Document:

exv10w1

 

EXHIBIT 10.1

CHANGE OF CONTROL AGREEMENT

     THIS CHANGE OF CONTROL AGREEMENT, dated as of April 1, 2006, is between ARI Network Services,
Inc. (the “Company”) and Brian E. Dearing (the “Employee”).

WITNESSETH:

     WHEREAS, the Employee has been employed by the Company since 1995 and currently serves as its
Chairman and Chief Executive Officer; and

     WHEREAS, the Board of Directors of the Company has determined that it wishes to assure the
continued availability of the Employee as the Chairman and Chief Executive Officer 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.

 

 

          (b) Change in Control. A “Change in Control” shall mean 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 in 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 the corporation
resulting from such Business Combination were members of the Board 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 Chairman and Chief Executive Officer 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 Milwaukee, Wisconsin;

          (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 and commissions (if
applicable) through the Date of Termination at the rate in effect at the time the Notice of
Termination is given;

          (ii) as the annual current year bonus for the year in which the Date of Termination
occurs, the Company will pay the Employee an amount (not less than zero) equal to (A) the
product of (i) the average of the Employee’s annual current year 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 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, minus (B) the aggregate payments previously made by the Company, if any, with
respect to the current year annual bonus;

          (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 annual bonus and long-term bonus for the
year in which the Effective Date or Date of Termination occurs, whichever is greater, or,
where the targeted short-term annual bonus or long-term bonus amounts have not been set as
of the Effective Date or Date of Termination, 100% of the average of the Employee’s targeted
annual short-term and long-term bonus for the three fiscal years of the Company ending prior
to the Date of Termination, without reduction for any amounts that would otherwise be
deferred to future fiscal years, within thirty days after the Date of Termination;

          (iv) any unpaid annual installments of long-term bonuses from prior fiscal years, which
installments shall become immediately vested as if the targeted performance levels for
future years were met; and

          (v) for a 24-month period after the Date of Termination starting with the 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.

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          (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 and commissions (if
applicable) through the Date of Termination at the rate in effect on the Date of
Termination; and

          (ii) as the annual current year bonus for the year in which the Date of Termination
occurs, the Company will pay the Employee an amount (not less than zero) equal to (A) the
product of (i) the average of the Employee’s annual current year 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 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, minus (B) the aggregate payments previously made by the Company, if any, with
respect to the current year annual bonus. 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.

          (c) Timing of Payments. Where a payment of benefits under any of Subsections
2(a)(ii), (iii) and (iv) or Subsection 2(b)(ii) is required to be delayed for six months after the
Date of Termination under Internal Revenue Code Section 409A, the Company shall make payment of
such amounts to the Employee on the date that is six months after the Date of Termination. Where a
payment of benefits under Subsections 2(a)(ii), (iii) and (iv) and Subsection 2(b)(ii) is not
required to be delayed for six months after the Date of Termination under Internal Revenue Code
Section 409A, the Company shall make payment of such amounts to the Employee within thirty (30)
days after the Date of Termination.

     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. Notwithstanding the foregoing, the term during
which any vested option held by an Employee is permitted to be exercised shall not be extended.
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), (iv) and (v) 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

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exceeded, the payments made pursuant to Subsections 2(a)(iii) and (iv) 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 Employee 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)(v), above, by retirement benefits distributed after the Date of
Termination, or otherwise.

     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

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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. Prior Agreements. This Agreement shall replace and supersede all prior agreements
between the Company and the Employee relating to the subject matter hereof.

     9. Amendments. No amendments or additions to this Agreement shall be binding unless
in writing and signed by both parties hereto.

     10. 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.

     11. 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.

     12. 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 mutually
agreeable to the parties hereto. Judgment may be entered on the Arbitrator’s award in any court
having jurisdiction.

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     IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first
above written.

	 	 	 	 	 
	 	ARI NETWORK SERVICES, INC.
 	 
	 
	11425 West Lake Park Drive, Suite 900

Milwaukee, Wisconsin 53224
	 	 
	 
	 	By:  	/s/ Timothy Sherlock
 	 
	 	 	Timothy Sherlock, Vice President of Finance 	 
	 	 	and Administration, Chief Financial Officer
and Secretary 	 
	 
	 	EMPLOYEE
 	 
	4120 West Gazebo Hill

Mequon, Wisconsin 53092

	 	 
	 
	 	/s/ Brian E. Dearing
 	 
	 	                                       (Signature) 	 
	 
	 	     Brian E. Dearing
 	 
	 	                                       (Print Name) 	 
	 	 	 
	 

8exv10w2

 

EXHIBIT 10.2

CHANGE OF CONTROL AGREEMENT

     THIS CHANGE OF CONTROL AGREEMENT, dated as of April 1, 2006, is between ARI Network Services,
Inc. (the “Company”) and John C. Bray (the “Employee”).

