1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to ________________
Commission file number: 0-26802
CHECKFREE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 31-1013521
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8275 NORTH HIGH STREET, COLUMBUS, OHIO 43235
(Address of principal executive offices, including zip code)
(614) 825-3000
(Registrant's telephone number, including area code)
ON APRIL 19, 1996, CHECKFREE CHANGED ITS FISCAL YEAR FROM DECEMBER 31 TO
JUNE 30
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to the
filing requirements for at least the past 90 days. YES X NO________
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date: 41,276,548 shares
of Common Stock, $.01 par value, were outstanding at May 9, 1996.
2
FORM 10-Q
CHECKFREE CORPORATION
TABLE OF CONTENTS
PAGE NO.
--------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Condensed Consolidated Balance Sheets 3
December 31, 1995 and March 31, 1996
Condensed Consolidated Statements of Operations 4
For the Three Months Ended March 31, 1995 and 1996
Condensed Consolidated Statements of Cash Flows 5
For the Three Months Ended March 31, 1995 and 1996
Notes to Interim Condensed Consolidated Unaudited Financial
Statements For the Three Months Ended March 31, 1995
and 1996 6-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 8-11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. N/A
Item 2. Changes in Securities. N/A
Item 3. Defaults Upon Senior Securities. N/A
Item 4. Submission of Matters to a Vote of Security Holders. N/A
Item 5. Other Information. N/A
Item 6. Exhibits and Reports on Form 8-K. 12-13
Signatures 14
3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
CHECKFREE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, March 31,
1995 1996
------------ ------------
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $63,839,854 $29,680,052
Investments 21,012,141 17,424,797
Receivables - trade, unbilled and other, net of allowance for doubtful 3,389,084 30,283,242
accounts of $32,661 and $2,211,339 as of 1995 and 1996, respectively
Refundable income taxes 144,119 2,560,024
Prepaid expenses and other 1,915,969 2,740,808
Deferred income taxes 165,543 --
------------ ------------
Total Current Assets 90,466,710 82,688,923
------------ ------------
Property and equipment - net 12,519,689 29,971,919
------------ ------------
Other Assets:
Investments 7,498,835 1,000,000
Intangible assets - computer software, net 1,325,045 32,643,277
Intangible assets - other, net -- 27,482,840
Other noncurrent assets 3,831,649 3,429,273
------------ ------------
Total Other Assets 12,655,529 64,555,390
------------ ------------
TOTAL $115,641,928 $177,216,232
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable 706,459 3,096,356
Accrued liabilities 5,632,852 13,989,700
Customer deposits 192,456 393,246
Current portion of long-term obligations 1,161,192 1,079,906
Deferred revenues 982,171 12,417,868
Deferred income taxes -- 5,256,544
------------ ------------
Total Current Liabilities 8,675,130 36,233,620
Note payable, less current portion -- 1,100,000
Obligations under capital leases 7,157,465 6,965,946
Deferred lease obligations 50,755 2,375,302
Stockholder and bank notes 125,000 106,250
Deferred income taxes 308,711 5,249,002
------------ ------------
Total Liabilities 16,317,061 52,030,120
------------ ------------
Stockholders' Equity
Preferred stock - 15,000,000 authorized shares, $.01 par value; -- --
none issues or outstanding
Common stock - 150,000,000 authorized shares, $.01 par value; 328,648 390,143
issued 32,864,765 and 39,014,277 shares issued in 1995
and 1996, respectively
Additional paid in capital 100,133,800 223,410,657
Treasury stock - at cost, 757,536 shares in 1995 and 1996 (629,481) (629,481)
Stockholders' notes receivable (133,793) (133,793)
Accumulated deficit (374,307) (97,851,414)
------------ ------------
Total Stockholders' Equity 99,324,867 125,186,112
------------ ------------
TOTAL $115,641,928 $177,216,232
============ ============
See Notes to Interim Condensed Consolidated Unaudited Financial Statements.
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CHECKFREE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three months ended March 31,
--------------------------------
1995 1996
----------- ------------
OPERATING REVENUES:
Processing, servicing and merchant discount revenues $10,447,221 $ 13,809,078
License fees 56,185 4,619,288
Maintenance fees 63,944 338,444
Consulting fees 100,510 1,893,596
Other 324,793 1,028,354
----------- ------------
Total Operating Revenues 10,992,653 21,688,760
----------- ------------
OPERATING EXPENSES:
Cost of processing, servicing and support 7,318,681 13,779,214
Research and development 1,514,775 4,765,290
Sales, marketing and royalties 1,582,342 7,006,252
General and administrative 969,550 3,490,138
Amortization expense of intangible assets -- 194,804
In-process research and development -- 93,757,586
----------- ------------
Total Operating Expenses 11,385,348 122,993,284
----------- ------------
(392,695) (101,304,524)
----------- ------------
LOSS FROM OPERATIONS
INTEREST:
Income 280,390 1,029,145
Expense (166,153) (156,042)
----------- ------------
Net Interest Income 114,237 873,103
----------- ------------
LOSS BEFORE INCOME TAXES
AND EXTRAORDINARY ITEM (278,458) (100,431,421)
Income tax benefit (125,307) (3,318,832)
----------- ------------
NET LOSS BEFORE EXTRAORDINARY ITEM (153,151) (97,112,589)
Extraordinary item, extinguishment of debt in conjunction
with an acquisition, net of tax -- (364,374)
----------- ------------
NET LOSS $ (153,151) $(97,476,963)
=========== ============
Net loss per common share:
Net loss before extraordinary item $ (0.01) $ (2.80)
Extraordinary item -- (0.01)
----------- ------------
Net Loss $ (0.01) $ (2.81)
=========== ============
Weighted average common shares outstanding 27,076,122 34,667,033
=========== ============
See Notes to Interim Condensed Consolidated Unaudited Financial Statements.
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CHECKFREE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three months ended March 31,
--------------------------------
1995 1996
---------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (153,151) $(97,476,963)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
In-process research and development -- 93,757,586
Depreciation and amortization 574,265 1,918,958
Loss on disposal of property and equipment 1,014 59,039
Deferred lease obligations (9,657) 16,985
Deferred income taxes -- (1,175,523)
Changes in operating assets and liabilities, net of businesses acquired:
Receivables - trade, unbilled and other (55,618) (2,107,641)
Refundable income taxes (302,407) (2,423,657)
Prepaid expenses and other (243,116) 547,081
Accounts payable 29,534 722,904
Accrued liabilities 1,052,741 2,030,132
Customer deposits 9,540 90,298
Deferred revenues 162,374 288,232
---------- ------------
Net cash provided by (used in) operating activities 1,065,519 (3,752,569)
---------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for property and equipment (523,429) (2,950,341)
Proceeds from the disposal of property and equipment -- 33,313
Purchase of businesses, net of cash acquired -- (38,937,027)
Proceeds from redemption of investments 968,277 10,086,179
---------- ------------
Net cash provided by (used in) investing activities 444,848 (31,767,876)
---------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends in lieu of fractional shares -- (144)
Repayment of bank and stockholder notes (269,000) (18,750)
Proceeds from note payable 250,000 1,100,000
Principal payments under capital lease obligations (251,873) (272,805)
Proceeds from exercise of stock options, including related
income tax benefits 34,860 552,342
---------- ------------
Net cash provided by (used in) financing activities (236,013) 1,360,643
---------- ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,274,354 (34,159,802)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,208,725 63,839,854
---------- ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $3,483,079 $ 29,680,052
========== ============
See Notes to Interim Condensed Consolidated Unaudited Financial Statements.
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CHECKFREE CORPORATION AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996
1. The accompanying condensed consolidated financial statements
and notes thereto have been prepared in accordance with the rules and
regulations of the Securities and Exchange Commission for Form 10-Q and
includes all of the information and disclosures required by generally accepted
accounting principles for interim financial reporting. The results of
operations for three months ended March 31, 1995 and 1996 are not necessarily
indicative of the results for the full year.
These financial statements should be read in conjunction with
the financial statements, accounting policies and financial notes thereto
included in the Company's Annual Report filed with the Securities and Exchange
Commission on Form 10-K. In addition, the Company filed a Registration
Statement on Form S-4 with the Securities and Exchange Commission (Registration
No. 333-1500) which described the Servantis Systems Holdings, Inc.
