EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is executed as of this 14th day of
August, 2012, by and between Xxxxxx X Xxxx III ("Executive") and ARI Network Services, Inc,
("Company"),
RECITALS
The Company desires to employ Executive in the position of Vice President of
Operations, and Executive desires to be so employed by the Company, on the terms and
conditions set forth herein,
As a result of Executive's employment with the Company as Vice President of
Operations, Executive will have access to and be entrusted with valuable information about the
Company's business and customers, including trade secrets and confidential information,
The Parties believe it is in their best interests to make provision for certain aspects of
their relationship during and after the period in which Executive is employed by the Company,
NOW, THEREFORE, in consideration of the promises and the mutual agreements and
covenants contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the Company and Executive (collectively,
"Parties" and individually, "Party"), the Parties agree as follows:
ARTICLE I
EMPLOYMENT
1.1 Position and Duties, During the term of Executive's employment under this
Agreement, Executive shall hold the position of Vice President of Operations of the Company
and shall be subject to the authority of, and shall report to, the President and Chief Executive
Officer ("CEO") of the Company, Executive's duties and responsibilities as Vice President of
Operations shall include all those customarily attendant to such position and other duties and
responsibilities as may be assigned from time to time by the Company's President and/or CEO,
At all times, Executive shall devote Executive's entire business time, attention and energies
exclusively to the business interests of the Company while employed by the Company, except as
otherwise specifically approved in writing by or on behalf of the President and/or CEO,
1.2 At-Will Employment. The term of Executive's employment under this
Agreement shall commence on August 1, 2012 and be for an indefinite period and may be
terminated by either Party at any time and for any reason or no reason upon written notice to the
other Party,
ARTICLE II
COMPENSATION AND OTHER BENEFITS
2.1 Base Salary. During the term of Executive's employment under this Agreement,
the Company shall pay Executive an annual salary of One Hundred Eighty Thousand Dollars
($180,000) ("Base Salary"), payable in accordance with the normal payroll practices and
schedule of the Company. Notwithstanding the foregoing, the Base Salary shall be subject to
annual review by the President and/or CEO and shall be subject to increase, but not decrease,
based on the recommendation of the President and/or CEO as approved by the Board of
Directors of the Company ("Board"); provided, however, that the Company may reduce
Executive's Base Salary if (a) Executive's Base Salary is reduced as part of a general reduction
in the base salaries for all executive officers of the Company or (b) Executive's Base Salary is
reduced for Cause (defined below), and Executive acknowledges and agrees that any reduction in
Base Salary due to the circumstances specified in Section 2. I (a) or (b), above, shall not
constitute Good Reason (as defined in Section 3.1(f), below).
2.2 Bonuses. During the term of Executive's employment under this Agreement,
Executive will be eligible to participate in the Company's Management Incentive Bonus Plan
("Bonus Plan"), the specifics of which are determined from time to time by the Compensation
Committee of the Board ("Compensation Committee") and approved by the Board. The Parties
acknowledge and agree that, under the Company's current Bonus Plan, the annualized bonus
amount which Executive would be eligible to receive if one hundred percent (100%) of such
Bonus Plan targets were met would be Thirty Thousand Dollars ($30,000). Executive
acknowledges and agrees that the Bonus Plan may be changed from time to time at the discretion
of the Compensation Committee as approved by the Board.
2.3 Equity. During the term of Executive's employment under this Agreement,
Executive shall be eligible to participate in stock option and equity plans and grants, if any, that
are offered to senior executive/officer employees of the Company, as determined by the
Compensation Committee and approved by the Board from time to time.
2.4 Perquisites, Benefits and Other Compensation. During the term of Executive's
employment under this Agreement, and subject to the express provisions of this Article II,
Executive will be entitled to receive perquisites and benefits provided by the Company to its
senior executive employees, subject to the eligibility criteria related to such perquisites and
benefits, and to such changes, additions, or deletions to such perquisites and benefits as the
Company may make from time to time, as well as such other perquisites or benefits as may be
specified from time to time at the sole discretion of the Board.
3.2 Rights Upon Termination Not In Connection With A Change In Control.
(a) Section 3.ICa), Section 3.ICc) and Section 3.1(f) Termination. If
Executive's employment is terminated pursuant to Section 3.1 (a), Section
3.I(c), or Section 3.I(f), above, Executive or Executive's estate shall have
no further rights against the Company hereunder, except for the right to
receive the following: (1) any unpaid Base Salary with respect to the
period prior to the effective date of termination and (2) any earned but
unpaid bonus due to Executive as of the effective date of termination.
