Document:

THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF
        THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
        1933, AS AMENDED.  THIS NOTE AND THE COMMON SHARES ISSUABLE
        UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR
        SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
        REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN
        OPINION OF COUNSEL REASONABLY SATISFACTORY TO SCIENCE DYNAMICS
        CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

                                  CONVERTIBLE NOTE
                                  ----------------

        FOR VALUE RECEIVED, SCIENCE DYNAMICS CORPORATION, a Delaware
corporation (hereinafter called "Borrower"), hereby promises to pay to
LAURUS MASTER FUND, LTD., c/o Ironshore Corporate Services Ltd., P.O. Box
1234 G.T., Queensgate House, South Church Street, Grand Cayman, Cayman
Islands, Fax: 345-949-9877 (the "Holder") on order, without demand, the
sum of One Hundred Forty Seven Thousand Three Hundred and Eighty Dollars
($147,380.00), with simple interest accruing at the annual rate of 8%, on
March 25, 2004 (the "Maturity Date").

The following terms shall apply to this Note:

                                     ARTICLE I

                            DEFAULT RELATED PROVISIONS

         1.1 Payment Grace Period.  The Borrower shall have a ten (10)
day grace period to pay any monetary amounts due under this Note, after
which grace period a default interest rate of twenty percent (20%) per
annum shall apply to the amounts owed hereunder.

         1.2 Conversion Privileges.  The Conversion Privileges set
forth in Article II shall remain in full force and effect immediately
from the date hereof and until the Note is paid in full.

         1.3 Interest Rate.   Subject to the Holder's right to convert,
interest payable on this Note shall accrue at the annual rate of eight
percent (8%) and be payable in arrears commencing June 30, 2002 and
quarterly thereafter, and on the Maturity Date, accelerated or otherwise,
when the principal and remaining accrued but unpaid interest shall be due
and payable, or sooner as described below.

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                                     ARTICLE II

                                 CONVERSION RIGHTS

The Holder shall have the right to convert the principal
amount and interest due under this Note into Shares of the Borrower's
Common Stock as set forth below.

          2.1. Conversion into the Borrower's Common Stock.

          (a) The Holder shall have the right from and after the
issuance of this Note and then at any time until this Note is fully paid,
to convert any outstanding and unpaid principal portion of this Note,
and/or at the Holder's election with the Company's consent, the interest
accrued on the Note, (the date of giving of such notice of conversion
being a "Conversion Date") into fully paid and nonassessable shares of
common stock of Borrower as such stock exists on the date of issuance of
this Note, or any shares of capital stock of Borrower into which such
stock shall hereafter be changed or reclassified (the "Common Stock") at
the conversion price as defined in Section 2.1(b) hereof (the "Conversion
Price"), determined as provided herein.  Upon delivery to the Company of
a Notice of Conversion as described in Section 9 of the subscription
agreement entered into between the Company and Holder relating to this
Note (the "Subscription Agreement") of the Holder's written request for
conversion, Borrower shall issue and deliver to the Holder within three
business days from the Conversion Date that number of shares of Common
Stock for the portion of the Note converted in accordance with the
foregoing.  At the election of the Holder, the Company will deliver
accrued but unpaid interest on the Note through the Conversion Date
directly to the Holder on or before the Delivery Date (as defined in the
Subscription Agreement).  The number of shares of Common Stock to be
issued upon each conversion of this Note shall be determined by dividing
that portion of the principal of the Note to be converted and interest,
if any, by the Conversion Price.

          (b) Subject to adjustment as provided in Section 2.1(c)
hereof, the Conversion Price per share shall be the lower of (i) eighty-
five percent (85%) of the average of the three lowest closing prices for
the Common Stock on the NASD OTC Bulletin Board, NASDAQ SmallCap Market,
NASDAQ National Market System, American Stock Exchange, or New York Stock
Exchange (whichever of the foregoing is at the time the principal trading
exchange or market for the Common Stock, the "Principal Market"), or if
not then trading on a Principal Market, such other principal market or
exchange where the Common Stock is listed or traded for the thirty (30)
trading days prior to but not including the  Closing Date (as defined in
the Subscription Agreement) in connection with which this Note is issued
("Maximum Base Price"); or (ii) eighty-five percent (85%) percent of the
average of the three lowest closing prices for the Common Stock on the
Principal Market, or on any securities exchange or other securities
market on which the Common Stock is then being listed or traded, for the
thirty (30) trading days prior to but not including the Conversion Date.

