SECURITY AGREEMENT
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1. Identification.
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This Security Agreement (the "Agreement"), dated May ___, 2001, is
entered into by and between Science Dynamics Corporation, a Delaware
corporation ("Debtor"), Innovative Communications Technology, Ltd., a
United Kingdom corporation, and Golden Phoenix Limited Partnership, a
partnership formed under the laws of Virginia (Innovative Communications
Technology, Ltd. and Golden Phoenix Limited Partnership are referred to
herein individually as a "Shareholder" and collectively "Shareholders") and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, as collateral agent [acting in the manner and to the
extent described in the Collateral Agent Agreement defined below] (the
"Collateral Agent"), for the benefit of the parties identified on Schedule
A hereto being collectively, the "Lenders" and each a "Lender".
2. Recitals.
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2.1 The Lenders have made loans ("Loans") to Debtor evidenced by
those certain Convertible Notes ("Secured Notes" or "Notes") dated at or
about May ___, 2001, and issued or to be issued pursuant to a subscription
agreement dated at or about the issue date of the Notes ("Subscription
Agreement. The Secured Notes are described on Schedule A hereto. The
Notes are or will be executed by Debtor as the "Borrower" thereof, for the
benefit of each individual Lender as the "Holder" thereof.
2.2 In order to induce Lenders to make the Loans, and as security
for Debtor's performance of its obligations under the Notes and as security
for the repayment of the Notes and any and all other sums due from Debtor
to Lender whether arising under the Notes issued pursuant to the
Subscription Agreement, or pursuant to other written instruments and
agreements entered into by the Debtor and a Lender, whether before or after
the date hereof, and further specifically including all of the Debtor's
obligations arising under the Notes and the Subscription Agreement relating
thereto (collectively, the "Obligations"), the Lenders, Debtor and
Shareholders, for good and valuable consideration, receipt of which is
acknowledged, have agreed to grant to the Collateral Agent, for the benefit
of the Lenders, a security interest in the Collateral (as such term is
hereinafter defined), on the terms and conditions hereinafter set forth.
Such Loans are specifically made with recourse as to Debtor.
2.3 The Lenders have appointed ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ as Collateral
Agent pursuant to that certain Collateral Agent Agreement dated as of May
____, 2001, among the Lenders and Collateral Agent.
Defined Terms. The following defined terms which are defined
in the Uniform Commercial Code in effect in the State of New York on the
date hereof are used herein as so defined: Accounts, Chattel Paper,
Documents, Equipment, General Intangibles, Instruments, Inventory and
Proceeds.
3. Grant of General Security Interest in Collateral.
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3.1 As security for the Obligations, Shareholders hereby grant the
Collateral Agent, for the benefit of the Lenders, a security interest in
the Collateral.
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3.2 "Collateral" shall mean all of the following property of the
Shareholders: the common stock of the Debtor as set forth on Schedule B
hereto, together with medallion signature guaranteed stock powers (or if
acceptable to the transfer agent for a non-United States shareholder, a
corporate resolution) ("Security Shares"). Such additional Collateral
shall include, but not be limited to, all the Shareholders right, title and
interest in and to the Security Shares, together with the proceeds of any
sale, exchange, liquidation or other disposition, whether voluntary or
involuntary, and including but not limited to any securities, Instruments,
and all benefits and entitlements evidenced by or arising out of the
Security Shares and all other securities, Instruments and other property
(whether real or personal, tangible or intangible) issued or accepted in
substitution for, or in addition to, the foregoing, and all dividends,
interest, cash, instruments, distributions, income, securities and any
other property (whether real or personal, tangible or intangible) at any
time received, receivable or otherwise distributed in respect of, or in
exchange for, the foregoing, whether now owned or hereafter acquired, and
any and all improvements, additions, replacements, substitutions and any
and all Proceeds arising out of or derived from the foregoing.
3.3 The Collateral Agent is hereby specifically authorized to
transfer any Collateral into the name of the Collateral Agent after the
occurrence of an Event of Default as defined in Section 9, and to take any
and all action deemed advisable to the Collateral Agent to remove any
transfer restrictions affecting the Collateral.
