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.


 


ADEONA CLINICAL LABORATORY, LLC


 





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










 



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