          (c) The Maximum Base Price described in Section 2.1(b)(i)
above and number and kind of shares or other securities to be issued upon
conversion determined pursuant to Section 2.1(a) and 2.1(b), shall be
subject to adjustment from time to time upon the happening of certain
events while this conversion right remains outstanding, as follows:

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          A. Merger, Sale of Assets, etc.  If the Borrower at any
time shall consolidate with or merge into or sell or convey all or
substantially all its assets to any other corporation, this Note, as to
the unpaid principal portion thereof and accrued interest thereon, shall
thereafter be deemed to evidence the right to purchase such number and
kind of shares or other securities and property as would have been
issuable or distributable on account of such consolidation, merger, sale
or conveyance, upon or with respect to the securities subject to the
conversion or purchase right immediately prior to such consolidation,
merger, sale or conveyance.  The foregoing provision shall similarly
apply to successive transactions of a similar nature by any such
successor or purchaser.  Without limiting the generality of the
foregoing, the anti-dilution provisions of this Section shall apply to
such securities of such successor or purchaser after any such
consolidation, merger, sale or conveyance.

          B. Reclassification, etc.  If the Borrower at any time
shall, by reclassification or otherwise, change the Common Stock into the
same or a different number of securities of any class or classes, this
Note, as to the unpaid principal portion thereof and accrued interest
thereon, shall thereafter be deemed to evidence the right to purchase an
adjusted number of such securities and kind of securities as would have
been issuable as the result of such change with respect to the Common
Stock immediately prior to such reclassification or other change.

          C. Stock Splits, Combinations and Dividends.  If the
shares of Common Stock are subdivided or combined into a greater or
smaller number of shares of Common Stock, or if a dividend is paid on the
Common Stock in shares of Common Stock, the Conversion Price shall be
proportionately reduced in case of subdivision of shares or stock
dividend or proportionately increased in the case of combination of
shares, in each such case by the ratio which the total number of shares
of Common Stock outstanding immediately after such event bears to the
total number of shares of Common Stock outstanding immediately prior to
such event.

          D. Share Issuance.  Subject to the provisions of this
Section, if the Borrower at any time shall issue any shares of Common
Stock prior to the conversion of the entire principal amount of the Note
(otherwise than as: (i) provided in Sections 2.1(c)A, 2.1(c)B or 2.1(c)C
or this subparagraph D; (ii) pursuant to options, warrants, or other
obligations to issue shares, outstanding on the date hereof as described
in the Reports and Other Written Information, as such terms are defined
in the Subscription Agreement (which agreement is incorporated herein by
this reference); or (iii) Excepted Issuances, as defined in Section 12 of
the Subscription Agreement; ((i), (ii) and (iii) above, are hereinafter
referred to as the "Existing Option Obligations") for a consideration
less than the Conversion Price that would be in effect at the time of
such issue, then, and thereafter successively upon each such issue, the
Conversion Price shall be reduced as follows:  (i) the number of shares
of Common Stock outstanding immediately prior to such issue shall be
multiplied by the Conversion Price in effect at the time of such issue
and the product shall be added to the aggregate consideration, if any,
received by the Borrower upon such issue of additional shares of Common
Stock; and (ii) the sum so obtained shall be divided by the number of
shares of Common Stock outstanding immediately after such issue.  The
resulting quotient shall be the adjusted conversion price.  Except for
the Existing Option Obligations, for purposes of this adjustment, the
issuance of any security of the Borrower carrying the right to convert
such security into shares of Common Stock or of any warrant, right or
option to purchase Common Stock shall result in an adjustment to the
Conversion Price upon the issuance of shares of Common Stock upon
exercise of such conversion or purchase rights.

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<PAGE>

          (d) During the period the conversion right exists, Borrower
will reserve from its authorized and unissued Common Stock a sufficient
number of shares to provide for the issuance of Common Stock upon the
full conversion of this Note.  Borrower represents that upon issuance,
such shares will be duly and validly issued, fully paid and non-
assessable.  Borrower agrees that its issuance of this Note shall
constitute full authority to its officers, agents, and transfer agents
who are charged with the duty of executing and issuing stock certificates
to execute and issue the necessary certificates for shares of Common
Stock upon the conversion of this Note.

        2.2 Method of Conversion.  This Note may be converted by the
Holder in whole or in part as described in Section 2.1(a) hereof and the
Subscription Agreement.  Upon partial conversion of this Note, a new Note
containing the same date and provisions of this Note shall, at the
request of the Holder, be issued by the Borrower to the Holder for the
principal balance of this Note and interest which shall not have been
converted or paid.

                                     ARTICLE III

                                  EVENT OF DEFAULT

          The occurrence of any of the following events of default
("Event of Default") shall, at the option of the Holder hereof, make all
sums of principal and interest then remaining unpaid hereon and all other
amounts payable hereunder immediately due and payable, all without
demand, presentment or notice, or grace period, all of which hereby are
expressly waived, except as set forth below:

          3.1 Failure to Pay Principal or Interest.  The Borrower fails
to pay any installment of principal or interest hereon when due and such
failure continues for a period of ten (10) days after the due date.  The
ten (10) day period described in this Section 3.1 is the same ten (10)
day period described in Section 1.1 hereof.

