SECURITY AGREEMENT AND COLLATERAL ASSIGNMENT
THIS SECURITY AGREEMENT AND COLLATERAL ASSIGNMENT
(the Security Agreement and Collateral Assignment and all exhibits,
schedules, extensions, renewals, amendments, substitutions and
replacements hereto and hereof is referred to herein as the
"Security Agreement") dated as of June 26, 2015, is made and
entered into by and among SCIENTIFIC INDUSTRIES, INC., a Delaware
corporation with an address at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Debtor") and FIRST NATIONAL BANK OF
PENNSYLVANIA, with an address at One North Shore Center, Suite
500, ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
WITNESSETH:
WHEREAS, pursuant to a Credit Agreement (the
Credit Agreement and all exhibits, schedules, extensions, renewals,
amendments, substitutions and replacements thereto and thereof is
referred to herein as the "Credit Agreement") dated as of even date
herewith by and among the Secured Party as the lender and the
Debtor as the borrower, the Secured Party has agreed to make
available to the Debtor certain revolving, term and equipment
credit facilities in an initial aggregate principal amount of
$1,298,500.00, which Indebtedness will be evidenced by one or
more revolving, demand notes dated as of even date herewith
(such notes, together with all extensions, renewals, amendments,
substitutions and replacements thereto and thereof, are
hereinafter referred to individually as a "Note", and collectively
as the "Notes"), with interest as provided in the Credit Agreement
and to be repaid at the times and places and in the manner set
forth in the Credit Agreement, and containing other terms and
provisions as set forth in the Credit Agreement; and
WHEREAS, to secure the prompt payment in full
to the Secured Party of the Obligations, as such term is defined
in the Credit Agreement, the Debtor has agreed to execute
and deliver to the Secured Party this Security Agreement.
NOW, THEREFORE, in consideration of the premises
(each of which is incorporated herein by reference) and the
mutual promises contained herein and other valuable consideration,
the receipt and adequacy of which are hereby acknowledged, and
with the intent to be legally bound hereby, and for the purpose
of securing:
(i) the performance of all of the terms and
provisions contained in the Notes, including, but not limited to,
the payment of the aggregate unpaid principal balance of the Notes
(including all advances heretofore and hereafter made and evidenced
by any Note) and interest thereon unto the Secured Party, its
successors and assigns, according to the provisions and conditions
of the Notes, as they may be amended, extended, renewed, substituted
or replaced from time to time, and in discharge thereof;
(ii) the performance by the Debtor of all of
the terms and provisions contained in the Credit Agreement, this
Security Agreement and all of the other Loan Documents, as they
may be amended, modified or supplemented from time to time, the
terms and provisions of all of such documents being specifically
incorporated herein by reference as though set forth herein; and
(iii) the Debtor's payment of any and all of
the Obligations to the Secured Party, whether now or hereafter
existing or incurred and whether direct or indirect, by virtue
of any assignment, pledge or other transfer or disposition to
the Secured Party of Indebtedness and other obligations of the
Debtor to one or more third parties, or otherwise, and including
without limitation, any and all obligations and liabilities of
the Debtor to the Secured Party, whether absolute or contingent,
whether now existing or hereafter created, arising, evidenced
or acquired (including all renewals, extensions and modifications
thereof and substitutions therefor) under (a) any agreement,
device or arrangement designed to protect the Borrowers from
fluctuations of interest rates, exchange rates or forward rates,
including, but not limited to, dollar-denominated or cross-
currency exchange agreements, forward rate currency or interest
rate options, puts, warrants, swaps, swaptions, U.S. Treasury
locks and U.S. Treasury options, (b) any other interest rate
hedging transactions, such as, but not limited to, managing
the Borrowers' interest rate risk associated with any pending
or potential capital market transactions such as fixed rate bond
issues and (c) any and all cancellations, buybacks, reversals,
terminations or assignments of any of the foregoing;
the Debtor and the Secured Party hereby agree as follows:
1. Grant of Security Interests. The Debtor hereby
assigns and pledges to the Secured Party, and its successors
and assigns, and grants to the Secured Party, and its successors
and assigns, a perfected and continuing lien and security
interest, prior to all other liens and security interests
(except for Permitted Liens, but only to the extent permitted
by the Credit Agreement), on and in all of the Debtor's
property described below, whether now owned or existing or
hereafter acquired, arising or created, and all of the Debtor's
rights, titles and interests in and to and relating to all
such property, wherever located, and all products thereof
and all proceeds derived therefrom (including, without
limitation, proceeds of insurance):
(a) All personal property of the Debtor, including
without limitation the following, all whether now owned or
hereafter acquired or arising and wherever located: (i) accounts
(including health-care-insurance receivables and credit card
receivables); (ii) securities entitlements, securities accounts,
commodity accounts, commodity contracts and investment
property; (iii) deposit accounts; (iv) instruments (including
promissory notes); (v) documents (including warehouse receipts);
(vi) chattel paper (including electronic chattel paper and
tangible chattel paper); (vii) inventory, including raw
materials, work in process, or materials used or consumed in
