EXHIBIT 4.1


                                                                  EXECUTION COPY

                            SENIOR SUBORDINATED NOTE

         THIS NOTE IS SUBJECT TO A SUBORDINATION  AGREEMENT DATED AS OF JULY 25,
         2000 AMONG ALLOU HEALTH & BEAUTY CARE, INC., ALLOU DISTRIBUTORS,  INC.,
         THE OTHER BORROWERS NAMED THEREIN, FLEET CAPITAL CORPORATION, AS AGENT,
         AND  THE  NOTEHOLDERS  NAMED  THEREIN,   WHICH,   AMONG  OTHER  THINGS,
         SUBORDINATES  THE  BORROWERS'  OBLIGATIONS  HEREUNDER TO THE BORROWERS'
         OBLIGATIONS TO CERTAIN  HOLDERS OF SENIOR DEBT, AS MORE FULLY DESCRIBED
         IN SAID SUBORDINATION AGREEMENT.

$11,470,588.00

                                                                   July 25, 2000
                                                             Brentwood, New York

         FOR VALUE RECEIVED, the undersigned,  ALLOU HEALTH & BEAUTY CARE, INC.,
a Delaware  corporation (the "Company"),  ALLOU  DISTRIBUTORS,  INC., a New York
corporation ( "Distributors") (the Company, Distributors and the other Borrowers
signatories hereto are hereinafter  referred to as a "Borrower" and collectively
as the  "Borrowers")  and the other  Borrowers,  HEREBY,  JOINTLY AND SEVERALLY,
PROMISE  TO  PAY  to  the  order  of  RFE  INVESTMENT  PARTNERS  VI,  L.P.  (the
"Noteholder"),  the  principal  sum  of  ELEVEN  MILLION  FOUR  HUNDRED  SEVENTY
THOUSAND,  FIVE  HUNDRED  EIGHTY  EIGHT  and  00/100  DOLLARS  ($11,470,588.00),
together with interest on the unpaid principal amount in the manner and upon the
terms and conditions set forth below.

         This Note is one of the Notes  referred to and is subject and  entitled
to certain terms and  conditions,  covenants and agreements  (including  without
limitation  those relating to the right of the noteholder to accelerate  payment
of this Note) set forth in the Senior  Subordinated  Note and  Warrant  Purchase
Agreement  dated as of July 25,  2000 (as the same may be  amended,  modified or
supplemented from time to time, the "Note Purchase  Agreement") by and among the
Borrowers and the Purchasers  named therein.  Capitalized  terms used herein and
not  otherwise  defined  shall have the meanings set forth in the Note  Purchase
Agreement.  Reference  herein  to the Note  Purchase  Agreement  shall in no way
impair the negotiability hereof or the absolute and unconditional  obligation of
the  Borrowers  to pay both  principal  of and interest on this Note as provided
herein.

         Interest shall accrue on the outstanding  principal balance hereof at a
rate  equal to  twelve  percent  (12%) per annum on the basis of a 360 day year,
payable  quarterly,  in  arrears,  on the 25th day of January,  April,  July and
October  in each  year  (or,  if such  day is not a  Business  Day,  on the next
succeeding  Business  Day) and on the Maturity  Date (as  hereinafter  defined),

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commencing on October 25, 2000 (the "Quarterly Interest Payments"). Interest for
the period  commencing with the date of this Note through October 25, 2000 shall
be payable on October  25,  2000.  If an Event of Default  has  occurred  and is
continuing,  from and after the date such  Event of  Default  has  occurred  the
entire  outstanding  principal  balance  of the  Notes and any  unpaid  interest
thereon  shall bear  interest,  payable on demand,  at the rate of fourteen  and
one-half percent (14.5%) per annum or such lower rate as then may be the maximum
rate permitted by applicable law. The interest rate hereunder is also subject to
increase  pursuant  to  Sections  2.1.2,  2.1.3 and  2.1.4 of the Note  Purchase
Agreement.

         The Borrowers may elect, in their sole discretion, to accrue payment of
up to two (2)  Quarterly  Interest  Payments  prior to the  Maturity  Date  (the
"Accrued  Interest  Payments").  Interest on the Accrued Interest Payments shall
bear compounded  interest payable quarterly in arrears at a rate equal to twelve
(12%)  percent  per annum,  subject to  increase  as set forth in the  preceding
paragraph and in the Note Purchase Agreement.

