<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 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):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
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(4) Date filed:
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<PAGE> 2
ARI NETWORK SERVICES, INC.
330 East Kilbourn Avenue
Milwaukee, Wisconsin 53202
---------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
December 9, 1999
To the Shareholders of ARI Network Services, Inc.:
The 1999 Annual Meeting of Shareholders of ARI Network Services, Inc.
will be held at 330 East Kilbourn Ave., Suite 807, Milwaukee, Wisconsin, on
Thursday, December 9, 1999 at 9:00 a.m., local time, for the following purposes:
1. To elect one director to serve until 2002.
2. To ratify the appointment of Ernst & Young LLP as independent auditors.
3. To transact such other business as may properly come before the meeting.
Shareholders of record at the close of business on October 29, 1999 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.
Mark L. Koczela, Secretary
November 8, 1999
<PAGE> 3
ARI NETWORK SERVICES, INC.
330 East Kilbourn Avenue
Milwaukee, Wisconsin 53202
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 29, 1999 will be entitled to one vote for each share of
Common Stock registered in such shareholder's name. As of October 29, 1999, the
Company had outstanding 5,843,304 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 Company's shareholders commencing on November 8, 1999.
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 A 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). THE OTHER PROPOSAL WILL BE APPROVED IF THE
AFFIRMATIVE VOTES EXCEED THE VOTES CAST AGAINST. BROKER NON-VOTES ARE COUNTED
ONLY FOR PURPOSES OF DETERMINING WHETHER A QUORUM IS PRESENT AT THE MEETING BUT
ARE NOT CONSIDERED PRESENT WITH RESPECT TO THAT MATTER AND, THEREFORE, WILL HAVE
NO EFFECT ON THE OUTCOME OF THE VOTING. ABSTENTIONS WILL ALSO HAVE NO EFFECT ON
THE VOTING.
2
<PAGE> 4
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 September 30,
1999.
<TABLE>
<CAPTION>
NAME OF AMOUNT AND NATURE OF
BENEFICIAL OWNERS BENEFICIAL OWNERSHIP (1) PERCENT
----------------- ------------------------ -------
<S> <C> <C>
WITECH Corporation (2)(3) 1,305,308 21.3%
231 West Michigan Street
Milwaukee, WI 53203
Briggs & Stratton Corporation 840,000 14.4%
12301 West Wirth Street
Milwaukee, WI 53201
Vulcan Ventures Incorporated 508,198 8.7%
110 110th Avenue, N.E.
Bellevue, WA 98004
State of Wisconsin Investment Board 391,875 6.7%
121 W. Wilson Street
Madison, WI 53703
RPI Holdings, Inc. (4)(5) 305,816 5.2%
330 East Kilbourn Avenue
Milwaukee, WI 53203
John C. Bray (6) 50,750 *
Gordon J. Bridge (7) 38,000 *
Francis Brzezinski (3)(8) 14,194 *
George D. Dalton (9) 31,251 *
Brian E. Dearing (10) 129,500 2.2%
Mark L. Koczela (11) 76,478 1.3%
Michael E. McGurk (12) 28,626 *
Frederic G. Tillman (13) 2,500 *
Richard W. Weening (5)(14) 34,661 *
All executive officers and directors as a 405,960 6.5%
group (9 persons) (15)
</TABLE>
- ------------
*Less than 1%
3
<PAGE> 5
(1) 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. Indicated options and warrants are
exercisable within 60 days of September 30, 1999.
(2) WITECH's shares include 280,000 shares subject to warrants. Excludes
20,350 shares of non-voting, non-convertible Series A Preferred Stock
(the entire series) also owned by WITECH.
(3) Mr. Brzezinski is an officer and director of WITECH and has voting
control of the Common Stock held by WITECH.
(4) Includes 15,157 shares subject to a warrant.
(5) Mr. Weening is a shareholder, director, and President of RPI Holdings,
Inc. ("RPI").
(6) Includes options for 49,500 shares.
(7) Includes options for 36,000 shares.
