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EX - 10.25 - Form of Change of Control Agreement
FORM OF CHANGE OF CONTROL AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated as of the __th day of __________,
_____, is between ARI Network Services, Inc. (the "Company") and _____________
(the "Employee").
W I T N E S S E T H :
WHEREAS, the Employee has been employed by the Company since ____ and
currently serves as its __________________; and
WHEREAS, the Board of Directors of the Company has determined that it
wishes to assure the continued availability of the Employee as the
___________________ of the Company by entering into this Change of Control
Agreement (the "Agreement"); and
WHEREAS, the Board of Directors of the Company wants to assure that, in
the event of a Change of Control (as hereinafter defined), the Employee's
service to the Company will be recognized.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, the Company and the Employee hereby agree as follows:
1. DEFINITIONS. For Purposes of this Agreement:
(a) Cause. "Cause" means (i) the willful and continued failure by the
Employee to substantially perform the Employee's duties with the Company (other
than any such failure resulting from the Employee's incapacity due to physical
or mental illness) for a period of at least ten days after a written demand for
substantial performance is delivered to the Employee which specifically
identifies the manner in which the Employee has not substantially performed his
duties, or (ii) the willful engaging by the Employee in misconduct which is
demonstrably and materially injurious to the Company, monetarily or otherwise.
For purposes of this Agreement, no act or failure to act on the Employee's part
shall be considered "willful" unless done or omitted to be done by the Employee
not in good faith and without reasonable belief that such action or omission was
in the best interest of the Company. Notwithstanding the foregoing, the Employee
shall not be deemed to have been terminated for Cause unless and until there
shall have been delivered to the Employee a copy of a resolution, duly adopted
by the affirmative vote of not less than a majority of the Board of Directors of
the Company at a meeting of the Board called and held for such purposes (after
reasonable notice to the Employee and an opportunity for the Employee, together
with the Employee's counsel, to be heard before the Board), stating that in the
good faith opinion of the Board the Employee was guilty of conduct constituting
Cause as set forth above and specifying the particulars thereof in detail.
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(b) Change of Control. A "Change of Control" means the first to occur
of the following:
(i) the acquisition by an individual, entity or group, acting
individually or in concert (a "Person") of beneficial ownership of
more than 50% of the then outstanding shares of common stock of the
Company (the "Outstanding Common Stock"); provided, however, that
for purposes of this Subsection 1(b)(i), the following acquisitions
shall not constitute a Change of Control: (A) any acquisition
directly from the Company, (B) any acquisition by the Company, (C)
any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation
controlled by the Company, or (D) any acquisition by any
corporation pursuant to a transaction which complies with clauses
(A), (B) and (C) of Subsection 1(b)(ii) below; or
(ii) consummation of a reorganization, merger or
consolidation, share exchange, or sale or other disposition of all
or substantially all of the assets of the Company (a "Business
Combination"), in each case, unless, immediately following such
Business Combination, (A) all or substantially all of the
individuals and entities who were the beneficial owners of the
Outstanding Common Stock immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 50%
of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as
a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or
through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Common Stock, (B) no Person
(excluding any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, more than
50% of, respectively, the then outstanding common stock of the
corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities of
such corporation except to the extent that such ownership existed
prior to the Business Combination, and (C) at least a majority of
the members of the Board of Directors of the corporation resulting
from such Business Combination were members of the Board of
Directors of the Company at the time of the execution of the
initial agreement providing for such Business Combination; or
(iii) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
(c) Date of Termination. "Date of Termination" means the date specified
in the Notice of Termination where required (which date shall be on
or after the date of the Notice of Termination) or in any other
case during the Term, upon the Employee's ceasing to perform
services for the Company.
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(d) Effective Date. "Effective Date" means the date on which the
Change of Control occurs.
(e) Good Reason. "Good Reason" means, without the Employee's written
consent, the occurrence of one or more of the following during the Term:
(i) a material diminution of or interference with the
Employee's duties and responsibilities as _________________ of the
Company, including, but not limited to a material demotion of the
Employee, a material reduction in the number or seniority of other
Company personnel reporting to the Employee, or a material reduction in
the frequency with which, or in the nature of the matters with respect
to which, such personnel are to report to the Employee;
(ii) a change in the principal workplace of the Employee to a
location outside of a 50-mile radius from ____________________;
(iii) a reduction or adverse change in the salary, bonus,
perquisites, benefits, contingent benefits or vacation time which had
theretofore been provided to the Employee; or
(iv) an unreasonable increase in the workload of the Employee.