         The  Borrowers  may also  elect,  in their sole  discretion  during any
Postponement Periods (as defined in the Subordination  Agreement),  to pay up to
an  aggregate  of four (4)  Quarterly  Interest  Payments in kind on an interest
payment  date by the timely  issuance and  delivery to the  Noteholder  of whole
shares (collectively,  the "PIK Stock") of Class A Common Stock, par value $.001
per share,  of the Company  (the "Class A Common  Stock"),  in the total  amount
equal to the  amount of each such  Quarterly  Interest  Payment  divided  by the
lesser of (i) the book value per share of Class A Common Stock,  computed  based
upon the most recently filed audited  financial  statements of the Company filed
with the SEC prior to the applicable  interest payment date and (ii) the average
of the Market Price (as defined below) for the twenty  consecutive  trading days
ending on the second trading day immediately  preceding the applicable  interest
payment date.  Notwithstanding the foregoing,  the Company shall not be entitled
to  deliver  shares  of Class A Common  Stock  in lieu of a  Quarterly  Interest
Payment  hereunder  unless:  (1) the Noteholder shall have concluded in its sole
discretion  that a premerger  notification  filing is not required under the HSR
Act as a result of such  issuance,  (2) the Company shall have complied with all
applicable  federal and state  securities laws in connection with such issuance,
(3) the Class A Common Stock is then listed on a national securities exchange or
designated as a national  market  system  security by NASD and the shares of PIK
Stock shall have been listed for trading on such national securities exchange or
shall have been so designated, (4) such shares shall be duly authorized, validly
issued, fully paid and nonassessable and the Company shall have delivered to the
Noteholders an opinion of counsel  reasonably  satisfactory to the Noteholder to
such effect and (5) unless the holders of greater  than fifty  percent  (50%) in
principal  amount  of all  Notes  then  outstanding  (the  "Required  Interest")
otherwise consent in writing, an Event of Default shall not have occurred and be
continuing.  No fractional shares shall be issued hereunder,  and any fractional
amounts  shall be  rounded up (not down) to the next  whole  share  amount.  For
purposes hereof,  "Market Price" means on any date specified herein,  the amount
per share of Class A Common  Stock  equal to (a) the last sale  price of Class A
Common Stock,  regular way, on such date or, if no such sale takes place on such
date,  the average of the closing bid and asked prices  thereof on such date, in
each case as officially  reported on the principal national  securities

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exchange on which Class A Common Stock is then listed or admitted to trading, or
(b) if Class A Common  Stock is not then  listed or  admitted  to trading on any
national  securities  exchange but is  designated  as a national  market  system
security by the NASD, the last trading price of Common Stock on such date.

         Notwithstanding  any other  provision of this Note,  but subject to the
terms and conditions of the Subordination Agreement first referred to above, the
entire  balance of principal and any then accrued and unpaid  interest  shall be
paid in full on July 25, 2005 (the "Maturity Date").

         The Borrowers shall have the right, at any time, to voluntarily  prepay
all or any part of the outstanding principal amount of this Note, subject to the
provisions of the Note Purchase Agreement.

         Each of the Borrowers and any endorser or guarantor (collectively,  the
"Obligors") hereof and each of them, hereby (i) waive(s) presentment, diligence,
demand,  notice,  protest,  notice of demand,  notice of acceptance or reliance,
notice of  non-payment,  notice of  dishonor,  notice of  protest  and all other
notices to parties in  connection  with the delivery,  acceptance,  performance,
default or  enforcement  of this Note,  or any  endorsement  or guaranty of this
Note,  (ii)  consent(s)  to any and all  delays,  extensions,  renewals or other
modifications of this Note, any related document or the debt(s) evidenced hereby
or  thereby,  or  any  other  failure  to act by  the  Noteholder  or any  other
forebearance or indulgence shown by the Noteholder, from time to time and in one
or more  instances  (without  notice to or assent from any of the  Obligors) and
agree(s) that none of the foregoing shall release, discharge or otherwise impair
any of the  liabilities;  (iii)  agree(s)  that the full or  partial  release or
discharge of any Obligor(s) shall not release, discharge or otherwise impair the
liabilities of any  Obligor(s);  and (iv) otherwise  waive(s) any other defenses
based upon suretyship or impairment of collateral.

