AMENDMENT NO. 1
TO
STOCK PURCHASE AGREEMENT
This Amendment No. 1 to the Stock Purchase Agreement dated as of December
16, 2004 (the "Purchase Agreement") among Science Dynamics Corporation, a
corporation existing under the laws of Delaware (the "Purchaser"), Systems
Management Engineering, Inc., a corporation existing under the laws of the
Commonwealth of Virginia (the "Company"), and the shareholders of the Company
identified on Exhibit A attached thereto (collectively the "Sellers"), is dated
January 26, 2005.
WITNESSETH:
WHEREAS, on December 16, 2004, the Purchaser, the Company and the Sellers
entered into the Purchase Agreement, a copy of which is annexed hereto as
Exhibit A; and
WHEREAS, the parties now desire to amend the Purchase Agreement as
hereinafter set forth to correct certain provisions relating to the sale of
shares of common stock, $.01 par value, of the Company (the "Shares") and the
Purchase Price described in the Purchase Agreement;
NOW, THEREFORE, in consideration of and for the mutual promises and
covenants contained herein, and for other good and valuable consideration, the
receipt of which is hereby acknowledged, the Purchase Agreement is hereby
amended as follows:
1. All capitalized terms not defined herein shall have the meanings of the
ascribed to such terms in the Purchase Agreement.
2. The first WHEREAS on page 1 of the Purchase Agreement is hereby amended
to be and read as follows:
"WHEREAS, the Sellers own an aggregate of 4,177,500 shares of common stock,
$.01 par value (the "Shares"), of the Company, which Shares constitute
approximately eighty-two percent (82%) of the issued and outstanding shares of
capital stock of the Company on a fully diluted basis; and"
3. Section 2.1 of the Purchase Agreement is hereby amended to be and read
as follows:
"2.1 Amount of Purchase Price; Payment of Purchase Price.
(a) The aggregate initial purchase price for the Shares shall be an amount
equal to $3,095,650 (the "Initial Purchase Price"). $1,547,825 of the Initial
Purchase Price shall be paid in cash on the Closing Date to the Sellers which
shall be paid by the delivery to Sellers of certified or bank cashier's checks,
or at the Sellers' option, by wire transfer of immediately available funds into
accounts designated by Sellers and allocated among the Sellers in accordance
with their pro rata ownership of the Shares as set forth in Exhibit A hereto.
The remaining $1,547,825 of the Initial Purchase Price shall be paid by the
issuance to the Sellers within fifteen (15) business days after the Closing Date
of 15,478,251 shares of the Purchaser's common stock (the "Purchase Shares").
(b) Purchaser shall cause an audit to be completed on the Company's
financial statements for the twelve (12) month period ending December 31, 2005
no later than April 15, 2006. Purchaser shall pay Sellers up to an additional
$1,547,825 (the "Additional Purchase Price") upon the Company reaching the
following goals for the twelve (12) month period ending December 31, 2005, where
"EBITDA" represents earnings before interest, tax, depreciation and
amortization, and before any marketing and/or selling expenses which have been
incurred in connection with the Company's technology products and which
marketing and/or selling expenses have been incurred in accordance with the
budget mutually approved by Purchaser and the Sellers and attached hereto as
Schedule 2.1(b):
(i) If the Company's EBITDA is less than $500,000, then Purchaser
shall not be obligated to pay any Additional Purchase Price to Sellers;
(ii) If the Company's EBITDA is equal to or greater than $500,000 and
less than $750,000, the Purchaser shall pay Sellers and Additional Purchase
Price equal to $193,478.13;
(iii) If the Company's EBITDA is equal to or greater than $750,000 and
less than $1,000,000, the Purchaser shall pay Sellers an Additional Purchase
Price equal to $386,956.25;
(iv) If the Company's EBITDA is equal to or greater than $1,000,000
and less than $1,250,000, the Purchaser shall pay Sellers an Additional Purchase
Price equal to $580,434.38;
(v) If the Company's EBITDA is equal to or greater than $1,250,000 and
less than $1,500,000, the Purchaser shall pay Sellers an Additional Purchase
Price equal to $773,912.50; and
(vi) If the Company's EBITDA is equal to or greater than $1,500,000,
the Purchaser shall pay Sellers an Additional Purchase Price equal to
$1,547,825.
The Additional Purchase Price, if any, shall be paid to the Sellers in cash no
later than fifteen (15) business days after April 15, 2006, which shall be paid
by the delivery to Sellers of certified or bank cashier's checks, or at the
Sellers' option, by wire transfer of immediately available funds into accounts
designated by Sellers and allocated among the Sellers in accordance with their
pro rata ownership of the Shares as set forth in Exhibit A hereto. In the event
that any payments due under this Section 2.1(b) are not made, Sellers may
deliver written notice of such fact to Purchaser in accordance with Section
10.10 hereof and Purchaser shall have ten (10) calendar days from the date that
it receives such notice to cure the nonpayment. If Purchaser does not cure any
nonpayment in accordance with this Section 2.1(b), then: (A) Purchaser shall
immediately issue to Sellers such number of shares of Purchaser's common stock
equal to the Additional Purchase Price divided by eighty-five percent (85%) of
the average daily weighted volume average price of Purchaser's common stock for
the fifteen (15) trading days prior to April 15, 2006; and (B) Sellers shall
have the right to appoint one natural person to Purchaser's board of directors
for a period of one year."
