SECURITY AGREEMENT
OWNER OF
COLLATERAL: Scientific Industries, Inc.
00 Xxxxxxx Xxxxx, Xxxxxxx, XX 00000-0000
DESCRIPTION OF COLLATERAL: The undersigned borrower ("Borrower")
hereby grants to Capital One, N. A. (the "Bank") a security interest
(see Right to Repossess Section below for explanation of "security
interest") in the following described collateral ("Collateral"):
All Assets of the Borrower perfected through UCC-1 lien filings.
OBLIGATIONS: The obligations that this agreement is to secure are:
1. The amount of $500,000.00, which amount represents a loan made
on even date herewith by the Bank to Borrower, as evidenced by a
certain note dated as of even date herewith executed by Borrower
promising, among other things, to pay the Bank, together with
interest due and extensions and renewals thereof, plus all costs
of collection in the event of default, including attorney's fees.
2. Any and all other liabilities of Borrower to the Bank under this
agreement.
3. Any and all other liabilities of Borrower to the Bank, direct
or indirect, absolute or contingent, present or future, due or to
become due. Borrower agrees to promptly pay all obligations
when due.
STATEMENT OF OWNER: Borrower states and promises that:
1. The Collateral is bought or used primarily for: [ ]Personal,
family of household purposes; [ ]Farming operations;
[ X ]Business, and, if checked here, [ ]is being acquired with
the proceeds of a loan signed at the same time as this agreement
and the Bank may pay those proceeds directly to the seller of
the Collateral.
2. The Collateral is or is to be located at Borrower's address
shown above (or at____________________).
(Address if Collateral is to be kept elsewhere)
3. The Collateral will not be attached to real estate unless
indicated here:
______________________________________________
(Description of real estate by Street, Number,
______________________________________________
(Town or City, County & State)
______________________________________________
(Name and address of owner of real estate)
If the Collateral is to be attached to real estate and if the Bank requests
it, Borrower agrees to furnish the Bank with statements signed and
notarized by everybody who has an interest in that real estate stating that
they claim no interest in the Collateral. Borrower gives the Bank permission
to file a financing statement (notice of the Bank's security interest filed
for public record) covering the Bank's security interest without Borrower's
signature on it. Upon request of the Bank, Borrower will pay all filing fees
to protect the Bank's security interest on the Collateral. The Bank may charge
those fees to any account Borrower has with the Bank.
INSURANCE REQUIREMENTS: Borrower will keep the Collateral insured against
fire, including so-called extended coverage, theft and if the Collateral
is a motor vehicle, Borrower will also maintain $500 deductible collision
insurance. The limits and terms of the coverage and the insurance company
must be satisfactory to the Bank. If the Bank requires additional insurance
on the Collateral, Borrower will obtain and maintain the additional coverage.
The Bank shall be named as the loss payee (the person who gets the money to
pay for damages) on all insurance policies. BORROWER SHALL HAVE THE RIGHT
TO CHOOSE THE PERSON THROUGH WHOM SUCH INSURANCE IS TO
BE OBTAINED. Borrower authorizes the Bank to act in my behalf to make,
adjust or settle any insurance claim covering the Collateral. Borrower also
authorizes the Bank to sign any checks on my behalf received as a result of
an insurance claim.
EVENTS OF DEFAULT: Borrower will have possession and use of the Collateral
unless one of the following events occurs:
1. If one of the "Secured Loans or Obligations" is not paid as required or
if one of the promises made in one of the "Secured Loans or Obligations"
or in this agreement is broken; or 2. If Borrower, or any other person
whose debt this secures, have made any false or misleading statement(s)in
connection with this agreement; or 3. If Borrower, or any person whose debt
this secures, files bankruptcy or if any proceeding is instituted to seek
relief from Borrower's debts; or 4. If Borrower, or any other person whose
debt this secures, dies or becomes legally unable to manage its affairs; or
5. If any motor vehicle is used for collateral and the Bank's namee does not
appear as the only "lienholder" on any certificate of title issued now or in
the future; or 6. If the Collateral is lost or damaged without adequate
insurance coverage, or sold, or given away, or seized; or 7. If something
else happens that the Bank reasonably feels affects Borrower's ability to
pay the unpaid balance.
RIGHT TO REPOSSESS: Borrower gives the Bank a security interest in the
Collateral which means that after Borrower defaults (see Events of Default
section), the Bank can repossess (take ) the Collateral, sell it and apply
the proceeds to the balance of what Borrower owes the Bank after deducting
the Bank's reasonable repossession, storage, repair, preparation for sale
and selling expenses. The Bank may enter, without demand or notice, upon any
premises where the Collateral may be found and take possession of and
remove the Collateral. The Bank will send 7 days notice by mail of any sale
of the Collateral. Borrower can still recover the Collateral before the Bank
sells it by paying any amounts past due under th is agreement and any charges
you are entitled to. To recover any articles Borrower claims are not part
of the Collateral but were contained in the Collateral, Borrower must notify
the Bank within 7 days after repossession. Failure to claim and take
possession of these items promptly will be an abandonment of them. If the
sale does not cover all that Borrower owes, Borrower will be responsible for
the amount still owed. If there is any surplus money, it will be refunded to
Borrower.
PROTECTING THE COLLATERAL: Borrower promises that:
1.Borrower is now the owner of the Collateral or will immediately become the
owner of the Collateral. 2. The Collateral is now and will be maintained in
good working order and repair. 3. The Collateral is now and will be kept free
from any other lien or legal claim against it. 4. Borrower will not sell or
offer to sell, transfer, lease, abandon or encumber (use as collateral
elsewhere) any of the Collateral. Borrower will not remove it from Delaware
State for more than 30 days without the Bank's consent. Borrower will
not use it, or permit its use, in any illegal act. 5. Borrower will
immediately notify the Bank in writing of any loss or damage to the Collateral.
6.If the Collateral is a motor vehicle, Borrower will have the Bank's name
listed as the "Lienholder" on any certificate of title issued now or in the
future. 7. Borrower will promptly pay all taxes and assessments on the
Collateral. 8. If the owner is a corporation, owner and officer executing
this agreement certify that all necessary corporate action has been taken to
authorize this agreement to be signed.
WAIVERS AND RELEASES: The Bank can waive or delay enforcing any of its rights
without losing them. The Bank can waive or delay enforcing a right as to
Borrower or any other borrower without waiving it as to others. Also, the Bank
can release any Collateral or release one borrower from its responsibility
under this agreement without releasing the others. The Bank need not give
notice of any waiver, delay, release, or default to anyone. If any provision
of this agreement is found invalid, the remaining provisions shall remain in
full force and effect. The Bank's failure to properly file financing
statements against the Collateral will not affect Borrower's obligationsto
the Bank.
Scientific Industries, Inc.
/s/Xxxxxx X. Xxxxxx, Xxxxxx X. Xxxxxxx 10/30/08
________________________________________________ Date:_________________
Borrower acknowledges receipt of a copy of this Security Agreement and
agrees with the terms.