(8) Includes options for 13,944 shares. Mr. Brzezinski's total excludes any
shares held by WITECH.
(9) Includes options for 15,501 shares.
(10) Includes options for 127,000 shares.
(11) Includes options for 75,003 shares.
(12) Includes options for 26,126 shares.
(13) Includes options for 2,500 shares.
(14) Includes options for 5,691 shares and a warrant for 15,157 shares. Mr.
Weening's total excludes any shares held by RPI.
(15) Includes options and warrants for 366,422 shares. Excludes shares held
by WITECH and RPI.
4
<PAGE> 6
ELECTION OF DIRECTORS
The Company's directors are divided into three classes, with staggered
terms of three years each. At the meeting, shareholders will elect one director
to serve until 2002. Messrs. Robison and Alverson have declined to stand for
reelection as directors because of other commitments. Until their replacements
have been appointed, the Board will be composed of five members.
NOMINEE FOR ELECTION TO SERVE
UNTIL THE ANNUAL MEETING IN 2002
FRANCIS BRZEZINSKI, 48; Mr. Brzezinski, a director since 1990, is Vice
President, Wisconsin Energy Corporation and President of its real estate and
venture subsidiaries WISPARK, WITECH, Minergy and WISVEST.
DIRECTORS WHOSE TERMS
EXPIRE AT THE ANNUAL MEETING IN 2001
BRIAN E. DEARING, 44; Mr. Dearing, is the President and Chief
Executive Officer, Acting Chief Financial Officer and Treasurer 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, 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.
RICHARD W. WEENING, 53; 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 and
Chairman and Chief Executive Officer of the Company until October 1990. Mr.
Weening is also a director of QUAESTUS Management Corporation, a private equity
investment management firm. From 1972 to present Mr. Weening has also served as
President of RPI, a significant shareholder of the Company. See "Security
Ownership of Certain Beneficial Owners". Mr. Weening currently serves as
Executive Chairman and CEO of Cumulus Media, Inc. (NASDAQ:CMLS). In addition,
Mr. Weening is the Treasurer and Chairman of the Board of Cumulus Broadcasting
Inc.
DIRECTORS WHOSE TERMS
EXPIRE AT THE ANNUAL MEETING IN 2000
GEORGE D. DALTON, 70; Mr. Dalton, a director since March, 1994, is
Chairman of the Board of Directors of Fiserv Inc. (NASDAQ:FISV), a major
provider of data processing outsourcing and related products and services for
financial institutions. Mr. Dalton was one of the original investors in Fiserv
when it was formed in 1984. Mr. Dalton also serves as a board member for APAC
Customer Services Inc. (NASDAQ:APAC), Clark/Bardes Holdings, Inc (NASDAQ:CLKB)
and Wisconsin Wireless Inc.
GORDON J. BRIDGE, 57; Mr. Bridge, a director since December 1995,
is Chairman of the Board and a director of ConnectInc.com Company (NASDAQ:CNKT).
Mr. Bridge was with AT&T where he held various executive management positions
from 1988 to 1995. Most recently, Mr. Bridge served as Vice President, Corporate
Strategy for Emerging Services and Products for AT&T. He previously managed
three business units for AT&T, including Consumer Interactive Services, EasyLink
Services and Computer Systems. Prior to joining AT&T, Mr. Bridge was with the
IBM Corporation for 23 years. Mr. Bridge holds a B.A. in mathematics from
Bradley University.
5
<PAGE> 7
The Board of Directors held seven meetings in fiscal 1999. Each
incumbent director, except Mssrs. Robison and Weening, attended 75 percent or
more of the combined number of meetings of the Board and Committees on which
such director served.
The Company's Board of Directors has established an Executive Committee
that currently is composed of Mr. Dearing, Mr. Bridge, Mr. Brzezinski and Mr.