With respect to a termination pursuant to Section 3.I(a) or Section 3.I(f),
above, Executive shall also receive (1) Executive's Base Salary, at the rate
in effect at the time of termination, for nine (9) months following the
effective date of termination; (2) a bonus for the fiscal year of the Company
in which such termination occurs, which bonus shall be equal to (A) the
product of (i) the average of Executive's annual bonus received pursuant to
the Company's Bonus Plan for the three fiscal years of the Company ending
prior to the effective date of termination, multiplied by (ii) a fraction, the
numerator of which is the actual number of days Executive was employed by
the Company during the fiscal year of the Company in which the termination
occurs and the denominator of which is 365, less (B) any payment
previously made by the Company, if any, with respect to the current fiscal
year's Bonus Plan; and (3) acceleration of all outstanding unvested options
held by Executive as of the effective date of termination. Payment of the
amounts specified in subsections (1) and (2) of the immediately preceding
sentence shall be made in nine (9) equal monthly installments following
the effective date of termination; provided, however, that if such
installment payments would continue beyond the later of: (x) the first
September 15 following the Company's fiscal year which included the
effective date of termination or (y) the first March IS following the
calendar year which included the effective date of termination (the "Latest
Date"), all remaining monthly installments shall be paid to Executive in a
lump sum on the Latest Date. Notwithstanding the foregoing, the payment
and receipt of the benefits specified in subsections (1), (2) and (3), of that
same sentence are contingent upon Executive's execution of a written
severance agreement (in a form satisfactory to the Company) containing,
among other things, a general release of claims against the Company, and
the rescission period of such agreement must expire, without revocation of
such release, within sixty (60) days following the effective date of
termination. To the extent that payments would otherwise be paid to
Executive within the sixty (60) day period following the effective date of
termination, such payment(s) shall be made following Executive's
execution of such general release and the expiration of the applicable
rescission period, except where the sixty (60) day period following the
effective date of termination spans two different calendar years, in which
case such payment(s) or benefit(s) will not be paid until the later calendar
year during the sixty (60) day period.
Disability under this Section 3 .1 (c) is not intended to alter any benefits
any Party may be entitled to receive under any long-term disability
insurance policy carried by either the Company or Executive with respect
to Executive, which benefits shall be governed solely by the terms of any
such insurance policy.
(d) Termination by Retirement. Subject to Section 3.2, below, Executive's
employment and all of the Company's obligations under this Agreement
(except as provided in Section 10.5, below, and as required by law) shall
terminate automatically, effective upon Executive's retirement in
accordance with the Company's retirement plan or policy should a
retirement plan or policy for senior executives of the Company be
adopted.
(e) Termination by Resignation. Subject to Paragraph 3.2, below, Executive's
employment and all of the Company's obligations under this Agreement
(except as provided in Section 10.5, below, and as required by law) shall
terminate automatically, effective immediately upon Executive's provision
of thirty (30) days' prior written notice to the President and/or CEO of
resignation from employment with the Company or at such other time as
may be mutually agreed between the Parties following the provision of
such notice.
(f) Termination for Good Reason. Subject to Section 3.2, below, Executive
may terminate his employment and all of the Company's obligations under
this Agreement (except as provided in Section 10.5, below, and as
required by law) for Good Reason (defined below). A termination shall
only be for Good Reason if: (I) within ninety (90) calendar days of the
initial existence of Good Reason, Executive provides written notice of
Good Reason to the President and/or CEO; (2) the Company does not
remedy said Good Reason within thirty (30) calendar days of its receipt of
such notice; and (3) Executive terminates his employment effective any
time after the expiration of such 30-day remedy period prior to the date
that is two (2) years after the initial existence of Good Reason. "Good
Reason" shall mean the occurrence of any of the following without the
written consent of Executive: (a) the Company has breached this
Agreement in a material way, which breach remains uncured, if subject to
cure, for thirty (30) calendar days after the President and/or CEO receives
written notice thereof from Executive; (b) a material diminution in
Executive's Base Salary; or (c) a material change in the geographic
location at which Executive must perform his services, provided such new
location is more than fifty (50) miles from the location where Executive is
required to perform services prior to the change.