("Servantis") acquisition discussed in Note 2.
In the opinion of management, the accompanying condensed
consolidated unaudited financial statements reflect all adjustments (consisting
only of normal recurring adjustments) which are necessary for a fair
presentation of financial results for the interim periods presented.
2. On February 21, 1996, the Company completed the acquisition of
Servantis. The total purchase price of the acquisition was $165.1 million
consisting of common stock, stock options, acquisition costs, and the repayment
of Servantis' debt by the Company. The acquisition was treated as a purchase
for accounting purposes, and accordingly, the assets and liabilities were
recorded based on their independently appraised fair values at the date of the
acquisition. Of the purchase price, $90.6 million was allocated to in-process
research and development, $46.5 million to identified intangible assets, and
$12.6 million to goodwill, including approximately $7.5 million relating to the
tax effect of identified intangibles. The amount of the purchase price
allocated to in-process research and development was charged to the Company's
operations at the time of the acquisition. Servantis is included in the
consolidated results of operations from the date of the acquisition.
Consistent with the Company's policy for internally developed
software, the Company determined the amounts to be allocated to developed and
in-process technology based on whether technological feasibility had been
achieved and whether there was any alternative future use for the technology.
As of the date of the acquisition, the Company concluded that the in-process
technology had no alternative future use after taking into consideration the
potential for usage of the software in different products, resale of the
software and internal usage.
The unaudited pro forma results of operations of the Company for the
three months ended March 31, 1995 and 1996, assuming the Servantis acquisition
occurred on January 1, 1995 on the bases described above with all material
intercompany transactions eliminated are as follows:
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Three Months Ended March 31,
1995 1996
---- ----
(In thousands, except per share data)
Total operating revenues $21,627 $32,209
Loss before income taxes (6,099) (10,009)
Net loss (4,230) (7,468)
Net loss per share (0.12) (0.20)
This information is presented to facilitate meaningful comparisons to
on-going operations and to other companies. The unaudited pro forma net loss
and per share amounts above do not include a charge for in-process research and
development charges of $90.6 million arising from the acquisition of Servantis.
The pro forma results also reflect amortization of acquired software, goodwill
and other intangible assets. The unaudited pro forma information is not
necessarily indicative of the actual results of operations had the transaction
occurred at the beginning of the earliest period presented, nor should it be
used to project the Company's results of operations for any future periods.
In March 1996, the Company completed the acquisition of Interactive
Solutions Corp. ("ISC") for a purchase price of $3.2 million in common stock
and cash, plus assumed liabilities. The acquisition was treated as a purchase
for accounting purposes, and accordingly, the assets and liabilities were
recorded based on their fair values at the date of the acquisition. Of the
purchase price, $3.2 million was allocated to in-process research and
development. The amount of the purchase price allocated to in-process research
and development was charged to the Company's operations at the time of the
acquisition. ISC is included in the consolidated results of operations from
the date of acquisition. Pro forma information related to the purchase
acquisition of ISC has not been presented due to the relative insignificance of
the amounts involved.
3. On March 21, 1996, the Company announced that it had entered
into a definitive merger agreement with Security APL, Inc. ("Security APL")
pursuant to which Security APL will become a wholly owned subsidiary of the
Company in a stock-for-stock merger intended to be tax-free and accounted for
as a pooling-of-interests for financial reporting purposes. In connection with
the merger, the Company will issue approximately 2.8 million shares of common
stock of the Company. On May 9, 1996, the transaction was completed.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
OVERVIEW
The acquisitions of Servantis, ISC, and Security APL further
Checkfree's strategy of providing an expanding range of convenient, secure and
cost-effective electronic commerce services and related products to consumers,
businesses and financial institutions. Servantis' experience as a provider of
electronic commerce and financial applications software and services to
financial institutions substantially enhances Checkfree's presence in the
financial institutions segment of the electronic commerce market. Security APL
is a full-service provider of fully integrated, customized portfolio management
software services, including performance measurement and trade and reporting
systems for institutional money managers. ISC is a system developer and
integrator of Web-based electronic commerce services. The integration of
Checkfree's and Security APL's electronic transaction processing and remote
delivery technology with Servantis' software products and market presence and
ISC's Web-based development capabilities has created a single vendor of
electronic commerce services and related products to an expanded customer base
of consumers, businesses and financial institutions.
In 1996, the Company intends to increase research and development
costs for new products and related services. The research and development will
include the integration of the products and services of Checkfree, Servantis,
Security APL, and ISC. In addition, the Company intends to increase sales and
marketing efforts to promote the Company's electronic commerce offerings and to
specifically acquire new consumers both directly and through strategic
alliances with financial institutions.
Although these initiatives may adversely impact the Company's
short-term profitability, the Company expects that these initiatives will allow
it to maintain and enhance its leading position in the rapidly growing
electronic commerce market. There can be no assurance, however, that the
Company will be able to compete against current or future competitors
successfully or that the competitive pressures faced by the Company will not
have a material adverse effect on its business, operating results, and
financial condition.
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RESULTS OF OPERATIONS
The following table sets forth as percentages of total operating
revenues certain consolidated statements of operations data:
Three months ended March 31,
----------------------------------
1995 1996
-------------- --------------
OPERATING REVENUES:
Processing, servicing and merchant discount revenues 95.0% 63.7%
License fees 0.5% 21.3%
Maintenance fees 0.6% 1.6%
Consulting fees 0.9% 8.7%
Other 3.0% 4.7%
-------------- --------------
Total Operating Revenues 100.0% 100.0%
-------------- --------------
OPERATING EXPENSES:
Cost of processing, servicing and support 66.6% 63.5%
Research and development 13.8% 22.0%
Sales, marketing and royalties 14.4% 32.3%
General and administrative 8.8% 16.1%
Amortization expense of intangible assets 0.0% 0.9%
In-process research and development 0.0% 432.3%
-------------- --------------
Total Operating Expenses 103.6% 567.1%
-------------- --------------
LOSS FROM OPERATIONS -3.6% -467.1%
INTEREST:
Income 2.6% 4.7%
Expense -1.5% -0.7%
-------------- --------------
Net Interest Income 1.1% 4.0%
-------------- --------------
LOSS BEFORE INCOME TAXES AND EXTRAORDINARY ITEM -2.5% -463.1%
Income tax benefit -1.1% -15.3%
-------------- --------------
NET LOSS BEFORE EXTRAORDINARY ITEM -1.4% -447.8%
Extraordinary item, extinguishment of debt in conjunction with an
acquisition, net of tax 0.0% -1.7%
-------------- --------------
NET LOSS -1.4% -449.5%
============== ==============
Revenues increased by 97.3% from $11.0 million to $21.7 million for the
three months ended March 31, 1995 and 1996, respectively. The increase was
primarily due to revenues of $7.6 million that was recognized after the
acquisitions of Servantis and ISC. Servantis' revenues are primarily software
license fees and related maintenance and consulting fees. In addition, the
number of transactions processed in the quarter ended March 31, 1996, excluding
transactions related to the acquired companies, increased by 30% compared to
the same quarter a year ago.
Costs of processing, servicing and support were $7.3 million and $13.8
million or 66.6% and 63.5% of total operating revenues for the three months
ended March 31, 1995 and 1996,
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respectively. The decrease as a percentage of total operating revenues is due
to the increase in license, maintenance and consulting revenues with the
acquisitions. The related costs of service and support for these revenues are
less than the processing and servicing costs related to processing revenues,
particularly credit card items. Excluding the cost of processing, servicing and
support and the total operating revenues for the acquired companies, cost of
processing and servicing was $7.3 million and $10.0 million or 66.6% and 71.1%
of total operating revenues for the three months ended March 31, 1995 and 1996,
respectively. The primary reason for the increase as a percentage of revenue
is due to increased credit card transactions, as a percentage of ACH and paper
transactions. Credit card discount fees doubled in the quarter ended March 31,
1996 compared to a year ago.