Weening. Mr. Dalton will replace Mr. Weening on the Executive Committee on
December 9, 1999. Mr. Bridge serves as Chairman of the Executive Committee. The
duties of the Executive Committee are to: (1) act as a resource to the CEO in
the development of the Company's business plan, overall business strategy and
any other matter which the CEO or any member deems appropriate; (2) consider and
act upon matters requiring Board consideration between regular meetings of the
full Board not prohibited by law or by the by-laws of the Company; (3) review
and approve compensation including base salary, benefits, bonus and (subject to
the review and approval of the Stock Option Committee) stock option awards for
the CEO and the CEO's recommendations for all employees; and (4) review and make
recommendations to the Board as to appropriate action regarding any and all
matters of corporate finance, acquisitions, the sale of stock, the incurrence of
debt and the sale of assets. The Executive Committee met four times during
fiscal 1999.
The Company's Board of Directors has established an Audit Committee
that currently is composed of Mr. Brzezinski and Mr. Alverson. The Board will
appoint a director to replace Mr. Alverson on the Audit Committee at its
earliest possible convenience. The duties of the Audit Committee are to: (1)
evaluate the independent auditors; (2) make recommendations as to the selection
of independent auditors; (3) review the audit plan and scope with the
independent auditors; (4) review audit results; (5) review transactions between
management and the Company; (6) review reports of the accounting staff of the
Company and its auditors as to the adequacy of its system of internal controls;
and (7) make appropriate inquiries respecting financial matters to the auditors
and others. The Audit Committee met one time during fiscal 1999.
The Company's Board of Directors has established a Stock Option
Committee that currently is composed of Mr. Brzezinski, Mr. Dalton and Mr.
Alverson. The Board will appoint a director to replace Mr. Alverson on the Stock
Option Committee at its earliest possible convenience. The duties of the Stock
Option Committee are to administer the Company's 1991 Incentive Stock Option
Plan, the 1992 Employee Stock Purchase Plan and the 1993 Director Stock Option
Plan. The Stock Option Committee met three times during fiscal 1999.
The Board of Directors does not have a nominating committee, as
decisions regarding Board membership are made by the full Board.
Each non-employee member of the Board of Directors is compensated under
the Director Stock Option Plan in lieu of any cash compensation. Under the Plan,
each participant receives options for 375 shares of the Company's common stock
on the first business day of each calendar year and receives options for an
additional 375 shares for each meeting of the Board and 188 shares for each
meeting of a Committee attended by the participant.
6
<PAGE> 8
EXECUTIVE COMPENSATION
The following table sets forth compensation for the last three fiscal
years for each of the Company's executive officers whose salary and bonus during
fiscal 1999 exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
------------------- ------------
Securities
Name and Other Annual Underlying
Principal Position Year Salary Bonus Compensation Options/SARs (#)
------------------ ---- ---------- --------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
Brian E. Dearing, 1999 $ 150,000 $ 50,023 -- 35,000
President and Chief Executive 1998 150,000 38,829 -- 24,000
Officer 1997 150,000 33,683 -- 25,000
Mark L. Koczela, Executive Vice 1999 $ 125,000 $ 46,407 -- 25,000
President of Business Development 1998 125,000 33,562 -- 32,500
& Administration 1997 125,000 38,947 -- 25,000
John C. Bray, 1999 $ 130,000 $ 15,566 $ 56,121 15,000
Vice President of Sales (1) 1998 130,000 15,204 11,810 16,500
1997 111,032 19,801 21,402 37,500
Michael E. McGurk, Vice President 1999 $ 100,000 $ 11,124 -- 12,500
of Technology Operations (2) 1998 100,000 19,579 -- 16,500
1997 53,529 18,343 -- 28,125
Frederic G. Tillman, Vice President 1999 $ 88,846 $ 39,937 -- 10,000
of Technology Development (3)
</TABLE>
- -----------------
(1) Mr. Bray's employment with the Company commenced September 30, 1996.
Other annual compensation consists of commission paid on new sales.
(2) Mr. McGurk's employment with the Company commenced January 20, 1997.
(3) Mr. Tillman's employment with the Company commenced on September 15,
1998.
