ex_10-26.htm


     

    
      

      

    

    
 

    NOTE
PURCHASE AGREEMENT

     

    


    This
NOTE PURCHASE AGREEMENT
(this “Agreement”), dated as
of March 31, 2009, is entered into by and between York Pharma plc, a public
limited company incorporated under the laws of England and Wales with company
number 04422613 (the “Company”), and ULURU
Inc., a Nevada corporation (the “Lender”).

     

    WHEREAS,
the Lender has agreed to lend to the Company on the date hereof the aggregate
principal amount of $1,000,000 and may lend to the Company from time to time
after the date hereof additional aggregate principal amounts, all as hereinbelow
provided.

     

    NOW,
THEREFORE, in consideration of the mutual promises and covenants in this
Agreement, the parties hereto agree as follows:

     

    1. (a)           Initial Loan Amount.  On
the date hereof (the “Closing“), the Lender
shall pay, on behalf of the Company, the initial loan amount of $500,000 (the
“Loan”) by
check or wire transfer pursuant to wire transfer instructions furnished by the
Company.  At the Closing, the Company shall issue to the Lender a
promissory note in the form of Exhibit A hereto, initially
reflecting outstanding principal in the amount of the Loan (the “Note”).  In
addition, at the Closing, the Company shall execute, deliver and/or authorize,
as the case may be, (i) the Patent Collateral Assignment and Security
Agreement in the form of Exhibit B hereto (the
“Patent
Agreement”), (ii) the Trademark Collateral Assignment and Security
Agreement in the form of Exhibit C hereto
(the “Trademark
Agreement”), (iii) the Security Agreement in the form of Exhibit D hereto
(the “Security
Agreement”), (iv) the English law governed debenture dated on or about
the date hereof and made between, among others, the Lender and the Borrower (the
“Debenture”),
and (v) all other instruments and documents, including, without limitation,
Uniform Commercial Code financing statements, required to be delivered pursuant
to the Patent Agreement, the Trademark Agreement and the Security Agreement
(such other instruments and documents, together with the Patent Agreement, the
Trademark Agreement, the Security Agreement and the Debenture, the “Security Documents,”
which Security Documents, together with this Agreement, and the Note, are
collectively referred to herein as the “Loan
Documents”).

    


    (b)           Possible Additional Loan Amounts.  Upon a
request by the Company in the form of Exhibit E hereto (each a
“Request for Loan
Advance”), Lender may, in its sole and absolute discretion, advance
additional loan amounts (each a “Loan Advance”), up to
an aggregate amount of US$1,000,000.00 in all loan amounts advanced hereunder,
as requested by the Company (but subject to Lender’s right to reject any such
request for any reason), whereupon Lender shall annotate the Table of Advances
and Repayment of Principal attached to the Note to record such Loan Advance,
thereby increasing the Loan and the then outstanding principal balance owed
under the Note by the amount of such advance.  The Company hereby
authorizes Lender to make such annotations and such annotations shall be deemed
to be amendments to the Note duly authorized and agreed by the
Company.

     

    2. Representations, Warranties
and Certain Covenants of the Lender.  The Lender hereby
represents, warrants and covenants to the Company as to itself,  as
follows:

     

    (a) The
Lender understands that the offering and sale of the Note are intended to be
exempt from registration under the Securities Act of 1933, as amended (the
“Securities
Act”), by
virtue of Section 4(2) thereof and the provisions of Regulation D
promulgated thereunder and, in accordance therewith and in furtherance thereof,
the Lender further represents and warrants to and agrees with the Company that
the Lender is purchasing the Note for such Lender’s own account, for investment
only, and not with a view to, or for sale in connection with, any distribution
of the Note in violation of the Securities Act, any rule or regulation
thereunder, or any state securities laws.

     

    (b) The
Lender is an "accredited investor" within the meaning of Rule 501 of
Regulation D, as promulgated by the Securities and Exchange Commission, as
presently in effect.

