Exhibit 10.30
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is entered into on
this ___ day of August, 2002, to be effective as of the 1st day of July, 2002
(the "Effective Date"), by and among Cooperative Computing, Inc., a Delaware
corporation (the "Company"), Cooperative Computing Holding Company, Inc., a
Delaware corporation ("CCHC"), and Xxxxxxx X. Xxxxxx (the "Executive").
WHEREAS, Executive is currently employed by the Company pursuant to an
agreement dated June 14, 1999 and the amendment of that agreement dated June 27,
2000 (as so amended, the "Prior Agreement");
WHEREAS, the Board of Directors of the Company (the "Board") has determined
that it is essential and in the best interest of the Company and its
shareholders to continue to employ Executive in his executive capacity with the
Company, and Executive desires to continue to be employed by the Company in said
capacity; and
WHEREAS, in order to induce Executive to enter into this Agreement and to
continue employment by the Company, the Company desires to provide Executive
with certain benefits during the term of his employment and, in the event of a
Change of Control (as defined below) or if his employment is terminated, to
provide Executive with the benefits and payments described herein.
NOW, THEREFORE, in consideration of the respective agreements of the
parties contained herein, it is agreed as follows:
1. Employment Term.
Subject to Section 6 herein, the Company agrees to continue to employ
Executive, and Executive agrees to continue to be employed by the Company, in
accordance with the terms and provisions of this Agreement, until September 30,
2005 (the "Employment Term").
2. Employment.
(a) During the Employment Term, Executive shall be employed as the
President, Chief Executive Officer and Chairman of the Board and shall report
directly to the Board. Executive shall perform the duties, undertake the
responsibilities and exercise the authority from time to time delegated to him
by the Board as a whole or as are customarily performed, undertaken and
exercised by persons situated in a similar executive capacity. He shall also
promote, by entertainment or otherwise, the business of the Company.
(b) During the Employment Term, excluding periods of vacation and sick
leave to which Executive is entitled, Executive agrees to devote his business
time and attention to the business and affairs of the Company to the extent
necessary to discharge the responsibilities assigned to Executive hereunder.
Executive may (1) serve on corporate, civil or charitable boards or committees,
(2) manage personal investments and (3) engage in any charitable, political or
not-for-profit activity, so long as such activities do not significantly
interfere with the performance of Executive's responsibilities hereunder.
3. Compensation.
(a) Base Salary. Beginning on the Effective Date, the Company agrees to pay
Executive an annual base salary of $375,000.00, payable biweekly in accordance
with the regular payroll practices of the Company (the "Base Salary"). Such Base
Salary shall be subject to appropriate increase as determined in the sole
discretion of the Board, the Compensation Committee of the Board or the Board of
Directors or Compensation Committee of CCHC.
(b) Annual Incentive Bonus. In addition to the Base Salary, beginning
October 1, 2002, Executive shall be eligible to receive an annual incentive
bonus (the "Annual Incentive Bonus") with an annual minimum target of not less
than $300,000 with a maximum bonus opportunity of 150% (i.e., $450,000) based on
the Company's achievement of financial and other objectives, and paid quarterly
in accordance with the terms and conditions of the Annual Incentive Bonus Plan
for executives of the Company approved by the Board, the Compensation Committee
of the Board or the Board of Directors or Compensation Committee of CCHC.
(c) Special Cash Incentives. In addition to the Base Salary and Annual
Incentive Bonus described above, Executive will be entitled to certain Special
Cash Incentives described below.
(1) Special Cash Incentive for Fiscal Year 2002. Executive shall be
entitled to a Special Cash Bonus in the amount of $2 million if
the Company achieves a $10 million increase, after accrual for
bonuses payable to management for Fiscal Year 2002, in Operating
Cash Flow (as defined below) for Fiscal Year 2002 over the
Operating Cash Flow for Fiscal Year 2001. Any bonus payable
pursuant to this provision will be payable within thirty (30) days
after approval by the Board or the Audit Committee of either the
Company or CCHC of the computation of Operating Cash Flow for
Fiscal Year 2002, but in no event later than one hundred twenty
(120) days after the end of such Fiscal Year. In the event that
the Company has achieved the $10 million increase set forth above
or is reasonably likely to achieve the $10 million increase, and
(i) there is a Change of Control, the Company shall immediately on
the Change of Control Date pay to Executive the full $2 million
Special Cash Bonus for Fiscal Year 2002 (to the extent such
Special Cash Bonus has not previously been paid) or (ii) Executive
is terminated by the Company without Good Cause (as defined
below), or Executive terminates his employment with Good Reason
(as defined below), the Company shall, within five (5) business
days after the Termination Date, pay to Executive the full $2
million Special Cash Bonus for Fiscal Year 2002 (to the extent
such Special Cash Bonus has not previously been paid). For
purposes of this Agreement, "Change of Control" and "Change of
Control Date" shall have the meanings for those terms set forth in
the Change of Control Bonus Agreement among Executive, the Company
and CCHC (the "Change of Control Agreement") attached hereto as
Exhibit A and incorporated herein for all purposes.
(2) Annual Special Cash Incentives in Fiscal Years 2003 through 2005.
Executive shall further be entitled to an Annual Special Cash
Bonus in respect of Fiscal Years 2003 through 2005 for any such
Fiscal Year in which the Operating Cash Flow exceeds the Operating
Cash Flow (in each case, after accrual for bonuses payable to
management) for the prior Fiscal Year by at least $5 million.
