ESCROW AGREEMENT, dated as of February 26, 2014 (this
"Agreement"), is made by and among SCIENTIFIC INDUSTRIES,
INC., a Delaware corporation (the "Company"), FULCRUM,
INC., a New Jersey corporation (?Fulcrum?), and XXXXXXX
XXXXXX & XXXXXXXXXX LLC, as escrow agent (the "Escrow
Agent").
RECITALS
The Company and Fulcrum are parties to that
certain Asset Purchase Agreement, dated as of the date
hereof (the "Purchase Agreement"), providing for the
acquisition by the Company and sale by Fulcrum of the
assets of Fulcrum described in the Purchase Agreement.
The Purchase Agreement provides that 31,612 shares of
the Company's Common Stock registered in the name of
Fulcrum (the "Escrowed Shares") of the acquisition
consideration is to be deposited with the Escrow Agent
to be held and disbursed pursuant to the terms of the
Purchase Agreement and this Agreement.
Capitalized terms not otherwise defined herein
shall have the meanings set forth in the Purchase
Agreement.
NOW THEREFORE, it is agreed as follows:
1. Appointment of Escrow Agent. The Company and
Fulcrum hereby appoint the Escrow Agent, and the Escrow
Agent hereby agrees to serve, as escrow agent in
accordance with, and pursuant to, this Agreement.
2. Delivery of Escrowed Shares.
(a) As soon as practicable but no later than
three (3) business days following the Closing Date,
the Company, pursuant to the terms of the Purchase
Agreement, shall deliver to the Escrow Agent the
Escrowed Shares to be held pursuant to the terms of
this Agreement and the Purchase Agreement. Subject to
Section 2(b) of this Agreement, the Escrowed Shares shall
be delivered to Fulcrum on the first anniversary of the
Closing Date. During such escrow period, Fulcrum shall be
entitled to receive dividends paid by the Company with
respect to the Escrowed Shares. Fulcrum shall not assign
any of the Escrowed Shares or any interest thereon during
the period such Escrowed Shares are held. During such
period the stock certificates for the Escrowed Shares shall
bear in addition to the legend set forth in Section 4.17
of the Purchase Agreement, the following legend which shall
be deleted upon delivery of the Escrowed Shares pursuant
to this Agreement.
"THE SHARES EVIDENCED BY THIS CERTIFICATE
ARE SUBJECT TO THE TERMS OF AN ESCROW
AGREEMENT, DATED FEBRUARY 26, 2014, AND
SUCH SHARES OR ANY INTEREST THEREIN MAY
NOT BE ASSIGNED DURING THE RELATED ESCROW
PERIOD."
(b) The undersigned parties agree that the Company
may foreclose upon the Escrowed Shares in accordance with
Section 9.1 of the Purchase Agreement.
3. Voting of Escrowed Shares. During the escrow
period, the Company agrees to provide to Fulcrum with
respect to the Escrowed Shares copies of all materials
provided to the stockholders of the Company with respect
to the voting of such shares and copies of written
communication delivered to stockholders pursuant to the
Company's Certificate of Incorporation, By-Laws and the
Rules and Regulations under the Securities Exchange Act
of 1934, as amended.
4. Escrow Agent.
(a) The Escrow Agent shall receive no fee for
its services hereunder. The Escrow Agent shall be entitled
to reimbursement, within 15 days of presentation of appropriate
documented invoices, from the Company, of the Escrow Agent's
reasonable expenses incurred to third parties in the performance
of its duties hereunder; provided, however, the Escrow Agent
shall not be entitled to reimbursement for fees incurred in
connection with the negotiation and preparation of this
Agreement or in connection with acting as Escrow Agent.
(b) To induce the Escrow Agent to act hereunder, it
is further agreed that:
(i) The Escrow Agent shall not be under any duty
to give the Escrowed Shares held by it hereunder any greater
degree of care than it gives its own similar property.
(ii) This Agreement expressly sets forth all the
duties of the Escrow Agent with respect to any and all matters
pertinent hereto. No implied duties or obligations shall be
read into this Agreement against the Escrow Agent. The Escrow
Agent shall not be bound by the provisions of any agreement
among the other parties hereto (including the Purchase Agreement),
except this Agreement.
