def14a
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to §240.14a-12
ARI Network Services, Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of Filing Fee (check the appropriate box):
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ARI NETWORK SERVICES, INC.
11425 West Lake Park Drive, Suite 900
Milwaukee, Wisconsin 53224
_______________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
December 8, 2005
To the Shareholders of ARI Network Services, Inc.:
The 2005 Annual Meeting of Shareholders of ARI Network Services, Inc. will be held at the
headquarters of ARI Network Services, Inc., 11425 West Lake Park Drive, Suite 900, Milwaukee,
Wisconsin, on Thursday, December 8, 2005 at 9:00 a.m., local time, for the following purposes:
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To elect one director to serve until 2008. |
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To ratify the appointment of Wipfli LLP as independent auditors. |
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To transact such other business as may properly come before the meeting. |
Shareholders of record at the close of business on October 21, 2005 are entitled to notice of
and to vote at the meeting and at all adjournments thereof.
Holders of a majority of the outstanding shares must be present in person or by proxy in order
for the meeting to be held. Shareholders are urged to date, sign and return the accompanying proxy
in the enclosed envelope whether or not they expect to attend the annual meeting in person. If you
attend the meeting and wish to vote your shares personally, you may do so by revoking your proxy at
any time prior to the voting thereof.
By order of the Board of Directors,
Timothy Sherlock, Secretary
November 9, 2005
TABLE OF CONTENTS
ARI NETWORK SERVICES, INC.
11425 West Lake Park Drive, Suite 900
Milwaukee, Wisconsin 53224
(414) 973-4300
PROXY STATEMENT
The Board of Directors of ARI Network Services, Inc. (the Company) submits the enclosed
proxy for the annual meeting to be held on the date, at the time and place and for the purposes set
forth in the accompanying Notice of Annual Meeting of Shareholders. Each shareholder of record at
the close of business on October 21, 2005 will be entitled to one vote for each share of Common
Stock registered in such shareholders name. As of October 21, 2005, the Company had outstanding
6,148,264 shares of Common Stock. The presence, in person or by proxy, of a majority of the shares
of Common Stock outstanding on the record date is required for a quorum at the meeting. This proxy
statement and the accompanying proxy and Annual Report to Shareholders are being sent to the
Companys shareholders commencing on or about November 9, 2005.
Any shareholder executing and delivering the enclosed proxy may revoke the same at any time
prior to the voting thereof by written notice of revocation given to the Secretary of the Company.
Unless otherwise directed, all proxies will be voted FOR the election of the individual
nominated to serve as director and FOR the other proposal. The director will be elected by a
plurality of votes cast at the meeting (assuming a quorum is present). In other words, the nominee
receiving the largest number of votes will be elected. Any shares not voted, whether by withheld
authority, broker non-vote or otherwise, will have no effect on the election of directors except to
the extent that a failure to vote for an individual results in another individual receiving a
larger number of votes. Any votes attempted to be cast against a candidate are not given legal
effect and are not counted as votes cast in an election of directors. The other proposal will be
approved if the affirmative votes exceed the votes cast against. Broker non-votes and abstentions
are counted for purposes of determining whether a quorum is present at the meeting but are not
affirmative votes or votes against and, therefore, will have no effect on the outcome of the
voting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the beneficial ownership of
shares of Common Stock by each person known by the Company to beneficially own 5% or more of the
Common Stock, by each director or nominee of the Company, by certain executive officers of the
Company, and by all directors and executive officers of the Company as a group as of October 21,
2005.
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NAME OF |
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AMOUNT AND NATURE OF |
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BENEFICIAL OWNERS |
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BENEFICIAL OWNERSHIP (1) |
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PERCENT |
Briggs & Stratton Corporation |
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12301 West Wirth Street |
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Milwaukee, WI 53201 |
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840,000 |
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13.7 |
% |
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Peter H. Kamin (2) |
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591,500 |
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9.6 |
% |
c/o The Nelson Law Firm, LLC |
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75 South Broadway, 4th Floor |
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White Plains, NY 10601 |
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John C. Bray |
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136,655 |
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2.2 |
% |
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Gordon J. Bridge |
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145,037 |
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2.3 |
% |
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NAME OF |
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AMOUNT AND NATURE OF |
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BENEFICIAL OWNERS |
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BENEFICIAL OWNERSHIP (1) |
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PERCENT |
Brian E. Dearing (3) |
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569,252 |
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9.1 |
% |
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Ted C. Feierstein |
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59,106 |
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1.0 |
% |
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Jeffrey E. Horn |
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50,232 |
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* |
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Michael E. McGurk |
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124,163 |
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2.0 |
% |
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William C. Mortimore |
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17,188 |
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* |
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Timothy Sherlock |
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52,601 |
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* |
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Frederic G. Tillman |
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83,909 |
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1.3 |
% |
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Richard W. Weening (4) |
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236,939 |
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3.8 |
% |
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All executive officers and directors as a group
(10 persons) |
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1,432,986 |
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21.0 |
% |
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* |
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Less than 1% |
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(1) |
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Except as otherwise noted, the persons named in the above table have sole voting and
investment power with respect to all shares shown as beneficially owned by them. Includes
options exercisable within 60 days of October 21, 2005 as follows: Mr. Bray (104,625 shares),
Mr. Bridge (86,295 shares), Mr. Dearing (96,375 shares), Mr. Feierstein (59,106 shares), Mr.
Horn (35,625 shares), Mr. McGurk (86,688 shares), Mr. Mortimore (17,188 shares), Mr. Sherlock
(45,625 shares), Mr. Tillman (71,875 shares), Mr. Weening (100,632 shares), and all other
executive officers and directors as a group (686,845 shares). |
(2) |
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Stock ownership information is provided as of December 31, 2004 based upon Schedule 13G
amendment filed February 2, 2005. Mr. Kamins total includes 151,900 shares held by the Peter
H. Kamin Childrens Trust, 103,200 shares held by the Peter H. Kamin Profit Sharing Plan,
28,100 shares held by the Peter H. Kamin Family Foundation and 25,000 shares held by 3K
Limited Partnership. |
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(3) |
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Mr. Dearings total includes 283,007 shares held in the Companys 401(k) plan, of which
Mr. Dearing is a trustee with voting power. Mr. Dearing disclaims any beneficial ownership in
these shares in excess of his pecuniary interest (10,157 shares). |
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Mr. Weenings total also includes 50,677 shares held by Quaestus Management Corp.,
85,000 shares held by RPI Holdings, Inc., 535 shares held in tenancy in common with a third
party and 125 shares held by his spouse. Mr. Weening disclaims any beneficial ownership in
the shares held by third parties in excess of his pecuniary interest. |
2
ELECTION OF DIRECTORS
The Companys directors are divided into three classes, with staggered terms of three years
each. At the meeting, shareholders will vote on one director to serve until 2008, Brian E.