Executive is entitled to a $1 million Special Cash Bonus if the
Operating Cash
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Flow for the applicable Fiscal Year exceeds the prior Fiscal Year's
Operating Cash Flow by $5 million, ramping linearly (for example, at a
rate of $10,000.00 per $50,000.00 increase in Operating Cash Flow), up
to a maximum Special Cash Bonus of $2 million for each Fiscal Year in
which the Operating Cash Flow exceeds the prior Fiscal Year's Operating
Cash Flow by $10 million or more. For purposes of this Agreement
"Fiscal Year" shall mean the Company's fiscal year ending September 30
of each year.
(a) In the event a Change of Control occurs prior to the end of a
Fiscal Year (other than Fiscal Year 2002 which is governed by
Section 3(c)(1)), Executive shall be entitled to a pro-rated
Special Cash Bonus for the year in which the Change of Control
occurs based on the year-to-date percentage increase in the
Operating Cash Flow (calculated as of the most recent month ended
prior to the Change of Control for which financial statements are
available) over the same period for the prior Fiscal Year at the
time of the Change of Control. The amount of the pro-rated Special
Cash Bonus shall be determined as follows and paid immediately on
the Change of Control Date:
(i) Calculate the year-to-date Operating Cash Flow (calculated
as of the most recent month ended prior to the Change of
Control for which financial statements are available);
(ii) Divide the year-to-date Operating Cash Flow (calculated as
of the most recent month ended prior to the Change of
Control for which financial statements are available) by the
Operating Cash Flow for the same period for the prior Fiscal
Year;
(iii) Multiply the result obtained in paragraph (ii) above by the
Operating Cash Flow for the prior full Fiscal Year;
(iv) Subtract the Operating Cash Flow for the prior full Fiscal
Year from the amount calculated in paragraph (iii);
(v) Use the positive amount calculated in paragraph (iv) to
determine the amount (if any) of the annual Special Cash
Bonus to which Executive would be entitled during the
applicable Fiscal Year as specified above; and
(vi) Pro-rate the annual Special Cash Bonus determined in
paragraph (v) for the number of days worked in the Fiscal
Year in which the Change of Control occurs, unless the
year-to-date increase in Operating Cash Flow over the same
period for the prior Fiscal Year is $5 million or more in
which event the Special Cash Bonus due Executive will not be
prorated.
(b) In the event that Executive's employment is terminated by the
Company without Good Cause, or by Executive with Good Reason,
Executive shall be entitled to a Special Cash Bonus for the Fiscal
Year in which the termination or resignation occurs based on the
year-to-date percentage increase in the Operating Cash Flow over
the same period for the prior
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Fiscal Year (calculated as of the most recent month ended
prior to the Termination Date (as defined below) for which
financial statements are available). The determination as to
whether or not Executive is entitled to any Special Cash
Bonus will be made using the calculations set forth in
paragraphs (i), (ii), (iii), (iv), (v) and (vi) of Section
3(c)(2)(a) above, unless the year-to-date increase in
Operating Cash Flow over the same period for the prior
Fiscal Year is $5 million or more in which event the Special
Cash Bonus due Executive will not be prorated. The Company
shall pay to Executive any such Special Cash Bonus within
five (5) business days after the Termination Date.
(3) For the purposes of this Agreement, "Operating Cash Flow" shall
mean Consolidated EBITDA (as defined in the Company's indenture
governing its 9% senior subordinated notes due 2008) less capital
expenditures incurred during the applicable period, provided that
such Consolidated EBITDA will not be impacted negatively or
positively by such other unusual items as Executive and the Board
may designate in writing regarding any applicable period. In
addition to the foregoing, in calculating the Operating Cash Flow,
appropriate adjustments shall be made to the measurements of
performance to give pro forma effect to any sale or purchase by
the Company or CCHC of the assets or stock, whether pursuant to a
merger, exchange, acquisition, or otherwise, of any division or
line of business, as applicable, occurring during such fiscal
year.
4. Benefits.
(a) Employee Benefits. During the Employment Term, Executive and/or
Executive's family, as the case may be, shall be eligible to participate in all
welfare benefit plans, practices and programs provided by the Company to other
executive officers of the Company, including, without limitation, all medical,
prescription, hospitalization, disability, dental, employee life, group life,
accidental death, salary continuation, or travel accident insurance plans or
programs to the extent applicable generally to other executives of the Company.
Unless otherwise provided herein, the compensation and benefits hereunder, and
Executive's participation in, such plans, practices and programs shall be on the
same basis and terms as are applicable to employees of the Company generally,
but in no event on a basis less favorable in terms of benefit levels and
coverage then offered to other executive officers of the Company.
(b) Executive Benefits. During the Employment Term, Executive shall be
eligible to participate in all executive benefit or incentive compensation plans
maintained or established by the Company for the purpose of providing
compensation and/or benefits to executives of the Company including, but not
limited to, any supplemental retirement or deferred compensation plans. Unless
otherwise provided herein, the compensation and benefits under, and Executive's
participation in, such plans shall be on the same basis and terms as other
similarly situated executives of the Company. No additional compensation
provided under any of such plans shall be deemed to modify or otherwise affect
the terms of this Agreement or any of the Executive's entitlements hereunder.
Notwithstanding the above, except as provided in this Agreement and in the
Change of Control Agreement, Executive shall not be entitled to participate in
any incentive or bonus compensation plans enacted after the Effective Date,
unless Executive's participation is expressly approved by the Board.
(c) Vacation. Executive shall be entitled to five (5) weeks per annum
vacation.