          3.2 Breach of Covenant.  The Borrower breaches any material
covenant or other term or condition of this Note or the Subscription
Agreement in any material respect and such breach, if subject to cure,
continues for a period of seven (7) days after written notice to the
Borrower from the Holder.

          3.3 Breach of Representations and Warranties.  Any material
representation or warranty of the Borrower made herein, in the
Subscription Agreement entered into by the Holder and Borrower in
connection with this Note, or in any agreement, statement or certificate
given in writing pursuant hereto or in connection therewith shall be
false or misleading in any material respect.

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<PAGE>

         3.4 Receiver or Trustee.  The Borrower shall make an
assignment for the benefit of creditors, or apply for or consent to the
appointment of a receiver or trustee for it or for a substantial part of
its property or business; or such a receiver or trustee shall otherwise
be appointed.

         3.5 Judgments.  Any money judgment, writ or similar final
process shall be entered or filed against Borrower or any of its property
or other assets for more than $100,000, and shall remain unvacated,
unbonded or unstayed for a period of forty-five (45) days.

        3.6 Bankruptcy.  Bankruptcy, insolvency, reorganization or
liquidation proceedings or other proceedings or relief under any
bankruptcy law or any law for the relief of debtors shall be instituted
by or against the Borrower and if instituted against Borrower are not
dismissed within 45 days of initiation.

        3.7 Delisting.  Delisting of the Common Stock from the OTC
Bulletin Board or delisting from such other principal exchange on which
the Common Stock is listed for trading; Borrower's failure to comply with
the requirements of the Principal Market for continued listing for a
period of three consecutive trading days; or notification from the
Principal Market that the Borrower is not in compliance with the
conditions for such continued listing.

       3.8 Concession.  A concession by the Borrower, after
applicable notice and cure periods, under any one or more obligations in
an aggregate monetary amount in excess of $100,000.

       3.9 Stop Trade.  An SEC stop trade order or Principal Market
trading suspension that lasts for five or more trading days.

       3.10 Failure to Deliver Common Stock or Replacement Note.
Borrower's failure to timely deliver Common Stock to the Holder pursuant
to and in the form required by this Note and Section 9 of the
Subscription Agreement, or if required a replacement Note.

       3.11 Registration Default.  The occurrence of a Non-
Registration Event as described in Section 10.4 of the Subscription
Agreement except that with respect to a Non-Registration Event in
connection with the required declared effectiveness of the Registration
Statement (as defined in the Subscription Agreement) on or before the
Effective Date (as defined in the Subscription Agreement) such Non-
Registration Event must be continuing on or occur after a date which is
one-hundred and twenty (120) days after the Closing Date (as defined in
the Subscription Agreement).

                                     ARTICLE IV

                                   MISCELLANEOUS

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<PAGE>

         4.1 Failure or Indulgence Not Waiver.  No failure or delay on
the part of Holder hereof in the exercise of any power, right or
privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or
privilege.  All rights and remedies existing hereunder are cumulative to,
and not exclusive of, any rights or remedies otherwise available.

         4.2 Notices.  Any notice herein required or permitted to be
given shall be in writing and may be personally served or sent by fax
transmission (with copy sent by regular, certified or registered mail or
by overnight courier).  For the purposes hereof, the address and fax
number of the Holder is as set forth on the first page hereof.  The
address and fax number of the Borrower shall be Science Dynamics
Corporation, 1919 Springdale Road, Cherry Hill, NJ 08003, telecopier
number:  (856) 751-7361.  Both Holder and Borrower may change the address
and fax number for service by service of notice to the other as herein
provided.  Notice of Conversion shall be deemed given when made to the
Company pursuant to the Subscription Agreement.

        4.3 Amendment Provision.  The term "Note" and all reference
thereto, as used throughout this instrument, shall mean this instrument
as originally executed, or if later amended or supplemented, then as so
amended or supplemented.

        4.4 Assignability.  This Note shall be binding upon the
Borrower and its successors and assigns, and shall inure to the benefit
of the Holder and its successors and assigns, and may be assigned by the
Holder.

        4.5 Cost of Collection.  If default is made in the payment of
this Note, Borrower shall pay the Holder hereof reasonable costs of
collection, including reasonable attorneys' fees.

        4.6 Governing Law.  This Note shall be governed by and
construed in accordance with the laws of the State of New York.  Any
action brought by either party against the other concerning the
transactions contemplated by this Agreement shall be brought only in the
state courts of New York or in the federal courts located in the state of
New York.  Both parties and the individual signing this Agreement on
behalf of the Borrower agree to submit to the jurisdiction of such
courts.  The prevailing party shall be entitled to recover from the other
party its reasonable attorney's fees and costs.

        4.7 Maximum Payments.  Nothing contained herein shall be
deemed to establish or require the payment of a rate of interest or other
charges in excess of the maximum permitted by applicable law.  In the
event that the rate of interest required to be paid or other charges
hereunder exceed the maximum permitted by such law, any payments in
excess of such maximum shall be credited against amounts owed by the
Borrower to the Holder and thus refunded to the Borrower.