For purposes hereof, any good faith determination made by the Employee
that he has Good Reason to terminate his employment with the Company shall be
conclusive. The Employee's continued employment or failure to give Notice of
Termination will not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.
(f) Notice of Termination. Any termination of the Employee's employment
by the Company without Cause, or termination by the Employee for Good Reason,
during the Term will be communicated by a Notice of Termination to the other
party hereto. A "Notice of Termination" means a written notice which specifies a
Date of Termination (which date shall be on or after the date of the Notice of
Termination), indicates the provision in this Agreement applying to the
termination and, if applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Employee's
employment under the provision so indicated.
(g) Term. The "Term" means a period beginning on the Effective Date and
ending on the date two years after the occurrence of a Change of Control.
2. TERMINATION OF EMPLOYMENT DURING THE TERM.
(a) Termination by the Company Without Cause or by the Employee for
Good Reason. If the Employee's employment is terminated during the Term by the
Company without Cause or by the Employee for Good Reason, the Employee shall be
entitled to the following:
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(i) the Company shall pay the Employee his full base salary
through the Date of Termination at the rate in effect at the time
the Notice of Termination is given;
(ii) as the annual bonus for the year in which the Date of
Termination occurs, the Company will pay the Employee an amount
equal to the product of (i) the average of the Employee's annual
bonus for the three fiscal years of the Company ending prior to the
Date of Termination and (ii) a fraction, the numerator of which is
the actual number of the days Employee was employed by the Company
during the fiscal year in which the Date of Termination occurs and
the denominator of which is 365;
(iii) the Company shall pay to the Employee as a severance
benefit a lump-sum amount equal to two (2) times the sum of (a) the
Employee's annual base salary as in effect on the Effective Date or
Date of Termination, whichever is greater, without reduction for any
mandatory or voluntary deferrals, (b) 100% of the targeted
commissions, if any, for the year in which the Effective Date or
Date of Termination occurs, whichever is greater, and (c) 100% of
the targeted short-term and long-term cash bonuses for the year in
which the Effective Date or Date of Termination occurs, whichever is
greater, without reduction for any amounts that would otherwise be
deferred, within thirty days after the Date of Termination; and
(iv) for a 24-month period after the Date of Termination
starting with month immediately after the month in which the Date of
Termination occurs, the Company will arrange to provide the Employee
and the Employee's eligible dependents, at the Company's expense,
with benefits under the medical and dental plans of the Company, or,
if such benefits are not available, benefits substantially similar
to the benefits the Employee was receiving during the 90-day period
immediately prior to the Date of Termination; provided, however,
that benefits otherwise receivable by the Employee pursuant to this
Subsection 2(a)(iv) will be reduced to the extent other comparable
benefits are actually received by the Employee from subsequent
employment during the 24-month period following the Date of
Termination, and any such benefits actually received by the Employee
will be reported to the Company; and provided, further, that any
access to insurance continuation coverage that the Employee may be
entitled to receive under the Consolidated Omnibus Budget
Reconciliation Act of 1986 ("COBRA") will commence on the Date of
Termination.
(b) Termination for Any Other Reason. If the Employee's employment with the
Company is terminated during the Term for any reason not specified in Subsection
2(a) above, the Employee will be entitled to the following:
(i) the Company will pay the Employee his full base salary
through the Date of Termination at the rate in effect on the Date of
Termination; and
(ii) as the annual bonus for the year in which the Date of
Termination occurs, the Company will pay the Employee an amount
equal to the product of (i) the average of the Employee's annual
bonus for the three fiscal years of the Company ending prior to the
Date of Termination and (ii) a fraction, the numerator of which is
the actual number
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of days the Employee was employed by the Company during the fiscal
year in which the Date of Termination occurs and the denominator of
which is 365. Notwithstanding the foregoing, no bonus will be paid
to the Employee under this Subsection 2(b)(ii) if the Employee's
employment is terminated for Cause.
3. RESTRICTIONS. As of the Effective Date, all restrictions limiting
the exercise, transferability or other incidents of ownership of any outstanding
award, including but not limited to restricted stock, options, stock
appreciation rights, or other property or rights of the Company granted to the
Employee shall lapse, and such awards shall become fully vested and be held by
the Employee free and clear of all such restrictions. In addition, all amount
deferred under any plan or agreement providing for deferred compensation,
including increases in salary which have been deferred and that portion of the
long-term bonus which is deferred, shall become immediately vested and shall be
paid in a lump sum to the Employee no later than thirty days after the Effective
Date. This provision shall apply to all such property or rights notwithstanding
the provisions of any other plan or agreement to the contrary.
4. LIMITATION ON PAYMENTS. Subsections 2(a)(iii) and (iv) and Section
3, above, provide for certain payments to be made or benefits to be given to the
Employee if the Employee's employment with the Company terminates during the
Term (the "Change of Control Payments"). Notwithstanding such subsections, the
Change of Control Payments will be reduced such that the present value of the
payments to the Employee or for the Employee's benefit, receipt of which is
deemed to be contingent on a change of control under Section 280G(b)(2) of the
Internal Revenue Code of 1986, as amended (the "Code"), shall not exceed an
amount equal to the maximum which the Company may pay without loss of deduction
under Section 280G(a) of the Code (the "Golden Parachute Threshold"). If the
Golden Parachute Threshold is exceeded, the payments made pursuant to Subsection
2(a)(iii) will be reduced, but not below zero, so that the total amount paid to
the Employee or for the Employee's benefit is not in excess of the Golden
Parachute Threshold. Notwithstanding the foregoing, if not reducing the Change
of Control Payments would result in a greater after-tax amount to the Employee,
such payments shall not be reduced. All calculations required pursuant to this
Section 4 shall be made in accordance with proposed, temporary or final
regulations promulgated under Section 280G of the Code or other applicable
authority by the Company's public accountants, the Company's lawyers or such
other third party as is mutually agreed between the Executive and the Company.
In the event that the provisions of Sections 280G and 4999 of the Code or any
successor provision are repealed without succession this Section 4 shall be of
no further force or effect.
5. NO MITIGATION. The Employee shall not be required to mitigate the
amount of any salary or other payment or benefit provided for in this Agreement
by seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for in this Agreement be reduced by any compensation earned by
the Employee as a result of employment by another employer other than as
provided in subsection 2(a)(iv), above, by retirement benefits distributed after
the Date of Termination, or otherwise.
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6. NO ASSIGNMENTS.
(a) Successors and Assigns. This Agreement is personal to the Employee,
and the Employee may not assign or delegate any of the Employee's rights or
obligations hereunder without first obtaining the written consent of Company.
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 the Employee, 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 the Company's successors or assigns by operation of
law, the Employee is entitled to compensation from the Company in the same
amount and on the same terms as the compensation pursuant to Subsection 2(a)
hereof.
(b) Inurement. This Agreement and all rights of the Employee hereunder
shall inure to the benefit of and be enforceable by the Employee's personal and
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Employee should die while any amount
would still be payable to the Employee hereunder if the Employee had continued
to live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the Employee's devisee, legatee
or other designee or if there is no such designee, to the Employee's estate.
7. NOTICE. For the purposes of this Agreement, notices and all other
communication provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered or sent by fax with
confirmation printed on the sending fax machine, or five days after mailing
certified mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth opposite the parties' signatures to this
Agreement (provided that all notices to the Company shall be directed to the
attention of the Board of Directors of the Company with a copy to the Secretary
of the Company), or to such other address as either party may have furnished to
the other in writing in accordance herewith.
8. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties hereto.
9. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
10. GOVERNING LAW. This Agreement shall be governed by the laws of
the State of Wisconsin, without giving effect to its principles of conflicts of
laws.
11. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration by a
single arbitrator mutually agreed to by the disputing parties in accordance with
the rules of the American Arbitration Association then in effect. Such
arbitration shall be held in Milwaukee, Wisconsin, or such other place as is
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mutually agreeable to the parties hereto. Judgment may be entered on the
Arbitrator's award in any court having jurisdiction.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
ARI NETWORK SERVICES, INC.
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
By:
______________________________
Xxxxx X. Xxxxxxx, Chairman of
the Board and
Chief Executive Officer
EMPLOYEE
_______________________________
_______________________________
_______________________________
(Address)
________________________________
(Signature)
________________________________
(Print Name)
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