(d) Expenses. Executive shall be entitled to receive reimbursement of all
out-of-pocket expenses, reasonably incurred by him in connection with the
performance of his duties hereunder or for
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promoting, pursuing or otherwise furthering the business or interest of the
Company in accordance with the accounting procedures and expense reimbursement
policies of the Company as it shall adopt from time to time.
5. Change of Control Bonus.
Contemporaneous with the execution of this Agreement, the Company, CCHC and
Executive will execute the Change of Control Bonus Agreement attached hereto as
Exhibit A pursuant to which Executive is entitled to certain payments in the
event of the occurrence of a Change of Control or Divestiture (as defined
therein).
6. Termination.
Executive's employment hereunder may be terminated under the following
circumstances:
(a) Voluntary Termination. Either Executive or the Company may voluntarily
terminate Executive's employment hereunder at any time. Payments and benefits
due Executive in the event of termination of employment by either party to this
Agreement are set forth in this Agreement and the Change of Control Agreement.
(b) Good Cause. The Company may terminate Executive's employment for "Good
Cause." "Good Cause" means (a) Executive is convicted of a crime (other than
minor traffic offenses and the like), (b) Executive breaches any obligations
under the Non-Competition/Non-Solicitation Agreement dated as of June 14, 1999
(and fails to cure the breach within 30 days after notice), (c) Executive
engages in dishonesty or fraud, (d) Executive is physically able to perform his
duties and services but refuses to do so, or (e) Executive engages in gross
negligence or willful misconduct injurious to the Company, CCHC or their
respective subsidiaries.
Notwithstanding anything contained in this Agreement to the contrary, no failure
to perform by Executive after a Notice of Termination (as hereinafter defined)
is given by Executive shall constitute Good Cause for purposes of this
Agreement.
(c) Disability. The Company may terminate Executive's employment after
having established Executive's Disability. For purposes of this Agreement,
"Disability" means a physical or mental infirmity that substantially impairs
Executive's ability to perform his material duties under this Agreement which
continues for a period of at least ninety (90) consecutive days. Executive shall
be entitled to the compensation and benefits provided for under this Agreement
for any period during the Employment Term and prior to the establishment of
Executive's Disability during which Executive is unable to work due to a
physical or mental infirmity. Notwithstanding anything contained in this
Agreement to the contrary, until the Termination Date specified in a Notice of
Termination relating to Executive's Disability, Executive will be entitled to
return to his position with the Company as set forth in this Agreement, in which
event no Disability of Executive will be deemed to have occurred.
(d) Good Reason. Executive may terminate his employment for "Good Reason."
"Good Reason" shall mean (a) any breach by the Company of its obligations
hereunder, (b) any significant reduction, approved by the Board without
Executive's written consent, in Executive's title, duties or responsibilities
other than for Good Cause (unless in the case of either clause (a) or (b)
Executive has notified the Company within 30 days after the occurrence of such
event and the Company has cured such event within 30 days after receipt of such
notice) (provided, however, that any change in Executive's title following a
Change of Control shall not be deemed in and of itself to constitute Good Reason
pursuant to this clause (b) so long as Executive continues to have primary
management responsibility for the
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divisions and other business units of the Company that he was responsible for
immediately prior to the Change of Control) or (c) Executive is required to
relocate without his consent to an area that is outside a 50 mile radius of
Austin, Texas.
Executive's right to terminate his employment pursuant to this Section 6(d)
shall not be affected by his incapacity due to physical or mental illness.
7. Compensation Upon Termination.
Upon termination of Executive's employment during the Employment Term,
Executive shall be entitled to the following benefits:
(a) if Executive's employment with the Company shall be terminated by the
Company for Good Cause or by Executive other than for Good Reason, the Company
shall pay Executive the following amounts (collectively, "Accrued Compensation")
on or no later than five (5) business days after the Termination Date or at such
other date as may be expressly provided below:
(1) Executive's Base Salary accrued through the Termination Date;
(2) reimbursement for reasonable and necessary expenses incurred by
Executive on behalf of the Company prior to the Termination Date;
(3) any amount arising from Executive's participation in, or benefits
under, any benefit, incentive, or investment plans described in
Sections 4(a) and (b) of this Agreement, which amounts shall be payable
in accordance with the terms and conditions of the plans;
(4) any earned but unpaid Annual Incentive Bonus as described in Section
3(b) above in respect of any full fiscal quarter ended prior to the
date Executive's employment is terminated (payable at the time such
Annual Incentive Bonus would otherwise be payable pursuant to Section
3(b));
(5) any earned but unpaid Special Cash Bonus as described in Section 3(c)
above in respect of any full Fiscal Year ended prior to the date
Executive's employment is terminated (payable at the time such Special
Cash Bonus would otherwise be payable pursuant to Section 3(c)); and
(6) all other payments and benefits to which Executive may be entitled
under the terms of any applicable compensation arrangement or benefit
plan or program, including any earned and accrued but unused vacation
pay and sick leave.
(b) If Executive's employment with the Company shall be terminated by
reason of Executive's death or Disability, the Company shall pay to Executive's
legal representatives the following amounts on or no later than five (5)
business days after the Termination Date:
(1) all Accrued Compensation as outlined in Sections 7(a)(1) through (6)
above; and
(2) subject to and consistent with the terms therein, any payments required
pursuant to the Change of Control Agreement.
