**Exhibit10.5**

 

 

PROMISSORY NOTE

 

$60,000

 
| Dated: April 23, 2002 |   | At: South El Monte,  California |
|-----------------------|--------|---------------------------------|

 

 

                FOR VALUERECEIVED, the undersigned LEE PHARMACEUTICALS, INC., a California corporationwith its principal place of business located at 1444 Santa Anita Avenue, SouthEl Monte, California 91733 (“Maker”) promises to pay to the order of U.S.DERMATOLOGICS, INC., with its principal place of business located at 133Franklin Corner Road, Lawrenceville, New Jersey 08648, the principal sum ofSixty Thousand Dollars ($60,000) (the “Principal Sum”), with interest thereonat the simple annual rate equal to the highest prime rate published in the WallStreet Journal during the month preceding the month in which the interestpayment is due and continuing until the entire outstanding amount of thePrincipal Sum shall have been paid in full, but in no case more than ispermitted by relevant law, to be paid in lawful money of the United States ofAmerica, at Lender’s address set forth above or such other place as Lender mayfrom time to time designate in writing. All references to Lender in this Note shall be deemed to mean andinclude the original holder and any subsequent holder hereof Capitalized termsused herein and not otherwise defined shall have the meaning ascribed theretoin the Loan Documents (as defined in Section 2 hereof).

 

                1.             Payment of Principal andInterest.  The Principal Sum shallbe repaid in twenty equal monthly installments of principal in the amount ofThree Thousand Dollars ($3,000) each, plus interest, commencing on June 15,2002 and continuing until paid in full. Payment of all sums under this Note shall be made by the Maker to theLender by Maker’s check or by wire transfer. Whenever any payment under this Note or under any agreement, document,or instrument required hereunder is to be made by the Maker on a day other thana Business Day, such payment shall be made on the next succeeding Business Dayand such extension of time shall be included in the computation of interest.  “Business Day” means any day other than aday on which banks located in Los Angeles, California, and New York, New Yorkare required or are authorized by law or by executive order to close.

 

                2.             Loan Documents.  This Note, together with all other documentsnow or at any time hereafter creating, evidencing or securing the indebtednessevidenced by this Note, including a Guarantee of Ronald G. Lee, a principalshareholder of Maker (the “Guarantor”), in favor of Lender, both of even date,are herein referred to collectively as the “Loan Documents.”  The amount due under this Note may bereduced as provided for in the Loan Documents.

 

                3.             Prepayment Rights.  Maker shall have the right to prepay at anytime and from time to time all or any portion of the entire balance of thePrincipal Sum then due of this Note and interest thereon, together with allother indebtedness evidenced hereby, without penalty, provided that Lendershall have received at least ten (10) days prior

 

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 written notice of prepaymentand Maker shall pay all accrued and unpaid interest thereon and all other feesand costs, if any, due to Lender under this Note.  Any partial prepayment will be applied first against any fees orcharges due under the Loan Documents, if applicable, and then against accruedand unpaid interest and then against the Principal Sum of this Note.  No partial prepayment will excuse anyfurther payment of any of the Principal Sum or interest as long as any amountsremain unpaid.

 

 

 

 

 

 

                4.             Default Provisions.  Regardless of the other terms of this Note,the occurrence of any of the following events (each, an “Event of Default”), atthe option of Lender, upon written notice to the Maker, may terminate anyobligation on part of Lender to continue this Note and may declare thePrincipal Sum outstanding (determined as of the date Lender first exercises itsrights under this Section 4 in connection with such event or events), with allother sums outstanding under or in respect of this Note and the Loan Documents,immediately due and payable, without notice of default, presentment or demandfor payment, protest or notice of nonpayment or dishonor, or other notices ordemands of any kind or character, except as herein above and hereinafterspecified.

 

                                (a)           Nonpayment.  Maker shall fail to pay, within ten (10)Business Days of a due date, any installment of the Principal Sum or interestunder this Note in accordance with the terms hereof;

 

                                (b)           Voluntary Petition.  Maker or the Guarantor shall file anypetition or action for relief under any bankruptcy, reorganization, insolvencyor moratorium law, or any other law or laws for the relief of or relating todebtors;

 

                                (c)           Involuntary Petition.  The involuntary petition shall be filedunder any bankruptcy statute against Maker or the Guarantor, or a custodian,receiver, trustee, assignee for the benefit of creditors (or the similarofficial) shall be appointed to take possession, custody, or control of theproperties of Maker or the Guarantor, unless such petition or appointment isset aside or withdrawn or ceases to be in effect within sixty (60) BusinessDays from the date of said filing or appointment.