     

    3. Representations and
Warranties of the Company.  The Company hereby represents and
warrants to the Lender as follows as of the date set forth above (and, in the
event of any advance under the Note, as of the date of any request for an
advance under the Note, as applicable):

     

    (a) Corporate Power; Binding
Effect; Non-Contravention.  The Company and each of its
subsidiaries that is a party to any Loan Document (each, a “Subsidiary” and
collectively, the “Subsidiaries”) has
all requisite power and full legal right to execute and deliver this Agreement
and each of the other Loan Documents to which it is a party, and to perform all
of its obligations hereunder and thereunder in accordance with the respective
terms hereof and thereof.  The Loan Documents and the transactions
contemplated thereby have been duly approved and authorized by all requisite
company action on the part of the Company and each of the Subsidiaries, and the
Loan Documents have been duly executed and delivered by the Company and by each
of the Subsidiaries specified as a party thereto and constitute the legal, valid
and binding obligations of the Company and each such Subsidiary, enforceable
against them in accordance with their respective terms.  The
execution, delivery and performance by the Company and the Subsidiaries, as
applicable, of the Loan Documents in accordance with their respective terms, and
the consummation by the Company and each of the Subsidiaries, as applicable, of
the transactions contemplated thereby, will not result (with or without the
giving of notice or the lapse of time or both) in any conflict, violation,
breach, or default, or the creation of any lien or encumbrance of any nature
(“Liens”) upon
any assets of the Company, (other than pursuant to the Security Documents), or
the termination, acceleration, vesting or modification of any right or
obligation, under or in respect of (i) the memorandum of association or
articles of association of the Company or any Subsidiary, as amended to date,
(ii) any judgment, decree, order, statute, rule, or regulation binding on
or applicable to the Company or any Subsidiary, or (iii) any agreement or
instrument to which the Company or any Subsidiary is a party or by which it or
any of its assets is or are bound.

     

    (b) Proposed
Acquisition.  The execution and delivery by the Company of any
definitive document governing the acquisition of the Company by the Lender
pursuant to the contemplated terms set forth in that certain non-binding Deed of
Understanding Relating to Proposed Offer for the Whole Issued Share Capital
executed by each of Company and Lender on or about the date hereof and attached
hereto as Exhibit F, and
the consummation of any such acquisition or of any other change of control of
the Company involving the Lender as the acquiror, will not result (with or
without the giving of notice or the lapse of time or both) in any conflict,
violation, breach, or default, or the creation of any Lien upon any assets of
the Company, or the termination, acceleration, vesting or modification of any
right or obligation, under or in respect of (i) the memorandum of
association or articles of association of the Company or any Subsidiary, as
amended to date, (ii) any judgment, decree, order, statute, rule, or
regulation binding on or applicable to the Company or any Subsidiary, or
(iii) any agreement or instrument to which the Company or any Subsidiary is
a party or by which it or any of its assets is or are bound.

     

    (c)           Properties, Leases,
Etc.  Except with respect to Liens in favor of the Lender
pursuant to the Security Documents and as otherwise previously notified by the
Company in a written communication to the Lender specifically identifying in
language prepared for the Lender by the Company an exception to the
representations and warranties of the Company set forth herein, the Company and
each Subsidiary has (A) good, valid and marketable title to all of the
assets and properties owned by it, free and clear of all Liens, (B) valid
title to the lessee interest in all assets and properties leased by the Company
or such Subsidiary as lessee, free and clear of all Liens, and (C) full
right to hold and use all of its assets and properties used in or necessary to
its businesses and operations, in each case all free and clear of all Liens, and
in each case subject to applicable laws and the terms of any lease under which
the Company or such Subsidiary leases such assets or properties as
lessee.  All such assets and properties are in good condition and
repair, reasonable wear and tear excepted, and are adequate and sufficient to
carry on the businesses of the Company and such Subsidiary as presently
conducted.  Neither the Company nor any Subsidiary owns any real
property or any interest (other than a leasehold interest) in any real
property.  The Company's and each Subsidiary’s leasehold interests are
subject to no Lien, and the Company and each Subsidiary is in quiet possession
of the properties covered by such leases.

