Exhibit
10.3


 


 


 


SECURED PROMISSORY NOTE


 


	
  $70,000.00

  	
   

  	
  Pasadena, California

  	
   

  
	
   

  	
   

  	
  November 14, 2002

  	
   

  



 


 


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
Avenue, Suite 930 Pasadena, California 91101, or at such other address as the
holder may specify in writing, the principal sum of Seventy Thousand and 00/100
Dollars ($70,000.00) 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, 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 four equal monthly installments of Two Thousand Nine Hundred
Dollars ($2,900.00) commencing December 1, 2002 and continue thereafter on the
1st day of each month, plus interest shall be payable monthly commencing
December 1, 2002 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 incured by the holder whether or not suit is
filed hereon.


 

















 


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
interst 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 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:

  	
  RONALD G. LEE

  	
   

  
	
   

  	
   

  	
  Ronald G. Lee,
  President

  



 


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November
14, 2002


 


 


Mr.
Farhad Motia


Preferred
Business Credit, Inc.


300
N. Lake Avenue, #930


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
his/her (their) 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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