Document:

exv10w1

 

Exhibit 10.1

FY2007 INCENTIVE COMPENSATION PLAN

ICP OVERVIEW

The following information regarding the ACE*COMM Incentive Compensation Plan (ICP) is intended
as a brief summary of the Plan. Complete details are available in the Plan Document.

AWARDS:

	•	 	Target Awards are a percentage of each participant’s base salary.
	 
	•	 	Calculated Awards are based on performance achieved relative to targets established at the
beginning of the Plan Year. Award levels between the threshold and maximum will be
calculated on actual results using the following tables:

	 	 	 	 	 
	 	 	Performance	 	Percent of Target
	 	 	Relative to Plan	 	Earned
	For Revenue and Bookings:
	 	 	 	 
	 
	 	Below 90%	 	0
	 
	 	90	 	50.00%
	 
	 	91	 	55.00%
	 
	 	92	 	60.00%
	 
	 	93	 	65.00%
	 
	 	94	 	70.00%
	 
	 	95	 	75.00%
	 
	 	96	 	80.00%
	 
	 	97	 	85.00%
	 
	 	98	 	90.00%
	 
	 	99	 	95.00%
	 
	 	100	 	100.00%
	 
	 	101	 	105.00%
	 
	 	102	 	110.00%
	 
	 	103	 	115.00%
	 
	 	104	 	120.00%
	 
	 	105	 	125.00%
	 
	 	110	 	150.00%
	 
	 	115	 	175.00%
	 
	 	120	 	200.00%

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FY2007 INCENTIVE COMPENSATION PLAN

ICP OVERVIEW

	 	 	 	 	 
	 	 	Performance Relative	 	Percent of Target
	 	 	to Plan	 	Earned
	 
	 	 	 	 
	For EBITDA:
	 	Below 95%	 	0
	 
	 	95	 	50.00%
	 
	 	96	 	60.00%
	 
	 	97	 	70.00%
	 
	 	98	 	80.00%
	 
	 	99	 	90.00%
	 
	 	100	 	100.00%
	 
	 	101	 	105.00%
	 
	 	102	 	110.00%
	 
	 	103	 	115.00%
	 
	 	104	 	120.00%
	 
	 	105	 	125.00%
	 
	 	110	 	150.00%
	 
	 	115	 	175.00%
	 
	 	120	 	200.00%

Remainder of page intentionally left blank

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FY2007 INCENTIVE COMPENSATION PLAN

ICP OVERVIEW

	•	 	Calculated Awards are determined following the end of the Fiscal Year, based on the level of achievement on each
of the weighted performance targets and objectives.
	 
	•	 	Calculated Awards may be further adjusted (up or down) at the discretion of the CEO and the Committee for
exceptional circumstances (e.g. outstanding contribution not reflected in annual appraisal or performance targets
and objectives; poor demonstration of critical competencies).
	 
	•	 	Final total payout pool cannot exceed the sum of the participants’ target awards multiplied by the weighted
corporate performance factor. If awards exceed the pool, participants’ awards will be pro-rated uniformly to stay
within the pool.
	 
	•	 	Earned Awards will be paid in cash, as determined by the Committee.
	 
	•	 	No awards will be paid out if EBITDA is 50% or less of plan after accruing for awards.

PERFORMANCE MEASURES:,

	•	 	Awards will be based on performance relative to ACE*COMM Corporate, Group, Area of Business and individual
targets, as appropriate.
	 
	•	 	The Corporate Performance Component consists of Revenue, EBITDA, and Bookings.

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FY2007 INCENTIVE COMPENSATION PLAN

ICP OVERVIEW

	•	 	The Group and Area of Business Performance Components consist of financial measurements such as Revenue, EBITDA,
and Bookings.
	 
	•	 	The Individual Performance Objective consists of specific objectives reflective of each participant’s area of
responsibility with results measured on the basis of determinations by top management.
	 
	•	 	Participants who terminate prior to the end of the Fiscal Year, except for reasons of death, disability or
retirement, are ineligible to receive any Earned Award.
	 
	•	 	Participation in the ICP does not imply any contract or guarantee of employment.
	 
	•	 	The Company may modify or terminate the ICP at any time.
	 
	•	 	The final interpretation of the ICP and determination of awards shall be at the discretion of the CEO and the
Committee.

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FY2007 INCENTIVE COMPENSATION PLAN

ICP OVERVIEW

1.0 PLAN OBJECTIVES

The Plan objectives are:

	 	1.1	 	To encourage individual effort and group teamwork toward the
accomplishment of overall Company objectives which include Group, Area of
Business, and individual goals.
	 
	 	1.2	 	To reward outstanding managerial performance.
	 
	 	1.3	 	To provide total direct compensation (salary plus annual
incentive), which is competitive with the businesses with which the Company
competes and which is sufficient to ensure the Company’s ability to attract,
retain and motivate outstanding executives.
	 
	 	1.4	 	To focus the attention of participants on Corporate, Group and Area
of Business goals; other performance measures may also be used from time to
time.

2.0 DEFINITIONS

	 	2.1	 	Bookings: Awards or contracts.
	 
	 	2.2	 	Calculated: Award: Total Performance Score multiplied by
the Target Award established at the beginning of the Plan Year.
	 
