder of Series&nbsp;A Preferred Stock would be entitled upon conversion or otherwise
pursuant hereto, the Corporation shall issue to such holder, one share of Common Stock. The number
of whole shares to be issuable to each holder upon such conversion shall be determined
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">on the basis of the number of shares of Common Stock issuable upon conversion of the total
number of shares of Series&nbsp;A Preferred Stock of such holder at the time converting into Common
Stock.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <U>No Impairment</U>. Except by amendment to the Amended and Restated Certificate of
Incorporation, the Corporation will not 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 Corporation, but will at all times in good faith assist in the taking of
all such action as may be necessary or appropriate in order to protect the conversion rights of the
holders of the Series&nbsp;A Preferred Stock against impairment.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <U>Status of Converted Stock</U>. In the event any shares of Series&nbsp;A Preferred Stock
shall be converted pursuant to <U>Section&nbsp;2(d)</U> above or otherwise acquired by the Corporation,
the shares so converted shall be canceled and shall resume the status of authorized shares of
Preferred Stock without differentiation as to series.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>IN WITNESS WHEREOF</B>, the Corporation has caused this Certificate of Designation to be signed by Mark
Andrews, its Chairman of the Board, effective as of October 9, 2008.
</DIV>


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left"><B>CASTLE BRANDS INC.</B><BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>

<TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/
Mark Andrews&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top">Name:&nbsp;&nbsp;</TD>
    <TD align="left">Mark Andrews&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top">Title:&nbsp;&nbsp;</TD>
    <TD align="left">Chairman of the Board&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>




</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>3
<FILENAME>y00297exv10w1.htm
<DESCRIPTION>EX-10.1: SERIES A PREFERRED STOCK PURCHASE AGREEMENT
<TEXT>
<HTML>
<HEAD>
<TITLE>EX-10.1</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><b>EXHIBIT 10.1</b>
</DIV>


<DIV align="right" style="font-size: 10pt; margin-top: 12pt">EXECUTION COPY
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><DIV style="width: 100%; border-bottom: 3px double #000000; font-size: 1px">&nbsp;</DIV>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>SERIES A PREFERRED STOCK PURCHASE AGREEMENT</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>DATED
AS OF OCTOBER 11, 2008</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>BY AND AMONG</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>CASTLE BRANDS INC.</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>AND</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>EACH OF THE INVESTORS LISTED ON SCHEDULE I</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><DIV style="width: 100%; border-bottom: 3px double #000000; font-size: 1px">&nbsp;</DIV>

</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>TABLE OF CONTENTS</B></U>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="92%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE 1 TERMINOLOGY AND USAGE</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">1.1 Definitions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">1.2 Interpretation and Rules of Construction</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE 2 PURCHASE AND SALE</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.1 Purchase Price; Closing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.2 Company&#146;s Deliveries</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">2.3 Purchasers&#146; Deliveries</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE 3 REPRESENTATIONS AND WARRANTIES</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">3.1 Representations and Warranties of the Company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">3.2 Representations and Warranties of the Purchasers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE 4 COVENANTS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.1 Filings and Public Disclosure by the Company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.2 Use of Proceeds</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.3 Proxy Statement</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.4 Board Composition</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.5 Transfer Restrictions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.6 Furnishing of Information</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.7 Indemnification</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.8 Termination of Credit Facility</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.9 Conduct of Business Pending Conversion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.10 Regulatory and Other Authorizations; Notices and Consents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.11 NYSE Alternext Listing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.12 Cooperation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.13 Right of First Offer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.14 Indemnification of Directors and Officers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">4.15 Further Action</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ARTICLE 5 MISCELLANEOUS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5.1 Severability</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5.2 Fees and Expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5.3 Entire Agreement</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5.4 Amendments; Waivers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5.5 Construction</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5.6 Successors and Assigns</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5.7 No Third-Party Beneficiaries</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5.8 Governing Law; Jurisdiction; Venue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5.9 Nature of Purchasers&#146; Obligations and Rights</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5.10 Notices</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5.11 Adjustments in Share Numbers and Prices</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">5.12 Counterparts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio --><!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">SCHEDULES AND EXHIBITS
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="85%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Schedule&nbsp;I
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Purchasers</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Schedule&nbsp;II
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Notes</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Schedule&nbsp;III
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Non Current Payments</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Schedule&nbsp;IV
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Employment Agreements</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Exhibit&nbsp;A
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certificate of Designation</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Exhibit&nbsp;B
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Indemnification Agreement</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Exhibit&nbsp;C
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Legal Opinion</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->ii<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SERIES A PREFERRED STOCK PURCHASE AGREEMENT</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This SERIES A PREFERRED STOCK PURCHASE AGREEMENT, dated as of October&nbsp;11, 2008 (this
&#147;<U>Agreement</U>&#148;), is by and among CASTLE BRANDS INC., a Delaware corporation (the
&#147;<U>Company</U>&#148;), and each of the investors listed on <U>Schedule&nbsp;I</U> attached hereto
(individually, a &#147;<U>Purchaser</U>&#148; and collectively, the &#147;<U>Purchasers</U>&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, the Company wishes to issue and sell to the Purchasers, and each Purchaser wishes to
purchase from the Company, upon the terms and subject to the conditions set forth in this
Agreement, that number of shares of the Company&#146;s Series&nbsp;A Convertible Preferred Stock, par value
$0.01 per share (the &#147;<U>Series&nbsp;A Preferred Stock</U>&#148;), which series shall be designated pursuant
to the Certificate of Designation of Series&nbsp;A Convertible Preferred Stock in the form attached
hereto as <U>Exhibit&nbsp;A</U> (the &#147;<U>Certificate of Designation</U>&#148;), set forth opposite such
Purchaser&#146;s name on Schedule&nbsp;I, equaling an aggregate of 1,200,000 shares of Series&nbsp;A Preferred
Stock;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, each share of Series&nbsp;A Preferred Stock shall be convertible into 35.7143 shares of
the Company&#146;s common stock, par value $0.01 per share (&#147;<U>Common Stock</U>&#148;), on the terms and
subject to the conditions set forth herein and in the Certificate of Designation;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, the Company and each Purchaser are executing, delivering and performing this
Agreement in reliance upon the exemption from securities registration afforded by Section&nbsp;4(2) of
the Securities Act of 1933, as amended (together with the rules and regulations promulgated
thereunder, the &#147;<U>Securities Act</U>&#148;), and Rule&nbsp;506 of Regulation&nbsp;D (&#147;<U>Regulation&nbsp;D</U>&#148;),
as promulgated by the Securities and Exchange Commission (the &#147;<U>SEC</U>&#148;) under the Securities
Act; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, the shares of Series&nbsp;A Preferred Stock to be purchased by the Purchasers hereunder
(the &#147;<U>Shares</U>&#148;), and the shares of Common Stock issuable upon conversion of the Shares in
accordance herewith and with the Certificate of Designation (the &#147;<U>Underlying Shares</U>&#148;), are
collectively referred to herein as the &#147;<U>Securities</U>&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW, THEREFORE, in consideration of the mutual promises made herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company
and the Purchasers hereby agree as follows:
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE 1<BR>
TERMINOLOGY AND USAGE</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1 <U>Definitions</U>. When used herein, the terms below shall have the respective meanings indicated:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Affiliate</U>&#148; means as applied to any Person, means any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common control with, such
Person. For purposes of this definition and the definition of &#147;subsidiary,&#148; &#147;control&#148; (including,
with correlative meanings, the terms &#147;controlling,&#148; &#147;controlled by&#148; and &#147;under common control
with&#148;), as applied to any Person, means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person, whether through the
</DIV>

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</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">ownership of voting securities, by contract or otherwise, and, in addition to the foregoing, a
Person shall be deemed to control another Person if the controlling Person owns ten (10%) or more
of any class of voting securities (or other ownership interest) of the controlled Person.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Affiliated Party Transaction</U>&#148; means any transaction, contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any director, executive
officer named in the SEC Reports, or Affiliate of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Agreement</U>&#148; has the meaning set forth in the Preamble.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Board of Directors</U>&#148; means the Board of Directors of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Business Day</U>&#148; means any day other than Saturday, Sunday or other day on which
commercial banks in The City of New York are authorized or required by Law to remain closed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Certificate of Designation</U>&#148; has the meaning set forth in the Recitals.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Closing</U>&#148; has the meaning set forth in Section&nbsp;2.1.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Closing Date</U>&#148; has the meaning set forth in Section&nbsp;2.1.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Code</U>&#148; has the meaning set forth in Section&nbsp;3.1(q)(i).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Common Stock</U>&#148; has the meaning set forth in the Recitals.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Company</U>&#148; has the meaning set forth in the Preamble.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Company Directors</U>&#148; means Keith A. Bellinger, Robert J. Flanagan, Colm Leen and Kevin
P. Tighe.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Company Licensed Intellectual Property</U>&#148; has the meaning set forth in Section
3.1(n)(iii).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Company Owned Intellectual Property</U>&#148; has the meaning set forth in Section&nbsp;3.1(n)(ii).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Company Stockholder Approval</U>&#148; shall mean the adoption and approval by the
stockholders of the Company, by the requisite vote required under, and in accordance with,
applicable Law, the rules and regulations of the NYSE Alternext (including exemptions granted with
respect thereto) and the Company&#146;s Amended and Restated Certificate of Incorporation and by-laws,
of all of the proposals set forth in the Proxy Statement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Company Stockholders Meeting</U>&#148; means the meeting of the stockholders of the Company to
adopt and approve all of the proposals set forth in the Proxy Statement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Company Subsidiaries</U>&#148; means the Persons set forth on Exhibit&nbsp;21.1 of the Company&#146;s
Annual Report on Form 10-K, as amended, for the fiscal year ended March&nbsp;31, 2008 and Castle&nbsp;Bourbon
Holding&nbsp;LLC, except for the Inactive Subsidiaries.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Controlled Group</U>&#148; has the meaning set forth in Section&nbsp;3.1(q)(i).
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Conversion</U>&#148; means the automatic conversion of all issued and outstanding shares of
Series&nbsp;A Preferred Stock into shares of Common Stock in accordance with the Certificate of
Designation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Conversion Date</U>&#148; means the date on which the Conversion occurs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Disclosure Materials</U>&#148; has the meaning set forth in Section&nbsp;3.1(h).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Employment Agreements</U>&#148; means the employment agreements between the Company and each
of Mark Andrews, Donald L. Marsh, Jr., Alfred J. Small, John Soden, T. Kelly Spillane, Seth
Weinberg, John S. Glover, Chester F. Zoeller, III and Conor O&#146;hAonghusa and any other agreements or
instruments containing &#147;change of control&#148; provisions that may require the Company to make payments
to employees party thereto in connection with the transactions contemplated by this Agreement,
which Employment Agreements are all set forth on Schedule&nbsp;IV attached hereto.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>ERISA</U>&#148; has the meaning set forth in Section&nbsp;3.1(q)(i).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Exchange Act</U>&#148; means the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Fairness Opinion</U>&#148; means the opinion, delivered by Miller Buckfire &#038; Co., LLC to the
Company, that the Purchase Price to be received by the Company in consideration for the Securities
is fair, from a financial point of view, to the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Frost Credit Agreement</U>&#148; has the meaning set forth in Section&nbsp;4.8.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>GAAP</U>&#148; means generally accepted accounting principles in the United States.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Governmental Entity</U>&#148; shall mean any: (a)&nbsp;state, commonwealth, county, municipality,
district or other domestic or foreign jurisdiction of any nature; (b)&nbsp;federal, state, local,
municipal or other government; or (c)&nbsp;governmental or quasi governmental authority of any nature
(including, but not limited to, any governmental division, subdivision, department, agency,
registering authority, bureau, branch, office, commission, council, self-regulatory organization,
board, instrumentality, officer, official, representative, organization, unit, body or Person and
any court or other tribunal).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Inactive Subsidiaries</U>&#148; means The Boru Vodka Company Limited, The Clontarf Irish
Whiskey Company Limited, Castle Brands Whiskey Company Limited, Castle Brands Spirits Marketing and
Sales Company Limited, Great Spirits (Ireland) Limited, Castle Brands Spirits Company (GB)&nbsp;Limited
and The Roaring Water Bay Spirits Company (NI)&nbsp;Limited.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Indemnifiable Claim</U>&#148; means any claim for which an Indemnified Party is entitled to
indemnification under Section&nbsp;4.7.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Indemnification Agreement</U>&#148; means the agreement between the Company and each director
comprising the Board of Directors in the form attached hereto as <U>Exhibit&nbsp;B</U>.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Indemnified Party</U>&#148; has the meaning set forth in Section&nbsp;4.7(e).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Indemnifying Party</U>&#148; has the meaning set forth in Section&nbsp;4.7(e).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Interim Purchaser Directors</U>&#148; means Phillip Frost, M.D., Glenn Halpryn, Richard Lampen
and Micaela Pallini.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Junior Notes</U>&#148; means (i)&nbsp;the 6% Convertible Promissory Note, in the principal amount
of $3,000,000, issued by the Company in favor of FURSA SPV LLC on March&nbsp;1, 2005, as amended, (ii)
the 6% Convertible Promissory Note, in the principal amount of $3,000,000, issued by the Company in
favor of FURSA SPV LLC on June&nbsp;27, 2005, as amended, and (iii)&nbsp;the 6% Convertible Promissory Note,
in the principal amount of $3,000,000, issued by the Company in favor of Black River Global Credit
Fund Ltd. on August&nbsp;16, 2005, as amended.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Knowledge</U>&#148; of Company means (a)&nbsp;the actual knowledge of any of Donald L. Marsh, Jr.,
T. Kelley Spillane, Seth B. Weinberg, Alfred J. Small and John Soden and (b)&nbsp;any knowledge that
such persons would reasonably be expected to have as a result of their respective positions with
the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Law</U>&#148; means any federal, national, supranational, state, provincial, local or similar
statute, law, ordinance, regulation, executive order, rule, code, order, requirement or rule of law
(including common law) of a Governmental Entity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Licenses and Permits</U>&#148; has the meaning set forth in Section&nbsp;3.1(p).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Lien</U>&#148; means any lien, charge, claim, security interest, encumbrance, mortgage,
pledge, transfer restriction, litigation, charge, right of first refusal or other restriction of
any kind whatsoever (including, without limitation any conditional sale or other title retention
agreement or lease in the nature thereof or any agreement to give any security interest).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Losses</U>&#148; means any and all losses, claims, damages, liabilities, settlement costs and
expenses, including, without limitation, the costs of investigation and reasonable attorneys&#146; fees
incurred in connection with any suit, action, proceeding or claim asserted, as such costs and fees
are incurred.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Material Adverse Effect</U>&#148; means an effect that is material and adverse to the
consolidated business, properties, assets, operations, results of operations, financial condition
or credit worthiness of the Company and the Company Subsidiaries taken as a whole, or the ability
of the Company to perform its material obligations under this Agreement or the other Transaction
Documents; except for any such effect arising out of or relating to (a)&nbsp;non current payments of
payables, invoices or similar obligations that are described on Schedule&nbsp;III attached hereto or (b)
termination of the employment of any employee of the Company who is party to an Employment
Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Material Contracts</U>&#148; means, as to the Company and the Company Subsidiaries, any
agreement required pursuant to Item&nbsp;601 of Regulation&nbsp;S-B or Item&nbsp;601 of Regulation&nbsp;S-K, as
applicable, promulgated under the Securities Act to be filed as an exhibit to any report, schedule,
registration statement or definitive proxy statement filed or required to be filed by the Company
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">with the SEC under the Exchange Act or any rule or regulation promulgated thereunder, and any
and all material amendments, modifications, supplements, renewals or restatements thereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>New Securities</U>&#148; has the meaning set forth in Section&nbsp;4.13(a).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>New York Court</U>&#148; has the meaning set forth in Section&nbsp;5.8.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Notes</U>&#148; means the Senior Notes and the Junior Notes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Notes Event</U>&#148; means the occurrence of the following with respect to the Notes: (a)
all of the outstanding principal of the Senior Notes and all accrued interest thereon is either (i)
converted into shares of Series&nbsp;A Preferred Stock at the Per Share Purchase Price and the Senior
Notes are cancelled or (ii)&nbsp;the Senior Notes are amended so that (A)&nbsp;the final maturity date of the
Senior Notes is deferred until May&nbsp;31, 2014 and (B)&nbsp;the 9% interest rate on the Senior Notes is
reduced to 3% and the reduced 3% interest rate is compounded annually and accrues and is payable
only at maturity and (C)&nbsp;the Security Documents are terminated and all Liens in the Collateral and
all of the Owners&#146; rights under the Security Documents are released, terminated and extinguished in
full (as such terms in this clause (C)&nbsp;are defined in the First Amended and Restated Trust
Indenture, originally dated as of June&nbsp;1, 2004, and amended and restated as of August&nbsp;15, 2005),
and (b)&nbsp;all of the outstanding principal of the Junior Notes and all accrued interest thereon is
converted into shares of Series&nbsp;A Preferred Stock at $23.21 per share and the Junior Notes are
cancelled.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>NYSE Alternext</U>&#148; means NYSE Alternext US LLC (formerly named the American Stock
Exchange).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Offer Notice</U>&#148; has the meaning set forth in Section&nbsp;4.13(a)(i).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Per Share Purchase Price</U>&#148; has the meaning set forth in Section&nbsp;2.1.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Person</U>&#148; means any individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint stock company,
Governmental Entity or other entity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Plan</U>&#148; has the meaning set forth in Section&nbsp;3.1(q)(i).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Principal Market</U>&#148; means the principal exchange, market or quotation system on which
the Common Stock is listed, traded or quoted.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Proceeding</U>&#148; means an action, claim, suit, investigation or proceeding, whether
commenced or threatened in writing, whether in any court, before any arbitrator or before any
Governmental Entity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Proxy Statement</U>&#148; means the proxy statement on Schedule&nbsp;14A to be filed by the Company
with the SEC in accordance with Section&nbsp;4.3 and sent to stockholders of the Company in connection
with the Company Stockholders Meeting to (a)&nbsp;approve an amendment to the Company&#146;s Amended and
Restated Certificate of Incorporation to increase the authorized shares of the Company to
250,000,000 shares, 225,000,000 shares of which shall be designated
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Common Stock and 25,000,000 shares of which shall be designated as preferred stock, par value
$0.01 per share, of the Company, (b)&nbsp;approve an amendment to the Company&#146;s Amended and Restated
Certificate of Incorporation to permit stockholders of the Company to act by written consent and
(c)&nbsp;elect the Purchaser Directors as sole directors comprising the Board of Directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Purchase Price</U>&#148; has the meaning set forth in Section&nbsp;2.1 of the Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Purchaser</U>&#148; has the meaning set forth in the Preamble.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Purchaser Directors</U>&#148; means the Interim Purchaser Directors and those persons
designated by the Purchaser Majority prior to the mailing of the Proxy Statement to the