       4.8 Prepayment.  This Note may not be paid prior to the
Maturity Date or after the occurrence of an Event of Default without the
consent of the Holder except as set forth in Section 9.7 of the
Subscription Agreement.

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      4.9 Security Interest.  The holder of this Note has been granted a
security interest in common stock of the Company more fully described in
a Security Agreement.

                       [THIS SPACE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, Borrower has caused this Note to be signed in
its name by its Chief Executive Officer on this 25th day of March 2002.

SCIENCE DYNAMICS CORPORATION

By:________________________________

WITNESS:

_______________________________

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                               NOTICE OF CONVERSION
                               --------------------
(To be executed by the Registered Holder in order to convert the Note)

The undersigned hereby elects to convert $_________ of the principal
and $_________ of the interest due on the Note issued by SCIENCE DYNAMICS
CORPORATION on March 25, 2002 into Shares of Common Stock of SCIENCE
DYNAMICS CORPORATION (the "Company") according to the conditions set
forth in such Note, as of the date written below.

Date of
Conversion:_____________________________________________________________

Conversion
Price:__________________________________________________________________

Shares To Be
Delivered:______________________________________________________________

Signature:______________________________________________________________

Print
Name:___________________________________________________________________

Address:________________________________________________________________

        ________________________________________________________________

-9-THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT
OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO SCIENCE DYNAMICS
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

     Right to Purchase 150,000 Shares of Common
     Stock of Science Dynamics Corporation
     (subject to adjustment as provided herein)

                 COMMON STOCK PURCHASE WARRANT

No. 2002-1                                   Issue Date:  March 25, 2002

SCIENCE DYNAMICS CORPORATION, a corporation organized under the laws
of the State of Delaware (the "Company"), hereby certifies that, for
value received, LAURUS MASTER FUND LTD., or assigns, is entitled, subject
to the terms set forth below, to purchase from the Company from and after
the Issue Date of this Warrant and at any time or from time to time
before 5:00 p.m., New York time, through five (5) years after such date
(the "Expiration Date"), up to 150,000 fully paid and nonassessable
shares of Common Stock (as hereinafter defined), $.01 par value per
share, of the Company, at a purchase price of $.084 per share (such
purchase price per share as adjusted from time to time as herein provided
is referred to herein as the "Purchase Price"). The number and character
of such shares of Common Stock and the Purchase Price are subject to
adjustment as provided herein.

As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:

(a) The term "Company" shall include Science Dynamics Corporation
and any corporation which shall succeed or assume the obligations of
Science Dynamics Corporation hereunder.

(b) The term "Common Stock" includes (a) the Company's Common Stock,
$.01 par value per share, as authorized on the date of the Subscription
Agreement referred to in Section 9 hereof, (b) any other capital stock of
any class or classes (however designated) of the Company, authorized on
or after such date, the holders of which shall have the right, without
limitation as to amount, either to all or to a share of the balance of
current dividends and liquidating dividends after the payment of
dividends and distributions on any shares entitled to preference, and the
holders of which shall ordinarily, in the absence of contingencies, be
entitled to vote for the election of a majority of directors of the
Company (even if the right so to vote has been suspended by the happening
of such a contingency) and (c) any other securities into which or for
which any of the securities described in (a) or (b) may be converted or
exchanged pursuant to a plan of recapitalization, reorganization, merger,
sale of assets or otherwise.

(c) The term "Other Securities" refers to any stock (other than
Common Stock) and other securities of the Company or any other person
(corporate or otherwise) which the holder of the Warrant at any time
shall be entitled to receive, or shall have received, on the exercise of
the Warrant, in lieu of or in addition to Common Stock, or which at any
time shall be issuable or shall have been issued in exchange for or in
replacement of Common Stock or Other Securities pursuant to Section 4 or
otherwise.

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1. Exercise of Warrant.

1.1. Number of Shares Issuable upon Exercise.  From and after
the date hereof through and including the Expiration Date, the holder
hereof shall be entitled to receive, upon exercise of this Warrant in
whole in accordance with the terms of subsection 1.2 or upon exercise of
this Warrant in part in accordance with subsection 1.3, shares of Common
Stock of the Company, subject to adjustment pursuant to Section 4.

1.2. Full Exercise.  This Warrant may be exercised in full by
the holder hereof by delivery of an original or fax copy of the form of
subscription attached as Exhibit A hereto (the "Subscription Form") duly
executed by such holder and surrender of the original Warrant within
seven days of exercise, to the Company at its principal office or at the
office of its Warrant agent (as provided hereinafter), accompanied by
payment, in cash, wire transfer, or by certified or official bank check
payable to the order of the Company, in the amount obtained by
multiplying the number of shares of Common Stock for which this Warrant
is then exercisable by the Purchase Price (as hereinafter defined) then
in effect.