	 	2.3	 	Committee: The Executive Compensation Committee of the
Board of Directors of ACE*COMM Corporation, Inc.
	 
	 	2.4	 	Company: ACE*COMM Corporation, Inc. and its affiliates.
	 
	 	2.5	 	Corporate Performance: ACE*COMM’s annual financial and
operational performance measures and specific objectives established by top
management and approved by the Committee. The attainment of these performance
objectives will be used. to determine ICP awards. For FY2007, Corporate
Performance will consist of Revenue, EBITDA, and Bookings, weighted as outlined
in the FY2007 Incentive Compensation Plan Summary.

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FY2007 INCENTIVE COMPENSATION PLAN

ICP OVERVIEW

	 	2.6	 	ACE*COMM: ACE*COMM Corporation, Inc.
	 
	 	2.7	 	Earned Award: The Calculated Award which may be
adjusted based upon a review of a participant’s contributions and other
performance considerations by top management, with input from group senior
management.
	 
	 	2.8	 	EBIT: Earnings Before Interest and Taxes; operating income
performance measure used at the Corporate level.
	 
	 	2.9	 	Free Cash Flow: Operating cash flow minus capital expenditures.
	 
	 	2.10	 	Group: The major business units of ACE*COMM Corporation,
Inc., reporting directly to the corporate level.
	 
	 	2.11	 	Group Performance: The specific financial and/or operational
targets established for each Group, the attainment of which will be the basis for
granting the Group Award Component. For FY2007, the three major Group financial
measures consist of Revenue, EBITDA, and Bookings, weighted as outlined in the
FY2007 Incentive Compensation Plan Summary.
	 
	 	2.13	 	ICP: The ACE*COMM Corporation, Inc. Incentive Compensation Plan, as
approved by the Committee.
	 
	 	2.14	 	Individual Performance Objectives: Specific performance
objectives established for each participant reflective of his/her functional area
and individual responsibilities. This also considers top management’s evaluation
of performance relative to objectives.
	 
	 	2.15	 	Invested Capital: Total assets net of intercompany
receivables less total liabilities net of intercompany payables.
	 
	 	2.16	 	Operating Income: Revenue less the sum of all allowable
expenses which typically include labor, material, overhead, SG&A and allowable
Corporate allocation plus unallowable costs which include unallowable Corporate
allocation plus amortization of good will and related intangibles.
	 
	 	2.17	 	Plan Year: The twelve month performance period for 2007
corresponding to the Company’s fiscal year, beginning July 1, 2006, and ending
June 30, 2007.
	 
	 	2.18	 	Retirement: The voluntary termination of employment of the
participant.
	 
	 	2.19	 	Revenue: The actual sales revenue results achieved during
the Plan Year as reported in ACE*COMM’s audited Profit & Loss Statement.

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FY2007 INCENTIVE COMPENSATION PLAN

ICP OVERVIEW

	 	2.20	 	Area of Business: A major business area of a Group,
reporting directly to the Group level.
	 
	 	2.21	 	Area of Business Performance: The specific financial and/or
operating targets established for each Area of Business, the attainment of which
will be the basis for granting the Area of Business Award Component. For FY2007,
the three major Area of Business financial measures consist of Revenue, EBITDA,
and Bookings, weighted as outlined in the FY2007 Incentive Compensation Plan
Summary.
	 
	 	2.22	 	Target Award: The established award a participant is
eligible to receive if all performance requirements are achieved at 100%. The
Target Award is shown as a percentage of the participant’s base salary.
	 
	 	2.23	 	Target Performance Level: The fully satisfactory performance
level at which awards will equal 100% of the Target Award established for that
performance measure.
	 
	 	2.24	 	Threshold Performance Level: The minimum level of acceptable
performance for which incentive awards will be earned for any of the established
performance objectives or measures.
	 
	 	2.25	 	Total Performance Score: The sum of all of the performance
scores.

3.0 PARTICIPATION

	 	3.1	 	Participation is limited to the officers and key managers of ACE*COMM, who
are selected by top management. Participants must have an on-going opportunity
to contribute significantly to the success and profitability of ACE*COMM.
	 
	 	3.2	 	A participant who has been employed by ACE*COMM for less than one
year, but more than six months, may receive a pro-rated Earned Award. A
participant employed by the Company for less than six months may be eligible to
receive a pro-rated Earned Award at the discretion of the CEO, subject to
approval of the Committee.

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FY2007 INCENTIVE COMPENSATION PLAN

ICP OVERVIEW

4.0 PERFORMANCE MEASURES

	 	4.1	 	Corporate Financial Performance targets will be established annually by top
management and approved by the Committee, based on the desired performance
consistent with ACE*COMM’s Strategic Business Plan. The Earnings related targets
will contain accruals to cover ICP awards.
	 
	 	4.2	 	The Committee will establish the Target Threshold (minimum) for each
financial performance measure each year. For FY2007, the Target minimums and
maximums are shown in the tables on pages 1 and 2.
	 
	 	4.3	 	Individual Performance Objectives will be established for each
participant that focus attention on measurable key desired results.
	 
	 	4.4	 	The relative weighting of the performance components (appropriate
Corporate, Group, Area of Business, and individual for each position) will be
established for each Plan Year, based on the desired focus.

5.0 TARGET AWARDS

Target Award levels are based upon a percentage of each participant’s base salary.