Dearing.
Nominee For Election To Serve
Until The Annual Meeting In 2008
Brian E. Dearing, 50; Mr. Dearing, is the Chairman of the Board, President and Chief Executive
Officer of the Company. He has been a director since 1995 and was elected Chairman of the Board
of Directors in 1997. Prior to joining ARI in 1995, Mr. Dearing held a series of electronic
commerce executive positions at Sterling Software, Inc. in the U.S. and in Europe. Prior to
joining Sterling in 1990, Mr. Dearing held a number of marketing management positions in the EDI
business of General Electric Information Services since 1986. Mr. Dearing holds a Masters Degree
in Industrial Administration from Krannert School of Management at Purdue University and a BA in
Political Science from Union College.
Directors Whose Term
Expires At The Annual Meeting In 2006
Gordon J. Bridge, 63; Mr. Bridge, a director since December 1995, is president and Chief
Executive Officer of CM IT Solutions, a nationwide franchise system providing information
technology consulting and support services to small and medium sized businesses. From December
1999 to August 2001, Mr. Bridge was Chairman of the Board and Chief Executive Officer of
SurferNETWORK. From November 1995 to January 2000, Mr. Bridge was Chairman of the Board and from
April 1997 to March 1998 was Chief Executive Officer of ConnectInc.com Company. Mr. Bridge held
various executive management positions with AT&T from 1988 to 1995, including president of three
business units for AT&T; Consumer Interactive Services (CSI), EasyLink Services and Computer
Systems. Prior to joining AT&T, Mr. Bridge was with the IBM Corporation for nearly 23 years
holding the positions of Vice President of Sales and Vice President of Marketing for the US for the
National Accounts Division in the mid 1980s. Mr. Bridge holds a B.A. in Mathematics from Bradley
University.
Ted C. Feierstein, 47; Mr. Feierstein, a director since January 2000, is a partner in Ascent
Partners (Ascent), a merchant bank specializing in investments, mergers and acquisitions, and
strategic assistance for Internet, software and information technology-focused professional service
companies. Mr. Feierstein is also a founding partner of Prism Capital, a private equity fund.
Prior to co-founding Ascent, Mr. Feierstein was a senior vice-president with the Corum Group, a
firm specializing in merger and acquisition advisory services to the software industry, and was a
venture capitalist with Wind Point Partners, a private equity fund. Mr. Feierstein received an MBA
from the Harvard Business School in 1989 and a BBA from the University of Wisconsin-Madison in
1979.
Directors Whose Term
Expires At The Annual Meeting In 2007
William C. Mortimore, 59; Mr. Mortimore, a director since 2004, is the founder and an
executive officer of Merge Technologies Incorporated (MTI). He has served as Chairman of the
Board and Chief Strategist of MTI since September 2000, as President and Chief Executive Officer of
MTI from November 1987 through August 2000 and as a member of the Board of Directors of MTI since
its inception in November 1987. MTI is a global healthcare software and services company that
trades on the Nasdaq National Market under the symbol MRGE. Mr. Mortimore has served as co-founder
and a senior manager of several businesses in the fields of information communications technology,
healthcare services and real estate and has been responsible for securing public and private
financing for these organizations. Mr. Mortimore is an original member of the American College of
Radiology / National Association of Electrical Manufacturers (ACR / NEMA) committee responsible
for establishing and maintaining the DICOM medical imaging standard. Mr. Mortimore has served as a
member of the Board of Directors of the Diagnostic Imaging Division of NEMA, since the Spring of
1996. Mr. Mortimore has also served as a member of the Board of Directors of MRI Devices, Inc., a
privately held diagnostic imaging manufacturer, from November 2002 until its sale to Intermagnetics
General Corporation in mid 2004 . Mr. Mortimore received a B. S. in Electrical Engineering from
Michigan State University, an M.E.E. from the University of Minnesota and pursued doctoral studies
in Electrical Engineering at the University of Minnesota.
3
Richard W. Weening, 59; Mr. Weening, a director since 1981, organized the Company in 1981 as a
business information publishing subsidiary of Raintree Publishers, Inc., now known as RPI Holdings,
Inc. (RPI). He served as President and Chief Executive Officer of the Company until October
1987, Chairman and Chief Executive Officer of the Company until October 1990, and Chairman of the
Board of Directors until 1997. Mr. Weening is also the President, Chief Executive Officer and
director of QUAESTUS & Co., Inc., a private equity investment firm; the Chairman of the Board and
Chief Executive Officer of Prolitec Inc., an environmental technology and services company and
Chief Executive Officer of Prolitec Defense Systems. Mr. Weening has served as President of RPI
from 1972 to the present. In 1996 Mr. Weening founded Cumulus Media Inc. (NASDAQ:CMLS), a radio
broadcasting group, and served as its executive chairman until June 2000. In November 2003, Mr.
Weening, without admitting or denying the allegations, entered into a Final Judgment and Order of
Permanent Injunction to settle litigation instituted by the Securities and Exchange Commission
relating to record-keeping and internal controls violations in connection with his position at
Cumulus Media, Inc. Without admitting or denying the Commissions findings, Mr. Weening consented
to the issuance of the order that required him to pay a $75,000 civil penalty and be permanently
enjoined from violating the record-keeping and internal controls requirements under the Securities
Exchange Act of 1934, including Section 13(b)(5) and Rules 13b2-1 and 13b2-2 promulgated
thereunder, and from aiding and abetting violations of Section 13(b)(2)(A) of the Exchange Act.
The Board of Directors held eleven meetings in fiscal 2005. Each incumbent director attended
75 percent or more of the combined number of meetings of the Board and committees on which such
director served, during the period for which he has been a director or served on the committee.
Directors are encouraged to attend the annual meeting of shareholders, but the Company has not
adopted a formal policy requiring attendance at the annual meeting. Four of the Companys five
directors attended the 2004 annual meeting of shareholders.
