**Exhibit10.3**

 

 

 

SECURED PROMISSORY NOTE

 
| $70,000.00 |   | Pasadena, California |   |
|------------|--------|----------------------|--------|
|       |   | November 14, 2002    |   |

 

 

FOR VALUE RECEIVED, theundersigned hereby jointly and severally (if applicable) promises to pay toPREFERRED BUSINESS CREDIT, INC., a California Corporation, at 300 N. LakeAvenue, Suite 930 Pasadena, California 91101, or at such other address as theholder may specify in writing, the principal sum of Seventy Thousand and 00/100Dollars ($70,000.00) plus interest as provided below.

 

This note shall bear interestat the rate of 12.25% per annum, computed on the basis of a 360 day year foractual days elapsed.  This rate is basedupon the prime rate of interest of 4.25%, the rate in effect as of this date.  The prime rate of interest is the prime rateannounced as being charged by Union Bank of California, N.A., San FranciscoCalifornia, from time to time.  In theevent the prime rate is from time to time hereafter changed, the rate ofinterest provided in this note shall be correspondingly changed.  For each month the rate of interest chargedunder this note shall be based upon the average prime rate in effect duringsuch month.  In no event shall the rateof interest chargeable hereunder be less than 1% per month.

 

Principal shall bepayable in twenty four equal monthly installments of Two Thousand Nine HundredDollars ($2,900.00) commencing December 1, 2002 and continue thereafter on the1st day of each month, plus interest shall be payable monthly commencingDecember 1, 2002 and continue thereafter on the 1st day of each month, and onefinal installment on May 20, 2004 equal to all principal outstanding togetherwith all accrued and unpaid interest.

 

This note is secured bythat certain Loan and Security Agreement (“Agreement”) dated February 20, 2001and 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 principalor interest hereunder when due, the holder of this note may, at its electionand without notice to the undersigned, declare the entire balance hereofimmediately due and payable.

 

If any installment ofprincipal or interest hereunder is not paid when due, the holder shall have thefollowing rights in addition to the rights set forth in the precedingparagraph:  (a) the right to add unpaidinterest to principal and to have such amount thereafter bear interest asprovided in this note, and (b) if any installment is more than ten days pastdue, the right to collect a charge equal to the greater of $15.00 or fivepercent of the deliquent payment.  Thischarge is the result of a reasonable endeavor by the undersigned and the holderto estimate the holder’s added costs and damages resulting from the undersigned’sfailure to timely make payments under this note; hence the undersigned agreesthat the charge shall be presumed to be the amount of damage sustained by theholder since it is extremely difficult to determine the actual amount necessaryto reimburse the holder of such damages. If this note is not paid when due, theundersigned further promises to pay all costs of collection, foreclosure feesand reasonable attorney’s fees incured by the holder whether or not suit isfiled hereon.

 

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Provided the undersignedis not then in default hereunder or under any other agreement with the holderof this note, this note may be prepaid at any time after one year from the datehereof by paying the balance of principal owing plus all accrued and unpaidinterst and charges, together with a prepayment charge of N/A on the amountprepaid.

 

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 MAYLEGALLY 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 TOTHIS NOTE, OR IN ANY WAY CONNECTED WITH, OR RELATED TO, OR INCIDENTAL TO, THEDEALINGS OF THE PARTIES HERETO WITH RESPECT TO THIS NOTE OR THE TRANSACTIONSRELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, ANDIRRESPECTIVE OF WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.  THE UNDERSIGNED, TO THE EXTENT IT MAY LEGALLYDO SO, HEREBY AGREES THAT ANY SUCH CLAIM, DEMAND, ACTION, CAUSE OF ACTION, ORPROCEEDING SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT THE HOLDEROF THIS NOTE MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITHANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE UNDERSIGNED TO THE WAIVEROF ITS RIGHT TO TRIAL BY JURY.

 

IN WITNESS WHEREOF, thisNote 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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November14, 2002

 

 

Mr.Farhad Motia

PreferredBusiness Credit, Inc.

300N. Lake Avenue, #930

Pasadena,CA  91101

 

 

DearFarhad:

 

Youhave this day modified the financing arrangement between Preferred BusinessCredit, Inc. and LEE PHARMACEUTICALS (“Borrower”).  As Guarantor(s) of all present and future obligations of Borrowerto Preferred Business Credit, Inc., the undersigned hereby confirms thathis/her (their) Continuing Guaranty of the obligations of Borrower datedFebruary 20, 2001, remains in full force and effect notwithstanding the recentmodifications of your financing.

 
| Very  truly yours,        |   |
|---------------------------|--------|
|                      |   |
| RONALD  G. LEE            |   |
| Ronald  G. Lee, Guarantor |   |

 

 

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