1.3. Partial Exercise.  This Warrant may be exercised in part
(but not for a fractional share) by surrender of this Warrant in the
manner and at the place provided in subsection 1.2 except that the amount
payable by the holder on such partial exercise shall be the amount
obtained by multiplying (a) the number of shares of Common Stock
designated by the holder in the Subscription Form by (b) the Purchase
Price then in effect.  On any such partial exercise, the Company, at its
expense, will forthwith issue and deliver to or upon the order of the
holder hereof a new Warrant of like tenor, in the name of the holder
hereof or as such holder (upon payment by such holder of any applicable
transfer taxes) may request, the number of shares of Common Stock for
which such Warrant may still be exercised.

1.4. Fair Market Value. Fair Market Value of a share of Common
Stock as of a particular date (the "Determination Date") shall mean the
Fair Market Value of a share of the Company's Common Stock. Fair Market
Value of a share of Common Stock as of a Determination Date shall mean:

(a) If the Company's Common Stock is traded on an
exchange or is quoted on the National Association of Securities Dealers,
Inc. Automated Quotation ("NASDAQ") National Market System or the NASDAQ
SmallCap Market, then the closing or last sale price, respectively,
reported for the last business day immediately preceding the
Determination Date.

(b) If the Company's Common Stock is not traded on an
exchange or on the NASDAQ National Market System or the NASDAQ SmallCap
Market but is traded in the over-the-counter market, then the mean of the
closing bid and asked prices reported for the last business day
immediately preceding the Determination Date.

(c) Except as provided in clause (d) below, if the
Company's Common Stock is not publicly traded, then as the Holder and the
Company agree or in the absence of agreement by arbitration in accordance
with the rules then standing of the American Arbitration Association,
before a single arbitrator to be chosen from a panel of persons qualified
by education and training to pass on the matter to be decided.

(d) If the Determination Date is the date of a
liquidation, dissolution or winding up, or any event deemed to be a
liquidation, dissolution or winding up pursuant to the Company's charter,
then all amounts to be payable per share to holders of the Common Stock
pursuant to the charter in the event of such liquidation, dissolution or
winding up, plus all other amounts to be payable per share in respect of
the Common Stock in liquidation under the charter, assuming for the
purposes of this clause (d) that all of the shares of Common Stock then
issuable upon exercise of all of the Warrants are outstanding at the
Determination Date.

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1.5. Company Acknowledgment. The Company will, at the time of
the exercise of the Warrant, upon the request of the holder hereof
acknowledge in writing its continuing obligation to afford to such holder
any rights to which such holder shall continue to be entitled after such
exercise in accordance with the provisions of this Warrant. If the holder
shall fail to make any such request, such failure shall not affect the
continuing obligation of the Company to afford to such holder any such
rights.

1.6. Trustee for Warrant Holders. In the event that a bank or
trust company shall have been appointed as trustee for the holders of the
Warrants pursuant to Subsection 3.2, such bank or trust company shall
have all the powers and duties of a warrant agent (as hereinafter
described) and shall accept, in its own name for the account of the
Company or such successor person as may be entitled thereto, all amounts
otherwise payable to the Company or such successor, as the case may be,
on exercise of this Warrant pursuant to this Section 1.

2.1 Delivery of Stock Certificates, etc. on Exercise. The Company
agrees that the shares of Common Stock purchased upon exercise of this
Warrant shall be deemed to be issued to the holder hereof as the record
owner of such shares as of the close of business on the date on which
this Warrant shall have been surrendered and payment made for such shares
as aforesaid. As soon as practicable after the exercise of this Warrant
in full or in part, and in any event within 7 days thereafter, the
Company at its expense (including the payment by it of any applicable
issue taxes) will cause to be issued in the name of and delivered to the
holder hereof, or as such holder (upon payment by such holder of any
applicable transfer taxes) may direct in compliance with applicable
Securities Laws, a certificate or certificates for the number of duly and
validly issued, fully paid and nonassessable shares of Common Stock (or
Other Securities) to which such holder shall be entitled on such
exercise, plus, in lieu of any fractional share to which such holder
would otherwise be entitled, cash equal to such fraction multiplied by
the then Fair Market Value of one full share, together with any other
stock or other securities and property (including cash, where applicable)
to which such holder is entitled upon such exercise pursuant to Section 1
or otherwise.

 2.2. Cashless Exercise.

 (a) Payment may be made either in (i) cash or by certified or
official bank check payable to the order of the Company equal to the
applicable aggregate Purchase Price, (ii) by delivery of Warrants, Common
Stock and/or Common Stock receivable upon exercise of the Warrants in
accordance with Section (b) below, or (iii) by a combination of any of
the foregoing methods, for the number of Common Shares specified in such
form (as such exercise number shall be adjusted to reflect any adjustment
in the total number of shares of Common Stock issuable to the holder per
the terms of this Warrant) and the holder shall thereupon be entitled to
receive the number of duly authorized, validly issued, fully-paid and
non-assessable shares of Common Stock (or Other Securities) determined as
provided herein.