The Board of Directors currently does not have a formal process for shareholders to send
communications to the Board of Directors. Nevertheless, efforts are made to ensure that the views
of shareholders are heard by the Board or individual directors, as applicable, and that appropriate
responses are provided to shareholders on a timely basis. The Board of Directors believes that
informal communications are sufficient to communicate questions, comments and observations that
could be useful to the Board. However, shareholders wishing to formally communicate with the Board
of Directors may send communications directly to ARI Network Services, Inc., Attention: Chairman,
11425 West Lake Park Drive, Suite 900, Milwaukee, Wisconsin 53224. The Chairman will review such
communications and, if appropriate, forward such communications to other board members.
The Companys Board of Directors has established an audit committee which is currently
composed of Mr. Bridge (chairman), Mr. Mortimore and Mr. Weening. The Board of Directors has
adopted a written charter which is included in this proxy statement as Appendix A. Information
regarding the functions performed by the audit committee, its membership, and the number of
meetings held during fiscal 2005 is set forth in the Report of the Audit Committee, included in
this annual proxy statement. The members of the audit committee are independent under the rules
adopted by the NASD regarding the independence of audit committee members. The Board of Directors
has determined that Mr. Bridge, Mr. Mortimore and Mr. Weening are each an audit committee
financial expert and are each independent as those terms are defined under applicable Securities
and Exchange Commission rules.
The Companys Board of Directors has established a compensation committee that currently is
composed of Mr. Bridge and Mr. Feierstein. The duties of the compensation committee are to approve
all executive compensation, to administer the Companys 1991 Incentive Stock Option Plan, the 2000
Employee Stock Purchase Plan, the 1993 Director Stock Option Plan and the 2000 Stock Option Plan
and to recommend director compensation for approval by the entire Board. The compensation
committee met three times during fiscal 2005.
The Companys Board of Directors has not established a nominating committee, as decisions
regarding Board membership are made by the full Board. Due to the small size of the Companys
Board of Directors, as well as the recent lack of turnover in the Board of Directors, the Board has
determined not to have a separate nominating committee. Likewise, the Board has not adopted a
written charter governing director nominating decisions. Messrs. Bridge, Feierstein, Mortimore and
Weening meet the NASD definition of independence as it would apply to a nominating committee, but
Mr. Dearing does not because he is an executive officer of the Company.
4
The Board will consider candidates for director that are nominated by shareholders in
accordance with the procedures set forth in the Companys by-laws. Under the by-laws, nominations,
other than those made by the Board of Directors, must be made pursuant to timely notice in proper
form to the secretary of the Company. To be timely, a shareholders request to nominate a person
for director, together with the written consent of such person to serve as a director, must be
received by the secretary of the Company at the principal office not later than 90 days and not
earlier than 150 days prior to the anniversary date of the annual meeting of shareholders in the
immediately preceding year. To be in proper written form, the notice must contain certain
information concerning the nominee and the shareholder submitting the nomination.
The Board will consider proposed nominees whose names are submitted to it by shareholders.
However, it does not have a formal process for that consideration because it believes that the
informal consideration process has been adequate given the historical absence of shareholder
proposals. The Board intends to review periodically whether a formal policy should be adopted.
The Board has generally identified nominees based upon suggestions by non-management
directors, management members and/or shareholders. The Board considers factors important for
potential members of the Board, including the individuals integrity, general business background
and experience, experience with our industry, and the ability to serve on the Board. The Board
does not evaluate proposed nominees differently based on who made the proposal.
For fiscal 2006 service, non-employee director compensation consists of an annual cash
retainer of $18,000 and an option grant for 6,000 shares. Audit committee members receive an
additional $6,000 per year ($8,000 for the chairman) and compensation committee members an
additional $2,500. Any director who fails to attend in a fiscal year at least 75% of the combined
number of the meetings of the Board and committees on which such director served, and fails to
attend in person at least 75% of the in person Board meetings, may forfeit some or all of the
compensation, as the Board may in its discretion determine.
For fiscal 2005 service, non-employee directors received compensation of $4,500, and options
for 16,875 shares, which were granted on December 9, 2004. Audit committee members received
options for an additional 7,500 shares (10,000 shares for the chairman) and compensation committee
members received options for an additional 2,500 shares. The options have a 10-year term and have
an exercise price equal to the fair market value of the stock on the date of grant. The options
vested in two equal annual increments, commencing July 31, 2005.
Non-employee directors were not paid until fiscal 2005 for their service during fiscal 2004.
On October 26, 2004, non-employee directors other than Mr. Mortimore (who joined the Board at the
end of fiscal 2004) received fiscal 2004 compensation consisting of options for 15,000 shares of
common stock. Directors received no cash compensation. Audit committee members received options
for an additional 3,000 shares and compensation committee members received options for an
additional 800 shares. The options have a 10-year term and have an exercise price equal to the
fair market value of the stock on the date of grant. The options vested 50% immediately and 50% on
July 31, 2005.
Code of Ethics
ARI has adopted a code of ethics that applies to our principal executive officer, principal
financial officer, principal accounting officer or controller and persons performing similar
functions. The code of ethics is designed to promote honest and ethical conduct, including the
ethical handling of conflicts of interest, compliance with applicable laws, and full, accurate,
timely and understandable disclosure in reports we send to our shareholders or file with the SEC.
Violations of the code of ethics are to be reported to the audit committee. A copy of the code of
ethics may be obtained, without charge, by sending a request to ARI Network Services, Inc.,
Attention: Corporate Secretary, 11425 West Lake Park Drive, Suite 900, Milwaukee, Wisconsin 53224.
5
EXECUTIVE COMPENSATION
The following table sets forth compensation for the last three fiscal years for each of the
Companys executive officers.
