Cooperative Computing, Inc.
6207 Bee Cave Road
Austin, Texas 78746
June 27, 2000
Michael Aviles
6604 Canon Wren Drive
Austin, Texas 78746
Dear Mike:
The Board of Directors recognizes the substantial and immediate
progress you have been able to make at Cooperative Computing, Inc. (the
"Company") and recognizes that some of the investments the Company is
making may disadvantage you under your employment agreement. As we advised
you in January of this year, the board is interested in rationalizing the
terms of your employment to align them with the long term interests of the
Company. Accordingly, at the May 22 board meeting the Board of Directors
resolved to amend, as provided below, certain provisions of your letter
agreement dated as of June 14, 1999, and the term sheet (the "Term Sheet")
attached thereto (collectively with the Term Sheet, the "Employment
Letter") between yourself and the Company pursuant to which you were
offered, and accepted, employment with the Company. The purpose of this
letter is to evidence our mutual agreement to amend the item of the Term
Sheet entitled "Special Cash Incentive" in its entirety so that, as so
amended, such item shall read as follows:
"SPECIAL CASH INCENTIVE: In addition to the base compensation and
quarterly bonus described above, Executive will
be entitled during the Initial Term to receive a
special cash bonus of (a) $1.5 million upon the
achievement of the First Hurdle (described
below), (b) $2.0 million upon the achievement of
the Second Hurdle (described below) and (c) $1.5
million upon achievement of the Third Hurdle
(described below). The First Hurdle will be
satisfied as of the end of the first fiscal year
in which the Company achieves a $5.0 million
increase in Adjusted Operating Cash Flow (as
defined below) versus the Adjusted Operating Cash
Flow for the fiscal year ended September 30, 1999
("Base Cash Flow"); the Second Hurdle will be
satisfied as of the end of the first fiscal year
in which the Company achieves a $10.0 million
increase in Adjusted Operating Cash Flow versus
the Base Cash Flow; and the Third Hurdle will be
satisfied as of the end of the first fiscal year
in which the Company achieves a $15.0 million
increase in Adjusted Operating Cash Flow versus
the Base Cash Flow. These bonuses will be
cumulative in the event the Company achieves more
than one hurdle as of the end of any particular
fiscal year (for example, if Adjusted Operating
Cash Flow for the fiscal year ended September 30,
2000 is $10.0 million greater than the Base Cash
Flow, Executive would be entitled to a $3.5
million bonus) and once a bonus is paid as to a
particular hurdle, Executive will not be entitled
to any further bonus in respect of that hurdle
(for example, if the Company pays the $3.5
million bonus as provided in the prior example,
and the Adjusted Operating Cash Flow for the next
fiscal year is $15 million greater than the Base
Cash Flow, Executive will be entitled to an
additional one time bonus of $1.5 million in
respect of the Third Hurdle, and no further
special bonuses would be payable). Any bonus
payable pursuant to this provision will be
payable within 30 days after approval by the
Audit Committee of the computation of Adjusted
Operating Cash Flow for the applicable fiscal
year (but in no event later than 120 days after
the end of such fiscal year). Executive will
also be entitled to a one time cash bonus of $5.0
million (less any bonuses previously paid
pursuant to the provisions of the first sentence
above) upon the occurrence during the Initial
Term of either of the events specified in
paragraphs (a) or (c) of the definition of Change
of Control set forth below under "Stock Options"
(to the extent Executive is employed by the
Company at the time of such event). In addition,
in the event the Company has achieved the Second
Hurdle or is reasonably likely to achieve the
Second Hurdle, Executive is terminated during the
Initial Term without Cause (as defined) or
Executive terminates his employment for Good
Reason (as defined) while ongoing discussions are
taking place between the Company and one or more
other persons relating to a transaction (the
"Pending Transaction") that will result in the
occurrence of one of the events specified in
clause (a) or (c) of the definition of Change of
Control, and such Pending Transaction is
consummated within 120 days after the date of
Executive's termination, Executive shall be
entitled to receive (in addition to any other
amounts payable to Executive upon such
termination) upon consummation of the Pending
Transaction a one time cash bonus of $5.0 million
(less any bonuses previously paid pursuant to the
first sentence of this paragraph). For the
purposes hereof, the term "Adjusted Operating
Cash Flow" shall mean Consolidated EBITDA (as
defined in the Company's indenture governing its
9% senior subordinated notes due 2008) reduced by
capital expenditures; provided that such
Consolidated EBITDA will not be impacted
negatively or positively by (A) SOP 97-2, (B)
write downs of accounts receivable within the
first 18 months of employment, (C) professional
fees paid to Arthur Andersen during fiscal 2000
related to certain "order to cash cycle"
consulting services, (D) operating and capital
expenditures incurred in connection with the
development of one or more internet gateways
relating to the Company's IAP initiatives and (E)
such other unusual items as you and the Board of
Directors of the Company may designate in writing
regarding an applicable period. In addition to
the foregoing, in calculating Adjusted Operating
Cash Flow for any applicable fiscal year,
appropriate adjustments shall be made to the
hurdles, the Base Cash Flow, and the measurements
of performance to give pro forma effect to any
sale or purchase by the Company of the assets or
stock, whether pursuant to a merger, exchange,
acquisition of stock or assets, or otherwise, of
any division or line of business, as applicable,
occurring during such fiscal year."
Except as amended hereby, the Employment Letter shall remain in full
force in accordance with its terms. Please acknowledge your agreement and
acceptance of the terms hereof by executing this letter in the space
provided below.
Very truly yours,
COOPERATIVE COMPUTING, INC.
By: /s/JOE COLONNETTA
----------------------------------
Name: Joe Colonnetta
Title: Director
AGREED AND ACCEPTED:
/s/MICHAEL AVILES
--------------------------------------
Michael Aviles
Date: June 27, 2000