 (b) Notwithstanding any provisions herein to the contrary, if the
Fair Market Value of one share of Common Stock is greater than the
Purchase Price (at the date of calculation as set forth below), in lieu
of exercising this Warrant for cash, upon consent of the Company, the
holder may elect to receive shares equal to the value (as determined
below) of this Warrant (or the portion thereof being cancelled) by
surrender of this Warrant at the principal office of the Company together
with the properly endorsed Subscription Form in which event the Company
shall issue to the holder a number of shares of Common Stock computed
using the following formula:

  X=Y (A-B)
       ---
    A
  --------

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<PAGE>

 Where X= the number of shares of Common Stock to be issued to the
          holder

  Y= the number of shares of Common Stock purchasable under the
     Warrant or, if only a portion of the Warrant is
     being exercised, the portion of the Warrant being
     exercised (at the date of such calculation)

  A= the Fair Market Value of one share of the Company's Common
     Stock (at the date of such calculation)

  B= Purchase Price (as adjusted to the date of such calculation)

3. Adjustment for Reorganization, Consolidation, Merger, etc.

3.1. Reorganization, Consolidation, Merger, etc. In case at
any time or from time to time, the Company shall (a) effect a
reorganization, (b) consolidate with or merge into any other person, or
(c) transfer all or substantially all of its properties or assets to any
other person under any plan or arrangement contemplating the dissolution
of the Company, then, in each such case, as a condition to the
consummation of such a transaction, proper and adequate provision shall
be made by the Company whereby the holder of this Warrant, on the
exercise hereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation or merger or the
effective date of such dissolution, as the case may be, shall receive, in
lieu of the Common Stock (or Other Securities) issuable on such exercise
prior to such consummation or such effective date, the stock and other
securities and property (including cash) to which such holder would have
been entitled upon such consummation or in connection with such
dissolution, as the case may be, if such holder had so exercised this
Warrant, immediately prior thereto, all subject to further adjustment
thereafter as provided in Section 4.

3.2. Dissolution. In the event of any dissolution of the
Company following the transfer of all or substantially all of its
properties or assets, the Company, prior to such dissolution, shall at
its expense deliver or cause to be delivered the stock and other
securities and property (including cash, where applicable) receivable by
the holders of the Warrants after the effective date of such dissolution
pursuant to this Section 3 to a bank or trust company having its
principal office in New York, NY, as trustee for the holder or holders of
the Warrants.

3.3. Continuation of Terms. Upon any reorganization,
consolidation, merger or transfer (and any dissolution following any
transfer) referred to in this Section 3, this Warrant shall continue in
full force and effect and the terms hereof shall be applicable to the
shares of stock and other securities and property receivable on the
exercise of this Warrant after the consummation of such reorganization,
consolidation or merger or the effective date of dissolution following
any such transfer, as the case may be, and shall be binding upon the
issuer of any such stock or other securities, including, in the case of
any such transfer, the person acquiring all or substantially all of the
properties or assets of the Company, whether or not such person shall
have expressly assumed the terms of this Warrant as provided in Section
4.  In the event this Warrant does not continue in full force and effect
after the consummation of the transaction described in this Section 3,
then only in such event will the Company's securities and property
(including cash, where applicable) receivable by the holders of the
Warrants be delivered to the Trustee as contemplated by Section 3.2.

-4-
<PAGE>

 3.4. Share Issuance.   Except for the Excepted Issuances as
described in Section 11 of the Subscription Agreement, if the Company at
any time shall issue any shares of Common Stock prior to the complete
exercise of this Warrant for a consideration less than the Purchase Price
that would be in effect at the time of such issue, then, and thereafter
successively upon each such issue, the Purchase Price shall be reduced as
follows: (i) the number of shares of Common Stock outstanding immediately
prior to such issue shall be multiplied by the Purchase Price in effect
at the time of such issue and the product shall be added to the aggregate
consideration, if any, received by the Company upon such issue of
additional shares of Common Stock; and (ii) the sum so obtained shall be
divided by the number of shares of Common Stock outstanding immediately
after such issue.  The resulting quotient shall be the adjusted Purchase
Price.  For purposes of this adjustment, the issuance of any security of
the Company carrying the right to convert such security into shares of
Common Stock or of any warrant, right or option to purchase Common Stock
shall result in an adjustment to the Purchase Price upon the issuance of
shares of Common Stock upon exercise of such conversion or purchase
rights.

