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 Xxxx Xxxxxxxxxxx who
resides at 000 Xxxxxxx Xx. Xxxxx Xxxxx XX 00000 (?KN?).
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, KN and Xxxxx Xxxxx (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 KN 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 KN of $135,000 ("Cash Consideration"), KN
hereby agrees that during the Non-Competition Period, KN 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 KN
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 KN
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 fourth anniversary thereof.
(iv) "Restricted Area" shall mean the United States,
Canada, Central America and South America.
2. KN 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, KN 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, KN 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. XXXX XXXXXXXXXXX
/s/ Xxxxxx X. Xxxxxx /s/ Xxxx Xxxxxxxxxxx
By:____________________________ ____________________
Xxxxxx X. Xxxxxx, President