4. Perfection of Security Interest.
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The Collateral shall be delivered to the Collateral Agent. The Collateral
Agent shall have a perfected security interest in the Collateral. Shareholders
shall execute and deliver to the Collateral Agent UCC-1 Financing Statements
("Financing Statements") assigning to the Collateral Agent security interests
in Shareholders' right, title and interest in and to the Collateral. Debtor
and Shareholders hereby authorize the Collateral Agent to file such
Financing Statement at the Debtor's expense, in such filing locations as
the Collateral Agent deems appropriate.
5. Distribution on Liquidation.
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5.1 If any sum is paid as a liquidating distribution on or with
respect to the Collateral, Shareholders shall accept same in trust for the
Lenders and shall deliver same to the Collateral Agent to be applied to the
Obligations then due, in accordance with the terms of the Notes.
5.2 Prior to any Event of Default (as defined herein),
Shareholders shall be entitled to exercise all voting power pertaining to
any of the Collateral, provided such exercise is not contrary to the
interests of the Lenders and does not impair the Collateral.
6. Further Action By Debtor and Covenants and Warranties.
-----------------------------------------------------
6.1 Collateral Agent at all times shall have a perfected security
interest in the Collateral which shall be prior to any other unperfected
interest therein. Subject to the security interest described herein,
Shareholders have and will continue to have full title to the Collateral
free from any liens, leases, encumbrances, judgments or other claims.
Collateral Agent's security interest in the Collateral constitutes and will
continue to constitute a first, prior and indefeasible security interest in
favor of Collateral Agent. Shareholders will do all acts and things, and
will execute and file all instruments (including but not limited to
security agreements, financing statements, continuation statements, etc.)
reasonably requested by Collateral Agent to establish, maintain and
continue the perfected security interest of Collateral Agent in the
Collateral, and will promptly on demand, pay all costs and expenses of
filing and recording, including the costs of any searches deemed necessary
by Collateral Agent from time to time to establish and determine the
validity and the continuing priority of the security interest of Collateral
Agent, and also pay all other claims and charges that in the opinion of
Collateral Agent might prejudice, imperil or otherwise affect the
Collateral or its security interest therein.
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6.2 Shareholders will not sell, transfer, assign or pledge those
items of Collateral and Debtor and Shareholders will not allow any such
items to be sold, transferred, assigned or pledged, without the prior
written consent of Collateral Agent. Although Proceeds of Collateral are
covered by this Security Agreement, this shall not be construed to mean
that Collateral Agent consents to any sale of the Collateral.
6.3 Debtor and Shareholders will, at all reasonable times, allow
Collateral Agent or its representatives free and complete access to all of
Debtor 's and Shareholders' records which in any way relate to the
Collateral, for such inspection and examination as Collateral Agent deems
necessary.
6.4 Debtor and Shareholders, at their sole cost and expense, will
protect and defend this Security Agreement, all of the rights of Collateral
Agent hereunder, and the Collateral against the claims and demands of all
other parties.
6.5 Debtor and Shareholders will promptly notify Collateral Agent
of any levy, distraint or other seizure by legal process or otherwise of
any part of the Collateral, and of any threatened or filed claims or
proceedings that might in any way affect or impair any of the rights of
Collateral Agent under this Security Agreement.
6.6 Shareholders, at their own expense, will obtain and maintain
in force insurance policies covering losses or damage to those items of
Collateral which constitute physical personal property, if any. The
insurance policies to be obtained by Shareholders shall be in form and
amounts reasonably acceptable to Collateral Agent. Shareholders shall make
the Collateral Agent a loss payee thereon. Collateral Agent is hereby
irrevocably appointed Debtor's and Shareholders' attorney-in-fact to
endorse any check or draft that may be payable to Shareholders, so that
Collateral Agent may collect the proceeds payable for any loss under such
insurance. The proceeds of such insurance, less any costs and expenses
incurred or paid by Collateral Agent in the collection thereof, shall be
applied either toward the cost of the repair or replacement of the items
damaged or destroyed, or on account of any sums secured hereby, whether or
not then due or payable.