Summary Compensation Table
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Long Term |
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All Other |
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Annual Compensation |
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Compensation |
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Compensation |
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Awards |
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Payouts |
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Securities |
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Underlying |
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Name and |
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Other Annual |
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Options/ |
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LTIP |
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Principal Position |
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Year |
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Salary |
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Bonus |
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Compensation (1) |
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SARs (#) (2) |
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Payouts ($) |
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$(3) |
Brian E. Dearing, |
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2005 |
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$ |
192,687 |
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$ |
72,839 |
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$ |
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50,000 |
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$ |
75,482 |
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$ |
1,927 |
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President and Chief |
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2004 |
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$ |
179,610 |
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$ |
93,859 |
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$ |
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20,833 |
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$ |
135,170 |
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$ |
1,863 |
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Executive Officer |
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2003 |
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$ |
172,687 |
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$ |
47,434 |
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$ |
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25,000 |
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$ |
13,708 |
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$ |
1,262 |
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Timothy Sherlock |
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2005 |
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$ |
163,890 |
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$ |
41,944 |
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$ |
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22,500 |
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$ |
45,903 |
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$ |
1,694 |
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Chief Financial
Officer, |
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2004 |
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$ |
163,890 |
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$ |
56,728 |
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$ |
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$ |
18,058 |
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$ |
441 |
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Secretary,
Treasurer and VP of
Finance |
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2003 |
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$ |
163,103 |
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$ |
29,561 |
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$ |
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15,000 |
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$ |
2,575 |
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$ |
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John C. Bray, |
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2005 |
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$ |
157,661 |
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$ |
29,431 |
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$ |
14,269 |
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22,500 |
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$ |
27,927 |
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$ |
1,061 |
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Vice President of New |
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2004 |
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$ |
147,853 |
|
|
$ |
37,132 |
|
|
$ |
29,815 |
|
|
|
35,000 |
|
|
$ |
87,510 |
|
|
$ |
892 |
|
Market
Development
|
|
|
2003 |
|
|
$ |
142,573 |
|
|
$ |
22,648 |
|
|
$ |
59,144 |
|
|
|
15,000 |
|
|
$ |
4,218 |
|
|
$ |
1,516 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey E. Horn, |
|
|
2005 |
|
|
$ |
108,890 |
|
|
$ |
30,505 |
|
|
$ |
95,902 |
|
|
|
22,500 |
|
|
$ |
33,384 |
|
|
$ |
1,523 |
|
Vice President of North |
|
|
2004 |
|
|
$ |
108,890 |
|
|
$ |
41,257 |
|
|
$ |
65,439 |
|
|
|
|
|
|
$ |
8,866 |
|
|
$ |
1,434 |
|
American Sales |
|
|
2003 |
|
|
$ |
106,757 |
|
|
$ |
21,499 |
|
|
$ |
78,284 |
|
|
|
20,000 |
|
|
$ |
|
|
|
$ |
1,674 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael E. McGurk, |
|
|
2005 |
|
|
$ |
138,890 |
|
|
$ |
42,579 |
|
|
$ |
|
|
|
|
22,500 |
|
|
$ |
41,451 |
|
|
$ |
1,120 |
|
Vice President of |
|
|
2004 |
|
|
$ |
129,082 |
|
|
$ |
49,290 |
|
|
$ |
|
|
|
|
23,750 |
|
|
$ |
97,448 |
|
|
$ |
1,356 |
|
Technology Operations |
|
|
2003 |
|
|
$ |
123,103 |
|
|
$ |
40,636 |
|
|
$ |
|
|
|
|
15,000 |
|
|
$ |
8,397 |
|
|
$ |
1,138 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frederic G. Tillman, |
|
|
2005 |
|
|
$ |
118,745 |
|
|
$ |
40,569 |
|
|
$ |
|
|
|
|
22,500 |
|
|
$ |
43,406 |
|
|
$ |
1,600 |
|
Vice President of |
|
|
2004 |
|
|
$ |
118,745 |
|
|
$ |
53,978 |
|
|
$ |
|
|
|
|
20,000 |
|
|
$ |
17,972 |
|
|
$ |
1,772 |
|
Technology
Development |
|
|
2003 |
|
|
$ |
118,244 |
|
|
$ |
27,269 |
|
|
$ |
|
|
|
|
15,000 |
|
|
$ |
8,397 |
|
|
$ |
1,232 |
|
|
|
|
(1) |
|
Other annual compensation consists of commissions paid on sales. |
|
(2) |
|
Options granted during fiscal 2004 were awarded pursuant to an option exchange program. |
|
(3) |
|
Amounts represent a Company match in common stock under the Companys 401(k) plan. |
6
The table below provides information regarding option grants in the year ended July 31,
2005 to the persons named in the Summary Compensation Table.
Option/SAR Grants In Last Fiscal Year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number Of |
|
Percent Of Total |
|
|
|
|
|
|
Securities |
|
Options/SARs |
|
|
|
|
|
|
Underlying |
|
Granted To |
|
|
|
|
|
|
Options/SARs |
|
Employees In Fiscal |
|
Exercise Or Base |
|
Expiration |
Name |
|
Granted # (1) |
|
Year (1) |
|
Price ($/Share) |
|
Date |
Brian E. Dearing |
|
|
50,000 |
|
|
|
10.5 |
% |
|
$ |
1.35 |
|
|
|
10/12/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy Sherlock |
|
|
22,500 |
|
|
|
4.7 |
% |
|
$ |
1.35 |
|
|
|
10/12/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John C. Bray |
|
|
22,500 |
|
|
|
4.7 |
% |
|
$ |
1.35 |
|
|
|
10/12/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey E. Horn |
|
|
22,500 |
|
|
|
4.7 |
% |
|
$ |
1.35 |
|
|
|
10/12/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael E. McGurk |
|
|
22,500 |
|
|
|
4.7 |
% |
|
$ |
1.35 |
|
|
|
10/12/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frederic G. Tillman |
|
|
22,500 |
|
|
|
4.7 |
% |
|
$ |
1.35 |
|
|
|
10/12/14 |
|
|
|
|
(1) |
|
All options granted in the fiscal year were awarded with an exercise price equal to the
fair market value of the Common Stock on the date of grant. The options vest in four equal
annual increments commencing July 31, 2005. Under the terms of the Plan under which the
options were granted, the Compensation Committee retains discretion to, among other things,
accelerate the exercise of an option, modify the terms of outstanding options (including
decreasing the exercise price), and permit the exercise price and tax withholding obligations
related to exercise to be paid by delivery of already owned shares or by offset of the
underlying shares. |
The table below provides information regarding the exercises of stock options during
fiscal 2005 and the value of stock options held at July 31, 2005 by the persons named in the
Summary Compensation Table.