WITNESSETH:

     WHEREAS, the Employee has been employed by the Company since 1996 and currently serves as its
Vice President of Business Development; and

     WHEREAS, the Board of Directors of the Company has determined that it wishes to assure the
continued availability of the Employee as Vice President of Business Development 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.

 

 

          (b) Change in Control. A “Change in Control” shall mean 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 in 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 the corporation
resulting from such Business Combination were members of the Board 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 Vice President of Business Development 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 reduction or adverse change in the salary, bonus, perquisites, benefits,
contingent benefits or vacation time which had theretofore been provided to the Employee; or

          (iii) 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:

          (i) the Company shall pay the Employee his full base salary and commissions (if
applicable) through the Date of Termination at the rate in effect at the time the Notice of
Termination is given;

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          (ii) as the annual current year bonus for the year in which the Date of Termination
occurs, the Company will pay the Employee an amount (not less than zero) equal to (A) the
product of (i) the average of the Employee’s annual current year 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 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, minus (B) the aggregate payments previously made by the Company, if any, with
respect to the current year annual bonus;

          (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 annual bonus and long-term bonus for the
year in which the Effective Date or Date of Termination occurs, whichever is greater, or,
where the targeted short-term annual bonus or long-term bonus amounts have not been set as
of the Effective Date or Date of Termination, 100% of the average of the Employee’s targeted
annual short-term and long-term bonus for the three fiscal years of the Company ending prior
to the Date of Termination, without reduction for any amounts that would otherwise be
deferred to future fiscal years, within thirty days after the Date of Termination;

          (iv) any unpaid annual installments of long-term bonuses from prior fiscal years, which
installments shall become immediately vested as if the targeted performance levels for
future years were met; and

          (v) for a 24-month period after the Date of Termination starting with the 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:

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          (i) the Company will pay the Employee his full base salary and commissions (if
applicable) through the Date of Termination at the rate in effect on the Date of
Termination; and

          (ii) as the annual current year bonus for the year in which the Date of Termination
occurs, the Company will pay the Employee an amount (not less than zero) equal to (A) the
product of (i) the average of the Employee’s annual current year 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 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, minus (B) the aggregate payments previously made by the Company, if any, with
respect to the current year annual bonus. 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.

          (c) Timing of Payments. Where a payment of benefits under any of Subsections
2(a)(ii), (iii) and (iv) or Subsection 2(b)(ii) is required to be delayed for six months after the
Date of Termination under Internal Revenue Code Section 409A, the Company shall make payment of
such amounts to the Employee on the date that is six months after the Date of Termination. Where a
payment of benefits under Subsections 2(a)(ii), (iii) and (iv) and Subsection 2(b)(ii) is not
required to be delayed for six months after the Date of Termination under Internal Revenue Code
Section 409A, the Company shall make payment of such amounts to the Employee within thirty (30)
days after the Date of Termination.

     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. Notwithstanding the foregoing, the term during
which any vested option held by an Employee is permitted to be exercised shall not be extended.
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), (iv) and (v) 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
Subsections 2(a)(iii) and (iv) 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

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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 Employee 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)(v), above, by retirement benefits distributed after the Date of
Termination, or otherwise.

     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.

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     8. Prior Agreements. This Agreement shall replace and supersede all prior agreements
between the Company and the Employee relating to the subject matter hereof.

     9. Amendments. No amendments or additions to this Agreement shall be binding unless
in writing and signed by both parties hereto.

     10. 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.

     11. 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.

     12. 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 mutually
agreeable to the parties hereto. Judgment may be entered on the Arbitrator’s award in any court
having jurisdiction.

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     IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first
above written.

	 	 	 	 	 
	 	ARI NETWORK SERVICES, INC.
 	 

11425 West Lake Park Drive, Suite 900

Milwaukee, Wisconsin 53224

	 	 	 	 	 
	 	 	 
	 	By:  	                                              /s/ Timothy Sherlock
 	 
	 	 	Timothy Sherlock, Vice President of Financial 	 
	 	 	and Administration, Chief Financial Officer
and Secretary 	 
	 

	 	 	 	 	 
	 	 EMPLOYEE
 	 

706 Beverly Drive

Alexandra, Virginia 22302

	 	 	 	 	 
	 	 	 
	 	     /s/ John C. Bray
 	 
	 	(Signature) 	 
	 	 	 
	 
	 	 	 
	 	     John C. Bray
 	 
	 	(Print Name) 	 
	 	 	 
	 

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