7
<PAGE> 9
The table below provides information regarding option grants in the year
ended July 31, 1999 to the persons named in the Summary Compensation Table
pursuant to the Company's 1991 Stock Option Plan.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO
OPTIONS/SARS EMPLOYEES IN EXERCISE OR BASE
NAME GRANTED # (1) FISCAL YEAR (1) PRICE ($/SHARE) EXPIRATION
---- ---------- --------------- --------------- -----------
<S> <C> <C> <C> <C>
Brian E. Dearing 35,000 16.5% $2.125 12/2008
Mark L. Koczela 25,000 11.8% 2.125 12/2008
John C. Bray 15,000 7.1% 2.125 12/2008
Michael E. McGurk 12,500 5.9% 2.125 12/2008
Frederic G. Tillman 10,000 4.7% 2.125 12/2008
</TABLE>
- -------------------
(1) All options granted in the fiscal year were awarded with an exercise
price equal to the fair market value of the Common Stock on the date of
grant. Under the terms of the Plan, the Stock Option Committee retains
discretion to, among other things, accelerate the exercise of an option,
modify the terms of outstanding options (including decreasing the
exercise price), and permit the exercise price and tax withholding
obligations related to exercise to be paid by delivery of already owned
shares or by offset of the underlying shares.
The table below provides information regarding the exercises of stock
options during fiscal 1999 and the value of stock options held at July 31, 1999
by the persons named in the Summary Compensation Table.
AGGREGATED OPTION/SAR EXERCISES
IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTION/SARS AT IN-THE-MONEY OPTIONS AT
ACQUIRED ON VALUE FISCAL YEAR END (#) FISCAL YEAR END
NAME EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------ ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
Brian E. Dearing -- -- 127,000/44,500 $36,094/$108,281
Mark L. Koczela -- -- 75,003/41,250 $25,781/$77,344
John C. Bray -- -- 49,500/19,500 $15,469/$46,406
Michael E. McGurk -- -- 26,126/30,999 $12,891/$38,672
Frederic G. Tillman -- -- 2,500/7,500 $10,313/$30,938
</TABLE>
8
<PAGE> 10
The table below provides information regarding long-term incentive plan
awards in fiscal 1999 to the persons named in the Summary Compensation Table
LONG-TERM INCENTIVE PLAN AWARDS
<TABLE>
<CAPTION>
Estimated Future Payouts
Under Non-Stock Price-Based Plans
----------------------------------
Number Period
Name of Units Until Payment Threshold Target Maximum
---- -------- ------------- --------- ------ -------
<S> <C> <C> <C> <C> <C>
Brian E. Dearing (1) (2) $ 11,667 $ 11,667 $ 11,667
(1) (3) $ 17,511 $ 17,511 $ 17,511
Mark L. Koczela (1) (2) $ 8,750 $ 8,750 $ 8,750
(1) (3) $ 19,453 $ 19,453 $ 19,453
John C. Bray (1) (2) $ 8,750 $ 8,750 $ 8,750
(1) (3) $ 7,783 $ 7,783 $ 7,783
Michael E. McGurk (1) (2) $ 8,750 $ 8,750 $ 8,750
(1) (3) $ 5,562 $ 5,562 $ 5,562
</TABLE>
- ---------------
(1) Consists of contingent, deferred cash awards.
(2) Paid out at such time as the Company, in the judgment of the Board,
generates sufficient cash resources from operations regardless of whether
the participant is then employed by the Company.
(3) Vesting in two equal installments (August 1, 2000 and August 1, 2001),
provided the participant is then employed by the Company.
On May 20, 1999 the Board of Directors adopted Change of Control
Agreements ("Change of Control Agreements") which contained "Change in Control"
benefits for the current key officers of ARI. The officers include Brian E.