stockholders of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Purchaser Majority</U>&#148; means Purchasers who have agreed to purchase a majority of the
Shares to be issued and sold hereunder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Qualifying Purchaser</U>&#148; has the meaning set forth in Section&nbsp;4.13(a).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Regulation&nbsp;D</U>&#148; has the meaning set forth in the Recitals.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Representative</U>&#148; means, with respect to any Person, (a)&nbsp;such Person&#146;s directors,
officers, employees or (b)&nbsp;any investment banker, financial advisor, attorney, accountant or other
advisor, agent representative of such Person, when acting as such or (c)&nbsp;any controlled Affiliate
of such Person.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Rule&nbsp;144</U>&#148; means Rule&nbsp;144 promulgated by the SEC pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by
the SEC having substantially the same effect as such Rule.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>SEC</U>&#148; has the meaning set forth in the Recitals.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>SEC Reports</U>&#148; has the meaning set forth in Section&nbsp;3.1(h).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Securities</U>&#148; has the meaning set forth in the Recitals.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Securities Act</U>&#148; has the meaning set forth in the Recitals.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Senior Notes</U>&#148; means the 9% Senior Secured Notes of Castle Brands (USA)&nbsp;Corp. due May
31, 2009 set forth of <U>Schedule&nbsp;II</U> attached hereto.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Series&nbsp;A Preferred Stock</U>&#148; has the meaning set forth in the Recitals.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Shares</U>&#148; has the meaning set forth in the Recitals.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>SOXA</U>&#148; means the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated
thereunder, all as the same shall be in effect from time to time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Transaction Documents</U>&#148; means (i)&nbsp;this Agreement, (ii)&nbsp;the Indemnification Agreement
and (iii)&nbsp;all other agreements, documents and other instruments executed and delivered by or on
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">behalf of the Company, any Company Subsidiary or any of their respective officers on or after
the Closing in connection with this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>&#147;Transfer Agent&#148;</u> means the Company&#146;s transfer agent.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>&#147;TTB&#148;</u> has the meaning set forth in Section&nbsp;2.2(b)(x).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>&#147;Underlying Shares&#148;</u> has the meaning set forth in the Recitals.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2 <u>Interpretation and Rules of Construction</u>. In this Agreement, except to the extent otherwise provided or that the context otherwise
requires:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;when a reference is made in this Agreement to an Article, Section, Exhibit or Schedule,
such reference is to an Article or Section of, or a Schedule or Exhibit to, this Agreement unless
otherwise indicated;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;the table of contents and headings for this Agreement are for reference purposes only and
do not affect in any way the meaning or interpretation of this Agreement;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;whenever the words &#147;include,&#148; &#147;includes&#148; or &#147;including&#148; are used in this Agreement, they
are deemed to be followed by the words &#147;without limitation&#148;;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;the words &#147;hereof,&#148; &#147;herein&#148; and &#147;hereunder&#148; and words of similar import, when used in
this Agreement, refer to this Agreement as a whole and not to any particular provision of this
Agreement;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;all terms defined in this Agreement have the defined meanings when used in any certificate
or other document made or delivered pursuant hereto, unless otherwise defined therein;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;the definitions contained in this Agreement are applicable to the singular as well as the
plural forms of such terms;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;any Law defined or referred to herein or in any agreement or instrument that is referred
to herein means such Law or statute as from time to time amended, modified or supplemented,
including by succession of comparable successor Laws;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;references to a Person are also to its successors and permitted assigns; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;the use of &#147;or&#148; is not intended to be exclusive unless expressly indicated otherwise.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE 2<BR>
PURCHASE AND SALE</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1 <U>Purchase Price; Closing</U>. Upon the terms and subject to the conditions set forth
in this Agreement, at the Closing, the Company shall issue and sell to each Purchaser, and each
Purchaser shall purchase from the Company, that number of Shares, at a price per Share of
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">$12.50 (the &#147;<U>Per Share Purchase Price</U>&#148;), for the total price set forth opposite such
Purchaser&#146;s name on Schedule&nbsp;I, equaling an aggregate of 1,200,000 shares of Series&nbsp;A Preferred
Stock for an aggregate purchase price of $15,000,000 (the &#147;<U>Purchase Price</U>&#148;). The closing
of such purchase and sale is hereinafter referred to as the &#147;<U>Closing</U>&#148;, and the date on
which the Closing occurs is hereinafter referred to as the &#147;<U>Closing Date</U>&#148;. The Closing
shall occur at the offices of Greenberg Traurig, LLP, The Met Life Building, 200 Park Avenue, New
York, New York 10166, at 10:00&nbsp;a.m. Eastern Standard Time on Monday, October&nbsp;20, 2008, or such
other date and time as mutually agreed to by the Purchaser Majority and the Company. For the
avoidance of doubt, the Closing, as contemplated hereby, (a)&nbsp;shall occur as set forth in the
immediately preceding sentence and is not subject to any conditions whatsoever and (b)&nbsp;shall not be
deemed to have occurred unless the Company receives aggregate funding hereunder from the Purchasers
of at least $12,500,000.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2 <U>Company&#146;s Deliveries</U>. Concurrently with the execution of this Agreement, the
Company shall deliver, or cause to be delivered:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;to the Purchaser Majority:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the resignations, effective upon execution of this Agreement, of each of the
Company Directors from the Board of Directors; and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) a true and complete copy, certified by the Secretary of the Company, of the
resolutions, duly and validly adopted by the Board of Directors at a meeting held for such
purposes, evidencing the Board of Director&#146;s unanimous appointment of the Interim Purchaser
Directors as members of the Board of Directors; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;to Greenberg Traurig, LLP, to hold in escrow pending the Closing as contemplated by the
escrow letter, dated as of the date hereof, executed in connection herewith:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) a certified copy of the Certificate of Designation that has been accepted for
filing by the Secretary of State of the State of Delaware;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) a certificate, signed by the Secretary of the Company and each Company Subsidiary,
certifying true, complete and accurate copies of the constituent organizational documents of
each such entity, each as amended through the Closing;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) a true and complete copy, certified by the Secretary of the Company, of the
resolutions, duly and validly adopted by the Board of Directors at a meeting held for such
purposes, evidencing the Board of Director&#146;s unanimous approval, authorization and
ratification of the execution and delivery of this Agreement and the other Transaction
Documents to which the Company is a party and the consummation of the transactions
contemplated hereby and thereby;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) original duly executed stock certificates representing those numbers of Shares set
forth opposite such Purchaser&#146;s name on Schedule&nbsp;I;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) the executed signature pages of each of the other Transaction Document to which the
Company is a party;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) a certificate evidencing the formation and good standing of the Company issued by
the Secretary of State (or comparable office) of the Company&#146;s and each Company Subsidiary&#146;s
jurisdiction of formation and in each state where it is qualified to do business, as of a
date within twenty (20)&nbsp;Business Days of the Closing Date;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) a legal opinion of Patterson Belknap Webb &#038; Tyler LLP covering the matters set
forth on <U>Exhibit&nbsp;C</U> hereto, which opinion shall be in form and substance reasonably
satisfactory to the Purchaser Majority;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) evidence reasonably satisfactory to the Purchaser Majority that the Notes Event
has occurred;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) evidence reasonably satisfactory to the Purchaser Majority that the aggregate
amount of fees owed by the Company to Miller Buckfire &#038; Co., LLC do not exceed $500,000;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) evidence reasonably satisfactory to the Purchaser Majority that all of the filings
(except those filings disclosed on Schedule&nbsp;3.1(f)) required to be filed and notifications
required to be provided by the Company with or to the United States Department of the
Treasury, Tobacco and Alcohol Tax and Trade Bureau (&#147;<U>TTB</U>&#148;) prior to Closing have
been filed or provided; and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) a copy of the Fairness Opinion, which shall be reasonably satisfactory to the
Purchaser Majority.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3 <U>Purchasers&#146; Deliveries</U>. (a)&nbsp;On or prior to the Closing Date, each Purchaser
shall deliver, or cause to be delivered, to the Company, the amount set forth opposite such
Purchaser&#146;s name on Schedule&nbsp;I, by wire transfer of immediately available funds. During the period
between the date hereof and ending at 11:59&nbsp;p.m. on the day immediately preceding the Closing Date,
all funds received by a Purchaser in accordance with this Section&nbsp;2.3(a) shall be held by the
Company in a segregated account, and neither the Company nor any of its Affiliates shall use for
any purpose or otherwise disburse any payment received from a Purchaser in accordance with this
Section&nbsp;2.3(a) during such period, unless such use or disbursement is approved in writing by
Richard J. Lampen, in his capacity as a Purchaser Director. Notwithstanding anything to the
contrary set forth herein, (x)&nbsp;the Company shall be obligated to return the full amount delivered
hereunder by I.L.A.R. S.p.A. if, on the Closing Date, excluding the amount delivered or required to
be delivered hereunder by I.L.A.R. S.p.A., the Company fails to receive aggregate funding of at
least $12,000,000 from the other Purchasers and (y)&nbsp;Frost Gamma Investments Trust shall fund any
amount not funded by a Purchaser in accordance herewith, but only to the extent necessary to cause
the Company to receive at least $12,500,000 in aggregate funding on or before the Closing Date;
<U>provided</U>, <U>however</U>, that this provision shall not limit any remedies available to
the Company as a result of a Purchaser&#146;s failure to fund in accordance herewith.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Notwithstanding anything to the contrary set forth herein, at Closing, Frost Gamma
Investments Trust shall be entitled to set-off any amounts owed to it by the Company under the
Promissory Note, in the principal amount of $2,000,000, issued by the Company to Frost Gamma
Investments Trust on the date hereof, from Frost Gamma Investments Trust&#146;s payment of its portion
of the Purchase Price set forth on Schedule&nbsp;I.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE 3<BR>
REPRESENTATIONS AND WARRANTIES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1 <U>Representations and Warranties of the Company</U>. The Company hereby represents and
warrants to each of the Purchasers as follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<U>Organization</U>. The Company is a corporation duly organized, validly existing and
in good standing under the Laws of the State of Delaware, and each Company Subsidiary is an entity
duly organized, validly existing and in good standing under the Laws of the jurisdiction of its
organization, and the Company and each Company Subsidiary is duly qualified or licensed to do
business as a foreign corporation and is in good standing under the Laws of each jurisdiction where
the nature of the property owned or leased by it or the nature of the business conducted by it
makes such qualification or license necessary, except where the failure to be so qualified or
licensed would not reasonably be expected to either prevent or delay its ability to perform its
obligations hereunder or under the Transaction Documents and would not, individually or in the
aggregate have a Material Adverse Effect. The Company and each Company Subsidiary has the full
corporate power and authority to own and operate its properties, to lease the property it operates
under lease and to conduct its business as now conducted. Other than the Company Subsidiaries and
except as set forth on Schedule&nbsp;3.1(a), there are no corporations, partnerships, joint ventures,
associations or other entities in which the Company owns, of record or beneficially, any direct or
indirect equity or other interest or any right (contingent or otherwise) to acquire the same. The
Company is not a member of (nor is any part of the business of the Company conducted through) any
partnership nor is the Company a participant in any joint venture or similar arrangement. Except
for intercompany investments and balances and immaterial prepaids and accruals, none of the
Inactive Subsidiaries (i)&nbsp;owns any assets or property, (ii)&nbsp;has any indebtedness, liabilities or
obligations, (iii)&nbsp;generates any revenues, or (iv)&nbsp;performs or conducts any business activities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<U>Authorization</U>. The Company has all necessary corporate power and authority to
enter into, execute and deliver this Agreement and the other Transaction Documents and, assuming
the Company Stockholder Approval is obtained, to perform its obligations hereunder and thereunder,
including the issuance of the Shares to be issued as contemplated hereby, and to consummate the
transactions contemplated hereby and thereby. The Company&#146;s execution, delivery and performance by
it of this Agreement and the other Transaction Documents has been duly authorized by all necessary
corporate and stockholder action.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;<U>Due Execution; Enforceability</U>. This Agreement and the other Transaction Documents
have been duly and validly executed and delivered by the Company and constitute or will constitute
upon execution, valid and binding obligations of the Company, enforceable against it in accordance
with their respective terms, except as limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar Laws affecting
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">creditors&#146; rights and remedies generally and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or in equity).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;<U>Due Issuance and Authorization of Capital Stock</U>. The Shares shall be, upon
issuance, duly authorized, validly issued, fully paid and non-assessable. The Shares shall be free
of any Liens, charges or encumbrances, and will be free of restrictions on transfer, in each case
other than those created by or imposed upon the Purchasers through no action of the Company and
other than any restrictions on transfer pursuant to applicable state and federal securities Laws.
Assuming the accuracy of the representations and warranties of the Purchasers set forth in Section
3.2 hereof, the offer, issuance and sale to the Purchasers of the Shares are exempt from the
registration requirements of the Securities Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;<U>No Conflicts</U>. The execution, delivery and performance of this Agreement and the
other Transaction Documents and the consummation of the transactions contemplated hereunder and
thereunder, do not or will not at Closing (a)&nbsp;conflict with, violate or result in any breach of any
provision of the Company&#146;s certificate of incorporation or by-laws, (b)&nbsp;except as set forth on
Schedule&nbsp;3.1(e), conflict with, violate or result in the breach of the terms, conditions or
provisions of or constitute a default (or an event which with notice or lapse of time or both would
become a default) under, or give rise to any Lien (affecting property of the Company or any Company
Subsidiary), right of termination, acceleration or cancellation under, or modify or trigger a
change in the rights or obligations of another party under, any material agreement, lease,
mortgage, license, indenture, instrument or other contract to which the Company or any Company
Subsidiary is a party or by which any of its respective properties or assets are bound, or
(c)&nbsp;result in a material violation of any Law (including, without limitation, assuming the accuracy
of the representations and warranties of the Purchasers set forth in Section&nbsp;3.2 hereof, federal
and state securities Laws) applicable thereto or by which any of its properties or assets are
bound.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;<U>Consents</U>. Except as set forth on Schedule&nbsp;3.1(f) and for such filings and
approvals contemplated by this Agreement or as may be required under, and other applicable
requirements of, federal securities Laws and applicable state securities or &#147;blue sky&#148; Laws or the
applicable Principal Market, the execution, delivery and performance of this Agreement and the
other Transaction Documents and the consummation of the transactions contemplated hereby and
thereby do not require any material consent or approval, registration or qualification of,
authorization by, exemption from, filing with, or notice to any Governmental Entity or any other
Person.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;<U>Capitalization</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;The authorized capital stock of the Company as of the date hereof consists solely of (A)
45,000,000 shares of Common Stock, of which 15,629,776 shares are issued and outstanding, and (B)
5,000,000 shares of preferred stock, par value $0.01 per share, of which no shares were outstanding
immediately prior to the Closing. All of the issued and outstanding shares of Common Stock and
other rights to acquire equity interests of the Company have been duly authorized and validly
issued, are fully paid and non-assessable, are not subject to any
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">preemptive rights and were not issued in violation of the Securities Act or any other
applicable Laws (including, without limitation, state securities or &#147;blue sky&#148; Laws).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;The issued and outstanding capital securities (including warrants and other rights of
purchase) of the Company immediately after the Closing will be as set forth in Schedule&nbsp;3.1(g)(ii)
(assuming the Company does not issue additional securities after the date hereof). All shares of
capital stock of the Company issued and outstanding immediately after the Closing will be duly
authorized, validly issued, fully paid and non-assessable.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;Other than as set forth on Schedule&nbsp;3.1(g), the Company does not have outstanding any
securities convertible into or exercisable or exchangeable for any shares of its capital stock nor
does it have outstanding any rights to subscribe for or to purchase, or any warrants, options or
other rights for the purchase of, or any agreements providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any character relating to, any of its capital
stock or securities convertible into or exercisable or exchangeable for any of its capital stock or
other equity interests. Other than as set forth on Schedule&nbsp;3.1(g), no shares of the Company&#146;s
outstanding capital stock, or stock issuable upon exercise or exchange of any outstanding options,
warrants or rights, or other stock issuable by the Company, are subject to any rights of first
refusal or other rights to purchase such stock (whether in favor of the Company or any other
Person), pursuant to any agreement or commitment of the Company. The Company has no obligation to
pay any dividend on or make any distribution in respect of any capital stock.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;Except as set forth on Schedule&nbsp;3.1(g), there are no preemptive or other outstanding
rights, options, warrants, conversion rights, stock appreciation rights, redemption rights,
repurchase rights, agreements, arrangements, evidences of indebtedness or commitments of any
character, written or oral, under which the Company is or may become obligated to issue or sell, or
giving any Person a right to subscribe for or acquire, or in any way dispose of, any shares of the
capital stock or other equity interests, or any securities or obligations exercisable or
exchangeable for or convertible into any shares of the capital stock or other equity interests of
the Company, and no securities or obligations evidencing such rights are authorized, issued or
outstanding. The outstanding capital stock of the Company is not subject to any voting trust
agreement or other agreement or commitment restricting or otherwise relating to the voting,
dividend rights or disposition of such capital stock. Except for the options and warrants listed
on Schedule&nbsp;3.1(g), there are no outstanding or authorized stock appreciation, phantom stock or
similar rights providing economic benefits based, directly or indirectly, on the value or price of
the stock or other equity interests of the Company.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;<U>SEC Reports</U>. The Company has filed all reports required to be filed by it under
the Exchange Act, including pursuant to Section&nbsp;13(a) or 15(d) thereof, since March&nbsp;31, 2006 on a
timely basis or has received a valid extension of such time of filing and has filed any such SEC
Reports prior to the expiration of any such extension. Any reports required to be filed by the
Company under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, together with
any materials filed or furnished by the Company under the Exchange Act and together with any
amendments to such reports, whether or not any such reports were required, are collectively
referred to herein as the &#147;<U>SEC Reports</U>&#148; and, together with this Agreement and the Schedules
to this Agreement, the &#147;<U>Disclosure Materials</U>&#148;. As of their respective dates the SEC
Reports filed
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">by the Company complied with the requirements of the Exchange Act, and none of the SEC
Reports, when filed by the Company and as of the date such statements were made, contained any
untrue statement of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;<U>Financial Statements and No Undisclosed Liabilities</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;Each of the consolidated financial statements (including, in each case, any notes thereto)
contained in the SEC Reports was prepared in accordance with GAAP applied on a consistent basis
throughout the periods indicated (except as may be indicated in the notes thereto or, in the case
of unaudited statements, as permitted by Form 10-Q of the SEC) and each fairly presents in all
material respects the consolidated financial position, results of operations and cash flows of the
Company and its consolidated subsidiaries as at the respective dates thereof and for the respective
periods indicated therein, except as otherwise noted therein.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;Except for non current payments listed on Schedule&nbsp;III, there are no liabilities or
obligations of the Company or any Company Subsidiary of any kind whatsoever in existence on the
date hereof that, either individually or in the aggregate, would be reasonably likely to have a
Material Adverse Effect, whether accrued, contingent, absolute, determined, determinable or
otherwise, required to be set forth in the Company&#146;s balance sheet under GAAP, other than (A)
liabilities or obligations disclosed in the Company&#146;s Annual Report on Form 10-K, as amended, for
the fiscal year ended March&nbsp;31, 2008 or any SEC reports filed after June&nbsp;30, 2008 but prior to the
date hereof or (B)&nbsp;liabilities or obligations incurred in the ordinary course of business
consistent with past practices. Since the date of the most recent financial statements of the
Company and the Company Subsidiaries included in the SEC Reports filed prior to the date hereof,
(x)&nbsp;there has been no Material Adverse Effect and (y)&nbsp;the Company has not taken any action that
would, if taken after the date hereof, or as disclosed under this Agreement, and prior to the