         All  obligations of any and all Borrowers  hereunder and under the Note
Purchase Agreement are joint and several, whether or not expressly so stated.

         The  Borrowers  shall  pay all costs and  expenses,  including  without
limitation all reasonable attorneys' fees and disbursements and all court costs,
incurred by the Noteholder in defending, preserving and/or enforcing (including,
without  limitation,  collecting  any amounts owed by any of the  Borrowers) its
rights or remedies under this Note or the Note Purchase  Agreement,  and whether
or not incurred in any  bankruptcy  or  insolvency  case or proceeding or in any
workout.

         All payments shall be made without any deduction whatsoever,  including
deduction  for  set-off,  recoupment  or  counterclaim  (provided,  that nothing
contained  in this  sentence  shall be  interpreted  or  construed  to limit the
provisions  of this Note with  respect to Accrued  Interest  Payments or, to the
extent permitted hereby, the delivery of Class A Common Stock in payment in kind
for certain interest payments). All payments hereunder shall first be applied to
costs and

                                      -3-
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expenses  which the  Borrowers  are obligated to pay, then to accrued but unpaid
interest and then to unpaid principal.

         No delay or omission on the part of the  Noteholder in  exercising  any
right or remedy  hereunder  shall operate as a waiver of such right or remedy or
of any other right or remedy under this Note, and a waiver, delay or omission on
any one occasion  shall not be construed as a bar to or waiver of any such right
or remedy on any future occasion.

         THE BORROWERS  ACKNOWLEDGE THAT THE TRANSACTION OF WHICH THIS NOTE IS A
PART IS A COMMERCIAL TRANSACTION. THE BORROWERS HEREBY KNOWINGLY AND VOLUNTARILY
WAIVE  TRIAL BY JURY AND THE RIGHT  THERETO IN ANY ACTION OR  PROCEEDING  OF ANY
KIND,  ARISING UNDER OR OUT OF, OR OTHERWISE  RELATED TO OR OTHERWISE  CONNECTED
WITH, THIS NOTE, THE NOTE PURCHASE  AGREEMENT AND/OR ANY RELATED DOCUMENT OR THE
DEALINGS  OR THE  RELATIONSHIP  BETWEEN THE  BORROWERS  AND THE  NOTEHOLDER  AND
FURTHERMORE  AGREE NOT TO  CONSOLIDATE  ANY SUCH ACTION WITH ANY OTHER ACTION IN
WHICH A JURY  TRIAL  CANNOT BE OR HAS NOT BEEN  WAIVED.  THE  BORROWERS  FURTHER
ACKNOWLEDGE  THAT THEY HAVE HAD AN OPPORTUNITY TO REVIEW THIS NOTE AND THE OTHER
FINANCING DOCUMENTS PERTAINING TO THE NOTE PURCHASE AGREEMENT WITH THEIR COUNSEL
AND THAT THEY ON THEIR OWN HAVE MADE THE  DETERMINATION TO EXECUTE THIS NOTE AND
ALL OTHER FINANCING DOCUMENTS PERTAINING TO THE NOTE PURCHASE AGREEMENT TO WHICH
THEY ARE PARTIES AFTER  CONSIDERATION  OF ALL OF THE TERMS OF THIS NOTE AND SUCH
OTHER  DOCUMENTS  (INCLUDING THE INTEREST RATE) AND ALL OTHER FACTORS WHICH THEY
CONSIDER RELEVANT.

         This Note shall bind the Borrowers and the  Borrowers'  successors  and
permitted  assigns  and shall  inure to the  benefit of the  Noteholder  and the
Noteholder's representatives,  successors and assigns. The term "Noteholders" as
used herein shall  include,  in addition to the initial payee,  any  successors,
endorsees or other  assignees  of such  Noteholder  and shall  include any other
holder of this Note.

         This  Note  shall  be  deemed  to be under  seal,  and all  rights  and
obligations  hereunder  shall be  governed  by the laws of the State of New York
(without giving effect to any conflicts of law provisions contained therein).