Research and development expenses were $1.5 million and $4.8 million
or 13.8% and 22.0% of total operating revenues for the three months ended March
31, 1995 and 1996, respectively. The increase as a percentage of total
operating revenues is due to increased product and business development for new
and existing services and related products, including Electronic Cash
Disbursement ("ECD"), bill presentment and expanded home banking offerings.
Excluding the research and development costs and the total operating revenues
of the acquired companies, research and development costs were $1.5
million and $4.0 million or 13.8% and 28.3% of total operating revenues. The
most significant increase was related to ECD, which was up $1.6 million over
the prior quarter.
Sales, marketing and royalties costs were $1.6 million and $7.0
million or 14.4% and 32.3% of total operating revenues for the three months
ended March 31, 1995 and 1996, respectively. The Company initiated several
direct marketing campaigns to acquire new customers, which accounted for the
majority of the increase. In addition, the increase was due to $1.8 million of
increased sales, marketing and royalty expense related to the activities of the
acquired companies.
General and administrative costs were $1.0 million and $3.5 million or
8.8% and 16.1% of total operating revenues for the three months ended March 31,
1995 and 1996, respectively. The increase was due to $1.6 million of increased
general and administrative expense related to the newly acquired companies. In
addition, the Company incurred significant expenses related to being a public
company in the quarter ended March 31, 1996.
Amortization expense reflects the amortization of all intangible
assets related to the acquisitions, except for amortization of capitalized
software, which is included in costs of processing, servicing and support.
In-process research and development reflects the amounts of the
purchase prices independently appraised and allocated to in-process technology
and expensed at the time of the acquisitions of Servantis and ISC. In-process
research and development represents research efforts underway which have not
reached technological feasibility and which do not have an alternative future
use.
Interest income increased from $280,000 to $1.0 million due primarily
to interest on investments purchased from the proceeds of the Company's initial
public offering.
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The effective income tax rate (benefit) was (45.0%) and (3.3%). The
effective tax benefit was more than the statutory rate of 34% in 1995 due to
state and local taxes. In 1996, the effective benefit was less than the
statutory rate due to non-deductible amortization and in-process research and
development expenses.
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended March 31, 1996, the Company's operating
activities used cash of $3.8 million. During the quarter, the Company invested
$38.9 million for the Servantis and ISC acquisitions (net of cash acquired) and
invested $3.0 million in property additions, primarily for computer related
equipment and facilities. The Company used cash, the proceeds from the sale of
investments of $10.1 million and unsecured bank borrowings of $1.1 million to
finance these investing activities.
At March 31, 1996, the Company's cash and cash equivalents and
investments were $48.1 million, a decrease of $44.2 million from December 31,
1995. As of March 31, 1996 the Company's current ratio was 2.3 to 1, compared
to a current ratio of 10.4 to 1 as of December 31, 1995. In addition, working
capital was $46.5 million and $81.8 million at March 31, 1996 and December 31,
1995, respectively. These decreases reflect the Company's investing activities
in the quarter ended March 31, 1996, primarily the acquisition of Servantis.
The Company believes the existing cash and cash equivalents and
investments will be sufficient to meet the Company's presently anticipated
working capital and capital expenditure requirements both for the short-term
and through at least June 30, 1997. To the extent that the Company needs
additional capital resources, the Company believes that it will have access to
both bank financing and capital leasing for additional facilities and
equipment.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Except for the historical information contained herein, the matters
discussed in this Form 10-Q include forward-looking statements that involve
risks and uncertainties, including, but not limited to, quarterly fluctuations
in results, the management of growth, and other risks detailed from time to
time in the Company's Annual Report on Form 10-K and other Securities and
Exchange Commission filings. Actual results may differ materially from
management expectations.
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS.
EXHIBIT NUMBER EXHIBIT DESCRIPTION
-------------- -------------------
2(a) Agreement and Plan of Merger, dated as of January 15, 1996, among the Registrant, Checkfree
Acquisition Corporation, and Servantis Systems Holdings, Inc. (Reference is made to Exhibit 2
to the Current Report on Form 8-K, dated January 15, 1996, filed with the Securities and
Exchange Commission, and incorporated herein by reference.)
2(b) Agreement and Plan of Merger, dated as of March 21, 1996, among the Registrant, ISC
Acquisition Corporation, and Security APL, Inc. (Reference is made to Exhibit 2 to the
Current Report on Form 8-K, dated March 21, 1996, filed with the Securities and Exchange
Commission, and incorporated herein by reference.)
2(c) * Amendment to Agreement and Plan of Merger, dated as of April 30, 1996, among the Registrant,
ISC Acquisition Corporation, and Security APL, Inc.
10(a) * Payment Services, Software Development and Marketing Agreement, dated as of February 27,
1996, between the Registrant and CyberCash.**
10(b) * Termination of Voting Agreement, dated as of April 19, 1996, among Peter J. Kight,
Mark A. Johnson, Greylock Limited Partnership, Highland Capital Partners Limited Partnership
and Tribune Company.
10(c) * Voting Agreement, dated as of April 19, 1996, among Peter J. Kight, Mark A. Johnson, and
Tribune Company.
10(d) * Executive Employment Agreement between Registrant and Kenneth J. Benvenuto.
10(e) * Executive Employment Agreement between Registrant and Robert E. Bowers.
10(f) * Executive Employment Agreement between Registrant and Lynn D. Busing.
10(g) * Executive Employment Agreement between Registrant and James M. Garrett.
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p
10(h) * Executive Employment Agreement between
Registrant and James Robert Lewis, III.
10(i) * Executive Employment Agreement between
Registrant and Jay N. Whipple, III.
27 * Financial Data Schedule.
______________________
* Filed with this Report.
** The Registrant has requested that portions of this Exhibit be given confidential treatment.
(B) REPORTS ON FORM 8-K.
The Registrant filed the following Current Reports on Form 8-K with
the Securities and Exchange Commission:
(i) A Current Report on Form 8-K, dated as of January 15,
1996, was filed with the Securities and Exchange
Commission on January 16, 1996 (Items 5 and 7).
(ii) A Current Report on Form 8-K, dated as of February
21, 1996, was filed with the Securities and Exchange
Commission on March 5, 1996 (Items 2 and 7).
(iii) A Current Report on Form 8-K/A No. 1, dated as of
February 21, 1996, was filed with the Securities and
Exchange Commission on April 23, 1996 (Items 2 and
7).
(iv) A Current Report on Form 8-K, dated as of March 21,
1996, was filed with the Securities and Exchange
Commission on March 29, 1996 (Items 5 and 7).
(v) A Current Report on Form 8-K, dated as of April 19,
1996, was filed with the Securities and Exchange
Commission on April 23, 1996 (Item 8).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CHECKFREE CORPORATION
Date: May 14, 1996 By: /s/ Peter J. Kight
----------------------------
Peter J. Kight,
Chairman, President, and
Chief Executive Officer
Date: May 14, 1996 By: /s/ Robert E. Bowers
----------------------------
Robert E. Bowers, Executive
Vice President, Finance and
Administration and Chief
Financial Officer
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CHECKFREE CORPORATION
FORM 10-Q FOR THE QUARTER ENDED
MARCH 31, 1996
EXHIBIT INDEX
16
EXHIBIT EXHIBIT EXHIBIT INDEX
NUMBER DESCRIPTION PAGE NUMBER
- - ------- ----------- -----------
2(a) Agreement and Plan of Merger, dated as of January 15, 1996, among the Registrant, Checkfree
Acquisition Corporation, and Servantis Systems Holdings, Inc. (Reference is made to Exhibit
2 to the Current Report on Form 8-K, dated January 15, 1996, filed with the Securities and
Exchange Commission, and incorporated herein by reference.)
2(b) Agreement and Plan of Merger, dated as of March 21, 1996, among the Registrant, ISC
Acquisition Corporation, and Security APL, Inc. (Reference is made to Exhibit 2 to the
Current Report on Form 8-K, dated March 21, 1996, filed with the Securities and Exchange
Commission, and incorporated herein by reference.)
2(c) * Amendment to Agreement and Plan of Merger, dated as of April 30, 1996, among the Registrant,
ISC Acquisition Corporation, and Security APL, Inc.