 

                                (d)           Suspension of Business.  Maker shall voluntarily suspend its businessfor more than twenty (20) Business Days in any forty-five (45) Business Dayperiod unless such suspension is the result of acts of God, interruption ofpower, strikes, or work stoppage or government action.

                Any declarationmade pursuant to this Section 4 to accelerate payment of all of the PrincipalSum and related interests, is subject to the condition that, if at any timeafter the Principal Sum shall become due and payable, and before judgment ordecree for the payment of moneys so sue, or any thereof, shall have beenentered, all arrears of the Principal Sum and interest upon this Note (exceptthat the Principal Sum which by such declaration shall have become payable)shall have been paid, and every Event of Default shall have been made good,waived or cured, then such declaration and its consequences

 

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 shall be rescinded andannulled; but no such recission or annulment shall extend to or affect anysubsequent Event of Default or impair any consequences thereon.

 

                5.             Payment of Collection Costs.  Maker agrees to pay on demand to Lender (a)all reasonable costs, expenses, and attorneys’ and paralegal fees incurred byLender in connection with the administration of this Note and any Loan Document(but not the original preparation and negotiation thereof) and (b) allreasonable costs, expenses and attorneys’ fees incurred by Lender in connectionwith the reasonable preservation of Lender’s rights under, and the enforcementof, this Note and any Loan Document and in connection with any refinancing orrestructuring of the loan in the nature of a “work-out”, whether or notlitigation is involved.  Any amountsunder this Note or any Loan Document not paid when due shall bear interest at adefault interest rate equal to the lesser of (i) fifteen percent (15%) perannum or (ii) the maximum amount permitted under applicable law.

 

 

 

 

 

 

 

 

                6.             Indemnification.  Maker shall indemnify Lender against anddefend and hold Lender harmless from, any and all claims, obligations,liabilities, losses, damages, penalties, actions, suits, costs and expenses (includingattorneys’ fees) of whatever kind or nature, whether or not well founded,meritorious or unmeritorious, demanded, asserted or claimed against Lender inany way relating to, or arising out of or in connection with, this loan and theconduct or operation of Maker’s business, other than claims against Lenderbased on the willful misconduct or gross and active negligence of Lender.

 

                7.             Non-Waiver of Certain Rights ofHolder.  Any failure by the holderhereof to insist upon the strict performance of any of the terms and provisionsof this Note or of any of the other Loan Documents shall not be deemed to be awaiver of any of the terms and provisions hereof or thereof and the holderhereof, notwithstanding any such failure, shall have the rights thereafter toinsist upon the stricy performance by Maker of any and all of the terms andprovisions of this Note and the other Loan Documents.

 

                8.             Invalidity of Provisions.  In the event that any one or more of theprovisions contained in this Note or any of the other Loan Documents shall forany reason be held to be invalid, illegal or unenforceable in any respect, suchinvalidity, illegality or unenforceability shall not affect any otherprovisions of this Note or any of the other Loan documents, and each term andprovision of this Note and the other Loan documents shall be valid andenforceable to the fullest extent permitted by law.

 

                9.             Amendments Must Be in Writing.  This Note may not be changed orally, butonly by an agreement in writing signed by Maker and Lender.

 

                10.           Governing Law.  This Note is to be construed according tothe laws of the

 

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 State of New York withoutregard to conflicts of laws, and shall be binding upon and inure to the benefitof Maker and Lender and their respective successors and assigns.

 

                11.           Captions.  The captions of this Note are forconvenience only and shall neither limit nor enlarge the provisions hereof.

 

                12.           Integration.  This Note and the Loan Documents integrateall the terms and conditions mentioned herein or incidental hereto, andsupersede all oral negotiations and prior writings in respect to the subjectmatter hereof.  In the event of anyconflict between the terms, conditions, and provisions of this Note and any suchagreement, document or instrument, the terms, conditions and provisions of thisNote shall prevail (except for any provision of the Loan Documents providingfor the reduction of the Principal Sum due under this Note).

 

                Executed as of theday and year first above written.

 

 

 

 
|   |   |   |   |   | LEE PHARMACEUTICALS, INC. |
|--------|--------|--------|--------|--------|---------------------------|
|   |   |   |   |   |                      |   |   |
|   |   |   |   |   |                      |   |   |
|   |   |   |   |   | By:                       | RONALD G. LEE |   |
|   |   |   |   |   |                      | Ronald G. Lee |
|   |   |   |   |   |                      |   |   |
|   |   |   |   |   |                      | Title:   President and CEO |
|        |        |        |        |        |                           |  |  |  |

 

 

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