OMNIBUS AMENDMENT AND WAIVER

This OMNIBUS AMENDMENT AND WAIVER (this “ Amendment ”), dated as of September 18, 2006, 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 and amending and restating and waiving certain terms of (i) the Amended and Restated Secured Convertible Term Note, issued as of February 11, 2005 and amended and restated as of July 21, 2006 (as amended and restated, amended, modified and supplemented from time to time, the “ Term Note ”) by the Company to Laurus, (ii) the Securities Purchase Agreement, dated as of February 11, 2005 (as amended, modified or supplemented from time to time, the “ Purchase Agreement ”) by and between the Company and Laurus, (iii) the Common Stock Purchase Warrant, issued as of February 11, 2005 by the Company to Laurus (as amended and restated, amended, modified and supplemented from time to time, the “ Initial Warrant ”), (iv) the Common Stock Purchase Warrant, issued as of November 18, 2005 by the Company to Laurus (as amended and restated, amended, modified and supplemented from time to time, the “ Additional Warrant ”) and (v) the Forbearance Agreement, dated as of July 21, 2006 between the Company and Laurus (as amended, modified or supplemented from time to time, the “ Forbearance Agreement ” and, together with the Term Note, the Purchase Agreement, the Initial Warrant, the Additional Warrant and each other Related Agreement as defined in the Purchase Agreement, collectively, the “ Documents ” and each, a “ Document ” ). Capitalized terms used herein without definition shall have the meanings ascribed to such terms in the applicable Term Note and Purchase Agreement as applicable,

WHEREAS, the Company has failed to pay to Laurus when due certain payments and principal in respect of the Term Note as otherwise set forth in the Forbearance Agreement; 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 interest and principal in respect of the Term Note and, in consideration therefore and in consideration of the other agreements set forth herein;

WHEREAS, the Company and Laurus have agreed to make certain changes to the Term Note, the Initial Warrant, the Additional Warrant and the Purchase Agreement as set forth herein;

WHEREAS, the Company and Laurus have agreed that the Company shall redeem $500,000 in principal amount of the Term Note; and

WHEREAS, the Company wishes to issue to Laurus a warrant in the form of Exhibit B hereto (as amended, modified and/or supplemented from time to time, the “ September 2006   Warrant ”) in exchange for $750,000 in principal amount of the Term Note, which warrant is exercisable for up to 14,583,333 shares of the Company’s Common Stock (subject to adjustment as set forth therein) upon the cashless exercise by the holder thereof for an imputed exercise price of $0.01 per share in connection with this Amendment;

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:

WAIVER .  

1.   Upon the occurrence of the Amendment Effective Date (as defined below), Laurus hereby waives each Event of Default that may have arisen under Section 4.1 of the Term Note and Section 3 of the Forbearance Agreement solely as a result of the failure by the Company to pay Laurus the full amount of the August Repayment (as defined in the Forebearance Agreement) on August 1, 2006.

PARTIAL REDEMPTION OF THE TERM NOTE; EXCHANGE .  

2.   Pursuant to the terms and conditions set forth in this Agreement, on the Amendment Effective Date, (i) the Company shall redeem $500,000 in principal amount of the Term Note (the “ Redemption ”) by remitting to Laurus via wire transfer in immediately available funds to an account designated in writing by Laurus, and (ii) Laurus shall surrender to the Company, without any further consideration, the Term Note for cancellation of the $1,000,000 in principal amount outstanding thereunder after giving effect to the Redemption in exchange for (the “ Exchange ”) issuance by the Company of (x) the Second Amended and Restated Term Note in the form attached hereto as Exhibit B in the principal amount of $250,000 and (y) the September 2006 Warrant in the form attached hereto as Exhibit A exercisable for up to 14,583,333 shares of Common Stock of the Company (subject to adjustment as set forth therein), upon the cashless exercise by the holder thereof for an imputed exercise price of $0.01 per share.

AMENDMENTS

3.   Purchase Agreement . Upon the occurrence of the Amendment Effective Date, the Purchase Agreement is hereby amended as follows:

(i)   Section 2(a) of the Purchase Agreement is hereby amended by inserting the following sentence at the end thereof:

“The Warrants issued by the Company to Laurus as of (i) November 18, 2005 exercisable into 3,000,000 shares of Common Stock (as amended and restated, amended, modified and supplemented from time to time, the “November 2005 Warrant”) and (ii) September 18, 2006 exercisable into 14,583,333 shares of Common Stock (as amended and restated, amended, modified and supplemented from time to time, the “September 2006 Warrant”), shall each be deemed to be, together with the Warrant issued on the Closing Date, a &