(c) If Executive's employment with the Company shall be terminated by the
Company without Good Cause or by Executive for Good Reason, the Company shall
pay to Executive the following
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on or no later than five (5) business days after the Termination Date (except as
otherwise provided below):
(1) all Accrued Compensation as outlined in Section 7(a)(1) through (6)
above;
(2) severance pay equal to (i) eighteen (18) months of Executive's Base
Salary (based upon the Base Salary in effect at the Termination Date),
and (ii) eighteen (18) months of Executive's target Annual Incentive
Bonus for the Fiscal Year in which the Termination Date occurs, payable
monthly in arrears;
(3) subject to and consistent with the terms therein, any payments required
pursuant to the terms of the Change of Control Agreement; and
(4) Executive and/or Executive's family, as the case may be, shall continue
to be covered, upon the same terms and conditions as described in
Section 4(a) hereinabove, by the same or equivalent medical, dental,
and life insurance coverages as in effect for Executive and/or
Executive's family, as the case may be, immediately prior to the
termination of Executive's employment, until the earlier of (A) the
expiration of eighteen (18) months after the Termination Date or (B)
the date Executive has commenced new employment and has thereby become
eligible for comparable benefits subject to Executive's rights under
COBRA.
8. Mitigation.
In no event shall Executive be obligated to seek other employment or take
any other action by way of mitigation of the amounts payable to Executive under
any of the provisions of this Agreement and such amounts shall not be reduced
whether or not Executive obtains other employment.
9. Legal Fees.
The Company shall reimburse Executive for his reasonable attorneys' fees
and expenses incurred in connection with the drafting and negotiation of this
Agreement and the Change of Control Agreement; provided, however, that as a
condition to such reimbursement Executive shall have first submitted to the
Company one or more invoices describing such fees and expenses in reasonable
detail.
10. Definitions.
(a) Notice of Termination. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which indicates the specific termination
provision in this Agreement, if any, relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Executive's employment under the provision so indicated. Any
purported termination by the Company or by the Executive shall be communicated
by written Notice of Termination to the other, except for any termination as a
result of Executive's death. For purposes of this Agreement, no such purported
termination of employment (other than in the case of Executive's death) shall be
effective without such Notice of Termination.
(b) Termination Date, Etc. For purposes of this Agreement, "Termination
Date" shall mean in the case of Executive's death, his date of death, or in all
other cases, the date specified in the Notice of Termination subject to the
following:
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(1) If Executive's employment is terminated by the Company for Good Cause,
the date specified in the Notice of Termination;
(2) If Executive's employment is terminated by the Company due to
Disability, the date specified in the Notice of Termination, which
shall be at least thirty (30) days after the date the Notice of
Termination is given to Executive, provided that Executive shall not
have returned to the full time performance of his duties during the
thirty (30) day period; and
(3) If Executive's employment is terminated for Good Reason, the date
specified in the Notice of Termination, which shall not be more than
thirty (30) days after the date the Notice of Termination is given to
the Company.
11. Tax Adjustment.
(a) Gross-Up Payment. Notwithstanding anything in this Agreement to the
contrary, in the event that it is determined that any payment or benefit,
whether paid or payable, provided by the Company to or for the benefit of
Executive under this Agreement, the Change of Control Agreement or any other
agreement, plan or program, is or will be subject to the excise tax imposed by
section 4999 of the Internal Revenue Code or any successor provision ("Section
4999"), the Company will, prior to the date on which any amount of the excise
tax must be paid or withheld, make an additional lump sum payment (the "gross-up
payment") to Executive. The gross-up payment will be sufficient, after giving
effect to all federal, state and other taxes and charges (including interest and
penalties, if any) with respect to the gross-up payment, to make Executive whole
for all taxes (including withholding taxes) and any associated interest and
penalties, imposed under or as a result of Section 4999.
(b) Determination. Determinations under this section will be made by the
Company's primary independent public accounting firm unless Executive has
reasonable objections to the use of that firm, in which case the determinations
will be made by a comparable accounting firm or law firm chosen by Executive
after consultation with the Company (the firm making the determination to be
referred to as the "Firm"). The determinations of the Firm will be binding upon
Executive and the Company except as the determinations are established in
resolution (including by settlement) of a controversy with the Internal Revenue
Service (the "IRS") to have been incorrect. All fees and expenses of the Firm
will be paid by the Company.
(c) IRS Claim. If the IRS asserts a claim that, if successful, would
require the Company to make a gross-up payment or an additional gross-up
payment, the Company and Executive will cooperate fully in resolving the
controversy with the IRS. The Company will make or advance such gross-up
payments as are necessary to prevent Executive from having to bear the cost of
payments made to the IRS in the course of, or as a result of, the controversy.
The Firm will determine the amount of such gross-up payments or advances and
will determine after resolution of the controversy whether any advances must be
returned by Executive to the Company. The Company will bear all expenses of the
controversy and will gross Executive up for any additional taxes that may be
imposed upon Executive as a result of its payment of such expenses. The Company
will further indemnify and hold Executive harmless, on an after-tax basis, for
any excise tax or income tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of costs and
expenses. The application or non-application of Internal Revenue Code Section
280G to any payment or benefit, whether paid or payable, provided by the Company
to or for the benefit of Executive will have no impact on the determinations
made in this section or any other section of this Agreement.
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12. Indemnification.
(a) In addition to any other indemnification provided herein, Executive
shall be entitled to indemnification by the Company in accordance with the
provisions of the Company's bylaws and the implementing Board resolutions as in
effect on the date of this Agreement or, if more favorable to Executive, the
provisions of such bylaws as in effect at the time indemnification is requested.
