-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NSiam3WnsHJ4W6QSTuT8yoU0/UmoJw348p5zLVu0K6j+lXqnNNz6B5yBb7qnbxiJ x3LrlfwGtXhhfxiwSELs/g== 0001013762-05-000179.txt : 20050211 0001013762-05-000179.hdr.sgml : 20050211 20050211105808 ACCESSION NUMBER: 0001013762-05-000179 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050211 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050211 DATE AS OF CHANGE: 20050211 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SCIENCE DYNAMICS CORP CENTRAL INDEX KEY: 0000350644 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE & TELEGRAPH APPARATUS [3661] IRS NUMBER: 222011859 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-10690 FILM NUMBER: 05595799 BUSINESS ADDRESS: STREET 1: 1919 SPRINGDALE RD CITY: CHERRY HILL STATE: NJ ZIP: 08003 BUSINESS PHONE: 8564240068 MAIL ADDRESS: STREET 1: SCIENCE DYNAMICS CORP STREET 2: 1919 SPRINGDALE RD CITY: CHERRY HILL STATE: NJ ZIP: 08003 8-K 1 feb1120058k.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): February 2, 2005 Science Dynamics Corporation (Exact name of registrant as specified in its charter) Delaware 000-10690 22-2011859 - -------------------------------------------------------------------------------- (State or other jurisdiction (Commission File Number) (IRS Employer of Identification No.) incorporation) 7150 N. Park Drive, Suite 500 Pennsauken, NJ 08109 (Address of principal executive offices and Zip Code) Registrant's telephone number, including area code: (856) 910-1166 Copies to: Gregory Sichenzia, Esq. Sichenzia Ross Friedman Ference LLP 1065 Avenue of the Americas New York, New York 10018 Phone: (212) 930-9700 Fax: (212) 930-9725 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 1.01 Entry into a Material Definitive Agreement. On February 2, 2005, Science Dynamics Corporation (the "Company") entered into Amendment No. 1 (the "Amendment") to the Stock Purchase Agreement dated December 16, 2004 among the Company, Systems Management Engineering, Inc. ("SMEI") and certain shareholders of SMEI (the "SMEI Shareholders"). The Amendment is dated January 26, 2005. Under the Amendment, the Company agreed to purchase an aggregate of 4,177,500 shares (the "SMEI Shares") of the outstanding common stock of SMEI from the SMEI Shareholders on or before February 14, 2005 (the "Closing Date"), which shares constitute approximately 82% of the issued and outstanding shares of capital stock of SMEI on a fully diluted basis. In consideration for the SMEI Shares, the Company agreed to: (1) pay to the SMEI Shareholders $1,547,825 cash on the Closing Date; (2) issue to the SMEI Shareholders 15,478,251 shares of common stock of the Company within 15 business days after the Closing Date; and (3) pay to the SMEI Shareholders up to an additional $1,547,825 (the "Additional Consideration") cash upon certain financial goals begin met, as described below. Upon SMEI reaching the following goals for the 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 SMEI's technology products and which marketing and/or selling expenses have been incurred in accordance with a budget to be mutually approved by the Company and the SMEI Shareholders: o If SMEI's EBITDA is less than $500,000, then the Company is not obligated to pay any Additional Consideration to the SMEI Shareholders; o If SMEI's EBITDA is equal to or greater than $500,000 and less than $750,000, the Company must pay the SMEI Shareholders Additional Consideration equal to $193,478.13; o If SMEI's EBITDA is equal to or greater than $750,000 and less than $1,000,000, the Company must pay the SMEI Shareholders Additional Consideration equal to $386,956.25; o If SMEI's EBITDA is equal to or greater than $1,000,000 and less than $1,250,000, the Company must pay the SMEI Shareholders Additional Consideration equal to $580,434.38; o If SMEI's EBITDA is equal to or greater than $1,250,000 and less than $1,500,000, the Company must pay the SMEI Shareholders Additional Consideration equal to $773,912.50; and o If SMEI's EBITDA is equal to or greater than $1,500,000, the Company must pay the SMEI Shareholders Additional Consideration equal to $1,547,825. The Additional Consideration, if any, must be paid to the SMEI Shareholders in cash no later than 15 business days after April 15, 2006. In the event that any required Additional Consideration is not paid within 15 business days after April 15, 2006, the SMEI Shareholders may deliver written notice of such fact to the Company and the Company will have 10 calendar days from the date that it receives such