6.0 DETERMINATION OF EARNED AWARDS

	 	6.1	 	Earned Awards reflect achievement of Corporate, Group, Area of Business,
and/or individual objectives, which are indicative of each participant’s
performance and contribution. Each component may range from 0% to 200% of Target
Performance.

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FY2007 INCENTIVE COMPENSATION PLAN

ICP OVERVIEW

	 	6.3	 	The Calculated Award is the sum of the weighted performance
components. The Earned Award is determined by multiplying the Calculated Award
by a discretionary portion as determined by top management.
	 
	 	6.4	 	Actual Earned Awards will be calculated and rounded to the nearest
one hundred dollars.
	 
	 	6.5	 	Earned Award recommendations will be reviewed and approved by the
CEO. The Committee and the Board of Directors will approve the overall award
budget, as well as the specific awards payable to the CEO and his direct
subordinates and Group Presidents.

7.0 AWARD DISTRIBUTION

	 	7.1	 	A participant must be actively employed through the last day of the Fiscal
Year (i.e., June 30) in order to be eligible to receive an Earned Award.
	 
	 	7.2	 	Earned Awards will be calculated and paid within a reasonable
period following the end of the Plan Year.
	 
	 	7.3	 	Participants who terminate during the Plan Year due to death,
disability or retirement may receive a pro-rated Earned Award at the conclusion
of the Plan Year, as determined by top management and the Committee.
	 
	 	7.4	 	During the Plan Year, in the event that a participant voluntarily
terminates his/her employment with the Company, or he/she is terminated by the
Company for cause, he/she will be ineligible to receive any Earned Award at the
conclusion of the Plan Year.
	 
	 	7.5	 	If a participant is terminated by the Company other than for cause
(e.g., job elimination, poor performance, etc.), he/she may be eligible to
receive a pro-rated award after the conclusion of the Plan Year, at the sole
discretion of the CEO.
	 
	 	7.6	 	In the event that a participant’s status changes during the Plan
Year as a result of promotion, demotion, position re-evaluation or
re-assignment, the Target Award may be changed following review and approval by
top management. Awards will typically be prorated based on the amount of time
spent in each position and the corresponding Target Awards and base salary.

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FY2007 INCENTIVE COMPENSATION PLAN

ICP OVERVIEW

8.0 GENERAL

	 	8.1	 	The CEO or his designee shall be responsible for the implementation and
on-going administration of the Plan.
	 
	 	8.2	 	Interpretation of all matters related to this Plan, including, but
not limited to, eligibility, calculation and determination of Earned Awards, as
well as the resolution of any questions relating to accounting of the Plan,
shall be at the sole and final discretion of the CEO and the Committee.
	 
	 	8.3	 	The Company may amend or discontinue this Plan at any time with
respect to future awards; however, any awards earned up to the date of
modification or termination will be distributed in accordance with Plan
provisions at the time they were earned.
	 
	 	8.4	 	Nothing in this Plan shall be interpreted as giving any participant
the right to be retained as an employee of the Company, or of limiting the
Company’s rights to control or terminate the service of any employee at any time
in the course of its business.

10exv10w2

 

Exhibit 10.2

AGREEMENT

     THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of the 1st day of
December, 2006, by and between ACE*COMM Corporation, a Maryland corporation (the “Company”), having
an address at 704 Quince Orchard Road, Gaithersburg, Maryland 20878 and George T. Jimenez (the
“Executive”), currently residing at 2535 Tarpon Road, Naples, FL 34102.

     WHEREAS, the Executive desires to enter into an agreement of employment with the Company in
accordance with the terms and conditions set forth herein; and

     WHEREAS, the Company desires to employ the Executive as its Chairman, Chief Executive Officer
and Treasurer in accordance with the terms and conditions set forth herein;

     NOW, THEREFORE, in consideration of the premises and mutual agreements herein contained, the
parties hereto, intending legally to be bound, hereby agree as follows:

	1.	 	Term of Employment. The initial term of employment shall begin on the date set forth
above (the “Effective Date”) and shall continue in effect until the second anniversary of the
Effective Date (such period being the “Initial Term”). On the second anniversary of the
Effective Date and on subsequent anniversaries, the term of employment shall automatically
renew for successive two year periods, unless at least thirty (30) days prior to the end of
such renewal date either party hereto gives written notice to the other party of its intention
not to renew the term of employment. As provided below, this Agreement shall remain in effect
following a Change in Control. The Executive’s employment may be terminated at any time
during the Initial Term or during any renewal term solely in accordance with the terms and
conditions of Section 5 hereof.

	2.	 	Duties.

	 	2.1	 	Position. The Company hereby employs the Executive in an executive
capacity with the title of Chairman, Chief Executive Officer and Treasurer, and the
Executive hereby accepts such employment and undertakes and agrees to serve in such
capacity. In such capacity, the Executive shall have such powers, perform such duties
and fulfill such responsibilities typically associated with such positions in other
publicly held companies. The Executive shall devote substantially all of his working
time and efforts to the performance of his duties hereunder. The Executive shall
report directly to the Board of Directors (the “Board”) of the Company and have the
authority to hire and discharge any employee within his area of responsibility.
	 
