0001144204-12-014279.txt : 20120312 0001144204-12-014279.hdr.sgml : 20120310 20120312163430 ACCESSION NUMBER: 0001144204-12-014279 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20120309 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Completion of Acquisition or Disposition of Assets ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20120312 DATE AS OF CHANGE: 20120312 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Synthetic Biologics, Inc. CENTRAL INDEX KEY: 0000894158 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 133808303 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12584 FILM NUMBER: 12684369 BUSINESS ADDRESS: STREET 1: 3930 VARSITY DRIVE CITY: ANN ARBOR STATE: MI ZIP: 48108 BUSINESS PHONE: 734-332-7800 MAIL ADDRESS: STREET 1: 3930 VARSITY DRIVE CITY: ANN ARBOR STATE: MI ZIP: 48108 FORMER COMPANY: FORMER CONFORMED NAME: ADEONA PHARMACEUTICALS, INC. DATE OF NAME CHANGE: 20081027 FORMER COMPANY: FORMER CONFORMED NAME: PIPEX PHARMACEUTICALS, INC. DATE OF NAME CHANGE: 20061214 FORMER COMPANY: FORMER CONFORMED NAME: SHEFFIELD PHARMACEUTICALS INC DATE OF NAME CHANGE: 19970730 8-K 1 v304692_8-k.htm CURRENT REPORT

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported): March 9, 2012

Synthetic Biologics, Inc.

(Exact name of registrant as specified in charter)

Nevada

(State or other jurisdiction of incorporation)

01-12584		13-3808303
(Commission File Number)		(IRS Employer Identification No.)

3985 Research Park Drive, Suite 200

Ann Arbor, MI 48108

(Address of principal executive offices and zip code)

(734) 332-7800

(Registrant’s telephone number including area code)

Adeona Pharmaceuticals, Inc.

(Former Name and Former Address)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement

In connection with the change in business focus of Synthetic Biologics, Inc. (the “Company”), on March 8, 2012, the Company entered into a Membership Interest Purchase Agreement and certain related agreements listed below as exhibits, pursuant to which the Company divested all of its interest in Adeona Clinical Laboratory, LLC (the “Lab”) to Hartlab, LLC, an entity controlled by the Lab’s former owner, in consideration for (i) the immediate assignment of the Lab’s outstanding accounts receivable up through the date of closing, plus (ii) Seven Hundred Thousand Dollars ($700,000) payable pursuant to the terms of a two-year non-recourse promissory note secured by all of the assets of the Lab.

The information contained in this Item 1.01 is qualified in its entirety by the copy of the agreements attached to this Current Report on Form 8-K and incorporated herein by this reference.

Item 2.01. Completion of Acquisition or Disposition of Assets

Reference is made to the information set forth in Item 1.01 above.

Item 9.01. Financial Statements and Exhibits

(b)

Pro Forma Financial Information.

The following unaudited pro forma condensed financial statements are required pursuant to Item 9.01(b) of the Current Report on Form 8-K and include adjustments to the Company’s Balance Sheet to reflect the sale of the Lab and to exclude the Lab results from the Company’s Statement of Operations.

The data are presented for informational purposes only and are not intended to represent or be indicative of the results of operations or financial condition of the Company that actually would have been reported had the disposition of the Lab been completed as of the dates presented, and should not be taken as representative of future results of operations or financial condition of the Company. The unaudited pro forma condensed financial information should be read in conjunction with the historical consolidated financial statements and the accompanying notes of the Company.

SYNTHETIC BIOLOGICS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET

	As of December 31, 2010									As of December 31, 2009
	Historical Synthetic Biologics			Disposition			Pro Forma Synthetic Biologics			Historical Synthetic Biologics			Disposition			Pro Forma Synthetic Biologics
	(In thousands)
Assets
Current Assets:
Cash and cash equivalents	$	2,649		$	-		$	2,649		$	2,715		$	-		$	2,715
Accounts receivable, net		339			-			339			31			-			31
Other current assets		343			-			343			9			-			9
Total Current Assets		3,331			-			3,331			2,755			-			2,755

Property and equipment		511			(36	)		475			1,052			(47	)		1,005
Goodwill		178			(178	)		-			178			(178	)		-
Long term note receivable		-			700			700			-			700			700
Deposits and other assets		91			-			91			91			-			91

Total Assets	$	4,111		$	486		$	4,597		$	4,076		$	475		$	4,551

Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable	$	266		$	-		$	266		$	401		$	-		$	401
Accrued liabilities		210			-			210			8			-			8
Current portion of capital lease		25			(25	)		-			17			(17	)		-
Total Current Liabilities		501			(25	)		476			426			(17	)		409

Long Term Liabilities:
Accounts payable		32			-			32			93			-			93
Capital lease		-			-			-			13			(13	)		-
Total Liabilities		533			(25	)		508			532			(30	)		502

Stockholders' Equity
Series A, convertible preferred stock, $0.001 par value; 5,000,000 shares authorized, none issued and outstanding		-			-			-						-			-
Preferred stock, $0.001 par value; 10,000,000 shares authorized, none issued and outstanding		-			-			-			-			-			-
Common stock, $0.001 par value; 100,000,000 shares authorized, 23,420,189 issued and 23,338,707 outstanding and 21,530,834 issued and 21,449,352 outstanding		23			-			23			21			-			21
Additional paid-in capital		47,279			-			47,279			45,553			-			45,553
Accumulated deficit		(43,724	)		511			(43,213	)		(42,013	)		505			(41,508	)
Subscription receivable		-			-			-			(17	)		-			(17	)
Total Stockholders' Equity		3,578			511			4,089			3,544			505			4,049

