SECURED PROMISSORY
NOTE
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$500,000
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September 19, 2006
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This Promissory
Note (the "Note") is being executed by SCIENCE DYNAMICS
CORPORATION, a Delaware corporation ("Purchaser") in favor of and
being delivered to Michael Ricciardi as a representative of all of
the Owners ("Owner Representative") in connection with that certain
Stock Purchase Agreement, dated as September 19, 2006, by and
between Buyer, Ricciardi Technologies, Inc. ("Company") and the
Owners set forth on Schedule O thereto (the "Purchase Agreement"),
and is intended to embody that portion of the Purchase Price (as
defined in the Purchase Agreement) which is payable to the Owners
pursuant to Section 3.1(a)(iii) of the Purchase
Agreement.
FOR VALUE
RECEIVED, the undersigned SCIENCE DYNAMICS CORPORATION, a Delaware
corporation (hereinafter referred to as “Maker”), does
hereby unconditionally promise to pay to the order of the
individuals listed on Schedule 1 hereto (hereinafter collectively
referred to as the “holder”) c/o the Owner
Representative, at 5704 Old Clifton Road, Clifton, Virginia
20124-1023, or at such other place or places as the holder hereof
may from time to time designate in writing, the principal sum of
FIVE HUNDRED THOUSAND DOLLARS ($500,000.00) together with all
accrued interest thereon at the rate or rates hereinafter provided
until paid, as hereinafter provided:
1.
Interest, principal and all other
sums payable hereunder shall be payable, without any offset,
reduction or recoupment whatsoever, in lawful money of the United
States of America and in immediately available funds which shall be
legal tender in payment of all debts and dues, public and private,
at the time of payment, and shall be due and payable as
follows:
(a)
Interest (i) shall accrue from
and after the date of this Note at the rate of ten percent (10%)
per annum on the outstanding principal balance and (ii) shall
be due and payable by the 1 st of each month this Note
is outstanding; and
(b)
If not sooner paid, the entire
balance of principal remaining unpaid, plus all accrued interest
thereon, fees and costs, if any shall be due and payable in full on
the date that is earlier to occur: (i) twelve (12)
months from the date hereof and (ii) the consummation of a
transfer of all or substantially all of the assets or equity
securities of Maker to a third party (the “Maturity
Date”).
(c) Upon the occurrence of an Event of Default (as
hereinafter defined) under this Note, and until payment in full of
the amount due hereunder, the rate of interest accruing on the
unpaid principal balance shall be at the rate of 15% per annum
compounded monthly from and after the date of the Event of Default,
irrespective of the acceleration of the unpaid principal balance,
accrued interest and other charges as a result of the occurrence of
such Event of Default. This Section 1(c) shall not be
construed as an agreement or privilege to extend the date upon
which payment in full is due hereunder, nor a waiver of any other
right or remedy available to holder hereunder.
(d)
All payments shall be applied first
on account of late charges (if any), next to interest accrued, and
the balance to the reduction of principal.
(e)
For the purposes of computing
interest on the debt evidenced hereby, interest shall be calculated
on the basis of a year consisting of three hundred sixty (360)
days, and shall be charged on the basis of the actual number of
calendar days that the principal amount remains unpaid to the
holder hereof.
2. Event of
Default; Remedies.
(a)
Each of the following shall
constitute an “Event of Default” hereunder:
(i) Maker’s failure to make any required
payment of principal and/or interest under this Note, on or before
the date on which such payment is due and such failure shall
continue for five (5) business days of when the same shall become
due and payable; or
(ii) Maker’s failure to perform any other
agreement or other obligation required under this Note or the
Pledge Agreement (as defined in Section 10 below), and the
continuation of such failure for a period of five (5) business days
after holder gives Maker written notice of such failure to perform;
or
(iii) (A) Maker shall commence any case,
proceeding or other action (1) under any existing or future law of
any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or
(2) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any
substantial part of Maker’s assets, or Maker shall make a
general assignment for the benefit of its creditors; or (B) there
shall be commenced