(b) The Company shall include Executive as an additional insured under its
directors and officers' liability insurance which shall be maintained (or a
replacement policy not materially less favorable to Executive) by the Company
during the Employment Term and for eighteen (18) months after the Termination
Date (to the extent Executive's employment is terminated by the Company without
Good Cause or by Executive for Good Reason).
(c) In addition, the Company agrees to indemnify and hold harmless
Executive from and against any damages, liabilities, expenses, costs and
attorneys' fees incurred by Executive in connection with any litigation or
threatened litigation, including any regulatory proceedings or shareholder
claims, arising out of the making, execution, performance or enforcement of this
Agreement or the Change of Control Agreement.
13. Successors and Assigns.
(a) This Agreement shall be binding upon and shall inure to the benefit of
the Company, its successors and assigns. The term "Company" as used herein shall
include such successors and assigns. The term "successors and assigns" as used
herein shall mean a person, corporation or other entity acquiring all or
substantially all the assets and business of the Company (including this
Agreement) whether by operation of law or otherwise.
(b) The rights of Executive under this Agreement may not be assigned by
Executive during his lifetime. However, all rights of Executive under this
Agreement shall inure to the benefit of and be enforceable by Executive's
personal or legal representatives, estates, executors, administrators, heirs and
beneficiaries. All amounts payable to Executive hereunder shall be paid, in the
event of Executive's death, to Executive's estate, heirs or representatives.
14. Notice.
For purposes of this Agreement, notice and all other communications
provided for in the Agreement (including the Notice of Termination) shall be in
writing and shall be deemed to have been duly given when personally delivered or
sent by facsimile or certified mail, return receipt requested, postage prepaid,
to the respective facsimile numbers or addresses last given by each party to the
other, provided that all notices to the Company shall be directed to the
attention of the Board with a copy to the Secretary of the Company. All notices
and communications shall be deemed to have been received on the date of delivery
thereof, on the day sent via facsimile, or on the third (3rd) business day after
the mailing thereof, except that notice of change of address shall be effective
only upon receipt.
15. Non-Exclusivity of Rights.
Except as otherwise expressly provided in Section 4(b), nothing in this
Agreement shall prevent or limit Executive's continuing or future participation
in any benefit, bonus, incentive, stock option or other plan or program provided
by the Company, CCHC, or any of their subsidiaries and for which Executive may
qualify or be entitled to payment, nor shall anything herein limit or reduce
such rights as Executive may have under any other agreements with the Company,
CCHC or any of their subsidiaries
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including, but not limited to, Executive's rights under CCHC's 1998 Stock Option
Plan (including the June 14, 1999 Option Agreement between Executive and CCHC),
CCHC's Amended and Restated 2000 Stock Option Plan for Key Employees (including
the February 16, 2000 Incentive Stock Option Agreement between Executive and
CCHC), and CCITRIAD's Incentive and Executive Bonus Plans for Fiscal Year ended
September 30, 2002. Amounts which are vested benefits or which Executive is
otherwise entitled to receive under any plan or program of the Company, CCHC, or
any of their subsidiaries, including, but not limited to, those referenced
above, shall be payable in accordance with such plan or program, except as
explicitly modified by this Agreement.
16. Miscellaneous.
No provision of this Agreement may be modified, waived or discharged unless
such waiver, modification or discharge is agreed to in writing and signed by
Executive and the Company. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement.
17. Governing Law.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Texas without giving effect to the
conflict of law principles thereof. Any action brought by a party to this
Agreement shall be brought and maintained in a court of competent jurisdiction
in Xxxxxx County, Texas.
18. Severability.
The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provisions hereof shall not affect the
validity or enforceability of the other provisions hereof.
19. Entire Agreement.
Except as otherwise expressly provided herein, this Agreement constitutes
the entire agreement between the parties hereto and supersedes all prior
agreements, understandings and arrangements, oral or written between the parties
hereto with respect to the subject matter hereof. Without limiting the
generality of the foregoing, the Prior Agreement is hereby terminated in all
respects except in respect of the payment of the annual incentive bonus for the
fiscal year ended September 30, 2002.
20. Withholding.
Any payments provided for herein shall be reduced by any amounts required
to be withheld by the Company from time to time under applicable federal, state
or local income or employment tax laws or similar statutes or other provisions
of law then in effect.
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IN WITNESS WHEREOF, the Company and CCHC have caused this Agreement to be
executed by a duly authorized officer thereof and the Executive has executed his
Agreement as of the date and year first above written.
COOPERATIVE COMPUTING, INC. EXECUTIVE
By: ________________________ By:__________________________
Title:______________________ Xxxxxxx X. Xxxxxx
COOPERATIVE COMPUTING
HOLDING COMPANY, INC.
By: ________________________
Title:______________________
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EXHIBIT A
CHANGE OF CONTROL BONUS AGREEMENT
This Change of Control Bonus Agreement (the "Agreement") is entered into on this
___ day of August, 2002, effective as of the 1st day of July, 2002 (the
"Effective Date"), by and among Cooperative Computing, Inc., a Delaware
corporation (the "Company"), Cooperative Computing Holding Company, Inc., a
Delaware corporation ("CCHC"), and Xxxxxxx X. Xxxxxx (the "Executive").
WHEREAS, the Board of the Company has determined that it is essential and in the
best interests of the Company and its shareholders that the Company, CCHC and
Executive enter into the Executive Employment Agreement concurrently herewith
(the "Executive Employment Agreement"); and
WHEREAS, in order to induce Executive to enter into the Executive Employment
Agreement, the Company and CCHC desire to provide Executive with certain
benefits during the term of his employment and, in the event of a Change of
Control (as hereinafter defined) or if his employment is terminated, to provide
Executive with the benefits and payments described herein and in the Executive
Employment Agreement.