Total Liabilities and Stockholders' Equity	$	4,111		$	486		$	4,597		$	4,076		$	475		$	4,551

SYNTHETIC BIOLOGICS, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET

	As of September 30, 2011									As of September 30, 2010
	Historical Synthetic Biologics			Disposition			Pro Forma Synthetic Biologics			Historical Synthetic Biologics			Disposition			Pro Forma Synthetic Biologics
Assets	(In thousands)
Current Assets:
Cash and cash equivalents	$	4,609		$	-		$	4,609		$	3,305		$	-		$	3,305
Short-term investments		2,866						2,866			-			-			-
Accounts receivable, net		495			-			495			387			-			387
Other current assets		124			-			124			9			-			9
Total Current Assets		8,094			-			8,094			3,701			-			3,701

Property and equipment		371			(26	)		345			710			(39	)		671
Goodwill		178			(178	)		-			178			(178	)		-
Long term note receivable		-			700			700			-			700			700
Deposits and other assets		32			-			32			91			-			91

Total Assets	$	8,675		$	496		$	9,171		$	4,680		$	483		$	5,163

Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable	$	193		$	-		$	193		$	307		$	-		$	307
Accrued liabilities		41			-			41			8			-			8
Current portion of capital lease		-			-			-			17			(17	)		-
Total Current Liabilities		234			-			234			332			(17	)		315

Long Term Liabilities:
Accounts payable		2			-			2			107			-			107
Capital lease		-			-			-			2			(2	)		-
Total Liabilities		236			-			236			441			(19	)		422

Stockholders' Equity
Series A, convertible preferred stock, $0.001 par value; 5,000,000
shares authorized, none issued and outstanding		-			-			-						-			-
Preferred stock, $0.001 par value; 10,000,000 shares authorized,
none issued and outstanding		-			-			-			-			-			-
Common stock, $0.001 par value; 100,000,000 shares authorized,
28,209,126 issued and 28,127,644 outstanding and
23,152,068 issued and 23,070,586 outstanding		28			-			28			23			-			23
Additional paid-in capital		57,099			-			57,099			47,070			-			47,070
Accumulated deficit		(48,688	)		496			(48,192	)		(42,854	)		502			(42,352	)
Subscription receivable		-			-			-			-			-			-
Total Stockholders' Equity		8,439			496			8,935			4,239			502			4,741

Total Liabilities and Stockholders' Equity	$	8,675		$	496		$	9,171		$	4,680		$	483		$	5,163

SYNTHETIC BIOLOGICS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS

	For the year ended December 31, 2010									For the year ended December 31, 2009
	Historical Synthetic Biologics			Disposition			Pro Forma Synthetic Biologics			Historical Synthetic Biologics			Disposition			Pro Forma Synthetic Biologics
		(In thousands, except per share)
Revenues:
License revenue, net	$	2,125		$	-		$	2,125		$	-		$	-		$	-
Laboratory fees, net		551			(551	)		-			103			(103	)		-
Grant revenue		489			-			489			-			-			-
Total revenues, net		3,165			(551	)		2,614			103			(103	)		-

Operating Costs and Expenses:
General and administrative		2,701			(590	)		2,111			2,709			(262	)		2,447
Research and development		1,580			-			1,580			949			-			949
Costs of laboratory services		468			(468	)		-			127			(127	)		-
Total Operating Costs and Expenses		4,749			(1,058	)		3,691			3,785			(389	)		3,396

Loss from Operations		(1,584	)		507			(1,077	)		(3,682	)		286			(3,396	)

Other Income (Expense):
Gain on sale of Adeona Clinical Laboratory		-			511			511			-			505			505
Interest income		-			-			-			3			-			3
Impairment loss on equipment		(121	)		-			(121	)		-			-			-
Other income (expense)		(6	)		10			4			(52	)		-			(52	)
Total Other Expenses, net		(127	)		521			394			(49	)		505			456

Net Loss from Continuing Operations	$	(1,711	)	$	1,028		$	(683	)	$	(3,731	)	$	791		$	(2,940	)

Net Loss from Continuing Operations Per Share - Basic and Dilutive	$	(0.08	)				$	(0.03	)	$	(0.18	)				$	(0.14	)

Weighted average number of shares outstanding during the period - Basic and Dilutive		22,393,568						22,393,568			21,318,906						21,318,906

SYNTHETIC BIOLOGICS, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS

	For the nine months ended September 30, 2011									For the nine months ended September 30, 2010
	Historical Synthetic Biologics			Disposition			Pro Forma Synthetic Biologics			Historical Synthetic Biologics			Disposition			Pro Forma Synthetic Biologics

License revenue, net	$	-		$	-		$	-		$	2,125		$	-		$	2,125
Laboratory fees, net		972			(972	)		-			420			(420	)		-
Total revenues, net		972			(972	)		-			2,545			(420	)		2,125