6.7 Collateral Agent may, at its option, and without any
obligation to do so, pay, perform and discharge any and all amounts, costs,
expenses and liabilities herein agreed to be paid or performed by Debtor or
Shareholders, and all amounts expended by Collateral Agent in so doing
shall become part of the Obligations secured hereby, and shall be
immediately due and payable by Debtor and Shareholders to Collateral Agent
upon demand and shall bear interest at 18% per annum from the dates of such
expenditures until paid.
6.8 Upon the request of Collateral Agent, Debtor and Shareholders
will furnish within five (5) days thereafter to Collateral Agent, or to any
proposed assignee of this Security Agreement, a written statement in form
satisfactory to Collateral Agent, duly acknowledged, certifying the amount
of the principal and interest then owing under the Obligations, whether any
claims, offsets or defenses exist against the Obligations or against this
Security Agreement, or any of the terms and provisions of any other
agreement of Debtor securing the Obligations. In connection with any
assignment by Collateral Agent of this Security Agreement, Shareholders
hereby agree to cause the insurance policies required hereby to be carried
by Shareholders, if any, to be endorsed in form satisfactory to Collateral
Agent or to such assignee, with loss payable clauses in favor of such
assignee, and to cause such endorsements to be delivered to Collateral
Agent within ten (10) calendar days after request therefore by Collateral
Agent.
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6.9 The Debtor and Shareholders will, at their own expense, make,
execute, endorse, acknowledge, file and/or deliver to the Collateral Agent
from time to time such vouchers, invoices, schedules, confirmatory
assignments, conveyances, financing statements, transfer endorsements,
powers of attorney, certificates, reports and other assurances or
instruments and take further steps relating to the Collateral and other
property or rights covered by the security interest hereby granted, as the
Collateral Agent may reasonable require.
6.10 Each Shareholders represents and warrants that he/she is the
true and lawful exclusive owner of the Collateral, free and clear of any
liens and encumbrances and acquired the Security Shares for purposes of
calculating the holding period for purposes of Rule 144 under the
Securities Act of 1933 ("Rule 144") on the dates set forth on Schedule B.
Each Shareholder for himself represents that the holding period of the
Security Shares held by each such Shareholder commenced for purposes of
resale under Rule 144 on the Acquisition Date set forth on Schedule B
hereto.
6.11 Shareholders hereby agree not to divest themselves of any
right under the Collateral absent prior written approval of the Collateral
Agent.
6.12 Debtor and Shareholders will cooperate and provide such
certificate, resolutions, representations, legal opinions and all other
matters necessary to facilitate a transfer or sale of any part of the
Collateral pursuant to Rule 144. Debtor and Shareholders are unaware of
any impediment to the resale of the security by the Collateral Agent
pursuant to Rule 144. Debtor and Shareholders will take no action that
would impede or limit the Collateral Agent's ability to resell all the
Security Shares pursuant to Rule 144. For so long as any Security Shares
are subject to this Security Agreement, the Shareholders will not sell any
security of the Debtor which sale would be aggregated with sales by the
Collateral Agent pursuant to Rule 144. Debtor shall issue written
instructions to its transfer agent to comply with the foregoing sentence.
Debtor will not permit the transfer of any security of the Debtor if such
transfer would aggregate for purposes of Rule 144 with sales of the
Security Shares by the Collateral Agent or any sales of the Security
Shares. Shareholders represent and warrant that they have not sold any
security of the Debtor during the thirty (30) days prior to the date of
this Agreement.
7. Power of Attorney.
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Shareholders hereby irrevocably constitute and appoint the Collateral
Agent as the true and lawful attorney of Debtor and Shareholders, with full
power of substitution, in the place and stead of Debtor and Shareholders
and in the name of Debtor and Shareholders or otherwise, at any time or
times, in the discretion of the Collateral Agent, to take any action and to
execute any instrument or document which the Collateral Agent may deem
necessary or advisable to accomplish the purposes of this Agreement which
Debtor or Shareholders fail to take or fail to execute within five (5)
business days of the Collateral Agent's reasonable request therefor. This
power of attorney is coupled with an interest, is irrevocable and shall not
be affected by any subsequent disability or incapacity of Debtor or
Shareholders.
