AMENDMENT AND WAIVER
This AMENDMENT AND WAIVER (this "Amendment"), dated as of November 18,
2005, is entered into by and between
SCIENCE DYNAMICS
CORPORATION,
a Delaware
corporation (the "Company"), and LAURUS MASTER FUND,
LTD., a Cayman
Islands
company ("Laurus"), for the purpose of amending the
terms of (i) the Securities
Purchase Agreement, dated as of February 11, 2005,
by and between the
Company
and Laurus (as amended, modified and/or supplemented from time to time, the
"Securities Purchase Agreement"),
(ii) the Secured
Convertible Term Note, dated
as of February 11, 2005 (as amended,
modified and/or
supplemented from time
to
time, the "Term Note") issued by the
Company pursuant to the Securities Purchase
Agreement and (iii) the Registration Rights
Agreement, dated as of
February 11,
2005 between the Company and Laurus (as
amended, modified
and/or supplemented
from time to time, the "Registration Rights Agreement" and, together with
the
Term Note, the Securities Purchase Agreement and the other Related
Agreements
referred to therein, the "Loan Documents".
Capitalized terms used herein without
definition shall have the meanings ascribed to such terms in the Securities
Purchase Agreement, the Term Note and the Registration
Rights Agreement, as
applicable.
WHEREAS, the
Company has failed to pay to Laurus
when due accrued
interest and principal in respect of the
Term Note; and
WHEREAS, Laurus
has agreed to waive on
the terms and
conditions set
forth herein, the Events of Default that
may have occurred and are continuing as
a result of the failure by the Company to pay to Laurus when due accrued
principal in respect of the Term Note and as a result
of the failure
of the
Company to file the Registration Statement on or before the Filing Date (as
defined in the Registration Rights Agreement) and, in consideration
therefore
and in consideration of the other agreements set forth
herein, the receipt
and
sufficiency of which is hereby
acknowledged, the Company has agreed to issue the
Additional Warrant (as defined below) to
Laurus;
WHEREAS, the Company
and Laurus have agreed to make certain changes to
the Term Note as set forth herein; and
NOW, THEREFORE,
in consideration of
the above, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as
follows:
1. Laurus hereby waives each Event of Default that may have arisen
under: (a) Section 4.1 of the Term Note
solely as a result of the failure by the
Company to pay Laurus (x) the full amount of the principal portion of the
Monthly Amount due and payable on the
first business day of
each of June 2005,
July 2005, August 2005, September 2005, October 2005 and November 2005
(i.e.
$[363,636.36]) (the "Overdue Principal") and (y) the interest payable on the
Term Note when due on each of September 1,
2005, October 1, 2005 and November 1,
2005 (the "Overdue Interest"); and (b) Section 4.2 of the Term
Note solely as a
result of the failure of the Company to
file the Registration
Statement on or
before the required Filing Date (as defined in the Registration Rights
Agreement). In consideration of the waivers
in this Section 1, the Company will,
on the date hereof, pay to Laurus the unpaid
interest accrued under the Term
Note as of the date hereof (i.e.
$[32,236.25]) ("Overdue Interest").
<PAGE>
2. Laurus and the Company hereby agree that the Company
shall not be
required to pay the principal portion of any Monthly Amount due on the first
business day of December 2005 on such date (collectively, the "Postponed
Principal"); provided that, the Overdue
Pr