ARTICLE III
TERMINATION
3.1 Termination Not In Connection With A Change In Control.
(a) Termination Without Cause. Subject to Section 3.2, below, the President
and/or CEO may terminate Executive's employment and all of the
Company's obligations under this Agreement (except as provided in
Section 10.5, below, and as required by law) at any time without Cause
(defined below).
(b) Termination For Cause. Subject to Section 3.2, below, the President and/or
CEO may terminate Executive's employment and all of the Company's
obligations under this Agreement (except as provided in Section 10.5,
below, and as required by law) at any time for Cause (defined below)
by giving written notice to Executive stating the basis for such
termination, effective immediately upon giving such notice or at such
other time thereafter as the President and/or CEO may designate. For
purposes of this Agreement, "Cause" shall mean, with respect to
Executive, the occurrence of one or more of the following events, as
determined by the Company: (1) breach of this Agreement or violation of
one or more policies of the Company; (2) act of dishonesty; (3)
insubordination; (4) failure to follow the reasonable directions of the
President, CEO and/or the Board; (5) failure to satisfactorily perform
Employee's employment duties and responsibilities; (6) conviction of a
crime the circumstances of which substantially relate to Executive's
position with the Company; and (7) any attempt to obtain a personal profit
from any transaction in which the Company has an interest or which is
adverse to the interests of the Company.
(c) Termination by Death or Disability. Subject to Section 3.2, below,
Executive's employment and all of the Company's obligations under this
Agreement (except as provided in Section 10.5, below, and as required by
law) shall terminate automatically, effective immediately and without any
notice being necessary, upon Executive's death or a determination
of Disability of Executive. For purposes of this Agreement, "Disability"
means the inability of Executive, due to a physical or mental impairment,
to perform the essential functions of Executive's job with the Company,
with or without a reasonable accommodation, for ninety (90) consecutive
business days or one hundred twenty (120) business days in the aggregate
during any 365-day period. A determination of Disability shall be made
by the President and/or CEO and/or the Board, which may, at their sole
discretion, consult with a physician or physicians satisfactory to the
President and/or CEO and/or the Board, and Executive shall cooperate
with any effort to make such determination. Any such determination
shall be conclusive and binding on the Parties. Any determination of
(b) Section 3.1(b) and Section 3.1Ce) Terminations. If Executive's employment
is terminated pursuant to Section 3 .1 (b), above, or if Executive resigns
pursuant to Section 3 .1 (e), above, Executive shall have no further rights
against the Company hereunder, except for the right to receive: (1) any
unpaid Base Salary with respect to the period prior to the effective date of
termination; and (2) any earned but unpaid bonus due to Executive as of the
effective date of termination.
(c) Section 3.1 (d) Termination. If Executive retires pursuant to Section 3.1 (d),
above, Executive shall have no further rights against the Company
hereunder, except for the right to receive: (1) any unpaid Base Salary with
respect to the period prior to the effective date of termination; (2) any
earned but unpaid bonus due to Executive as of the effective date of
termination; and (3) any additional benefits provided for under the
Company's retirement plan or policy for senior executives, if any.
3.3 Termination In Connection With A Change In Control. Should Executive's
employment be terminated upon the occurrence of or within two (2) years of a "Change in
Control," as defined in Executive's Change of Control Agreement ("COC Agreement"), the
terms of such termination shall be governed exclusively by the COC Agreement and Executive
shall not be entitled to receive any of the benefits provided for under this Article III.
ARTICLE IV
CONFIDENTIALITY
4.1 Confidentiality Obligations. Executive will not, during his employment with the
Company, directly or indirectly, use or disclose any Confidential Information or Trade Secrets
(defined below) except in the interest and for the benefit of the Company. After the end, for
whatever reason, of Executive's employment with the Company, Executive will not, directly or
indirectly, use or disclose any Trade Secrets. For a period of two (2) years following the end, for
whatever reason, of Executive's employment with the Company, Executive will not, directly or
indirectly, use or disclose any Confidential Information. Executive further agrees not to, directly
or indirectly, use or disclose at any time information received by the Company from others
except in accordance with the Company's contractual or other legal obligations; the Company's
customers are third xxxxx beneficiaries of this promise.
4.2 Definitions.
(a) Trade Secret. The term "Trade Secret" has that meaning set forth under
applicable law. The term includes, but is not limited to, all computer
source, object or other code created by or for the Company.