Conversion Date, be prohibited by Section&nbsp;4.9, except as set forth in Schedule&nbsp;3.1(i)(ii).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;<U>Internal Controls</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;The Company and the Company Subsidiaries have in place the &#147;disclosure controls and
procedures&#148; (as defined in Rules&nbsp;13a-15(e) and 15d-15(e) of the Exchange Act) required in order for
the principal executive officer and principal financial officer of the Company to engage in the
review and evaluation process mandated by Section&nbsp;302 of SOXA. The Company&#146;s &#147;disclosure controls
and procedures&#148; are reasonably designed to ensure that material information (both financial and
non-financial) relating to the Company required to be disclosed by the Company in the reports that
it files or submits under the Exchange Act is recorded, processed, summarized and reported within
the time periods applicable to the Company specified in the rules and forms of the SEC, and that
such information is accumulated and communicated to the Company&#146;s principal executive and principal
financial officers, or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure as to the Company and to make the certifications of the
principal executive officer and principal financial officer of the Company required by Section&nbsp;302
of SOXA with respect to such reports. There is and has been no failure on the part of the Company
or any of the
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Company&#146;s directors or officers, in their capacities as such, to comply with any provision of
SOXA that is applicable to the Company, including (as applicable) Section&nbsp;402 related to loans and
Section&nbsp;906 related to certifications.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;The Company and the Company Subsidiaries maintain systems of &#147;internal control over
financial reporting&#148; (as defined in Rule&nbsp;13a-15(f) of the Exchange Act) that comply with the
applicable requirements of the Exchange Act and have been designed by, or under the supervision of,
their respective principal executive and principal financial officers, or persons performing
similar functions, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles, including, but not limited to, internal accounting controls
sufficient to provide reasonable assurance that (i)&nbsp;transactions are executed in accordance with
management&#146;s general or specific authorizations; (ii)&nbsp;transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability; (iii)&nbsp;access to assets is permitted only in
accordance with management&#146;s general or specific authorization; and (iv)&nbsp;the recorded
accountability for assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences. Except as disclosed in the SEC
Reports filed prior to the date hereof, there are no material weaknesses in such systems of
&#147;internal control over financial reporting.&#148;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;<U>Compliance</U>. Except for the matters as to which the Company has been granted a
waiver or exception that are set forth on Schedule&nbsp;3.1(k), the Company and each of the Company
Subsidiaries is in material compliance with all applicable Laws, except where non-compliance with
such laws would not result in a Material Adverse Effect. Except as set forth in the SEC Reports,
there is no term or provision of any mortgage, indenture, contract, agreement or instrument to
which the Company or any of the Company Subsidiaries is a party or by which it is bound, or of any
provision of any foreign, Federal or state judgment, decree, order, statute, rule or regulation
applicable to or binding upon the Company or any of the Company Subsidiaries, which materially
restricts the conduct of their respective businesses. Except for the matters as to which the
Company or Company Subsidiary, as applicable, has been granted a waiver or exception that is set
forth on Schedule&nbsp;3.1(k), neither the Company nor any Company Subsidiary has, since April&nbsp;2006,
received any notice relating to any material violation or potential material violation of any
applicable Laws.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l)&nbsp;<U>Absence of Certain Changes</U>. Since the date of the most recent financial
statements of the Company included in the SEC Reports filed prior to the date hereof and except as
disclosed in or as contemplated by this Agreement, (a)&nbsp;there has not been any change in the capital
stock or long-term debt of the Company, or any dividend or distribution of any kind declared, set
aside for payment, paid or made by the Company on any class of capital stock, or any change or
development in or affecting the business, properties, management, financial position, results of
operations or prospects of the Company; (b)&nbsp;the Company has not entered into any transaction or
agreement that is material to the Company or incurred any liability or obligation, direct or
contingent, that is material to the Company; and (c)&nbsp;the Company has not sustained any material
loss or interference with its business taken as a whole from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor disturbance or dispute or any
action, order or decree of any court or arbitrator or governmental or
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">regulatory authority; except in the case of (b)&nbsp;and (c), as would not be reasonably likely to
have a Material Adverse Effect.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m)&nbsp;<U>Legal Proceedings</U>. Except as set forth on Schedule&nbsp;3.1(m), to the Knowledge of
the Company, there is no material Proceeding pending or threatened against the Company or any
Company Subsidiary, or any property or asset of the Company or any Company Subsidiary, before any
Governmental Entity, except for claims asserted by or on behalf of Purchasers. Neither the Company
nor any Company Subsidiary nor any property or asset of the Company or any Company Subsidiary is
subject to any continuing order of, consent decree, settlement agreement or other similar written
agreement with, or continuing investigation by, any Governmental Entity, or any order, writ,
judgment, injunction, decree, determination or award of any Governmental Entity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n)&nbsp;<U>Intellectual Property</U>. (i)&nbsp;To the Knowledge of the Company, the conduct of the
business of the Company and the Company Subsidiaries as currently conducted does not materially
infringe upon or misappropriate the intellectual property rights of any third party, and no claim
has been asserted to the Company that the conduct of the business of the Company and the Company
Subsidiaries as currently conducted materially infringes upon or may materially infringe upon or
misappropriate the intellectual property rights of any third party; (ii)&nbsp;with respect to each item
of intellectual property owned by the Company or a Company Subsidiary and material to the business,
financial condition or results of operations of the Company and the Company Subsidiaries taken as a
whole (&#147;<U>Company Owned Intellectual Property</U>&#148;) except as set forth on Schedule&nbsp;3.1(n), the
Company or a Company Subsidiary is the owner of the entire right, title and interest in and to such
Company Owned Intellectual Property and is entitled to use such Company Owned Intellectual Property
in the continued operation of its respective business; (iii)&nbsp;with respect to each item of
intellectual property licensed to the Company or a Company Subsidiary that is material to the
business of the Company and the Company Subsidiaries as currently conducted (&#147;<U>Company Licensed
Intellectual Property</U>&#148;), the Company or a Company Subsidiary has the right to use such Company
Licensed Intellectual Property in the continued operation of its respective business in accordance
with the terms of the license agreement governing such Company Licensed Intellectual Property; (iv)
the Company Owned Intellectual Property is valid and enforceable, and has not been adjudged invalid
or unenforceable in whole or in part; (v)&nbsp;to the Knowledge of the Company, no person is engaging in
any activity that infringes upon the Company Owned Intellectual Property; (vi)&nbsp;to the Knowledge of
the Company, each license of the Company Licensed Intellectual Property is valid and enforceable,
is binding on all parties to such license, and is in full force and effect; (vii)&nbsp;to the Knowledge
of the Company, no party to any license of the Company Licensed Intellectual Property is in breach
thereof or default thereunder; and (viii)&nbsp;neither the execution of this Agreement nor the
consummation of any transaction contemplated hereby shall adversely affect any of the Company&#146;s
rights with respect to the Company Owned Intellectual Property or the Company Licensed Intellectual
Property.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o)&nbsp;<U>Taxes</U>. The Company and the Company Subsidiaries have filed all United States
federal, state, local and non-United States tax returns and reports required to be filed by them
and have paid and discharged all taxes required to be paid or discharged, except where the failure
to do so would not constitute a Material Adverse Effect. All such tax returns are materially true,
accurate and complete. To the Knowledge of the Company, neither the Internal Revenue Service
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">nor any other United States or non-United States taxing authority or agency is now asserting,
or threatening to assert, against the Company or any Company Subsidiary any deficiency or claim for
any taxes or interest thereon or penalties in connection therewith, except where such assertion or
threat is unlikely to result in a Material Adverse Effect. Neither the Company nor any Company
Subsidiary has granted any waiver of any statute of limitations with respect to, or any extension
of a period for the assessment of, any tax. The accruals and reserves for taxes reflected in the
most recent financial statements of the Company and the Company Subsidiaries included in the SEC
Reports filed prior to the date hereof are substantially adequate to cover all taxes accruable
through such date (including interest and penalties, if any, thereon) in accordance with GAAP. To
the Knowledge of the Company, there are no tax Liens upon any property or assets of the Company or
any of the Company Subsidiaries, nor has the Company or any Company Subsidiary received any notice
that any Person intends to subject any property or assets of the Company to a tax Lien.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p)&nbsp;<U>Licenses and Permits</U>. Except as set forth on Schedule&nbsp;3.1(p), the Company and the
Company Subsidiaries possess all licenses, certificates, permits and other authorizations issued
by, and have made all declarations and filings with, the appropriate Governmental Entities that are
material to the ownership or lease of their respective properties or the conduct of their
respective business as currently being conducted (&#147;<U>Licenses and Permits</U>&#148;); and neither the
Company nor any of the Company Subsidiaries has received notice of any revocation or modification
of any such license, certificate, permit or authorization, and to the Knowledge of the Company,
such license, certificate, permit or authorization can be renewed in the ordinary course. Subject
to the filing of required information with respect to the Purchasers with certain state regulatory
agencies that, if required to be filed prior to Closing, has been filed, upon consummation of the
transactions contemplated by this Agreement and the other Transaction Documents, the Licenses and
Permits shall continue in full force and effect without penalty or other adverse consequence.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q)&nbsp;<U>Compliance With ERISA</U>. (i)&nbsp;Each employee benefit plan, within the meaning of
Section&nbsp;3(3) of the Employee Retirement Income Security Act of 1974, as amended (&#147;<U>ERISA</U>&#148;),
for which the Company or any member of its &#147;<U>Controlled Group</U>&#148; (defined as any organization
which is a member of a controlled group of corporations within the meaning of Section&nbsp;414 of the
Internal Revenue Code of 1986, as amended (the &#147;<U>Code</U>&#148;)) would have any liability (each, a
&#147;<U>Plan</U>&#148;) has been maintained and operated in accordance with its terms and is in with any
applicable statutes, orders, rules and regulations, including but not limited to ERISA and the
Code; (ii)&nbsp;no prohibited transaction, within the meaning of Section&nbsp;406 of ERISA or Section&nbsp;4975 of
the Code, has occurred with respect to any Plan excluding transactions effected pursuant to a
statutory or administrative exemption; (iii)&nbsp;for each Plan that is subject to the funding rules of
Section&nbsp;412 of the Code or Section&nbsp;302 of ERISA, no &#147;accumulated funding deficiency&#148; as defined in
Section&nbsp;412 of the Code and Section&nbsp;302 of ERISA, whether or not waived, has occurred or is
reasonably expected to occur; (iv)&nbsp;no &#147;reportable event&#148; (within the meaning of Section 4043(c) of
ERISA and the regulations promulgated by the Pension Benefit Guaranty Corporation &#147;PBGC&#148; under such
Section) has occurred or is reasonably expected to occur which the PBGC has not by regulation
waived the requirement of Section 4043(a) of ERISA that it be notified within thirty (30)&nbsp;days of
the occurrence of that event; and (v)&nbsp;neither the Company nor any member of the Controlled Group
has incurred, nor reasonably expects to incur, any liability under Title IV of ERISA (other than
contributions to the Plan or premiums to the PBGC, in the
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">ordinary course and without default) in respect of a Plan (including a &#147;multiemployer plan&#148;,
within the meaning of Section&nbsp;4001(a)(3) of ERISA).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r)&nbsp;<U>No Unlawful Payments</U>. To the Knowledge of the Company, neither the Company nor
the Company Subsidiaries nor any director, officer, agent, employee or other person associated with
or acting on behalf of the Company or any of the Company Subsidiaries has (i)&nbsp;used any corporate
funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to
political activity; (ii)&nbsp;made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii)&nbsp;violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977; or (iv)&nbsp;made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s)&nbsp;<U>No Undisclosed Relationships</U>. To the Knowledge of the Company, no relationship,
direct or indirect, exists between or among the Company or any of the Company Subsidiaries, on the
one hand, and the directors, officers, stockholders, customers or suppliers of the Company or any
of the Company Subsidiaries, on the other hand, exists that is required by the Exchange Act to be
described in the SEC Reports and is not so described therein, or will not be so described therein.
Except for (i)&nbsp;transactions disclosed in the SEC Reports filed prior to the date hereof or
specifically contemplated by this Agreement, (ii)&nbsp;Employment Agreements listed on Schedule&nbsp;IV, and
(iii)&nbsp;employment and indemnification agreements entered into in the ordinary course of business and
set forth on Schedule&nbsp;3.1(s), all Affiliated Party Transactions of the Company are set forth on
Schedule&nbsp;3.1(s).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t)&nbsp;<U>Material Contracts</U>. Each Material Contract: (i)&nbsp;is valid and binding on the
parties thereto and is in full force and effect and (ii)&nbsp;upon consummation of the transactions
contemplated by this Agreement and the other Transaction Documents shall continue in full force and
effect without material penalty or other materially adverse consequence. Except for non current
payments listed in Schedule&nbsp;III, neither the Company nor any Company Subsidiary is in material
breach of, or default under, any Material Contract. Except as Disclosed on Schedule&nbsp;3.1(t), to the
Knowledge of the Company, no other party to any Material Contract is in material breach thereof or
default thereunder and none of the Company or any Company Subsidiary has received any notice of
termination, cancellation, breach or default under any Material Contract.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u)&nbsp;<U>Labor Matters</U>. Neither the Company nor any Company Subsidiary is a party to any
collective bargaining agreement or other labor union contract or similar scheme or arrangement
applicable to its employees nor does the Company have Knowledge of any activities or proceedings of
any labor union to organize any such employees. To the Knowledge of the Company, there are no
charges with respect to or relating to either the Company or the Company Subsidiaries pending or
threatened before the Equal Employment Opportunity Commission or any state, local or foreign agency
responsible for the prevention of unlawful employment practices. Neither the Company nor any
Company Subsidiary has received any notice from any national, state, local or foreign agency
responsible for the enforcement of labor or employment laws of an intention to conduct an
investigation of either the Company or the Company Subsidiaries and no such investigation is in
progress. There has been no &#147;mass layoff&#148; or &#147;plant closing&#148; as defined by the Worker Adjustment
and Retraining Notification Act or any
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">similar state or local &#147;plant closing&#148; Law with respect to the current or former employees of
the Company or the Company Subsidiaries.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;<U>Customers and Suppliers</U>. Except to the extent affected by late payment of the
amounts due from the Company and requests by certain US distributors for exclusive distribution
rights in certain states that are described on Schedule&nbsp;3.1(v), the relationships of each of the
Company and Company Subsidiaries with its material customers and material suppliers are maintained
on commercially reasonable terms. To the Company&#146;s Knowledge and except with respect to agreements
that expire in accordance with their terms, no customer or supplier of the Company or a Company
Subsidiary has any plan or intention to terminate its agreement with the Company or such Company
Subsidiary.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(w)&nbsp;<U>Accountants</U>. The Company&#146;s accountants, who the Company expects will render their
opinion with respect to the financial statements to be included in the Company&#146;s Annual Report on
Form 10-K for the fiscal year ended March&nbsp;31, 2009, are, to the Company&#146;s Knowledge, independent
accountants as required by the Securities Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x)&nbsp;<U>Disclosure</U>. The representations, warranties and written statements contained in
this Agreement and the other Transaction Documents and in the certificates, exhibits and schedules
delivered by the Company to Purchaser pursuant to this Agreement and the other Transaction
Documents do not, and, assuming the completeness and accuracy of all information provided by the
Purchasers, when filed with the SEC, the Proxy Statement and any other SEC Reports and all
amendments thereto will not, contain any untrue statement of a material fact, and do not or will
not, as the case may be, omit to state a material fact required to be stated therein or necessary
in order to make such representations, warranties or statements not misleading in light of the
circumstances under which they were made.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y)&nbsp;<U>Transfer Taxes</U>. No stock transfer or other taxes (other than income taxes) are
required to be paid in connection with the issuance and sale of any of the Shares, other than such
taxes for which the Company has established appropriate reserves and intends to pay in full on or
before the Closing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(z)&nbsp;<U>Private Placement</U>. Assuming the accuracy of the Purchasers&#146; representations and
warranties set forth in Section&nbsp;3.2, no registration under the Securities Act is required for the
offer and sale of the Shares by the Company to the Purchasers as contemplated hereby.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(aa)&nbsp;<U>Listing and Maintenance Requirements</U>. The Common Stock is registered pursuant to
Section 12(b) of the Exchange Act, and the Company has taken no action designed to, or which to its
Knowledge is likely to have the effect of terminating the registration of the Common Stock under
the Exchange Act. Except as specified in the SEC Reports filed prior to the date hereof, the
Company has not, in the two years preceding the date hereof, received written notice from the NYSE
Alternext to the effect that the Company is not in compliance with the listing or maintenance
requirements thereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(bb)&nbsp;<U>Investment Company</U>. The Company is not and, immediately after receipt of payment
for the Shares, will not be an Affiliate of, an &#147;investment company&#148; within the meaning of the
Investment Company Act of 1940, as amended.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(cc)&nbsp;<U>Registration Rights</U>. Except as set forth on Schedule&nbsp;3.1(cc), no Person has any
right to cause the Company to effect the registration under the Securities Act of any securities of
the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(dd)&nbsp;<U>No Integrated Offering</U>. Assuming the accuracy of the Purchasers&#146; representations
and warranties set forth in Section&nbsp;3.2 and except as contemplated by this Agreement, neither the
Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to buy any security,
under circumstances that would cause this offering of the Shares to be integrated with prior
offerings by the Company for purposes of the Securities Act any state securities Law or any
applicable shareholder approval provisions, including, without limitation, under the rules and
regulations of the NYSE Alternext.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ee)&nbsp;<U>Insurance</U>. The Company and the Company Subsidiaries maintain insurance coverage
with the insurers in such amounts and covering such risks as are (i)&nbsp;set forth on Schedule&nbsp;3.1(ee)
and (ii)&nbsp;to the Knowledge of the Company, in accordance with normal industry practice for companies
engaged in businesses similar to that of the Company and the Company Subsidiaries (taking into
account the cost and availability of such insurance).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ff)&nbsp;<U>Board Approval</U>. The Board of Directors, by resolutions duly adopted at a meeting
duly called and held and not subsequently rescinded or modified in any way, has duly (i)&nbsp;determined
that this Agreement and the transactions contemplated hereby are fair to and in the best interests
of the Company and its stockholders, (ii)&nbsp;approved this Agreement and the transactions contemplated
hereby and declared their advisability, (iii)&nbsp;recommended that the stockholders of the Company
approve and adopt all of the proposals set forth in the Proxy Statement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(gg)&nbsp;<U>Environmental Matters</U>. To the Knowledge of the Company, there is no Proceeding
pending or threatened against the Company, any of the Company Subsidiaries or any of their
respective properties under any applicable environmental Law, and since March&nbsp;31, 2006, the Company
and the Company Subsidiaries have not received any written notice of any violation or liability
under any applicable environmental Laws from any Person or any Governmental Entity or of an
inquiry, request for information, or demand letter under any environmental Law relating to
operations or properties of the Company or the Company Subsidiaries. None of the Company, the
Company Subsidiaries or their respective properties or operations is subject to any orders arising
under environmental Laws nor, to the Knowledge of the Company, are there any Proceedings pending or
threatened against the Company or the Company Subsidiaries under any environmental Law. To the
Knowledge of the Company, there has been no release or threatened release of any hazardous material
in violation of applicable environmental Laws, on, at or beneath any of the property of the Company
or other properties currently or previously owned or operated by the Company or the Company
Subsidiaries. None of the Company or the Company Subsidiaries has sent or arranged for the
disposal of any hazardous material, or transported any hazardous material in violation of
applicable environmental Laws. The Company has not performed or created any environmental studies,
investigations, reports or assessments since March&nbsp;31, 2006. None of the Company and the Company
Subsidiaries is required to, or is reasonably expected to, incur costs or expenses in order to
cause their operations or properties to comply with applicable environmental Laws.
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(hh)&nbsp;<U>Real Property; Title to Assets</U>. Each parcel of real property owned by the
Company or any Company Subsidiary (i)&nbsp;is owned free and clear of all material Liens and (ii)&nbsp;is
neither subject to any governmental decree or order to be sold nor is being condemned, expropriated
or otherwise taken by any public authority with or without payment of compensation therefor, nor
has any such condemnation, expropriation or taking been proposed. All current leases and subleases
of real property occupied by the Company are in full force and effect, are valid and effective in
accordance with their respective terms, and there is not, under any of such leases, any existing
default or event of default (or event which, with notice or lapse of time, or both, would
constitute a default) by the Company or any Company Subsidiary or, to the Company&#146;s Knowledge, by
the other party to such lease or sublease, or person in the chain of title to such leased premises.
