Document:

s22-9272_ex103.htm

Exhibit 10.3

SECOND AMENDMENT TO

LIMITED LIABILITY COMPANY PURCHASE AGREEMENT

This second amendment (the “Second Amendment Agreement”) dated July 9th  2009 to the Limited Liability Company Purchase Agreement (the “Purchase Agreement”) dated May 30, 2009 as amended by first amendment dated June 30, 2009,
by and between Narayan Torke (“Seller”), Hart Lab LLC (the “Company”)  and Adeona Pharmaceuticals, Inc., (“Purchaser”). Purchaser, the Company and Seller may collectively be referred to as the “Parties.”

WHEREAS, on June 30, 2009 the parties entered into a first amendment to the Purchase Agreement dated May 30, 2009 to extend the closing date until July 10, 2009.

WHEREAS, the Parties desire to enter into this Second Amendment Agreement to amend certain provisions of the Purchase Agreement.

NOW, THEREFORE, in consideration for the promises set forth in this Agreement, the Parties agree as follows:

Sections 1, 2, 3, 4 and 9 of the Purchase Agreement are amended in their entirety to read as follows;

	
1.  
	
PURCHASE AND SALE:  Subject to the terms and conditions set forth in this Agreement, Purchaser hereby agrees to purchase from Seller, and Seller hereby agree to sell, transfer and convey to the Purchaser all of the interests of the Company, representing all of the issued
and outstanding membership interests of the Company (the “Interests”).  The transaction shall also include the sale and transfer of the operating assets of the Company listed on Exhibit A. At closing (“Closing”) Purchaser shall transfer by wire $266,000.00 to an IOLTA bank account of Seller’s attorney pursuant to an Escrow Agreement under which a portion of such funds in the amount of $187,141.30 shall be paid to Seller as described herein this Agreement and the remainder
of such funds in the amount of $78,858.70 shall either be released back to Purchaser upon (a) (i) evidence to the Seller’s attorney of the release of the personal guarantee of Seller under the Olympus and Baytree clinical equipment leases (the “Equipment Leases”), or (ii) evidence to Seller’s lawyer of payoff by Purchaser of the Equipment leases, or (b) released to Seller after 60 days in the event Seller is unable obtain the release of the personal guarantee of Seller or payoff the Equipment
Leases within such 60 day period whereupon Seller shall become primarily obligated to pay the remaining $78,858.70 in lease expenses for the Olympus and Baytree clinical Equipment Leases over the remaining term of such leases with the Buyer to pay in full all other leases. Purchaser shall have the right to make employment offers to any or all of the Company’s existing employees after Closing. Purchaser shall become personally liable after Closing for the performance of all existing contracts that do not
have change in control provisions, and for those that do, the Parties shall attempt to seek to negotiate such change in control authorization to continue such agreements in effect after Closing.  The Purchaser shall assume the existing real estate lease (the Real Estate Lease”) and seek and obtain the landlord’s consent to the change in ownership and use its best efforts to obtain a full release of Seller within 90 days of closing, or Purchaser shall indemnify Seller for all costs under
the Real Estate Lease.  The Parties shall cooperate in good faith in the transfer of the CMS license and Illinois Dept. of Public Health license, including a power of attorney in favor of the Company following ownership transfer to the Purchaser until such licenses are transferred by CMS and Illinois.  A copy of  the power of attorney(s) are attached as Exhibit B.

	
2.  
	
PURCHASE PRICE:  The purchase price for all of the shares of Interests shall be Two Hundred and One Thousand One Hundred and Forty One dollars and Thirty cents ($201,141.30) in cash (the “Purchase Price”) with Fourteen Thousand dollars ($14,000) to be paid in
cash to the Seller as a nonrefundable earnest payment creditable against the Purchase Price contemporaneous with the execution of this Agreement and the remainder of the Purchase Price of One Hundred Eighty Seven Thousand One Hundred Forty One dollars and Thirty cents  ($187,141.30) to be paid by check to the Seller at the Closing on July 10, 2009 by the Escrow Agent pursuant to the terms of an Escrow Agreement entered into by the Parties unless an earlier Closing date is agreed to in writing signed
by both parties.    In addition to the Purchase Price, Purchaser shall also issue fifty thousand (50,000) unregistered shares of Purchaser’s common stock to Seller at Closing.