Operating Costs and Expenses:
General and administrative		2,649			(311	)		2,338			2,000			(223	)		1,777
Research and development		801			-			801			963			-			963
Costs of laboratory services		806			(806	)		-			430			(430	)		-
Total Operating Costs and Expenses		4,256			(1,117	)		3,139			3,393			(653	)		2,740

Loss from Operations		(3,284	)		145			(3,139	)		(848	)		233			(615	)

Other Income (Expense):
Warrant expense		(1,492	)		-			(1,492	)		-			-			-
Change in fair value of stock warrants		(242	)		-			(242	)		-			-			-
Gain on sale of Adeona Clinical Laboratory		-			496			496			-			502			502
Interest income		7			-			7			-			-			-
Impairment loss on equipment		-			-			-			-			-			-
Impairment loss on goodwill		-			-			-			-			-			-
Other income (expense)		47			-			47			7			3			10
Total Other Expenses, net		(1,680	)		496			(1,184	)		7			505			512

Net Loss from Continuing Operations	$	(4,964	)	$	641		$	(4,323	)	$	(841	)	$	738		$	(103	)

Net Loss from Continuing Operations Per Share - Basic and Dilutive	$	(0.18	)				$	(0.16	)	$	(0.04	)				$	(0.00	)

Weighted average number of shares outstanding during the period - Basic and Dilutive		27,075,730						27,075,730			22,095,349						22,095,349

(d)

Exhibits

The following exhibits are being filed as part of this Report.

Exhibit Number	Description

10.1	Membership Interest Purchase Agreement by and among Synthetic Biologics, Inc., Hartlab LLC, and Adeona Clinical Laboratory, LLC, dated as of March 7, 2012.

10.2	Pledge and Security Agreement between Synthetic Biologics, Inc. and Hartlab, LLC dated as of March 7, 2012.

10.3	Non-Recourse Promissory Note between Synthetic Biologics, Inc. and Hartlab, LLC dated as of March 7, 2012

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated March 12, 2012	SYNTHETIC BIOLOGICS, INC.
	(Registrant)

	By:	/s/ Jeffrey Riley
	Name: Jeffrey Riley
	Title: Chairman, President and Chief Executive Officer

EXHIBIT INDEX

Exhibit Number	Description

10.1	Membership Interest Purchase Agreement by and among Synthetic Biologics, Inc., Hartlab LLC, and Adeona Clinical Laboratory, LLC, dated as of March 7, 2012

10.2	Pledge and Security Agreement between Synthetic Biologics, Inc. and Hartlab, LLC dated as of March 7, 2012

10.3	Non-Recourse Promissory Note between Synthetic Biologics, Inc. and Hartlab, LLC dated as of March 7, 2012

EX-10.1 2 v304692_ex10-1.htm EXHBIIT 10.1

MEMBERSHIP INTEREST PURCHASE AGREEMENT

MEMBERSHIP INTEREST PURCHASE AGREEMENT (the “Agreement”) made as of this 7^th day of March, 2012, by and among Synthetic Biologics, Inc., a Nevada corporation (the “Seller”), Hartlab LLC, an Illinois limited liability company (the “Buyer”), and Adeona Clinical Laboratory, LLC, an Illinois limited liability company (the “Company”).

WITNESSETH:

WHEREAS, the Seller owns one hundred percent (100%) of the outstanding membership interests of the Company (the “Membership Interests”), and the Buyer desires to purchase from the Seller the Membership Interests for a purchase price of Seven Hundred Thousand Dollars ($700,000), upon the terms and conditions hereinafter set forth herein.

NOW THEREFORE, in consideration of the mutual covenants and promises herein contained and upon the terms and conditions hereinafter set forth, the parties hereto, intending to be legally bound, agree as follows:

1. PURCHASE AND SALE OF THE MEMBERSHIP INTERESTS.

Upon the terms and conditions herein contained, at the Closing (as hereinafter defined), the Seller hereby sells, assigns and transfers to the Buyer and the Buyer agrees to purchase from the Seller all of the Membership Interests and all rights of the Seller in and to the Membership Interests, as of the date of the Closing, free and clear of all liens, claims, pledges, mortgages, restrictions, obligations, security interests and encumbrances of any kind, nature and description.

2. CONSIDERATION.

The purchase price of the Membership Interests (the “Purchase Price”) shall be Seven Hundred Thousand Dollars ($700,000), payable pursuant to the terms of a non-recourse two (2) year promissory note, attached hereto as Exhibit A, to be issued by the Buyer (the “Note”).

3. CLOSING.

The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place simultaneously with the payment of the Purchase Price as provided above.

4. CONDITIONS TO CLOSING.

4.1 Assignment of Receivables. On the date immediately preceding the Closing, the Company shall have assigned all of its accounts receivables to the Seller as of the Closing (the “Closing Accounts Receivables”) in accordance with the Assignment Agreement attached hereto as Exhibit B. Any payment made to the Company or Buyer with respect to a Closing Accounts Receivable shall be paid to the Seller within seven (7) calendar days of receipt.

4.2 Cancellation of Intercompany Debt. On the date immediately preceding the Closing, the guarantees by Seller of obligations of the Company shall be extinguished. The Buyer hereby indemnifies the Seller and its officers and directors and affiliates for any and all claims, demands, losses, expenses and liabilities incurred by the Seller from and after the Closing with respect to or arising out of any obligations of Company or guarantees by Seller of any obligations of the Company.

