Exhibit
10.3


 


SECURED PROMISSORY NOTE


 




	
  $216,000.00

  	
   

  	
  Pasadena, California

  
	
   

  	
   

  	
  February 3, 2004

  






 


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
Two Hundred Sixteen Thousand and 00/100 Dollars ($216,000.00) plus interest as
provided below.


 


This note shall bear interest at the rate of 12.0% 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 4.0%, 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 twenty four equal monthly installments of
Nine Thousand and 00/100 Dollars ($9,000.00) commencing March 1, 2004 and
continue thereafter on the 1st day of each month, plus interest shall be
payable monthly commencing March 1, 2004 and continue thereafter on the 1st day
of each month, and one final installment on March 1, 2006 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 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:

  	
  /s/ RONALD G. LEE

  	
   

  
	
   

  	
  Ronald G. Lee, President

  
				



 


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