(b) Confidential Information. The term "Confidential Information" means all
non-Trade Secret or proprietary information of the Company which has
value to the Company and which is not known to the public or the
Company's competitors, generally. Confidential Information includes, but
is not limited to: (i) inventions, product specifications, information about
products under development, research, development or business plans,
production know-how and processes, manufacturing techniques,
operational methods, equipment design and layout, test results, financial
information, customer lists, information about orders and transactions with
customers, sales and marketing strategies, plans and techniques, pricing
strategies, information relating to sources of materials and production
costs, purchasing and accounting information, personnel information and
all business records; (ii) information which is marked or otherwise
designated or treated as confidential or proprietary by the Company; and
(iii) information received by the Company from others which the
Company has an obligation to treat as confidential.
(c) Exclusions. Notwithstanding the foregoing, the terms "Trade Secret" and
"Confidential Information" shall not include, and the obligations set forth
in this Agreement shall not apply to, any information which: (i) can be
demonstrated by Executive to have been known by him prior to his
employment by the Company; (ii) is or becomes generally available to the
public through no act or omission of Executive; (iii) is obtained by
Executive in good faith from a third party who discloses such information
to Executive on a non-confidential basis without violating any obligation
of confidentiality or secrecy relating to the information disclosed; or (iv) is
independently developed by Executive outside the scope of his
employment without use of Confidential Information or Trade Secrets.
ARTICLE V
NON-COMPETITION
5.1 Restrictions on Competition During Employment. During Executive's
employment by the Company, Executive shall not, directly or indirectly, compete against the
Company, or, directly or indirectly, divert or attempt to divert business from the Company
anywhere the Company does business.
5.2 Post-Employment Restricted Services Obligation. For two (2) years following
termination of Executive's employment with the Company, for whatever reason, Executive
agrees not to, directly or indirectly, provide Restricted Services to any Competitor in the United
States.
5.3 Definitions.
(a) Restricted Services. The term "Restricted Services" means employment
duties and functions of the type provided by Executive to the Company
during the twelve (12) month period prior to the termination, for whatever
reason, of Executive's employment with the Company, as described in
Executive's job description with the Company.
(b) Competitor. For purposes of this Article V, the term "Competitor"
means any entity, including a sole proprietorship, that sells or services, or
attempts to sell or service, (i) distribution-side electronic commerce and
marketing products or services (including, without limitation, electronic
parts catalogs, search engine marketing, lead generation and management,
and web site provision) of the type sold or serviced by the Company
during the twelve (12) month period prior to the termination, for whatever
reason, of Executive's employment with the Company (ii) in vertical
markets in which the Company sold or serviced its products or services
during the twelve (12) month period prior to the termination, for whatever
reason, of Executive's employment with the Company; provided,
however, that the term "Competitor" shall not include a subsidiary or other
corporate division of such an entity which subsidiary or division does not
sell or service, or attempt to sell or service, such aforementioned
distribution-side electronic commerce and marketing products or services
in such vertical markets. To the extent that the following entities, or their
subsidiaries or corporate divisions, meet the aforementioned definition,
such entities, or their subsidiaries or corporate divisions as the case may
be, shall be deemed competitors of the Company: Snap-On Business
Solutions, Dominion Enterprises, 50 Below, Enigma, HLSM and ADP
Lightspeed and any successor of such entities; provided, however, that the
foregoing list of entities is included for the sole purpose of providing
examples of possible Competitors and shall not affect the aforementioned
definition. Examples of vertical markets in which the Company sells or
services its products or services may include, without limitation, the
following: powersports, outdoor power equipment, marine and
recreational vehicle and home appliances.
ARTICLE VI
CUSTOMER NON-SOLICITATION
6.1 Post-Employment Non-Solicitation of Restricted Customers. For two (2) years
following termination of Executive's employment with the Company, for whatever reason,
Executive agrees not to, directly or indirectly, solicit or attempt to solicit any business from any
Restricted Customer in any manner which competes with the services or products offered by the
Company in the twelve (12) months preceding termination of Executive's employment with the
Company, or to, directly or indirectly, divert or attempt to divert any Restricted Customer's
business from the Company.
6.2 Restricted Customer. The term "Restricted Customer" means any
individual or entity (a) for whom/which the Company provided services or
products, and (b) with whom/which Executive had contact on behalf of the
Company, or about whom/which Executive acquired non-public
information in connection with his employment by the Company, during
the twenty-four (24) month period preceding the end, for whatever reason,
of Executive's employment with the Company; provided, however, that
the term "Restricted Customer" shall not include any individual or entity
whom/which, through no direct or indirect act or omission of Executive,
terminated its business relationship with the Company more than six (6)
months prior to the end of Executive's employment with the Company.