	 	2.2	 	Limitation on Other Employment. During the term of his employment
hereunder, the Executive will not engage in any other occupation for gain, profit or
pecuniary advantage, without the consent of the Board of Directors of the Company;
provided, however, that this limitation shall not be construed as preventing him from
(a) serving on the board of directors of any corporation not directly competitive with
the Company (provided that the Executive has obtained the approval of the Board prior
to commencing such service), and (b) investing or

 

 

	 	 	 	trading in securities or other forms of investment, in each case so long as such
activities do not materially interfere with the performance of his duties hereunder
and such investments do not represent the ownership of 5% or more of the capital
stock of publicly traded entities.

	3.	 	Compensation.

	 	3.1	 	Base Salary. In consideration of the services rendered hereunder, the
Company shall pay the Executive during the Initial Term of this Agreement a base salary
at the rate of Two Hundred Fifty Thousand ($250,000) per annum or such higher rate as
the Board may in their discretion determine (“Base Salary”), which amount will be
payable to him in bi-weekly installments (or at such intervals as other salaried
employees of the Company are paid). The amount of the Executive’s Base Salary shall be
reviewed annually by the Board but shall not be reduced without written consent of the
Executive.
	 
	 	3.2	 	Incentive Compensation.

	 	(a)	 	The Executive will be eligible to participate in the ACE*COMM
Incentive Compensation Plan (“ICP”) at a level commensurate with his position.
Specific annual entitlements to bonus awards shall be predicated on the
Executive’s performance and subject to the Company achieving its operating
targets, consistent with the rules set forth in the ICP.
	 
	 	(b)	 	The Executive shall participate in all other Bonus, Long-Term
Capital Accumulation and/or Stock-Based Programs that the Company may adopt
from time to time for senior executives.

	4.	 	Benefits.

	 	4.1	 	Benefit Program. The Executive will be eligible to participate in the
group insurance plans (“Insurance Plans”), retirement plans, and other benefits plans
and arrangements (such retirement and other benefit plans and arrangements, together
with the Insurance Plans, the “Benefit Program”) available to executives of the
Company, as such plans may be or have been adopted from time to time in the Company’s
discretion. Nothing in this Agreement shall affect the Company’s right to change
insurance carriers and to adopt, amend, or terminate such plans and arrangements at any
time. The Company will provide to the Executive the specific benefits listed on
Schedule A hereto.
	 
	 	4.2	 	Employee Time Off. Employee Time Off will be provided as customary for
executives when necessary and convenient for both ACE*COMM and the Executive; and no
Employee Time Off will be accrued or paid out at any time.
	 
	 	4.3	 	Automobile. In accordance with Company policy as established from time
to time, the Company will provide the Executive with an automobile of a type mutually
agreed upon and the Company will pay, or reimburse him for, all

 

 

	 	 	 	business related operating expenses of such automobile (including, without
limitation, insurance, service, repairs, gasoline and oil).
	 
	 	4.4	 	Expense Reimbursement. In accordance with the policies and procedures
which may be adopted from time to time by the Company and upon presentation by the
Executive of sufficient documentation and substantiation of such expenses, the Company
will reimburse the Executive for his ordinary and customary business expenses incurred
in the performance of his duties hereunder.

	5.	 	Termination.

	 	5.1	 	Termination by the Company for Cause.

	 	(a)	 	Definition. The Company may terminate the Executive’s
employment hereunder for “Cause” which shall be limited to:

	 	(i)	 	Neglect or dereliction in the performance of
the Executive’s duties or other similar misconduct by him and the
failure to cure such situation within ten (10) days after receipt of a
notice thereof from the Board of Directors,
	 
	 	(ii)	 	The Executive’s engaging in conduct which has
caused material injury to the Company, monetary or otherwise, as
determined by the Board of Directors,
	 
	 	(iii)	 	The Executive’s engaging in conduct
constituting a breach of fiduciary duty to the Company, or the
Executive’s commission of an act of dishonesty, disloyalty, or fraud
with respect to the Company,
	 
	 	(iv)	 	The Executive’s breach of this Agreement,
	 
	 	(v)	 	The Executive’s material violation of the code
of conduct adopted by the Board of Directors or any other written
Company policy of similar significance, or
	 
	 	(vi)	 	The Executive’s conviction of, or plea of
guilty or nolo contendere to, any felony or any crime which involves
the property of the Company or dishonesty, disloyalty, or fraud with
respect to the Company.

	 	(b)	 	Compensation upon Termination for Cause. Upon the
termination of the Executive’s employment for Cause, the Company shall pay the
Executive his Base Salary and prorated target incentive compensation, if any,
and shall permit his continued participation in the Benefit Program through the
effective date of such termination.

 

 

	 	5.2	 	Termination for Disability or Death.

	 	(a)	 	Disability. The Company may terminate the Executive’s
employment hereunder in the event of the Executive’s permanent disability. For
the purposes of this Agreement, permanent disability shall mean the Executive’s
inability, whether mental or physical, to perform the regular duties of his
employment on a full-time continuous basis for six (6) consecutive months (the
“Disability Period”). If a policy of disability insurance maintained by the
Company is in effect insuring the Executive, then in no event shall Executive
be deemed to be disabled until he is determined to be entitled to receive
disability income payments pursuant to such disability policy. During the
Disability Period the Company shall (i) pay the Executive his full Base Salary
then in effect, as well as any ICP benefit to which he would otherwise be
entitled, reduced by any amounts which he actually received under any
disability plan maintained by the Company during the Disability Period, and
(ii) shall continue his participation in the Benefit Program subject to the
terms and conditions of the plans and arrangements. The Company shall notify
the Executive in writing of its determination that he has a permanent
disability. If the Executive disputes the Company’s determination that he has
a permanent disability, then the question shall be decided by a panel of three
physicians, one to be designated by the Company, one by the Executive and one
by the first two so designated. The determination of the panel shall be final
and binding upon the parties with costs of the panel to be paid by the Company.
	 