10(a) * 10(a) *Payment Services, Software Development and Marketing Agreement, dated as of February 27,
1996, between the Registrant and CyberCash.**
10(b) * Termination of Voting Agreement, dated as of April 19, 1996, among Peter J. Kight, Mark A.
Johnson, Greylock Limited Partnership, Highland Capital Partners Limited Partnership and
Tribune Company.
10(c) * Voting Agreement, dated as of April 19, 1996, among Peter J. Kight, Mark A. Johnson, and
Tribune Company.
10(d) * Executive Employment Agreement between Registrant and Kenneth J. Benvenuto.
10(e) * Executive Employment Agreement between Registrant and Robert E. Bowers.
10(f) * Executive Employment Agreement between Registrant and Lynn D. Busing.
10(g) * Executive Employment Agreement between Registrant and James M. Garrett.
10(h) * Executive Employment Agreement between Registrant and James Robert Lewis, III.
10(i) * Executive Employment Agreement between Registrant and Jay N. Whipple, III.
17
27 * Financial Data Schedule.
_____________
* Filed with this Report.
** The Registrant has requested that portions of this
Exhibit be given confidential treatment.
1
EXHIBIT 2(C)
AMENDMENT TO
AGREEMENT AND PLAN OF MERGER
THIS AMENDMENT TO AGREEMENT AND PLAN OF MERGER (this "Amendment") is
made as of April 30, 1996, among CHECKFREE CORPORATION, a Delaware corporation
("Parent"), ISC ACQUISITION CORPORATION, an Ohio corporation and a wholly owned
subsidiary of Parent ("Acquisition"), and SECURITY APL, INC., an Illinois
corporation (the "Company").
RECITALS
A. Parent, Acquisition and the Company entered into an Agreement
and Plan of Merger, dated as of March 21, 1996 (the "Merger Agreement"), which
provides for the merger of Acquisition into the Company (the "Merger") and the
exchange of all issued and outstanding shares of common stock of the Company
into shares of common stock, $.01 par value, of Parent. All capitalized terms
not otherwise defined herein shall have the meanings ascribed to them in the
Merger Agreement.
B. The parties hereto desire to amend the Merger Agreement on the
terms and conditions set forth in this Amendment.
AGREEMENT
In consideration of the foregoing and the mutual promises contained
herein, the parties agree as follows:
1. AMENDMENT CONCERNING ACCOUNTING TREATMENT OF MERGER. The
Merger Agreement shall be amended by inserting a new Section 2.08 to read in
its entirety as follows:
SECTION 2.08 PURCHASE OF PARENT COMMON STOCK FOR PURCHASE ACCOUNTING
TREATMENT.
(a) If on or before September 30, 1996, Parent accounts
for the business combinations to be effected by the Merger under the purchase
method of accounting rather than under the pooling-of-interests method of
accounting as the result of actions taken by Parent, then Parent shall notify
the former shareholders of the Company who received Parent Common Stock in the
Merger (the "Former Shareholders") in writing within five (5) business days of
the date on which such change in accounting treatment is determined (the
"Purchase Notice").
(b) Within ten (10) business days after the date of the
Purchase Notice, each Former Shareholder shall have the right and option to
require Parent to purchase up to ten percent (10%) of the number of shares of
Parent Common Stock received by such Former Shareholder in the Merger (the "Put
Shares") at a price of $19.00 per share (the "Put Purchase Price").
(c) Each Former Shareholder may exercise his or her
respective rights to require Parent to purchase the Put Shares by surrendering
for such purpose to Parent, at its principal office, the certificates for the
Put Shares free and clear of any liens, claims, encumbrances, or rights of
third parties of any kind, accompanied by a written notice stating that the
Former Shareholder requests Parent to purchase the Put Shares in accordance
with the provisions of this Section 2.08. As promptly as practicable, and in
any event within ten (10) business days after the surrender of the certificates
representing the Put Shares and the receipt of such notice relating thereto,
Parent shall deliver or cause to be delivered to the Former Shareholder the Put
Purchase Price or the portion thereof which Parent is not then prohibited under
applicable law and regulation from so delivering.
(d) To the extent that Parent is prohibited under
applicable law or regulation, or as a result of administrative or judicial
action, from purchasing the Put Shares in full at any time that it may be
required to do so hereunder, Parent shall immediately so notify each affected
Former Shareholder and thereafter deliver or cause to be delivered, from time
to time, to each affected Former Shareholder the portion of the Put Purchase
Price which it is no
2
longer prohibited from delivering, within ten (10) business days after the date
on which Parent is no longer so prohibited. Upon receipt of such notice from
Parent and for a period of fifteen (15) days thereafter, any affected Former
Shareholder may revoke his or her notice of purchase of the Put Shares by
written notice to Parent at its principal office stating that the Former
Shareholder elects to revoke its election to exercise its right to require
Parent to purchase the Put Shares, whereupon Parent will promptly deliver to
such Former Shareholder the certificates representing the Put Shares
surrendered to Parent for purposes of such purchase. Whether or not such
election is revoked, Parent hereby agrees to use its best efforts to obtain all
required legal and regulatory approvals necessary to permit Parent to purchase
the Put Shares as promptly as practicable.
(e) In the event that a Former Shareholder exercises his
or her respective rights to require Parent to purchase the Put Shares, the
number of shares of Registrable Securities for which such Former Shareholder is
entitled to registration rights in accordance with the Registration Rights
Agreement attached as EXHIBIT A to the Merger Agreement shall be reduced by the
number of Put Shares purchased by Parent with respect to Parent's first
registration of Registrable Securities pursuant to Section 5 of the
Registration Rights Agreement.
2. Ratification. Except as otherwise amended hereby, the Merger
Agreement shall remain unchanged and in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the day and year first above written.
CHECKFREE CORPORATION ISC ACQUISITION CORPORATION
By: /s/ Peter J Kight By: /s/ Peter J. Kight
------------------------------ -------------------------
Peter J. Kight, President and Peter J. Kight, President
Chief Executive Officer
SECURITY APL, INC.
By: /s/ Jay N. Whipple, III
------------------------------
Jay N. Whipple, III, President
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Exhibit 10(a)
Confidential Treatment - Asterisked
material has been omitted and filed
separately with the Securities and
Exchange Commission
PAYMENT SERVICES, SOFTWARE
DEVELOPMENT AND MARKETING AGREEMENT
THIS PAYMENT SERVICES, SOFTWARE DEVELOPMENT AND MARKETING AGREEMENT
(the "Agreement") is made and entered into as of this 27th day of February,
1996 (the "Effective Date") by and between CYBERCASH, INC., a Delaware
corporation ("CyberCash"), with offices at 2100 Reston Parkway, Reston,
Virginia 22091, and CHECKFREE CORPORATION, a Delaware corporation
("Checkfree"), with offices at 8275 N. High Street, Columbus, Ohio 43235.
RECITALS
WHEREAS, CyberCash is in the business of providing secure payment
services over the Internet and developing products to be used in conjunction
with such services; and
WHEREAS, Checkfree is in the business of providing home-banking
services, developing products to be used in conjunction with such services, and
credit transaction processing services to merchants; and
WHEREAS, Checkfree desires to utilize certain products of CyberCash in
conjunction with its own services and to private label such products; and
WHEREAS, CyberCash desires to provide such products to Checkfree; and
WHEREAS, the parties also wish to establish a framework for future
cooperative ventures, including enhancements to their existing products and new
products, on mutually acceptable terms and conditions; and
WHEREAS, the parties have reached agreement on terms and conditions to
accomplish these objectives.
NOW THEREFORE, in consideration of the mutual promises and obligations
set forth below, the parties hereto agree as follows:
2
AGREEMENT
1. DEFINITIONS.
"E-Payment Software" means the machine-executable object code of CyberCash's
basic end-user client payment application program as described in Exhibit A.
"E-Payment Source Code" means the source code of the E-Payment Software.
"E-Payment Documentation" means the end-user documentation of the E-Payment
Software released as of the date of this Agreement.
"Merchant Server Software" means machine-executable object code of CyberCash's
Internet server-based merchant processing application program.
"Merchant Server Source Code" means the source code of the Merchant Server
Software.