Dearing, Mark L. Koczela, John C. Bray, and Michael M. McGurk. In addition, on
August 19, 1999, the Board approved a similar Change of Control Agreement for
Frederic G. Tillman. The Change of Control Agreements are intended to retain the
services of these officers and provide for continuity of management in the event
of any "Change in 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 in Control," as defined
below, the officer's employment is terminated without cause. For this purpose,
"without cause" is defined to include: (i) a significant reduction in the
executive's compensation duties, title or reporting responsibilities; (ii) a
change in the executive's 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 officer's average annual bonus for the
preceding three fiscal years. If the officer leaves ARI for any other reason,
within two years following a Change in Control, the officer will receive a
prorated portion of the officer's 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 in Control,
all stock options and similar awards become immediately vested and all deferred
compensation becomes payable.
9
<PAGE> 11
For purposes of the Change of Control Agreements, a "Change in 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 ARI's 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 Company's shareholders of a complete
liquidation or dissolution of the Company.
On February 18, 1999, the Board approved an increase in salary for
Messrs. Dearing, Bray, Koczela, and McGurk (the "Deferred Compensation Plan.")
Under the Deferred Compensation Plan, Messrs. Dearing, Bray, Koczela and McGurk
were granted pay increases in the following amounts: Mr. Dearing $20,000; Mr.
Bray $15,000; Mr. Koczela $15,000; and Mr. McGurk $15,000. The pay increases are
retroactive to January 1, 1999. Any amounts earned under the Deferred
Compensation Plan are deferred until the Company, in the judgment of the Board,
generates sufficient cash from operations such that the Company is able to
afford to make the payments. Such amounts earned are to be paid regardless of
whether the participant is then employed by the Company. Under the Deferred
Compensation Plan the Company allocated the following amounts during fiscal
1999: Mr. Dearing $11,667; Mr. Bray $8,750; Mr. Koczela $8,750; and Mr. McGurk
$8,750.
On February 18, 1999, the Board also approved an additional bonus for
Messrs. Dearing, Bray, Koczela, and McGurk (the "Deferred Bonus Plan"). Under
the Deferred Bonus Plan, Messrs. Dearing, Bray, Koczela, and McGurk were granted
a one-time bonus equal to the bonus that each executive would earn for fiscal
1999. The bonus earned under the Deferred Bonus Plan will vest on August 1,
1999, August 1, 2000 and August 1, 2001 (the "Vesting Dates") assuming the
participant is employed by the Company on such dates. Should the employment of
any participant with the Company terminate for any reason before any Vesting
Date, no further installments will be paid to such participant under the
Deferred Bonus Plan. Under the Deferred Bonus Plan the amount of the bonus
accrued for each participant in fiscal 1999 is as follows: Mr. Dearing $26,267;
Mr. Bray $11,674; Mr. Koczela $29,180; and Mr. McGurk $8,343.
10
<PAGE> 12
CERTAIN TRANSACTIONS
The Company has a line of credit with WITECH Corporation (the "WITECH
Line") that has been in place since October 4, 1993. In September 1998, the
amount available under the WITECH Line was increased from $2.0 million to $2.8
million. In connection with this amendment, the Company issued WITECH 250 shares
of the Company's Series A Preferred Stock. In January 1999, the amount available
under the WITECH Line was increased from $2.8 million to $3.0 million. In
connection with this amendment, the Company issued WITECH 100 shares of the
Company's Series A Preferred Stock.
On September 30, 1999, the Company and WITECH restructured and amended
the WITECH Line in order to (1) reduce the revolver from $3.0 million to $1.0
million, and (2) establish a $1.0 million term loan payable in equal monthly
installments over three years, commencing November 1, 1999. The revolver bears
interest at prime plus 2.0% and the term loan bears interest at prime plus
3.25%. In addition, WITECH purchased $1.0 million of common stock, or 195,122
shares at $5 1/8 per share. In connection with this amendment the Company paid
WITECH $12,500 and issued a seven year warrant to purchase 30,000 shares of the
Company's common stock at $5 1/8 per share. Since the inception of the WITECH
Line, the Company has issued warrants for an aggregate of 280,000 shares of
Common Stock exercisable at prices ranging from $2 1/8 to $5 1/8 per share. The
exercise price of the warrants is reduced if the Company sells stock for less
than the then current exercise price.