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8. Performance By The Collateral Agent.
-----------------------------------
If Debtor or Shareholders fail to perform any material covenant,
agreement, duty or obligation of Debtor or Shareholders under this
Agreement, the Collateral Agent may, at any time or times in its
discretion, take action to effect performance of such obligation. All
reasonable expenses of the Collateral Agent incurred in connection with the
foregoing authorization shall be payable by Debtor and Shareholders as
provided in Paragraph 12.1 hereof. No discretionary right, remedy or power
granted to the Collateral Agent under any part of this Agreement shall be
deemed to impose any obligation whatsoever on the Collateral Agent with
respect thereto, such rights, remedies and powers being solely for the
protection of the Collateral Agent.
9. Event of Default.
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An event of default ("Event of Default") shall be deemed to have
occurred hereunder upon the occurrence of any event of default as defined
in the Notes or Subscription Agreement. Upon and after any Event of
Default, after the applicable cure period, if any, any or all of the
Obligations shall become immediately due and payable at the option of the
Collateral Agent, for the benefit of the Lenders, and the Collateral Agent
may dispose of Collateral as provided below. A default by Debtor or
Shareholders of any of their obligations pursuant to this Agreement
including but not limited to the obligations set forth in Section 6 of this
Agreement, or a misrepresentation by Debtor or Shareholders of a material
fact stated herein, shall be deemed an Event of Default hereunder and an
event of default as defined in the Obligations.
10. Disposition of Collateral.
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10.1 Upon and after any Event of Default,
(a) The Collateral Agent may exercise its rights with
respect to each and every component of the Collateral, without regard to
the existence of any other security or source of payment for the
Obligations or any other component of the Collateral. In addition to other
rights and remedies provided for herein or otherwise available to it, the
Collateral Agent shall have all of the rights and remedies of a lender on
default under the Uniform Commercial Code then in effect in the State of
New York.
(b) If any notice to Shareholders of the sale or other
disposition of Collateral is required by then applicable law, five (5) days
prior notice (or, if longer, the shortest period of time permitted by then
applicable law) to Shareholders of the time and place of any public sale of
Collateral or of the time after which any private sale or any other
intended disposition is to be made, shall constitute reasonable
notification. The foregoing notwithstanding notification shall not be
required of sales of the Collateral pursuant to Section 144(d) of Rule 144.
(c) The Collateral Agent is authorized, at any such sale,
if the Collateral Agent deems it advisable to do so, in order to comply
with any applicable securities laws, to restrict the prospective bidders or
purchasers to persons who will represent and agree, among other things,
that they are purchasing the Collateral for their own account for
investment, and not with a view to the distribution or resale thereof, or
otherwise to restrict such sale in such other manner as the Collateral
Agent deems advisable to ensure such compliance. Sales made subject to
such restrictions shall be deemed to have been made in a commercially
reasonable manner.
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(d) All cash proceeds received by the Collateral Agent
for the benefit of the Lenders in respect of any sale, collection or other
enforcement or disposition of Collateral, shall be applied (after deduction
of any amounts payable to the Collateral Agent pursuant to Paragraph 12.1
hereof) against the Obligations pro rata among the Lenders in proportion to
the interest in the Obligations. Upon payment in full of all Obligations,
Shareholders shall be entitled to the return of all Collateral, including
cash, which has not been used or applied toward the payment of Obligations
or used or applied to any and all costs or expenses of the Collateral Agent
incurred in connection with the liquidation of the Collateral (unless
another person is legally entitled thereto). Any assignment of Collateral
by the Collateral Agent to Shareholders shall be without representation or
warranty of any nature whatsoever and wholly without recourse. Each Lender
may purchase the Collateral and pay for such purchase by offsetting any
sums owed to such Lender by Debtor arising under the Obligations or any
other source.
(e) No exercise by the Collateral Agent of any right
hereby given it, no dealing by the Collateral Agent with Debtor, Shareholders
or any other person, and no change, impairment or suspension of any right or
remedy of the Collateral Agent shall in any way affect any of the
obligations of Debtor or Shareholders hereunder or any Collateral furnished
by Shareholders or give Debtor or Shareholders any recourse against the
Collateral Agent.