Debtor's business, items held for sale or lease or furnished
or to be furnished under contracts of service, sale or lease,
goods that are returned, reclaimed or repossessed; (viii) goods
of every nature, including stock-in-trade, goods on consignment,
standing timber that is to be cut and removed under a conveyance
or contract for sale, computer programs embedded in such
goods and farm products; (ix) equipment, including machinery,
vehicles and furniture; (x) fixtures; (xi) agricultural liens;
(xii) as-extracted collateral; (xiii) commercial tort claims,
if any, described on Schedule 1 hereto; (xiv) letter of credit
rights; (xv) general intangibles, of every kind and description,
including payment intangibles, software, computer information,
source codes, object codes, records and data, all existing and
future customer lists, choses in action, claims (including
claims for indemnification or breach of warranty), books, records,
patents and patent applications, copyrights, trademarks,
tradenames, tradestyles, trademark applications, goodwill,
blueprints, drawings, designs and plans, trade secrets,
contracts, licenses, license
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agreements, formulae, tax and any other types of refunds,
returned and unearned insurance premiums, rights
and claims under insurance policies; (xvi) all supporting
obligations of all of the foregoing property; (xvii) all
property of the Debtor now or hereafter in the Secured Party's
possession or in transit to or from, or under the custody or
control of, the Secured Party or any affiliate thereof;
(xviii) all cash and cash equivalents thereof; and (xix)
all cash and noncash proceeds (including insurance proceeds)
of all of the foregoing property, all products thereof and
all additions and accessions thereto, substitutions therefor
and replacements thereof.
(b) All books, records, documents, ledger
receipts and other information of the Debtor pertaining to
any of the foregoing, including, without limitation, all
customer lists, credit files, computer records, computer
programs, storage media and computer software used or required
in connection with the establishment, generation, processing,
maintenance or storage of such books, records or documents or
otherwise used or acquired in connection with documenting
information pertaining to any of the aforesaid collateral.
All of the Debtor's property described in items (a) and (b)
above, both inclusive, as well as all products and proceeds
thereof and all of the Debtor's rights, titles and interests
in and to and relating to all such property, whether now
owned or existing or hereafter acquired or created, are
hereinafter referred to collectively and individually as
the "Collateral".
2. Representations and Warranties. The Debtor
hereby represents and warrants to the Secured Party that:
(i) Title to Collateral. The Debtor has
good title to all of its presently owned or existing Collateral,
free and clear of all Liens except for Permitted Liens (but
only to the extent permitted by the Credit Agreement). Each
of the assignments, pledges liens and security interests made
and granted hereby, when duly and properly perfected, will be
liens and security interests prior to all other Liens and are
not in any respect subject or subordinate to any other Lien,
except for the Permitted Liens (but only to the extent
permitted by the Credit Agreement). Except for Permitted Liens,
the Debtor has not heretofore assigned or pledged, or granted
any other Liens upon or in, or otherwise assigned a Lien on,
any of the Collateral.
(ii) Authority. The Debtor has and has
duly exercised all requisite right, power and authority to
enter into this Security Agreement, and to assign and pledge,
and to grant liens and security interests upon and in, the
Collateral for the purposes set forth in this Security Agreement,
and to carry out the transactions contemplated by this Security
Agreement.
(iii) Chief Executive Office and Other
Locations. The Debtor's chief executive office is as shown on
Schedule 1 attached hereto and made a part hereof. All of the
Debtor's other places of business are as shown on Schedule 1.
(iv) Records. The records relating to the
Collateral in the possession of, or subject to the control of,
the Debtor are kept at the Debtor's chief executive office as
shown on Schedule 1 and at no other locations.
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(v) Locations of Inventory, Fixtures and
Goods. The Collateral which consists of inventory, fixtures
and goods is located only at those sites more fully described on
Schedule 1 hereto.
3. Covenants. The Debtor hereby covenants and
agrees with the Secured Party that:
(i) Title to Collateral. The Debtor will
be the sole legal and beneficial owner of, and will have and
maintain good and marketable title in and to, all of the
Collateral hereafter acquired, created or arising, free and
clear of all Liens except Permitted Liens. At its expense,
the Debtor shall generally warrant title to the Collateral
and shall defend the Collateral and the rights, titles and
interests of the Secured Party therein and thereto, against
all claims and demands of any and all Persons. The Debtor
shall not (A) grant, create, incur or permit to exist any
Lien on or in any of the Collateral, other than Permitted
Liens, (B) permit any of the Collateral to be levied upon
under any legal process, (C) assign, transfer or otherwise
dispose of any of the Collateral (except as otherwise may
be permitted in the Credit Agreement), or (D) do, or permit
to be done, anything that may impair the value of any of
the Collateral or any of the liens and security interests
granted or afforded by this Security Agreement. The Debtor
shall promptly discharge any Lien on any of the Collateral
which is not specifically permitted to exist pursuant to
the terms of this Security Agreement or any of the other
Loan Documents.