Aggregated Option/SAR Exercises
In Last Fiscal Year And Fiscal Year-End Option/SAR Values
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number Of Securities Underlying |
|
Value Of Unexercised |
|
|
Shares |
|
|
|
|
|
Unexercised Option/SARS At |
|
In-The-Money Options At |
|
|
Acquired On |
|
Value |
|
Fiscal Year End (#) |
|
Fiscal Year End |
Name |
|
Exercise (#) |
|
Realized ($) |
|
Exercisable/Unexercisable |
|
Exercisable/Unexercisable (1) |
Brian E. Dearing |
|
|
10,000 |
|
|
$ |
11,738 |
|
|
|
106,375/48,958 |
|
|
$ |
100,740/76,557 |
|
Timothy Sherlock |
|
|
|
|
|
$ |
|
|
|
|
45,625/41,250 |
|
|
$ |
93,006/29,325 |
|
John C. Bray |
|
|
|
|
|
$ |
|
|
|
|
104,625/29,375 |
|
|
$ |
136,613/44,725 |
|
Jeffrey E. Horn |
|
|
5,000 |
|
|
$ |
11,750 |
|
|
|
35,625/21,875 |
|
|
$ |
50,131/37,069 |
|
Michael E. McGurk |
|
|
|
|
|
$ |
|
|
|
|
86,688/26,563 |
|
|
$ |
119,342/41,252 |
|
Frederic G. Tillman |
|
|
|
|
|
$ |
|
|
|
|
71,875/25,625 |
|
|
$ |
121,919/40,094 |
|
|
|
|
(1) |
|
For valuation purposes, a July 29, 2005 market price of $2.80 was used. |
7
The table below provides information regarding long-term incentive plan awards in fiscal 2005
to the persons named in the Summary Compensation Table.
Long-Term Incentive Plan Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts |
|
|
|
|
|
|
|
|
|
|
Under Non-Stock Price-Based Plans |
|
|
Number |
|
Period |
|
|
|
|
|
|
Name |
|
of Units |
|
Until Payment |
|
Threshold |
|
Target |
|
Maximum |
Brian E. Dearing |
|
|
(1 |
) |
|
|
(2 |
) |
|
$ |
40,226 |
|
|
$ |
53,635 |
|
|
$ |
107,270 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy Sherlock |
|
|
(1 |
) |
|
|
(2 |
) |
|
$ |
23,164 |
|
|
$ |
30,886 |
|
|
$ |
61,771 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John C. Bray |
|
|
(1 |
) |
|
|
(2 |
) |
|
$ |
16,253 |
|
|
$ |
21,671 |
|
|
$ |
43,342 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey E. Horn |
|
|
(1 |
) |
|
|
(2 |
) |
|
$ |
16,847 |
|
|
$ |
22,462 |
|
|
$ |
44,925 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael E. McGurk |
|
|
(1 |
) |
|
|
(2 |
) |
|
$ |
23,515 |
|
|
$ |
31,353 |
|
|
$ |
62,706 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frederic G. Tillman |
|
|
(1 |
) |
|
|
(2 |
) |
|
$ |
22,405 |
|
|
$ |
29,873 |
|
|
$ |
59,746 |
|
|
|
|
(1) |
|
Consists of contingent, deferred cash and stock awards. |
|
(2) |
|
Consists of three consecutive one year performance periods commencing with fiscal
2006. The amount of the payout is adjusted on a sliding scale based upon the extent to
which the Companys revenue plan is achieved for each of the three years, ranging from a
floor of 75% of the target award if the Companys revenue plan is not met to a cap of 200%
of the target award if revenue equals or exceeds 150% of plan. The award is paid in three
annual installments following fiscal years 2006, 2007 and 2008, provided the participant is
then employed by the Company. |
|
|
|
Targets for fiscal 2006 will equal the fiscal 2006 bonuses earned, up to 40% of the target
bonuses, adjusted upward if the Company overachieves its fiscal 2006 net income objective.
Payouts will be adjusted as noted above based on the Companys revenue during fiscal years
2007, 2008 and 2009 and paid in installments following each of those fiscal years, provided
the employee is then employed by the Company. One-half of the threshold amount will be paid
in ARI stock, valued at the time of payment, and the remainder paid in cash. |
The Company has entered into Change of Control Agreements (Change of Control
Agreements) with each of its executive officers. The Change of Control Agreements are intended to
reduce the incentive for officers not to support a transaction that is beneficial to shareholders
for fear that their employment would be terminated, retain the services of these officers and
provide for continuity of management in the event of any Change of Control, as defined below.
These Change of Control Agreements provide that each officer shall receive severance benefits equal
to two times the sum of salary and targeted bonuses and medical and dental plan continuation for
two years if, within two years following a Change of Control, as defined below, the officers
employment is terminated without cause. For this purpose, without cause is defined to include:
(i) a significant reduction in the executives compensation, duties, title or reporting
responsibilities; (ii) a change in the executives job location; or (iii) the termination by the
officer of his employment for certain enumerated reasons. In addition, the officer will receive a
prorated portion of the officers average annual bonus for the preceding three fiscal years. If
the officer leaves ARI for any other reason, within two years following a Change of Control, the
officer will receive a prorated portion of the officers average annual bonus for the preceding
three fiscal years. The officer is under no obligation to mitigate amounts payable under the
Change of Control Agreements. In addition, upon a Change of Control, all stock options and similar
awards become immediately vested and all deferred compensation becomes payable.
For purposes of the Change of Control Agreements, a Change of Control means any of the
following events: the acquisition (other than from ARI) by any individual, entity or group, subject
to certain exceptions, of beneficial ownership, directly or indirectly, of 50% or more of the
combined voting power of ARIs then outstanding voting securities; (ii) a merger, consolidation,
share exchange, or sale or disposition of substantially all of the assets of the Company; or (iii)
approval by the Companys shareholders of a complete liquidation or dissolution of the Company.
8
CERTAIN TRANSACTIONS
Only January 3, 2005, the Company entered into a consulting agreement with Ascent Partners,
Inc. Under the agreement, Ascent provides consulting services at a rate of $300 per hour, plus
reimbursement for modeling expenses of approximately $5,000. During fiscal 2005, Ascent was paid
approximately $45,200 under the agreement. Mr. Feierstein, a director of the Company, is a partner
of Ascent.
Briggs & Stratton Corporation (Briggs) is one of the Companys customers and owns more than
5% of the Companys stock. Briggs has entered into customer contracts with the Company in the
ordinary course business. Generally, the contracts are for one year and renew annually unless
either party elects otherwise. The Company invoiced Briggs approximately $610,000 for products and
services provided during fiscal 2005.
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely upon its review of Forms 3, 4 and 5 and amendments thereto furnished to the
Company pursuant to Section 16 of the Securities Exchange Act of 1934, as amended, all of such
forms were filed on a timely basis by reporting persons during fiscal 2005, except as follows:
During fiscal 2005, Mr. Bridges broker mistakenly sold 170 shares of stock without authorization.
