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THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT") OR ANY APPLICABLE STATE SECURITIES LAW, AND MAY
NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED, UNLESS REGISTERED UNDER THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS, OR UPON DELIVERY TO THE ISSUER OF AN OPINION OF
COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THE
NOTE THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT OR SUCH
APPLICABLE STATE SECURITIES LAWS PURSUANT TO AVAILABLE EXEMPTIONS
THEREFROM. THE TRANSFER OF THIS NOTE IS RESTRICTED PURSUANT TO THE
TERMS HEREOF.
SCIENTIFIC INDUSTRIES INC.
PROMISSORY NOTE
$230,000 Bohemia, New York
November 14, 2011
Scientific Industries Inc., a Delaware corporation (the
"Company"), in consideration of the release in the form of Exhibit A
hereto of the Company and Fluorometrix Corporation, a Massachusetts
corporation, and other valuable considerations hereby promises
unconditionally to pay to the University of Maryland, Baltimore
County, or its permitted transferees or assigns (collectively, the
"Holder"), in immediately available and lawful money of the United
States of America ("Dollars" or "$"), the principal amount of Two
Hundred Thirty Thousand Dollars ($230,000) (the "Principal"), plus
any accrued and unpaid Interest thereon (as such terms are
defined below).
1. CERTAIN DEFINITIONS; CERTAIN INTERPRETATIONS.
1.1. Certain Definitions. As used herein, the following
terms shall have the following meanings:
"Business Day" means any day that is not a Saturday,
Sunday or a legal holiday in the State of New York.
"Event of Default" shall have the meaning assigned to such
term in Section 3.
"Holder" shall have the meaning assigned to such term in the
Preamble.
"Interest" shall have the meaning assigned to such term in
Section 2.1.
"Issue Date" means the first date written above, which is the
date of execution and issuance of this Note.
"Person" means any individual, corporation, limited liability
company, partnership, limited partnership, limited liability partnership,
firm, joint venture, association, joint stock company, trust or other
entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Securities Act" means the Securities Act of 1933, as amended.
1.2. Certain Interpretations. The definitions of terms
herein shall apply equally to the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include
the corresponding masculine, feminine and neuter forms. The words
"include", "includes" and "including" shall be deemed to be followed
by the phrase "without limitation." The word "will" shall be construed
to have the same meaning and effect as the word "shall". Unless the
context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as
referring to such agreement, instrument or other document as from time
to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set
forth herein), (b) any reference to any law, rule or regulation herein
shall be construed as referring to any amendment or modification of such
law, rule or regulation, (c) any reference herein to any Person shall
be construed to include such Person's permitted successors and assigns,
(d) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Note in its entirety and not
to any particular provision hereof, (e) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles
and Sections of, and Exhibits and Schedules to, this Note, except as
otherwise expressly provided, and (f) the words "asset" and "property"
shall be construed to have the same meaning and effect and to refer to any
and all tangible and intangible assets and properties, including cash,
securities, accounts and contract rights.
2. INTEREST; PAYMENT
2.1. Interest. Interest on the unpaid Principal ("Interest")
during the period from the Issue Date shall accrue at 3.25% per annum.
2.2. Payment. Principal and Interest shall be payable in
thirty-six consecutive 30-day installments, each installment in the
amount of $6,714.085, with the principal and interest components set
forth on Schedule A hereto with the first installment due on the
thirtieth day following the Issue Date. The Company may prepay the
Note in whole or in part without penalty.
2.3. Location and Extension of Time for Repayments. All
payments (including any prepayments) of Principal, Interest and other
amounts due and payable by the Company pursuant to this Note shall be
paid to the Holder at such Holder's address for notice pursuant to
Section 5.8. If the outstanding installment of Principal and Interest
become due and payable on any day other than a Business Day, the payment
date thereof shall be automatically extended to the next succeeding
Business Day, and such payable amounts shall automatically be added the
Interest which shall have accrued during such extension period at the
rate per annum herein specified.
3. EVENTS OF DEFAULT.
If one or more of the following events shall have
occurred during the date and be continuing (each, an "Event of
Default"):
(a) the failure by the Company to pay an installment of
Principal and accrued and unpaid interest on this Note within five
business days of its due date;
(b) the Company shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment
of a trustee, receiver, liquidator, custodian or other similar official
of it or any substantial part of its property, or shall consent to any
such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against it,
or shall make a general assignment for the benefit of creditors, or
shall take any corporate action to authorize any of the foregoing; or
(c) an involuntary case or other proceeding shall be
commenced against the Company seeking liquidation, reorganization or
other relief with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, and
such involuntary case or other proceeding shall remain undismissed for
a period of sixty (60) days; or an order for relief shall be entered
against the Company under the federal bankruptcy laws as now or
hereafter in effect.
then, and in each and every such Event of Default, the Holder may, by
written notice to the Company, declare immediately due and payable in
full the unpaid principal of this, along with the unpaid interest in
installments which were due on or prior to the date of payment in full
of the principal without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Company; provided,
however, that in the case of any of the Events of Default specified
in clauses (b) or (c) above, without any notice to the Company or any
other act by the Holder or the other Holders, principal of this Note
shall become immediately due and payable in full along with the unpaid
interest in installments which were due on or prior to the date of
payment in full of the principal without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the
Company and without giving rise to the automatic conversion of this
Note.