     

    (d)           Tax
Matters.  The Company and each Subsidiary has timely filed all
tax returns required to be filed by it, each such tax return has been prepared
in compliance with all applicable laws and regulations, and all such tax returns
are true and accurate in all material respects.  All taxes due and
payable by the Company and each Subsidiary have been paid in respect of any
period ending on or before the date hereof, and neither the Company nor any
Subsidiary will be liable for any additional taxes in respect of any taxable
period ending on or before the date hereof in an amount that exceeds the
corresponding reserve therefor, if any, reflected in the accounting records of
the Company or any Subsidiary as of the date hereof.  No claim has
ever been made by a taxing authority in a jurisdiction where the Company or any
Subsidiary does not pay tax or file tax returns that the Company or any
Subsidiary is or may be subject to taxes assessed by such
jurisdiction.  There are no Liens for taxes (other than current taxes
not yet due and payable) on the assets of the Company or any
Subsidiary.  There is no action, suit, taxing authority proceeding, or
audit with respect to any tax now in progress, pending, or, to the Company's
knowledge, threatened, against or with respect to the Company or any
Subsidiary.  No deficiency or proposed adjustment in respect of taxes
that has not been settled or otherwise resolved has been asserted or assessed by
any taxing authority against the Company or any Subsidiary.  Neither
the Company nor any Subsidiary has consented to extend the time in which any tax
may be assessed or collected by any taxing authority.  Neither the
Company nor any Subsidiary has requested or been granted an extension of the
time for filing any tax return to a date on or after the Closing.  The
Company and each Subsidiary has withheld and paid all taxes required to have
been withheld and paid by it in connection with amounts paid or owing to any
employee, creditor, independent contractor or other third party.

     

    (e)           Governmental and Other
Third-Party Consents.  Except for filings or other notices
required by any applicable securities laws (which will be completed by the
Company or any applicable Subsidiary within the applicable periods) or as
otherwise required pursuant to the terms of the Loan Documents, no consent,
approval or authorization of, or registration, designation, declaration or
filing with, any governmental authority, federal or other, or any other person
or entity is required on the part of the Company or any Subsidiary in connection
with its execution, delivery or performance of the Loan Documents and its
consummation of the transactions contemplated hereby and thereby, or the
continued conduct of the present business of the Company or any Subsidiary after
the Closing.

     

    (f)           Compliance with Securities
Laws.  Assuming the accuracy of the representations of the
Lender contained in Section 2 hereof, the offer, issuance and delivery of
the Note as contemplated by this Agreement are exempt from the registration
requirements of the Securities Act, and are exempt from registration or
qualification under applicable states' securities laws.  Neither the
Company nor anyone authorized by the Company to act on its behalf will hereafter
offer to sell, solicit offers to buy, or sell, any securities of the Company so
as to subject the offer, issuance and sale of the Note to the registration
requirements of the Securities Act.

     

    (g)           Litigation.  No
litigation, arbitration or administrative proceeding is taking place, pending
or, to the knowledge of the Company, threatened against it or any of the
Subsidiaries, in which (i) the legality, validity, binding effect,
enforceability or admissibility in evidence of the Loan Documents, (or any of
them) is challenged, questioned or repudiated or (ii) there is a reasonable
likelihood of an adverse determination, and if adversely determined would or is
reasonably likely to have a material adverse effect.

     

    (h)           Insolvency.  Save
to the extent otherwise previously notified by the Company in a written
communication to the Lender specifically identifying in language prepared for
the Lender by the Company an exception to the representations and warranties of
the Company set forth herein, neither the Company nor any of the Subsidiaries (a
"relevant person") has taken any corporate action nor have any other steps been
taken or legal proceedings been started or (to the best of the knowledge and
belief of the Company) threatened against such relevant person for its
winding-up, dissolution, administration or re-organisation or for the
appointment of a receiver, administrator, administrative receiver, trustee or
similar officer of such relevant person or of any or all of its assets or
revenues.