4.3 Assumption of Trade Payables. The Seller shall assume no liabilities of Company, with the exception of the trade payables incurred by the Company prior to the March 7, 2012 listed on Schedule 4.3.

5. CONSENT OF THE COMPANY.

The Company, as evidenced by its signature to this Agreement, hereby represents and warrants that upon the Closing the Company shall promptly cause the transfer of the Membership Interests to the Buyer to be reflected on its books and records.

6. COVENANTS OF THE BUYER.

6.1 Within 90 days following the Closing, the Buyer shall cause the name of the Company to be changed to a name that does not have the words “Synthetic Biologics” or “Adeona” or any derivative thereof.

6.2 The Buyer covenants to use its best effort to continue the operations of the Company at least to the same degree as its current operations until such time as the Note is paid in full.

7. RECONCILIATION.

Until such time as all Closing Accounts Receivables have been paid to the Seller, the Seller shall have the right to inspect the books and records of the Company during regular business hours, including but not limited to all bank accounts, electronic laboratory billing and collection system (including remote Labdaq and Daqbilling software access), data, records and laboratory documentation and shall be provided unlimited access to the laboratory record keeping system for the Company’s accounts receivables as well as the collections agency retained by the Company to collect its accounts receivables. The Buyer shall provide the Seller with a reconciliation of accounts receivables on a weekly basis. In the event of a dispute between the Buyer and the Seller in connection with a reconciliation, which dispute is not resolved by the parties within ten (10) days of receipt by the Seller of such reconciliation, the parties shall submit such dispute to a third party accountant selected by the parties who will make a final determination. The Buyer hereby acknowledges that the Seller may choose to use a collection agency to collect the Closing Accounts Receivables that may not be the same as the agency used by the Buyer or the Company to collect accounts receivables and the Buyer agrees to provide all assistance necessary to enable the agency selected by Seller to perform its collection services.

8. LIMITATION OF LIABILITY; RELEASE.

8.1 In no event shall the Seller’s liability for acts, or a failure to act, under this Agreement or in connection with the Company exceed in the aggregate the principal amount of the Note.

8.2 Buyer and Narayan Torke hereby irrevocably release and discharge the Seller and its respective shareholders, members, subsidiaries, directors, managers, officers, employees and agents, their respective successors and assigns, from any and all actions, suits, debts, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, damages, judgments, extents, executions, claims and demands whatsoever, in law or in equity, which against any or all of the foregoing, Buyer and/or Narayan Torke and their respective shareholders, members, subsidiaries, directors, managers, officers, employees, agents or heirs, and their respective successors and assigns, ever had, now have or hereafter can, shall or may, have for, upon, or by reason of any matter, cause or thing whatsoever from the beginning of the world through and including the date hereof, excluding any obligations arising under this Agreement.

9. REPRESENTATION AND WARRANTIES.

9.1 The Buyer acknowledges and agrees that it is purchasing the Membership Interests “as is”, and that the Seller has made no representations or warranties as to the Membership Interests, except as specifically set forth in this Agreement.

9.2 The Buyer has full authority or capacity to execute and to perform this Agreement in accordance with its terms; the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby does not and will not result in a breach, violation or default or give rise to an event which, with the giving of notice or after the passage of time, or both, would result in a breach, violation or default of any of the terms or provisions or of any indenture, agreement, judgment, decree or other instrument or restriction to which the Buyer is a party or by which the Buyer may be bound or affected; and no further authorization or approval, whether of governmental bodies or otherwise, is necessary in order to enable the Buyer to enter into and perform the same; and this Agreement constitutes a valid and binding obligation enforceable against the Buyer in accordance with its terms.

9.3 The Buyer acknowledges that due to the position of its principal shareholder as the Laboratory Director of the Company it has full access to all pertinent data and information regarding the Company and, as such, has received all the information it considers necessary or appropriate for deciding whether to purchase the Membership Interests. The Buyer further represents that it is an “accredited investor” within the meaning of Securities and Exchange Commission (“SEC”) Rule 501 of Regulation D, as presently in effect and has had an opportunity to ask questions and receive answers from the Seller regarding the terms and conditions of the sale of the Membership Interests and the business, properties, prospects and financial condition of the Company.

9.4 The Buyer acknowledges that it can bear the economic risk of its investment, has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the purchase of the Membership Interests.

10. MISCELLANEOUS.

10.1 Binding Effect, Benefits. This Agreement shall insure to the benefit of, and shall be binding upon, the parties hereto and their respective successors and permitted assigns. Except as otherwise set forth herein, this Agreement may not be assigned by any party hereto without the prior written consent of the Company and of the other parties hereto. Except as otherwise set forth herein, nothing in this Agreement, expressed or implied, is intended to confer on any person other than the parties hereto or their respective successors and permitted assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement.

