<PAGE>

                                                                    Exhibit 10.4

                             SECURED PROMISSORY NOTE

$300,000.00                                                 Pasadena, California
                                                               February 20, 2001

FOR VALUE RECEIVED, the undersigned hereby jointly and severally (if applicable)
promises to pay to PREFERRED BUSINESS CREDIT, INC., a California Corporation, at
P. O. Box 60307, Pasadena, CA 91116, or at such other address as the holder may
specify in writing, the principal sum of Three Hundred Thousand and 00/100
Dollars ($300,000.00) plus interest as provided below.

This note shall bear interest at the rate of 16.5% 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 8.5%, 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, N.A., San Francisco California, 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% per month.

Principal shall be payable in twenty equal monthly installments of Five Thousand
Dollars ($5,000.00) commencing May 1, 2001 and continue thereafter on the 1st
day of each month, plus interest shall be payable monthly commencing March 1,
2001 and continue thereafter on the 1st day of each month, and one final
installment on May 20, 2003 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 delinquent 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 attorneys' fees incurred by the holder whether
or not suit is filed hereon.

<PAGE>

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,
THEREBY 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 AGREES 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 delivered on the date first
set forth above.

                                 LEE PHARMACEUTICALS
                                 a California corporation


                              By /s/ Ronald G. Lee
                                 ---------------------------------
                                 Ronald G. Lee, President