	
3.  
	
CLOSING:  The closing contemplated by this Agreement for the transfer of the Interests and the payment of the Purchase Prices shall take place at the offices of Russel G. Winick & Associates, P.C. on July 10, 2009 at 9:00a.m. CT unless an earlier Closing date is agreed
to in writing signed by both parties.  The certificates representing the Interests shall be duly endorsed for transfer by the Seller or accompanied by an appropriate Interests transfer and the State of Illinois Annual Report of Hartlab shall be duly amended by Seller to provide for Purchaser to become the new owner of all of the outstanding Interests.  Purchaser shall be responsible for filing the State of Illinois Annual Report as described above with the Illinois Secretary of State and for
paying the annual franchise taxes and any other fees assessed by the Illinois Secretary of State upon the filing of the Annual Report. The Company shall notify the Federal CMS and Illinois licensing agency of the transfer and Seller and Company shall provide a power or attorney to continue the business of the Company under his CLIA license until such license shall have been transferred by CMS.  Purchaser’s obligation to close shall be conditioned upon the satisfactory completion of Purchaser’s
due diligence determined in Purchaser’s sole discretion which Seller shall undertake and complete on or before the Closing.  Should Purchaser not be satisfied with the outcome of its due diligence and elect not to close on July 10, 2009, Purchaser shall forfeit the $14,000 nonrefundable earnest payment and the Parties shall have no further obligation under this Agreement.

 

 

 

 

 

	
4.  
	
REPRESENTATIONS AND WARRANTIES OF SELLER:  Seller hereby warrants and represents that:

	
(a)  
	
Restrictions on Interests.  The Seller is not a party to any agreements that create rights or obligations in the Interests relating to any third party including voting or other agreements.  The Seller is the lawful owner of the Interests, free and clear of any encumbrances,
security interests or liens of any kind and has full power and authority to sell and transfer the Interests as contemplated in this Agreement.  The Interests represents all of the issued and outstanding Interests of the Company.

	
(b)  
	
Organization and Standing.  To the Seller’s knowledge, the Company is duly organized, validly existing and in good standing under the laws of the State of Illinois and has full power and authority to own
and operate its property and assets and to carry on its business as presently conducted and the one thousands shares of Interests represent all of the issued and outstanding Interests of the Company.

	
(c)  
	
Operation of Business.  Between the signing of this Agreement and the Closing, the Seller shall operate the business of the Company in the normal course and at the Closing the assets and liabilities, net working capital and equity reflected in the balance sheet dated June
30, 2009 (the “Balance Sheet”)  attached hereto as Exhibit C shall not materially differ except as listed in the schedule of exceptions attached hereto.  Until July 10, 2009, Seller, Company and their agents, shall not solicit other offers from other parties and shall discontinue any and all discussions with other parties whom they may be already in discussion with.

	
(d)  
	
Narayan Torke Consulting.  Following the Closing, Narayan Torke shall serve as a consultant on a part-time basis to Seller for a period of up to twelve (12) months following the Closing for a monthly consulting fee of Four Thousand dollars ($4,000) per month to assist in
the transition and business of the Company, pursuant to an Independent Contractor Agreement attached hereto as Exhibit D, providing for not more than 15 hours per week and permit 100% of activities to be conducted by Torke remotely.  For a period of two (2) years following the closing Narayan Torke shall not solicit the Company’s accounts or employees nor compete with the Company in Illinois without the prior written permission of the Company.

	
(e)  
	
General Ledger.  Seller represents and warrants that as of the Closing Date except as disclosed in the Balance Sheet, due diligence request response or List of Exceptions attached hereto as Exhibit E,  that there will be no material liabilities, (including Medicare,
MediCal or other insurance liabilities), liens, tax liabilities, actions, actual, pending or threatened that may have a material adverse effect on the business of the Company (the “Liabilities”).  For purposes of this Agreement, Liabilities will only be considered material if together in the aggregate they exceed ten percent (10%) of the Purchase Price.

	
(f)  
	
Taxes.  Each of the parties shall be responsible for their own taxes with respect to the transaction with all income loss, deductions and credits on or prior to the Closing date shall be allocated to the Seller, including any gain or loss on the sale hereunder.