notice to cure the nonpayment. If the Company does not cure nonpayment of any required Additional Consideration, then: (1) the Company must immediately issue to the SMEI Shareholders such number of shares of the Company's common stock equal to the Additional Consideration divided by 85% of the average daily weighted volume price of the Company's common stock for the 15 trading days prior to April 15, 2006; and (2) the SMEI Shareholders will have the right to appoint one natural person to the Company's board of directors for a period of one year. The common stock of the Company to be issued and sold under the Agreement will be issued and sold pursuant to the exemption from registration provided by Section 4(2) and Regulation D of the Securities Act of 1933, as amended. About SMEI SMEI has developed advanced data management applications, Internet server technology and information systems that it markets to both public and private sectors. SMEI's technology helps its customers reduce development time for projects, manage the deployment of applications across the Internet to desktops around the world and implement military grade security on all systems where the applications are deployed. 2 Item 2.03 Creation of a Direct Financial Obligation. See Item 1.01 above. Item 9.01 Financial Statements and Exhibits. (a) Financial statements of business acquired. Not applicable. (b) Pro forma financial information. Not applicable (c) Exhibits. Exhibit Number Description - -------------- ------------------------------------------------------------- 2.1 Amendment No. 1 to Stock Purchase Agreement dated December 16, 2004 among Science Dynamics Corporation, Systems Management Engineering, Inc. and the shareholders of Systems Management Engineering, Inc. identified on the signature page thereto. 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Science Dynamics Corporation Date: February 11, 2005 /s/ Paul Burgess ------------------ Paul Burgess Chief Operating Officer 4 EX-2 2 feb1120058kex21.txt 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." 2 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 David Kaye 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 Robert Horner 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: William F. Blocher, Jr.; J. Mark Elliott; Daniel C. Melchior; J. Robert Newton; and Quinn, Racusin & Gazzola 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] 3 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/ Alan Bashforth ------------------ Alan Bashforth, Chief Executive Officer SYSTEMS MANAGEMENT ENGINEERING, INC. By:/s/ Herbert B. Quinn, Jr. ------------------------ Herbert B. Quinn, Jr. Chief Executive Officer [SELLERS' SIGNATURES FOLLOW] 4 SELLERS By: /s/ Herbert B. Quinn, Jr. ------------------------- Name: Herbert B. Quinn, Jr. No. of Shares: 1,682,500 Cash Portion of Initial Purchase Price: $623,390.93 Purchase Shares: 6,233,909 By: /s/ Eric D. Zelsdorf -------------------- Name: Eric D. Zelsdorf No. of Shares: 1,575,000 Cash Portion of Initial Purchase Price: $583,560.60 Purchase Shares: 5,835,606 By: /s/ Elizabeth L. Quinn ----------------------- Name: Elizabeth L. Quinn No. of Shares: 100,000 Cash Portion of Initial Purchase Price: $37,051.47 Purchase Shares: 370,515 By: /s/ Barbara Schipper --------------------- Name: Barbara Schipper No. of Shares: 115,000 Cash Portion of Initial Purchase Price: $42,609.19 Purchase Shares: 426,092 By: /s/ Ellwood H. Witt, Jr. ------------------------- Name: Ellwood H. Witt, Jr. No. of Shares: 305,000 Cash Portion of Initial Purchase Price: $113,006.97 Purchase Shares: 1,130,070 By: /s/ William F. Blocher, Jr. ---------------------------- Name: William F. Blocher, Jr. 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) 5 By: J. Mark Elliott ----------------- Name: J. Mark Elliott No. of Shares: 30,000 Cash Portion of Initial Purchase Price: $11,115.44 Purchase Shares: 111,154 By: /s/ Daniel C. Melchior ----------------------- Name: Daniel C. Melchior. No. of Shares: 60,000 Cash Portion of Initial Purchase Price: $22,230.88 Purchase Shares: 222,309 By: /s/ J. Robert Newton --------------------- Name: J. Robert Newton No. of Shares: 45,000 Cash Portion of Initial Purchase Price: $16,673.16 Purchase Shares: 166,732 QUINN, RACUSIN & GAZZOLA CHARTERED By: /s/ John H. Quinn, Jr. ----------------------- Name: /s/ John H. Quinn, Jr. Title: President No. of Shares: 15,000 Cash Portion of Initial Purchase Price: $5,557.72 Purchase Shares: 55,577 6 Exhibit A Stock Purchase Agreement -----END PRIVACY-ENHANCED MESSAGE-----