Mr. Bridge subsequently repurchased 170 shares at a higher price. The two Forms 4 related to these
transactions were late because the forms were filed more than two business days after the
transactions had occurred.
RATIFICATION OF INDEPENDENT AUDITORS
The Audit Committee has appointed Wipfli LLP to serve as the Companys independent accountant
to audit the books and accounts of the Company and its subsidiaries for the fiscal year ending July
31, 2006. The Board of Directors has recommended that shareholders ratify this appointment. It is
intended that the shares represented by the proxy will be voted (unless the proxy indicates to the
contrary) for ratification of the appointment. Wipfli LLP also served as the Companys independent
accountant for the fiscal year ended July 31, 2005. A representative of Wipfli LLP is expected to
be present at the meeting with the opportunity to make a statement if he or she desires to do so,
and is expected to be available to respond to appropriate questions.
Auditors Fees
Fees for professional services provided by our independent auditors in each of the last two
fiscal years, in each of the following categories, were as follows:
|
|
|
|
|
|
|
|
|
|
|
2005 |
|
2004 |
Audit Fees |
|
$ |
102,500 |
|
|
$ |
89,708 |
|
Audit Related Fees |
|
$ |
10,766 |
|
|
$ |
|
|
Tax Fees |
|
$ |
6,497 |
|
|
$ |
6,401 |
|
All Other Fees |
|
$ |
450 |
|
|
$ |
1,460 |
|
Total Fees |
|
$ |
120,213 |
|
|
$ |
97,569 |
|
Tax services rendered by our independent auditors included consultations on state sales and
use tax. Audit related fees included consultations related to Sarbanes Oxley 404. All other
services rendered by our independent auditors in fiscal 2005 included consultations on accounting
matters regarding the Securities and Exchange Commission.
The audit committee pre-approves all audit and allowable non-audit services provided by the
independent auditors, unless such pre-approval is waived in accordance with Item 2-01(c)(7)(i)(C)
of Regulation S-X. These services may include audit services, audit-related services, tax services
and other services. The audit committee has delegated the authority to grant pre-approval of
auditing or allowable non-audit services to the chairman of the audit committee. Each pre-approval
decision pursuant to this delegation is to be presented to the full audit committee at its next
scheduled meeting.
9
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth certain information about shares of the Companys Common Stock
outstanding and available for issuance under the Companys existing equity compensation plans, the
1991 Incentive Stock Option Plan, the 1993 Director Stock Option Plan, the 2000 Employee Stock
Purchase Plan and the 2000 Stock Option Plan. The table details securities authorized for issuance
under the Companys equity compensation plans as of July 31, 2005. The table below does not
include stock option grants, exercises or cancellations since July 31, 2005 and, in accordance with
SEC rules, excludes information concerning the Companys 401(k) plan. The Company has discontinued
granting options under the 1991 Incentive Stock Option Plan and 1993 Director Stock Option Plan,
although options are outstanding under those plans.
Equity Compensation Plan Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
securities |
|
|
|
|
|
|
|
|
|
|
remaining available |
|
|
Number of |
|
|
|
|
|
for future issuance |
|
|
securities to be |
|
|
|
|
|
under equity |
|
|
issued upon |
|
Weighted-average |
|
compensation plans |
|
|
exercise of |
|
exercise price of |
|
[excluding |
|
|
outstanding |
|
outstanding |
|
securities |
|
|
options, warrants |
|
options, warrants |
|
reflected in column |
|
|
and rights |
|
and rights |
|
(a) |
Plan category |
|
(a) |
|
(b) |
|
(c) |
Equity compensation
plans approved by
security holders |
|
|
1,632,842 |
|
|
$ |
1.31 |
|
|
|
168,753 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation
plans not approved
by security holders
(1) |
|
|
24,675 |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
1,657,517 |
|
|
|
|
|
|
|
168,753 |
|
|
|
|
(1) |
|
Represents estimated number of shares to be issued pursuant to long-term
incentive plan awards described above, based on an assumed value of $2.31 per share
(the October 21, 2005 closing stock price). |
OTHER MATTERS
Other Proposed Action
The Board of Directors of the Company knows of no other matters which may come before the
meeting. However, if any matters other than those referred to above should properly come before
the meeting, the persons named in the enclosed proxy will vote such proxy in accordance with their
discretion.
Shareholder Proposals
All proposals of shareholders intended to be presented at the Companys 2006 Annual Meeting
must be received by the Company at its executive offices on or before September 9, 2006, in order
to be presented at the meeting (and must otherwise be in accordance with the requirements of the
Bylaws of the Company) and must be received by July 12, 2006 to be considered for inclusion in the
proxy statement for that meeting.
Costs of Solicitation
The expenses of printing and mailing proxy materials, including reasonable expenses involved
in forwarding materials to beneficial owners of Common Stock, will be borne by the Company. In
addition, directors, officers or employees of the Company may solicit the return of proxies from
certain shareholders by telephone, e-mail, facsimile or personal solicitation.
10
SHAREHOLDERS MAY OBTAIN A COPY OF THE COMPANYS ANNUAL REPORT ON FORM 10-KSB AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION AT NO COST BY WRITING TO THE INVESTOR RELATIONS DEPARTMENT, ARI
NETWORK SERVICES, INC., 11425 WEST LAKE PARK DRIVE, SUITE 900, MILWAUKEE, WISCONSIN 53224.
|
|
|
|
|
|
BY ORDER OF THE BOARD OF DIRECTORS
Timothy Sherlock, Secretary
November 9, 2005
|
|
|
|
|
|
|
|
|
|
|
11
REPORT OF THE AUDIT COMMITTEE
The primary responsibility of the Committee is to oversee the Companys financial
reporting process on behalf of the Board of Directors and to report the results of its activities
to the Board. Management has the primary responsibility for the financial statements and the
reporting process including the systems of internal controls. A complete description of the
Committees duties is set forth in its charter, a copy of which is attached to this proxy
statement.
In fulfilling its oversight responsibilities, the Committee reviewed the audited financial
statements in the Annual Report with management including a discussion of the quality, not just the
acceptability, of the accounting principles, the reasonableness of significant judgments, and the
clarity of disclosures in the financial statements.
The Committee reviewed with the independent auditors, who are responsible for expressing an
opinion on the conformity of those audited financial statements with accounting principles
generally accepted in the United States, their judgments as to the quality, not just the
acceptability, of the Companys accounting principles and such other matters as are required to be
discussed with the Committee under standards of the Public Company Oversight Board (United States).