4. Extraordinary Events Regarding Common Stock. In the event that
the Company shall (a) issue additional shares of the Common Stock as a
dividend or other distribution on outstanding Common Stock, (b) subdivide
its outstanding shares of Common Stock, or (c) combine its outstanding
shares of the Common Stock into a smaller number of shares of the Common
Stock, then, in each such event, the Purchase Price shall, simultaneously
with the happening of such event, be adjusted by multiplying the then
Purchase Price by a fraction, the numerator of which shall be the number
of shares of Common Stock outstanding immediately prior to such event and
the denominator of which shall be the number of shares of Common Stock
outstanding immediately after such event, and the product so obtained
shall thereafter be the Purchase Price then in effect. The Purchase
Price, as so adjusted, shall be readjusted in the same manner upon the
happening of any successive event or events described herein in this
Section 4. The number of shares of Common Stock that the holder of this
Warrant shall thereafter, on the exercise hereof as provided in Section
1, be entitled to receive shall be increased to a number determined by
multiplying the number of shares of Common Stock that would otherwise
(but for the provisions of this Section 4) be issuable on such exercise
by a fraction of which (a) the numerator is the Purchase Price that would
otherwise (but for the provisions of this Section 4) be in effect, and
(b) the denominator is the Purchase Price in effect on the date of such
exercise.

5. Certificate as to Adjustments. In each case of any adjustment or
readjustment in the shares of Common Stock (or Other Securities) issuable
on the exercise of the Warrants, the Company at its expense will promptly
cause its Chief Financial Officer or other appropriate designee to
compute such adjustment or readjustment in accordance with the terms of
the Warrant and prepare a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment
or readjustment is based, including a statement of (a) the consideration
received or receivable by the Company for any additional shares of Common
Stock (or Other Securities) issued or sold or deemed to have been issued
or sold, (b) the number of shares of Common Stock (or Other Securities)
outstanding or deemed to be outstanding, and (c) the Purchase Price and
the number of shares of Common Stock to be received upon exercise of this
Warrant, in effect immediately prior to such adjustment or readjustment
and as adjusted or readjusted as provided in this Warrant. The Company
will forthwith mail a copy of each such certificate to the holder of the
Warrant and any Warrant agent of the Company (appointed pursuant to
Section 11 hereof).

6. Reservation of Stock, etc. Issuable on Exercise of Warrant;
Financial Statements. The Company will at all times reserve and keep
available, solely for issuance and delivery on the exercise of the
Warrants, all shares of Common Stock (or Other Securities) from time to
time issuable on the exercise of the Warrant.  This Warrant entitles the
holder hereof to receive copies of all financial and other information
distributed or required to be distributed to the holders of the Company's
Common Stock.

-5-
<PAGE>

7. Assignment; Exchange of Warrant. Subject to compliance with
applicable Securities laws, this Warrant, and the rights evidenced
hereby, may be transferred by any registered holder hereof (a
"Transferor") with respect to any or all of the Shares. On the surrender
for exchange of this Warrant, with the Transferor's endorsement in the
form of Exhibit B attached hereto (the Transferor Endorsement Form") and
together with evidence reasonably satisfactory to the Company
demonstrating compliance with applicable Securities Laws, the Company at
its expense but with payment by the Transferor of any applicable transfer
taxes) will issue and deliver to or on the order of the Transferor
thereof a new Warrant or Warrants of like tenor, in the name of the
Transferor and/or the transferee(s) specified in such Transferor
Endorsement Form (each a "Transferee"), calling in the aggregate on the
face or faces thereof for the number of shares of Common Stock called for
on the face or faces of the Warrant so surrendered by the Transferor.

8. Replacement of Warrant. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation
of this Warrant and, in the case of any such loss, theft or destruction
of this Warrant, on delivery of an indemnity agreement or security
reasonably satisfactory in form and amount to the Company or, in the case
of any such mutilation, on surrender and cancellation of this Warrant,
the Company at its expense will execute and deliver, in lieu thereof, a
new Warrant of like tenor.

9. Subscription Agreement.  This Warrant is issued pursuant to a
Subscription Agreement entered into by the Company and Subscribers of the
Company's 8% Convertible Notes at or prior to the issue date of this
Warrant.  The terms of the Subscription Agreement are incorporated herein
by this reference.

 10. Maximum Exercise.   The Holder shall not be entitled to exercise
this Warrant on an exercise date, in connection with that number of
shares of Common Stock which would be in excess of the sum of (i) the
number of shares of Common Stock beneficially owned by the Holder and its
affiliates on an exercise date, and (ii) the number of shares of Common
Stock issuable upon the exercise of this Warrant with respect to which
the determination of this proviso is being made on an exercise date,
which would result in beneficial ownership by the Holder and its
affiliates of more than 4.99% of the outstanding shares of Common Stock
of the Company on such date.  For the purposes of the proviso to the
immediately preceding sentence, beneficial ownership shall be determined
in accordance with Section 13(d) of the Securities Exchange Act of 1934,
as amended, and Regulation 13d-3 thereunder.  Subject to the foregoing,
the Holder shall not be limited to aggregate exercises which would result
in the issuance of more than 4.99%.  The restriction described in this
paragraph may be revoked upon 75 days prior notice from the Holder to the
Company.  The Holder may allocate which of the equity of the Company
deemed beneficially owned by the Subscriber shall be included in the
4.99% amount described above and which shall be allocated to the excess
above 4.99%.