(iii) The Escrow Agent shall not be liable, except
for its own gross negligence or willful misconduct, and, except
with respect to claims based upon such gross negligence or willful
misconduct that are successfully asserted against the Escrow Agent,
the other parties hereto shall jointly and severally indemnify and
hold harmless the Escrow Agent (and any successor Escrow Agent)
from and against any and all losses, liabilities, claims, actions,
damages, and expenses, including reasonable attorneys' fees and
disbursements, arising out of, and in connection with, this
Agreement. In no event shall the Escrow Agent be liable for
consequential, indirect or punitive damages. This paragraph
shall survive termination of this Agreement.
(iv) The Escrow Agent shall be entitled to rely upon
any order, judgment, certification, demand, notice, instrument,
or other writing delivered to it hereunder without being required
to determine the authenticity or the correctness of any fact stated
therein or the propriety or validity of the service thereof. The
Escrow Agent may act in reliance upon any instrument or signature
believed by it in good faith to be genuine and may assume, if in
good faith, that any person purporting to give notice or receipt
or advice or make any statement or execute any document in
connection with the provisions hereof has been duly authorized
to do so. The Escrow
Agent shall not be liable for any action taken or omitted in
good faith and in accordance with such advice.
(v) The Escrow Agent does not have any interest in
the Escrowed Shares deposited hereunder (except as provided in
Section 4(a)), but is serving as escrow holder only.
(vi) The Escrow Agent (and any successor escrow agent)
at any time may be discharged from its duties and obligations
hereunder by the delivery to it of notice of termination signed
by the Company and Fulcrum or at any time may resign by giving
written notice to such effect to the Company and Fulcrum. Upon
any such termination or resignation, the Escrow Agent shall
deliver the Escrowed Shares to any successor escrow agent jointly
designated by the other parties hereto in writing, or to any court
of competent jurisdiction if no such successor escrow agent is
agreed upon, whereupon the Escrow Agent shall be discharged of
and from any and all further obligations arising in connection
with this Agreement. The termination or resignation of the Escrow
Agent shall take effect on the earlier of (A) the appointment of a
successor (including a court of competent jurisdiction) or (B) the
twentieth day after the date of delivery: (1) to the Escrow Agent
of the other parties? notice of termination or (2) to the other
parties hereto of the Escrow Agent?s written notice of resignation.
If at that time the Escrow Agent has not received a designation of
a successor escrow agent, the Escrow Agent?s sole responsibility
after that time shall be to keep the Escrowed Shares safe until
receipt of a designation of successor escrow agent or a joint
written disposition instruction by the other parties hereto or
an enforceable order of a court of competent jurisdiction.
(vii) The Escrow Agent shall have no responsibility
for the contents of any writing of any third party contemplated
herein as a means to resolve disputes and may rely without any
liability upon the contents thereof.
(viii) In the event of any dispute among or between
the other parties hereto resulting in adverse claims or demands
being made in connection with the Escrowed Shares or in the event
that the Escrow Agent in good faith is in doubt as to what action
it should take hereunder, the Escrow Agent shall retain the
Escrowed Shares until the Escrow Agent shall have received (A) a
final and non-appealable order of a court of competent jurisdiction
directing delivery of the Escrowed Shares or (B) a written agreement
executed by the other parties hereto directing delivery of the
Escrowed Shares, in which event the Escrow Agent shall release
and distribute the Escrowed Shares in accordance with such order
or agreement. The Escrow Agent shall act on such court order
without further question.
(ix) The parties hereto irrevocably (A) submit to
the jurisdiction of any state or federal court sitting in New
York County, New York in any action or proceeding arising out
of, or relating to, this Agreement, (B) agree that all claims
with respect to such action or proceeding shall be heard and
determined in such state or federal court, and (C) waive, to
the fullest extent possible, the defense of an inconvenient
forum. The parties hereby consent to and grant any such court
jurisdiction over the persons of such parties and over the
subject matter of any such dispute and agree that delivery
or mailing of process or other papers in connection with any
such action or proceeding in the manner provided hereinabove,
or in such other manner as may be permitted by law, shall be
valid and sufficient service thereof.
(x) No publicly distributed material or other
matter in any language which mentions the Escrow Agent's
name or the rights, powers, or duties of the Escrow Agent
shall be issued by the other parties hereto or on such parties'
behalf unless the Escrow Agent shall first have given its
specific written consent thereto.
(xi) Distribution of the Escrowed Shares pursuant
to this Agreement by the Escrow Agent shall operate to divest
all right, title, interest, claim and demand, either at law
or in equity, of any party to this Agreement in and to the
Escrowed Shares, and shall be a perpetual bar both at law
and in equity as against the Escrow Agent, the Company and
Fulcrum. The Escrow Agent's responsibilities and liabilities
hereunder will terminate upon transfer by Escrow Agent of the
Escrowed Shares under this Agreement.