To the Knowledge of the Company, there are no contractual or legal restrictions that preclude or
restrict the ability to use any real property owned or leased by the Company or any Company
Subsidiary for the purposes for which it is currently being used. To the Knowledge of the Company,
there are no latent defects or adverse physical conditions affecting the real property, and
improvements thereon, owned or leased by the Company or any Company Subsidiary other than those
that would not, individually or in the aggregate, prevent or delay consummation of any of the
transactions contemplated hereby or otherwise prevent or delay the Company from performing its
obligations under this Agreement and would not, individually or in the aggregate, have a Material
Adverse Effect. To the Knowledge of the Company, each of the Company and the Company Subsidiaries
has good and valid title to, or, in the case of leased properties and assets, valid leasehold or
subleasehold interests in, all of its properties and assets, tangible and intangible, real,
personal and mixed, used or held for use in its business, free and clear of any Liens, except for
such imperfections of title, if any, that would not, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;<U>Board Composition</U>. Immediately upon execution of this Agreement, (i)&nbsp;the
resignations of the Company Directors will be accepted by the Company and will constitute valid and
effective resignations of the Company Directors from the Board of Directors, and the Interim
Purchaser Directors&#146; election to the Board of Directors will be effective, and (ii)&nbsp;assuming the
Company Stockholder Approval is obtained, the Purchaser Directors will, at the Conversion, be the
sole members of the Board of Directors, and will have been duly and validly elected as the sole
members of the Board of Directors in accordance with applicable Law and the Company&#146;s
organizational documents, and the resignations of the directors comprising the Board of Directors
immediately prior to the election of the Purchaser Directors at the Company Stockholder Meeting
will have been accepted by the Company and constitute valid and effective resignations of such
directors from the Board of Directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(jj)&nbsp;<U>Anti-Takeover</U>. Each of the Company and the Board of Directors has taken all
actions necessary and within its authority (i)&nbsp;such that no restrictive provision of any &#147;fair
price,&#148; &#147;moratorium,&#148; &#147;control share acquisition,&#148; &#147;business combination,&#148; &#147;stockholder
protection,&#148; &#147;interested stockholder&#148; or other similar anti-takeover statute or regulation,
including Section&nbsp;203 of the Delaware General Corporation Law,
or any restrictive provision of the Company&#146;s Amended and Restated Certificate of Incorporation or by-laws is, or at the Conversion will be,
applicable to the Company, the Purchasers, the Securities or any other transaction contemplated by
this Agreement or the Transaction Documents and (ii)&nbsp;so that the Purchasers, and their respective
Affiliates, will not be prohibited by applicable Law or any provision of the
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Company&#146;s Amended and
Restated Certificate of Incorporation or by-laws from voting Shares beneficially owned by them at
the Company Stockholders Meeting.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(kk)&nbsp;<U>Fees</U>. Except for fees payable to Miller Buckfire &#038; Co., Inc., which fees shall
not exceed $500,000 plus reasonable out of pocket expenses including counsel fees, and except as
described in Section&nbsp;5.2, the Company is not obligated to pay any brokers, finders or financial
advisory fees or commissions to any underwriter, broker, agent or other Representative in
connection with the transactions contemplated hereby.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2 <U>Representations and Warranties of the Purchasers</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each Purchaser hereby, severally and not jointly, represents and warrants to the Company as
follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<U>Organization; Authority; Enforceability</U>. Such Purchaser, if an entity, is an
entity duly organized, validly existing and in good standing under the Laws of the jurisdiction of
its organization with the requisite corporate, partnership or other power and authority to enter
into and to consummate the transactions contemplated by the Transaction Documents and otherwise to
carry out its obligations hereunder and thereunder. Such Purchaser, if not an entity, has the
requisite power, authority and capacity to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out his obligations hereunder and
thereunder. The purchase by such Purchaser of the Shares hereunder has been duly authorized by all
necessary action on the part of such Purchaser. This Agreement has been duly and validly executed
and delivered by such Purchaser and constitutes the valid and binding obligation of such Purchaser,
enforceable against such Purchaser in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting creditors&#146;
rights and remedies generally and subject, as to enforceability, to general principles of equity,
including principles of commercial reasonableness, good faith and fair dealing (regardless of
whether enforcement is sought in a proceeding at Law or in equity).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<U>Acquisition for Investment</U>. The Shares to be acquired under this Agreement are
being acquired by each of the Purchasers solely for its own account, for present investment and not
with a view toward resale or other distribution (within the meaning of the Securities Act) in
violation of the Securities Act; <U>provided</U>, <U>however</U>, that the disposition of an
Purchaser&#146;s property shall at all times be under its control.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;<U>Purchaser Status</U>. At the time such Purchaser was offered the Shares, it was, and
at the date hereof it is, an &#147;accredited investor&#148; as defined in Rule 501(a) under the Securities
Act. Such Purchaser is not a broker-dealer registered under Section 15(a) of the Exchange Act,
or a member of The Financial Industry Regulatory Authority or an entity engaged in the
business of being a broker dealer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <U>Experience of Such Purchaser</U>. Such Purchaser, either alone or together with its
Representatives has such knowledge, sophistication and experience in business and financial matters
so as to be capable of evaluating the merits and risks of the prospective investment in the Shares,
and has so evaluated the merits and risks of such investment. Such Purchaser
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">understands that it must bear the economic risk of this investment in the Shares indefinitely, and is able to bear such
risk and is able to afford a complete loss of such investment.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;<U>Access to Information</U>. Such Purchaser acknowledges that it has reviewed the
Disclosure Materials and has been afforded: (i)&nbsp;the opportunity to ask such questions as it has
deemed necessary of, and to receive answers from, Representatives of the Company concerning the
terms and conditions of the offering of the Shares and the merits and risks of investing in the
Shares; (ii)&nbsp;access to information about the Company and the Subsidiaries and their respective
financial condition, results of operations, business, properties, management and prospects
sufficient to enable it to evaluate its investment; and (iii)&nbsp;the opportunity to obtain such
additional information that the Company possesses or can acquire without unreasonable effort or
expense that is necessary to make an informed investment decision with respect to the investment.
Each Purchaser represents and warrants that it is not relying on any information, statements,
representations or warranties furnished or made by any Person other than the representations and
warranties set forth in the Transaction Documents, provided, however, that neither such inquiries
nor any other investigation conducted by or on behalf of such Purchaser or its Representatives
shall modify, amend or affect such Purchaser&#146;s right to rely on the representations and warranties
contained in the Transaction Documents.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;<U>Restricted Shares</U>. Such Purchaser understands that the Shares are characterized
as &#147;restricted securities&#148; as such term is defined in Rule&nbsp;144 under the Securities Act, that such
shares have not been registered and, except as provided in this Agreement, the Company will not be
required to effect any registration under the Securities Act or any state securities Law with
respect to such Shares, that such Shares will be issued in reliance upon exemptions contained in
the Securities Act or interpretations thereof and in the applicable state securities Laws, and that
the Purchaser may not sell, offer for sale or otherwise transfer such Shares unless pursuant to a
registration statement or in a transaction exempt from or not subject to registration under the
Securities Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;<U>No Legal, Tax or Investment Advice</U>. Such Purchaser understands that nothing in
this Agreement or any other materials presented by or on behalf of the Company to the Purchaser in
connection with the purchase of the Shares constitutes legal, tax or investment advice. Such
Purchaser has consulted such legal, tax and investment advisors as it, in its sole discretion, has
deemed necessary or appropriate in connection with its purchase of the Shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;<U>Litigation</U>. There is no Proceeding pending, or, to the actual knowledge of such
Purchaser, threatened, against such Purchaser that would give any third party the right to enjoin
or rescind the transactions contemplated by this Agreement or otherwise prevent such Purchaser from
complying with the terms and provisions of this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;<U>No Brokers/Finders</U>. Other than Ladenburg Thalmann &#038; Co. Inc., no agent, broker,
Person or firm acting on behalf of such Purchaser is, or shall be, entitled to any broker&#146;s fees,
finder&#146;s fees or commissions from such Purchaser or any of the other parties hereto in connection
with this Agreement or any of the transactions contemplated hereby.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;<U>Noncontravention</U>. The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated by this Agreement will not: (i)&nbsp;conflict with any
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">of the provisions of the certificate or articles of incorporation or by-laws (or comparable documents)
of such Purchaser, in each case as amended to the date of this Agreement, (ii)&nbsp;except as set forth
on Schedule&nbsp;3.1(e), conflict with, violate or result in the breach of the terms, conditions or
provisions of or constitute a default (or an event which with notice or lapse of time or both would
become a default) under, or give rise to any Lien (affecting property of such Purchaser), right of
termination, acceleration or cancellation under, or modify or trigger a change in the rights or
obligations of another party under, any agreement, lease, mortgage, license, indenture, instrument
or other contract to which such Purchaser is a party or by which any of its respective properties
or assets are bound, or (c)&nbsp;result in a violation of any Law (including, without limitation,
assuming the accuracy of the representations and warranties of the Company set forth in Section&nbsp;3.1
hereof, federal and state securities Laws) applicable thereto or by which any of its properties or
assets are bound, in each case, that would adversely affect the ability of such Purchaser to carry
out its obligations under, and to consummate the transactions contemplated by, this Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;<U>No Undisclosed Relationships</U>. Except in connection with the transactions
contemplated by this Agreement or as otherwise disclosed to the Company, no Purchaser has entered
into any agreement, understanding, undertaking, arrangement or the like with any Person who is an
employee, director or officer of the Company (or a Representative or Affiliate of any of the
foregoing) with respect to the transactions contemplated hereby or the ongoing business of the
Company.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE 4<BR>
COVENANTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1 <U>Filings and Public Disclosure by the Company</U>. The Company shall:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;file a Form&nbsp;D with respect to the Securities issued at the Closing as and when required
under Regulation&nbsp;D and provide a copy thereof to the Purchaser Majority promptly after such filing;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;at or prior to the Closing, take such action as the Company reasonably determines upon the
advice of counsel is necessary to qualify the Securities for sale under applicable state or
&#147;blue-sky&#148; Laws or obtain an exemption therefrom, and shall promptly provide evidence of any such
action to the Purchaser Majority at the Purchaser Majority&#146;s request; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;(i)&nbsp;on or prior to 8:30 a.m. (eastern time) on the first Business Day following the date
hereof, issue a press release disclosing the material terms of this Agreement and the other
Transaction Documents and the transactions contemplated hereby and thereby, and (ii)&nbsp;on or
prior to 5:00 p.m. (eastern time) on the first Business Day following the date hereof, file with
the SEC a Current Report on Form 8-K disclosing the material terms of and including as exhibits
this Agreement and the other Transaction Documents and the transactions contemplated hereby and
thereby; <U>provided</U>, <U>however</U>, that the Purchaser Majority shall have a reasonable
opportunity to review and comment on any such press release or Form 8-K prior to the issuance or
filing thereof, and no such press release or Form 8-K shall be issued or filed by the Company
without the Purchaser Majority&#146;s prior written consent (which consent shall not be unreasonably
withheld, conditioned or delayed), unless such issuance or filing is required by Law; and
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>provided</U>, <U>further</U>, that if the Company fails to issue a press release disclosing
the material terms of this Agreement and the other Transaction Documents within the time frames
described herein, any Purchaser may issue a press release disclosing such information without any
notice to or consent by the Company. Thereafter, the Company agrees that no public release or
announcement concerning the transactions contemplated hereby shall be issued by it without the
prior written consent of the Purchaser Majority (which consent shall not be unreasonably withheld,
conditioned or delayed), unless the release or announcement is required by Law. Purchaser Majority
shall have a reasonable opportunity to review and comment on any public release or announcement
concerning the transactions contemplated hereby prior to the issuance or filing thereof.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2 <U>Use of Proceeds</U>. The Company shall use the proceeds from the sale of the Securities
for working capital and general corporate purposes, including, without limitation, payment of
obligations due and payment of costs associated with the transactions contemplated by this
Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3 <U>Proxy Statement</U>. (a)&nbsp;As promptly as reasonably practicable after the date hereof, the
Company shall prepare and file with the SEC the Proxy Statement; <U>provided</U> that the Company
shall consult with the Purchaser Majority and provide the Purchaser Majority and its counsel,
which, at Closing, shall be engaged by the Company as the Company&#146;s co-counsel, a reasonable
opportunity to review and comment on such Proxy Statement (and any amendments or supplements
thereto), and shall reasonably consider such comments of the Purchaser Majority, prior to filing.
The parties shall reasonably cooperate with each other in the preparation of the Proxy Statement
and to have such document cleared by the SEC as promptly as reasonably practicable after such
filing. Each Purchaser shall furnish to the Company the information relating to it that is
required by the rules and regulations promulgated by the SEC under the Exchange Act for inclusion
in the Proxy Statement. The Company shall apply reasonable best efforts to cause the Proxy
Statement to be mailed to the holders of Securities as promptly as practicable upon the earlier of
(x)&nbsp;receiving notification that the SEC is not reviewing the Proxy Statement and (y)&nbsp;the conclusion
of any SEC review of the Proxy Statement. The Company shall promptly provide copies, consult with
the Purchaser Majority and prepare written responses with respect to any written comments received
from the SEC with respect to the Proxy Statement and advise the Purchaser Majority of any oral
comments received from the SEC. The Company shall cause the Proxy Statement to comply as to form
with the rules and regulations promulgated by the SEC under the Exchange Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;The Company shall make all necessary filings with respect to the transactions contemplated
thereby under the Exchange Act and the rules and regulations thereunder. The Company will advise
the Purchaser Majority, promptly after it receives notice thereof, of any request by the SEC for
any amendment of or supplement to the Proxy Statement or comments thereon and responses thereto or
requests by the SEC for additional information. The Company shall provide the Purchaser Majority
and its counsel a reasonable opportunity to review and comment on any such comments and any
amendment or supplement to the Proxy Statement made in response thereto and the Company shall
reasonably consider the Purchaser Majority&#146;s and its counsel&#146;s comments prior to filing. If at any
time prior to the Effective Time, any information relating to the Purchasers or the Company, or any
of their respective Affiliates, officers or directors, should be discovered by the Purchasers or
the Company that should be set
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">forth in an amendment or supplement to the Proxy Statement, so that
such documents would not include any misstatement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the circumstances under which they were
made, not misleading, the party which discovers such information shall promptly notify the other
parties hereto and an appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by applicable Law, disseminated to the
holders of the Securities.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;The Company shall, acting through the Board of Directors, cause the Company Stockholders
Meeting to be duly called and held as soon as reasonably practicable following the commencement of
the mailing of the Proxy Statement to the stockholders of the Company for the purpose of obtaining
the Company Stockholder Approval.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;Each Purchaser and any of its Affiliates shall vote all shares of Common Stock or Series&nbsp;A
Preferred Stock owned or beneficially owned by it in favor of all the matters set forth in the
Proxy Statement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.4 <U>Board Composition</U>. The Company shall use its reasonable best efforts to take, or cause
to be taken, all appropriate action, do or cause to be done all things necessary, proper or
advisable, and execute and deliver such resolutions, documents and other papers, as may be required
to (a)&nbsp;maintain the service of the current directors (other than the Company Directors) of the
Board of Directors, and refrain from taking any action that would impair such continued service,
until the Purchaser Directors are duly elected at the Company Stockholders Meeting, (b)&nbsp;effective
at the Conversion, fix the number of total directors comprising the Board of Directors at a number
determined by the Purchaser Majority prior to the mailing of the Proxy Statement to the
stockholders of the Company and cause the Purchaser Directors to comprise the sole members of the
Board of Directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.5 <U>Transfer Restrictions</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;The Purchasers covenant that the Securities will only be disposed of (i)&nbsp;pursuant to an
effective registration statement under, and in compliance with the requirements of, the
Securities Act or (ii)&nbsp;pursuant to an available exemption from the registration requirements
of the Securities Act, and in compliance with any applicable state securities Laws.
Notwithstanding the foregoing, the Company hereby consents to and agrees to register on the books
of the Company and with the Transfer Agent, any transfer of Securities by a Purchaser to an
Affiliate of such Purchaser, provided that the transferee certifies to the Company that it is an
&#147;accredited investor&#148; as defined in Rule 501(a) under the Securities Act and provided that such
Affiliate does not request removal of any existing notation or legend restricting transfer of such
Securities as specified by subsection (b)&nbsp;below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Each Purchaser, on behalf of itself and any transferee contemplated by the provisions of
subsection (a)&nbsp;above, agrees, so long as is required by this Section&nbsp;4.5(b), the Securities shall
be registered in the name of such Purchaser, and may bear the following legend:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE &#147;SECURITIES ACT&#148;), OR ANY APPLICABLE
STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES
LAWS OR BLUE SKY LAWS.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;The legends and restrictions imposed by Section&nbsp;4.5(b) shall cease and terminate when (i)
any such Securities are sold or otherwise disposed of pursuant to an effective registration
statement or are sold or otherwise disposed of in a transaction which does not require that the
Securities transferred bear the legends set forth in Section&nbsp;4.5(b), or (ii)&nbsp;the Securities cease
to be &#147;restricted securities&#148; as defined by Rule&nbsp;144(a)(3) under the Securities Act. Whenever the
restrictions imposed by Section&nbsp;4.5(b) shall terminate, as herein provided, to the extent that such
Securities are in certificated form, the holder of such Securities shall be entitled to receive
from the Company, without expense, a new certificate not bearing the restrictive legend set forth
above and not containing any other reference to the restrictions imposed by Section&nbsp;4.5(b).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.6 <U>Furnishing of Information</U>. Until the date that any Purchaser owning Securities may
sell all of them under Rule&nbsp;144 of the Securities Act (or any successor provision), the Company
covenants to apply reasonable efforts to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by the Company after the
date hereof pursuant to the Exchange Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.7 <U>Indemnification</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<U>Survival of Representations, Warranties and Agreements</U>. Subject to the
limitations set forth in Section&nbsp;4.7(c) of this Agreement, all representations, warranties,
covenants and agreements of the parties to this Agreement and in any certificate or other document
furnished by Company under Section&nbsp;2.2 shall survive execution, delivery and performance of this
Agreement for a period of eighteen (18)&nbsp;months following Closing, and notice of any Indemnifiable
Claim (as defined in Section&nbsp;4.7(b)) must be given prior to the expiration of such eighteen (18)
month period (any such Indemnifiable Claim not so noticed shall be released and the Indemnifying
Party shall have no liability or obligation with respect thereto).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Indemnification by the Company</U>. The Company shall indemnify, save and hold
harmless each Purchaser, the officers, directors, partners, members, agents and employees of each
of them, each Person who controls any such Purchaser (within the meaning of Section&nbsp;15 of the
Securities Act or Section&nbsp;20 of the Exchange Act) and the officers, directors, partners,
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">members, agents and employees of each such controlling Person, and all of their respective heirs,
successors, legal administrators and permitted assigns, to the fullest extent permitted by
applicable Law, from and against any and all Losses, as incurred, joint or several, as incurred by
any or all such Indemnified Parties, arising out of or relating to (i)&nbsp;any material
misrepresentation, inaccuracy or breach of any representation or warranty made by the Company in
the Transaction Documents or any other certificate, instrument or document contemplated hereby or
thereby (it being understood that such representations and warranties shall be interpreted without
giving effect to any limitations or qualifications as to &#147;materiality&#148; or &#147;Material Adverse
Effect&#148;, as set forth therein), (ii)&nbsp;any material breach or nonperformance of any covenant,
agreement or obligation of the Company contained in the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby or (iii)&nbsp;any cause of action,
suit or claim brought or made against such Indemnified Party by a third party (including for these
purposes a derivative action brought on behalf of the Company but not including Losses arising from
a breach of fiduciary duty by the applicable Indemnified Party), arising out of or resulting from
the Company&#146;s execution, delivery, performance or enforcement of the Transaction Documents or any
other certificate, instrument or document contemplated hereby or thereby; provided, however, that
nothing herein shall diminish in any way any existing rights of the Company&#146;s officers and
directors to indemnification or to advancement of legal fees in connection with claims arising out