ARTICLE VII
RESTRICTION RELATING TO PRODUCTS OR SERVICES UNDER DEVELOPMENT
BY THE COMPANY
7.1 Restriction Relating to Products or Services Under Development by the
Company. For two (2) years following termination of Executive' s employment with the
Company, for whatever reason, Executive agrees not to, directly or indirectly, develop, market or
sell, or attempt to develop, market or sell, on behalf of any Competitor (defined below) in the
United States any product or service that is under development by the Company during the
twelve (12) month period prior to the termination, for whatever reason, of Executive's
employment with the Company; provided, however, that this Article VII shall not apply to any
product or service which the Company has not taken steps to market or sell within the twelve
(12) month period following the termination, for whatever reason, of Executive's employment
with the Company.
7.2 Competitor. For purposes of this Article VII, the term "Competitor" means any
entity, including a sole proprietorship, that sells or services, or attempts to sell or service, (i)
distribution-side electronic commerce and marketing products or services (including, without
limitation, electronic parts catalogs, search engine marketing, lead generation and management,
and web site provision) of the type sold or serviced by the Company during the twelve (12)
month period prior to the termination, for whatever reason, of Executive's employment with the
Company (ii) in vertical markets in which the Company sold or serviced its products or services
during the twelve (12) month period prior to the termination, for whatever reason, of Executive's
employment with the Company; provided, however, that the term "Competitor" shall not include
a subsidiary or other corporate division of such an entity which subsidiary or division does not
sell or service, or attempt to sell or service, such aforementioned distribution-side electronic
commerce and marketing products or services in such vertical markets. To the extent that the
following entities, or their subsidiaries or corporate divisions, meet the aforementioned
definition, such entities, or their subsidiaries or corporate divisions as the case may be, shall be
deemed competitors of the Company: Snap-On Business Solutions, Dominion Enterprises, 50
Below, Enigma, HLSM and ADP Lightspeed and any successor of such entities; provided,
however, that the foregoing list of entities is included for the sole purpose of providing examples
of possible Competitors and shall not affect the aforementioned definition. Examples of vertical
markets in which the Company sells or services its products or services may include, without
limitation, the following: powersports, outdoor power equipment, marine and recreational
vehicle and home appliances.
ARTICLE VIII
BUSINESS IDEA RIGHTS
8.1 Assignment. The Company will own, and Executive hereby assigns to the
Company and agrees to assign to the Company, all rights in all Business Ideas. All Business
Ideas which are or form the basis for copyrightable works are hereby assigned to the Company
and/or shall be assigned to the Company or shall be considered "works for hire" as that term is
defined by United States copyright law.
8.2 Definition of Business Ideas. The term "Business Ideas" means all ideas, designs,
modifications, formulations, specifications, concepts, know-how, trade secrets, discoveries,
inventions, data, software, developments and copyrightable works, whether or not patentable or
registrable, which Executive originates or develops, either alone or jointly with others, while
Executive is employed by the Company and which are: (a) related to any business known to
Executive to be engaged in or contemplated by the Company; (b) originated or developed during
Executive's working hours; or (c) originated or developed in whole or in part using materials,
labor, facilities or equipment furnished by the Company.
8.3 Disclosure. While employed by the Company, Executive will promptly disclose
all Business Ideas to the Company.
8.4 Execution of Documentation. Executive, at any time during or after his
employment by the Company, will promptly execute all documents which the Company may
reasonably require to perfect its patent, copyright and other rights to such Business Ideas
throughout the world.
ARTICLE IX
NON-SOLICITATION OF EMPLOYEES
During Executive's employment by the Company and for twelve (12) months thereafter,
Executive shall not, directly or indirectly, encourage any Company employee to terminate his/her
employment with the Company or solicit such an individual for employment outside the
Company in any manner which would end or diminish that employee's services to the Company;
provided, however, that this Article IX shall not prohibit use of general classified advertising to
solicit for employment positions.