	
(g)  
	
Limitation on Representations and Warranties.  Seller’s representations and warranties shall not exceed $140,000 in the aggregate and shall survive the closing for six months (with the exception of the noncompete provision which shall survive for it two year term).

 

 

 

 

 

 

	
9.  
	
NOTICE:  Any notice required or otherwise given pursuant to this Agreement shall be in writing and mailed certified return receipt requested, postage prepaid, or delivered by overnight delivery service:

	
(a)  
	
If to Purchaser:

Max Lyon

Chief Executive Officer

Adeona Pharmaceuticals, Inc.

3930 Varsity Drive

Ann Arbor, MI  48108

Fax: (734) 332-7800

	
(b)  
	
If to Seller:

Narayan Torke

532 Connecticut Ave.

Naperville, IL 60565

 

 

 

 

IN WITNESS WHEREOF, the parties have caused this Second Amendment Agreement to be executed the day and year first above written.

 

 

	
 ADEONA PHARMACEUTICALS, INC.:  
	  	
 SELLER:

	  	  	  
	
 /s/ Max Lyon                      
	  	
 /s/ Narayan Torke                    

	
 Max Lyon    
	  	
 Narayan Torke

	
 Chief Executive Officer and President
	  	  
	  	  	  
	  	  	
 HART LAB LLC

	  	  	  
	  	  	
 /s/ Narayan Torke                       

	  	  	
 By: Narayan Torke

	  	  	  
	  	  	
 Its: Presidents22-9272_ex104.htm

 

Exhibit 10.4

CONSULTING AGREEMENT

This Consulting Agreement (“Agreement”) is made on the date set forth below by and between Adeona Pharmaceuticals, Inc., a corporation with a business address at 3930 Varsity Drive, Ann Arbor MI, 48108 (“Company”), and Narayan Torke, an individual (“Contractor”). Company and Contractor are hereinafter
sometimes collectively referred to as the “Parties,” and singly as a “Party.”

 

RECITALS

A.           Company entered into a certain Limited Liability Company Purchase Agreement with Contractor dated May 30, 2009 whereby the Company purchased all One Hundred Percent (100%) of the Contractor’s Membership Interest in Hart Lab, LLC, an Illinois
limited liability company, including Hart Lab, LLC’s clinical laboratory (“Clinical Laboratory”) located in Bolingbrook, Illinois. 

 

B.           Company wishes to engage Contractor as a consultant to assist the Company in the transition of Company as the new owner and operator of the Clinical Laboratory and Contractor wishes to be engaged by Company as a consultant to provide such services (“Services”).

 

NOW, in consideration of the mutual covenants and promises of the parties contained herein this Agreement, the sufficiency of which is hereby acknowledged, Company and Contractor covenant and agree as follows:

AGREEMENT

1.           Recitals.  The Recitals described above are hereby incorporated by reference into this Agreement.

2.           Engagement and Scope of Services:

A.           Company hereby engages Contractor on a non-exclusive basis to provide Services to the Company on a part-time basis for up to fifteen (15) hours per week.

B.           Contractor may at the Contractor’s sole discretion provide One Hundred Percent (100%) of the Services remotely.

C.          Contractor shall provide laboratory director services to the Company to help insure the continued professional operation of the Clinical Laboratory until such time as the Company can hire a full time laboratory director, which hiring is expected within 30 to 60 days. These services
shall include oversight to insure CLIA, Medicare and other applicable governmental and clinical standards are maintained at the Clinical Laboratory at the level maintained during Contractor’s ownership of the Clinical Laboratory.

3.           Independent Contractor Status

A.           The Parties expressly understand and agree that the relationship between Contractor and Company will be solely that of independent contractor, and nothing contained in this Agreement shall be construed to create an employer-employee or partnership relationship.

B.           Contractor agrees to be solely responsible for all of Contractor’s expenses incurred in performing Services for Company pursuant to the terms of this Agreement, including, without limitation, liability for Contractor’s federal and state income and payroll taxes,
workers’ compensation, minimum wages, social security withholdings, professional liability insurance, license fees, and continuing education.

 

 

 

 

4.           Payments to Contractor:

A.           Company agrees to pay Contractor a monthly consulting fee (“Consulting Fee”) of Four Thousand and 00/100 Dollars ($4,000.00) for Services provided by Contractor for the duration of this Agreement.