of their service as officers or directors of the Company.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;<U>Limitations on Indemnity</U>. No Indemnified Party shall be entitled to
indemnification with respect to any Indemnifiable Claim under this Section&nbsp;4.7, unless the amount
of Loss with respect to an Indemnifiable Claim exceeds $50,000. Notwithstanding anything to the
contrary set forth in this Agreement, (i)&nbsp;the Company&#146;s maximum liability with respect to
Indemnifiable Claims shall not exceed $15,000,000 and (ii)&nbsp;a Purchaser&#146;s maximum liability with
respect to Indemnifiable Claims shall be such Purchaser&#146;s share of the Purchase Price as set forth
on Schedule&nbsp;I.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;<U>Indemnification by the Purchasers</U>. Each Purchaser shall, severally but not
jointly, indemnify, save and hold harmless the Company and its officers, directors, agents and
employees, to the fullest extent permitted by applicable Law, from and against any and all Losses,
as incurred, joint or several, as incurred by any or all such Indemnified Parties, arising out of
or relating to (i)&nbsp;any material misrepresentation, inaccuracy or breach of any representation or
warranty made by such Purchaser in the Transaction Documents or any other certificate, instrument
or document contemplated hereby or thereby (it being understood that such representations and
warranties shall be interpreted without giving effect to any limitations or qualifications as to
&#147;materiality&#148; or &#147;Material Adverse Effect&#148;, as set forth therein) or (ii)&nbsp;any material breach or
non-performance of any covenant, agreement or obligation of such Purchaser contained in the
Transaction Documents or any other certificate, instrument or document contemplated hereby or
thereby.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;<U>Conduct of Indemnification Proceedings</U>. If any Proceeding shall be brought or
asserted against any Person entitled to indemnity under Section&nbsp;4.7(b) or Section&nbsp;4.7(d) (an
&#147;<U>Indemnified Party</U>&#148;), such Indemnified Party shall promptly notify the Person required to
indemnify under this Section&nbsp;4.7 (an &#147;<U>Indemnifying Party</U>&#148;) in writing, and the Indemnifying
Party shall assume the defense thereof, as incurred, including the employment of counsel reasonably
satisfactory to the Indemnified Party (who shall not, without the consent of the
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indemnified Party,
be counsel to the Indemnifying Party) and the payment of all fees and expenses incurred in
connection with defense thereof; <U>provided</U>, that other than as provided in Section&nbsp;4.7(a)
the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party
of its obligations or liabilities pursuant to this Section&nbsp;4.7, except (and only) to the extent
that its ability to defend such matter has been materially prejudiced; and <U>provided</U>,
<U>further</U>, that such failure to notify the Indemnifying Party shall not relieve it from any
liability that it may have to an Indemnified Party otherwise than under this Section&nbsp;4.7. An
Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party or Parties unless: (i)&nbsp;the Indemnifying Party has agreed in
writing to pay such fees and expenses; (ii)&nbsp;the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding or to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; (iii)&nbsp;the Indemnified Party shall have reasonably
concluded that there may be legal defenses available to it that are different from or in addition
to those available to the Indemnifying Party; or (iv)&nbsp;the named parties to any such Proceeding
(including any impleaded parties) include both such Indemnified Party and the Indemnifying Party,
and such Indemnified Party shall have been advised by counsel that a conflict of interest is likely
to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party
(in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects
to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall
not have the right to assume the defense thereof and the reasonable fees and expenses of separate
counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be
liable for any settlement of any such Proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the Indemnifying Party
agrees to indemnify each Indemnified Party from and against any Losses by reason of such settlement
or judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified Party shall
have requested that an Indemnifying Party reimburse the Indemnified Party for fees and expenses of
counsel as contemplated by this Section&nbsp;4.7(e), the Indemnifying Party shall be
liable for any settlement of any proceeding effected without its written consent if (i)&nbsp;such
settlement is entered into more than thirty (30)&nbsp;days after receipt by the Indemnifying Party of
such request and (ii)&nbsp;the Indemnifying Party shall not have reimbursed the Indemnified Party in
accordance with such request prior to the date of such settlement. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any settlement of any pending
Proceeding in respect of which any Indemnified Party is or could have been a party and
indemnification could have been sought hereunder by such Indemnified Party, unless such settlement
(x)&nbsp;includes an unconditional release of such Indemnified Party, in form and substance reasonably
satisfactory to such Indemnified Party, from all liability on claims that are the subject matter of
such proceeding and (y)&nbsp;does not include any statement as to or any admission of fault, culpability
or a failure to act by or on behalf of any Indemnified Party. All reasonable fees and expenses of
the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection
with investigating or preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, within twenty (20)&nbsp;Business Days of
written notice thereof to the Indemnifying Party.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <U>Contribution</U>. If a claim for indemnification under Section&nbsp;4.7(b) or Section
4.7(d) is unavailable to an Indemnified Party (by reason of public policy or otherwise) or
insufficient in respect of any Losses, then each Indemnifying Party, in lieu of indemnifying such
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a
result of such Losses, in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions
that resulted in such Losses as well as any other relevant equitable considerations. The relative
fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among
other things, whether any action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission of a material fact, has been taken or made by, or
relates to information supplied by or on behalf of, such Indemnifying Party or Indemnified Party,
and the parties&#146; relative intent, knowledge, access to information and opportunity to correct or
prevent such action, statement or omission. The amount paid or payable by a party as a result of
any Losses shall be deemed to include, subject to the limitations set forth in Section&nbsp;4.7(c), any
reasonable attorneys&#146; or other reasonable fees or expenses incurred by such party in connection
with any Proceeding. The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section&nbsp;4.7(f) were determined by pro rata allocation or by any other
method of allocation that does not take into account the equitable considerations referred to in
the immediately preceding paragraph. Notwithstanding the provisions of this Section&nbsp;4.7(f), no
Purchaser shall be required to contribute, in the aggregate, any amount in excess of the amount by
which the proceeds actually received by such Purchaser from the sale of the Securities subject to
the Proceeding exceeds the amount of any damages that such Purchaser has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No
Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;<U>REMEDIES EXCLUSIVE; LIMITATION ON DAMAGES</U><B>. </B>THE REMEDIES PROVIDED FOR IN THIS
ARTICLE IV (AND ANY INDEMNIFICATION OBLIGATIONS OF THE PARTIES SET FORTH ELSEWHERE IN THIS
AGREEMENT) SHALL CONSTITUTE THE SOLE AND EXCLUSIVE REMEDIES FOR ANY CLAIMS MADE FOR
BREACH OF THIS AGREEMENT (INCLUDING BREACH OF REPRESENTATIONS AND WARRANTIES) OR IN CONNECTION
WITH THE TRANSACTIONS CONTEMPLATED HEREBY, EXCEPT FOR CLAIMS ARISING OUT OF ANY BREACH OF THIS
ARTICLE IV (OR ANY OTHER INDEMNIFICATION PROVISIONS SET FORTH IN THIS AGREEMENT) OR CLAIMS BASED ON
FRAUD. EACH PARTY HEREBY WAIVES ANY PROVISION OF LAW TO THE EXTENT THAT IT WOULD LIMIT OR RESTRICT
THE AGREEMENT CONTAINED IN THIS SECTION 4.7(g). NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED
IN THIS AGREEMENT, NO PARTY OR ITS AFFILIATES SHALL SEEK OR BE LIABLE FOR PUNITIVE DAMAGES OR
CONSEQUENTIAL DAMAGES (OTHER THAN PUNITIVE DAMAGES OR CONSEQUENTIAL DAMAGES RECOVERED AGAINST AN
INDEMNIFIED PARTY WITH RESPECT TO AN INDEMNIFIED THIRD-PARTY CLAIM AGAINST SUCH INDEMNIFIED PARTY).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.8 <U>Termination of Credit Facility</U>. Each of the Company and the Frost Nevada Investments
Trust hereby agrees that simultaneously with the funding of the promissory note described in
Section&nbsp;2.3(b), the Credit Agreement, dated October&nbsp;22, 2007, by and between the Company and the
Frost Nevada Investments Trust (&#147;<U>Frost Credit Agreement</U>&#148;), is hereby terminated without any
further action by either of the parties thereto; <U>provided</U>, <U>however</U>, that,
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">unless
such funding does not occur on or before Tuesday, October&nbsp;14, 2008, the Company shall continue to
forbear from pursuing any rights it may have, and shall not make a borrowing request under the
Frost Credit Agreement. The Company hereby releases and discharges, and shall cause its Affiliates
to release and discharge, effective immediately upon termination of the Frost Credit Agreement in
accordance with this Section&nbsp;4.8, Frost Nevada Investments Trust and its Affiliates from any and
all claims, causes of action, costs, expenses or damages arising on or before the date hereof and
related to the Frost Credit Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.9 <U>Conduct of Business Pending Conversion</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;The Company covenants and agrees that, during the period from the date hereof to the
Conversion Date (except as otherwise expressly provided by the terms of this Agreement and Schedule
3.1(i)(ii)): (x)&nbsp;the businesses of the Company and the Company Subsidiaries shall be conducted in
the ordinary course of business and in a manner consistent with past practice and (y)&nbsp;the Company
shall use reasonable best efforts consistent with the foregoing to preserve substantially intact
the business organization of the Company and the Company Subsidiaries, to keep available the
services of the present officers and key employees of the Company and the Company Subsidiaries and
to preserve the present relationships of the Company and the Company Subsidiaries with Persons with
which the Company or any of the Company Subsidiaries has significant business relations. Without
limiting the generality of the foregoing, neither the Company nor any of the Company Subsidiaries
shall (except as otherwise expressly provided by the terms of this Agreement), between the date of
this Agreement and the Conversion Date, directly or indirectly do, any of the following without the
prior written consent of the Purchaser Majority:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;amend or otherwise make any change in any of the organizational documents of the Company
or a Company Subsidiary;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;issue, sell, pledge, dispose of, grant or encumber, or authorize the issuance, sale,
pledge, disposition, grant or encumbrance of, (A)&nbsp;any shares of capital stock (other than upon the
exercise of options to purchase shares of Common Stock outstanding on the date hereof in accordance
with the Plans) or other equity securities, restricted or performance stock award or grant any
option, warrant, restricted stock or performance unit, stock appreciation or depreciation right or
other right to acquire any capital stock or other equity securities or issue any security
convertible into or exchangeable for such securities or alter in any way any its outstanding
securities or make any change in outstanding shares of capital stock or other ownership interests
or its capitalization, whether by reason of a reclassification, recapitalization, stock split or
combination, exchange or readjustment of shares, stock dividend or otherwise or (B)&nbsp;any assets of
the Company or any Company Subsidiary, except in the ordinary course of business consistent with
past practice, or pursuant to obligations in existence prior to the execution of this Agreement
under a Material Contract that was included as an exhibit to a SEC Report or that were disclosed in
writing to the Purchasers prior to the execution of this Agreement;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;reclassify, combine, split, subdivide or redeem, or purchase or otherwise acquire,
directly or indirectly, any of its capital stock;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;make, including by merger, consolidation, business combination or otherwise, any sale,
assignment, transfer, abandonment, sublease, license or other conveyance of its assets, property,
intellectual property or other material rights or any part thereof, including the sale of any
Company Subsidiary, or any division or brand of the Company or any Company Subsidiary, other than
sales of inventory in the ordinary course of business consistent with past practice;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;subject any of its or the Company Subsidiaries&#146; material assets, properties or rights or
any part thereof, to any Lien or suffer such to exist (except for such as exist on the date hereof
that were disclosed in writing to the Purchasers prior to the date hereof);
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)&nbsp;redeem, retire, purchase or otherwise acquire, directly or indirectly, any shares of the
capital stock, membership interests or partnership interests or other ownership interests of the
Company and the Company Subsidiaries or declare, set aside or pay any dividends or other
distribution in respect of such shares or interests;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) (A)&nbsp;acquire any corporation, partnership, other business organization or any division
thereof in any transaction or series of related transactions (including by merger, consolidation or
acquisition of stock or assets or any other business combination); (B)&nbsp;acquire assets outside of
the ordinary course of business consistent with past practice from any Person for consideration in
excess of $25,000 individually or $50,000 in the aggregate, other than any such acquisitions
required under the terms of any Material Contract in effect as of the date hereof (including by
merger, consolidation, or acquisition of stock or assets or any other business combination); (C)
incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or
endorse, or otherwise become responsible for, the obligations of any
Person, or make any loans or advances or grant any security interest in any of its assets; or
(D)&nbsp;authorize, or make any commitment with respect to any capital expenditure that is in excess of
$50,000; or enter into or amend any agreement, commitment or arrangement with respect to any matter
set forth in this Section&nbsp;4.10(a)(vii);
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii)&nbsp;amend or modify in any material respect or terminate or (other than in the ordinary
course of business and consistent with past practice) enter into any Material Contract, cancel,
modify in any material respect or waive any debts or claims held by the Company or any Company
Subsidiary or waive any rights having in each case a value in excess of $50,000;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix)&nbsp;hire any additional employees or increase the compensation payable or to become payable
or the benefits provided to its directors, officers or employees, except for increases in the
ordinary course of business and consistent with past practice in salaries or wages of employees of
the Company or any Company Subsidiary who are not directors or officers of the Company, or grant
any severance or termination pay to, or enter into any employment or severance agreement with, any
director, officer or other employee of the Company or of any Company Subsidiary, or establish,
adopt, enter into or amend any collective bargaining, bonus, profit-sharing, thrift, compensation,
stock option, restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit
of any director, officer or employee;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) (A)&nbsp;exercise its discretion with respect to or otherwise voluntarily accelerate the
vesting of any Company stock option as a result of the consummation of the transactions
contemplated hereby, any other change of control of the Company (as defined in the Plans) or
otherwise; or (B)&nbsp;exercise its discretion with respect to or otherwise amend, modify or supplement
any Plan;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi)&nbsp;fail to keep in full force and effect insurance materially comparable in amount and scope
to coverage maintained as of the date hereof;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xii)&nbsp;pay (other than with respect to compensatory payments to current or former employees,
officers, consultants or directors, in each case (A)&nbsp;in the ordinary course of business consistent
with past practice, (B)&nbsp;as required under agreements in effect as of the date hereof or (C)&nbsp;which
have been accrued for on the Company&#146;s balance sheet), lend or advance any amount to, or sell,
transfer or lease any properties or assets to, or enter into any agreement or arrangement with, any
of its Affiliates (other than Company Subsidiaries);
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiii)&nbsp;make any change in any method of accounting or accounting principle, method, estimate
or practice except for any such change required by reason of a concurrent change in U.S. GAAP or
applicable Law, or write off as uncollectible any accounts receivable except in the ordinary course
of business and consistent with past practice;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiv)&nbsp;settle, release or forgive any material claim or litigation or waive any right thereto
(any claim or litigation involving less than $25,000 being understood not to be material) in excess
of $25,000;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xv)&nbsp;create any new subsidiaries;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvi)&nbsp;make any tax election or settle or compromise any United States federal, state, local or
non-United States income tax liability;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvii)&nbsp;pay, discharge or satisfy any claim, liability or obligation (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than in the ordinary course of business and
consistent with past practice;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xviii)&nbsp;commence or settle any Proceeding;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xix)&nbsp;fail to take reasonable steps to prevent any item of the Company&#146;s intellectual property
from lapsing or being abandoned, dedicated, or disclaimed or to perform or make any applicable
filings, recordings or other similar actions or filings, or fail to pay all required fees and taxes
required or advisable to maintain and protect its interest in each and every item of the Company&#146;s
intellectual property;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xx)&nbsp;fail to make in a timely manner any filings with the SEC required under the Securities
Act or the Exchange Act or the rules and regulations promulgated thereunder; or
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxi)&nbsp;announce any intention, enter into any agreement or otherwise make a commitment, to do
any of the foregoing.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Nothing contained in this Agreement shall give to a Purchaser, directly or indirectly,
rights to control or direct the operations of the Company or the Company Subsidiaries prior to the
Closing Date. Prior to the Conversion Date, the Company and the Company Subsidiaries shall
exercise, consistent with the terms and conditions of this Agreement, complete control and
supervision of its and the Company Subsidiaries&#146; operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.10 <U>Regulatory and Other Authorizations; Notices and Consents</U>. The Company shall use
reasonable best efforts to obtain all authorizations, consents, orders and approvals of all
Governmental Entities and officials that may be or become necessary for its execution and delivery
of, and the performance of its obligations pursuant to, this Agreement and the Transaction
Documents. The Company shall promptly give such notices to, and make such filings with, third
parties and use reasonable efforts to obtain such third party consents, in each case as the
Purchaser Majority may in its sole discretion deem necessary or desirable in connection with the
transactions contemplated by this Agreement. The Company and the Purchasers agree that, in the
event that any consent, approval or authorization necessary or desirable to preserve for the
Company or any Company Subsidiary any right or benefit under any lease, license, contract,
commitment or other agreement or arrangement to which the Company or any Company Subsidiary is a
party is not obtained prior to the Closing, the Company will, subsequent to the Closing, cooperate
with the Purchasers, the Company or any such Company Subsidiary in attempting to obtain such
consent, approval or authorization as promptly thereafter as practicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.11 <U>NYSE Alternext Listing</U>. If the Common Stock is listed on the NYSE Alternext, the
Company shall promptly prepare and submit to the NYSE Alternext a listing application covering the
Underlying Shares and shall apply reasonable best efforts to obtain, prior to the Conversion Date, approval for the listing of
such Underlying Shares, and Purchasers shall cooperate with the Company with respect to such
listing. The Company shall promptly (within twenty-four (24)&nbsp;hours) inform the Purchasers if it
receives any communication from the NYSE Alternext regarding the delisting of the Common Stock, and
shall consult with the Purchaser Majority and provide the Purchaser Majority and its counsel a
reasonable opportunity to review and comment on any proposed written responses to the NYSE
Alternext, and shall reasonably consider such comments of the Purchaser Majority prior to
responding, and provide the Purchaser Majority and its counsel reasonable opportunity to
participate in any discussions or meetings with the NYSE Alternext.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.12 <U>Cooperation</U>. The Purchasers shall cooperate with the Company following the Closing in
the Company&#146;s filings and applications required as a result of this Agreement and the transactions
contemplated hereby, including providing the necessary information and consents required to the
Company to complete all licensing requirements, including TTB disclosures and applications and
other Federal and state filings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.13 <U>Right of First Offer</U>. (a)&nbsp;On the terms and subject to the conditions of this Section
4.13 and applicable securities Laws, if the Company proposes to offer or sell any Common Stock, or
any securities convertible into or exercisable for Common Stock (&#147;<U>New Securities</U>&#148;), the
Company shall first offer such New Securities to each Purchaser, or any of such Purchaser&#146;s
permitted transferees or assigns, that owns shares of Common Stock issued pursuant
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">to this
Agreement as of the date of the issuance of such New Securities (a &#147;<U>Qualifying Purchaser</U>&#148;)
as follows:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;The Company shall give notice (the &#147;<U>Offer Notice</U>&#148;) to each Qualifying Purchaser,
stating (i)&nbsp;the Company&#146;s bona fide intention to offer such New Securities, (ii)&nbsp;the number of such
New Securities to be offered, and (iii)&nbsp;the price and terms, if any, upon which the Company
proposes to offer such New Securities.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;By notification to the Company within twenty (20)&nbsp;days after the Offer Notice is given,
each Qualifying Purchaser may elect to purchase or otherwise acquire, at the price and on the terms
specified in the Offer Notice, up to that portion of such New Securities that equals the proportion
that the Common Stock held by such Qualifying Purchaser or that would be held by such Qualifying
Purchaser upon conversion, on the date of the Offer Notice, of any securities of the Company that
are convertible into, or exercisable for, shares of Common Stock, that are beneficially owned by
such Qualifying Purchaser, at such time bears to the total shares of Common Stock of the Company
then outstanding (assuming full conversion and/or exercise, as applicable, of all outstanding
options, warrants and convertible securities). The closing of any sale pursuant to this Section
4.13 shall occur within the later of ninety (90)&nbsp;days of the date that the Offer Notice is given
and the date of initial sale of New Securities pursuant to this Section&nbsp;4.13.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;The Company may, during the one hundred and twenty (120)&nbsp;day period following the
expiration of the period provided in Section&nbsp;4.13(a)(ii), offer and sell the remaining
unsubscribed portion of such New Securities to any persons or entities at a price not less
than, and upon terms no more favorable to the offeree than, those specified in the Offer Notice.
If the Company does not enter into an agreement for the sale of the New Securities within such
period, or if such agreement is not consummated within sixty (60)&nbsp;days of the execution thereof,
the right provided hereunder shall be deemed to be revived and such New Securities shall not be
offered unless first reoffered to the Qualifying Purchasers in accordance with this Section&nbsp;4.13.