11. Warrant Agent.  The Company may, by written notice to the each
holder of the Warrant, appoint an agent for the purpose of issuing Common
Stock (or Other Securities) on the exercise of this Warrant pursuant to
Section 1, exchanging this Warrant pursuant to Section 7, and replacing
this Warrant pursuant to Section 8, or any of the foregoing, and
thereafter any such issuance, exchange or replacement, as the case may
be, shall be made at such office by such agent.

12. Transfer on the Company's Books.  Until this Warrant is
transferred on the books of the Company, the Company may treat the
registered holder hereof as the absolute owner hereof for all purposes,
notwithstanding any notice to the contrary.

13. Notices, etc.  All notices and other communications from the
Company to the holder of this Warrant shall be mailed by first class
registered or certified mail, postage prepaid, at such address as may
have been furnished to the Company in writing by such holder or, until
any such holder furnishes to the Company an address, then to, and at the
address of, the last holder of this Warrant who has so furnished an
address to the Company.

-6-
<PAGE>

14. Miscellaneous. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed
by the party against which enforcement of such change, waiver, discharge
or termination is sought. This Warrant shall be construed and enforced in
accordance with and governed by the laws of New York.  Any dispute
relating to this Warrant shall be adjudicated in New York State.  The
headings in this Warrant are for purposes of reference only, and shall
not limit or otherwise affect any of the terms hereof.  The invalidity or
unenforceability of any provision hereof shall in no way affect the
validity or enforceability of any other provision.

               [THIS SPACE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the Company has executed this Warrant under seal
as of the date first written above.

SCIENCE DYNAMICS CORPORATION

By:_____________________________________

Witness:

______________________________

-8-
<PAGE>

                                                            Exhibit A
                            FORM OF SUBSCRIPTION
                (To be signed only on exercise of Warrant)

TO: Science Dynamics Corporation

The undersigned, pursuant to the provisions set forth in the attached
Warrant (No.____), hereby irrevocably elects to purchase (check
applicable box):

___ ________ shares of the Common Stock covered by such Warrant; or

___ the maximum number of shares of Common Stock covered by such Warrant
pursuant to the cashless exercise procedure set forth in Section 2.

The undersigned herewith makes payment of the full purchase price for
such shares at the price per share provided for in such Warrant, which is
$___________.  Such payment takes the form of (check applicable box or
boxes):

___ $__________ in lawful money of the United States; and/or

___ the cancellation of such portion of the attached Warrant as is
exercisable for a total of _______ shares of Common Stock (using a Fair
Market Value of $_______ per share for purposes of this calculation);
and/or

___ the cancellation of such number of shares of Common Stock as is
necessary, in accordance with the formula set forth in Section 2, to
exercise this Warrant with respect to the maximum number of shares of
Common Stock purchaseable pursuant to the cashless exercise procedure set
forth in Section 2.

The undersigned requests that the certificates for such shares be issued
in the name of, and delivered to  ____________________       whose
address is _____________________________________________________________.

The undersigned represents and warrants that all offers and sales by the
undersigned of the securities issuable upon exercise of the within
Warrant shall be made pursuant to registration of the Common Stock under
the Securities Act of 1933, as amended (the "Securities Act") or pursuant
to an exemption from registration under the Securities Act.

Dated:___________________   _______________________________________
                            (Signature must conform to name of holder
                             as specified on the face of the Warrant)
                            _____________________________________
                            (Address)

-9-
<PAGE>

                                                         Exhibit B

                        FORM OF TRANSFEROR ENDORSEMENT
                  (To be signed only on transfer of Warrant)

For value received, the undersigned hereby sells, assigns, and
transfers unto the person(s) named below under the heading "Transferees"
the right represented by the within Warrant to purchase the percentage
and number of shares of Common Stock of Science Dynamics Corporation to
which the within Warrant relates specified under the headings "Percentage
Transferred" and "Number Transferred," respectively, opposite the name(s)
of such person(s) and appoints each such person Attorney to transfer its
respective right on the books of Science Dynamics Corporation with full
power of substitution in the premises.

------------------------------------------------------------------------
Transferees       Percentage                       Number
                  Transferred                      Transferred
------------------------------------------------------------------------

------------------------------------------------------------------------

------------------------------------------------------------------------

------------------------------------------------------------------------

Dated:                  , __ ___   ______________________________________
                                   (Signature must conform to name of
                                    holder as specified on the face of the
                                    warrant)

Signed in the presence of:

_____________________________      _______________________________________
        (Name)                                  (address)

                                   _______________________________________

                                                (address)

ACCEPTED AND AGREED:
[TRANSFEREE]

_________________________________
    (Name)

-10-

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