         No delay or  omission  by the  Noteholder  in  exercising  any right or
remedy  hereunder shall operate as a waiver of such right or remedy or any other
right or remedy; and a waiver on one occasion shall not be a bar to or waiver of
any right or remedy  on any other  occasion.  All  rights  and  remedies  of the
Noteholder  hereunder,  any other  applicable  document and under applicable law
shall be cumulative and not in the alternative. No provision of this Note may be
waived or modified  orally but only by a writing (a) signed by the party against
whom  enforcement of such

                                      -4-
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amendment, waiver or other modification is sought or (b) consented to in writing
by the  Required  Interest;  provided  however,  that no such  consent  shall be
effective  to reduce  or to  postpone  the date  fixed  for the  payment  of the
principal (including any required redemption) or interest payable hereon without
the consent of the holder, or to alter or amend the consent  mechanism  provided
for herein. All notices, requests, consents and demands shall be made in writing
and shall be  mailed  first  class  postage  prepaid,  or  delivered  by hand or
messenger  to the  Borrowers  or to the  Noteholder  hereof at their  respective
addresses, as provided for in the Note Purchase Agreement.

                     [REMAINDER OF PAGE INTENTIONALLY BLANK]


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         IN WITNESS  WHEREOF,  each of the  Borrowers has executed and delivered
this Note as of the day and year first written above.

                             ALLOU HEALTH & BEAUTY CARE, INC.

                             By:_______________________________________
                                   Name: David Shamilzadeh
                                   Title:  President and Chief Financial Officer


                             ALLOU DISTRIBUTORS, INC.

                             By:_______________________________________
                                   Name: David Shamilzadeh
                                   Title:  President and Chief Financial Officer


                             ALLOU PERSONAL CARE CORPORATION

                             By:______________________________________
                                   Name: David Shamilzadeh
                                   Title:   Chief Financial Officer

                             M.  SOBOL, INC.



                             By:______________________________________
                                    Name: David Shamilzadeh
                                    Title:   Chief Financial Officer


                                      -6-
<PAGE>

                            SUPERBUY OF NEW YORK, INC.

                            By:_______________________________
                                  Name: David Shamilzadeh
                                  Title:   President and Chief Financial Officer

                            RONA BEAUTY SUPPLIES, INC.

                            By:_______________________________
                                  Name: David Shamilzadeh
                                  Title:   President and Chief Financial Officer


                            HEMPSTEAD HEALTH & BEAUTY AIDS, INC.

                            By:_______________________________
                                  Name: David Shamilzadeh
                                  Title:   President and Chief Financial Officer


                            PASTEL COSMETIC AND BEAUTY AIDS, INC.

                            By:_______________________________
                                  Name: David Shamilzadeh
                                  Title:   President and Chief Financial Officer


                            HBA NATIONAL SALES CORP.

                            By:_______________________________
                                  Name: David Shamilzadeh
                                  Title:   President and Chief Financial Officer


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<PAGE>

                             HBA DISTRIBUTORS, INC.

                             By:_______________________________
                                  Name: David Shamilzadeh
                                  Title:   President and Chief Financial Officer


                             TRANS WORLD GROCERS, INC.

                             By:_______________________________
                                  Name: David Shamilzadeh
                                  Title:   President and Chief Financial Officer

                             DOMINO PAPER COMPANY, INC.

                             By:_______________________________
                                  Name: David Shamilzadeh
                                  Title:   President and Chief Financial Officer

                             RUSS KALVIN PERSONAL CARE CORP.

                             By:_______________________________
                                  Name: David Shamilzadeh
                                  Title:   President and Chief Financial Officer



                             STANFORD PERSONAL CARE
                                MANUFACTURING, INC.

                             By:_______________________________
                                  Name: David Shamilzadeh
                                  Title:   President and Chief Financial Officer


                                      -8-
<PAGE>



                              COSMETICS PLUS TWO, INC.

                              By:_______________________________
                                  Name: David Shamilzadeh
                                  Title:   President and Chief Financial Officer


                              DIRECT FRAGRANCES, INC.

                              By:_______________________________
                                  Name: David Shamilzadeh
                                  Title:   Chief Financial Officer

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