In addition, the Committee has discussed with the independent auditors the auditors independence
from management and the Company including matters in the written disclosures required by the
Independence Standards Board and considered the compatibility of non-audit services with auditors
independence.
The Committee discussed with the Companys independent auditors the overall scope and plans
for their audit. The Committee meets with the independent auditors, with and without management
present, to discuss the results of their examination and their evaluation of the Companys internal
controls, and the overall quality of the Companys financial reporting. The Committee held six
meetings during fiscal 2005.
In reliance on the views and discussions referred to above, the Committee recommended to the
Board of Directors (and the Board has approved) that the audited financial statements be included
in the Annual Report on Form 10-KSB for the year ended July 31, 2005 for filing with the Securities
and Exchange Commission. The Committee has also approved the selection of the Companys
independent auditors.
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/s/ Gordon J. Bridge |
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Gordon J. Bridge, Chairman of the Audit Committee
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/s/ Richard W. Weening |
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Richard W. Weening, Audit Committee Member
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/s/ William C. Mortimore |
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William C. Mortimore, Audit Committee Member
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APPENDIX A
ARI NETWORK SERVICES, INC.
AUDIT COMMITTEE CHARTER
Effective as of October 21, 2005
I. Purpose
The Audit Committee shall assist the Board of Directors in fulfilling its responsibility to
the shareholders, to the investment community and to governmental agencies relating to corporate
accounting, financial reporting practices, and the quality and integrity of the financial reports
of the Company. The primary responsibility of the Committee is to oversee the Companys financial
reporting process on behalf of the Board of Directors and to report the results of its activities
to the Board. It is not the responsibility of the Committee or any member of the Committee to plan
or conduct audits or to determine that the Companys financial statements are complete and accurate
and are in accordance with generally accepted accounting principles. Management of the Company is
responsible for preparing the Companys financial statements, and the independent public
accountants are responsible for auditing the Companys financial statements.
II. Committee Composition
The Committee shall be composed of at least two members, comprised solely of independent
directors who are financially literate at the time of their appointment to the Committee. A
director is independent and financially literate if he or she meets the requirements set forth
in the rules of the Nasdaq Stock Market and the SEC. In addition, no member of the Committee shall
have participated in the preparation of the Companys financial statements during any of the past
three years.
The members of the Committee shall be elected by the Board to hold such office until their
successors shall be duly elected and qualified. Unless a Chairman is elected by the Board, the
members of the Committee may designate a Chairman by majority vote of the full Committee
membership.
III. Meetings and Reports
The Committee shall meet as frequently as the Committee deems necessary, but not less
frequently than four times each year. Special Meetings of the Committee may be called at any time
by any member thereof on not less than three days notice. The Committee shall report periodically
to the Board of Directors regarding the Committees activities, findings and recommendations.
The Committee may conduct its business and affairs at any time or location it deems
appropriate. Attendance and participation in a meeting may take place by conference telephone or
similar communications equipment by means of which all persons participating in the meeting can
hear each other. Any action to be taken at any meeting of the Committee may be taken without a
meeting, if all members of the Committee consent thereto in writing and such writing or writings
are filed with the minutes of the Committee. All decisions of the Committee shall be determined by
the affirmative vote of a majority of the members present.
A-1
ARI NETWORK SERVICES, INC.
AUDIT COMMITTEE RESPONSIBILITIES
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Audit Committee Meeting for: |
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Responsibility |
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Q2 |
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Comments |
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Oversight of the Independent Auditors |
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Appoint the
independent public
accountants to
audit the books and
records of the
Company and approve
audit engagement
fees and terms.
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Any changes in independent
public accountants must be
approved prior to proxy
mailing. |
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X |
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2. |
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Obtain a formal
written statement
listing all
relationships
between the
independent public
accountants and the
Company from the
independent public
accountants on an
annual basis.
Review and discuss
with the
independent public
accountants any
disclosed
relationships or
services that may
impact the
objectivity and
independence of the
independent public
accountants and
review the actions
taken to ensure the
independent public
accountants
independence. |
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3. |
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Receive the written
disclosures and
confirmation from
the independent
auditors required
by Independence
Standards Board
Standard No. 1
(Independence
Discussions with
Audit Committees),
as may be modified
or supplemented
from time to time,
discuss with the
independent
auditors the
independent
auditors
independence,
including engaging
in a dialog with
the independent
auditors with
respect to any
disclosed
relationships or
services that may
impact the
objectivity and
independence of the
independent
auditors, and take
appropriate action
in response to the
independent
auditors report to
satisfy itself of
the independent
auditors
independence. |
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4. |
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Monitor the
rotation of the
lead (or
coordinating) audit
partner having
primary
responsibility for
the audit and the
audit partner
responsible for
reviewing the audit
as required by law. |
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A-2
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Audit Committee Meeting for: |
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Responsibility |
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Comments |
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5.
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Review and approve
hiring decisions by
the Company
involving any
partner or employee
of the independent
public account who
worked on the
Companys account
during the
preceding three
years. No audit
engagement team
member that
participated in the
audit of the
Company within one
year prior to the
proposed date of
hire may be hired
by the Company as a
senior executive.
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X
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As needed |
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B. |
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Financial Statement and Disclosure Matters |
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1.
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Review with
management and the
independent public
accountants the
Companys audited
financial
statements to be
included in the
Companys Annual
Report on Form
10-K.
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Meet with the independent
auditors both with and
without Management present. |
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2.
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Review with
management and the
independent public
accountants the
Companys quarterly
operating results
to be included in
the Companys
Quarterly Reports
on Form 10-Q. The
Chairman of the
Committee may
represent the
entire Committee
for purposes of
this review.
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3.
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Review any
disclosures made to
the Committee by
the Companys Chief
Executive Officer
and Chief Financial
Officer regarding
any significant
deficiencies in the
design or operation
of the Companys
disclosure controls
and procedures.
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X
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As disclosures occur |
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4.
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As part of the
review of the
Companys Annual
Report on Form
10-K, review and
discuss with the
independent public
accountants (1) all
critical accounting
policies and
practices used in
the audited
financial
statements, (2) all
alternative
treatments of
financial
information within
generally accepted
accounting
principles that
have been discussed
with management,
the ramifications
of the use of such
alternative
disclosures and
treatments, and the
treatment preferred
by the independent
auditors, and (3)
other written
communications
between the
independent
auditors and
management, such as
any management
letter or schedule
of unadjusted
differences.