B.           Company agrees to reimburse Contractor for all reasonable travel expenses including airfare, hotel, meal, and ground transportation which Contractor incurs if Contractor is required to travel to the Clinical Laboratory to perform the Services.  Contractor shall
submit itemized receipts to Company with all requests for reimbursement.

C.           Company’s payments of the Consulting Fee to the Contractor shall take place no less frequently than 30 days after the end of each month during which the Services were provided, or on the Company’s regular payroll cycle whichever is earlier.

5.           Term.  This Agreement shall be effective for a term of up to twelve (12) months following the closing unless terminated as described below.

6.           Termination.  Company may terminate this Agreement upon ten (10) days written notice to the Contractor.

7.           Return of Property.  Contractor agrees that upon the termination of this Agreement as set forth herein, the Contractor shall return any files, documents, records, reports, designs, software, regardless of their form prepared for Company and immediately terminate
the provision of Services.

8.           Payments Upon Termination.

A.           Within thirty (30) days of the termination of this Agreement, or on the Company’s regular payroll cycle whichever is earlier, the Company shall pay Contractor for all Consulting Fees due to Contractor as provided pursuant to this Agreement.

B.           Upon payment by Company of Contactor’s final Consulting Fee, Contractor shall thereafter have no further claims against Company for payment.

9.           NonSolicitation of Employees and Clients.  Throughout the term of the Agreement between Company and Contractor and for two (2) years thereafter, Contractor shall not, either on Contract’s own account or for any person, firm, partnership, corporation, or
other entity, directly or indirectly (a) solicit, interfere with, or endeavor to cause any employee of the Company to leave his or her employment, or (b) induce or attempt to induce any such employee to breach his or her written or oral employment agreement with the Company, or (c) call on, solicit, divert, or take away any Client of the Company for the purpose of soliciting or providing to any such Client any service which is offered by the Company or which is similar to the services offered by the Company.

10.           Nondisclosure of Confidential Information.  The Contractor specifically agrees that Contractor will not at any time, in any fashion, form, or manner, either directly or indirectly, divulge, disclose, or communicate to any person, firm, or corporation in any manner
whatsoever any information of any kind, nature, or description concerning any matters affecting or relating to the business of Company or its Clients, including but not limited to, the names of any of the Company’s Clients, the prices it obtains or has obtained or at which the Company sells or has sold its services, or any other information concerning the business of Company or its Clients, its manner of operation, its plans, methods and processes, designs, software, or any other data of any kind, nature,
or description without regard to whether any or all of the foregoing matters would be deemed confidential, material, or important.  The Contractor acknowledges that the above mentioned matters are important, material, and confidential, and gravely affect the effective and successful conduct of the business of Company and its goodwill, and that any breach of the terms of this section is a material breach of this Agreement, for which money may not provide adequate compensation as damages.

 

 

 

 

11.           Covenant Against Competition.  Contractor acknowledges that Contractor’s Services to be performed under this Agreement are special, unique, unusual, and extraordinary, that the business of the Company is local in scope, that its services are marketed on
a limited basis throughout the Chicago Metropolitan Area, and that the Company competes with other organizations that are or could be located in any part of the United States.  In consideration of the foregoing, and in consideration of Contractor being offered the opportunity to enter into this Agreement with the Company and, if applicable, other additional consideration paid to Contractor as set forth in this Agreement, Contractor hereby covenants and agrees that Contractor shall not during the term
of this Agreement, and for a  period of two (2) years after its termination, directly or indirectly engage or invest in, own, manage, operate, control or participate in the ownership, management, operation or control of, be employed by, associated or in any manner connected with, or render services or advice to, any person or business that offers any service to the Company’s Clients which are offered by the Company or which are similar to the services offered by the Company, where the Company’s
Clients are defined as any person or business who at any time during the term of this Agreement were the Company’s Clients; provided, however, that Contractor may invest in up to (but not more than) five percent (5%) of any class of securities of any enterprise (but without otherwise participating in the activities of such enterprise) if such securities are listed on any national or regional securities exchange or have been registered under Section 12(g) of the  Securities Exchange Act of 1934.