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4. Section 10.3 of the Purchase Agreement is hereby amended to be and read as
follows:
"10.3 Expenses.
Purchaser shall issue 1,000,000 shares of Purchaser's common stock and
shall pay $100,000 cash to Xxxxx Xxxx for financial advisory services rendered
to the Company and to Sellers in connection with this Agreement. In addition,
Purchaser shall issue 75,000 shares of Purchaser's common stock and shall pay
$7,500 cash to Xxxxxx Xxxxxx for legal services rendred to the Company and to
Sellers in connection with this Agreement. Except as otherwise provided in this
Agreement, the Sellers and the Purchaser shall each bear its own expenses
incurred in connection with the negotiation and execution of this Agreement and
each other agreement, document and instrument contemplated by this Agreement and
the consummation of the transactions contemplated hereby and thereby, it being
understood that in no event shall the Company bear any of such costs and
expenses."
5. The following Sellers are hereby added as parties to the Purchase
Agreement and hereby agree to all terms of the Purchase Agreement in the form
attached hereto as Exhibit A, as amended by this agreement: Xxxxxxx X. Xxxxxxx,
Xx.; J. Xxxx Xxxxxxx; Xxxxxx X. Xxxxxxxx; J. Xxxxxx Xxxxxx; and Xxxxx, Xxxxxxx &
Xxxxxxx Chartered.
6. (A) This agreement shall be construed and interpreted in accordance with
the laws of the State of New Jersey without giving effect to the conflict of
laws rules thereof or the actual domiciles of the parties.
(B) Except as amended hereby, the terms and provisions of the Purchase
Agreement shall remain in full force and effect, and the Purchase Agreement is
in all respects ratified and confirmed. On and after the date of this agreement,
each reference in the Purchase Agreement to the "Agreement," "hereinafter,"
"herein," "hereinafter," "hereunder," "hereof," or words of like import shall
mean and be a reference to the Purchase Agreement as amended by this agreement.
(C) This agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which taken together shall
constitute a single Amendment.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 1
to the Purchase Agreement as of the date first stated above.
SCIENCE DYNAMICS CORPORATION
By:/s/ Xxxx Xxxxxxxxx
------------------
Xxxx Xxxxxxxxx,
Chief Executive Officer
SYSTEMS MANAGEMENT ENGINEERING, INC.
By:/s/ Xxxxxxx X. Xxxxx, Xx.
------------------------
Xxxxxxx X. Xxxxx, Xx.
Chief Executive Officer
[SELLERS' SIGNATURES FOLLOW]
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SELLERS
By: /s/ Xxxxxxx X. Xxxxx, Xx.
-------------------------
Name: Xxxxxxx X. Xxxxx, Xx.
No. of Shares: 1,682,500
Cash Portion of Initial Purchase Price: $623,390.93
Purchase Shares: 6,233,909
By: /s/ Xxxx X. Xxxxxxxx
--------------------
Name: Xxxx X. Xxxxxxxx
No. of Shares: 1,575,000
Cash Portion of Initial Purchase Price: $583,560.60
Purchase Shares: 5,835,606
By: /s/ Xxxxxxxxx X. Xxxxx
-----------------------
Name: Xxxxxxxxx X. Xxxxx
No. of Shares: 100,000
Cash Portion of Initial Purchase Price: $37,051.47
Purchase Shares: 370,515
By: /s/ Xxxxxxx Xxxxxxxx
---------------------
Name: Xxxxxxx Xxxxxxxx
No. of Shares: 115,000
Cash Portion of Initial Purchase Price: $42,609.19
Purchase Shares: 426,092
By: /s/ Xxxxxxx X. Xxxx, Xx.
-------------------------
Name: Xxxxxxx X. Xxxx, Xx.
No. of Shares: 305,000
Cash Portion of Initial Purchase Price: $113,006.97
Purchase Shares: 1,130,070
By: /s/ Xxxxxxx X. Xxxxxxx, Xx.
----------------------------
Name: Xxxxxxx X. Xxxxxxx, Xx.
No. of Shares: 250,000
Cash Portion of Initial Purchase Price: $92,628.67
Purchase Shares: 926,287
[SELLERS' SIGNATURES CONTINUE ON SUBSEQUENT PAGE]
SELLERS (CONTINUED)
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By: J. Xxxx Xxxxxxx
-----------------
Name: J. Xxxx Xxxxxxx
No. of Shares: 30,000
Cash Portion of Initial Purchase Price: $11,115.44
Purchase Shares: 111,154
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------
Name: Xxxxxx X. Xxxxxxxx.
No. of Shares: 60,000
Cash Portion of Initial Purchase Price: $22,230.88
Purchase Shares: 222,309
By: /s/ J. Xxxxxx Xxxxxx
---------------------
Name: J. Xxxxxx Xxxxxx
No. of Shares: 45,000
Cash Portion of Initial Purchase Price: $16,673.16
Purchase Shares: 166,732
XXXXX, XXXXXXX & XXXXXXX CHARTERED
By: /s/ Xxxx X. Xxxxx, Xx.
-----------------------
Name: /s/ Xxxx X. Xxxxx, Xx.
Title: President
No. of Shares: 15,000
Cash Portion of Initial Purchase Price: $5,557.72
Purchase Shares: 55,577
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Exhibit A
Stock Purchase Agreement