     

    (i)           Brokers.  Save
to the extent otherwise previously notified by the Company in a written
communication to the Lender specifically identifying in language prepared for
the Lender by the Company an exception to the representations and warranties of
the Company set forth herein, no finder, broker, agent or other intermediary has
acted for or on behalf of the Company in connection with the negotiation or
consummation of the transactions contemplated hereby, and no fee will be payable
by the Company or any Subsidiary to any such person in connection with such
transactions.

     

    (j)           Disclosure.  No
representation or warranty by the Company in this Agreement or any other Loan
Document, in any schedule to this Agreement or any other Loan Document, or in
the Note, contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact required to be stated herein or
therein or necessary to make the statements contained herein or therein not
false or misleading.

     

    (k)           Repetition of
Representations and Warranties.  All of the representations and
warranties in this Section 3 are made by the Company on:

     

    (A)           the
date of this Agreement;

     

    (B)           each
date on which a Request for Loan Advance is submitted by theCompany;
and

     

    (C)           the
date on which each Loan Advance has been requested to be paid.

     

    4. Indemnification by the
Company.  The Company agrees to indemnify and hold harmless the
Lender and the officers, directors, and affiliates and each other person, if
any, who controls the Lender within the meaning of Section 15 of the Securities
Act, from and against any and all loss, liability, claim, damage and expense
whatsoever (including, but not limited to, any and all expenses reasonably
incurred in investigating, preparing or defending against any litigation,
commenced or threatened or any claim whatsoever) arising out of or based upon
any false representation or warranty or breach or failure by the Company to
comply with any covenant or agreement made by the Company herein or in any other
Loan Document furnished by the Company to any of the foregoing in connection
with this transaction.

     

    5.           Miscellaneous
Provisions.

     

    (a) Amendments, Consents and
Waivers.

     

    (i) This
Agreement or any provision hereof may be amended or terminated by the agreement
of the Company and the Lender, and the observance of any provision of this
Agreement that is for the benefit of the Lender may be waived (either generally
or in a particular instance, and either retroactively or prospectively), and any
consent, approval, or other action to be given or taken by the Lender pursuant
to this Agreement, may be given or taken by means of waiver, consent, approval
or other action of the Lender; provided, however, that the
Lender may, in writing, waive the benefits of any provision of this
Agreement.

     

    (ii) No course
of dealing between the Company and the Lender will operate as a waiver of any of
the Company's or the Lender's rights under this Agreement.  No waiver
of any breach or default hereunder will be valid unless in a writing signed by
the waiving party.  No failure or other delay by any person in
exercising any right, power, or privilege hereunder will be or operate as a
waiver thereof, nor will any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power, or
privilege.

     

    (b) Notices.  All
notices, requests, payments, instructions or other documents to be given
hereunder will be in writing or by written telecommunication, and will be deemed
to have been duly given if (i) delivered personally (effective upon
delivery), (ii) mailed by certified mail, return receipt requested, postage
prepaid (effective five business days after dispatch), (iii) sent by a
reputable, established courier service that guarantees overnight delivery
(effective the next business day) or (iv) dispatched by telecopier if the
telecopy is received in complete, readable form (effective upon dispatch),
addressed as follows (or to such other address as the recipient party may have
furnished to the sending party):

     

    (i) If to the
Company:

    


    York
Pharma plc

    York
House

    327 Upper
Fourth Street

    Milton
Keynes

    Buckinghamshire

    MK9
1EH

    United
Kingdom

    Attention:  Ian
Miscampbell

    Fax: +44
(0)  207 764021

     

    with
copies (which will not constitute notice) sent at the same time and by the same
means to:

    


    Morrison
& Foerster (U.K.) LLP

    CityPoint

    One
Ropemaker Street

    London

    EC2Y
9AW

    Attention:  James
Gubbins & Bradley Theobald

    Telecopier
No.:  + 44 (0) 207 496 8560 & + 44 (0) 207 496 8525

    


    (ii) If to
Lender, to

    


    ULURU
Inc.