"Merchant Server Documentation" mean the end user documentation of the Merchant
Server Software released as of the date of this Agreement.
"CyberCash Software" means the E-Payment Software and the Merchant Server
Software.
"Documentation" means the E-Payment Documentation and Merchant Server
Documentation.
"Checkfree Software" means the software identified in Exhibit B of this
Agreement.
"Branded Software" means the combination of E-Payment Software which
incorporates graphical images for logos provided by Checkfree which may display
the trademarks of Checkfree along with the trademarks of CyberCash. It is
acknowledged that prior to the execution of this Agreement, CyberCash has
electronically delivered the E-Payment Software and the E-Payment Source Code
to versions 0.8.2 and 0.8.3 to Checkfree so as to permit Checkfree to make the
following modifications: (i) rebranding of the E-Payment Software as
"Checkfree Wallet with/by CyberCash"; (ii) inclusion of Checkfree graphics and
logos of Checkfree including the Checkfree Wallet "lookup" art, with the phrase
"with CyberCash" and the CyberCash logo, and (iii) the version number. It is
further agreed that the prior delivery of said E-Payment Software modifications
were done pursuant to the Letter of Intent dated July 10, 1995 and in
contemplation of the execution of this Agreement and shall be subject to the
terms hereof as if this Agreement had been fully executed prior to such
delivery and modifications.
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"Server Technology" means the CyberCash-developed and owned technology as may
be necessary to permit Checkfree to operate a server capable of creating,
receiving, sending, decrypting, and processing messages containing credit card
transaction data in a form which is compatible with the CyberCash Software.
"GUI" means Graphical User Interface.
2. LICENSE GRANTS.
2.1 E-PAYMENT SOFTWARE LICENSE GRANT. Subject to the terms and
conditions set forth in this Agreement, CyberCash hereby grants to Checkfree a
worldwide, royalty-free, nonexclusive, nontransferable license during the term
of this Agreement, to use the E-Payment Software as a component of the Branded
Software, and reproduce and distribute the Branded Software to third-party
end-users, or to third-party resellers for redistribution to end-users.
(a) The distribution right set forth above shall be subject to the
following restrictions:
(i) each copy of the Branded Software shall be subject to license terms
substantially similar and no less restrictive than those set forth Exhibit C
hereto (as may be revised from time to time by CyberCash); and
(ii) each copy of the Branded Software reproduced and distributed
hereunder fully complies with the Mandatory E-Payment Software Requirements set
forth below.
(b) To comply with the Mandatory E-Payment Software Requirements, the
Branded Software must (i) be Tightly Bundled (as described below), (ii) be
distributed free of any additional charge to end-users, except that a
third-party reseller may incorporate the Branded Software into a commerce
module that it may then resell, (iii) conform with the E-Payment Software base
standard established by CyberCash (as may be revised from time to time), (iv)
require end-user assent in the form of an end-user license agreement complying
with Section 1.1(b)(i) upon initial installation, (v) retain and display all
copyright notices, logos and trademarks in the form as provided by CyberCash on
all copies of the E-Payment Software and (vi) include without alteration, the
object code to be supplied by CyberCash providing E-Payment Software
functionality for: (A) wallet invalidation (enabling invalidation of defective
and/or outdated versions of the E-Payment Software), (B) automatic download,
(C) CyberCash payment server interface, (D) display of the E-Payment Software
about box and logo, and (E) additional wallet security features as may
reasonably be required from time to time by CyberCash.
(c) The Branded Software will be considered Tightly Bundled, if, and
only if, it is delivered to end-users in such a manner that it is commercially
impracticable
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4
for a person skilled in the area of computer programming to use or permit
others to use such software inconsistent with the Mandatory E-Payment Software
Requirements.
(d) In addition, CyberCash hereby grants Checkfree a license to revise
and reformat the E-Payment Documentation and to incorporate such documentation
as modified into its own documentation for the Branded Software (the "Revised
E-Payment Documentation") and to reproduce and distribute the Revised E-Payment
Documentation along with the Branded Software, it being understood that the
Revised E-Payment Documentation will be considered a derivative work. Checkfree
agrees to provide CyberCash an electronic and paper copy of such documentation
at no charge.
(e) CyberCash shall have the right to invalidate a release of the
E-Payment Software and require end-users to download replacement software
("Replacement Software") in its sole discretion that such invalidation is
necessary to maintain security of the system and/or the financial viability of
its business, provided that CyberCash shall implement the Invalidation
Procedures incorporated herein as Exhibit F. If the Replacement Software does
not maintain the GUI and/or the branding as implemented in the Branded
Software, CyberCash shall use its best efforts to provide Replacement Software
within 15 business days which restores the GUI and/or branding of the Branded
Software.
2.2 MERCHANT SERVER SOFTWARE LICENSE GRANT.
(a) Subject to the terms and conditions set forth in this Agreement,
CyberCash hereby grants to Checkfree a worldwide, royalty-free, nonexclusive,
nontransferable license during the term of this Agreement, to use the Merchant
Server Software for purposes of distributing the Merchant Server Software
(either separately or as bundled with other on-line-merchant support software),
with the right to reproduce said Merchant Server Software and sublicense such
rights to (i) end-users without further right of sublicense and (ii) to Value
Added Resellers ("VAR(s)") and Integrators to whom Checkfree has sublicensed
the Merchant Server Software with the right to further sublicense the Merchant
Server Software to end-users without further right to sublicense subject to the
terms and conditions contained herein.
(b) The distribution right set forth above shall be subject to the
following restrictions:
(i) Checkfree has entered into a "Processor Agreement" with CyberCash
substantially in the form attached as Schedule 1; and
(ii) each end-user of the Merchant Server Software has entered into an
agreement with Checkfree for the processing of credit card and/or debit card
transactions transported over the Internet; and
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5
(iii) each copy of the Merchant Server Software is configured in a
manner such that credit card and/or debit card transaction messages may only be
transported from the end-user of the Merchant Server Software through a
CyberCash designated server to Checkfree's processing facility; and
(iv) each copy of the Merchant Server Software shall be subject to
license terms substantially similar and no less restrictive than those set
forth in Exhibit C hereto (as may be revised from time to time by CyberCash);
and,
(v) each copy of the Merchant Server Software reproduced and
distributed hereunder fully complies with the mandatory Merchant Server
Software requirements set forth herein. To comply with the mandatory Merchant
Server Software requirements, the Merchant Server Software distributed by
Checkfree must (i) conform with the Merchant Server base standard established
by CyberCash (as may be revised from time to time), (ii) require end-user
assent in the form of an end-user license agreement complying with Section
1.2(b)(i) upon initial installation, (iii) retain and display all copyright
notices, logos and trademarks in the form as provided by CyberCash on all
copies of the Merchant Server Software and (iv) include without alteration, the
object code to be supplied by CyberCash providing Merchant Server functionality
for: (A) CyberCash payment server interface, and (B) additional security
features as may reasonably be required from time to time by CyberCash.
(c) CyberCash shall have the right to invalidate a release of the
Merchant Server Software and require end-users to download replacement software
("Replacement Software") if CyberCash determines in its sole discretion that
such invalidation is necessary to maintain security of the system and/or the
financial viability of its business, provided that CyberCash shall implement
the Invalidation Procedures incorporated herein as Exhibit F.
(d) In addition, CyberCash hereby grants Checkfree a license to revise
and, reformat the Merchant Server Documentation and to incorporate such
documentation as modified into in its own documentation (the "Revised Merchant
Documentation") and to reproduce and distribute the Revised Merchant
Documentation along with the Merchant Server Software, it being understood that
the Revised Server Documentation will be considered a derivative work.
Checkfree agrees to provide CyberCash an electronic and paper copy of such
documentation at no charge.
2.3 LICENSE GRANT TO SOURCE CODE OF CYBERCASH SOFTWARE. Upon request
of Checkfree, CyberCash agrees to grant to Checkfree a nonexclusive,
nontransferable, royalty free license, without the right to further sublicense,
to use the E-Payment Source Code and Merchant Server Source Code during the
term of this Agreement for the sole purpose of permitting Checkfree to review
and identify problems in the E-Payment
- 5 -
6
Software and/or the Merchant Server Software. Checkfree acknowledges receipt
of Merchant Server Source Code versions 0.8.2 and 1.0.12.0.