NOW, THEREFORE, in consideration of the respective agreements of the parties
contained herein, it is agreed as follows:
21. Change of Control Bonus.
(a) Payment of Change of Control Bonus. The Company and CCHC agree to pay
Executive a Change of Control Bonus pursuant to the formula set forth below on
the effective date of a Change of Control (the "Change of Control Date"). The
Change of Control Bonus shall be made in a lump sum in cash or, at the
discretion of the Board, in whole or part, in the form of the securities or
other non-cash consideration being paid in connection with such Change of
Control and subject to the same terms and conditions generally applicable
thereto; provided, however, that if the securities or other non-cash
consideration being paid in connection with the Change of Control would not be
freely transferable in the hands of Executive, at least 40% of the Change of
Control Bonus will be paid in cash. Non-cash consideration will be considered
not to be freely transferable pursuant to the proviso contained in the preceding
sentence to the extent that such non-cash consideration is subject to
restrictions on transfer pursuant to any escrow, holdback, market stand-off or
other contractual arrangement or restrictions on transfer pursuant to applicable
law, it being understood that securities that are permitted to be sold by
Executive as of the Change of Control Date (but after giving effect to the
Change of Control) pursuant to Rule 144 or Rule 145 of the Securities Act of
1933, as amended, will be considered to be freely transferable. Any non-cash
consideration to be paid in accordance with this Section 1(a) shall be valued in
accordance with Section 1(b). The Change of Control Bonus shall be in an amount
equal to:
1. $2,500,000 if the Gross Enterprise Value is less than
$350,000,000;
2. the sum of (x) $6,500,000 and (y) ($0.0566667 * (Gross Enterprise
Value -$350,000,000)), if the Gross Enterprise Value is
$350,000,000 to $499,999,999.99; or
3. $15,000,000 if the Gross Enterprise Value is $500,000,000 or
greater.
"Gross Enterprise Value" means the sum of (w) the Consideration, (x) the
aggregate amount of Indebtedness of the Company and CCHC outstanding as of the
Change of Control Date, (y) any transaction fees and third party payments
incurred or accrued by the Company or CCHC in connection with a Change of
Control, and (z) the total amount of cash, securities and other property paid to
the Company or CCHC in connection with any sale or disposition of any division,
business segment, product line, or other asset or property of the Company or
CCHC (other than such sales or dispositions in the
12
ordinary course of business) that did not result in the payment of a Divestiture
Bonus pursuant to Section 2.
"Consideration" means, at any date of determination, the total amount of cash,
securities and other property paid to the Company, CCHC, and their respective
stockholders in connection with a Change of Control, excluding the amount of any
Earn-Out Payment under Section 4 that has not been paid (and is not being paid)
as of the applicable date of determination.
"Indebtedness" means all outstanding interest-bearing liabilities of the Company
and CCHC, including the current portion, including but not limited to, all
promissory notes, bonds and credit facilities with lending institutions.
(b) Valuation of Consideration if Other Than Cash. If Consideration is paid
in property other than cash, the amount shall be valued based upon the valuation
methodology, if any, employed in the agreements governing such Change of Control
or, if no such methodology exists, determined as follows:
(i) If the non-cash Consideration consists in whole or in part of
capital stock, and such capital stock, is traded on a securities
exchange, the value of such capital stock shall be deemed to be
the average of the security's closing prices on such exchange
over the ten (10) day period ending three (3) trading days prior
to the Change of Control Date;
(ii) If the non-cash Consideration consists in whole or in part of
capital stock, and such capital stock, is actively traded
over-the-counter, the value of such capital stock shall be deemed
to be the average of the closing bid prices over the ten (10) day
period ending three (3) trading days prior to the Change of
Control Date; and
(iii) If neither clause (i) nor (ii) above is applicable, the value of
the non-cash Consideration shall be the fair market value thereof
as of the Change of Control Date, as determined in good faith by
the Board (taking into consideration any valuation reports of any
third-party valuation firm engaged by the Company in connection
with the transaction involving the Change of Control); provided,
however, that in any event, the non-cash Consideration shall be
valued in the same manner as any non-cash Consideration paid to
the Company, CCHC, and their respective stockholders.
(c) Definition of Change of Control. For purposes of this Agreement,
"Change of Control" means the first to occur of the following events: (i) any
sale, lease, exchange, or other transfer (in one or a series of related
transactions) of all or substantially all of the assets of the Company or CCHC
to any person or group of related persons as determined pursuant to Section
13(d) of the Securities Exchange Act of 1934, as amended, and the regulations
and interpretations thereunder ("Group") other than one or more members of the
HMC Group, or (ii) the acquisition by any person or Group other than one or more
members of the HMC Group of the power, directly or indirectly, to vote or direct
the voting of securities having more than 50% of the ordinary voting power for
the election of directors of the Company or CCHC.
For purposes of Section 1(c), "HMC Group" shall mean Hicks, Muse, Xxxx & Xxxxx
Incorporated, its affiliates, and their respective employees, officers, partners
and directors (and members of their respective families and trusts for the
primary benefit of such family members).