    4452
Beltway Drive

    Addison,
Texas  75001

    Attention:  President

    Telecopier
No.: (214) 905 5130

     

    with a
copy (which
will not constitute notice) sent at the same time and by the same means
to:

     

    Bingham
McCutchen LLP

    One
Federal Street

    Boston,
Massachusetts  02110

    Attention:  John
J. Concannon III, Esq.

    Telecopier
No.  (617) 951-8736

     

    (c) Counterparts.  This
Agreement may be executed by the parties in separate counterparts, each of which
when so executed and delivered will be an original, but all of which together
will constitute one and the same instrument.  In pleading or proving
this Agreement, it will not be necessary to produce or account for more than one
such complete counterpart.

     

    (d) Captions.  The
captions of sections or subsections of this Agreement are for reference only and
will not affect the interpretation or construction of this
Agreement.

     

    (e) Binding Effect and
Benefits.  This Agreement will bind and inure to the benefit of
the parties hereto and their respective successors and permitted
assigns.  Except as otherwise provided in this Agreement, the
provisions of this Agreement that are for the Lender's benefit will inure to the
benefit of all permitted transferees of the Note, and the applicable provisions
of this Agreement that bind the Lender will bind all transferees of the
Note.  Nothing in this Agreement is intended to or will confer any
rights or remedies on any person other than the parties hereto and their
respective successors and permitted assigns.

     

    (f) Assignment.  This
Agreement and the rights and obligations hereunder may not be assigned by the
Company without the prior written consent of the Lender in their sole and
absolute discretion.  This Agreement and the rights and obligations
hereunder and under the Note may be transferred by the Lender in the Lender’s
sole discretion at any time, in whole or in part, including, without limitation,
to affiliates of the Lender, without the consent of any other party
hereto.

     

    (g) Further
Assurances.  From time to time on and after the Closing, the
Company will promptly execute and deliver all such further instruments and
assurances, and will promptly take all such further actions, as the Lender may
reasonably request in order more effectively to effect or confirm the
transactions contemplated by this Agreement and/or any of the Loan Documents and
to carry out the purposes hereof and thereof.

     

    (h) Severability.  No
invalidity or unenforceability of any section of this Agreement or any portion
thereof will affect the validity or enforceability of any other section or the
remainder of such section.

     

    (i) Entire
Agreement.  The Loan Documents, together with the exhibits and
schedules thereto, contains the entire understanding and agreement among the
parties, or between or among any of them, and supersedes any prior
understandings or agreements between or among any of them, with respect to the
subject matter hereof.

     

    (j) Governing Law; Consent to
Jurisdiction.  This Agreement will be governed by and
interpreted and construed in accordance with the internal laws of the State of
Texas, without regards to conflicts of laws principles.  The Company
agrees that any action or claim arising out of any dispute in connection with
this Agreement, any rights or obligations hereunder or the performance or
enforcement of such rights or obligations may be brought in the courts of the
State of Texas or any federal court sitting therein, and consents to the
non-exclusive jurisdiction of such court and to service of process in any such
suit being made upon the Company by mail at the address specified
herein.  The Company hereby waives any objection that it may now or
hereafter have to the venue of any such suit or any such court or that such suit
is brought in an inconvenient court.

     

    (k)           Waiver of Jury
Trial.  

     

    THE
COMPANY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM
ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR
OBLIGATIONS HEREUNDER OR THE PERFORMANCE OR ENFORCEMENT OF ANY SUCH RIGHTS OR
OBLIGATIONS.  Except as prohibited by law, the Company waives any
right which it may have to claim or recover in any litigation referred to in the
preceding sentence any special, exemplary, punitive or consequential damages or
any damages other than, or in addition to, actual damages.  The
Company (a) certifies that neither the Lender nor any representative, agent
or attorney of the Lender has represented, expressly or otherwise, that the
Lender would not, in the event of litigation, seek to enforce the foregoing
waivers or other waivers contained in this Agreement, and (b) acknowledges that,
in entering into this Agreement and the other Loan Documents to which the Lender
is a party, the Lender is relying upon, among other things, the waivers and
certifications contained in this paragraph.