(ii) Locations of Offices and Collateral.
(A) The Debtor will immediately
advise the Secured Party in writing of any change or
anticipated change in, or any additions to, the chief executive
office and the other places of business of the Debtor listed
on Schedule 1 hereto.
(B) The Debtor will not remove
or permit the removal of any of the records relating to
the Collateral from the locations shown on Schedule 1,
and will not locate any such records at locations other
than the locations shown on Schedule 1, without the prior
written consent of the Secured Party.
(C) The Debtor will not remove
or permit the removal of any of the Collateral which
consists of inventory, equipment, fixtures and goods from
the locations shown on Schedule 1, and will not locate any
inventory, equipment, fixtures and goods at locations
other than the locations shown on Schedule 1, without the
prior written consent of the Secured Party, except for (i)
dispositions of assets in accordance with the Credit
Agreement and (ii) temporarily for use in the ordinary
business operations of the Debtor. The Debtor shall provide
to the Secured Party promptly upon request adequate evidence
that any removal or location of any such Collateral was
permitted by the Credit Agreement, and shall ensure that
any replacement inventory, equipment, goods and fixtures
are free and clear of all Liens, except for Permitted Liens.
(iii) Changes to Chief Executive Office,
Places of Business or Name of Debtor. If the Debtor
desires to make any change or addition to the information
set forth on Schedule 1 hereto, or to establish a new or
additional name in which it may invoice account debtors,
maintain records concerning the Collateral, own or locate
Collateral or conduct its business, then the Debtor shall
first, with respect to each such new or changed name or
location:
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(A) give the Secured Party at least
30 days' prior written notice of its intention to do so
and provide the Secured Party with such information in
connection therewith as the Secured Party may reasonably
request; and
(B) take such action, satisfactory to
the Secured Party, as may be necessary in the opinion of
the Secured Party to maintain at all times the perfection
and priority of the security interests granted to the
Secured Party hereunder.
(iv) Covenants Relating to Accounts.
(A) The Debtor shall promptly deliver
to the Secured Party from time to time any information
relating to its accounts, including without limitation the
names and addresses of account debtors; the aging of such
accounts; the dates on which such accounts first became
due; the amounts of any offsets or claims of any account
debtor and whether the Debtor disputes such claim or offset;
copies of any documents, instruments, invoices and purchase
orders; and all schedules, certifications and any reports or
other information relating to the Debtor's accounts, all as
the Secured Party may reasonably request from time to time,
all of the foregoing to be in form and substance satisfactory
to the Secured Party and in such detail as the Secured Party
may reasonably request. The Debtor shall at all times and
from time to time cooperate fully with the Secured Party and
its employees, officers and authorized representatives
in verifying any matter relating to any account.
(B) The Debtor shall not invoice any
account debtors or maintain the records of the Debtor
relating to any account in any name other than the
Debtor's proper corporate name and such new names as it
may establish in accordance with Section 3(iii) above.
(C) The Debtor agrees that the
Secured Party may at any time, with reasonable notice
to the Debtor if no Event of Default is then in existence,
verify with any account debtors the status of any accounts
payable by such account debtors. The Debtor shall, from
time to time upon the reasonable request of the Secured
Party, execute and deliver such information, documents and
instruments, and take all such action as the Secured Party
may reasonably request in order to effectuate the purposes
of this paragraph (C).
(D) The Debtor shall promptly notify
the Secured Party of any dispute (including without
limitation any rejection or revocation of acceptance of
goods) between the Debtor and any account debtor concerning
any disputed amount in excess of $50,000 due and owing under
any Account, including the reason for the dispute, all
claims related thereto and the amount in controversy. The
Debtor will promptly notify the Secured Party if the Debtor
has notice or knowledge of claims or adverse changes which
will or may affect the ultimate collectibility of any or
all of the accounts of an account debtor, in an aggregate
amount at any time in excess of $50,000.
(E) To the extent that any applicable
Law, custom or any contract or agreement with any account
debtor requires notice to or the consent of such account
debtor in order for the Secured Party to obtain a security
interest in the accounts of such account debtor, the Debtor
agrees to promptly give such notice or obtain such consent.
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(v) Performance of Agreements. The
Debtor shall abide by, perform and discharge each and
every obligation, covenant, condition, duty and agreement
in connection with the Collateral contained herein or in
any of the other Loan Documents.
(vi) Preservation of Security Interests.
(A) The Debtor will preserve and protect the Secured Party's
security interest in the Collateral. The Debtor will execute
or join in the execution of, from time to time upon the
request of the Secured Party, all financing statements,
continuation statements and all other documents and instruments
required by the Secured Party to evidence and perfect, and
continue to evidence and perfect, all of the security interests
granted herein or hereby, and the Debtor shall pay the cost of
filing or recording such documents and instruments in all
public offices where deemed necessary by the Secured Party.
