Exhibit
10.4


 


SECURED PROMISSORY
NOTE


 


	
  $50,000.00

  	
   

  	
  Pasadena, California 

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  February
  4, 2003

  	
   

  



 


 


FOR VALUE RECEIVED, the
undersigned hereby jointly and severally (if applicable) promises to pay to
PREFERRED BUSINESS CREDIT, INC., a California Corporation, at 300 N.Lake Ave.,
Pasadena, California 91101, or at such other address as the holder may specify
in writing, the principal sum of Fifty  Thousand and 00/100
Dollars ($50,000.00) plus interest as provided below.


 


This note shall bear
interest at the rate of 12.25% per annum, computed on the basis of a 360
day year for actual days elapsed.  This
rate is based upon the prime rate of interest of 4.25%, the rate in effect as
of this date.  The prime rate of
interest is the prime rate announced as being charged by Union Bank of
California, San Francisco, from time to time. 
In the event the prime rate is from time to time hereafter changed, the
rate of interest provided in this note shall be correspondingly changed.  For each month the rate of interest charged
under this note shall be based upon the average prime rate in effect during
such month.  In no event shall the rate
of interest chargeable hereunder be less than 1.0% per month.


 


Principal shall be
payable in 15 equal monthly installments of $2,000.00 commencing March 1, 2003
and continue thereafter on the 1st day of each month, plus interest shall be
payable monthly commencing March 1, 2003 and continue thereafter on the 1st day
of each month, and one final installment on May 20, 2004 equal to all principal
outstanding together with all accrued and unpaid interest.


 


This note is secured by
that certain Loan and Security Agreement (“Agreement”) dated February 20, 2001
and is subject to all of the terms and conditions thereof.  In the event of default under the Agreement,
including but not limited to, the failure to pay any installment of principal
or interest hereunder when due, the holder of this note may, at its election
and without notice to the undersigned, declare the entire balance hereof immediately
due and payable.


 


If any installment of
principal or interest hereunder is not paid when due, the holder shall have the
following rights in addition to the rights set forth in the preceding
paragraph:  (a) the right to add unpaid
interest to principal and to have such amount thereafter bear interest as
provided in this note, and (b) if any installment is more than ten days past
due, the right to collect a charge equal to the greater of $15.00 or five
percent of the deliquent payment.  This
charge is the result of a reasonable endeavor by the undersigned and the holder
to estimate the holder’s added costs and damages resulting from the
undersigned’s failure to timely make payments under this note; hence the
undersigned agrees that the charge shall be presumed to be the amount of damage
sustained by the holder since it is extremely difficult to determine the actual
amount necessary to reimburse the holder of such damages. If this note is not
paid when due, the undersigned further promises to pay all costs of collection,
foreclosure fees and reasonable attorney’s fees incurred by the holder whether
or not suit is filed hereon.


 


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Provided the undersigned
is not then in default hereunder or under any other agreement with the holder
of this note, this note may be prepaid at any time after one year from the date
hereof by paying the balance of principal owing plus all accrued and unpaid
interest and charges, together with a prepayment charge of N/A on the amount
prepaid.


 


Presentment for payment,
notice of dishonor, protest, and notice of protest are expressly waived.  This note cannot be changed, modified,
amended or terminated orally.


 


Waiver of Trial by Jury.  THE UNDERSIGNED, TO THE EXTENT IT MAY
LEGALLY DO SO, HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING ARISING UNDER OR WITH RESPECT TO
THIS NOTE, OR IN ANY WAY CONNECTED WITH, OR RELATED TO, OR INCIDENTAL TO, THE
DEALINGS OF THE PARTIES HERETO WITH RESPECT TO THIS NOTE OR THE TRANSACTIONS
RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
IRRESPECTIVE OF WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.  THE UNDERSIGNED, TO THE EXTENT IT MAY
LEGALLY DO SO, HEREBY AFGREES THAT ANY SUCH CLAIM, DEMAND, ACTION, CAUSE OF
ACTION, OR PROCEEDING SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT
THE HOLDER OF THIS NOTE MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE UNDERSIGNED TO
THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.


 


IN WITNESS WHEREOF, this Note has been
executed and delivewred on the date first set forth above.


 


 


	
   

  	
  LEE PHARMACEUTICALS

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  RONALD G. LEE

  
	
   

  	
  Ronald G. Lee,
  President

  
				



 


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February 4, 2003


 


 


Mr. Farhad Motia


Preferred Business
Credit, Inc.


Pasadena, CA 91101


 


 


Dear Farhad:


 


You have this day
modified the financing arrangement between PREFERRED BUSINESS CREDIT, INC. and
Lee Pharmaceuticals (“Borrower”).  As
Guarantor(s) of all present and future obligations of Borrower to PREFERRED
BUSINESS CREDIT, INC., the undersigned hereby confirms that my Continuing
Guaranty of the obligations of Borrower dated February 20, 2001, remains in full
force and effect notwithstanding the recent modifications of your financing.


 


	
  Very truly yours,

  
	
   

  
	
  RONALD G. LEE

  	
   

  
	
  Ronald G. Lee,
  Guarantor

  



 


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