     

    (l)           Expenses.  The
Company agrees to pay on demand all costs and expenses, including reasonable
fees and disbursements of all counsel (in each jurisdiction in which, from time
to time, the Company or any Subsidiary is located or has assets) for the Lender,
incurred in connection with the negotiation, preparation, execution and delivery
of the Loan Documents and the consummation of the transactions contemplated
thereby, and all costs and expenses, including reasonable fees and disbursements
of all counsel (in each jurisdiction in which, from time to time, the Company or
any Subsidiary is located or has assets) for the Lender, incurred in connection
with any amendments to or waivers under or in respect of the Loan Documents from
time to time or in connection with enforcing any of Lender’s rights
hereunder.

     

    


    [Signatures
on Following Page.]


    
      
        
          


           

          --

        

         


      

      
         


        
          

        

      

      
         


      

    


    IN WITNESS WHEREOF, the Company and the
Lender have duly executed and delivered this Agreement on and as of the date
first above written.

    


    


    COMPANY:                                                    YORK PHARMA PLC

    


    


     

    By:   /s/ Richard
Anderson                                                                        

    Name:  Richard
Anderson

    Title:    Chief
Executive Officer

    


    


    


    


    
      	
              LENDER:

            	
              ULURU
    INC.

            


    

    


    


     

    By: 
/s/ Terrance K.
Wallberg                                                                      

    Name:  Terrance K.
Wallberg

    Title:     Chief
Financial Officer

    


    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    


    Exhibit
A

    


    


    Form of
Note

    


    


    


    THIS
NOTE WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED.  THIS NOTE MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM.

    


    PROMISSORY
NOTE

     

     March
31, 2009

    Boston,
Massachusetts

     

    


     

    FOR VALUE RECEIVED, the
undersigned York Pharma plc, a public limited company incorporated under the
laws of England and Wales with company number 04422613 (“Borrower”), hereby
promises to pay to the order of ULURU Inc., a Nevada corporation (“Lender”), at Lender’s
office at 4452 Beltway Drive, TX 75001, upon the earliest of (i) September
___, 2009, (ii) the date that is thirty (30) days following the receipt by
either the Borrower or the Lender of any written communication from the other
party stating that such party has decided to no longer pursue the execution and
delivery of a definitive agreement (the “Acquisition Agreement”) by and
among Borrower, Lender and certain other parties, as appropriate, governing the
proposed transaction discussed in that certain non-binding Deed of Understanding
Relating to Proposed Offer for the Whole Issued Share Capital executed by each
of Borrower and Lender on or about the date hereof and attached hereto as Exhibit A, and (iii)
the date that is thirty (30) days following the termination for any reason of
the Acquisition Agreement, but subject to the provisions hereinafter set forth,
the outstanding principal balance set forth on the Table of Advances and
Repayment of Principal attached hereto and incorporated herein, and interest on
the outstanding principal balance owing hereunder from time to time, through and
including the repayment date, in full at a rate per annum equal to ten percent
(10%).  All capitalized terms used in this Note and not otherwise
defined herein shall have the same meanings herein as in that certain Note
Purchase Agreement, dated as of March 31, 2009 (as amended and in effect from
time to time, the “Note Purchase
Agreement”), by and between Borrower and Lender.

     

    Upon
request by Borrower in writing as provided in the Note Purchase Agreement,
Lender may, in its sole and absolute discretion, advance amounts requested by
Borrower, whereupon Lender shall annotate the Table of Advances and Repayment of
Principal attached hereto to record such advance by increasing the then
outstanding principal balance by the amount of such advance.  Borrower
hereby authorizes Lender to make such annotations and such annotations shall be
deemed to be amendments to this Note duly authorized and agreed by
Borrower.

