EXHIBIT 4.1
SECURED
NON-NEGOTIABLE
PROMISSORY NOTE
$1,084,816.98
New York, NY
September 21, 2009
FOR VALUE RECEIVED, Castle Brands
Inc., and its successors and assigns (hereinafter called the
“Maker”), unconditionally promise(s) to pay to Betts
& Scholl, LLC (hereinafter the “Holder”), the
principal sum of ONE MILLION, EIGHTY-FOUR THOUSAND, EIGHT HUNDRED
SIXTEEN and 98/100 DOLLARS ($1,084,816.98), together with interest
on the principal balance hereof from time to time outstanding, when
and as set forth below:
1. Until the Maturity Date (as
defined below)(unless the maturity is accelerated prior thereto
pursuant to the terms of this Note), the principal amount
outstanding under this Note shall bear interest at the rate per
annum equal to 0.84%, compounded quarterly.
2. Interest shall be charged on
the principal balance hereof from time to time outstanding and
shall be calculated on the basis of the actual number of days
elapsed over a 365 day year.
3. Except as provided in
Section 7.5 of the Asset Purchase Agreement (as defined in the
Security Agreement referred to below), principal and interest shall
be payable in lawful money of the United States, by wire transfer,
to the account of the Holder which Holder shall designate in
writing to the Maker from time to time. Until the Maturity Date, or
earlier if the maturity is accelerated prior thereto, principal and
interest shall be due and payable in an initial installment of
$250,000 due and payable on the date hereof and eight
(8) equal quarterly installments with each such installment in
the combined amount of $106,118.18 . If not accelerated
prior thereto in accordance with the terms hereof, seven
(7) quarterly installments of principal and accrued interest
shall be due and payable beginning on December 21, 2009 and
the eighth (8 th ) installment, together with all then
accrued and unpaid interest hereon, shall be due and payable on the
Maturity Date. If the date upon which any payment hereunder is due
is not a business day, such payment shall be made on the next
succeeding business day. Notwithstanding anything contained herein
to the contrary, the obligation of Maker to make any payments under
this Note shall be subject to the off-set rights set forth in
Section 7.5 of the Asset Purchase Agreement (as defined below)
and no such exercise of these rights by Maker shall be deemed an
Event of Default (as defined below).
4. If not accelerated or prepaid
prior thereto in accordance with the terms hereof, the full
principal balance of this Note shall be due and payable on
September 21, 2011 (the “Maturity Date”).
5. The Maker waives presentment,
demand, protest and notice of protest and all requirements
necessary to hold it liable as Maker. Any failure of the Holder to
exercise any right hereunder shall not be construed as a waiver of
the right to exercise the same or any other right at any time and
from time to time thereafter.
6. This Note may be prepaid in
full or in part at any time without premium or penalty;
provided ,