4. REPLACEMENT OF THE NOTE.
Upon receipt by the Company of evidence satisfactory to
it of the loss, theft, destruction or mutilation of this Note, and in
case of loss, theft or destruction, of indemnity reasonably satisfactory
to it (with or without requirement of a surety bond in the Company's
sole discretion), and upon reimbursement to the Company of all
reasonable expenses incidental thereto, and (if mutilated) upon
surrender and cancellation of this Note, the Company shall make
and deliver to the Holder a new promissory note of like tenor in
lieu of this Note. Any replacement promissory note made and delivered
in accordance with this Section 4 shall be dated
as of the date hereof.
5. MISCELLANEOUS.
5.1. Survival. All agreements and covenants contained
in this Note shall survive the execution hereof and shall remain in
full force and effect until the earlier to occur of the payment in
full of all outstanding Principal and Interest, and any other amounts
due and payable, under this Note.
5.2. Assignment. The Holder may not assign or otherwise
dispose of this Note or the rights and obligations hereunder (including
by operation of law) without the prior written consent of the Company
which consent may not be unreasonably withheld. Notwithstanding
anything to the contrary in the foregoing, this Note may not be assigned
or otherwise disposed of by the Holder unless (i) registered under the
Securities Act and applicable state securities laws or (ii) the Company
receives an opinion of counsel to the proposed transferor in form and
substance satisfactory to the Company, to the effect that such proposed
assignment or other disposition is exempt from the registration
requirements of the Securities Act and applicable state securities
laws. Any instrument purporting to make an assignment or other
disposition in violation of this Section 5.2 shall be void.
5.3. Benefits of Note. The terms and provisions of this
Note shall be binding upon the successors, assigns, heirs, executors
and administrators of the Company and the Holder and shall inure to
the benefit of, and be enforceable by, each Person who shall be a
registered holder of this Note from time to time. The Holder shall
have no rights as a stockholder of the Company solely by virtue of
the ownership of this Note.
5.4. Severability. In case any provision of this Note
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
5.5. Further Assurances. The Holder agrees to execute
such other documents, instruments, agreements and consents, and take
such other actions as may be reasonably requested by the Company hereto
to effectuate the purposes of this Note.
5.6. Amendment and Waiver. The terms and provisions of
this Note may only be modified, amended or waived in writing signed
by the Company and the Holder. All modifications, amendments, waivers
and consents shall be effective only in the specific instance
for the purpose for which given.
5.7. Delays or Omissions. No delay by the Holder or the
Holder's agents in exercising any powers or rights hereunder shall
operate as a waiver of such power or right, nor shall any single or
partial exercise of any power or right preclude other or further
exercise thereof, or the exercise of any other power or right
hereunder or otherwise.
5.8. Notices. All notices required or permitted hereunder
shall be in writing and shall be deemed effectively given: (a) upon
personal delivery to the party to be notified, (b)
when sent by confirmed facsimile transmission if sent during
normal business hours of the recipient, if not, then on the
next business day, (c) five (5) days after having been sent by
registered or certified mail, return receipt requested, postage
prepaid, or (d) one (1) day after deposit with a nationally
recognized overnight courier, specifying next day delivery,
with written verification of receipt. All communications shall
be sent as follows:
If to the Company:
Scientific Industries, Inc.
70 Orville Drive
Bohemia, New York 11716
Attention: Helena R. Santos
Telecopy: (631) 567-5896
With a copy to:
Reitler Kailas & Rosenblatt LLC
885 Third Avenue, 20th Floor
New York, New York 10022
Attention: Leo Silverstein, Esq.
Facsimile: (212) 371-5500
If to Holder:
University of Maryland Baltimore County
Office of Technology Development
5523 Research Park Drive, Suit 310
Baltimore, MD 21228
ATTN Wendy Martin, Director, Technology
Attention: Director
Facsimile: 410-455-1130
or, to such other address or facsimile number as the party to whom
notice is to be given may have furnished to the other party in writing
in accordance herewith.
5.9. Titles and Subtitles. The titles of the sections and
subsections of this Note are for convenience of reference only and are
not to be considered in construing this Note.
5.10. Governing Law. This Note shall be construed in
accordance with, and governed by, the laws of the State of Maryland
(without giving effect to conflict of laws principles).
5.11. Consent to Exclusive Jurisdiction and Service
of Process. The Company and the Holder each hereby irrevocably and
unconditionally submits to the jurisdiction of the courts of the State
of Maryland and of the Federal courts sitting in Baltimore County in the
District of Maryland in any action or proceeding directly or indirectly
arising out of or relating to this Note or the transactions contemplated
hereby (whether based in contract, tort, equity or any other theory).
The Company and the Holder each agrees that all actions or proceedings
arising out of or relating to this Note must be litigated exclusively in
any such court that sits in Baltimore County, and accordingly, each
party irrevocably waives any objection which he or it may now or hereafter
have to the laying of the venue of any such action or proceeding in any
such court. The Company and the Holder each further irrevocably consents
to service of process in the manner provided for notices in Section 5.8.
Nothing in this Note will affect the right of the Company or the Holder
to serve process in any other manner permitted by law.
IN WITNESS WHEREOF, the Company has caused its duly authorized
representative to execute this Note, and the Company has caused this
Note to be issued, each as of the date first set forth above.
SCIENTIFIC INDUSTRIES, INC.
By: /s/ Helena R. Santos
________________________
Name: Helena R. Santos
Title: President