     

    At such
time as all or any portion of the outstanding principal balance owing hereunder
is paid by Borrower, Borrower shall contemporaneously pay at such time all then
accrued but unpaid interest due hereunder.  Upon such payment by
Borrower, Lender shall annotate the Table of Advances and Repayment of Principal
attached hereto to record such payment.  Borrower hereby authorizes
Lender to make such annotations and such annotations shall be deemed to be
amendments to this Note duly authorized and agreed by Borrower.  Any
payments made hereunder shall be applied (i) first to any outstanding
expenses owed by Borrower as provided in the Note Purchase Agreement,
(ii) second to any accrued but unpaid interest hereunder and
(iii) third to repay outstanding principal.  In the event that
any rate of interest required to be paid pursuant to this Note exceeds the
maximum rate legally enforceable, the rate of interest so required to be paid
shall be automatically reduced to the maximum rate legally enforceable, and any
excess paid over such maximum enforceable rate shall be automatically credited
to the outstanding principal balance hereof.

     

    This Note
evidences borrowings under, and has been issued by Borrower in accordance with
the terms of, the Note Purchase Agreement.  Lender and any holder
hereof is entitled to the benefits of the Note Purchase Agreement and the other
Loan Documents, and may enforce the agreements of Borrower contained therein,
and any holder hereof may exercise the respective remedies provided for thereby
or otherwise available in respect thereof, all in accordance with the respective
terms thereof.

     

    If any
one or more of the following events (each an “Event of Default”) shall
occur, then, in any such event, (save to the extent otherwise previously
notified in writing and agreed to by the Lender in writing) all amounts payable
under this Note, including unpaid interest accrued hereon, shall accelerate and
become automatically and immediately due and payable without notice or
demand.  Any amount unpaid after the occurrence of an Event of Default
shall accrue interest thereon at a rate per annum equal to fourteen percent
(14%) per annum from the date thereof through and including the date on which
all such amounts are paid in full.

     

    (a)        Borrower
shall fail to make due and punctual payment of any interest or principal on this
Note or any other cost or expense provided for herein or in any of the Loan
Documents  when the same shall become due and payable;

     

    (b)        Borrower
shall (i) apply for or consent to the appointment of a receiver, trustee or
liquidator of any of its properties or assets, (ii) admit in writing its
inability to pay its debts as they mature, (iii) make a general assignment for
the benefit of its creditors, (iv) be adjudicated a bankrupt or insolvent, or
(v) file a voluntary petition in bankruptcy, or a petition or an answer seeking
reorganization or an arrangement with creditors to take advantage of any
bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or
liquidation law or statute, or an answer admitting the material allegations of a
petition filed against it in any proceeding under any such law;

     

    (c)        an
order, judgment or decree shall be entered, with or without the application,
approval or consent of Borrower, by any court of competent jurisdiction,
approving a petition seeking the reorganization or liquidation of Borrower or
all or a substantial part of the properties or assets of Borrower, or appointing
a receiver, trustee or liquidator of Borrower;

     

    (d)        Borrower
shall breach any representation, warranty or covenant contained in any of the
Loan Documents  or in the Merger Agreement;

     

    (e)        Borrower
shall terminate any contract or agreement that is material (as determined by
Lender in its sole discretion) to Borrower’s business or operations without the
prior written consent of Lender; or

     

    (f)        Any
event shall occur that constitutes an MAE (as defined in that certain Security
Agreement, dated on or about the date hereof, by and between the Lender and the
Borrower).

     

    Upon the
occurrence of any Event of Default hereunder, Lender may, by notice in writing
to Borrower (a “Notice of Default”), declare
all amounts owing with respect to the Note Purchase Agreement, the Note and the
other Loan Documents to be accelerated and they shall thereupon forthwith become
immediately due and payable upon notice in writing to Borrower without
presentment, other demand, protest or other notice of any kind, all of which are
hereby expressly waived by Borrower.