10.2 The Security Shares shall be released to the Shareholders
upon the sooner of (i) complete satisfaction of the Obligations, or (ii) the
timely compliance by the Debtor of its registration obligations set forth
in Section 10.1(iv) of the Subscription Agreement. Notwithstanding
anything to the contrary contained in this Security Agreement, the
Collateral Agent Agreement or in the Subscription Agreement, the Security
Shares shall be released and returned promptly to the Shareholders upon the
effectiveness of the SB-2 registration statement required to be filed by
the Company pursuant to Section 10.1(iv) of the Subscription Agreement,
provided an Event of Default has not occurred, otherwise the Security
Shares shall remain subject to this Agreement and retained by the
Collateral Agent until the complete satisfaction of the Obligations.
10.3 The Shareholders may collectively substitute with the
Collateral Agent prior to the occurrence of an Event of Default a sum of
money equal to the greater of (i) the Mandatory Payment as defined in
Section 9.2 of the Subscription Agreement, or (ii) all sums due, payable or
accruing on the Obligations through the Maturity Date of the Note as
substitute Collateral and receive the Security Shares in lieu thereof.
Said sum of money will be held as Collateral pursuant to this Security
Agreement, and shall be deposited in an interest bearing account for the
benefit of the Shareholders provided the Shareholders provide to the
Collateral Agent taxpayer identification numbers and other documents
reasonably requested by Collateral Agent.
10.4 At any time after the occurrence of an Event of Default the
Collateral Agent on behalf of the Lenders may purchase some or all of the
Security Shares at a per common share price equal to the lesser of the
closing price of the common stock on the Principal Market (as defined in
the Subscription Agreement) (i) on the day of the occurrence of an Event of
Default or (ii) on the day prior to written notification to Shareholder
that the Collateral Agent is exercising the option described in this
Section 10.4. The maximum amount of Security Shares that may be purchased
by the Collateral Agent pursuant to this Section 10.4 on behalf of each
Lender shall be the lesser of (y) the amount of Security Shares at the
above described purchase price that would fully satisfy the Obligations due
to each such Lender or (z) the amount described in Section 9.3 of the
Subscription Agreement as the maximum amount of Common Stock issuable upon
conversion of the Note, which limitation may be voided at the Lender's
option upon 75 days prior written notice to Shareholder.
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10.5 Contemporaneously with the release of the Collateral, the
Collateral Agent will file at the Debtor's expense, UCC-3 termination
statements for each of the UCC-1 financing statements filed herewith.
11. Waiver of Automatic Stay.
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The Debtor and Shareholders acknowledge and agree that should a proceeding
under any bankruptcy or insolvency law be commenced by or against the Debtor
or Shareholders, or if any of the Collateral (as defined in the Security
Agreement) should become the subject of any bankruptcy or insolvency proceeding,
then the Collateral Agent should be entitled to, among other relief to which
the Collateral Agent may be entitled under the Note, Security Agreement,
Subscription Agreement and any other agreement to which the Debtor,
Shareholders, Lenders or Collateral Agent are parties, (collectively "Loan
Documents") and/or applicable law, an order from the court granting immediate
relief from the automatic stay pursuant to 11 U.S.C. Section 362 to permit the
Collateral Agent to exercise all of its rights and remedies pursuant to the Loan
Documents and/or applicable law. THE DEBTOR AND SHAREHOLDERS EXPRESSLY
WAIVE THE BENEFIT OF THE AUTOMATIC STAY IMPOSED BY 11 U.S.C. SECTION 362.
FURTHERMORE, THE DEBTOR AND SHAREHOLDERS EXPRESSLY ACKNOWLEDGE AND AGREE
THAT NEITHER 11 U.S.C. SECTION 362 NOR ANY OTHER SECTION OF THE BANKRUPTCY
CODE OR OTHER STATUTE OR RULE (INCLUDING, WITHOUT LIMITATION, 11 U.S.C.
