Exhibit 10.1
SEPARATION AND CONSULTING
AGREEMENT
THIS SEPARATION AND CONSULTING AGREEMENT
(“Agreement”) is made and entered into as of the 16th
day of June, 2009, by and between ARI Network Services, Inc.
(“ARI”), and Kenneth S. Folberg
(“Consultant”).
W I T N E S S E T H:
WHEREAS, Consultant served ARI as its
Vice President of Finance and Chief Financial Officer from on or
about July 28, 2008 through June 16, 2009 (“Separation
Date”);
WHEREAS, Consultant and ARI have mutually
agreed that Consultant’s employment with ARI ends effective
on the Separation Date and desire to finalize all aspects of
Consultant’s pre- and post-separation relationship with
ARI;
WHEREAS, in order to assure and retain
the availability of Consultant’s specific expertise regarding
ARI and its finances, the industry in which it operates and the
contacts and business relationships which Consultant established
prior to his separation, ARI desires to engage Consultant in a
post-separation consulting relationship as more fully described in
this Agreement;
WHEREAS, Consultant desires to accept
such consulting engagement and perform such consulting services for
ARI, upon the terms and conditions contained in this
Agreement.
NOW, THEREFORE, in consideration of the
recitals and the mutual promises and covenants contained in this
Agreement, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I
Separation and Release
1.1
Consultant’s Separation and
Release . Consultant
acknowledges and agrees that his last date of employment with ARI
is the Separation Date. Consultant further acknowledges and
agrees that ARI has complied with all of its obligations to
Consultant, including all of ARI’s obligations under the July
28, 2008 Employment Agreement between ARI and Consultant
(“Employment Agreement”), and that ARI has no further
obligations to Consultant arising from his employment with ARI,
except the obligations to (1) pay Consultant his Base Salary (as
defined in the Employment Agreement) through the Separation Date;
(2) pay Consultant for any vacation (but not personal holidays)
that Consultant has accrued, but not used, prior to the Separation
Date; (3) pay Consultant any earned but unpaid bonus due to
Consultant for any fiscal quarter of ARI that has been completed as
of the Separation Date; (4) provide Consultant with his vested
rights, if any, as of the Separation Date in ARI’s 401(k)
plan and any payments due Consultant under the terms of such 401(k)
plan; and (5) provide Consultant with the right to participate, at
his own expense, in ARI’s group health insurance plan in
accordance with the mandates of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (including amendments under
the American Recovery and Reinvestment Act of 2009)
(“COBRA”). In order to wrap up any loose ends
regarding Consultant’s employment by ARI through the
Separation Date, Consultant agrees to sign and return, and choose
not to revoke, the
Complete and Permanent Release
(“Release”) which is attached hereto as Exhibit A and
incorporated herein. Consultant acknowledges and agrees that
if he fails to sign and return the Release to ARI or chooses to
revoke his acceptance of the Release as specified in Exhibit A,
this Agreement shall not become effective and shall be null and
void; provided, however, that Article VII and Section 8.1, below,
shall remain in full force and effect should Consultant choose to
revoke his acceptance of the Release as specified in Exhibit
A.
1.2
Company Release
. Except for claims involving
misconduct of the type specified in Wis. Stat . §
180.0851(2)(a)(1)-(4), the Company agrees to release Consultant,
his heirs, successors, and assigns from any claims arising out of
or related in any way to his employment by it and all other events,
occurrences and transactions through and including the date of this
agreement. This release of claims applies whether the claims
are known, unknown, anticipated or unanticipated by the Company.
The Company further waives its rights to any remedies or
benefits related to the claims it is releasing under this Section
1.2.
ARTICLE II
Consultation
2.1
Consulting Period
. The term of the consulting
arrangement between Consultant and ARI under this Agreement shall
be effective on June 16, 2009 and shall continue until March 15,
2010, subject to earlier termination as set forth in Article IV,
below. For purposes of this Agreement, the “Consulting
Period” shall be the period from June 16, 2009 through the
termination, pursuant to Article IV, below, of such consulting
arrangement.
2.2
Services . ARI hereby retains Consultant to act as an
independent contractor during the Consulting Period for purposes of
performing consulting services for ARI regarding ARI and its
finances and the industry in which it operates, and Consultant
hereby agrees to be engaged in such capacity, all in accordance
with the expressed terms, duties and obligations as set forth in
this Agreement.
2.3
Consulting Duties
. During the Consulting Period,
Consultant shall perform consulting services for ARI regarding ARI
and its finances and the industry in which it operates, consistent
with the Consultant’s professional expertise. Such
services shall, as requested and authorized by the Chairman of
ARI’s Board of Directors (“Board”) from time to
time, include, without limitation, the following (which for
purposes of this Agreement are designated as the
“Services”):
(a)
Consulting with and advising ARI
regarding its finances and financial activities;
(b)
Consulting with and advising ARI
regarding the development of new and existing industry
relationships;
(c)
Consulting with ARI regarding its
strategic growth, including potential acquisitions;
(d)
Completing special projects related to
ARI and its finances; and
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(e)
Any activities reasonably related to the
activities described above, as may reasonably be requested of the
Consultant from time to time by the Chairman of the
Board.
Consultant acknowledges and agrees that
Consultant has no authority to enter into any contracts or assume
any obligations on behalf of ARI. ARI shall not be liable for
any actions or omissions of Consultant in excess of his authority
as set forth above or otherwise in breach of this
Agreement.
