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EXHIBIT 10.4
THIS SECURED PROMISSORY NOTE (THIS "NOTE') WAS ACQUIRED FOR
INVESTMENT ONLY AND
NOT FOR RESALE. THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAW (COLLECTIVELY, THE
"SECURITIES
LAWS").
THIS NOTE IS NON-NEGOTIABLE AND MAY NOT BE SOLD, ASSIGNED,
TRANSFERRED, PLEDGED
OR HYPOTHECATED (A) WITHOUT MAKER'S (AS HEREINAFTER DEFINED) PRIOR
WRITTEN
CONSENT, AND (B) UNLESS (1) LENDER (AS HEREINAFTER DEFINED) FIRST
REGISTERS THIS
NOTE UNDER THE SECURITIES LAWS, OR (2) MAKER SHALL HAVE RECEIVED AN
OPINION OF
COUNSEL SATISFACTORY TO MAKER THAT REGISTRATION UNDER THE
SECURITIES LAWS IS NOT
REQUIRED.
SECURED
PROMISSORY NOTE
$500,000.00
September 28, 2006
FOR VALUE RECEIVED, Standard Management Corporation, an Indiana
corporation ("Maker"), hereby promises to pay to Michael G.
Browning ("Lender"),
on or before the Maturity Date, the principal sum of Five Hundred
Thousand and
00/100 Dollars ($500,000.00), together with interest on the portion
thereof from
time to time outstanding at the rate of twelve percent (12%) per
annum from the
date hereof until maturity (whether by acceleration or otherwise)
and at the
rate of 20% per annum from and after maturity (whether by
acceleration or
otherwise) and until paid in full. As additional consideration to
Lender for the
loan evidenced hereby, Maker shall pay to Lender a loan fee in the
amount of
$600,000.00 on the earliest to occur of (i) the Maturity Date, (ii)
the date the
principal and all accrued interest on this Note are paid in full,
or (iii) the
date to which the maturity of this Note is accelerated pursuant to
the terms
hereof; provided that, if the principal and all accrued interest on
this Note,
together with all amounts owed by Maker to Lender under the Second
Amended and
Restated Promissory Note dated as of August 11, 2006, are paid in
full on or
before October 31, 2006, and the loan fee is paid at the same time,
the loan fee
shall be reduced to $100,000.00. Maker shall pay these amounts
without relief
from valuation and appraisement laws.
ARTICLE I.
TERMS OF PAYMENT
SECTION 1.01 Prepayment During Term.
Maker may prepay this Note in whole or in part at any time and
from
time to time without premium, penalty, or other charge or cost. All
payments and
prepayments shall be applied (a) first, to all accrued costs and
expenses
(including loan fees) that are due an payable by Maker; (b) second,
to accrued
and unpaid interest; and (c) third, to the reduction of
principal.
SECTION 1.02 Payments and Computations.
(a)
Maker shall make payment under this Note in lawful money of
the United States to Lender at Lender's address stated in Section
3.06 or to
such other address as Lender may from time to time designate to
Maker in
writing.
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(b) Interest on the principal sum of the Note shall accrue on
the
basis of the actual number of days elapsed over a year consisting
of 365 or 366
days, as appropriate.
(c) Whenever any payment to be made hereunder is stated to be
due
on a day other than a Business Day (as hereinafter defined), such
payment shall
be made on the next succeeding Business Day, and such extension of
time shall be
included in the computation of interest. "Business Day" means a day
other than a
Saturday or Sunday or a government or bank holiday on which banks
generally are
closed in the State of Indiana.
ARTICLE II.
SECURITY
This Note and Maker's obligations hereunder are secured by (i)
an
Amended and Restated Guaranty dated August 11, 2006, executed by
Rainier Home
Health Care Pharmacy, Inc., a Washington corporation ("Rainier"),
Precision
Healthcare, Inc., a Tennessee corporation ("Precision"), Long Term
Rx, Inc., an
Indiana corporation ("Long Term Rx"), Home Med Channel, Inc., an
Indiana
corporation ("Home Med"), Holland Compounding Pharmacy, Inc., a
Washington
corporation ("Holland CP"), and Holland Drug Store, Inc., a
Washington
corporation ("Holland," and together with Rainier, Precision, Long
Term Rx, Home
Med, and Holland CP, the "Guarantors"), (ii) an Amended and
Restated Security
Agreement dated August 11, 2006, encumbering certain personal
property of the
Guarantors as described therein (the "Security Agreement"), and
(ii) Amended and