	 	(b)	 	Death. The Executive’s employment hereunder will
terminate upon the Executive’s death without any further notice or action
required by the Company.
	 
	 	(c)	 	Compensation Upon Termination For Disability or Death.

	 	(i)	 	If the Company terminates the Executive’s
employment due to permanent disability, pursuant to Subsection 5.2(a)
herein, the Company shall pay the Executive his monthly Base Salary
then in effect for two (2) years after his termination, reduced by any
amounts which he actually receives under any disability plan maintained
by the Company and shall pay the Executive when due, a pro-rata portion
of the bonus determined pursuant to (iii) below corresponding to the
period of his active employment during the termination year.
	 
	 	(ii)	 	If the Executive’s employment is terminated due
to his death, pursuant to Subsection 5.2(b) herein, the Company shall
pay the Executive’s estate or designated beneficiary (A) the
Executive’s Base Salary and any other amounts due or earned through the
date of death, (B) until the end of the fiscal year in which the date
of death occurred, or, if greater, for three months following the date

 

 

	 	 	 	of death, the Executive’s Base Salary as in effect (offset by any
proceeds paid to the Executive from any Company-maintained life
insurance policy), and (C) a pro-rata portion of the bonus determined
pursuant to (iii) below corresponding to the period of his employment
during the termination year.
	 
	 	(iii)	 	For purposes of determining the bonus payable
in the year of termination, the Company shall pay a bonus equal to the
amount of the current year’s target bonus which could have been paid to
Executive for the year of termination, pro-rated for the period of his
employment during the termination year.

	 	(d)	 	Insurance Plans upon Termination for Death or
Disability.

	 	(i)	 	If the Company terminates the Executive’s
employment due to his permanent disability, pursuant to Subsection
5.2(a) herein, the Company shall continue to provide him and his
dependents coverage under the Insurance Plans, at his option, for the
longer of two (2) years or the period required by applicable law. The
Company shall provide such coverage at its expense (except with respect
to those costs for which the Executive was responsible prior to the
termination of employment).
	 
	 	(ii)	 	If the Executive’s employment is terminated due
to his death, pursuant to Subsection 5.2(b) herein, the Company shall
continue to provide the Executive’s dependents medical insurance
coverage, at their option, for the longer of two (2) years after his
death or the period required by applicable law. The Company shall
provide such coverage at its expense (except for those costs for which
the Executive was responsible prior to his death).
	 
	 	(iii)	 	In the event the continued coverage
contemplated by Subsections 5.2(d)(i) and (ii) is not permitted by the
Insurance Plans, then the Company for the period specified above will
instead pay the Executive or the Executive’s dependents (in the event
of the Executive’s death) the monetary value of the premium(s) that it
would have paid on the Executive’s behalf if such continued coverage
were permitted.

	 	5.3	 	Termination By The Executive.

	 	(a)	 	Good Reason. The Executive may terminate his
employment hereunder for “Good Reason,” which shall be limited to: (i) the
failure by the Company (or its stockholders as the case may be) to elect or
reelect or to appoint or reappoint the Executive to the offices of Chairman,
Chief Executive Officer and Treasurer (ii) the occurrence, without the written
consent of the Executive, of an event constituting a material breach of this
Agreement by the Company, or (iii) a Change in Control (as defined in

 

 

	 	 	 	Section 5.3(c) herein) and any one of the following events occurring within
one (1) year after such Change in Control:

	 	(A)	 	the assignment to the Executive of any material
duties inconsistent with the Executive’s then status as an executive
officer of the Company or a substantial adverse alteration in the
nature of the Executive’s responsibilities from those in effect
immediately prior to the Change in Control;
	 
	 	(B)	 	a reduction by the Company in the Executive’s
Base Salary as in effect immediately prior to the Change in Control;
	 
	 	(C)	 	a reduction in the aggregate percentage upon
which the Executive’s Incentive Compensation is determined unless
equivalent reductions are made generally for other executives of the
Company;
	 
	 	(D)	 	the relocation of Executive’s principal place
of employment, without his consent, to a location more than twenty (20)
miles from the place of such employment immediately prior to the Change
in Control;
	 
	 	(E)	 	The failure by the Company to provide the
Executive with benefits substantially similar to those enjoyed by the
Executive under the Benefit Program immediately prior to the Change in
Control, any action by the Company which materially reduces the Benefit
Program (other than general reductions that are applicable to other
executives too), or the failure by the Company to provide the Executive
with paid Employee Time Off as provided to Executive immediately prior
to Change in Control;
	 
	 	(F)	 	The failure of a successor to the Company to
expressly assume and agree to perform this Agreement pursuant to
Section 5.5 herein.

	 	 	 	The Executive understands and agrees that none of the foregoing events shall
constitute Good Reason unless and until the Executive provides written
notice to the Company identifying the asserted grounds for Good Reason and
such notice is provided to the Company within ninety (90) days of such
event. The Executive further understands and agrees that the events
described above shall not constitute Good Reason unless and until the
Company fails to cure such asserted grounds for Good Reason within twenty
(20) days of its receipt of such notice from the Executive.