2.4
Time . Consultant agrees to devote such of his time
and efforts as are necessary to perform and complete the services
related to his obligations under this Agreement; provided, however,
that (1) such time does not exceed 693 total hours during the
entire Consulting Period (“Total Cap”) or (2) 154 hours
in any single calendar month (“Monthly Cap”), pro-rated
for any partial calendar month. For each calendar month
(“Current Month”) during the Consulting Period, ARI may
request that Consultant provide, and, if so requested, Consultant
agrees to provide, a number of hours of service determined as
follows: 77 hours (“Base Monthly Consulting Hours”)
plus the Banked Consulting Hours (defined below) plus the Borrowed
Consulting Hours (defined below); provided, however, that neither
the Total Cap nor the Monthly Cap may be exceeded in any Current
Month. For purposes of this Agreement, “Banked
Consulting Hours” equals the Base Monthly Consulting Hours
(77 hours) times the number of months in the Consulting Period
prior to the Current Month (pro-rated for any partial calendar
months) less the total hours of service provided by Consultant
under this Agreement prior to the Current Month. For purposes
of this Agreement, “Borrowed Consulting Hours” means
the total number of Base Monthly Consulting Hours (77 hours) times
the number of months between the end of the Current Month and March
15, 2010 (pro-rated for any partial calendar months).
2.5
Method . ARI anticipates that the performance of
Consultant’s consulting services will, from time to time, be
conducted in person, at meetings, presentations or conferences, or
via telephone, email or other electronic communication at mutually
agreed upon times and places, which agreement shall not be
unreasonably withheld. ARI acknowledges and agrees that the
time and effort that Consultant must devote to the performance of
services hereunder will likely vary from time to time. Except
as provided in Articles VII and VIII, below, and Articles IV
through VII of the Employment Agreement, ARI further acknowledges
and agrees that nothing contained herein shall be deemed to
prohibit Consultant from providing similar services for, accepting
employment with, or rendering professional services to, any other
party at any time.
ARTICLE III
Consideration; Expenses
3.1
Consideration . As full and complete compensation for the
Services to be provided by Consultant hereunder, ARI shall pay
Consultant a total fee of Fifteen Thousand Eight Hundred
Thirty-Three and 33/100 Dollars ($15,833.33) per month, pro-rated
for any partial calendar month of the Consulting Period.
Should this Agreement terminate pursuant to Article IV,
below, prior to March 15, 2010, ARI shall only be obligated to pay
a portion of the final monthly fee, pro-rated for the portion of
the final month of service completed prior to such termination.
Any time devoted by Consultant to the performance of
consulting services under this Agreement greater than the 693 total
hours specified in Section 2.4, above, shall be paid by
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ARI at the rate of $91.35 per hour;
provided, however, that any such additional hours are approved in
advance by the Chairman of the Board. Consultant shall be
responsible for maintaining accurate records of the time he devotes
to the services he provides under this Agreement, including,
without limitation, a list of the date of activity, a description
of the activity and the number of hours per activity, and shall
provide ARI with such records no later than the 10 th
day of the month following the provision of such services.
Notwithstanding Article V, below, the parties have agreed
that all payments by ARI to Consultant under this Agreement shall
be subject to normal tax withholding and tax payments and shall be
payable by ARI to Consultant pursuant to ARI’s regular
payroll schedule and that IRS Forms W-2 will be issued to
Consultant reflecting these payments.
3.2
Reimbursement of Expenses
. During the Consulting Period, ARI
shall pay or reimburse Consultant for all documented ordinary and
reasonable out-of-pocket expenses incurred by Consultant in
performing the Services hereunder in accordance with ARI policy on
such reimbursable expenses; provided, however, that any single
expense exceeding Five Hundred and no/100 Dollars ($500.00) must be
pre-approved by the Chairman of the Board. Consultant shall
be required to submit an itemized account of such expenditures and
such proof as may be necessary to establish to the reasonable
satisfaction of ARI that such expenses incurred by Consultant were
ordinary and necessary business expenses incurred on behalf of ARI.
Should Consultant elect to perform duties from his home, any
such home office expenses shall be his responsibility. In no
event shall ARI be obligated to pay any compensation other than
that specified in this Article III.
ARTICLE IV
Termination
4.1
Notwithstanding any other provision of
this Agreement, this Agreement will terminate if any of the
following events occur:
(a)
The expiration of March 15,
2010;
(b)
The mutual written agreement of the
parties that this Agreement be terminated; or
(c)
The material breach or material violation
of the terms of this Agreement by either party (including, but not
limited to, Consultant’s refusal or inability, for whatever
reason, to perform his duties hereunder), provided the breaching
party has been given written notice by the non-breaching party
specifying the nature of the breach or violation and a period of
five (5) calendar days in which to cure such breach or violation
and further provided that, in such case, only the non-breaching
party can exercise this right to termination; provided, however,
that Consultant’s inability to perform his duties hereunder
due to a medical disability that qualifies Consultant for Social
Security Disability Insurance shall not constitute a material
breach or violation. If ARI provides Consultant with written
notice of a breach or violation under this Section 4.1(c), such
notice shall be given to Consultant by the Chairman of the Board
and the Chairman of ARI’s Audit Committee, and Consultant
will be given an opportunity, during the five (5) day cure period
specified in the previous sentence to be heard by the Chairman of
the
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Board and/or the Chairman of ARI’s
Audit Committee regarding such notice of breach or
violation.
4.2
Obligations Upon
Termination . Upon the
termination of this Agreement pursuant to Section 4.1, above, the
parties shall have the following obligations:
(a)
Consultant shall deliver