The Debtor will promptly furnish all documents of title,
affidavits and other documents and instruments reasonably
required by the Secured Party to further evidence or to
perfect the liens and security interests granted herein or
hereby. To the extent controllable by the Debtor, the
Debtor will, at its own cost and expense, cause such
security interests as are governed by the Uniform Commercial
Code to be perfected and to continue to be perfected so
long as the Obligations or any portion thereof is
outstanding and unpaid, or any commitment to lend under
the Credit Agreement is in effect and, upon the request
of the Secured Party, the Debtor will, at its own cost
and expense, cause such liens and security interests as
are governed by Laws other than the Uniform Commercial
Code to be perfected and to continue to be perfected
so long as the Obligations or any portion thereof is
outstanding and unpaid or any commitment to lend under
the Credit Agreement is in effect. Immediately upon the
Debtor's receipt of any portion of the Collateral which
itself, or the ownership of which, is or becomes evidenced
by an agreement, instrument, document or other writing
(including but not limited to promissory notes, documents
of title, trade acceptances and warehouse receipts), the
Debtor shall deliver the original thereof to the Secured
Party, together with appropriate endorsements or other
specific evidence, in form and substance acceptable to
the Secured Party, of the assignment thereof to the
Secured Party.
(B) Without limitation of the
foregoing, the Secured Party may at any time and from
time to time file financing statements, continuation
statements and amendments thereto that describe the
Collateral as all assets of the Debtor, or words of
similar effect, and which contain any other information
required by the Uniform Commercial Code for the
sufficiency or filing office acceptance of any financing
statement, continuation statement or amendment, including
whether the Debtor is an organization, the type of
organization and any organization identification number
issued to the Debtor. The Debtor agrees to provide to
the Secured Party from time to time promptly upon request
any information requested by the Secured Party so that
the Secured Party can take any such action. Any such
financing statements, continuation statements or
amendments may be signed by the Secured Party on behalf
of the Debtor, and may be filed at any time in any
appropriate jurisdiction. The Debtor hereby authorizes
the Secured Party to do any of the foregoing and ratifies
and confirms any of the foregoing actions taken
previously by the Secured Party.
(C) The Debtor shall at any time and
from time to time, take such steps as the Secured Party
may reasonably request for the Secured Party (i) to obtain
an acknowledgement, in form and substance satisfactory to
the Secured Party, of any bailee or any other Person having
possession of any of the Collateral that the bailee or such
other Person holds such Collateral for
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the Secured Party, (ii) to obtain "control" of any
investment property, deposit accounts, letter-of-credit
rights or electronic chattel paper (as such terms are
defined in the Uniform Commercial Code with corresponding
provisions in Sections 9-104, 9-105, 9-106 and 9-107 of the
Uniform Commercial Code relating to what constitutes
"control" for such items of Collateral, with any agreements
establishing control to be in form and substance satisfactory
to the Secured Party, and (iii) otherwise to insure the
continued perfection and priority of the Secured Party's
security interest in any of the Collateral and of the
preservation of its rights therein, with the same
priority required by the Loan Documents.
(vii) Books and Records; Notices and Other
Information; Inspection. The Debtor will at all times keep,
or cause to be kept, accurate and complete books and records
relating to the Collateral. The Debtor hereby agrees that
the Secured Party, or any of its officers, employees and
authorized representatives, shall have the right to inspect
the Collateral and make extracts from the books and records
relating to the Collateral from time to time during normal
business hours. The Debtor shall promptly furnish or cause
to be furnished to the Secured Party such data and
information and copies of such papers and documents relating
to the Collateral as the Secured Party may request from time
to time and in such form and substance as may be requested
by the Secured Party from time to time, shall have access to
any premises where any of the Collateral is located, and shall
have the right, at any time, to discuss the Collateral with any
employee, officer, attorney, accountant, Account Debtor or
creditor of the Debtor. The Debtor will promptly deliver to
the Secured Party all written notices, and will promptly give
the Secured Party written notice of any other notices,
received by it with respect to a material diminution of the
value of the Collateral or the impairment of the lien of the
Secured Party in the Collateral.
(viii) Cooperation Upon Event of Default.
To assist the Secured Party in enforcing its rights and
remedies hereunder, upon the request of the Secured Party
made from time to time after the occurrence of an Event of
Default, the Debtor will, at its expense (A) assemble and
prepare for removal at and to places designated by the
Secured Party such items of Collateral selected by the
Secured Party, and (B) otherwise cooperate fully with the
Secured Party in all respects so that the Secured Party can
effectively exercise its rights and remedies hereunder.