The rights of first offer in this Section&nbsp;4.13 shall not be applicable to New Securities issued:
(i)&nbsp; as a dividend or distribution on Common Stock; (ii)&nbsp;by reason of a dividend, stock split,
split-up or other distribution on shares of Common Stock; (iii)&nbsp;to employees or directors of, or
consultants or advisors to, the Company or any of the Company Subsidiaries pursuant to a plan,
agreement or arrangement approved by the Board of Directors; (iv)&nbsp;upon the exercise or conversion
of securities outstanding as of the date hereof; (v)&nbsp;to banks, equipment lessors or other financial
institutions, or to real property lessors, pursuant to a debt financing, equipment leasing or real
property leasing transaction approved by the Board of Directors; (vi)&nbsp;to suppliers or third party
service providers in connection with the provision of goods or services pursuant to transactions
approved by the Board of Directors; (vii)&nbsp;pursuant to the acquisition of another corporation by the
Company by merger, purchase of assets or other reorganization or to a joint venture agreement,
provided, that such issuances are approved by the Board of Directors; (viii)&nbsp;in connection with
collaboration or strategic partnerships approved by the Board of Directors and (ix)&nbsp;in a public
offering of the Company&#146;s securities netting proceeds to the Company of at least $10,000,000.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.14 <U>Indemnification of Directors and Officers</U>. For a period of not less than six years
from and after the Closing Date, the certificate of incorporation and bylaws of the Company shall
</DIV>


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</DIV>




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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">contain provisions no less favorable with respect to indemnification and advancement of expenses of
each person who, on the date hereof, is or was a current or former director or officer of the
Company, for periods at or prior to the Closing Date, than are set forth in the Company&#146;s Amended
and Restated Certificate of Incorporation and by-laws on the date hereof. Notwithstanding anything
to the contrary set forth in this Agreement (including Section&nbsp;4.9(a)), the Company shall, as and
in the manner directed in writing by Richard J. Lampen, purchase directors&#146; and officers&#146; insurance
in favor of the persons who, on the date hereof, are or were current or former officers or
directors of the Company, for periods at or prior to the Closing Date, for a period following any
expiration of the policy in effect on the date hereof, <U>provided</U> that the Company shall not
be required to pay more than $175,000 to obtain such policy.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.15 <U>Further Action</U> The Company shall apply reasonable best efforts to take, or cause
to be taken, all appropriate action, do or cause to be done all things necessary, proper or
advisable, and to execute and deliver such documents and other papers, as may be required (a)&nbsp;to
carry out the provisions of this Agreement and the other Transaction Documents and consummate and
make effective the transactions contemplated hereby and thereby, (b)&nbsp;such that no restrictive
provision of any &#147;fair price,&#148; &#147;moratorium,&#148; &#147;control share acquisition,&#148; &#147;business combination,&#148;
&#147;stockholder protection,&#148; &#147;interested stockholder&#148; or other similar anti-takeover statute or
regulation, including Section&nbsp;203 of the Delaware General Corporation Law, or any restrictive
provision of the Company&#146;s Amended and Restated Certificate of Incorporation or by-laws is, or at
the Conversion will be, applicable to the Company, the Purchasers, the Securities or any other
transaction contemplated by this Agreement or the Transaction Documents and (c)&nbsp;so that the
Purchasers, and their respective Affiliates, will not be prohibited by applicable Law or any
provision of the Company&#146;s Amended and Restated Certificate of Incorporation or by-laws from voting
Shares beneficially owned by them at the Company Stockholders Meeting.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE 5<BR>
MISCELLANEOUS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1 <U>Severability</U>. In the event that any provision of this Agreement becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement
shall continue in full force and effect without said provision; <U>provided</U> that in such case
the parties shall negotiate in good faith to replace such provision with a new provision which is
not illegal, unenforceable or void, as long as such new provision does not materially change the
economic benefits of this Agreement to the parties.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2 <U>Fees and Expenses</U>. The Company shall pay all costs and expenses that it incurs in
connection with the negotiation, execution, delivery and performance of this Agreement or the other
Transaction Documents and the transactions contemplated hereby and thereby, which costs and
expenses shall be payable only to Miller Buckfire &#038; Co., Inc., Morris Nichols Arsht &#038; Tunnell LLP,
Patterson Belknap Webb &#038; Tyler LLP and Nixon Peabody LLP. In addition at Closing, the Company
shall pay the Purchasers for all of their respective costs and expenses (including the fees of
Ladenburg Thalmann &#038; Co. Inc., which shall not exceed $250,000 plus out-of-pocket expenses, and
Greenberg Traurig, P.A.<B>) </B>incurred or to be incurred by the Purchasers in connection with the
Purchasers&#146; due diligence investigation of the Company and
the negotiation, preparation, execution, delivery and performance of this Agreement and the
other Transaction Documents and the transactions contemplated hereby and thereby. The
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Company
shall not be obligated to pay any costs, fees or expenses of any other financial advisors or legal
counsel to any Purchaser.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3 <U>Entire Agreement</U>. The Transaction Documents, together with the Exhibits and
Schedules thereto, contain the entire understanding of the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such documents, exhibits and
schedules.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.4 <U>Amendments; Waivers</U>. No provision of this Agreement may be waived or amended
except in a written instrument signed, in the case of an amendment, by the Company and the
Purchaser Majority or, in the case of a waiver, by the party against whom enforcement of any such
waiver is sought. No waiver of any default with respect to any provision, condition or requirement
of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any
subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall
any delay or omission of either party to exercise any right hereunder in any manner impair the
exercise of any such right.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.5 <U>Construction</U>. The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.
The language used in this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be applied against any party.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.6 <U>Successors and Assigns</U>. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted assigns. The Company may not assign this
Agreement or any rights or obligations hereunder without the prior written consent of the Purchaser
Majority (which consent shall not be unreasonably withheld, conditioned or delayed). From and
after the Closing Date, any Purchaser may assign its rights under this Agreement to any Person to
whom such Purchaser assigns or transfers any Shares, provided (i)&nbsp;such transferor agrees in writing
with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to
the Company after such assignment, (ii)&nbsp;the Company is furnished with written notice of the name
and address of such transferee or assignee, (iii)&nbsp;following such transfer or assignment, the
further disposition of such Shares by the transferee or assignee is restricted under the Securities
Act and applicable state securities Laws, (iv)&nbsp;such transferee agrees in writing to be bound, with
respect to the transferred Shares, by the provisions hereof that apply to the &#147;Purchasers&#148; and (v)
such transfer shall have been made in accordance with the applicable requirements of this Agreement
and with all Laws applicable thereto. Nothing in this Section&nbsp;5.6 shall be deemed to prohibit or
restrict any Purchaser&#146;s right to, directly or indirectly, sell, pledge, hypothecate, grant a
security interest in, transfer, assign or otherwise dispose of Shares with or without consideration
and whether voluntarily or involuntarily or by operation of Law, to any Person.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.7 <U>No Third-Party Beneficiaries</U>. This Agreement is intended for the benefit of the
parties hereto and their respective successors and permitted assigns and is not for the benefit of,
nor may any provision hereof be enforced by, any other Person, <U>provided</U> that
notwithstanding anything to the contrary set forth herein, (a)&nbsp;each Qualifying Purchaser is an
intended third party
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">beneficiary of Section&nbsp;4.13 and each Qualifying Purchaser may enforce the
provisions of Section&nbsp;4.13 directly against the parties with obligations thereunder, (b)&nbsp;each
Indemnified Party may enforce the provisions of Section&nbsp;4.7 directly against the parties with
obligations thereunder, (c)&nbsp;the Frost Nevada Investments Trust is an intended third party
beneficiary of Section&nbsp;4.8 and the Frost Nevada Investments Trust may enforce the provisions of
Section&nbsp;4.8 directly against the parties with obligations thereunder and (d)&nbsp;each person who is or
was a current or former officer or director of the Company on the date hereof is an intended third
party beneficiary of Section&nbsp;4.14 and each such person may enforce the provisions of Section&nbsp;4.14
directly against the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.8 <U>Governing Law; Jurisdiction; Venue</U>. THE CORPORATE LAWS OF THE STATE OF DELAWARE
SHALL GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS STOCKHOLDERS. ALL
QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT
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. Each party hereby irrevocably
submits, for itself and its property, to the exclusive jurisdiction of the Supreme Court of the
State of New York located in New York, New York or the United States District Court for the
Southern District of New York, and any appellate court from any such court (as applicable, a
&#147;<U>New York Court</U>&#148;), in any suit, action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment resulting from any such suit, action
or proceeding, and each party hereby irrevocably and unconditionally agrees that all claims in
respect of any such suit, action or proceeding may be heard and determined in the New York Court.
Each party hereby irrevocably and unconditionally waives, to the fullest extent it may legally and
effectively do so, (i)&nbsp;any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement in the New York Court,
(ii)&nbsp;the defense of an inconvenient forum to the maintenance of such suit, action or proceeding in
any such court, (iii)&nbsp;the right to object, with respect to such suit, action or proceeding, that
such court does not have jurisdiction over such party and (iv)&nbsp;all rights to a trial by jury. Each
party irrevocably consents to service of process in any manner permitted by Law. The foregoing
consents to jurisdiction and service of process shall not constitute general consents to service of
process in the State of New York for any purpose except as relates to this Agreement and the
Transaction Documents, and shall not be deemed to confer rights on any Person other than the
respective parties to this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.9 <U>Nature of Purchasers&#146; Obligations and Rights</U>. The obligations of the Purchasers to
pay the Purchase Price are joint and several. Otherwise, the obligations of each Purchaser
under any Transaction Document are several and not joint with the obligations of any other
Purchaser, and no Purchaser shall be responsible in any way for the performance of the obligations
of any other Purchaser under any Transaction Document. The decision of each Purchaser to purchase
Shares pursuant to this Agreement has been made by such Purchaser independently of any other
Purchaser and independently of any information, materials, statements or opinions as to the
business, affairs, operations, assets, properties, liabilities, results
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">of operations, condition
(financial or otherwise) or prospects of the Company which may have been made or given by any other
Purchaser or by any agent or employee of any other Purchaser, and no Purchaser or any of its agents
or employees shall have any liability to any other Purchaser (or any other person) relating to or
arising from any such information, materials, statements or opinions. Nothing contained herein or
in any Transaction Document, and no action taken by any Purchaser pursuant thereto, shall be deemed
to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the Transaction Documents.
Each Purchaser acknowledges that no other Purchaser has acted as agent for such Purchaser in
connection with making its investment hereunder and that no other Purchaser will be acting as agent
of such Purchaser in connection with monitoring its investment hereunder. Each Purchaser shall be
entitled to independently protect and enforce its rights, including without limitation the rights
arising out of this Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any proceeding for such
purpose.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.10 <U>Notices</U>. Any notice, demand or request required or permitted to be given by the
Company or a Purchaser pursuant to the terms of this Agreement shall be in writing and shall be
deemed delivered (i)&nbsp;when delivered personally or by verifiable facsimile transmission, unless such
delivery is made on a day that is not a Business Day, in which case such delivery will be deemed to
be made on the next succeeding Business Day, (ii)&nbsp;on the next Business Day after timely delivery to
an overnight courier and (iii)&nbsp;on the Business Day actually received if deposited in the U.S. mail
(certified or registered mail, return receipt requested, postage prepaid), addressed as follows:
</DIV>
<DIV align="left" style="font-size: 10pt; margin-left: 3%; margin-top: 6pt">If to the Company:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 3%; margin-top: 6pt">Castle Brands Inc.<BR>
570 Lexington Avenue, 29<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> Floor<BR>
New York, New York 10022<BR>
Attn: General Counsel<BR>
Tel: (646)&nbsp;356-0200<BR>
Fax: (646)&nbsp;356-0222
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 3%; margin-top: 6pt">With a copy (which shall not constitute notice) to:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 3%; margin-top: 6pt">Patterson Belknap Webb &#038; Tyler LLP<BR>
1133 Avenue of the Americas<BR>
New York, New York 10036<BR>
Attn: John E. Schmeltzer, III<BR>
Tel: (212)&nbsp;336-2580<BR>
Fax: (212)&nbsp;336-7953
</DIV>



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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-left: 3%; margin-top: 6pt">If to a Purchaser:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 3%; margin-top: 6pt">to such address for such Purchaser as shall appear on Schedule&nbsp;I, or as shall be<BR>
designated by such Purchaser in writing to the Company in accordance with this<BR>
Section&nbsp;5.10
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 3%; margin-top: 6pt">With a copy (which shall not constitute notice) to:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 3%; margin-top: 6pt">Greenberg Traurig, P.A.<BR>
1221 Brickell Avenue<BR>
Miami, Florida 33131<BR>
Attn: Robert L. Grossman, Esq.<BR>
Tel: (305)&nbsp;579-0500<BR>
Fax: (305)&nbsp;579-0717
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 3%; margin-top: 6pt">and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 3%; margin-top: 6pt">Greenberg Traurig, LLP<BR>
The Met Life Building<BR>
200 Park Avenue<BR>
New York, New York 10166<BR>
Attn: Michael D. Helsel, Esq.<BR>
Tel: (212)&nbsp;801-9200<BR>
Fax: (212)&nbsp;801-6400
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.11 <U>Adjustments in Share Numbers and Prices</U>. In the event of any stock split,
subdivision, dividend or distribution affecting the Company&#146;s stockholders pro rata and payable in
shares of Common Stock (or other securities or rights convertible into, or entitling the holder
thereof to receive directly or indirectly shares of Common Stock), combination or other similar
recapitalization or event affecting the Company&#146;s stockholders pro rata and occurring after the
date hereof and prior to the Closing, each reference in any Transaction Document to a number of
shares or a price per share shall be amended to appropriately account for such event.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.12 <U>Counterparts</U>. This Agreement may be executed in two or more counterparts, each of
which will be deemed an original but all of which together will constitute one and the same
instrument, and delivered by means of a facsimile or portable document format (pdf)&nbsp;transmission.
This Agreement will become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties. For purposes of determining
whether a party has signed this Agreement or any document contemplated hereby or any amendment or
waiver hereof, only a handwritten original signature on a paper document or a facsimile copy of
such a handwritten original signature shall constitute a signature, notwithstanding any applicable
Law relating to or enabling the creation, execution or delivery of any contract or signature by
electronic means.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the parties hereto have caused this Series&nbsp;A Preferred Stock Purchase
Agreement to be duly executed by their respective authorized signatories as of the date first
indicated above.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="55%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="41%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">CASTLE BRANDS INC.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:&nbsp;&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Mark Andrews</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mark Andrews</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman of the Board</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">FROST GAMMA INVESTMENTS TRUST</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:&nbsp;&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Phillip Frost, M.D.</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Phillip Frost, M.D.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Trustee</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">VECTOR GROUP LTD.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:&nbsp;&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ J. Bryant Kirkland III</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">J. Bryant Kirkland III</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vice President and Chief Financial
Officer</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">I.L.A.R. S.P.A.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:&nbsp;&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Virgilio Pallini</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Virgilio Pallini</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">President</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">HALPRYN GROUP IV, LLC</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:&nbsp;&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Glenn L. Halpryn</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Glenn L. Halpryn</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Member</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">&#091;Signature Pages to Series&nbsp;A Preferred Stock Purchase Agreement&#093;
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="55%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="41%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">LAFFERTY LTD.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:&nbsp;&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ P. M. Whitford</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">P. M. Whitford</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">JACQUELINE SIMKIN TRUST AS AMENDED AND<BR>
RESTATED 12/16/2003</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:&nbsp;&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Jacqueline Simkin</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jacqueline Simkin</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Trustee</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">HSU GAMMA INVESTMENT, L.P.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:&nbsp;&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Jane Hsiao</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jane Hsiao</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">General Partner</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">MZ TRADING LLC</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:&nbsp;&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Mark Zeitchick</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mark Zeitchick</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Manager</TD>
</TR>
<TR>
<td>&nbsp;</td>
</TR>

<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">/s/
Richard J. Lampen</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">RICHARD J. LAMPEN</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">&#091;Signature Pages to Series&nbsp;A Preferred Stock Purchase Agreement&#093;
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U>SCHEDULE I</U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">PURCHASERS

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>% of Total</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name and Address</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B># Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Purchase Price</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Frost Gamma Investments Trust</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">397,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">33.10</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4,965,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Vector Group Ltd.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">320,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">26.67</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4,000,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">I.L.A.R. S.p.A.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">240,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">20.00</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3,000,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Halpryn Group IV, LLC</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">6.67</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,000,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Lafferty Ltd.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">6.67</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,000,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Jacqueline Simkin Trust As
Amended and Restated
12/16/2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">3.33</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">500,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Hsu Gamma Investment, L.P.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">3.33</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">500,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">MZ Trading LLC</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.12</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">17,500</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Richard J. Lampen</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.12</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">17,500</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B><I>Total:</I></B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B><I>1,200,000</I></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B><I>100</I></B></TD>
    <TD nowrap><B><I>%</I></B></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B><I>$</I></B></TD>
    <TD align="right"><B><I>15,000,000</I></B></TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>4
<FILENAME>y00297exv10w2.htm
<DESCRIPTION>EX-10.2: PROMISSORY NOTE
<TEXT>
<HTML>
<HEAD>
<TITLE>EX-10.2</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>EXHIBIT 10.2</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROMISSORY NOTE</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%"></TD>
    <TD width="5%"></TD>
    <TD width="47%"></TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">$2,000,000.00
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">October&nbsp;14, 2008</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FOR VALUE RECEIVED, CASTLE BRANDS INC., a Delaware corporation (the &#147;Borrower&#148;), with its
principal place of business at 570 Lexington Avenue, 29th Floor, New York, NY 10022, promises to
pay to the order of FROST GAMMA INVESTMENTS TRUST, a Florida trust (the &#147;Lender&#148;) at 4400 Biscayne
Blvd., Miami, Florida 33137, or any future permitted holder of this Note or such other place as the
Lender of this Note may from time to time designate, the principal sum of TWO MILLION DOLLARS and
NO CENTS ($2,000,000.00) with interest accruing thereon at a rate equal to 10% per annum,
calculated on the basis of a 360&nbsp;day year based on the number of days elapsed including the first
day, but excluding the day on which such calculation is being made.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The principal amount of this Note and all interest accrued thereon (the &#147;Outstanding Balance&#148;)
shall be held by the Borrower in a segregated interest-bearing account (the &#147;Account&#148;). Any and
all dispersements from the Account shall be approved in writing by Richard J. Lampen, as director
of the Borrower. Funds in the Account shall not be used for any purpose that is not authorized in
writing by Mr.&nbsp;Lampen in accordance herewith.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Outstanding Balance shall be due and payable no later than 10:00&nbsp;a.m. on October&nbsp;20, 2008
(&#147;Maturity&#148;). The Borrower&#146;s (a)&nbsp;failure to pay in full the Outstanding Balance by Maturity, (b)
breach of any representation, warranty or covenant contained in the Series&nbsp;A Preferred Stock
Purchase Agreement, dated as of the date hereof, by and among the Company, the Lender and the other
investors party thereto, or any other agreements executed by the Borrower in connection therewith
(the &#147;Purchase Agreement&#148;), or (c)&nbsp;bankruptcy, insolvency, liquidation, dissolution or winding up,
readjustment of its debts or other similar proceedings shall constitute an &#147;Event of Default&#148;
hereunder. If an Event of Default shall have occurred and shall be continuing, the Lender may at
any time and at its option, declare the Outstanding Balance due and payable, and thereupon, the
same shall be accelerated and become so due and payable.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Borrower agrees that time is of the essence, and that if an Event of Default occurs, the
outstanding principal balance hereof shall immediately bear interest at the maximum rate permitted
by applicable law for so long as the Event of Default is continuing.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding anything to the contrary set forth in this Note or the Purchase Agreement, at
Maturity, the Lender shall be entitled to set-off any amounts owed to it by the Borrower under this
Note from the Lender&#146;s payment of its portion of the purchase price under the Purchase Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If an Event of Default occurs, the Borrower promises to pay all fees, costs and expenses in
connection with the Lender&#146;s collection and enforcement activities, including without limitation,
reasonable attorneys&#146; fees, and all other fees, costs and expenses incurred by the Lender on
account of such collection and enforcement activities, whether or not suit is filed hereon or
thereon. Such fees, costs and expenses shall include, without limitation, all costs, expenses and
reasonable attorneys&#146; fees actually incurred by the Lender in connection with any insolvency,
bankruptcy, arrangement or other similar proceedings involving the Borrower, which in any way
affects the exercise by the Lender of its rights and remedies under this Note. In addition to the
rights and remedies set forth in this Note, in case any Event of Default shall occur and be
continuing, the Lender may proceed to protect and enforce its rights by a proceeding seeking the
specific performance of any agreement contained in this Note or in aid of the exercise of any power
granted in this Note or may proceed to enforce the payment of this Note or to enforce any other
legal or equitable rights as the Lender shall determine.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Presentment, demand, protest, notices of protest, dishonor and nonpayment of this Note and all
notices of every kind are hereby waived by all parties to this Note, whether the undersigned
principal, surety, guarantor or endorser, except as provided herein. To the extent permitted by
applicable law, the defense of the statute of limitations is hereby waived by the Borrower.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Principal and interest evidenced hereby are payable only in lawful money of the United States.
The receipt of a check shall not, in itself, constitute payment hereunder unless and until paid in
good funds.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Whenever any payment on this Note shall be stated to be due on a day which is not a business
day, such payment shall be made on the next succeeding business day and such extension of time
shall be included in the computation of the payment of interest of this Note.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Note is to be governed by and construed in accordance with the laws of the State of New
York, without reference to the conflicts of laws provisions thereof.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THE BORROWER HEREBY WAIVES, AND COVENANTS THAT THE BORROWER WILL NOT ASSERT WHETHER AS
PLAINTIFF, DEFENDANT OR OTHERWISE, ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE,
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS NOTE, THE SUBJECT MATTER
HEREOF OR ANY DOCUMENT RELATING HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING OR
WHETHER IN CONTRACT OR IN TORT OR OTHERWISE.