SECTION 105) SHALL STAY, INTERDICT, CONDITION, REDUCE OR INHIBIT IN ANY WAY
THE ABILITY OF THE COLLATERAL AGENT TO ENFORCE ANY OF ITS RIGHTS AND
REMEDIES UNDER THE LOAN DOCUMENTS AND/OR APPLICABLE LAW. The Debtor and
Shareholders hereby consent to any motion for relief from stay which may be
filed by the Collateral Agent in any bankruptcy or insolvency proceeding
initiated by or against the Debtor and Shareholders, and further agree not
to file any opposition to any motion for relief from stay filed by the
Collateral Agent. The Debtor and Shareholders represent, acknowledge and
agree that this provision is a specific and material aspect of this
Agreement, and that the Collateral Agent would not agree to the terms of
this Agreement if this waiver were not a part of this Agreement. The
Debtor and Shareholders further represent, acknowledge and agree that this
waiver is knowingly, intelligently and voluntarily made, that neither the
Collateral Agent nor any person acting on behalf of the Collateral Agent
has made any representations to induce this waiver, that the Debtor and
Shareholders have been represented (or has had the opportunity to be
represented) in the signing of this Agreement and in the making of this
waiver by independent legal counsel selected by the Debtor and Shareholders
and that the Debtor and Shareholders have had the opportunity to discuss
this waiver with counsel. The Debtor and Shareholders further agree that
any bankruptcy or insolvency proceeding initiated by the Debtor or
Shareholders will only be brought in courts within the geographic
boundaries of New York State.
12. Miscellaneous.
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12.1 Expenses. Debtor and Shareholders shall severally pay to
the Collateral Agent, on demand, the amount of any and all reasonable
expenses, including, without limitation, attorneys' fees, legal expenses
and brokers' fees, which the Collateral Agent may incur in connection with
(a) sale, collection or other enforcement or disposition of Collateral; (b)
exercise or enforcement of any the rights, remedies or powers of the
Collateral Agent hereunder or with respect to any or all of the
Obligations; or (c) failure by Debtor or Shareholders to perform and
observe any agreements of Debtor or Shareholders contained herein which are
performed by the Collateral Agent.
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12.2 Waivers, Amendment and Remedies. No course of dealing by
the Collateral Agent and no failure by the Collateral Agent to exercise, or
delay by the Collateral Agent in exercising, any right, remedy or power
hereunder shall operate as a waiver thereof, and no single or partial
exercise thereof shall preclude any other or further exercise thereof or
the exercise of any other right, remedy or power of the Collateral Agent.
No amendment, modification or waiver of any provision of this Agreement and
no consent to any departure by Debtor or Shareholders therefrom, shall, in
any event, be effective unless contained in a writing signed by the
Collateral Agent, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given. The
rights, remedies and powers of the Collateral Agent, not only hereunder,
but also under any instruments and agreements evidencing or securing the
Obligations and under applicable law are cumulative, and may be exercised
by the Collateral Agent from time to time in such order as the Collateral
Agent may elect.
12.3 Notices. Any notice or other communications under the
provisions of this Agreement shall be given in writing and delivered to the
recipient in person, by reputable overnight courier or delivery service, by
facsimile machine (receipt conformed) with a copy sent by first class mail
on the date of transmission, or by registered or certified mail, return
receipt requested, directed to its address set forth below (or to any new
address of which a party hereto shall have informed the other by the giving
of notice in the manner provided herein):
To Debtor: Science Dynamics Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
To Shareholders: To the addresses and telecopier
numbers Set forth on Schedule B
hereto
To Lenders: To the addresses and telecopier
numbers Set forth on Schedule A
hereto
To the Collateral
Agent: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Grushko & ▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may change its address by written notice in accordance with this
paragraph.
12.4 Term; Binding Effect. This Agreement shall (a) remain in
full force and effect until payment and satisfaction in full of all of the
Obligations; (b) be binding upon Debtor and Shareholders, and their
successors and assigns; and (c) inure to the benefit of the Collateral
Agent, for the benefit of the Lenders and their heirs, legal
representatives, successors in title and permitted assigns.
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12.5 Captions. The captions of Paragraphs, Articles and Sections
in this Agreement have been included for convenience of reference only, and
shall not define or limit the provisions hereof and have no legal or other
significance whatsoever.