(ix) Additional Provisions Regarding
Commercial Tort Claims. If the Debtor shall at any time,
acquire a commercial tort claim, as defined in the Uniform
Commercial Code, the Debtor shall immediately notify the
Secured Party in a writing signed by the Debtor of the
brief details thereof and shall grant to the Secured Party
in such writing a security interest therein and in all
proceeds thereof, all of which shall be upon and subject
to the terms of this Security Agreement, with such writing
to be in form and substance satisfactory to the Secured
Party.
4. Actions Upon Occurrence of Event of Default.
Upon the occurrence and during the continuance of any
Event of Default and at any time thereafter, the Secured
Party may declare all Obligations secured hereby immediately
due and payable and shall have, in addition to any remedies
provided herein or by any applicable law or in equity, all
the remedies of a secured party under the Uniform Commercial
Code. As permitted by such Code, the Secured Party may
(a) peaceably by its own means or with judicial assistance
enter the Debtor's premises and take possession of the
Collateral, (b) render the Collateral unusable, (c) dispose
of the Collateral on
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the Debtor's premises, (d) require the Debtor to assemble
the Collateral and make it available to the Secured Party
at a place designated by the Secured Party, and (e)
notify and direct any account debtor with respect to
any Account or payment intangible to make
payment directly to the Secured Party of the amounts due,
and give receipts to such account debtors for any such
payments, and the account debtors will be protected in
making such payments to the Secured Party. Unless the
Collateral is perishable or threatens to decline speedily
in value or is of a type customarily sold on a recognized
market, the Secured Party will give the Debtor reasonable
notice of the time and place of any public sale thereof or
of the time after which any private sale or any other
intended disposition thereof is to be made. The requirements
of commercially reasonable notice shall be met if such
notice is sent to the Debtor at least ten (10) days before
the time of the intended sale or disposition. Expenses of
retaking, holding, preparing for sale, selling or the like
shall include the Secured Party's reasonable attorney's
fees and legal expenses, incurred or expended by the
Secured Party to enforce any payment due it under this
Security Agreement either as against the Debtor, or in
the prosecution or defense of any action, or concerning
any matter growing out of or connection with the subject
matter of this Security Agreement and the Collateral
pledged hereunder.
5. Power of Attorney. The Debtor does hereby
make, constitute and appoint any officer or agent of the
Secured Party as the Debtor's true and lawful attorney-in-fact,
upon the occurrence and during the continuance of any Event of
Default, with power to endorse the name of the Debtor or any
of the Debtor's officers or agents upon any notes, checks,
drafts, money orders, or other instruments of payment or
Collateral that may come into the possession of the Secured
Party in full or part payment of any amounts owing to the
Secured Party; granting to the Debtor's said attorney full
power to do any and all things necessary to be done in and
about the premises as fully and effectually as the Debtor
might or could do, including the right to sign for the Debtor,
UCC-1 financing statements and UCC-3 statements of change and
to ▇▇▇ for, compromise, settle and release all claims and
disputes with respect to, the Collateral. The Debtor hereby
ratifies all that said attorney shall lawfully do or cause to
be done by virtue hereof. This power of attorney is coupled
with an interest, and is irrevocable. Debtor acknowledges
and agrees that the power of attorney herein granted is for
the benefit of the Secured Party and does not require the
Secured Party to act for the benefit of Debtor as principal;
and the power of attorney herein granted is not intended to
make the Secured Party a fiduciary for Debtor. The Secured
Party hereby accepts this power of attorney and all powers
granted hereunder for the benefit of the Secured Party.
Debtor and the Secured Party acknowledge, agree and consent
that, in accordance with the legislative intent and as
allowed by 20 Pa.C.S. ss 5601 (a), the provisions of 20
Pa.C.S. ss 5601 shall NOT apply to this power of attorney or
any of the powers granted herein. Debtor hereby acknowledges,
consents and agrees that the power of attorney granted
pursuant to this Section 5 is irrevocable and coupled with
an interest.
6. Maintenance of Properties; Insurance.
(i) Maintenance of Properties. If the
Debtor fails to comply with the provisions of the Credit
Agreement relating to maintenance of its properties, the
Secured Party may, but shall not be obligated to, pay the
cost of any repairs to or maintenance of the Collateral,
and may, but shall not be obligated to, pay any taxes,
levies or impositions relative to the Collateral, for
the account of the Debtor and add the amounts of all of
the foregoing to the Obligations.
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(ii) Insurance. If the Debtor fails
to effect and keep in force insurance covering the
Collateral as required by the Credit Agreement or fails
to pay any of the premiums thereon when due, the Secured
Party may, but shall not be obligated to, do so for the
account of the Debtor and add the cost thereof to the
Obligations. The Debtor hereby assigns and sets over
to the Secured Party all monies which may become payable
on account of all insurance covering the Collateral,
including without limitation any return of unearned
premiums which may be due upon cancellation of any such
insurance or any return of unearned premiums. The
Secured Party, its officers, directors, employees and
authorized agents, are hereby irrevocably appointed the
attorneys-in-fact of the Debtor to endorse any draft or
check that may be payable to the Debtor in order to
collect the proceeds of such insurance or any return
of unearned premiums. So long as any Obligations
remain outstanding or any commitment to lend under
the Credit Agreement remains in effect, any such
proceeds or returns of unearned premiums shall be
applied by the Secured Party to the payment of the
Obligations at the Secured Party's discretion. Any
balance of insurance proceeds remaining in the
possession of the Secured Party after payment in
full of the Obligations shall be paid to the Debtor
or its order as the Debtor shall instruct the Secured
Party in writing.