	 	(b)	 	Compensation and Benefits upon Termination By The
Executive.

	 	(i)	 	In the event of a termination of this Agreement
by the Executive without Good Reason, the Company shall pay him his
Base Salary and the prorated portion of the target bonus, if any,
determined

 

 

	 	 	 	pursuant to Section 5.2(c)(iii) and shall permit his continued
participation in the Benefit Program through the effective date of
such termination.
	 
	 	(ii)	 	If the Executive terminates his employment
hereunder for Good Reason, (A) if there has not occurred a Change in
Control, the Company shall also pay him a severance payment equal to
twenty-four (24) months of his Base Salary then in effect (paid as
salary continuation for the twenty-four months following the notice of
termination), plus the pro-rata portion of the target bonus determined
pursuant to Section 5.2(c)(iii); (B) if there has occurred a Change in
Control, the Company shall pay him a severance payment in a lump sum
equal to the sum of the target bonus plus 400% of his annual Base
Salary then in effect, and (C) in either case, the Executive’s
employment shall be deemed to continue for the balance of the term
identified in Section 1 above for purposes of determining his
participation in the Company’s medical and dental insurance plans;
provided, however, that if such participation by him after termination
of employment is not permitted under such plans, the Company will
instead pay the Executive the monetary value of the premium(s) that it
would have paid on the Executive’s behalf if such continued coverage
were permitted. The Company will pay the total costs of the
Executive’s participation in such plans or the equivalent thereof. If
during the period the Executive would have full use of the
Company-supplied automobile, the Company will instead pay the Executive
the monetary value of the car lease payments that it would have paid to
obtain the use of such automobile. The Executive also will be provided
out-placement assistance utilizing a consultation service designated
and paid for by the Company. Furthermore, all stock options granted to
Executive shall immediately vest and be exercisable for a period of 24
months following termination.

	 	(c)	 	Definition of Change in Control. A “Change in Control”
shall mean the occurrence of an event set forth in any one of the following
paragraphs:

	 	(i)	 	any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company (not including in
the securities beneficially owned by such Person any securities
acquired directly from the Company or its affiliates) representing 20%
or more of the combined voting power of the Company’s then outstanding
securities, excluding any Person who becomes such Beneficial Owner in
connection with a transaction described in clause (A) of paragraph
(iii) below and excluding a transaction whereby a person becomes the
Beneficial Owner of 20% or more of the combined voting power of the
Company’s then outstanding

 

 

	 	 	 	securities, but such transaction does not transfer the power to
control the management or the policies of the Company; or
	 
	 	(ii)	 	the following individuals cease for any reason
to constitute a majority of the number of directors then serving:
individuals who, on the Effective Date, constitute the Board and any
new director (other than a director whose initial assumption of office
is in connection with an actual or threatened election contest,
including but not limited to a consent solicitation, relating to the
election of directors of the Company) whose appointment or election by
the Board or nomination for election by the Company’s stockholders was
approved or recommended by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors on the
Effective Date or whose appointment, election or nomination for
election was previously so approved or recommended; or
	 
	 	(iii)	 	there is consummated a merger or consolidation
of the Company or any direct or indirect subsidiary of the company with
any other corporation, other than (A) a merger or consolidation which
would result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent thereof) at
least 60% of the combined voting power of the securities of the Company
or such surviving entity or any parent thereof outstanding immediately
after such merger or consolidation, or (B) a merger or consolidation
effected to implement a recapitalization of the Company (or similar
transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company (not including in
the securities Beneficially Owned by such Person any securities
acquired directly from the Company or its Affiliates other than in
connection with the acquisition by the Company or its Affiliates of a
business) representing 20% ore more of the combined voting power of the
Company’s then outstanding securities; or
	 
	 	(iv)	 	the stockholders of the Company approve a plan
of complete liquidation or dissolution of the Company or there is
consummated an agreement for the sale or disposition by the Company of
all or substantially all of the Company’s assets, other than a sale or
disposition by the Company of all or substantially all of the Company’s
assets to an entity, at least 60% of the combined voting power of the
voting securities of which are owned by the stockholders of the Company
in substantially the same proportions as their ownership of the Company
immediately prior to such sale.

 

 

For purposes of this Section 5.3(c), the following definitions shall apply: “Person” shall
have the meaning given in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended
(the “Act”), as modified and used in Section 13(d) thereof, except that such term shall not
include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any of its Affiliates,
(iii) an underwriter temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock of the Company.
“Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Act.
“Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of
the Act.

	 	5.4	 	Termination by the Company other than for Cause.

	 	(a)	 	Compensation Upon Termination by the Company other than for
Cause. If the Company terminates the Executive’s employment hereunder
without “Cause,” the Company shall pay the Executive a severance payment equal
to twenty-four (24) months of his Base Salary then in effect (paid as salary
continuation for the twenty-four months following the notice of termination),
plus the pro-rata portion of the target bonus determined pursuant to Section
5.2(c)(iii).
	 