12.6 Governing Law; Venue; Severability. This Agreement shall be
governed by and construed in accordance with the laws of the State of New
York without regard to principles of conflicts or choice of law, except to
the extent that the perfection of the security interest granted hereby in
respect of any item of Collateral may be governed by the law of another
jurisdiction. Any legal action or proceeding against the Debtor and
Shareholders with respect to this Agreement may be brought in the courts of
the State of New York or of the United States for the Southern District of
New York, and, by execution and delivery of this Agreement, each of the
Debtor and Shareholders hereby irrevocably accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of
the aforesaid courts. The Debtor and Shareholders hereby irrevocably waive
any objection which they may now or hereafter have to the laying of venue
of any of the aforesaid actions or proceedings arising out of or in
connection with this Agreement brought in the aforesaid courts and hereby
further irrevocably waives and agrees not to plead or claim in any such
court that any such action or proceeding brought in any such court has been
brought in an inconvenient forum. If any provision of this Agreement, or
the application thereof to any person or circumstance, is held invalid,
such invalidity shall not affect any other provisions which can be given
effect without the invalid provision or application, and to this end the
provisions hereof shall be severable and the remaining, valid provisions
shall remain of full force and effect.
12.7 Counterparts/Execution. This Agreement may be executed in
any number of counterparts and by the different signatories hereto on
separate counterparts, each of which, when so executed, shall be deemed an
original, but all such counterparts shall constitute but one and the same
instrument. This Agreement may be executed by facsimile signature and
delivered by facsimile transmission.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned have executed and delivered this
Security Agreement, as of the date first written above.
"DEBTOR"
SCIENCE DYNAMICS CORPORATION
a Delaware corporation
By: /S/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Its: President
-----------------------------------
"SHAREHOLDERS"
/S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------
INNOVATIVE COMMUNICATIONS
TECHNOLOGY, LTD.
/S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, General Partner
-----------------------------------------
GOLDEN PHOENIX LIMITED PARTNERSHIP
"THE COLLATERAL AGENT"
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------
APPROVED:
/S/ ▇▇▇▇ ▇▇▇▇▇▇ /S/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------- ------------------------
THE KESHET FUND, L.P. KESHET L.P.
/S/ ▇▇▇▇▇ Grin
----------------------
LAURUS MASTER FUND LTD.
This Security Agreement may be executed by facsimile signature and
delivered by confirmed facsimile transmission.
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SCHEDULE A TO SECURITY AGREEMENT
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LENDERS PRINCIPAL AMOUNT OF SECURED
CONVERTIBLE NOTES
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THE KESHET FUND, L.P. $100,000.00
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
KESHET L.P. $100,000.00
Ragnall House, ▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇
▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇-▇▇▇▇-▇▇▇▇▇▇
LAURUS MASTER FUND, LTD. $1,000,000.00
A Cayman Island corporation
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇.
▇.▇. ▇▇▇ ▇▇▇▇ G.T.
Queensgate House, South Church Street
Grand Cayman, Cayman Islands
Fax: ▇▇▇-▇▇▇-▇▇▇▇
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TOTAL $1,200,000.00
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SECURITY AGREEMENT - SCHEDULE B
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DEPOSITOR DEPOSITED STOCK ACQUISITION
SECURITY SHARES CERTIFICATE DATE *
NUMBERS
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INNOVATIVE COMMUNICATIONS 1,500,000 common JU 7894 11/21/96
TECHNOLOGY, LTD. shares ($.01 par
Le Virage value per share)
La Route de Sainte ▇▇▇▇▇ of Science Dynamics
▇▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇ ▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
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GOLDEN PHOENIX LIMITED 2,605,588 common JU 7978 7/2/97
PARTNERSHIP shares ($.01 par
▇.▇. ▇▇▇ ▇▇▇ value per share)
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ of Science Dynamics
Fax: ▇▇▇-▇▇▇-▇▇▇▇ Corporation
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* Each of the deposited Security Shares was initially issued on the
Acquisition Date and fully paid for as of the Acquisition Date.
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