5. Notices. Any notice or other communication required
or permitted to be given hereunder shall be in writing and
shall be (a) delivered by hand, (b) facsimile, or (c) overnight
delivery with proper postage prepaid, and addressed as follows:
(i) If to the Company:
Scientific Industries, Inc.
00 Xxxxxxx Xxxxx.
Xxxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Chief Executive Officer
Facsimile Number: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxxx & Xxxxxxxxxx LLC
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx Xxxxxxxxxxx, Esq.
Facsimile Number: (000) 000-0000
(ii) If to Fulcrum:
Fulcrum, Inc.
000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxx Xxxxx, President
Facsimile Number: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxx, Esq.
Law Officers of Xxxxxxx X. Xxxxx PC
000 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Facsimile Number: (000) 000-0000
(iii) If to the Escrow Agent:
Xxxxxxx Xxxxxx & Xxxxxxxxxx LLC
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxx, Esq.
Facsimile Number: (000) 000-0000
or to such other address as the person to whom notice
is to be given may have previously furnished to the
others in the above-referenced manner. Except as
otherwise provided herein, no notice or communication
shall be effective until received.
6. Miscellaneous.
(a) Conflict. Xxxxxxx Xxxxxx & Xxxxxxxxxx LLC
is counsel to Company in this transaction and has in the
past been counsel to the Company and certain of its affiliates.
Both Company and Fulcrum consent to the additional appointment
of Xxxxxxx Xxxxxx & Xxxxxxxxxx LLC as Escrow Agent for this
transaction. Both the Company and Fulcrum acknowledge that,
in acting as Escrow Agent, Xxxxxxx Xxxxxx & Xxxxxxxxxx LLC is
not acting as attorneys for Fulcrum. Fulcrum consents to
Xxxxxxx Xxxxxx & Xxxxxxxxxx LLC continued and future representation
of the Company and its affiliates and agree not to assert any
such conflict of interest or to seek to disqualify the firm
or its partners from representing the Company or an affiliate of
the Company notwithstanding any dispute that may develop between
Fulcrum and the Company other than a dispute between the Company
and Fulcrum as to the Escrow Agreement or enforcement of its terms.
(b) Binding Effect. This Agreement shall be binding
upon, and inure solely to the benefit of, the parties hereto and
their respective successors and assigns, heirs and administrators
and shall not be enforceable by, or inure to the benefit of, any
other third party, except as provided in paragraph (vi) of Section
4(b) with respect to the termination of, or resignation by, the
Escrow Agent. No party may assign any of its rights or obligations
under this Agreement without the
written consent of the other parties.
(c) Choice of Law. This Agreement shall be construed
in accordance with, and governed by, the internal law of the State
of New York (without reference to its rules as to conflicts
of law).
(d) Modification. This Agreement may only be modified
by a writing signed by the Company, the Escrow Agent and Fulcrum.
(e) Headings. The section headings herein are for
convenience only and shall not affect the construction thereof.
Unless otherwise indicated, references to Sections and Articles
are to Sections and Articles, respectively, contained herein.
(f) Counterparts; Facsimile. This Agreement may be
executed in one or more counterparts (each of which may be
transmitted via email or facsimile) but all such separate
counterparts shall constitute but one and the same instrument;
provided that, although executed in counterparts, the executed
signature pages of each such counterpart may be affixed to a
single copy of this Agreement which shall constitute an original.
(g) Conflicting Language. In the event of a conflict
between Company and Fulcrum relating to the language of this
Agreement and the language of the Purchase Agreement, as between
the Company and Fulcrum, the language of the Purchase Agreement
shall control between them.
(h) Termination. The escrow created pursuant to
this Escrow Agreement shall terminate at the time that the
Escrowed Shares have been delivered in accordance herewith,
and all obligations of Fulcrum and Company to the Escrow Agent
shall have been satisfied.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above written.
SCIENTIFIC INDUSTRIES, INC.
/s/ Xxxxxx X. Xxxxxx
By:________________________________
Name: Xxxxxx X. Xxxxxx
Title: President
FULCRUM, INC.
By: /s/ Xxxxx Xxxxx
___________________
Name: Xxxxx Xxxxx
Title: President
ESCROW AGENT:
XXXXXXX XXXXXX & XXXXXXXXXX LLC
/ Xxxxxxx xxxxxx & Xxxxxxxxxx LLC
By:________________________________
Name:
Title:
