ex10_31.htm


    
      
Exhibit 10.31

     

    
      
        EMPLOYMENT
AGREEMENT

        


      

      
        THIS
EMPLOYMENT AGREEMENT ("Agreement") is executed as of this 25th day of February, 2009, by
and between Michael T. Tenpas ("Executive") and ARI Network Services Inc. (the
"Company").

        


      

      
        RECITALS

        


      

      
        The
Company desires to employ Executive, and Executive desires to be employed by the
Company, on the terms and conditions set forth herein.

        


        As a
result of Executive's employment with the Company, 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.
Executive shall be employed in the position of Vice President of Sales &
Marketing, and shall be subject to the authority of, and shall report to, the
Company's President and Chief Executive Officer. Executive's duties and
responsibilities shall include all those customarily attendant to the position
of Vice President of Sales & Marketing and as may be assigned from time to
time by the President and Chief Executive Officer. 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.

        


        1.2      
     At-Will Employment.
The term of Executive's employment under this Agreement shall 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. While
employed by the Company, the Company shall pay Executive an annual salary of One
Hundred Sixty-Five Thousand and no/100 Dollars ($165,000) ("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 Compensation Committee (the "Compensation Committee") of
the Company's Board of Directors (the "Board") and, beginning on the first
anniversary of the commencement of Executive's employment by the Company, shall
be subject to annual adjustment based on the recommendation of the Compensation
Committee if approved by the full Board.

        


        2.2      
     Bonuses. While
employed by the Company, Executive will be eligible to participate in the
Company's Management Incentive Bonus Plan and Vice President of Sales
Compensation Plan or any successor plans for senior executives ("Bonus Plans"),
the specifics of which are determined from time to time by, and at the sole
discretion of, the Compensation Committee and approved by the full Board. For
purposes of clarification, the Parties acknowledge and agree that, under the
current Management Incentive Bonus Plan, the annualized bonus amount which
Executive would initially be eligible to receive if one hundred percent (100%)
of such plan's targets were met would be Forty Thousand and no/100 Dollars
($40,000), and that, under the current Vice President of Sales Compensation
Plan, the annualized bonus amount which Executive would initially be eligible to
receive if one hundred percent (100%) of such plan's targets were met would be
Sixty-Five Thousand and no/100 Dollars ($65,000). In the event that the Board
terminates or modifies in any material way the long-term incentive compensation
component or any other component of the Bonus Plans, Executive shall receive the
same treatment as other similarly situated executive employees.

        


        2.3       
    Equity - Grant of
Options. Upon commencement of Executive's employment with the Company,
Executive will be granted options to purchase up to fifty thousand (50,000)
shares of the Company's common stock pursuant to the terms and conditions of an
Award Agreement between the Company and Executive in the form of the Company's
standard Award Agreement. Such options shall be subject to the terms and
conditions of such Award Agreement, including, without limitation, with respect
to vesting and forfeiture.

        


        2.4        
   Perquisites, Benefits and
Other Compensation. While employed by the Company 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.

      


      
        
           


        

        
          2

          
            

          

        

        
           


        

      

       

      
        2.5     
      Vacation. Employee
shall be entitled to a maximum of twenty (20) days of paid vacation and three
(3) personal holidays in any calendar year, pro-rated for any partial calendar
year, in accordance with the Company's general vacation and personal holiday
policies for similarly situated employees.

        


        2.6      
     Car Allowance. During
Executive's employment by the Company, the Company will pay Employee a car
allowance of Five Hundred and no/100 Dollars ($500) per calendar month. Employee
acknowledges and agrees that this car allowance is subject to change (including
discontinuation) from time to time at the sole discretion of the
Company.

        


      

      
        ARTICLE
III

        TERMINATION

      

      
        


      

      
        3.1        
   Termination By The Company
For Cause. If Executive's employment is terminated by the Company at any
time for Cause (defined below), Executive shall have no further rights against
the Company, except for the right to receive (a) any unpaid Base Salary with
respect to the period prior to the effective date of termination and (b) any
vacation (but not personal holidays) that Executive has accrued, but not used,
prior to the effective date of termination.

        


        3.2      
     Termination By The Company
Without Cause. If Executive's employment is terminated by the Company at
any time without Cause (defined below), in addition to the compensation outlined
in Paragraph 3.1, above, Executive shall have the right to receive (a) any
earned but unpaid bonus due to Executive for any fiscal year of the Company that
has been completed as of the effective date of termination and (b) a Severance
Payment (defined below), the payment of which is 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 all claims,
statutory or otherwise, against the Company. Executive acknowledges and agrees
that the Company reserves the right to update and modify the businesses listed
in Paragraph 5.4(d), below, in such severance agreement.

        


        3.3      
     Termination By Executive
With Good Reason. If Executive resigns his employment with the Company
for Good Reason (defined below), in addition to the compensation outlined in
Paragraph 3.1, above, Executive shall have the right to receive (a) any earned
but unpaid bonus due to Executive for any fiscal year of the Company that has
been completed as of the effective date of resignation and (b) a Severance
Payment (defined below), the payment of which is 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 all claims,
statutory or otherwise, against the Company.

      


      
        
           


        

        
          3

          
            

          

        

        
           


        

      

       

      
        Executive
acknowledges and agrees that the Company reserves the right to update and modify
the businesses listed in Paragraph 5.4(d), below, in such severance agreement. A
resignation shall only be for "Good Reason" if: (1) within thirty (30) calendar
days of the initial existence of Good Reason, Executive provides written notice
of Good Reason to the Board; (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 ninety (90) days after the
initial existence of Good Reason.

        


      

      
        3.4        
   Resignation. If
Executive resigns his employment with the Company at any time without Good
Reason (defined below), Executive shall have no further rights against the
Company, except for the right to receive (a) any unpaid Base Salary with respect
to the period prior to the effective date of resignation and (b) any vacation
(but not personal holidays) that Executive has accrued, but not used, prior to
the effective date of resignation. Executive agrees that, following his
provision of notice of resignation without Good Reason, the Company may, at its
sole discretion, accept the resignation effective immediately or at such other
time as the Company may designate and that, in such case, such
Company-designated date shall be the effective date of resignation.

        


        3.5        
   Death or Disability.
If Executive's employment with the Company is terminated due to his death or
Disability (defined below), Executive shall have no further rights against the
Company, except for the right to receive (a) any unpaid Base Salary with respect
to the period prior to the effective date of termination, (b) any vacation (but
not personal holidays) that Executive has accrued, but not used, prior to the
effective date of termination and (c) any earned but unpaid bonus due to
Executive for any fiscal year of the Company that has been completed as of the
effective date of termination.

        


      

      
        3.6       
    Definitions.

        


      

      
        (a)            Severance Payment.
For purposes of Paragraphs 3.2 and 3.3, above, "Severance Payment" means nine
(9) months of Base Salary, payable following termination pursuant to the terms
of the written severance agreement specified in Paragraph 3.2 or 3.3, above.
Such Severance Payments shall be made in equal installments in accordance with
the Company's normal payroll practices and schedule beginning no later than the
second regular Company pay date following expiration of any revocation period
specified in such severance agreement; provided, however, that all installments
that have yet to be paid by the Final Payment Date (defined below) shall be paid
to the Executive in a lump sum on the Final Payment Date. For the purposes of
this Section 3.6(a), the Final Payment Date is the 15th day
of the third month following the later of (i) the last day of the calendar year
in which the termination occurs, or (ii) the last day of the Company's fiscal
year in which the termination occurs.

      


      
        
           


        

        
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        (b)           
Cause. For
purposes of Paragraphs 3.1 and 3.2, above, "Cause" shall mean any of the
following: (1) Executive has breached this Agreement in a material way or has
breached in a material way the fiduciary duty he owes to the Company or any
other obligation or duty he owes to the Company under this Agreement, which
breach remains uncured, if subject to cure, to the reasonable satisfaction of
the Board for thirty (30) calendar days after Executive receives written notice
thereof from the Board; (2) Executive has committed gross negligence or willful
misconduct in the performance of Executive's duties for the Company; (3)
Executive has failed in a material way to follow reasonable instructions from
the Board, consistent with this Agreement, concerning the operations or business
of the Company, which failure remains uncured, if subject to cure, to the
reasonable satisfaction of the Board for thirty (30) calendar days after
Executive receives written notice thereof from the Board; (4) Executive has
committed a crime the circumstances of which substantially relate to Executive's
employment duties with the Company; (5) Executive has misappropriated or
embezzled funds or property of the Company or engaged in any material act of
dishonesty; or (6) Executive has attempted to obtain a personal profit from any
transaction in which the Executive knows or reasonably should know the Company
has an interest, and which constitutes a corporate opportunity of the Company,
or which is adverse to the interests of the Company, unless the transaction was
approved in writing by the Board after full disclosure of all details relating
to such transaction.

        


        (c)           
For purposes of Paragraphs 3.3 and 3.4, above, "Good Reason" shall mean the
occurrence of any of the following without the written consent of Executive: (1)
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 Board
receives written notice thereof from Executive; (2) a material diminution in
Executive's Base Salary; (3) a material diminution in Executive's authority,
duties, or responsibilities; or (4) 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.

        


        (d)           
For purposes of Paragraph 3.5, above, "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 Board, which may, at its sole discretion,
consult with a physician or physicians satisfactory to the Board, and Executive
shall cooperate with any efforts to make such determination. Any such
determination shall be conclusive and binding on the Parties. Any determination
of Disability under this Paragraph 3.6(d) 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.

      


      
        
           


        

        
          5

          
            

          

        

        
           


        

      

       

      
        3.7        Termination In Connection
With A Change In Control. Notwithstanding any other provision of this
Agreement, should Executive's employment be terminated upon the occurrence of or
within two (2) years of a "Change in Control," as defined in any Change of
Control Agreement ("COC Agreement") that may be presented by the Company to
Executive (in a form satisfactory to the Company), the terms of such termination
shall be governed exclusively by such 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, while employed by the Company, directly
or indirectly use or disclose any Confidential Information or Trade Secrets
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 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 party 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 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
      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.

                


        

      


      
        
           


        

        
          6

          
            

          

        

        
           


        

      

       

      
        
          	
                	
                  (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. While employed by the Company, Executive shall not
directly or indirectly compete against the Company, or directly or indirectly
divert or attempt to divert Customers' business from the Company anywhere the
Company does or is taking steps to do business.

        


        5.2       
    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.

        


        5.3        
   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 provide Restricted Services to any Competitor. During such two (2) year
period, Executive also will not provide any Competitor with any advice or
counsel concerning the provision of Restricted Services.

        


      

      
        5.4        
   Definitions.

      


      
        
           


        

        
          7

          
            

          

        

        
           


        

      

       

      
        
          	
                	
                  (a)

                	
                  Customer. The
      term "Customer" means any individual or entity for whom/which the Company
      has provided services or products or made a written or formal proposal to
      perform services or provide
products.

                


        

        


        
          	
                	
                  (b)

                	
                  Restricted
      Customer.   The term "Restricted Customer" means any
      individual or entity (i) for whom/which the Company provided services or
      products, and (ii) 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)
      months 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, has terminated its business
      relationship with the Company.

                


        

        


        
          	
                	
                  (c)

                	
                  Restricted
      Services. The term "Restricted Services" means services of any kind
      or character comparable to those Executive provided to the Company during
      the twelve (12) months preceding the termination of Executive's employment
      with the Company relating to: (i) providing electronic parts catalogs for
      manufacturers and/or to their dealers and distributors, via compact discs
      and/or on-line, related to manufactured equipment and their components in
      the following industry segments: outdoor power (i.e., commercial lawn
      care); power sports (i.e., motorcycles, snowmobiles, all terrain
      vehicles); marine (i.e., boats, personal water crafts); recreation
      vehicles; floor maintenance; auto/truck after-care; agriculture; and
      construction; (ii) providing on-line, direct mail, electronic mail or
      other marketing services to equipment manufacturers, distributors and
      dealers, in the aforementioned industry segments, aimed at helping them
      market their equipment and related products; and (iii) providing F&I
      (finance and insurance-type products) and services for dealerships, in the
      aforementioned industry segments, using an outsourced center approach,
      where the center performs the primary selling role on behalf of and in
      conjunction with each dealership, directly to their customers via on-line
      and telephone interaction.

                


        

        


        
          	
                	
                  (d)

                	
                  Competitor. The term "Competitor" shall
      include the following businesses: Snap-on Business Solutions; Dominion
      Enterprises; 50 Below; Channel Blade; and Enigma, and such businesses'
      affiliates, successors and assigns, provided that such businesses are
      engaged in: (i)
      providing electronic parts catalogs for manufacturers and/or to
      their dealers and
      distributors, via compact discs and/or on-line, related to manufactured
      equipment and their components in the following industry segments:
      outdoor power (i.e., commercial lawn care); power sports (i.e.,
      motorcycles, snowmobiles, all terrain vehicles); marine (i.e., boats,
      personal water crafts); recreation vehicles; floor maintenance; auto/truck
      after-care; agriculture; and construction; (ii) providing on-line, direct
      mail, electronic mail or other marketing services to equipment
      manufacturers, distributors and dealers, in the aforementioned industry
      segments, aimed at helping them market their equipment and related
      products; and (iii) providing F&I (finance and insurance-type)
      products and services for dealerships, in the aforementioned industry
      segments, using an
      outsourced center approach, where the center performs the primary selling role on behalf of
      and in conjunction with each dealership, directly to their customers via
      on-line and telephone interaction, at the time of Executive's termination,
      for whatever
reason.

                


        

      


      
        
           


        

        
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        ARTICLE
VI

        BUSINESS
IDEA RIGHTS

      

      
        


      

      
        6.1     
      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 which Executive
originates or develops whether alone or working with others while Executive is
employed by the Company. 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.

        


        6.2      
     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: (i) related to any business known to Executive to be engaged in or
contemplated by the Company; (ii) originated or developed during Executive's
working hours; or (iii) originated or developed in whole or in substantial part
using materials, labor, facilities or equipment furnished by the
Company.

        


        6.3       
    Disclosure. While
employed by the Company, Executive will promptly disclose all Business Ideas to
the Board.

        


        6.4        
   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.

      


      
        
           


        

        
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        ARTICLE
VII

        NON-SOLICITATION
OF EMPLOYEES

      

      
        


      

      
        While
employed 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.

        


      

      
        ARTICLE
VIII

        EXECUTIVE
DISCLOSURES AND ACKNOWLEDGMENTS

      

      
        


      

      
        8.1    
       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 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.

        


        8.2     
      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.

        


        8.3      
     Prospective
Employers. Executive agrees, during the term of any restriction contained
in Articles IV, V, VI and VII 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 employers.

        


        8.4       
    Third Party
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

          
            

          

        

        
           


        

      

       

      
        8.5       
    Survival. The
covenants set forth in Articles IV, V, VI and VII of this Agreement shall
survive the termination of the Executive's employment hereunder.

        


      

      
        ARTICLE
IX

        RETURN
OF RECORDS

      

      
        


      

      
        Upon the
end, for whatever reason, of his employment with the Company, or upon request by
the Board at any time, Executive shall immediately return to the Board 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 Board
at any time, Executive further agrees to destroy such records maintained by him
on his own computer equipment.

        


      

      
        ARTICLE
X

        INDEMNITY

      

      
        


      

      
        10.1          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: (1) 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;
(2) 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; (3) a transaction from which Executive
derived an improper personal profit; or (4) willful misconduct.

        


        10.2         
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: (1)
unlawful intentional acts committed by Executive in the conduct of the Company's
business; (2) any willful gross negligence committed by Executive other than in
the conduct of the Company's business; and (3) any tax deductions Executive may
claim for expenses incurred or claim to have been incurred in connection with
Executive's duties hereunder.

      


      
        
           


        

        
          11

          
            

          

        

        
           


        

      

       

      
        10.3          Insurance.
Notwithstanding the foregoing, the indemnification provided for in this Article
X shall only apply to any costs or expenses incurred by indemnitees which are
not covered by applicable liability insurance. If this Article X is interpreted
to reduce insurance coverage to which an indemnitee would otherwise be entitled
in the absence of this provision, this provision shall be deemed inoperative and
not part of this Agreement. This Article X shall survive the termination of this
Agreement.

        


      

      
        ARTICLE
XI

        MISCELLANEOUS

      

      
        


      

      
        11.1         
Notice.
Any and all notices, consents, documents or communications provided for in this
Agreement shall be given in writing and shall be personally delivered, mailed by
registered or certified mail (return receipt requested), sent by courier
(confirmed by receipt), or telefaxed (confirmed by telefax confirmation) and
addressed as follows (or to such other address as the addressed Party may have
substituted by notice pursuant to this Paragraph 11.1):

        


      

      
        	 
      	
                To
      the Company:

              	
                ARI
      Network Services, Inc.

              
	 
      	 
      	
                Director
      of Human Resources

              
	 
      	 
      	
                11425
      West Lake Park Drive

              
	 
      	 
      	
                Milwaukee,
      WI 53224-3025

              
	 
      	 
      	
                Fax:+1
      (414)973-4618

              
	 
      	 
      	 
      
	 
      	
                To
      Executive:

              	
                Michael
      T. Tenpas

              
	 
      	 
      	
                N29
      W26140 Coachman Dr.

              
	 
      	 
      	
                Pewaukee,
      WI 53072

              


      

      
        


      

      
        Such
notice, consent, document or communication shall be deemed given upon personal
delivery or receipt at the address of the Party stated above or at any other
address specified by such Party to the other Party in writing, except that if
delivery is refused or cannot be made for any reason, then such notice shall be
deemed given on the third day after it is sent.

        


      

      
        11.2          Entire Agreement; Amendment;
Waiver. This Agreement (including any documents referred to herein) 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. 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.

      


      
        
           


        

        
          12

          
            

          

        

        
           


        

      

       

      
        11.3          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.

        


        11.4          Assignability. This
Agreement is personal to the Executive, and the Executive may not assign or
delegate any of the 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 the 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 the Executive's successors or assigns by operation of law,
the 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.

        


        11.5          Mitigation. The
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.

        


        11.6          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.

        


      

      
        11.7          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.

        


      

      
        11.8          Severability. If any
court of competent jurisdiction determines that any provision of this Agreement
is invalid or unenforceable, then such invalidity or unenforceability shall have
no effect on the other provisions hereof, which shall remain valid, binding and
enforceable and in full force and effect, and, to the extent allowed by law,
such invalid or unenforceable provision shall be construed in a manner so as to
give the maximum valid and enforceable effect to the intent of the Parties
expressed therein.

        


        11.9          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

          
            

          

        

        
           


        

      

       

      
        11.10        Governing Law. This
Agreement shall in all respects be construed according to the laws of the State
of Wisconsin, without regard to its conflict of laws principles.

        


        11.11        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:

              
	 
      	 
      
	 
      	 
      
	 
      	
                /s/ Michael T. Tenpas

              
	 
      	
                Michael
      T. Tenpas

              


      

      


      


      
        	 
      	 
      	
                ARI
      NETWORK SERVICES, INC.

              	 
      
	 	 	 	 
	 
      	 
      	 
      	 
      
	 
      	
                By: 
      

              	
                /s/ Roy W. Olivier

              	 
      
	 
      	 
      	
                Roy
      W. Olivier,

              	 
      
	 
      	 
      	
                President
      and Chief Executive Officer

              	 
      


      

       

       

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