NON-COMPETITION AGREEMENT
THIS AGREEMENT dated as of February 26, 2014 (the "Agreement")
by and between SCIENTIFIC INDUSTRIES, INC., (the "Company"), with the
principal office of both at 00 Xxxxxxx Xxxxx, Xxxxxxx, XX 00000 and
Xxxxx Xxxxx who resides at 000 Xxxxxxxx Xxxxxx, Xxxxx Xxxxx, XX
00000 ("JM").
WHEREAS, the Company is acquiring on this date by assignment
and sale from Fulcrum, Inc., a New Jersey corporation ("Assignor")
in accordance with the Asset Purchase Agreement dated as of February
26, 2014 by and among the Company, Assignor, JM and Xxxx Xxxxxxxxxxx
(the "Purchase Agreement"), substantially all of the assets of Assignor
including, without limitation, the rights to Assignor's Balance and
Scale Business (as defined in the Purchase Agreement);
WHEREAS, it is a condition to the Company's execution and
delivery of the Purchase Agreement and performance of its obligations
thereunder that JM enter into this Non-Competition Agreement with
the Company.
NOW, THEREFORE, it is hereby agreed as follows:
1. Non-Competition; Non-Solicitation.
(a) In order to induce the Company to execute and deliver
the Purchase Agreement and in consideration for the payment to JM of
$135,000 ("Cash Consideration"), JM hereby agrees that during the
Non-Competition Period, JM shall not, within the Non-Competition Area
(as defined in Section 2 below), except as may be otherwise agreed by
the Company in writing (i) perform services or otherwise act in any
capacity (including without limitation as an employee, independent
contractor, officer, director or consultant) for, or otherwise be
engaged by or have any financial interest in or affiliation with,
any individual corporation, partnership or any other entity involved
in or which involves or relates to one or more of the Competitive
Activities (as defined in Section 2 below); (ii) perform services
(including without limitation as an employee, independent contractor,
officer, director or consultant) for, or otherwise be engaged by or
have any financial interest in or affiliation with any individual
corporation, partnership or any other Competitor Entity (as defined
in Section 2 below); or (ii) own 5% or more in the aggregate of the
outstanding equity interests of any Competitor Entity. Notwithstanding
the foregoing, nothing contained in this Paragraph 1 shall prevent JM
from being an officer, director, employee or partner or owning an equity
interest in a lessor or sublessor of a facility of which the Company
is the lessee or sublessee at the time of the purchase.
(b) During the Non-Competition Period neither JM nor any
of his affiliates will, directly or indirectly: (i) recruit, solicit
or otherwise induce or influence any employee of the Company, or a
direct or indirect subsidiary of the Company (the "SI Group") or a
sales agent, joint venturer, lessor, supplier, agent, buyer or any
other person who or which was an employee of or engaged by an SI
Group member or has or had during the Non-Competition Period or
during the one year period initially preceding the commencement of
the Non-Competition Period a business relationship with a member of
the SI Group, to discontinue, reduce or adversely modify such
employment, agency or business relationship with a SI Group member
or (ii) employ or seek to employ or cause any person to employ or
seek to employ any person or agent who is employed or retained
by a member of SI Group.
(c) Definitions. For purposes of this Agreement, the
defined terms set forth below shall have the following meanings:
(i) "Competitive Activities" shall mean (i) developing or
providing products or services which compete with the Balance
and Scale Business of the Company; (ii) soliciting or endeavoring
to entice away any person or entity who is or was a customer of
the Company or any of is subsidiaries (collectively, a "Protected
Entity") or encouraging any such person or entity to use any products
or services which compete with the Balance and Scale Business of
the Company; (iii) assisting any person or entity in any way to do,
or attempt to do, anything prohibited by clauses (i) or (ii) above
and (iv) directly or indirectly soliciting, recruiting or hiring
any person employed by a Protected Entity; provided however this
covenant shall not be deemed breached as a result of the ownership
by Assignor or any Major Stockholder and their respective Affiliates
of less than an aggregate of five (5%) percent of any class of
stock of any publicly-traded entity engaged in Competitive Activities;
(ii) "Competitor Entity" shall mean any entity engaged in
Competitive Activities.
(iii) "Non-Competition Period" shall mean the period commencing
on the Closing Date as defined in the Purchase Agreement and ending
on the fifth anniversary thereof.
(iv) "Restricted Area" shall mean the United States, Canada,
Central America and South America.
2. JM acknowledges and agrees that the Company or
its affiliates may be damaged irreparably in the event any of the
provisions of this Agreement are breached. Accordingly, JM agrees
that the Company or SI shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement
and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any court of the
United States or any state thereof having jurisdiction over the
matter, without being required to secure a bond, in addition to any
other remedy to which it may be entitled, at law or in equity.
Without limiting the foregoing, JM shall be obligated to repay
to the Company the Cash Consideration upon a material breach of his
obligations under this Agreement.
3. If the final judgment of a court of competent
jurisdiction declares that any term or provision of Section 1 above,
is invalid or unenforceable, the parties to this Agreement agree that
the court making the determination of invalidity or unenforceability
shall have the power to reduce the scope, duration or area of the
term or provision, to delete specific words or phrases, or to replace
any invalid or unenforceable term or provision with a term or provision
that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this
Agreement shall be enforceable as so modified.
4. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK
WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION
OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER
JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF NEW YORK.
5. Each party submits exclusively to the jurisdiction
of any state or federal court sitting in the Borough of Manhattan,
New York in any action or proceeding arising out of or relating to
this Agreement and agrees that all claims in respect of the action
or proceeding may be heard and determined in any such court. Each
party waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety, or other
security that might be required of the other party with respect thereto.
A party may make service on the other party by sending or delivering a
copy of the process to the party to be served at the address set forth
in the first paragraph of this Agreement, unless notified of a different
address in writing by the party to be served.
SCIENTIFIC INDUSTRIES, INC. XXXXX XXXXX
/s/ Xxxxxx X. Xxxxxx /s/ Xxxxx Xxxxx
By: ____________________________ _______________________
Xxxxxx X. Xxxxxx, President