2.4 SUBLICENSE TO THIRD PARTIES. Checkfree's right of sublicense as
set forth in Section 1.1, 1.2(a) and 1.3 above shall be subject to such third
party's affirmative written agreement with Checkfree to comply with all the
terms and conditions set forth herein, including without limitation the license
terms set forth in this Section 1, the indemnity set forth in Section 6, and
the confidentiality provisions set forth in Section 11 hereof. It shall be
Checkfree's responsibility to enforce the terms and conditions set forth herein
against any sublicensee. Should CyberCash, in good faith, believe that a
sublicensee is not in compliance with those terms and conditions, it shall
promptly notify Checkfree in writing of the specific violation and Checkfree
will immediately take corrective action against the sublicensee, if such action
is warranted. Checkfree will make a full written report to CyberCash within
thirty (30) days of receipt of written notice.
2.5 SOFTWARE USE LIMITATIONS. Checkfree agrees to utilize CyberCash
Software only as permitted in this document or as authorized in writing by
CyberCash.
2.6 OWNERSHIP OF INTELLECTUAL PROPERTY. Checkfree agrees that
Checkfree acquires only the right to use the CyberCash Software as specified
herein and does not acquire any rights of ownership in the CyberCash Software
by way of the license granted herein. CyberCash retains all right, title, and
interest in and to the CyberCash Software and the trademarks and other
intellectual property embodied in the CyberCash Software. Checkfree retains
all rights, title and interest in and to the graphical images for logos,
trademarks, and other Checkfree-provided components of the Branded Software as
identified in Exhibit B.
2.7 TRADEMARK LICENSE. CyberCash hereby grants to Checkfree a
non-exclusive, limited license to use CyberCash's trademarks and logo(s)
associated with the applicable CyberCash Software licensed under or pursuant to
this Agreement (the "Trademarks") solely on the Branded Software, and/or
Merchant Server Software, as applicable, and in Checkfree's advertising and
printed materials for the same, provided Checkfree complies with the terms
herein. Checkfree acknowledges that Checkfree's utilization of the Trademarks
will not create in it, nor will it represent it has any right, title or
interest in or to the Trademarks. Checkfree acknowledges CyberCash's exclusive
right to use of the Trademarks and agrees not to do anything impairing
CyberCash's rights in the Trademarks. Checkfree agrees to display the
acknowledgment of trademark ownership adjacent to each Trademark the first time
it is used in any advertising for or on the Branded Software or the Merchant
Server Software, as applicable. Checkfree agrees to include the Trademarks on
all copies, advertisements, brochures, manuals, and other appropriate uses made
in the promotion, license or use of the Branded Software or Merchant Server
Software, as applicable. Checkfree agrees to use the Trademarks so that
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each of such Trademarks creates a separate and distinct impression from any
other trademark that may be used or affixed on any advertising for the Branded
Software or Merchant Server Software, as applicable. Any use of the Trademarks
must identify CyberCash as the owner of such Trademarks. Checkfree's use of
the Trademarks shall be in accordance with applicable law and CyberCash's
policies regarding advertising and trademark usage as established from time to
time.
3. ENHANCEMENTS.
It is acknowledged that CyberCash will continue in the ordinary course of
business to make enhancements and add additional functions and features to the
CyberCash Software and its payment services. It is further agreed by the
parties that Checkfree will incorporate such enhancements and additional
functionality into the Branded Software and Merchant Server Software within a
reasonable time of receipt from CyberCash in the regular course of Checkfree's
upgrading of its software and services, unless the parties expressly agree
otherwise in particular instances. All such enhancements shall be subject to
the license rights and obligations established in Section 1 of this Agreement.
CyberCash shall retain all title to and rights in such enhancements. Nothing
in this Section 3 shall limit CyberCash's right to invalidate a release of the
E-Payment Software or the Merchant Server Software as provided in Sections
2.1(e) and 2.2(c).
4. JOINT DEVELOPMENT EFFORTS.
4.1 CYBERCASH REFINEMENTS. CyberCash further agrees to work with
Checkfree to make additional refinements to the E-Payment Software ("CyberCash
Refinements") as may be mutually agreed from time to time, provided, that all
such CyberCash Refinements shall be cosmetic in nature, and that compatibility
with existing and planned software control mechanisms established by CyberCash
shall be preserved. Checkfree grants to CyberCash such license to CyberCash as
is necessary for CyberCash to accomplish such modifications.
4.2 ADDITIONAL FUNCTIONALITY. The parties agree to work together to
implement and market additional functionality to be incorporated into the
E-Payment Software and/or Merchant Server Software, including without
limitation bill payment functionality, check writing functionality, redesign of
the graphical user interface, and micropayment functionality. Another
additional functionality the parties may agree to develop may also be
CyberCash's "Card Present" credit card and smart card application programs,
such as by way of example and not limitation, the credit card associations'
Internet certification program(s), portable smart card technology, or merchant
kiosk technology. Any agreement by the parties to develop such additional
functionality ("Additional Functionality") shall be reduced to writing,
including without limitation the ownership of and the specifications for such
Additional Functionality and the development schedule and acceptance testing
therefor, and such writing shall be attached
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8
as an additional schedule to this Agreement and the terms and conditions set
forth in this Agreement shall apply to such schedules except as may be
expressly set forth therein. Any decision by either party not to co-develop an
Additional Functionality requested by the other party shall not be deemed a
breach of this Agreement.
4.3 JOINTLY DEVELOPED SOFTWARE. The parties agree to negotiate in good
faith from time to time regarding the development, implementation and marketing
of new software related to transaction processing and/or the functions and
services offered by the E-Payment Software and/or Merchant Server Software. Any
agreement by the parties to develop such new software ("Jointly Developed
Software") shall be reduced to writing, including without limitation the
ownership and the specifications for such Jointly Developed Software and the
development schedule and acceptance testing therefor, and such writing shall be
attached as an additional schedule to this Agreement and the terms and
conditions set forth in this Agreement shall apply to such schedules except as
may be expressly set forth therein Such Jointly Developed Software shall be
deemed separate from the Software furnished by CyberCash hereunder and the
modifications and enhancements that may be made thereto from time to time, and
distribution of such Jointly Developed Software to third parties shall only
occur on the specific prior written approval of both parties hereto. Any
decision by either party not to co-develop a Jointly Developed Software
requested by the other party shall not be deemed a breach of this Agreement.
5. MARKETING OBLIGATIONS.
5.1 CHECKFREE OBLIGATIONS.
(a) Checkfree hereby agrees to use its best efforts to promote and
market the E-Payment Software, through its existing and future consumer
distribution channels and to promote and market the Merchant Server Software
through its existing and future corporate services distribution channels. In
addition, Checkfree hereby agrees to use its best efforts to contract with
third party distributors such as, by way of example and not limitation, Spry,
Netcom, or NCD, to promote, market and distribute the E-Payment Software,
and/or the Merchant Server Software.
(b) Checkfree hereby agrees to use CyberCash's Money Payments
Services(TM) as one of Checkfree's Internet Payment vehicles for non-credit
card transactions pursuant to a pricing schedule to be agreed upon by the
parties and to be attached hereto as Exhibit F, provided however, that
Checkfree shall not be obligated to use the CyberCash systems in situations
where they would create an obstacle to Checkfree's ability to acquire or
support specific merchant relationships.
Checkfree agrees to promote the use of the CyberCash Secure Internet Payment
Service(TM) and the CyberCash Software when appropriate in its marketing
efforts to
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banks and merchants. Checkfree agrees to promote the use of all Additional
Functionality and Jointly Developed Software.
5.2 CYBERCASH OBLIGATIONS.
(a) CyberCash agrees to promote the use of Checkfree services and
products when appropriate in its marketing efforts to banks and merchants.
CyberCash agrees to promote the use of all Additional Functionality and Jointly
Developed Software.
(b) CyberCash agrees to identify Checkfree on the appropriate CyberCash
WEB page and to provide a hyperlink to a URL provided by Checkfree.
