ACE*COMM CORPORATION LOAN NOTE DUE September 30, 2006
Buyer Series 2B Loan Note
ACE*COMM CORPORATION
LOAN NOTE
DUE September 30, 2006
DUE September 30, 2006
| £104,500 | October 28, 2005 |
FOR VALUE RECEIVED, the undersigned, ACE*COMM Corporation, a Maryland corporation
(“Borrower”), hereby promises to pay to Integrated Strategic Communications Limited or its
registered assigns (the “Holder”), the principal sum of £104,500 (one hundred and four thousand
five hundred pounds sterling) on September 30, 2006 (the “Maturity Date”), except as otherwise set
forth herein, and with interest thereon as provided herein.
1. Interest and Principal Amortization.
(a) Basic Interest. The Borrower promises to pay interest (“Interest”) on the
outstanding unpaid principal amount of this Note at the rate of seven and one half percent (7.5%)
per annum. Interest on this Loan Note (this “Note”) shall accrue from and including the date of
issuance through and until repayment of the entire principal amount of this Note and payment of all
Interest in full, and shall be computed on the basis of a 365-day year applied to actual days on
the unpaid principal balance. The Interest shall accrue and be paid in full upon the Maturity Date.
(b) Security. This Note shall not be secured by any assets of the Borrower.
(c) Default Rate of Interest. Notwithstanding the foregoing provisions of this
Section 1, but subject to applicable law, any overdue principal of and overdue Interest on this
Note shall bear interest for each day from the date payment thereof was due to the date of actual
payment, at a rate equal to fifteen percent (15%) per annum payable as provided in Section 1(a)
above.
(d) No Usurious Interest. In the event that any interest rate(s) provided for in this
Section 1, shall be determined to be unlawful, such interest rate(s) shall be computed at the
highest rate permitted by applicable law. Any payment by the Borrower of any interest amount in
excess of that permitted by law shall be returned to the Borrower.
2. Payment.
(a) Cash. Subject to Section 2(b), payment of the principal amount and accrued
Interest under this Note shall be made by the Borrower on the Maturity Date in pounds sterling.
b) Shares. If the Borrower fails to pay its obligations under this Note in cash on
the Maturity Date, the Holder may thereafter elect by notice to the Borrower to receive
payment in shares of common stock of the Borrower (“ACE*COMM Stock”). If the Holder
makes such an
election, the pounds sterling principal amount and accrued Interest shall be converted into US
Dollars at the Exchange Rate, and the Borrower shall issue ACE*COMM Stock to Holder equal in value
(as specified below) to the sum of (i) the principal amount of the Note and (ii) the accrued
Interest on such portion. For purposes of this Note, the value of the ACE*COMM Stock shall be the
volume weighted average price of ACE*COMM Shares as reported by Bloomberg, LP (or another similar
service that Sellers and Buyer may agree upon in writing) during the trading hours from 9:30 a.m.
to 4:00 p.m., U.S. Eastern Time for the 10 trading days preceding the Maturity Date. For the
purposes of this Section 2(b), the “Exchange Rate” means the mid market spot rate for the
conversion of pounds sterling into US Dollars as published in the London edition of the Financial
Times on the business day preceding the date of issuance of the ACE*COMM Stock.
(c) Registration of ACE*COMM Stock. The Borrower agrees to register the ACE*COMM
Stock issued pursuant to this Note with the Securities and Exchange Commission in the same way as
Earn-Out Exchange Shares pursuant to the terms and conditions set forth in Clause 15 of
the Purchase Agreement by and among Borrower, Holder and Xxxx Xxxxxxx dated as of March 24, 2005,
as amended (the “Purchase Agreement”).
(d) No Prepayment. The Borrower shall not prepay any part of the principal amount of
or Interest accrued on this Note.
(e) Maximum Number of Shares Issuable. Notwithstanding the foregoing, the aggregate
amount of ACE*COMM Stock that may be issued under this Note, together with the ACE*COMM Stock
issued under the Purchase Agreement on or about 24 March 2005 and that is issued under the four
other notes entered into by the Borrower or its affiliates on or about 24 March 2005 and the date
hereof pursuant to the Purchase Agreement, may not exceed 19.999% of the ACE*COMM Stock outstanding
immediately prior to the completion under the Purchase Agreement, unless the Borrower obtains
shareholder approval under the rules of the Nasdaq trading market on which the ACE*COMM Stock is
then listed to exceed such limit. To the extent the Borrower is prevented by such limitation from
issuing ACE*COMM Stock in payment of this Note, whether principal or Interest, the Note shall,
notwithstanding an election by the Holder pursuant to Section 2(b), be paid in cash.