10.2 Notices. All notices, requests, demands and other communications which are required to be or may be given under this Agreement shall be in writing and shall be deemed to have been duly given when delivered in person, or transmitted by telecopy or telex, or upon receipt after dispatch by certified or registered first class mail, postage prepaid, return receipt requested, to the party to whom the same is so given or made, at the following addresses (or such others as shall be provided in writing hereinafter):

(10) If to the Seller, to:

	Synthetic Biologics, Inc.
	3985 Research Park Drive, Suite 200
	Ann Arbor, MI 48108
	Attention: Jeffery L. Riley
	Facsimile: (734) 332-7878

	With a copy to:

	Leslie Marlow
	Gracin & Marlow, LLP
	405 Lexington Avenue, 26^th Floor
	New York, New York 10174
	Facsimile; (212) 208-4657

(b) If to the Buyer, to:

	Hart Labs, LLC
	391 Quadrangle Drive
	Suite N9
	Bolingbrook, IL 60440

10.3 Entire Agreement. This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, oral and written, between the parties hereto with respect to the subject matter hereof.

10.4 Further Assurances. After the Closing, at the request of either party, the other party shall execute, acknowledge and deliver, without further consideration, all such further assignments, conveyances, endorsements, deeds, powers of attorney, consents and other documents and take such other action as may be reasonably requested to consummate the transactions contemplated by the Agreement.

10.5 Headings. The section and other headings contained in this Agreement are for reference purposes only and shall not be deemed to be a part of this Agreement or to affect the meaning or interpretation of this Agreement.

10.6 Counterparts. This Agreement may be executed in any number of counterparts, each of which, when executed, shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument.

10.7 Government Law. This Agreement shall be construed as to both validity and performance and enforced in accordance with and governed by the laws of the State of Illinois, without giving effect to the conflicts of law principles thereof and the parties consent to DuPage County, Illinois as having exclusive jurisdiction over any disputes arising under this Agreement.

10.8 Severability. If any term or provision of this Agreement shall to any extent be invalid or unenforceable, the remainder of this Agreement shall not be affected thereby, and each term and provision of this Agreement shall be valid and enforced to the fullest extent permitted by law.

10.9 Amendments. This Agreement may not be modified or changed except by an instrument or instruments in writing executed by the parties hereto.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

	SELLER:

	SYNTHETIC BIOLOGICS, INC.

	By:	/s/ Jeffrey Riley
		Name: Jeffrey Riley
		Title: President and CEO

	BUYER:

	HARTLAB LLC

	By:	/s/ Narayan Torke
		Name: Narayan Torke
		Title: Managing Member

ACCEPTED AND AGREED:

ADEONA CLINICAL LABORATORY, LLC

By:	/s/ Narayan Torke
	Name: Narayan Torke
	Title: Managing Member

ACCEPTED AND AGREED:

As to Section 8.2 above:

/s/ Narayan Torke
NARAYAN TORKE

Exhibit A

NON-RECOURSE PROMISSORY NOTE

$700,000.00

March 7, 2012

FOR VALUE RECEIVED, the undersigned, Hartlab LLC, with its principal place of business at 391 Quadrangle Drive Suite N-9, Bolingbrook, IL 60440, its successors and assigns (the “Maker”), hereby unconditionally promises to pay to the order of Synthetic Biologics, Inc., with an address at 3985 Research Park Drive, Suite 200, Ann Arbor, MI 48108 (“Payee”), in lawful money of the United States of America and in immediately available funds, the principal sum of Seven Hundred Thousand Dollars ($700,000.00) (“Principal”) on March 1, 2014 (the “Maturity Date”), together with annual interest thereon from the date hereof on the unpaid Principal at an annual rate of Five and 7/10^ths percent (5.7%), payable on the Maturity Date. Interest shall be computed on the basis of a year of 365 days and the actual number of days elapsed. Interest not paid when due shall earn interest at the rate specified above.

1. If: (a) the Maker fails to make any payment of Principal or interest on this Promissory Note when due (provided the Maker is provided with notice of any such failure and provided with ten (10) days to cure same); (b) a court of competent jurisdiction enters a judgment, decree or order for relief in respect of the Maker in an involuntary case or proceeding under any federal or state bankruptcy law, which shall (i) approve as properly filed a petition seeking reorganization, arrangement, adjustment or composition in respect of the Maker, (ii) appoint a custodian, receiver, trustee, liquidator or similar official for the Maker or for substantially all of its property or assets, or (iii) order the winding-up or liquidation of its affairs, and such judgment, decree or order shall remain unstayed and in effect for a period of sixty (60) consecutive days; (c) the Maker attempts to sell, transfer, assign or encumber the Secured Assets (as hereafter defined) or undergoes a Change of Control (“as hereinafter defined”); (d) the Maker files a voluntary petition seeking relief under any federal or state bankruptcy law; (e) the Maker breaches any provision of the Pledge and Security Agreement (as hereafter defined); (f) Adeona Clinical Laboratory, LLC, an Illinois limited liability company (“ACL”) shall discontinue providing CLIA regulated high complexity testing services for a period of more than sixty (60) days; (g) the Maker or any of its affiliates shall have instituted or threaten to institute any legal action against Payee or any of it’s affiliates under this or any other Agreement, or (h) the Maker expressly repudiates its obligations hereunder; then all unpaid Principal and all accrued and unpaid interest on this Promissory Note shall become immediately due and payable. The occurrence of any event described in clauses (a) through (f) above shall be referred to as an “Event of Default”. For the purposes hereof, the term a “Change in Control” shall mean a transaction or a series of related transactions pursuant to which (A) the persons constituting a majority of the Managers of Maker on the date of this Agreement shall have ceased to constitute a majority of the Managers of Maker, (B) a person or group of persons (as “group” is defined in the regulations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) who do not currently have beneficial ownership of more than 50% of the outstanding membership interests of Maker acquire, directly or indirectly, beneficial ownership of more than 50% of the outstanding membership interests of Maker, (C) ACL, shall cease to be a wholly owned subsidiary of Maker, or (D) Maker shall sell, transfer or assign all or substantially all of its assets.