7. Application of Proceeds. The Secured
Party shall apply the proceeds of any sale of or other
disposition or realization upon the Collateral after
the occurrence of an Event of Default as follows:
(i) First, to the payment or
reimbursement of all reasonable advances, expenses
and disbursements of the Secured Party (including,
without limitation, the fees and disbursements of its
counsel and agents) incurred in connection with the
administration and enforcement of, or the preservation
of any of the Secured Party's rights and security
interests in and under the Credit Agreement, this
Security Agreement or any other Loan Document or the
acquisition, completion, protection, removal, storage,
sale or delivery of the Collateral;
(ii) Second, to the repayment of
the Obligations, whether for principal, interest
or expenses, as the Secured Party, in its sole
discretion, shall determine; and
(iii) Third, any balance to be
distributed as required by law.
In no event shall the Secured Party
be liable to the Debtor for interest on any surplus.
If the proceeds of any such sale of or other disposition
or realization upon the Collateral are insufficient to
pay the Obligations, then the Debtor shall remain liable
for such deficiency.
8. Preservation of Collateral. The Debtor
assumes full responsibility for taking any and all steps
to preserve the Collateral. The Secured Party shall be
deemed to have exercised reasonable care in the custody
and preservation of such of the Collateral as may be in
the Secured Party's possession if the Secured Party
takes such action for that purpose as the Debtor shall
request in writing, provided that such requested action
shall not, in the judgment of the Secured Party, be
commercially unreasonable or impair the Secured Party's
security interest in such Collateral, or its rights in
or the value of such Collateral, and provided further
that such written request is received by the Secured
Party in sufficient time to permit the Secured Party
to take the requested action.
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9. Obligations Regarding Collateral
Unaffected. This Security Agreement is executed only
as security for the Obligations hereby secured and,
therefore, the execution and delivery of this Security
Agreement shall not subject the Secured Party, or
transfer or pass to the Secured Party, or in any way
affect or modify, the liability of the Debtor under
any or all of the Collateral; it being understood and
agreed that notwithstanding this Security Agreement or
any subsequent Security Agreement, all of the duties
and liabilities of the Debtor to each and every other
party under each and every item of the Collateral shall
be and remain enforceable by such other party, its
successors and assigns, against, but only against, the
Debtor or the Debtor's successors and assigns other
than the Secured Party or the Secured Party's
representatives,
successors and assigns.
10. Defeasance. Upon the full discharge
and satisfaction of the Obligations and the termination
of each commitment to lend under the Credit Agreement,
all rights herein assigned to the Secured Party shall
terminate, and all estate, right, title and interest of
the Secured Party in and to each and every one of the
items of Collateral shall revert to the Debtor. The
Secured Party shall file all requisite termination
statements and do all such other acts as are reasonably
required of it to evidence the termination of the security
interest granted hereby.
11. Defined Terms. All capitalized terms
used herein as defined terms which are not defined
herein but which are defined in the Credit Agreement
shall have the same meanings herein as are given them
in the Credit Agreement.
12. Secured Party's Ability to Deal with
Security. The Secured Party may have or in the future
may hold other security and/or guaranties to secure all
or any part of the Obligations, but it is specifically
understood and agreed by the Debtor that neither the
execution and delivery of this Security Agreement nor
the holding of any other security and/or guaranty shall
at any time or in any respect operate to prevent or
hinder the Secured Party from resorting first to such
other security and/or guaranty or first to the Collateral,
or first from time to time to all or any of the foregoing.
In addition, the Secured Party may from time to time as it
sees fit, in its sole and uncontrolled discretion, resort
to all or any part of the Collateral, without resorting to
all or any other security and/or guaranty securing the
Obligations, or to all or any part of any other security
and/or guaranty securing the Obligations, without
resorting to all or any part of the Collateral, and
such action on the part of the Secured Party shall not
in any respect be considered as a waiver of any of the
benefits or rights of the Secured Party relating to the
Collateral or such other security and/or guaranties.
13. Amendments and Waivers. The Secured
Party and the Debtor may from time to time enter into
amendments, extensions, supplements and replacements to
and of this Security Agreement, and the Secured Party may
from time to time waive compliance with a provision
hereof. No amendment, extension, supplement, replacement
or waiver shall be effective unless it is in writing and
is signed by the Secured Party and the Debtor. All waivers
shall be effective only for the specific instance and for
the specific purpose for which it is given.
