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 million. Under the terms of the purchase agreement, the Company will issue 1,200,000 shares of newly created Series 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’s common stock). Transaction deliverables are being held in escrow pending closing, which will occur on Monday, October 20, 2008. After approval by the Company’s stockholders at a special meeting of an amendment to the Company’s charter to increase its authorized shares, each outstanding share of Series A Preferred Stock will be automatically converted into 35.7143 shares of the Company’s common stock.

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.

Concurrently with the closing, all of the Company’s 6% convertible notes, in the principal amount of $9 million, due March 1, 2010, plus accrued interest, will be converted into shares of Series 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) Corp.’s 9% senior secured notes, in the principal amount of $10 million, due May 31, 2009, plus accrued interest, will be converted into shares of Series A Preferred Stock at a per share price of $12.50 (which is, in effect upon conversion, $0.35 per share of common stock).

Mark Andrews, Chairman of the Board, stated, “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.”

As required by the terms of the purchase agreement, four of the Company’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. Frost, Glenn Halpryn, Richard J.