     

    Upon
giving to Borrower any Notice of Default, Lender, if owed any amount with
respect to the Loans, may proceed to protect and enforce its rights by suit in
equity, action at law or any other appropriate proceeding, whether for the
specific performance of any covenant or agreement contained in the Note Purchase
Agreement and the other Loan Documents or any instrument pursuant to which the
obligations to Lender are evidenced, including as permitted by applicable law
the obtaining of the ex parte appointment
of a receiver, and, if such amount shall have become due, by declaration or
otherwise, proceed to enforce the payment thereof or any other legal or
equitable right of Lender.  No remedy herein conferred upon Lender or
the holder of any Note is intended to be exclusive of any other remedy and each
and every remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute or any other provision of law.

     

    No delay
or omission on the part of Lender or any holder hereof in exercising any right
hereunder shall operate as a waiver of such right or of any other rights of
Lender or such holder, nor shall any delay, omission or waiver on any one
occasion be deemed a bar or waiver of the same or any other right on any future
occasion.

     

    Borrower
and every endorser and guarantor of this Note or the obligation represented
hereby assents to any extension or postponement of the time of payment or any
other indulgence, to any substitution, exchange or release of collateral and to
the addition or release of any other party or person primarily or secondarily
liable.

     

    THIS
NOTE AND THE OBLIGATIONS OF BORROWER HEREUNDER SHALL FOR ALL PURPOSES BE
GOVERNED BY AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS
OF THE STATE OF TEXAS, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. BORROWER
AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS NOTE MAY BE BROUGHT IN THE
COURTS OF THE STATE OF TEXAS OR ANY FEDERAL COURT SITTING THEREIN, AND CONSENTS
TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY
SUCH SUIT BEING MADE UPON BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN THE NOTE
PURCHASE AGREEMENT. BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT
IS BROUGHT IN AN INCONVENIENT COURT.

     

    BORROWER WAIVES ITS RIGHT TO A JURY
TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS NOTE, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE
PERFORMANCE OR ENFORCEMENT OF ANY SUCH RIGHTS OR
OBLIGATIONS.  Except as prohibited by law, Borrower waives any
right which it may have to claim or recover in any litigation referred to in the
preceding sentence any special, exemplary, punitive or consequential damages or
any damages other than, or in addition to, actual damages. Borrower (a)
certifies that neither Lender nor any representative, agent or attorney of
Lender has represented, expressly or otherwise, that Lender would not, in the
event of litigation, seek to enforce the foregoing waivers or other waivers
contained in this Note, and (b) acknowledges that, in entering into this Note,
Lender is relying upon, among other things, the waivers and certifications
contained in this paragraph.

     

    Borrower
agrees to pay all costs and expenses, including reasonable attorneys’ fees and
disbursements, incurred in connection with the enforcement by Lender of this
Note after any demand for repayment of all or any portion of the amounts due
under this Note.

     

    This Note
may not be assigned by Borrower without the prior written consent of Lender,
which consent may be withheld in the sole and absolute discretion of
Lender.

     

    This Note
shall be deemed to take effect as a sealed instrument under the laws of the
State of Texas.

     

    [Signature
on Following Page]

     


    
      
         


      

      
         


        
          

        

      

      
         


        
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    IN WITNESS WHEREOF, the
undersigned has caused this Note to be executed and delivered by its duly
authorized officer(s) as of the day and year first above written.

     

    YORK
PHARMA PLC

     

    By:                                                                

    Name:

    Title:

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    TABLE
OF ADVANCES AND

    REPAYMENTS
OF PRINCIPAL

    


    


    Advances and payments of principal of
this Note were made on the dates and in the amounts specified
below:

    


    
      	
               

              Date

            	
              Amount
      of Loan

            	
              Amount
      of Principal Repaid

            	
              Principal
      Balance

            	
               

              Notation
      Made By

            
	
              3/31/2009

               

            	
              $500,000.00

            	 
      	
              $500,000.00