14. Exercise of Remedies; Remedies Cumulative.
No delay on the part of the Secured Party or failure by the
Secured Party to exercise any power, right or remedy under
this Security Agreement shall operate as a waiver hereof,
nor shall any single or partial exercise of
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any power,
right or remedy or any abandonment or discontinuance of
steps to enforce such right, power or remedy preclude other
or further exercises thereof, or the exercise of any other
power, right or remedy. The rights and remedies in this
Security Agreement are cumulative and not exclusive of any
rights or remedies (including, without limitation, the right
of specific performance) which the Secured Party would
otherwise have.
15. Taxes. The Debtor shall pay to the
Secured Party on demand any and all stamp, document,
transfer or recording taxes, filing fees and similar
impositions payable or hereafter reasonably determined
by the Secured Party to be payable in connection with
this Security Agreement and any other documents,
instruments and transactions pursuant to or in connection
with any of the Loan Documents. The Debtor agrees to
save the Secured Party harmless from and against any
and all present and future claims or liabilities with
respect to, or resulting from, any delay in paying or
failure to pay any such taxes or similar impositions.
The obligations of the Debtor pursuant to this Section
15 shall survive the termination of this Security Agreement
and the repayment of the Obligations, and shall be part of
the Obligations.
16. Expenses. The Debtor shall pay to the
Secured Party on demand all reasonable expenses incurred
by the Secured Party from time to time, including but not
limited to reasonable attorneys' fees and expenses,
incurred in protecting the Collateral and the Secured
Party's rights therein and in enforcing the rights and
remedies of the Secured Party hereunder, together with
interest thereon calculated at the Default Rate if any
such amount is not paid upon demand. The obligations of
the Debtor pursuant to this Section 16 shall survive the
termination of this Security Agreement and the repayment
of the Obligations, and shall be part of the Obligations
secured hereby.
17. Notices. All notices required to be
delivered pursuant to this Security Agreement shall be
in writing and shall be sent to the parties hereto, and
shall be deemed effective, in accordance with the Credit
Agreement.
18. Successors and Assigns. This Security
Agreement shall be binding upon the Debtor and the
Secured Party and their respective successors and assigns,
and shall inure to the benefit of the Debtor, the Secured
Party and their respective successors and assigns; provided,
however, that the Debtor shall not assign its rights or
duties hereunder or under any of the other Loan Documents
without the prior written consent of the Secured Party.
Without limitation of the foregoing, the Debtor recognizes,
acknowledges and agrees that Secured Party may be required
to assign certain rights hereunder to the Export-Import Bank
of the United States (?Ex-Im Bank?), or to act as agent for
Ex-Im Bank.
19. Severability. Any provision of this
Security Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or
enforceability without invalidating the remaining portions
hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
20. Survival. All representations, warranties,
covenants and agreements of the Debtor contained herein or
in the other Loan Documents or made in writing in connection
herewith shall survive the issuance of the Notes and shall
continue in full force and effect so long
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as the Debtor may borrow under the Credit Agreement and
so long thereafter until payment in full of the Notes and
the Obligations is made.
21. GOVERNING LAW. THIS SECURITY AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
COMMONWEALTH OF PENNSYLVANIA, WITHOUT REGARD TO THE
PRINCIPLES THEREOF REGARDING CONFLICT OF LAWS, EXCEPTING
APPLICABLE FEDERAL LAW AND EXCEPT ONLY TO THE EXTENT PRECLUDED
BY THE MANDATORY APPLICATION OF THE LAW OF ANOTHER
JURISDICTION.
22. FORUM. THE PARTIES HERETO AGREE THAT ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT
MAY BE COMMENCED IN THE COURT OF COMMON PLEAS OF ALLEGHENY
COUNTY, PENNSYLVANIA OR IN ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
FOR THE WESTERN DISTRICT OF PENNSYLVANIA AND THE PARTIES HERETO
AGREE THAT A SUMMONS AND COMPLAINT COMMENCING AN ACTION OR
PROCEEDING IN EITHER OF SUCH COURTS SHALL BE PROPERLY SERVED AND
SHALL CONFER PERSONAL JURISDICTION IF SERVED PERSONALLY OR BY
CERTIFIED MAIL TO THE PARTIES AT THEIR ADDRESSES DESCRIBED IN THE
CREDIT AGREEMENT, OR AS OTHERWISE PROVIDED UNDER THE LAWS OF THE
COMMONWEALTH OF PENNSYLVANIA. FURTHER, THE DEBTOR HEREBY
SPECIFICALLY CONSENTS TO THE PERSONAL JURISDICTION OF THE COURT OF
COMMON PLEAS OF ALLEGHENY COUNTY, PENNSYLVANIA AND THE DISTRICT
COURT OF THE UNITED STATES FOR THE WESTERN DISTRICT OF PENNSYLVANIA
SITTING IN PITTSBURGH, PENNSYLVANIA AND WAIVES AND HEREBY
ACKNOWLEDGES THAT IT IS ESTOPPED FROM RAISING ANY OBJECTION BASED
ON FORUM NON CONVENIENS, ANY CLAIM THAT EITHER SUCH COURT LACKS
PROPER VENUE OR ANY CLAIM THAT EITHER SUCH COURT LACKS PERSONAL
JURISDICTION OVER THE DEBTOR SO AS TO PROHIBIT EITHER SUCH COURT FROM
ADJUDICATING ANY ISSUES RAISED IN A COMPLAINT FILED WITH EITHER SUCH
COURT AGAINST THE DEBTOR BY THE SECURED PARTY CONCERNING THIS
SECURITY AGREEMENT OR PAYMENT TO THE SECURED PARTY. THE DEBTOR
HEREBY ACKNOWLEDGES AND AGREES THAT THE EXCLUSIVE CHOICE OF
FORUM CONTAINED IN THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE
ENFORCEMENT OF ANY JUDGMENT OBTAINED IN SUCH FORUM OR THE TAKING
OF ANY ACTION UNDER THE LOAN DOCUMENTS TO ENFORCE THE SAME IN ANY
APPROPRIATE JURISDICTION.