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(d) Effect of Termination Prior to Change of Control. In the event that
Executive's employment is terminated without Good Cause or by Executive for Good
Reason, then Executive shall nonetheless receive the Change of Control Bonus on
the Change of Control Date under the following circumstances:
(i) If, at the time of Executive's termination, the Company or CCHC
is a party to a definitive written agreement (which has not
expired or otherwise been terminated) that would result in a
Change of Control; or
(ii) If, (A) at the time of Executive's termination, the Company or
CCHC is a party to a written agreement with a potential acquiror
(which has not expired or otherwise been terminated) with respect
to or relating to any offer, proposal, or indication of interest
contemplating a Change of Control (including, for the avoidance
of doubt, a confidentiality agreement) and (B) within 180 days
after Executive's termination, the Company or CCHC enters into a
definitive written agreement with any such potential acquiror
that would result in a Change of Control or otherwise consummates
a Change of Control with any such potential acquiror.
For purposes of this Agreement, "Good Cause," "Good Reason" and "Termination
Date" shall have the definitions set forth for those terms in the Executive
Employment Agreement.
22. Divestiture Bonus.
(a) Payment of Divestiture Bonus. The Company and CCHC agree to pay
Executive a Divestiture Bonus pursuant to the formula set forth below on the
effective date of any Divestiture (the "Divestiture Date"). The Divestiture
Bonus shall be made in a lump sum in cash or, at the discretion of the Board, in
whole or part, in the form of the securities or non-cash consideration being
paid in connection with such Divestiture and subject to the same terms and
conditions generally applicable thereto; provided, however, that if the
securities or other non-cash consideration being paid in connection with such
Divestiture would not be freely transferable in the hands of Executive, at least
40% of such Divestiture Bonus will be paid in cash. Non-cash consideration will
be considered not to be freely transferable pursuant to the proviso contained in
the preceding sentence to the extent that such non-cash consideration is subject
to restrictions on transfer pursuant to any escrow, holdback, market stand-off,
or other contractual arrangement or restrictions on transfer pursuant to
applicable law, it being understood that securities that are permitted to be
sold by Executive as of the Divestiture Date (but after giving effect to such
Divestiture) pursuant to Rule 144 or Rule 145 of the Securities Act of 1933, as
amended, will be considered to be freely transferable. Any non-cash
consideration to be paid in accordance with this Section 2(a) shall be valued in
accordance with Section 1(b), except that (i) "Change of Control" as referred to
therein shall be deemed to refer to "Divestiture" and (ii) "Change of Control
Date" as referred to therein shall be deemed to refer to "Divestiture Date." The
Divestiture Bonus shall be in an amount equal to $2,500,000 multiplied by the
quotient of (1) the Divestiture Value divided by (2) $325,000,000; provided,
however, that in no event shall the Divestiture Bonus, together with any
Divestiture Bonuses previously paid hereunder, be in an amount greater than
$2,500,000.
"Divestiture" shall mean any sale or disposition of the Hard Lines & Lumber
Division or the Automotive Division of the Company that does not amount to a
Change of Control.
"Divestiture Value" shall mean, at any date of determination, the total amount
of cash or other property paid to the Company, CCHC, and their respective
stockholders in connection with a Divestiture,
14
excluding the amount of any Earn-Out Payment under Section 4 that has not been
paid (and is not being paid) as of the applicable date of determination.
(b) Effect of Termination Prior to Divestiture. In the event that
Executive's employment is terminated without Good Cause or by Executive for Good
Reason, then Executive shall nonetheless receive the Divestiture Bonus on the
applicable Divestiture Date under the following circumstances:
(i) If, at the time of Executive's termination, the Company or CCHC
is a party to a definitive written agreement (which has not
expired or otherwise been terminated) that would result in a
Divestiture; or
(ii) If, (A) at the time of Executive's termination, the Company or
CCHC is a party to a written agreement with a potential acquiror
(which has not expired or otherwise been terminated) with respect
to or relating to any offer, proposal, or indication of interest
contemplating a Divestiture (including, for the avoidance of
doubt, a confidentiality agreement) and (B) within 180 days after
Executive's termination, the Company or CCHC enters into a
definitive written agreement with any such potential acquiror
that would result in a Divestiture or otherwise consummates a
Divestiture with any such potential acquiror.
(c) Adjustment to Subsequent Change of Control Bonus. Notwithstanding any
provision of the definition of "Gross Enterprise Value" to the contrary, if
amounts are paid to Executive under this Section 2 and a Change of Control
subsequently occurs pursuant to which Executive is entitled to receive a Change
of Control Bonus, then the subsequent Change of Control Bonus shall be based on
the actual Gross Enterprise Value at the time of the subsequent Change of
Control plus the Divestiture Value received by the Company and CCHC from any
prior Divestitures. Any Divestiture Bonuses received by Executive as a result of
prior Divestitures will be subtracted from the subsequent Change of Control
Bonus.
23. Management Bonus Pool.
(a) On the Change of Control Date or Divestiture Date, the Company agrees
to set aside for full-time operating employees of the Company or its
subsidiaries (other than Executive), an amount in cash equal to one-half of the
amount of the applicable Change of Control Bonus or Divestiture Bonus payable to
Executive (the "Management Bonus Pool"). The Management Bonus Pool shall be
distributed as directed by Executive pursuant to Section 3(b) only to full-time
operating employees of the Company or its subsidiaries and in any event not to
Executive, any member of the Board or former employees. The Management Bonus
Pool shall be evidenced by a plan, arrangement or other program adopted by the
Board (or a committee thereof) containing the terms and conditions no more
favorable to such employees than the applicable terms set forth in this
Agreement.