ARTICLE X
EXECUTIVE DISCLOSURES AND ACKNOWLEDGMENTS
10.1 Confidential Information of Others. Executive warrants and represents to the
Company that he is not subject to any employment, consulting or services agreement, or any
restrictive covenants or agreements of any type, which would conflict with, or prohibit Executive
from fully carrying out, his duties as described under the terms of this Agreement. Further,
Executive warrants and represents to the Company that he has not and will not retain or use, for
the benefit of the Company, any confidential information, records, trade secrets, or other
property of a former employer.
10.2 Scope of Restrictions. Executive acknowledges that during the course of his
employment with the Company, he will gain knowledge of Confidential Information and Trade
Secrets of the Company. Executive acknowledges that the Confidential Information and Trade
Secrets of the Company are necessarily shared with Executive on a routine basis in the course of
performing his job duties and that the Company has a legitimate protectable interest in such
Confidential Information and Trade Secrets, and in the goodwill and business prospects
associated therewith. Accordingly, Executive acknowledges that the scope of the restrictions
contained in this Agreement are appropriate, necessary and reasonable for the protection of the
Company's business, goodwill and property rights, and that the restrictions imposed will not
prevent him from earning a living in the event of, and after, the end, for whatever reason, of his
employment with the Company.
10.3 Prospective Employers. Executive agrees, during the term of any restriction
contained in Articles IV, V, VI, VII, VIII, IX and X of this Agreement, to disclose this
Agreement to any entity which offers employment to Executive. Executive further agrees that
the Company may send a copy of this Agreement to, or otherwise make the provisions hereof
known to, any of Executive's potential or future employers.
10.4 Third Xxxxx Beneficiaries. Any Company affiliates are third party beneficiaries
with respect to Executive's performance of his duties under this Agreement and the undertakings
and covenants contained in this Agreement, and the Company and any of its affiliates enjoying
the benefits thereof, may enforce this Agreement directly against Executive. The terms Trade
Secret and Confidential Information shall include materials and information of the Company's
affiliates to which Executive has access.
10.5 Survival. The covenants set forth in Articles III, IV, V, VI, VII, VIII, IX, X, XI,
XII and XIII of this Agreement shall survive the termination of Executive's employment
hereunder.
ARTICLE XI
RETURN OF RECORDS
Upon the end, for whatever reason, of his employment with the Company, or upon
request by the Company at any time, Executive shall immediately return to the Company all
documents, records and materials belonging and/or relating to the Company (except Executive's
own personnel and wage and benefit materials relating solely to Executive), and all copies of all
such materials. Upon the end, for whatever reason, of Executive's employment with the
Company, or upon request of the Company at any time, Executive further agrees to destroy such
records maintained by him on his own computer equipment. Upon mutual agreement between
Executive and the Company, Executive may retain documents, records and materials belonging
and/or relating to the Company following the end, for whatever reason, of Executive's
employment with the Company.
ARTICLE XII
INDEMNITY
12.1 Indemnification By Company. To the extent permitted by applicable law, the
Company shall indemnify Executive if Executive is, or is threatened to be, made a party to an
action, suit or proceeding (other than by the Company) by reason of the fact that Executive is or
was a director or officer of the Company, unless liability was incurred because Executive
breached or failed to perform a duty that Executive owes to the Company and such breach or
failure constitutes: (a) a willful failure to deal fairly with the Company or its shareholders in
connection with a matter in which Executive has a material conflict of interest; (b) a violation of
the criminal law, unless Executive had reasonable cause to believe that his conduct was lawful
and Executive had no reasonable cause to believe such conduct was unlawful; (c) a transaction
from which Executive derived an improper personal profit; or (d) willful misconduct.
12.2 Indemnification By Executive. Executive agrees to indemnify and hold harmless
the Company against any and all losses, claims, damages, liabilities, costs, expenses (including
reasonable attorneys' fees and costs), judgments and settlements of amounts paid in connection
with any threatened, pending or completed action, suit, claim, proceeding or investigation arising
out of or pertaining to: (a) unlawful intentional acts committed by Executive in the conduct of
the Company's business; (b) any willful gross negligence committed by Executive other than in
the conduct of the Company's business; and (c) any tax deductions Executive may claim for
expenses incurred or claim to have been incU1l'ed in connection with Executive's duties
hereunder.
12.3 Insurance. Notwithstanding the foregoing, the indemnification provided for in
this Article XII shall only apply to any costs or expenses incurred by indemnities which are not
covered by applicable liability insurance. If this Article XII is interpreted to reduce insurance
coverage to which an indemnity would otherwise be entitled in the absence of this provision,
this provision shall be deemed inoperative and not part of this Agreement. This Article XII shall
survive the termination of this Agreement.