2. The Maker shall have the right to prepay all or any part of the unpaid Principal amount of this Promissory Note with interest thereon, without premium or penalty, at any time prior to the maturity hereof.

3. This Promissory Note is a non-recourse note and is secured solely by the pledge and grant to the Payee of a security interest in the Maker’s interest in all of the assets of ACL (the “Secured Assets”), pursuant to a Pledge and Security Agreement, of even date herewith (the “Pledge and Security Agreement”), the provisions of which are incorporated herein by reference and form a part hereof. The Maker shall be liable upon the indebtedness evidenced by this Promissory Note, for all sums to accrue or to become payable thereon and for performance of any covenants contained in this Promissory Note or in any of the related documents to the extent, but only to the extent, of the Maker’s security for the same, which consists of all of the Secured Assets. No attachment, execution or other writ or process shall be sought, issued or levied upon any assets, properties or funds of the Maker other than the Secured Assets described in the Pledge and Security Agreement. In the event of foreclosure of such title, liens or security interests, no judgment of any deficiency upon such indebtedness, sums and amounts shall be sought or obtained by the Payee against the Maker.

4. If one or more of the provisions hereof shall be declared or held to be invalid, illegal, or unenforceable in any respect in any jurisdiction, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby and any such declaration or holding shall not invalidate or render unenforceable such provision in any other jurisdiction. All references in this Promissory Note to the Maker and the Payee shall be deemed to include, as applicable, a reference to their respective successors and assigns. The provisions of this Promissory Note shall be binding upon and shall inure to the benefit of the successors and assigns of the Maker and the Payee.

5. Any notice relating to this Promissory Note shall be in writing and shall be deemed to be effective if given and received in the manner expressly provided in the Pledge and Security Agreement.

6. Presentment, demand, protest or notice of any kind are hereby waived by the Maker. The Maker may not set off against any amounts due to the Payee hereunder, any claims against the Payee or other amounts owed by the Payee to the Maker.

7. All rights and remedies of the Payee under this Note are cumulative and in addition to all other rights and remedies available at law or in equity, and all such rights and remedies may be exercised singly, successively and/or concurrently. Failure to exercise any right or remedy shall not be deemed a waiver of such right or remedy.

8. The Maker agrees to pay all reasonable costs of collection, including attorneys' fees which may be incurred in the collection of this Promissory Note or any portion thereof and, in case an action is instituted for such purposes, the amount of all attorneys' fees shall be such amount as the court shall adjudge reasonable.

9. This Note is made and delivered in, and shall be governed, construed and enforced under the laws of the State of Illinois.

	HARTLAB LLC

	By:	/s/ Narayan Torke
		Name: Narayan Torke
		Title: Managing Member

NON-RECOURSE LIMITED GUARANTY

In order to induce Payee to accept this Note, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the undersigned (the “Guarantor”), does hereby guarantee, on a non-recourse basis, limited to the assets of the undersigned being pledged to secure this Note, the full, complete and timely performance by Hartlab LLC (the “Maker”) of all of its obligations under the above Note. This Guaranty is absolute and unconditional irrespective of any term or provision of any documents or understandings relating to the above Note (other than its non-recourse basis), or any other circumstance which might otherwise constitute a legal or equitable discharge of a surety or guarantor; and no formal or informal change, amendment, modification or waiver of any term or condition of the Note, no extension in whole or in part of the time for the performance by the Maker of any of its obligations under the Note, and no settlement, compromise, release, surrender, modification or impairment, exercise or failure to exercise of any claims, rights, or remedies of any kind or nature under or in connection with the Note shall affect, impair or discharge, in whole or in part, the liability of the undersigned hereunder, the undersigned to be and at all times be and remain liable to the Payee to the same extent, but no greater than, the undersigned would be if it were jointly and severally liable, on a non-recourse basis, limited to the assets of the undersigned being pledged to secure this Note, with the Maker to the Payee for the full, complete and timely payment and performance of and compliance with all obligations of the Maker under the Note. The obligations of the undersigned hereunder shall in no way be released, diminished, or otherwise affected by reason of any voluntary or involuntary proceedings by or against the Maker in bankruptcy or for an arrangement or reorganization or for any other relief under any provision of any bankruptcy or other similar law as from time to time is in effect or the inability or failure of the Maker for any other reason to perform or comply with any or all of its obligations under the above Note.

IN WITNESS WHEREOF, the undersigned has executed this Guaranty as of March 7, 2012.

ADEONA CLINICAL LABORATORY, LLC

By:	/s/ Narayan Torke
Name: Narayan Torke
Title: Managing Member

EX-10.2 3 v304692_ex10-2.htm EXHIBIT 10.2

PLEDGE AND SECURITY AGREEMENT

PLEDGE AND SECURITY AGREEMENT (this “Agreement”) dated as of March 7, 2012, made by Hartlab LLC, an Illinois limited liability company with offices at 391 Quadrangle Drive Suite N9, Bolingbrook, IL 60440 (the “Pledgor”), in favor of Synthetic Biologics, Inc., a Nevada corporation with offices at 3985 Research Park Drive, Suite 200, Ann Arbor, MI (the “Secured Creditor”).