3. Events of Default. The following shall constitute an “Event of Default” hereunder:
(a) Xxxxxxxx’s insolvency, general assignment for the benefit of creditors, or the final
judgment by or against Borrower of any case, proceeding, or other action seeking reorganization,
arrangement, adjustment, liquidation, dissolution, or composition of Borrower’s debts under any law
relating to bankruptcy, insolvency, or reorganization, or relief of debtors, or seeking appointment
of a receiver, trustee, custodian, or other similar official for Borrower or for all or any
substantial part of Buyer’s assets.
(b) Borrower’s common stock being delisted from trading on the Nasdaq Small Caps Market unless
it commences trading on the Nasdaq National Market or American Stock Exchange.
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4. Remedies. Upon the occurrence of an Event of Default, Holder shall have the right
to cause the entire unpaid principal balance, together with all accrued Interest thereon,
reasonable attorneys’ fees and all fees, charges, costs and expenses, if any, owed by Borrower to
Holder, to become immediately due and payable in full by giving written notice to Borrower. In
addition, upon the occurrence of an Event of Default, Holder may avail itself of any legal or
equitable rights which Holder may have at law or in equity or under this Note. The remedies of
Holder as provided herein shall be distinct and cumulative, and may be pursued singly, successively
or together, at the sole discretion of Holder, and may be exercised as often as occasion therefor
shall arise. Failure to exercise any of the foregoing options upon the occurrence of an Event of
Default shall not constitute a waiver of the right to exercise the same or any other option at any
subsequent time in respect to the same or any other Event of Default, and no single or partial
exercise of any right or remedy shall preclude other or further exercise of the same or any other
right or remedy.
5. Amendment. Amendments and modifications of this Note may be made only in a writing
executed by the Borrower and the Holder.
6. Assignment. The Holder may not transfer this Note without the prior written
consent of the Borrower, which approval shall not be unreasonably withheld.
7. Replacement of Note. On receipt by the Borrower of an affidavit of an authorized
representative of the Holder stating the circumstances of the loss, theft, destruction or
mutilation of this Note (and in the case of any such mutilation, on surrender and cancellation of
such Note), the Borrower, at its expense, will promptly execute and deliver, in lieu thereof, a new
Note of like tenor. If required by the Borrower, the Holder must provide indemnity sufficient in
the reasonable judgment of the Borrower to protect the Borrower from any loss which the Borrower
may suffer if a lost, stolen or destroyed Note is replaced.
8. Covenants Bind Successors and Assigns. All the covenants, stipulations, promises
and agreements in this Note contained by or on behalf of the Borrower shall bind its successors and
assigns, whether so expressed or not.
9. Notices. All notices, demands and other communications provided for or permitted
hereunder shall be made in writing and shall be by registered or certified first-class mail, return
receipt requested, telecopier (with receipt confirmed), courier service or personal delivery, to
the applicable party at its principal corporate headquarters, attention: chief executive officer.
All such notices and communications shall be deemed to have been duly given when: delivered by
hand, if personally delivered; when delivered by courier, if delivered by courier service; if
mailed, five (5) business days after being deposited in the mail, postage prepaid; or if
telecopied, when receipt is acknowledged.
10. Governing Law. This Agreement shall be governed by, construed in accordance with,
and enforced under, the laws of the State of Maryland, without regard to the conflicts of law
principles thereof.
11. Severability. If any one or more of the provisions contained herein, or the
application thereof in any circumstance, is held invalid, illegal or unenforceable in any respect
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for any reason, the validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
12. Headings. The headings in this Note are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.
IN WITNESS WHEREOF, the undersigned has duly executed this Note as of the day and year first
hereinabove set forth.
| ACE*COMM CORPORATION |
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| By: | /s/ Xxxxxx X. Xxxxxx | |||
| Senior Vice President and CFO | ||||
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