	 	(b)	 	Benefits Upon Termination by the Company other than for
Cause. If the Company terminates the Executive’s employment hereunder
without “Cause,” the Executive’s employment shall be deemed to continue for the
balance of the term identified in Section 1 above for purposes of determining
his participation in the Company’s medical and dental insurance plans;
provided, however, that if such participation by him after termination of
employment is not permitted under such plans, the Company will pay for
equivalent coverage. The Company will pay the total costs of the Executive’s
participation in such plans or the equivalent thereof. If during this period
the Executive would have full use of the Company-supplied automobile, the
Company will instead pay the Executive the monetary value of the car lease
payments that it would have paid to obtain the use of such automobile. The
Executive also will be provided with out-placement assistance utilizing a
consultation service designated and paid for by the Company. Furthermore, all
stock options granted to Executive shall immediately vest and be exercisable
for a period of 24 months following termination.

	 	5.5	 	Successor. The Company, or any entity which controls the Company,
shall require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business assets of the
Company by written agreement expressly to assume and agree to perform this Agreement in
the same manner and to the same extent as the Company would be required to perform if
no such succession had occurred. As used in this Agreement, “Company” shall mean the
Company as defined above and any

 

 

	 	 	 	successor to all or substantially all of its business or assets which becomes bound
by all of the terms and conditions of this Agreement.
	 
	 	5.6	 	Requirement of a General Release. The Executive agrees that, as a
condition to receiving the compensation and benefits described in Sections 5.3(b),
5.4(a), or 5.4(b), the Executive will first execute a general release of claims in a
form acceptable to the Employer. The compensation and benefits shall begin within ten
(10) business days following the later of the Company’s receipt of the general release
of claims or the expiration of the revocation period (to the extent that there is a
revocation period) without the general release of claims being revoked by the
Executive.

	6.	 	Restrictions.

	 	6.1	 	Confidential Information. The Executive agrees that during and after
the period of his employment he will not, without authorization from the Company,
divulge, disclose or otherwise communicate to any person or company any confidential or
proprietary information pertaining to the Company’s business, functions or operations,
products, services, plans strategies, financial performance, customers, employees, or
contracts (collectively, “Confidential Information”), except in connection with the
discharge of his duties hereunder, or pursuant to the order of a court of competent
jurisdiction. The Executive and the Company agree that the term “Confidential
Information” shall have the broadest possible meaning permitted by law and shall
include any and all information described in the Company’s standard confidentiality
agreement with employees. The Executive further agrees that, upon termination of his
employment with the Company for any reason, he will promptly return to the Company all
books and records of or pertaining to the Company’s business, and all other property
belonging to the Company which is in his custody or possession.
	 
	 	6.2	 	Non-Compete. During his employment by the Company and for twelve (12)
months thereafter regardless of how his employment ends, subject to Section 2.2 above,
the Executive shall not anywhere in the United States or in any other country in which
the Company markets or sells its products or services: (i) solicit or encourage any
client or customer of the Company to terminate, reduce or alter in a manner adverse to
the Company any existing business arrangements with it; (ii) provide services to any
entity as an employee, consultant, contractor, partner, director, officer, agent, or
contractor if the entity competes with the Company by engaging in the Business and the
services to be provided by the Executive are substantially similar to or otherwise
competitive with those previously provided by the Executive to the Company; or (iii)
own an interest in any entity that competes with the Company by engaging in the
Business, provided, however, that the Executive may own, as a passive investor,
securities of any such entity that has outstanding publicly traded securities so long
as the Executive’s direct holdings in any such entity shall not in the aggregate
constitute more than 5% of the voting power of such entity. For the purposes of
Section 6.2, the “Business” shall mean the matters described in the Company’s Annual
Report on Form 10-K filed immediately prior to the end of the Executive’s employment,
and the entities

 

 

	 	 	 	that “compete with the Company” shall include without limitation those companies
listed as competing with the Company in the Company’s Annual Report on Form 10-K
filed immediately prior to the end of the Executive’s employment. Without the prior
written approval of the Board, the Executive further agrees that during the twelve
(12) month period following the termination of his employment for any reason, he
will not solicit for employment any employee of the Company or any person who was
employed by the Company within three (3) months of such solicitation. It is further
agreed and understood that the Executive shall not engage in any conduct or
communication which shall disparage the Company or interfere with its current or
prospective business relationships.
	 
	 	6.3	 	Modification/Severability. If any of the restrictions contained in
Section 6 are determined by any court of competent jurisdiction or other adjudicator to
be unenforceable by reason of their extending for too great a period of time or over
too great a geographical area or by reason of their being too extensive in any other
respect, then the Executive and the Company agree that the court or adjudicator shall
interpret and modify such restriction(s) to be effective for the maximum period of time
for which it/they may be enforceable and over the maximum geographical area as to which
it/they may be enforceable and to the maximum extent in all other respects as to which
it/they may be enforceable. The Executive and the Company further agree that such
modified restriction(s) shall be enforced by the court or adjudicator. In the event
that modification is not possible, then the Executive and the Company agree that,
because each of the Executive’s obligations in Section 6 is a separate and independent
covenant, any unenforceable obligation shall be severed and all remaining obligations
shall be enforced.