(c) CyberCash agrees to identify Checkfree merchants on the appropriate
CyberCash WEB page and to provide a hyperlink to a URL provided by Checkfree to
such merchants.
(d) At such time as CyberCash has developed and marketed a method of
providing the Server Technology, CyberCash agrees to offer to Checkfree the
right to license the Server Technology subject to the then current terms of the
CyberCash Server Technology License Agreement.
Checkfree acknowledges and agrees that the technology licensed by CyberCash may
not include other third-party software required to process messages containing
credit card transaction data.
5.3 MUTUAL OBLIGATIONS. Each party agrees to provide the other access
to an internal marketing representative to assist in both internal and external
marketing efforts.
6. MASTER AGREEMENT.
6.1 SCHEDULES. The parties agree that they may enter into additional
agreements ("Schedules") from time to time for other services, relationships or
particular situations (such as, but not limited to, processor/transporter
arrangements), and it is their desire that this Agreement serve as a "master"
or "umbrella" agreement governing their general relationship and under which
such Schedules may fall. For these purposes, it is agreed that the parties
will attach such Schedules hereto as part of Exhibit E and that the terms of
this Agreement shall apply to such Schedules to the extent they are consistent
therewith and the parties do not expressly provide otherwise. In the event of
inconsistency between a Schedule and this Agreement, the terms of the Schedule
shall control. A Schedule shall be considered incorporated into this Agreement
only if signed by an authorized representative of both parties.
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6.2 CONSIDERATION. As consideration for the royalty-free licenses
granted by CyberCash to Checkfree under this Agreement, Checkfree shall:
(a) promote the use of the CyberCash Secure Internet Payment
Service(TM) and the CyberCash Software when appropriate in its marketing
efforts in accordance with Section 5; and
(b) cause any sublicensee to sublicense the E-Payment Software (whether
provided as stand-alone product or as incorporated in the Branded Software) and
the Merchant Server Software in accordance with the terms and conditions set
forth in this Agreement and to cause transactions originating from or handled
by said Software from merchants to be routed through a CyberCash server to
Checkfree's processing facilities; and
(c) pay to CyberCash message transport fees as provided in the
Processor Agreement attached hereto as Exhibit D.
7. LIMITED WARRANTY.
7.1 CHECKFREE WARRANTY. Checkfree hereby represents and warrants that
(i) Checkfree is duly organized and validly existing under the laws of the
state of its incorporation and has full corporate power and authority to enter
into this Agreement and to carry out the provisions hereof; (ii) this Agreement
is a legal and valid obligation binding upon Checkfree and enforceable in
accordance with its terms; (iii) the execution, delivery and performance of
this Agreement by Checkfree does not conflict with the material terms of any
material agreement, instrument or understanding, oral or written, to which
Checkfree is a party or by which Checkfree may be bound, nor violate any law or
regulation of any court, governmental body or administrative or other agency
having jurisdiction over it; and (iv) that Checkfree has all necessary right,
title and interest in and to any software or technology it contributes to the
Additional Functionality.
7.2 CYBERCASH WARRANTY. CyberCash hereby represents and warrants that
(i) CyberCash is duly organized and validly existing under the laws of the
state of its incorporation and has full corporate power and authority to enter
into this Agreement and to carry out the provisions hereof; (ii) this Agreement
is a legal and valid obligation upon CyberCash and enforceable in accordance
with its terms; (iii) the execution, delivery and performance of this Agreement
by CyberCash does not conflict with the material terms of any material
agreement, instrument or understanding, oral or written, to which CyberCash is
a party or by which CyberCash may be bound, nor violate any law or regulation
of any court, government body or administrative or other agency having
jurisdiction over it; and, (iv) CyberCash has all the necessary right, title
and interest in and to the Software and to any software or technology it
contributes to the
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Additional Functionality. Except as set forth in this section, the Software is
provided by CyberCash to Checkfree under this Agreement on an "As-Is" basis and
without any warranty of any kind whatsoever.
8. INDEMNITY.
8.1 CHECKFREE INDEMNITY. Checkfree agrees to indemnify, defend and
hold CyberCash, its agents and employees harmless from and against any and all
costs, liabilities and damages (including without limitation reasonable
attorneys' fees) incurred by CyberCash directly caused by or arising out of a
claim brought against CyberCash, its agents or employees that the Checkfree
Software or any software or technology contributed by Checkfree to an
Additional Functionality or Jointly Developed Software infringes or
misappropriates any United States patent right, copyright, trade secret, trade
name, trademark or other proprietary right of any third party; provided that
(i) Checkfree is notified in writing within thirty (30) calendar days of any
such claim against CyberCash; (ii) CyberCash permits Checkfree sole control to
defend, compromise or settle the said claim, except that Checkfree may not,
without obtaining CyberCash's prior written approval, agree to a settlement or
compromise that does not unconditionally release CyberCash or that restricts or
prohibits the use, sale or distribution of CyberCash's software; and (iii)
CyberCash gives Checkfree all reasonably available information, assistance and
authority, at Checkfree's reasonable expense, to enable Checkfree to do so.
Notwithstanding the foregoing, Checkfree shall have no liability for, nor shall
it indemnify CyberCash against, any infringement claim based solely on the
E-Payment Software or the Merchant Server Software.
8.2 CYBERCASH INDEMNITY. CyberCash agrees to indemnify, defend and
hold Checkfree, its agents and employees harmless from and against any and all
costs, liabilities and damages (including without limitation reasonable
attorneys' fees) incurred by Checkfree directly caused by or arising out of a
claim brought against Checkfree, its agents or employees that the Software,
Merchant Server Software, or any software or technology contributed by
CyberCash to an Additional Functionality or Jointly Developed Software
infringes or misappropriates any United States patent right, copyright, trade
secret, trade name, trademark or other proprietary right of any third party;
provided that (i) CyberCash is notified in writing within thirty (30) calendar
days of any such claim against Checkfree; (ii) Checkfree permits CyberCash sole
control to defend, compromise or settle the said claim, except that CyberCash
may not, without obtaining Checkfree's prior written approval, agree to a
settlement or compromise that does not unconditionally release Checkfree in
full, or that restricts or prohibits the use, sale or distribution of
Checkfree's software; and (iii) Checkfree gives CyberCash all reasonably
available information, assistance and authority, at CyberCash's reasonable
expense, to enable CyberCash to do so. Notwithstanding the foregoing,
CyberCash shall have no liability for, nor shall it indemnify Checkfree against
any infringement claim
- 11 -
12
based: (i) solely on the Checkfree Software or (ii) on any modification of the
Software by Checkfree or any third party where, in the absence of such
modification, the Software would not be infringing. In the event the Software
is held or is believed by CyberCash to infringe, CyberCash shall have the
option, at its expense, to (i) modify the Software to be non-infringing or (ii)
obtain for Checkfree the right to continue using the Software. If such options
are not reasonably available, Checkfree's exclusive remedy shall be to
terminate this Agreement.
9. LIMITATION OF LIABILITY.
IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES, INCLUDING LOSS OF PROFITS, REVENUE, DATA, OR USE,
INCURRED BY EITHER PARTY OR ANY THIRD PARTY, WHETHER IN AN ACTION IN CONTRACT
OR TORT OR BASED ON A WARRANTY, EVEN IF THE OTHER PARTY OR ANY OTHER PERSON HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. IN ADDITION, BOTH PARTIES
HEREBY EXPRESSLY WAIVE ANY RIGHT THEY MAY HAVE OTHERWISE HAD TO SEEK OR RECOVER
ANY PUNITIVE OR EXEMPLARY DAMAGES FROM THE OTHER, AND AGREE THAT IF ANY
PLEADING IS FILED IN ANY ACTION BETWEEN THEM SEEKING SUCH PUNITIVE OR EXEMPLARY
DAMAGES, THE COURT SHALL ON MOTION OF THE OTHER PARTY IMMEDIATELY STRIKE AND
DISMISS SUCH CLAIM.
10. SUPPORT; MAINTENANCE.
10.1 SUPPORT. CyberCash agrees to use its reasonable efforts to answer
any reasonable technical questions asked by Checkfree during CyberCash's
regular business hours relating to the functionality of the E-Payment Software.