WHEREAS, pursuant to a Membership Purchase Agreement, dated the date hereof (the “MPA”), the Secured Creditor is selling, and the Pledgor is buying, one hundred percent (100%) of the membership interests in Adeona Clinical Laboratory, LLC, an Illinois limited liability company (the “Company”), in exchange for a secured promissory note , dated the date hereof, in the amount of Seven Hundred Thousand Dollars ($700,000) issued by Pledgor to the order of the Secured Creditor (the “Note”); and

WHEREAS, it is condition precedent to the closing of the MPA by the Secured Creditor that the Pledgor shall have executed and delivered to the Secured Creditor a pledge and security agreement providing for the pledge and grant to the Secured Creditor of a security interest in the collateral identified and defined below, and obtained the Company’s limited, non-recourse, guaranty of the Note for the benefit of Secured Creditor.

NOW, THEREFORE, in consideration of the premises and the agreements herein and in order to induce the Secured Creditor to close the MPA, the Pledgor hereby agrees with the Secured Creditor as follows:

SECTION 1. Definitions. All terms used in this Agreement which are defined in Article 9 of the Uniform Commercial Code (the “Code”) currently in effect in the State of Illinois and which are not otherwise defined herein shall have the same meanings herein as set forth therein.

SECTION 2. Pledge and Grant of Security Interest. (a) As collateral security for all of the Obligations (as defined in Section 3 hereof), the Pledgor hereby pledges, assigns and grants to the Secured Creditor a continuing security interest in the following collateral: all of the assets of the Company, including, but not limited to, those listed on Schedule A and all of the inventory, equipment, purchase orders, chattel paper, accounts, instruments and general intangibles, whether any of the foregoing is owned now or acquired later, and all accessions, additions, replacements and substitutions relating to any of the foregoing (including insurance, general intangibles and accounts proceeds) and all proceeds of the foregoing; in each case, howsoever its interest therein may arise or appear (whether by ownership, security interest, claim or otherwise, the “Pledged Collateral”).

(b) The Pledgor hereby represents and warrants to Secured Creditor as follows:

(i) The Pledged Collateral is not pledged to secure any indebtedness other than the Note;

(ii) The execution, delivery, and performance of the Pledgor of this Agreement will not violate any provision of law, any order of any court or other agency of government, or any agreement or other instrument to which the Pledgor is a party or by which the Pledgor is bound, or be in conflict with, result in a breach of or constitute (with due notice, lapse of time, or both) a default under any such agreement or other instrument, or result in the creation or imposition of any lien, charge, or encumbrance of any nature whatsoever upon any of the property of assets of the Pledgor, except as contemplated by the provisions of this Agreement; and

(iii) This Agreement constitutes the legal, valid and binding obligation of the Pledgor and is enforceable against the Pledgor in accordance with the terms hereof.

SECTION 3. Security for Obligations. The security interest created hereby in the Pledged Collateral constitutes continuing collateral security for all of the following obligations, whether now existing or hereafter incurred (the “Obligations”):

(a) the prompt payment by the Pledgor, as and when due and payable, of all amounts owing by it in respect of the Note; and

(b) the due performance and observance by the Pledgor of all of its other obligations from time to time existing under this Agreement.

SECTION 4. Covenants as to the Pledged Collateral. So long as any of the Obligations shall remain outstanding, the Pledgor will, unless the Secured Creditor shall otherwise consent in writing:

(a) keep adequate records concerning the Pledged Collateral and permit the Secured Creditor or any agents or representatives thereof at any reasonable time and from time to time to examine and make copies of and abstracts from such records;

(b) at any time and from time to time, promptly execute and deliver all further instruments and documents and take all further action that may be necessary or desirable or that the Secured Creditor may request in order to (i) perfect and protect the security interest created hereby; (ii) enable the Secured Creditor to exercise and enforce its rights and remedies hereunder in respect of the Pledged Collateral; or (iii) otherwise effect the purposes of this Agreement; and

(c) not create or suffer to exist any lien, security interest or other charge or encumbrance upon or with respect to any Pledged Collateral, except for the security interest created hereby.

SECTION 5. Additional Provisions Concerning the Pledged Collateral.

(a) The Pledgor hereby authorizes the Secured Creditor to file, without the signature of the Pledgor where permitted by law, one or more financing or continuation statements, and amendments thereto, relating to the Pledged Collateral.

(b) The Pledgor hereby irrevocably appoints the Secured Creditor as its attorney-in-fact and proxy, with full authority in the place and stead of it and in its name or otherwise, from time to time in the Secured Creditor's discretion, to take any action and to execute any instrument which the Secured Creditor may deem necessary or advisable to accomplish the purpose of this Agreement.

SECTION 6. Remedies Upon Default. If any Event of Default under the Note shall have occurred and be continuing:

(a) The Secured Creditor may, exercise in respect of the Pledged Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all of the rights and remedies of a secured party on default under the Code then in effect in the State of Illinois, and without limiting the generality of the foregoing and without notice except as specified below, sell the Pledged Collateral or any part thereof in one or more parcels at public or private sale at such price or prices and on such other terms as the Secured Creditor may deem commercially reasonable. The Pledgor agrees that, to the extent notice of sale shall be required by law, at least five days' notice to the Pledgor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. The Secured Creditor shall not be obligated to make any sale of Pledged Collateral regardless of notice of sale having been given. The Secured Creditor may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.