(b) At all times prior to the Termination Date, Executive shall have the
sole discretionary authority to determine eligibility and bonus amounts
available to individual full-time operating employees (other than Executive)
under the Management Bonus Pool; provided, however, that Executive shall
cooperate with the Company to mitigate the amount of any payments under Section
280G of the Internal Revenue Code of 1986, as amended. Executive's determination
with regard to any payment pursuant to the Management Bonus Pool shall be
conclusive and binding on the Company and CCHC. Any allocation forfeited or
surrendered, for instance through termination of an employee, shall be
re-allocated to the Management Bonus Pool so that the entire amount of the
Management Bonus Pool is available at all times to be fully distributed.
15
(c) The Company agrees to provide the "Tax Adjustment" benefits available
to Executive under Section 11 of the Executive Employment Agreement to any
employee who receives a bonus payment from the Management Bonus Pool.
24. Earn Out Bonus.
(a) Payment of Earn Out Bonus. If, in connection with a Change of Control
or any Divestiture, any additional consideration or amount becomes payable after
the Change of Control Date or Divestiture Date, as the case may be, pursuant to
an Earn Out provision, then Executive shall be entitled to a separate Earn-Out
Bonus payable to Executive in a lump sum on the date that the Earn-Out Payment
is made or within two (2) business days thereafter. Any Earn-Out Bonus shall be
in an amount equal to:
(i) the amount of the Change of Control Bonus or Divestiture Bonus
calculated in accordance with Section 1(a) or Section 2(a),
respectively, that would have been paid had the Consideration
included the Earn-Out Payment at the time of the determination
date in Section 1(a) or Section 2(a), respectively, less
(ii) an aggregate amount equal to (A) all Earn-Out Bonuses previously
paid to Executive pursuant to this Section 4, and (B) any Change
of Control Bonus previously paid to Executive pursuant to Section
1 and all Divestiture Bonuses previously paid to Executive
pursuant to Section 2.
"Earn-Out" means any portion of the consideration payable to the Company, CCHC,
and/or their respective stockholders in connection with a Change of Control or
Divestiture that is not payable or determinable at the time of the Change of
Control Date or Divestiture Date by reason of any earn-out provision or other
contingent pay-out feature based upon the financial or other performance of the
Company or CCHC following the Change of Control Date or Divestiture Date.
"Earn-Out Payment" is the portion of the consideration payable to the Company,
CCHC, and/or their respective stockholders in connection with a Change of
Control or Divestiture that becomes payable pursuant to the Earn-Out on one or
more dates following the Change of Control Date or Divestiture Date. If any
portion of the Earn-Out Payment is paid in property other than cash, the amount
shall be valued as set forth in Section 1(b)(i)-(iii) except that "Change of
Control Date" as referenced therein shall be "the date the Earn-Out Payment is
made to the Company and/or CCHC."
(b) Effect of Termination Prior to Earn-Out Payment. If any Earn-Out
Payment is made, and Executive's employment is terminated without Good Cause or
by Executive for Good Reason after the Change of Control Date or Divestiture
Date, Executive shall nonetheless be entitled to receive from the Company the
full Earn-Out Bonus on the date the Earn-Out Payment is made or within two (2)
business days thereafter. If Executive's employment is terminated without Good
Cause or by Executive for Good Reason before the Change of Control Date or
Divestiture Date, Executive shall nonetheless receive from the Company the full
Earn-Out Bonus on the date the Earn-Out Payment is made or within two (2)
business days thereafter if Executive is entitled to a Change of Control Bonus
or a Divestiture Bonus pursuant to Section 1(d) or Section 2(b) of this
Agreement in connection with the Change of Control or Divestiture.
25. Severability; Governing Law.
If any provision of the Agreement is found to be invalid or unenforceable, such
provision shall not affect the other provisions of the Agreement, and the
Agreement shall be construed in all respects as if such
16
invalid provision had been omitted. The provisions of the Agreement shall be
governed by and construed in accordance with the laws of the state of Texas
(without regard to its conflict of law rules).
26. Headings.
The Section headings in this Agreement are for convenience only; they form no
part of the Agreement and shall not affect its interpretation.
27. Amendment and Termination.
This Agreement may be amended, altered, suspended or terminated only with the
prior written consent of the Executive. Unless terminated earlier pursuant to
the previous sentence, the Agreement shall be perpetual.
28. No Third-Party Beneficiaries.
Nothing express or implied in this Agreement, is intended or shall be construed
to confer upon or give any person other than the parties hereto and their
respective heirs, successors and permitted assigns any right, benefit, or remedy
under or by reason of this Agreement.
29. Notice.
For purposes of this Agreement, notice and all other communications provided for
in the Agreement shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by facsimile or certified mail, return receipt
requested, postage prepaid, to the respective facsimile numbers or addresses
last given by each party to the other, provided that all notices to the Company
shall be directed to the attention of the Board with a copy to the Secretary of
the Company. All notices and communications shall be deemed to have been
received on the date of delivery thereof, on the day sent via facsimile, or on
the third (3rd) business day after the mailing thereof, except that notice of
change of address shall be effective only upon receipt.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the Company and CCHC have caused this Agreement to be
executed by a duly authorized officer thereof and the Executive has executed his
Agreement as of the date and year first above written.
COOPERATIVE COMPUTING, INC. EXECUTIVE
By: /s/ Xxxxx Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
-------------------------- ----------------------
Title: Asst. Secretary Xxxxxxx X. Xxxxxx
-----------------------
COOPERATIVE COMPUTING
HOLDING COMPANY, INC.
By: /s/ Xxxxx Xxxxxxx
-------------------------
Title: Asst. Secretary
-----------------------
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