ARTICLE XIII
MISCELLANEOUS
13.1 Notice. All notices required or permitted under this Agreement shall be in writing
and shall be deemed effectively given (a) upon personal delivery to the party to be notified; (b)
when sent by facsimile or electronic transmission (e-mail) if sent during normal business hours
of the recipient and confirmed by facsimile or electronic confirmation receipt; (c) five (5) days
after having been sent by registered or certified mail, return receipt requested, postage prepaid;
or (d) one (I) day after deposit with a nationally recognized overnight courier, specifying next
day delivery, with written verification of receipt, and such notices are addressed as follows or to
such other address as the addressed Xxxxx may have substituted by notice pursuant to this Section
13.1:
To the Company:
ARI Network Services, Inc.
President and CEO
00000 Xxxx Xxxx Xxxx Xxxxx
Xxxxxxxxx, XX 00000-0000
Fax: x0 (000) 000-0000
Email: xxxxxxx@xxxxxx.xxx
To Executive:
Xxxxxx X. Xxxx III
X00 X00000 Xxxxxxxx Xx.
Xxxxxxxxx Xxxxx, XX 00000
Fax:
Email: xxxx@xxxxxx.xxx
13.2 Entire Agreement; Amendment; Waiver. This Agreement sets forth the entire
understanding of the Parties hereto with respect to the subject matter contemplated hereby. Any
and all previous agreements and understandings between or among the Parties regarding the
subject matter hereof, whether written or oral, are superseded by this Agreement; provided,
however, that the COC Agreement shall survive and remain in full force and effect. This
Agreement shall not be amended or modified except by a written instrument duly executed by
each of the Parties hereto. Any extension or waiver by any Party of any provision hereto shall be
valid only if set forth in an instrument in writing signed on behalf of such Party. For purposes of
the foregoing two (2) sentences, the Parties acknowledge and agree that any such written
instrument to be signed by the Company shall require the signature of a representative of the
Company duly authorized by the Board to bind the Company to the terms of such written
instrument.
13.3 Headings. The headings of sections and paragraphs of this Agreement are for
convenience of reference only and shall not control or affect the meaning or construction of any
of its provisions.
13.4 Assignability. This Agreement is personal to Executive, and Executive may not
assign or delegate any of Executive's rights or obligations hereunder without first obtaining the
written consent of the Board. The Company will require any successor or assign (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company, by an assumption agreement in form and substance
satisfactory to Executive, to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it if no such
succession or assignment had taken place. If such succession or assignment does not take place,
and if this Agreement is not otherwise binding on Executive's successors or assigns by operation
of law, Executive is entitled to compensation from the Company in the same amount and on the
same terms as provided for in this Agreement. This Agreement shall be binding on and inure to
the benefit of each Party and such Party's respective heirs, legal representatives, successors and
assigns.
13.5 Mitigation. Executive shall not be required to mitigate the amount of any
payment or benefit provided for in this Agreement by seeking other employment or otherwise.
13.6 Injunctive Relief. The Parties agree that damages will be an inadequate remedy
for breaches of this Agreement and in addition to damages and any other available relief, a court
shall be empowered to grant injunctive relief (without the necessity of posting bond or other
security).
13.7 Waiver of Breach. The waiver by either Party of the breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent breach by either Party.
13.8 Severability. The obligations imposed by, and the provisions of, this Agreement
are severable and should be construed independently of each other. The invalidity of one
provision shall not affect the validity of any other provision.
13.9 Consideration. Execution of this Agreement is a condition of Executive's
employment with the Company and Executive's employment and other benefits provided for
herein by the Company constitutes the consideration for Executive's undertakings hereunder.
13.10 Governing Law. This Agreement shall in all respects be construed according to
the laws of Wisconsin, without regard to its conflict of laws principles.
13.11 Authority to Bind the Company. The Company represents and warrants that the
undersigned representative of the Company has the authority of the Board to bind the Company
to the terms of this Agreement.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly
executed as of the date first written above.
EXECUTIVE:
By: \s\ Xxxxxx X. Xxxx III
Xxxxxx X. Xxxx III
NETWORK SERVICES, INC.
By: \s\ Xxx X. Xxxxxxx
Xxx X. Xxxxxxx, President and Chief
Executive Officer