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(b) All cash proceeds received by the Secured Creditor in respect of any sale of, collection from, or other realization upon, all or any part of the Pledged Collateral may, in the discretion of the Secured Creditor, be held by the Secured Creditor as collateral for, and/or then or at any time thereafter applied in whole or in part by the Secured Creditor against, all or any part of the Obligations pro rata as to the principal amount of the Note. Any surplus of such cash or cash proceeds held by the Secured Creditor and remaining after payment in full of all of the Obligations shall be paid over to the Pledgor to such person as may be lawfully entitled to receive such surplus.

(c) In the event that the proceeds of any such sale, collection or realization are insufficient to pay all amounts to which the Secured Creditor is legally entitled, the Pledgor shall remain liable for the deficiency and the Secured Creditor shall retain all rights to collect on such Obligations provided by applicable law.

SECTION 7. Notices, Etc. All notices and other communications provided for hereunder shall be in writing and shall be mailed, faxed or delivered, if to the Pledgor, to it at the Pledgor’s address set forth above; and if to the Secured Creditor, to it at the address set forth above; or as to any of such parties at such other address as shall be designated by such parties in a written notice to the other parties hereto complying as to delivery with the terms of this Section 7. All such notices and other communications shall be effective (i) if mailed, when deposited in the mails, (ii) if faxed, when the facsimile transmission is acknowledged as received, or (iii) if delivered, upon delivery.

SECTION 8. Miscellaneous.

(a) No amendment of any provisions of this Agreement shall be effective unless it is in writing and signed by the Pledgor and the Secured Creditor, and no waiver of any provision of this Agreement, and no consent to any departure by the Pledgor therefrom, shall be effective unless it is in writing and signed by the Secured Creditor, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

(b) No failure on the part of the Secured Creditor to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The rights and remedies of the Secured Creditor provided herein are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law.

(c) Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceabilty without invalidating the remaining portions hereof or thereof or affecting the validity or enforceability of such provision on any other jurisdiction.

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(d) This Agreement shall create a continuing security interest in the Pledged Collateral and shall (i) remain in full force and effect until the payment in full or release of the obligations and (ii) be binding on the Pledgor and each of its assigns and shall inure, together with all rights and remedies of the Secured Creditor hereunder, to the benefit of the Secured Creditor and its successors, transferees and assigns.

(e) Upon the satisfaction in full of the Obligations: (i) this Agreement and the security interest created hereby shall terminate and all rights to the Pledged Collateral shall revert to the Pledgor, and (ii) the Secured Creditor will, upon the Pledgor's request at the Pledgor's expense, (A) return to the Pledgor such of the Pledged Collateral as shall not have been sold or otherwise disposed of or applied pursuant to the terms hereof and (B) execute and deliver to the Pledgor such documents as the Pledgor shall reasonably request to evidence such termination.

(f) This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois, except as required by mandatory provisions of law and except to the extent that the validity and perfection or the perfection and the effect of perfection or non-perfection of the security interest created hereby, or remedies hereunder, in respect of any particular Pledged Collateral are governed by the law of a jurisdiction other than the State of Illinois. The parties hereto agree that all actions or proceedings arising in connection with this Agreement shall be tried and litigated exclusively in the State and Federal courts located in Illinois. The aforementioned choice of venue is intended by the parties to be mandatory and not permissive in nature, thereby precluding the possibility of litigation between the parties with respect to or arising out of this Agreement in any jurisdiction other than that specified in this paragraph. Each party hereby waives any right it may have to assert the doctrine of forum non conveniens or similar doctrine or to object to venue with respect to any proceeding brought in accordance with this paragraph, and stipulates that the State and Federal courts located in Illinois shall have in personam jurisdiction and venue over each of them for the purpose of litigating any dispute, controversy, or proceeding arising out of or related to this Agreement. Each party hereby authorizes and accepts service of process sufficient for personal jurisdiction in any action against it as contemplated by this paragraph by registered or certified mail, return receipt requested, postage prepaid, to its address for the giving of notices as set forth in this Agreement. Any final judgment rendered against a party in any action or proceeding shall be conclusive as to the subject of such final judgment and may be enforced in other jurisdictions in any manner provided by law.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered as of the date first above written.

	PLEDGOR

	HARTLAB LLC


	By:	/s/ Narayan Torke
		Name: Narayan Torke
		Title: Managing Member

	SECURED CREDITOR

	SYNTHETIC BIOLOGICS, INC.


	By:	/s/ Jeffrey Riley
		Name: Jeffrey Riley
		Title: President and CEO

ACKNOWLEDGED AND AGREED

To secure its guarantee of the Note of even date herewith, the undersigned hereby acknowledges and irrevocably agrees as provided above to the pledge of its assets as collateral for the Note to the same extent as if the undersigned were the named Pledgor hereunder and, as such, hereby agrees to execute, acknowledge and deliver, without further consideration, all such further assignments, conveyances, endorsements, deeds, powers of attorney, consents and other documents and take such other action as may be reasonably requested to consummate or otherwise perform the transactions contemplated by this Agreement.