23. Construction. In this Security Agreement (except
as otherwise expressly provided or unless the context otherwise
requires), (i) the singular shall include the plural, and
vice-versa, (ii) the masculine and feminine genders shall
include the neuter gender, and vice-versa, (iii) the words
"hereof", "herein" and "hereunder" and words of similar import
shall refer to this Security Agreement as a whole and not to
any particular provision of this Security Agreement and (iv)
all references to particular Sections, items, clauses, exhibits
and schedules are references to the Sections, items, clauses,
exhibits and schedules of and to this Security Agreement.
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24. Integration. This Security Agreement is
the entire agreement between the parties relating to this
security transaction and it supersedes all prior
understandings and agreements, whether written or oral,
between the parties hereto relating to the transactions
provided for herein.
25. Headings. Section headings used in this
Security Agreement are intended for convenience only and
shall not affect the meaning or construction of this
Security Agreement.
26. Counterparts. This Security Agreement and
any amendment hereto may be executed in several counterparts
and by each party on a separate counterpart, each of which,
when so executed and delivered, shall be an original, but
all of which together shall constitute but one and the same
instrument. In proving this Security Agreement or any
amendment hereto, it shall not be necessary to produce or
account for more than one such counterpart signed by the
other party against whom enforcement is sought.
27. Collateral Sharing. All liens granted
under this Security Agreement shall secure ratably and
on a pari passu basis the Obligations in favor of the
Secured Party hereunder.
28. WAIVER OF JURY TRIAL. IN ORDER TO EXPEDITE THE
RESOLUTION OF ANY DISPUTES WHICH MAY ARISE UNDER THIS SECURITY
AGREEMENT, AND IN LIGHT OF THE COMPLEXITY OF THE TRANSACTIONS
CONTEMPLATED UNDER THIS SECURITY AGREEMENT, THE PARTIES HERETO
WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF
ANY KIND OR NATURE IN ANY COURT TO WHICH THEY MAY BOTH BE
PARTIES, WHETHER ARISING OUT OF, UNDER OR BY REASON OF THIS
SECURITY AGREEMENT OR OTHER TRANSACTION BETWEEN THEM OF ANY
KIND OR NATURE, AND BOTH PARTIES ACKNOWLEDGE THAT SUCH WAIVER
HAS BEEN SPECIFICALLY NEGOTIATED AS PART OF THIS SECURITY
AGREEMENT.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto,
with the intent to be legally bound hereby, have caused
this Security Agreement and Collateral Assignment to be
executed by their respective duly authorized officers as
of the date first written above.
WITNESS/ATTEST: SCIENTIFIC INDUSTRIES, INC., a Delaware
corporation
By:_______________ By:_______________(SEAL)
Name:_____________ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title:____________ Title: President and Chief
Executive Officer
FIRST NATIONAL BANK OF
PENNSYLVANIA
By: _______________(SEAL)
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Assistant Vice President
ACKNOWLEDGMENT
_________________ OF _________________ )
) SS:
COUNTY OF _______________________ )
On this the _____ day of June, 2015, before me, a
Notary Public, personally appeared ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, who
acknowledged herself to be the President and Chief Executive
Officer of Scientific Industries, Inc., a Delaware corporation,
and that she as such officer, being authorized to do so,
executed the foregoing instrument for the purposes therein
contained and in the capacity therein stated, by signing the
name of such company on behalf of such company by herself as
such officer
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
________________________________
Notary Public
My Commission Expires:
Schedule 1
to Security Agreement and Collateral Assignment
S CIENTIFIC INDUSTRIES, INC.
1. Debtors' chief executive office: ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
2. Locations of Debtors' Inventory, Fixtures and Goods:
A. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
B. ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