</DIV>


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">CASTLE BRANDS INC.<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/ Mark Andrews
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top">Name:&nbsp;&nbsp;</TD>
    <TD align="left">Mark Andrews&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top">Title:&nbsp;&nbsp;</TD>
    <TD align="left">Chairman of the Board&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->2<!-- /Folio -->
</DIV>




</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>5
<FILENAME>y00297exv10w3.htm
<DESCRIPTION>EX-10.3: FORM OF INDEMNIFICATION AGREEMENT
<TEXT>
<HTML>
<HEAD>
<TITLE>EX-10.3</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Exhibit
10.3
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><FONT style="font-variant: SMALL-CAPS"><B>INDEMNIFICATION AGREEMENT</B></FONT>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THIS INDEMNIFICATION AGREEMENT (the &#147;<U>Agreement</U>&#148;) is made and entered into as of
October &#95;&#95;&#95;, 2008 between Castle Brands Inc., a Delaware corporation (the &#147;<U>Company</U>&#148;), and
&#95;&#95;&#95;(&#147;<U>Indemnitee</U>&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WITNESSETH THAT:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, highly competent persons have become more reluctant to serve corporations as
directors, officers or in other capacities unless they are provided with adequate protection
through insurance or adequate indemnification against inordinate risks of claims and actions
against them arising out of their service to and activities on behalf of the corporation;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, the Board of Directors of the Company (the &#147;<U>Board</U>&#148;) has determined that, in
order to attract and retain qualified individuals, the Company will attempt to maintain on an
ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and
its subsidiaries from certain liabilities. Although the furnishing of such insurance has been a
customary and widespread practice among United States-based corporations and other business
enterprises, the Company believes that, given current market conditions and trends, such insurance
may be available to it in the future only at higher premiums and with more exclusions. At the same
time, directors, officers, and other persons in service to corporations or business enterprises are
being increasingly subjected to expensive and time-consuming litigation relating to, among other
things, matters that traditionally would have been brought only against the Company or business
enterprise itself. The By-laws of the Company require indemnification of directors and officers of
the Company. Indemnitee may also be entitled to indemnification pursuant to the General
Corporation Law of the State of Delaware (&#147;<U>DGCL</U>&#148;). The By-laws and the DGCL expressly
provide that the indemnification provisions set forth therein are not exclusive, and thereby
contemplate that contracts may be entered into between the Company and members of the board of
directors, officers and other persons with respect to indemnification;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, the uncertainties relating to such insurance and to indemnification have increased
the difficulty of attracting and retaining such persons;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, the Board has determined that the increased difficulty in attracting and retaining
such persons is detrimental to the best interests of the Company&#146;s stockholders and that the
Company should act to assure such persons that there will be increased certainty of such
protection in the future;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate
itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent
permitted by applicable law so that they will serve or continue to serve the Company free from
undue concern that they will not be so indemnified;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, this Agreement is a supplement to and in furtherance of the By-laws of the Company
and any resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to
diminish or abrogate any rights of Indemnitee thereunder; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, Indemnitee does not regard the protection available under the Company&#146;s
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">By-laws and
insurance as adequate in the present circumstances, and may not be willing to serve as a director
or officer without adequate protection, and the Company desires Indemnitee to serve in such
capacity. Indemnitee is willing to serve, continue to serve and to take on additional service for
or on behalf of the Company on the condition that he be so indemnified;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW, THEREFORE, in consideration of Indemnitee&#146;s agreement to serve as a director and/or
officer of the Company after the date hereof, the parties hereto agree as follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;<U>Indemnity of Indemnitee</U>. The Company hereby agrees to hold harmless and indemnify
Indemnitee, by reason of his Corporate Status (as hereinafter defined) and as more fully described
below, to the fullest extent permitted by law, as such may be amended from time to time. In
furtherance of the foregoing indemnification, and without limiting the generality thereof:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<U>Proceedings Other Than Proceedings by or in the Right of the Company</U>. Indemnitee
shall be entitled to the rights of indemnification provided in this
<U>Section 1(a)</U> if, by
reason of his Corporate Status, the Indemnitee is, or is threatened to be made, a party to or
participant in any Proceeding (as hereinafter defined) other than a Proceeding by or in the right
of the Company. Pursuant to this <U>Section&nbsp;1(a)</U>, Indemnitee shall be indemnified against all
Expenses (as hereinafter defined), judgments, penalties, fines and amounts paid in settlement
actually and reasonably incurred by the Indemnitee in connection with such Proceeding or any claim,
issue or matter therein, if the Indemnitee acted in good faith and in a manner the Indemnitee
reasonably believed to be in or not opposed to the best interests of the Company, and with respect
to any criminal Proceeding, had no reasonable cause to believe the Indemnitee&#146;s conduct was
unlawful.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<U>Proceedings by or in the Right of the Company</U>. Indemnitee shall be entitled to
the rights of indemnification provided in this <U>Section&nbsp;1(b)</U> if, by reason of his Corporate
Status, the Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding
brought by or in the right of the Company. Pursuant to this <U>Section&nbsp;1(b)</U>, Indemnitee shall
be indemnified against all Expenses actually and reasonably incurred by the Indemnitee in
connection with such Proceeding if the Indemnitee acted in good faith and in a manner the
Indemnitee reasonably believed to be in or not opposed to the best interests of the Company;
provided, however, if applicable law so provides, no indemnification against such Expenses shall be
made in respect of any claim, issue or matter in such Proceeding as to which Indemnitee shall have
been adjudged to be liable to the Company unless and to the extent that the Court of Chancery of the State
of Delaware shall determine that such indemnification may be made.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U>Indemnification for Expenses of a Party Who is Wholly or Partly Successful</U>.
Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason
of his Corporate Status, a party to and is successful, on the merits or otherwise, in any
Proceeding, he shall be indemnified to the maximum extent permitted by law, as such may be amended
from time to time, against all Expenses actually and reasonably incurred by him in connection
therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the
merits or otherwise, as to one or more but less than all claims, issues or matters in such
Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably
incurred by him in connection with each successfully resolved claim, issue or matter. For purposes
of this Section and without limitation, the termination of any
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->2<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">claim, issue or matter in such a
Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to
such claim, issue or matter.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;<U>Additional Indemnity</U>. In addition to, and without regard to any limitations on,
the indemnification provided for in <U>Section&nbsp;1</U> of this Agreement, the Company shall and
hereby does indemnify and hold harmless Indemnitee against all Expenses, judgments, penalties,
fines and amounts paid in settlement actually and reasonably incurred by him if, by reason of his
Corporate Status, he is, or is threatened to be made, a party to or participant in any Proceeding
(including a Proceeding by or in the right of the Company), including, without limitation, all
liability arising out of the negligence or active or passive wrongdoing of Indemnitee. The only
limitation that shall exist upon the Company&#146;s obligations pursuant to this Agreement shall be that
the Company shall not be obligated to make any payment to Indemnitee that is finally determined
(under the procedures, and subject to the presumptions, set forth in <U>Sections&nbsp;6</U> and
<U>7</U> hereof) to be unlawful.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;<U>Contribution</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;In respect of any threatened, pending or completed action, suit or proceeding in which the
Company is jointly liable with Indemnitee (or would be if joined in such action, suit or
proceeding), the Company shall pay, to the fullest extent permitted by law, in the first instance,
the entire amount of any judgment or settlement of such action, suit or proceeding without
requiring Indemnitee to contribute to such payment and the Company hereby waives and relinquishes
any right of contribution it may have against Indemnitee; provided, that such payment shall not be
required where such joint liability is due to (i)&nbsp;the failure of Indemnitee to meet the standards
of conduct set forth in Section&nbsp;1 and Section&nbsp;2 hereof, or (ii)&nbsp;any limitation on indemnification
set forth in Section&nbsp;9 hereof. The Company shall not enter into any settlement of any action, suit
or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such
action, suit or proceeding) unless such settlement provides for a full and final release of all
claims asserted against Indemnitee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Without diminishing or impairing the obligations of the Company set forth in the preceding
subparagraph, if, for any reason, Indemnitee shall elect or be required to pay all or any portion
of any judgment or settlement in any threatened, pending or completed action, suit or proceeding in
which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or
proceeding), the Company shall, to the fullest extent permitted by law, contribute
to the amount of expenses (including attorneys&#146; fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred and paid or payable by Indemnitee in proportion to the
relative benefits received by the Company and all officers, directors or employees of the Company,
other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such
action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, from the
transaction from which such action, suit or proceeding arose; provided, that such contribution
shall not be required where such joint liability is due to (i)&nbsp;the failure of Indemnitee to meet
the standards of conduct set forth in Section&nbsp;1 and Section&nbsp;2 hereof, or (ii)&nbsp;any limitation on
indemnification set forth in Section&nbsp;9 hereof; provided, further, however, that the proportion
determined on the basis of relative benefit may, to the extent necessary to conform to law, be
further adjusted by reference to the relative fault of the Company and all officers, directors or
employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would
be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->3<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">hand, in connection with the events that resulted in such expenses, judgments, fines or settlement
amounts, as well as any other equitable considerations which the law may require to be considered.
The relative fault of the Company and all officers, directors or employees of the Company, other
than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit
or proceeding), on the one hand, and Indemnitee, on the other hand, shall be determined by
reference to, among other things, the degree to which their actions were motivated by intent to
gain personal profit or advantage, the degree to which their liability is primary or secondary and
the degree to which their conduct is active or passive.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;To the fullest extent permissible under applicable law, the Company hereby agrees to fully
indemnify and hold Indemnitee harmless from any claims of contribution which may be brought by
officers, directors or employees of the Company, other than Indemnitee, who may be jointly liable
with Indemnitee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;To the fullest extent permissible under applicable law, if the indemnification provided
for in this Agreement is unavailable to Indemnitee, the Company, in lieu of indemnifying
Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines,
penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in
connection with any claim relating to an indemnifiable event under this Agreement, in such
proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding
in order to reflect (i)&nbsp;the relative benefits received by the Company and Indemnitee as a result of
the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii)&nbsp;the relative fault
of the Company (and its officers, directors and employees) and Indemnitee in connection with such
event(s) and/or transaction(s); provided, that such contribution shall not be required where such
liability is due to (x)&nbsp;the failure of Indemnitee to meet the standards of conduct set forth in
Section&nbsp;1 and Section&nbsp;2 hereof, or (y)&nbsp;any limitation on indemnification set forth in Section&nbsp;9
hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;<U>Indemnification for Expenses of a Witness</U>. To the extent that Indemnitee is, by
reason of his Corporate Status, a witness in any Proceeding to which Indemnitee is not a party, he
shall be indemnified against all Expenses actually and reasonably incurred by him in connection
therewith.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;<U>Advancement of Expenses</U>. Notwithstanding any other provision of this Agreement,
the Company shall advance all Expenses incurred by Indemnitee in connection with
any Proceeding by reason of Indemnitee&#146;s Corporate Status within thirty (30)&nbsp;days after the
receipt by the Company of a statement or statements from Indemnitee requesting such advance or
advances from time to time, whether prior to or after final disposition of such Proceeding. Such
statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall
include or be preceded or accompanied by an undertaking by Indemnitee to repay any Expenses
advanced if it shall ultimately be determined that Indemnitee is not entitled to be indemnified
against such Expenses. Any advances and undertakings to repay pursuant to this <U>Section&nbsp;5</U>
shall be unsecured and interest free.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <U>Procedures and Presumptions for Determination of Entitlement to Indemnification</U>.
It is the intent of this Agreement to secure for Indemnitee rights of indemnity that are as
favorable as may be permitted under the Delaware General Corporation Law and public policy of the
State of Delaware. Accordingly, the parties agree that the following
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">procedures and presumptions
shall apply in the event of any question as to whether Indemnitee is entitled to indemnification
under this Agreement:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a
written request, including therein or therewith such documentation and information as is reasonably
available to Indemnitee and is reasonably necessary to determine whether and to what extent
Indemnitee is entitled to indemnification. The Secretary of the Company shall, promptly upon
receipt of such a request for indemnification, advise the Board of Directors in writing that
Indemnitee has requested indemnification.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Upon written request by Indemnitee for indemnification pursuant to the first sentence of
<U>Section&nbsp;6(a)</U> hereof, a determination, if required by applicable law, with respect to
Indemnitee&#146;s entitlement thereto shall be made in the specific case by one of the following four
methods, which shall be at the election of the board: (1)&nbsp;by a majority vote of the Disinterested
Directors, even though less than a quorum, (2)&nbsp;by a committee of Disinterested Directors designated
by a majority vote of the Disinterested Directors, even though less than a quorum, (3)&nbsp;if there are
no Disinterested Directors or if the Disinterested Directors so direct, by Independent Counsel in a
written opinion to the Board of Directors, a copy of which shall be delivered to the Indemnitee, or
(4)&nbsp;if so directed by the Board of Directors, by the stockholders of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;If the determination of entitlement to indemnification is to be made by Independent
Counsel pursuant to <U>Section&nbsp;6(b)</U> hereof, the Independent Counsel shall be selected as
provided in this <U>Section&nbsp;6(c)</U>. The Independent Counsel shall be selected by the Board of
Directors. Indemnitee may, within 10&nbsp;days after such written notice of selection shall have been
given, deliver to the Company, as the case may be, a written objection to such selection; provided,
however, that such objection may be asserted only on the ground that the Independent Counsel so
selected does not meet the requirements of &#147;Independent Counsel&#148; as defined in <U>Section&nbsp;13</U>
of this Agreement, and the objection shall set forth with particularity the factual basis of such
assertion. Absent a proper and timely objection, the person so selected shall act as Independent
Counsel. If a written objection is made and substantiated, the Independent Counsel selected may
not serve as Independent Counsel unless and until such objection is withdrawn or a court has
determined that such objection is without merit. If, within 20&nbsp;days after submission by Indemnitee
of a written request for indemnification pursuant to <U>Section&nbsp;6(a)</U> hereof, no Independent
Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition
the Court of Chancery of the State of Delaware or other court of
competent jurisdiction for resolution of any objection which shall have been made by the
Indemnitee to the Company&#146;s selection of Independent Counsel and/or for the appointment as
Independent Counsel of a person selected by the court or by such other person as the court shall
designate, and the person with respect to whom all objections are so resolved or the person so
appointed shall act as Independent Counsel under <U>Section&nbsp;6(b)</U> hereof. The Company shall
pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent
Counsel in connection with acting pursuant to <U>Section&nbsp;6(b)</U> hereof, and the Company shall
pay all reasonable fees and expenses incident to the procedures of this <U>Section&nbsp;6(c)</U>,
regardless of the manner in which such Independent Counsel was selected or appointed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;In making a determination with respect to entitlement to indemnification hereunder, the
person or persons or entity making such determination shall presume that Indemnitee is entitled to
indemnification under this Agreement. Anyone seeking to overcome
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">this presumption shall have the
burden of proof and the burden of persuasion by clear and convincing evidence. Neither the failure
of the Company (including by its directors or Independent Counsel) to have made a determination
prior to the commencement of any action pursuant to this Agreement that indemnification is proper
in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual
determination by the Company (including by its directors or independent legal counsel) that
Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that Indemnitee has not met the applicable standard of conduct.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;Indemnitee shall be deemed to have acted in good faith if Indemnitee&#146;s action is based on
the records or books of account of the Enterprise, including financial statements, or on
information supplied to Indemnitee by the officers of the Enterprise (as hereinafter defined) in
the course of their duties, or on the advice of legal counsel for the Enterprise or on information
or records given or reports made to the Enterprise by an independent certified public accountant or
by an appraiser or other expert selected with reasonable care by the Enterprise, except where
reliance on the foregoing is not reasonable in the circumstances. In addition, the knowledge
and/or actions, or failure to act, of any director, officer, agent or employee of the Enterprise
shall not be imputed to Indemnitee for purposes of determining the right to indemnification under
this Agreement. Whether or not the foregoing provisions of this <U>Section&nbsp;6(e)</U> are
satisfied, it shall in any event be presumed that Indemnitee has at all times acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best interests of the
Company. Anyone seeking to overcome this presumption shall have the burden of proof and the burden
of persuasion by clear and convincing evidence.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;If the person, persons or entity empowered or selected under <U>Section&nbsp;6</U> to
determine whether Indemnitee is entitled to indemnification shall not have made a determination
within sixty (60)&nbsp;days after receipt by the Company of the request therefor, the requisite
determination of entitlement to indemnification shall be deemed to have been made and Indemnitee
shall be entitled to such indemnification absent (i)&nbsp;a misstatement by Indemnitee of a material
fact, or an omission of a material fact necessary to make any statement by Indemnitee not
materially misleading, in connection with the request for indemnification, or (ii)&nbsp;a prohibition of
such indemnification under applicable law; provided, however, that such 60-day period may be
extended for a reasonable time, not to exceed an additional thirty (30)&nbsp;days, if the person,
persons or entity making such determination with respect to entitlement to indemnification in good
faith requires such additional time to obtain or evaluate documentation and/or information
relating thereto; and provided, further, that the foregoing provisions of this <U>Section
6(g)</U> shall not apply if the determination of entitlement to indemnification is to be made by
the stockholders pursuant to <U>Section&nbsp;6(b)</U> of this Agreement and if (A)&nbsp;within thirty (30)
days after receipt by the Company of the request for such determination, the Board of Directors or
the Disinterested Directors, if appropriate, resolve to submit such determination to the
stockholders for their consideration at an annual meeting thereof to be held within seventy-five
(75)&nbsp;days after such receipt and such determination is made thereat, or (B)&nbsp;a special meeting of
stockholders is called within thirty (30)&nbsp;days after such receipt for the purpose of making such
determination, such meeting is held for such purpose within sixty (60)&nbsp;days after having been so
called and such determination is made thereat.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;Indemnitee shall cooperate with the person, persons or entity making such determination
with respect to Indemnitee&#146;s entitlement to indemnification, including providing to
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">such person,
persons or entity upon reasonable advance request any documentation or information which is not
privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee
and reasonably necessary to such determination. Any Independent Counsel, member of the Board of
Directors or stockholder of the Company shall act reasonably and in good faith in making a
determination regarding the Indemnitee&#146;s entitlement to indemnification under this Agreement. Any
costs or expenses (including attorneys&#146; fees and disbursements) actually and reasonably incurred by
Indemnitee in so cooperating with the person, persons or entity making such determination shall be
borne by the Company (irrespective of the determination as to Indemnitee&#146;s entitlement to
indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless
therefrom.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;The Company acknowledges that a settlement or other disposition short of final judgment
may be successful if it permits a party to avoid expense, delay, distraction, disruption and
uncertainty. In the event that any action, claim or proceeding to which Indemnitee is a party is
resolved in any manner other than by adverse judgment against Indemnitee (including, without
limitation, settlement of such action, claim or proceeding with or without payment of money or
other consideration) it shall be presumed that Indemnitee has been successful on the merits or
otherwise in such action, claim or proceeding. Anyone seeking to overcome this presumption shall
have the burden of proof and the burden of persuasion by clear and convincing evidence.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;The termination of any Proceeding or of any claim, issue or matter therein, by judgment,
order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not
(except as otherwise expressly provided in this Agreement) of itself adversely affect the right of
Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and
in a manner which he reasonably believed to be in or not opposed to the best interests of the
Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to
believe that his conduct was unlawful.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;<U>Remedies of Indemnitee</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;In the event that (i)&nbsp;a determination is made pursuant to <U>Section&nbsp;6</U> of this
Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii)&nbsp;advancement
of Expenses is not timely made pursuant to <U>Section&nbsp;5</U> of this Agreement, (iii)&nbsp;no
determination of entitlement to indemnification is made pursuant to <U>Section&nbsp;6(b)</U> of this
Agreement within 90&nbsp;days after receipt by the Company of the request for indemnification, (iv)
payment of indemnification is not made pursuant to this Agreement within ten (10)&nbsp;days after
receipt by the Company of a written request therefor or (v)&nbsp;payment of indemnification is not made
within ten (10)&nbsp;days after a determination has been made that Indemnitee is entitled to
indemnification or such determination is deemed to have been made pursuant to <U>Section&nbsp;6</U> of
this Agreement, Indemnitee shall be entitled to an adjudication in an appropriate court of the
State of Delaware, or in any other court of competent jurisdiction, of Indemnitee&#146;s entitlement to
such indemnification. Indemnitee shall commence such proceeding seeking an adjudication within 180
days following the date on which Indemnitee first has the right to commence such proceeding
pursuant to this <U>Section&nbsp;7(a)</U>. The Company shall not oppose Indemnitee&#146;s right to seek any
such adjudication brought in accordance with this <U>Section&nbsp;7(a)</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;In the event that a determination shall have been made pursuant to <U>Section&nbsp;6(b)</U> of
this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">commenced pursuant to this <U>Section&nbsp;7</U> shall be conducted in all respects as a de novo trial
on the merits, and Indemnitee shall not be prejudiced by reason of the adverse determination under
<U>Section&nbsp;6(b)</U>.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;If a determination shall have been made pursuant to <U>Section&nbsp;6(b)</U> of this Agreement
that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in
any judicial proceeding commenced pursuant to this <U>Section&nbsp;7</U>, absent (i)&nbsp;a misstatement by
Indemnitee of a material fact, or an omission of a material fact necessary to make any statement by