12.           Remedies. Any actual or threatened breach by Contractor of the restrictive covenants contained in this Agreement will cause Company irreparable harm for which money is inadequate compensation.  In addition to all of the remedies otherwise available to Company,
including, but not limited to, recovery from Contractor of damages and reasonable attorney’s fees incurred in the enforcement of this Agreement, Contractor acknowledges and agrees that the Company shall have the right to injunctive relief to restrain and enjoin any actual or threatened breaches of the provisions of Section 9, 10, and 11 of this Agreement without showing or proving any actual damage to Company.  The Contractor represents, acknowledges, and agrees that the restrictions contained
in this Agreement are reasonable and required for the protection of the Company, and that in the event of the termination of this Agreement, whether voluntary, involuntary, or as a result of the expiration of its term, Contractor’s experiences and capabilities are such that Contractor’s can obtain employment in business engaged in other lines or of a different nature, or without the need to compete with Company by working for Company’s Clients, and that the enforcement of a remedy by way of
injunction against Contractor will not prevent Contractor from earning a livelihood.

13.           Limitations and Liabilities.

A.           Contractor shall not have the authority to bind Company to any agreements, unless expressly authorized to do so in writing by Company.

B.           Except as is otherwise set forth herein, in no event shall Company be liable to Contractor for the payment of any compensation or commission except as provided by this Agreement.

14.           Indemnification

A.           The Company agrees to indemnify and hold Contractor harmless from and against any and all liabilities, damages, losses, claims, costs or expenses, whatsoever (including reasonable attorneys' fees) arising out of or resulting from any breach or the non-performance of any
covenant or obligation to be performed by Contractor on the part of Company under this Agreement, or from any misrepresentation or material omission contained in any certificate, instrument or paper delivered or to be delivered by and/or on behalf of Company by Contractor pursuant to this Agreement or in connection with the Contractor’s performance herein contemplated or any claim whether civil or criminal brought under the CLIA Regulations or by the Illinois Department of Public Health except where such
breach or non-performance is determined by a court of competent jurisdiction to have arisen out of Contractor’s willful or wanton conduct or Contractor’s gross negligence.

B.           Upon the occurrence of any event for which Contractor is entitled to indemnification under this Agreement, the Contractor shall promptly notify the Company in writing of the type of claim for damages and its alleged amount, including with such notice evidence supporting
the damage and amount. The Company shall promptly either (a) undertake the defense of the claim and assert its defenses; (b) assert its defense to the claim for indemnification; or (c) pay to the Contractor, by certified or official bank check within thirty (30) days following its receipt of notice, the full amount of such damage.

 

 

 

 

15.           Miscellaneous.

A.           This Agreement constitutes the entire agreement between the Parties, and supersedes any and all other agreements, either oral or in writing, between the Parties concerning the subject matter of this Agreement.  Any modification of this Agreement will be effective
only if it is in writing and signed by both Parties.

B.           Contractor’s obligations pursuant to this Agreement shall not be assigned, transferred, or shared by Contractor with any other person, firm, or other entity, without Company’s prior written approval.  Company shall have the right to assign this Agreement
to its heirs, successors, and assigns.

C.           If any provision of this Agreement is held by a court of competent jurisdiction to be unenforceable due to its scope, time, or amount, then such provision shall be deemed to be modified as to such scope, time, or amount to the extent necessary for such court to determine
that such provision is enforceable. If such provision cannot be so modified, the remaining provisions of this Agreement will nonetheless remain in full force, without being impaired or invalidated in any way.

D.           This Agreement is made under and shall be construed according to the laws of the State of Illinois.

E.           In the event of a default by either of the Parties with respect to the terms of this Agreement, the prevailing party in any litigation shall be entitled to recover from the defaulting Party all of its costs, including reasonable attorney’s fees, incurred in enforcing
the terms of this Agreement.

IN WITNESS WHEREOF, the Parties hereto have executed this Consulting Agreement on this 9th day of July, 2009.

 

	COMPANY:	CONTRACTOR:
	ADEONA PHARMACEUTICALS, INC.	NARAYAN TORKE
	 	 
	By:               /s/  Max Lyon                                	     /s/ Narayan Torke                         
	                            Max Lyon	           Narayan Torke
	 	 
	Its.           Chief Executive Officer and President

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