On September 15, 1998, the Company purchased from Briggs & Stratton
Corporation ("Briggs") the assets of Briggs' Powercom 2000 operating division
which was in the business of providing electronic commerce software and services
to companies primarily in the outdoor power, power tool and power sports
industries. In connection with the acquisition, the Company assumed certain
liabilities of the business and issued to Briggs 840,000 shares of Common Stock.
Briggs received "piggyback" registration rights with respect to its shares and
the right, after September 15, 1999, to require the Company to register its
shares for resale. Briggs also agreed to become a customer of the Company and
executed a Master Agreement with the Company on July 8, 1999 (the "Customer
Contract"). The Customer Contract provides for the Company to license its
electronic commerce and electronic cataloging software to Briggs and its dealers
and distributors and to provide certain related professional services. The
Customer Contract has an initial term of one year and automatically renews for
additional terms of one year each unless either party gives written notice of
termination to the other party. During fiscal 1999 the Company invoiced Briggs
$389,360 for products and services.
In connection with the acquisition of Powercom, the Company obtained a
line of credit from Briggs in the amount of $250,000 (the "Briggs Line").
Borrowings under the Briggs Line were secured by certain accounts receivable
associated with the Powercom business. Borrowings under the Briggs Line bore
interest at prime plus 2%. Pursuant to an amendment dated May 13, 1999, the
Briggs Line was extended to October 31, 1999. On October 7, 1999, the Company
terminated the Briggs Line by paying the amount outstanding of $182,264.50.
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, except Mr. Tillman filed one late Form 3 required when he became an
officer of the Company, Mr. Bridge filed one late Form 4 with respect to a stock
purchase and Mr. Weening filed one late Form 5 with respect to stock option
grants received during fiscal 1999.
11
<PAGE> 13
RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors, upon recommendation of its Audit Committee, has
appointed Ernst & Young LLP to audit the books and accounts of the Company and
its subsidiaries for the fiscal year ending July 31, 2000 and is seeking the
ratification of this appointment by the shareholders. 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.
A representative of Ernst & Young 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.
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 Company's
2000 Annual Meeting must be received by the Company at its executive offices on
or before September 8, 2000, 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 11, 2000 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. No solicitation other than by mail
is contemplated, except that officers or employees of the Company may solicit
the return of proxies from certain shareholders by telephone, facsimile or
personal solicitation.
SHAREHOLDERS MAY OBTAIN A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM
10-K AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AT NO COST BY WRITING
TO THE OFFICE OF THE CHIEF EXECUTIVE OFFICER, ARI NETWORK SERVICES, INC., 330 E.
KILBOURN AVENUE, MILWAUKEE, WI 53202.
BY ORDER OF THE BOARD OF DIRECTORS
Mark L. Koczela, Secretary
November 8,
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<PAGE> 14
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 Mark L. Koczela 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 below, all of
the shares of stock of the Company held of record by the undersigned on October
29, 1999, at the 1999 Annual Meeting of Shareholders of the Company to be held
on December 9, 1999 at 9:00 a.m. and at any and all adjournments thereof.
1. ELECTION OF DIRECTORS:
[ ] FOR the nominee below to serve [ ] WITHHOLD AUTHORITY to
until the Company's 2002 Annual vote for the nominee listed
Meeting and until his successor below.
is elected and qualified (except
as marked to the contrary below).
(INSTRUCTIONS: To withhold authority to vote for any individual
nominee, strike a line through that nominee's name in the list below.)
FRANCIS BRZEZINSKI
2. To ratify the selection of Ernst & Young LLP as the Company's Independent
Public Accountants for fiscal 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the proxy holders are authorized to vote upon such
other matters as may properly come before the 1999 Annual Meeting and at
any adjournment or postponement thereof.
(Continued and to be signed on the reverse side)
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.
Please sign exactly as your name appears below. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
Date: , 1999
-------------------------
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(Signature of Shareholder)
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(Signature of Shareholder - if held jointly)
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENVELOPE PROVIDED.
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