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5.
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Discuss with the
independent
auditors the
matters required to
be discussed by SAS
61 as may be
modified or
supplemented from
time to time.
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A-3
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Audit Committee Meeting for: |
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Responsibility |
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Q1 |
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Q2 |
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Q3 |
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Q4 |
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Other |
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Comments |
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6.
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Based on the review
and discussions
referred to in
Sections IV.A.3,
IV.B.1 and IV.B.5,
make a
recommendation to
the Board of
Directors regarding
inclusion of the
audited financial
statements in the
Companys Annual
Report on Form 10-K
filed each year.
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X |
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7.
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Review any
recommendations of
the independent
auditors resulting
from the audit and
monitor
managements
response in an
effort to ensure
that appropriate
actions are taken.
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Review initially at the Q4
meeting, establish actions
at the Q1 meeting, monitor
responses as needed. |
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8.
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Review with the
independent
auditors any matter
of significant
disagreement
between management
and the independent
auditors and any
other problems or
difficulties
encountered during
the course of the
audit and
managements
response to such
disagreements,
problems or
difficulties.
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X |
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9.
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Review with
management and the
independent
auditors (1) the
Companys annual
assessment of the
effectiveness of
its internal
control over
financial
reporting, (2) the
independent
auditors
attestation and
report about the
Companys
assessment and (3)
any material
weaknesses in the
Companys internal
control over
financial reporting
identified by
management.
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X |
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C. |
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Approval of Audit and Non-Audit Services |
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1.
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Except as provided
in (a) and (b)
below, pre-approve
all audit and
permitted non-audit
services to be
provided by the
Companys
independent public
accountants. The
Company may, if it
so chooses,
designate
pre-approval
responsibilities to
one or more members
of the Committee
and provide that
the designated
member must present
his decision to the
full Committee at
the Committees
next meeting.
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X
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Written approval required
prior to start of service. |
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(a) |
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Pre-approval of permitted non-audit services is not required if (1) the aggregate amount of all such non-audit services
constitutes not more than 5% of the total amount of revenues paid by the Company to the independent public accountants during
the fiscal year in which the non-audit services are provided, (2) such services were not recognized by the Company at the
time of engagement to be non-audit services, and (3) such services are promptly brought to the attention of the Committee and
approved by the Committee prior to the completion of the audit. |
A-4
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Audit Committee Meeting for: |
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Responsibility |
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Q2 |
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Q3 |
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Q4 |
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Other |
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Comments |
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The following are prohibited non-audit services which may not be performed by any independent public accountant for the
Company: (1) bookkeeping or other services related to the accounting records or financial statements of the Company, (2)
financial information systems design and implementation, (3) appraisal or valuation services, fairness opinions or
contribution-in-kind reports, (4) actuarial services, (5) internal audit outsourcing services, (6) management functions or
human resources, (7) broker or dealer, investment adviser, or investment banking services, (8) legal services and expert
services unrelated to the audit, and (9) any other service that the Public Company Accounting Oversight Board determines, by
regulation, is impermissible. |
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D. |
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Other |
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1.
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Review,
periodically, the
Companys
protection of
assets programs,
including
insurance.
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X |
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2.
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Establish, review
and update as
needed a Code of
Business Conduct
and Ethics for
certain principal
officers (Code) and
ensure that
management has
established a
system to enforce
the Code.
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X |
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3.
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Establish
procedures for the
receipt, retention
and treatment of
complaints received
by the Company
regarding
accounting,
internal accounting
controls or
auditing matters,
and the
confidential,
anonymous
submission by
employees of
concerns regarding
questionable
accounting or
auditing matters.
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X |
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4.
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Review and approve
any material
transaction to
which the Company
is a party
involving a
conflict of
interest with a
director, executive
officer or other
affiliate of the
Company.
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X
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As transactions occur |
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E. |
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Committee Administration |
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1.
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Review and assess
the adequacy of
this Charter on at
least an annual
basis.
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X |
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2.
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Review and assess
on an annual basis
whether the
Committee has
satisfied its
responsibilities
during the prior
year in compliance
with this Charter.
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3.
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Direct and
supervise an
investigation into
any matter the
Committee deems
necessary and
appropriate.
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X
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As Committee deems necessary |
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4.
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In the course of
fulfilling its
duties, the
Committee has the
authority to retain
its own independent
legal, accounting
and other advisors
in its sole
discretion. The
Company shall
provide for
appropriate
funding, as
determined by the
Committee, for
payment of fees to
any such advisors.
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As Committee deems necessary |
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5.
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Take action in
connection with
such other powers
and
responsibilities as
the Board of
Directors may, from
time to time,
determine.
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X
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As the Board of Directors
deems necessary |
A-5
ANNUAL MEETING OF SHAREHOLDERS OF
ARI NETWORK SERVICES, INC.
December 8, 2005
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible
¯ Please detach along perforated line and mail in the envelope provided. ¯
n
PLEASE
SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK
YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x
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1.
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Election of Director: |
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NOMINEE: |
¨
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FOR |
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BRIAN E. DEARING |
¨
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WITHHOLD AUTHORITY |
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To change the address on your account, please check the box at right and indicate
your new address in the address space above. Please note that changes to this
the registered name(s) on the account may not be submitted via this method. |
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FOR
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AGAINST
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ABSTAIN |
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2.
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To ratify the selection of Wipfli LLP as the
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¨
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¨ |
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Companys independent public accountants for fiscal 2006. |
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3.
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In their discretion, the proxy holders are authorized to
vote upon such other matters as may properly come before
the 2005 Annual Meeting and at any adjournment or
postponement thereof.
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THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
THE ELECTION OF THE NOMINEE FOR DIRECTOR AND FOR THE
OTHER PROPOSAL. |
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Signature of Shareholder |
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Signature of Shareholder |
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Note: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, attorney, trustee or guardian, please give full title as such. If the signer is a corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. |
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ARI NETWORK SERVICES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, a shareholder of ARI Network Services, Inc. (the Company), hereby appoints
Brian E. Dearing and Timothy Sherlock, and each of them, as proxies, each with the power to appoint
a substitute, and hereby authorizes each of them to represent and to vote, as designated on the
reverse side, all of the shares of stock of the Company held of record by the undersigned on
October 21, 2005, at the 2005 Annual Meeting of Shareholders of the Company to be held on December
8, 2005 at 9:00 a.m. and at any and all adjournments thereof.
(Continued and to be signed on the reverse side)