	7.	 	Legal Matters.

	 	7.1	 	Resolutions of Conflict. Other than for any claims or causes of action
which, in whole or in part, assert any violation by the Executive of Section 6, any and
all disputes, claims and controversies between the parties hereto concerning the
validity, interpretation, performance, termination or breach of this Agreement, which
cannot be resolved by the parties within ninety (90) days after such dispute, claim or
controversy arises shall, at the option of either party, be referred to and finally
settled by arbitration. Such arbitration shall be initiated by the initiating party
giving notice (the “Arbitration Notice”) to the other party (the “Respondent”) that it
intends to submit such dispute, claim or controversy to arbitration. Each party shall,
within thirty (30) days of the date of the Arbitration Notice is received by the
Respondent, designate a person who is approved as an American Arbitration Association
arbitrator to act as an arbitrator, if either party fails to designate a person to Act
as an arbitrator within the time specified herein the arbitration shall be conducted by
the sole designated arbitrator. The two arbitrators appointed by the parties shall,
within thirty (30) days after their designation appoint a third arbitrator who shall
act as presiding arbitrator (the “Presiding Arbitrator”). If the two arbitrators
designated by the parties are unable to appoint a Presiding Arbitrator, the Presiding
Arbitrator shall be appointed

 

 

	 	 	 	according to the rules of the American Arbitration Association as in effect on the
date the notice of submission to arbitration is given (the “Rules”).
	 
	 	 	 	Such arbitration shall be held in the Gaithersburg, Maryland area in accordance with
the Rules except as otherwise expressly provided herein. The arbitrators shall, by
majority vote, render a written decision stating reasons therefore in reasonable
detail within three (3) months after the appointment of all the arbitrators. Each
party shall bear its own costs and attorneys fees. All other costs and expenses of
arbitration shall be apportioned between the parties by the arbitrators. The award
of the arbitrators shall be final and binding, and judgment thereon may be rendered
by any court having jurisdiction thereof, or application may be made to such court
for the judicial acceptance of the award and an order of enforcement as the case may
be.
	 
	 	7.2	 	Notices. All notices, requests, consents and other communications,
required or permitted to be given hereunder, shall be in writing and shall be deemed to
have been duly given if delivered personally or mailed first class, postage prepaid, by
registered or certified mail, addressed to either party at the address first written
above (or to such other address as either party shall designate by notice in writing to
the other party in accordance herewith).

	8.	 	Miscellaneous.

	 	8.1	 	Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Maryland applicable to agreements
made and to be performed within Maryland, without regard to the principles of conflict
of laws.
	 
	 	8.2	 	Headings. The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of this
Agreement.
	 
	 	8.3	 	Entire Agreement. This Agreement sets forth the entire agreement and
understanding of the parties relating to the subject matter hereof, and from and after
the date hereof supersedes all prior agreements, arrangements and understandings,
written or oral, relating to the subject matter hereof provided, however, that the
benefits conferred under this Agreement are in addition to, and not in lieu of, any and
all benefits conferred under plans and arrangements currently in effect for the
Executive.
	 
	 	8.4	 	Assignment. This Agreement is binding upon and shall inure to the
benefits of the Executive and his estate, but the Executive’s rights and obligations
hereunder may not be assigned or pledged by him.
	 
	 	8.5	 	Modification. This Agreement may be amended, modified, superseded,
canceled, renewed or extended, and the terms or covenants hereof may be waived, only by
written instrument executed by both of the parties hereto or in the case of a waiver,
by the party waiving compliance.

 

 

	 	8.6	 	Section 162(m). In the event compensation payable to the Executive
hereunder in any single tax year would result in the non-deductibility of a portion of
such compensation by the Company solely by reason of Section 162(m) of the Internal
Revenue Code of 1986, as amended, then, and in such event, the Company shall be
permitted to defer payment of such non-deductible amount to the Executive to be paid to
him on the first day of the succeeding tax year of the Company.

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement with legal and
binding effect as of the day and year first above written.

	 	 	 	 	 
	 	ACE*COMM CORPORATION

 	 
	 	/s/ Paul G. Casner	 
	By:  	Paul G. Casner, Chairman, Compensation 	 
	 	Committee of the Board 	 
	 
	 	THE EXECUTIVE

 	 
	 	/s/ George T. Jimenez 	 
	 	George T. Jimenez 	 
	 	 	 	 
	 

 

 

SCHEDULE A

	 	 	 
	Group Plans

	 	Benefit
	 
	 	 
	ACE*COMM Group Medical Plan

	 	Varies
	 
	 	 
	ACE*COMM Group Life Insurance Plan

	 	Two times annual salary, up to
maximum of $500,000, with
reduction in benefits at age 70
and age 75.
	 
	 	 
	ACE*COMM Group Short-Term Disability Plan

	 	70% of weekly earnings after 14
Days, continuing up to 11 weeks.
Maximum weekly benefit is
$1,000, with reduction in
benefit depending on age at time
of disability.
	 
	 	 
	ACE*COMM Group Long-Term Disability Plan

	 	60% of monthly earnings after 90
days. Maximum monthly benefit
is $10,000, with reduction in
benefit depending on age at time
of disability. Benefit is
reduced at retirement age.
	 
	 	 
	Executive Plans/Benefits
	 	 
	 
	 	 
	Supplemental Disability Policy

	 	Benefit paid if executive
becomes totally disabled.
Benefit for over age 65 —
$6,900 per month for benefit
period of two years. Over age
75 — $6,900 per month for
benefit period of one year.
	 
	 	 
	Supplemental Life Insurance Policy

	 	Flexible Premium Adjustable Life
policy. Death benefit is
$500,000 plus any additional
accumulated value.
Beneficiaries chosen at sole
discretion of executive.
	 
	 	 
	Incentive Compensation Plan

Amended and Restated Omnibus Stock Plan

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