Indemnitee not materially misleading in connection with the application for indemnification, or
(ii)&nbsp;a prohibition of such indemnification under applicable law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;In the event that Indemnitee, pursuant to this <U>Section&nbsp;7</U>, seeks a judicial
adjudication of his rights under, or to recover damages for breach of, this Agreement, or to
recover under any directors&#146; and officers&#146; liability insurance policies maintained by the Company,
the Company shall pay on his behalf, in advance, any and all expenses (of the types described in
the definition of Expenses in <U>Section&nbsp;13</U> of this Agreement) actually and reasonably
incurred by him in such judicial adjudication, regardless of whether Indemnitee ultimately is
determined to be entitled to such indemnification, advancement of expenses or insurance recovery.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;The Company shall be precluded from asserting in any judicial proceeding commenced
pursuant to this <U>Section&nbsp;7</U> that the procedures and presumptions of this Agreement are not
valid, binding and enforceable and shall stipulate in any such court that the Company is bound by
all the provisions of this Agreement. The Company shall indemnify Indemnitee against any and all
Expenses and, if requested by Indemnitee, shall (within ten (10)&nbsp;days after receipt by the Company
of a written request therefor) advance, to the extent not prohibited by law, such expenses to
Indemnitee, in each case which are actually and reasonably incurred by Indemnitee in connection
with any action brought by Indemnitee for indemnification or advance of Expenses from the Company
under this Agreement or under any directors&#146; and officers&#146; liability insurance policies maintained
by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such
indemnification, advancement of Expenses or insurance recovery, as the case may be.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;Notwithstanding anything in this Agreement to the contrary, no determination as to
entitlement to indemnification under this Agreement shall be required to be made prior to the final
disposition of the Proceeding.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;<U>Non-Exclusivity; Survival of Rights; Insurance; Subrogation</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;The rights of indemnification as provided by this Agreement shall not be deemed exclusive
of any other rights to which Indemnitee may at any time be entitled under applicable law, the
certificate of incorporation of the Company, the By-laws, any agreement, a vote of stockholders, a
resolution of directors or otherwise. To the extent that a change in the Delaware General
Corporation Law, whether by statute or judicial decision, permits greater indemnification than
would be afforded currently under the By-laws and this Agreement, it is the intent of the parties
hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such
change. No right or remedy herein conferred is intended to be exclusive of any other right or
remedy, and every other right and remedy shall be cumulative and in addition
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">to every other right
and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other right or remedy.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;To the extent that the Company maintains an insurance policy or policies providing
liability insurance for directors, officers, employees, or agents or fiduciaries of the Company or
of any other corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise that such person serves at the request of the Company, Indemnitee shall be covered by
such policy or policies in accordance with its or their terms to the maximum extent of the coverage
available for any director, officer, employee, agent or fiduciary having the same Corporate Status
as Indemnitee under such policy or policies. If, at the time of the receipt of a notice of a claim
pursuant to the terms hereof, the Company has director and officer liability insurance in effect,
the Company shall give prompt notice of the commencement of such proceeding to the insurers in
accordance with the procedures set forth in the respective policies. The Company shall thereafter
take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee,
all amounts payable as a result of such proceeding in accordance with the terms of such policies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;In the event of any payment under this Agreement, the Company shall be subrogated to the
extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers
required and take all action necessary to secure such rights, including execution of such documents
as are necessary to enable the Company to bring suit to enforce such rights.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;The Company shall not be liable under this Agreement to make any payment of amounts
otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually
received such payment under any insurance policy, contract, agreement or otherwise.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;The Company&#146;s obligation to indemnify or advance Expenses hereunder to Indemnitee who is
or was serving at the request of the Company as a director, officer, employee or agent of any other
corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be
reduced by any amount Indemnitee has actually received as indemnification
or advancement of expenses from such other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp;<U>Exception to Right of Indemnification</U>. Notwithstanding any provision in this
Agreement, the Company shall not be obligated under this Agreement to make any payment in
connection with any claim made against Indemnitee:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;for which payment has actually been made to or on behalf of Indemnitee under any insurance
policy, other indemnity provision or otherwise, except with respect to any excess beyond the amount
paid under any insurance policy, other indemnity provision or otherwise; or
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;for any profit made from any purchase and sale (or sale and purchase) reportable by
Indemnitee with respect to securities of the Company within the meaning of Section 16(b) of the
Securities Exchange Act of 1934, as amended, or similar provisions of state statutory law or common
law; or
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee,
including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the
Company or its directors, officers, employees or other indemnitees, unless (i)&nbsp;the Board of
Directors of the Company authorized the Proceeding (or any part of any Proceeding) prior to its
initiation or (ii)&nbsp;the Company provides the indemnification, in its sole discretion, pursuant to
the powers vested in the Company under applicable law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.&nbsp;<U>Duration of Agreement</U>. All agreements and obligations of the Company contained
herein shall continue during the period Indemnitee is an officer or director of the Company (or is
or was serving at the request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise) and shall continue thereafter
so long as Indemnitee shall be subject to any Proceeding (or any proceeding commenced under
<U>Section&nbsp;7</U> hereof) by reason of his Corporate Status, whether or not he is acting or serving
in any such capacity at the time any liability or expense is incurred for which indemnification can
be provided under this Agreement. This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective successors (including any direct or
indirect successor by merger or consolidation, assigns, spouses, heirs, executors and personal and
legal representatives.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.&nbsp;<U>Security</U>. To the extent requested by Indemnitee and approved by the Board of
Directors of the Company, the Company may at any time and from time to time provide security to
Indemnitee for the Company&#146;s obligations hereunder through an irrevocable bank line of credit,
funded trust or other collateral. Any such security, once provided to Indemnitee, may not be
revoked or released without the prior written consent of the Indemnitee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.&nbsp;<U>Enforcement</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;The Company expressly confirms and agrees that it has entered into this Agreement and
assumes the obligations imposed on it hereby in order to induce Indemnitee to serve as a director
and/or officer of the Company, and the Company acknowledges that Indemnitee is relying upon this
Agreement in serving as a director and/or officer of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;This Agreement constitutes the entire agreement between the parties hereto with respect to
the subject matter hereof and supersedes all prior agreements and understandings, oral, written and
implied, between the parties hereto with respect to the subject matter hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.&nbsp;<U>Definitions</U>. For purposes of this Agreement:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&#147;<U>Corporate Statu</U><B>s</B>&#148; describes the status of a person who is or was a director,
officer, employee, agent or fiduciary of the Company or of any other corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise that such person is or was serving
at the express written request of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&#147;<U>Disinterested Director</U>&#148; means a director of the Company who is not and was not a
party to the Proceeding in respect of which indemnification is sought by Indemnitee.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&#147;<U>Enterprise</U>&#148; shall mean the Company and any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise that Indemnitee is or was serving at the
express written request of the Company as a director, officer, employee, agent or fiduciary.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&#147;<U>Expenses</U>&#148; shall include all reasonable attorneys&#146; fees, retainers, court costs,
transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and
binding costs, telephone charges, postage, delivery service fees and all other disbursements or
expenses of the types customarily incurred in connection with prosecuting, defending, preparing to
prosecute or defend, investigating, participating, or being or preparing to be a witness in a
Proceeding. Expenses also shall include Expenses incurred in connection with any appeal resulting
from any Proceeding, including without limitation the premium, security for, and other costs
relating to any cost bond, supersede as bond, or other appeal bond or its equivalent. Expenses,
however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or
fines against Indemnitee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&#147;<U>Independent Counsel</U>&#148; means a law firm, or a member of a law firm, that is
experienced in matters of corporation law and neither presently is, nor in the past five years has
been, retained to represent: (i)&nbsp;the Company or Indemnitee in any matter material to either such
party (other than with respect to matters concerning Indemnitee under this Agreement pursuant to
<U>Section&nbsp;6(b)(3)</U>, or other indemnitees under similar indemnification agreements), or (ii)
any other party to the Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term &#147;Independent Counsel&#148; shall not include any person who,
under the applicable standards of professional conduct then prevailing, would have a conflict of
interest in representing either the Company or Indemnitee in an action to determine Indemnitee&#146;s
rights under this Agreement. The Company agrees to pay the reasonable fees of the Independent
Counsel referred to above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&#147;<U>Proceeding</U>&#148; includes any threatened, pending or completed action, suit,
arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing
or any other actual, threatened or completed proceeding, whether brought by or in the right of the
Company or otherwise and whether civil, criminal, administrative or investigative, in which
Indemnitee was, is or will be involved as a party or otherwise, by reason of the fact that
Indemnitee is or was an officer or director of the Company, by reason of any action taken by him or
of any inaction on his part while acting as an officer or director of the Company, or by reason
of the fact that he is or was serving at the request of the Company as a director, officer,
employee, agent or fiduciary of another corporation, partnership, joint venture, trust or other
Enterprise; in each case whether or not he is acting or serving in any such capacity at the time
any liability or expense is incurred for which indemnification can be provided under this
Agreement; including one pending on or before the date of this Agreement, but excluding one
initiated by an Indemnitee pursuant to <U>Section&nbsp;7</U> of this Agreement to enforce his rights
under this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.&nbsp;<U>Severability</U>. The invalidity of unenforceability of any provision hereof shall in
no way affect the validity or enforceability of any other provision. Without limiting the
generality of the foregoing, this Agreement is intended to confer upon Indemnitee indemnification
rights to the fullest extent permitted by applicable laws. In the event any provision hereof
conflicts with any applicable law, such provision shall be deemed modified, consistent with the
aforementioned intent, to the extent necessary to resolve such conflict.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->11<!-- /Folio -->
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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.&nbsp;<U>Modification and Waiver</U>. No supplement, modification, termination or amendment of
this Agreement shall be binding unless executed in writing by both of the parties hereto. No
waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing
waiver.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.&nbsp;<U>Notice By Indemnitee</U>. Indemnitee agrees promptly to notify the Company in writing
upon being served with or otherwise receiving any summons, citation, subpoena, complaint,
indictment, information or other document relating to any Proceeding or matter which may be subject
to indemnification covered hereunder. The failure to so notify the Company shall not relieve the
Company of any obligation which it may have to Indemnitee under this Agreement or otherwise unless
and only to the extent that such failure or delay materially prejudices the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.&nbsp;<U>Notices</U>. All notices and other communications given or made pursuant to this
Agreement shall be in writing and shall be deemed effectively given: (a)&nbsp;upon personal delivery to
the party to be notified, (b)&nbsp;when sent by confirmed electronic mail or facsimile if sent during
normal business hours of the recipient, and if not so confirmed, then on the next business day, (c)
five (5)&nbsp;days after having been sent by registered or certified mail, return receipt requested,
postage prepaid, or (d)&nbsp;one (1)&nbsp;day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt. All communications shall be
sent:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;To Indemnitee at the address set forth below Indemnitee signature hereto.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;To the Company at:
</DIV>
<DIV align="left" style="font-size: 10pt; margin-left: 6%; margin-top: 6pt">Castle Brands Inc.<BR>
570 Lexington Avenue, 29<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> Floor<BR>
New York, New York 10022<BR>
Attn: General Counsel<BR>
Tel: (646)&nbsp;356-0200<BR>
Fax: (646)&nbsp;356-0222
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">or to such other address as may have been furnished to Indemnitee by the Company or to the Company
by Indemnitee, as the case may be.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18.&nbsp;<U>Counterparts</U>. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same
Agreement. This Agreement may also be executed and delivered by facsimile signature and in one or
more counterparts, each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19.&nbsp;<U>Headings</U>. The headings of the paragraphs of this Agreement are inserted for
convenience only and shall not be deemed to constitute part of this Agreement or to affect the
construction thereof.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->12<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20.&nbsp;<U>Governing Law and Consent to Jurisdiction.</U> This Agreement and the legal relations
among the parties shall be governed by, and construed and enforced in accordance with, the laws of
the State of Delaware, without regard to its conflict of laws rules. Each party hereby irrevocably
submits, for itself and its property, to the exclusive jurisdiction of the Supreme Court of the
State of New York located in New York, New York or the United States District Court for the
Southern District of New York, and any appellate court from any such court (as applicable, a
&#147;<U>New York Court</U>&#148;), in any suit, action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment resulting from any such suit, action
or proceeding, and each party hereby irrevocably and unconditionally agrees that all claims in
respect of any such suit, action or proceeding may be heard and determined in the New York Court.
Each party hereby irrevocably and unconditionally waives, to the fullest extent it may legally and
effectively do so, (i)&nbsp;any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement in the New York Court,
(ii)&nbsp;the defense of an inconvenient forum to the maintenance of such suit, action or proceeding in
any such court, (iii)&nbsp;the right to object, with respect to such suit, action or proceeding, that
such court does not have jurisdiction over such party and (iv)&nbsp;all rights to a trial by jury. Each
party irrevocably consents to service of process in any manner permitted by Law. The foregoing
consents to jurisdiction and service of process shall not constitute general consents to service of
process in the State of New York for any purpose except as relates to this Agreement, and shall not
be deemed to confer rights on any Person other than the respective parties to this Agreement.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B><I>SIGNATURE PAGE TO FOLLOW</I></B>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->13<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of the day and
year first above written.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="34%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">CASTLE BRANDS INC.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">INDEMNITEE</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">Print Name:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">Address:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
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    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
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</TABLE>
</DIV>


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<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>6
<FILENAME>y00297exv99w1.htm
<DESCRIPTION>EX-99.1: PRESS RELEASE
<TEXT>
<HTML>
<HEAD>
<TITLE>EX-99.1</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>EXHIBIT 99.1</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>FOR IMMEDIATE RELEASE</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">CASTLE BRANDS EXECUTES AGREEMENT TO RECEIVE CASH INFUSION<BR>
OF $15 MILLION THROUGH PRIVATE PLACEMENT
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">NEW YORK, NY (October&nbsp;13, 2008) &#151; Castle Brands Inc. (AMEX: ROX), the maker of premium branded
spirits, today announced that it has entered into a purchase agreement with investors led by Dr.
Phillip Frost, I.L.A.R. S.p.A., the owner of Pallini liqueurs, and Vector Group Ltd., to receive a
cash infusion of $15&nbsp;million. Under the terms of the purchase agreement, the Company will issue
1,200,000 shares of newly created Series&nbsp;A Convertible Preferred Stock for a price per share of
$12.50 (which is, in effect upon conversion, $0.35 per share of the Company&#146;s common stock).
Transaction deliverables are being held in escrow pending closing, which will occur on Monday,
October&nbsp;20, 2008. After approval by the Company&#146;s stockholders at a special meeting of an
amendment to the Company&#146;s charter to increase its authorized shares, each outstanding share of
Series&nbsp;A Preferred Stock will be automatically converted into 35.7143 shares of the Company&#146;s
common stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pending closing, one of the investors, Frost Gamma Investments Trust, will lend the Company $2
million. At closing, the outstanding balance of this loan, plus accrued interest, will be set-off
from the investment amount owed by Frost Gamma Investments Trust under the purchase agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Concurrently with the closing, all of the Company&#146;s 6% convertible notes, in the principal amount
of $9&nbsp;million, due March&nbsp;1, 2010, plus accrued interest, will be converted into shares of Series&nbsp;A
Preferred Stock at a per share price of $23.21 (which is, in effect upon conversion, $0.65 per
share of common stock). In addition, substantially all of the outstanding principal of Castle
Brands (USA)&nbsp;Corp.&#146;s 9% senior secured notes, in the principal amount of $10&nbsp;million, due May&nbsp;31,
2009, plus accrued interest, will be converted into shares of Series&nbsp;A Preferred Stock at a per
share price of $12.50 (which is, in effect upon conversion, $0.35 per share of common stock).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mark Andrews, Chairman of the Board, stated, &#147;This transaction will result in a significant capital
infusion and the conversion of virtually all of our debt into equity. Together, these developments
will put our company on much firmer footing, which will enable us to pursue our original vision of
building our own premium brands, supporting our existing agency brands, pursuing new agency
relationships and making brand acquisitions.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As required by the terms of the purchase agreement, four of the Company&#146;s nine directors have
resigned (Keith A. Bellinger, Robert J. Flanagan, Colm Leen and Kevin P. Tighe) and were replaced
with four directors designated by the investors (Dr.&nbsp;Frost, Glenn Halpryn, Richard J. Lampen and
Micaela Pallini). At the special meeting described above, stockholders will vote to elect a slate
of directors designated by the investors to comprise the Company&#146;s Board of Directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In connection with the transaction, the Company&#146;s Board of Directors has appointed new management
to replace Donald L. Marsh, who had acted as the Company&#146;s President and Chief Operating Officer.
Mr.&nbsp;Lampen was appointed to serve as the Company&#146;s interim President and Chief Executive Officer,
and John Glover, the Company&#146;s Senior Vice President &#151; Marketing, has been promoted to the position
of Chief Operating Officer of US Operations. Mr.&nbsp;Lampen will remain Executive Vice President of
Vector Group Ltd. and President and Chief Executive Officer of Ladenburg Thalmann Financial
Services Inc.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The consummation of the investment and conversion of the notes (and subsequent automatic conversion
of the Series&nbsp;A Preferred Stock issued in connection therewith) will result in the Company&#146;s
issuance of approximately 86&nbsp;million shares of common stock. Holders of Series&nbsp;A Preferred Stock
(comprised of the investors and the converting note holders, many of which are current stockholders
of the Company) will own, excluding present ownership, approximately 85% of the Company&#146;s common
stock on an as-converted basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The purchase agreement was unanimously approved by the members of the Board of Directors of the
Company, upon the recommendation of a special committee thereof comprised of independent directors.
The transaction is a result of a four month period of investigation and analysis of the Company&#146;s
opportunities and avenues to stability. Over the course of that search, more than 140 contacts
were made with strategic investors, industry participants and alternate financing sources, and the
Company reviewed and analyzed a number of potential transactions.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">According to the Company Guide of the NYSE Alternext US LLC (formerly known as the American Stock
Exchange), consummating the proposed transaction would ordinarily require the approval of the
Company&#146;s stockholders. Pursuant to Section 710(b) of the NYSE Alternext US LLC&#146;s Company Guide,
the Company has sought and received from NYSE Alternext US LLC a financial viability exception from
obtaining such stockholder approval. The Audit Committee of the Company&#146;s Board of Directors, which
is comprised solely of independent directors, has expressly approved the Company&#146;s reliance on this
exception, and the proposed transaction has been unanimously approved by the Company&#146;s Board of
Directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Miller Buckfire &#038; Co., LLC acted as financial advisor to the Company. Patterson Belknap Webb &#038;
Tyler LLP acted as legal counsel for the Company, and Morris Nichols Arsht &#038; Tunnell LLP acted as
legal counsel for the special committee. Greenberg Traurig, P.A. acted as legal counsel and
Ladenburg Thalmann &#038; Co. Inc. acted as financial adviser for the investors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">About Castle Brands Inc.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Castle Brands is an emerging developer and international marketer of premium branded spirits within
five growing categories of the spirits industry: vodka, rum, tequila, whiskey and
liqueurs/cordials. Castle Brands&#146; portfolio includes Boru<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> Vodka, Gosling&#146;s
Rum<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>, Sea Wynde<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> Rum, Tierras Tequila, Knappogue Castle Whiskey<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>,
Clontarf<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> Irish Whiskey, Jefferson&#146;s&#153; and Jefferson&#146;s Reserve<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> Bourbon, Sam
Houston<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> Bourbon, Celtic Crossing<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> Liqueur, Pallini<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> Limoncello&#153;,
Raspicello&#153; and Peachcello&#153; and Brady&#146;s<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> Irish Cream.
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<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Note Regarding Forward-Looking Statements
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">All statements in this press release that are not historical are forward-looking statements within
the meaning of Section&nbsp;21E of the Securities Exchange Act of 1934. Such forward-looking statements
may be identified by words such as &#147;believe&#148;, &#147;intend,&#148; &#147;expect&#148;, &#147;may&#148;, &#147;could&#148;, &#147;would&#148;, &#147;will&#148;,
&#147;should&#148;, &#147;plan&#148;, &#147;project&#148;, &#147;contemplate&#148;, &#147;anticipate&#148;, or similar statements. Because these
statements reflect Castle Brands&#146; current views concerning future events, these forward-looking
statements are subject to risks and uncertainties. Castle Brands&#146; actual results could differ
materially from those anticipated in these forward-looking statements as a result of many factors,
including, but not limited to, demand for its products and services, its ability to compete
effectively, its ability to increase revenue from its newer products and services and the other
factors described under the caption &#147;Risk Factors&#148; in Castle Brands&#146; Annual Report on Form 10-K for
the year ended March&nbsp;31, 2008 and Quarterly Report on Form 10-Q for the quarterly period ended June
30, 2008 filed with the Securities and Exchange Commission. Castle Brands undertakes no obligation
to update publicly any forward-looking statements contained in this press release.
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