EXHIBIT 10.3


 


SECURED
PROMISSORY NOTE


 


	
  $50,000.00

  	
  Pasadena, California

  
	
   

  	
  May 27, 2005

  



 


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 14.0% 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 6.0%, 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 twelve equal monthly installments of Two Thousand and 00/100 Dollars
($2,000.00) commencing July 1, 2005 and continue thereafter on the 1st day
of each month, plus interest shall be payable monthly commencing July 1,
2005 and continue thereafter on the 1st day of each month, and one final
installment on July 1, 2007 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 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
by Trial of 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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