10.2 END-USER SUPPORT; SECOND LINE SUPPORT. Checkfree shall provide
first-line support to end-users of the Branded Software and Merchant Server
Software distributed hereunder. Such support shall include without limitation
Checkfree's use of its Internal Customer Care Support Systems for both end-user
and commercial financial institution customers of the Software. CyberCash
shall provide second-line support to Checkfree in the form of routine telephone
and e-mail support to Checkfree during CyberCash's normal business hours
(currently 9:00 A.M. to 5:00 P.M. Eastern Time), Monday through Friday
(excluding state and federal public holidays) to assist Checkfree's support
staff to respond to questions and problems raised during the course of
Checkfree's first-line support. In addition, CyberCash will provide (either
directly or through a mutually acceptable contractor) network operations
support twenty-four hours per day, seven days per week for service related
issues which threaten to cause, or cause, a disruption of the communications or
the shut down of the operation of one or more merchants. CyberCash will
provide Checkfree phone and pager access numbers for network support personnel.
Notwithstanding the above, CyberCash will only provide support to Checkfree for
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13
versions of the Software for six months after they have been superseded by
subsequent versions.
10.3 UPDATE MAINTENANCE. CyberCash shall provide Checkfree with all
commercially available updates and enhancements to the CyberCash Software
generally released by CyberCash for the term of this Agreement and all such
updates and enhancements will be treated as CyberCash Software for the purpose
of this Agreement.
11. TERM AND TERMINATION.
11.1 TERM. Subject to the provisions of Sections 10.2 and 10.3 below,
this Agreement shall have a term of three (3) years, and shall automatically
renew thereafter for additional one (1) year terms unless either party gives
the other at least ninety (90) days notice of non-renewal prior to any
expiration date.
11.2 TERMINATION FOR CAUSE. Either party may terminate this Agreement
for Cause upon thirty (30) days written notice to the other party. Cause shall
mean: (a) the failure of either party to perform any material covenant,
promise, term or duty under any provision of this Agreement, or any Exhibit
attached hereto, and the failure to cure the same within thirty (30) days of
receipt of written notice of the failure; (b) the commencement of bankruptcy or
insolvency proceedings; or (c) the purchase of a controlling interest of either
party by a third party or the merger or consolidation of either party with a
third party. Either party shall have the right to terminate this Agreement
immediately in the event the other party permanently terminates its business,
or becomes subject to any bankruptcy or insolvency proceeding under Federal or
State statute, and such petition is not dismissed within sixty (60) days.
Termination under this Section 11.2 shall not terminate, negatively affect or
operate as a waiver of any rights to damages hereunder or otherwise that the
terminating party may have.
11.3 EFFECTS OF NON-RENEWAL AND TERMINATION.
(a) The termination or non-renewal of this Agreement shall not act to
terminate the licenses previously granted to end-users of either the E-Payment
Software or the Merchant Server Software pursuant to this Agreement, but may
result in the termination of the sublicense to any sublicensee in the sole
discretion of CyberCash. Checkfree shall be entitled to retain five (5) copies
of the E-Payment Software and five (5) copies of the Merchant Server Software
and associated documentation following termination to be used solely for the
purpose of providing support to its end users. Upon termination, Checkfree
shall return to CyberCash or, at CyberCash's request, destroy all other copies
of the CyberCash Software in its possession or control at the time of
termination, except as provided in this section.
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14
(b) In the event CyberCash gives Checkfree notice of non-renewal
pursuant to Section 11.1, Checkfree shall, within fifteen days of receipt of
such notice, give CyberCash written notice of Checkfree's election to proceed
with one of the following:
(i) permit this agreement to terminate; or
(ii) provided that CyberCash has developed and marketed the Server
Technology, request a license to use the Server Technology (which request shall
not be unreasonably withheld), subject to then current terms of the CyberCash
Server Technology License Agreement. Checkfree acknowledges and agrees that
the technology licensed by CyberCash may not include other third party software
required to process messages containing credit card transaction data.
Except as otherwise agreed to by the parties in writing, this Agreement
shall continue in effect for the earlier of one year from the date of
expiration of the term of this Agreement or the date the Server Technology has
been installed by Checkfree (the "Extended Term") as to those merchants that
have registered with CyberCash on or before the effective date of the
expiration of this Agreement. Checkfree shall not, during the Extended Term,
distribute any E-Payment Software or Merchant Server Software and its license
to do so shall be deemed terminated on the date of expiration of this
Agreement.
(c) In the event Checkfree gives notice to CyberCash of non-renewal
pursuant to Section 11.1, Checkfree agrees that CyberCash shall be permitted to
contact individuals and entities which have received the CyberCash Software and
advise them of (i) how they may continue to use such software to transmit and
receive credit card transaction data through a CyberCash operated facility and
to (ii) how they may obtain other CyberCash services.
11.4 ESCROW.
If at the end of the first twelve months of the term of this Agreement,
and provided that Checkfree is not in breach of this Agreement, CyberCash has
offered Checkfree a Server Technology License as provided in Section 5.2(d) of
this Agreement, CyberCash agrees to escrow the Server Technology and name
Checkfree as a conditional beneficiary of such escrow. The terms of such
escrow shall permit Checkfree access to such technology in the event that (a)
Checkfree has not been offered a Server Technology License pursuant to Section
5.2(d) of this Agreement; and (b) CyberCash has filed for protection under the
bankruptcy laws, or, in the event that an involuntary petition of bankruptcy
has been filed against CyberCash, CyberCash has not cause such petition to be
dismissed within sixty (60) days.
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15
12. FREEDOM TO PRODUCE COMPETING PRODUCTS.
Nothing in this Agreement shall preclude either party from developing
or marketing any product of any kind except as such product may include
proprietary or Confidential Information, as defined in Section 13.1, below, of
the other.
13. CONFIDENTIALITY.
13.1 CONFIDENTIALITY. During the term of this Agreement and for the
period of five (5) years thereafter, each party (the "Receiving Party") will
maintain in confidence any confidential or proprietary information of the other
party (the "Disclosing Party") disclosed to it by the Disclosing Party
including, without limitation, any information regarding scientific,
engineering, manufacturing, marketing, business plan, financial or personnel
matter relating to the Disclosing Party, whether in oral, written, graphic or
electronic form, provided that orally disclosed information is identified as
confidential at the time of disclosure and a summary of such information is
provided to the Receiving Party within 15 days of such disclosure
("Confidential Information"). The Receiving Party will not use, disclose or
grant use of each Confidential Information except as contemplated by this
Agreement or expressly authorized by the Disclosing Party. To the extent that
disclosure is authorized by the Disclosing Party, the Receiving Party will
obtain prior agreement from its employees, agents or consultants to whom
disclosure is to be made to hold in confidence and not make use of such
information for any purpose other than those contemplated by this Agreement or
permitted by the Disclosing Party. The Receiving Party will use at least the
same standard of care as it uses to protect its own Confidential Information to
ensure that such employees, agents or consultants do not disclose or make any
unauthorized use of such Confidential Information. The Receiving Party will
promptly notify the Disclosing Party upon discovery of any unauthorized use or
disclosure of the Confidential Information.
13.2 EXCEPTIONS. The obligations of confidentiality contained in
Section 12.1 will not apply to the extent that it can be established by the
Receiving Party by competent proof that such Confidential Information:
(a) was already known to the Receiving Party, other than under an
obligation of confidentiality, at the time of disclosure by the disclosing
party;
(b) was generally available to the public or otherwise part of the
public domain at the time of its disclosure to the receiving party;
(c) became generally available to the public or otherwise part of the
public domain after its disclosure and other than through any act or omission
of the Receiving Party in breach of this Agreement; or
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16
(d) was disclosed to the Receiving Party, other than under an
obligation of confidentiality, by a third party who had no obligation not to
disclose such information to others.
14. MISCELLANEOUS.
14.1 MODIFICATION AND AMENDMENT. This Agreement may be modified or
amended only in writing by the consent of both parties.
14.2 SURVIVAL. Sections 8, 10, 12 and 13 shall survive termination of
this Agreement for five (5) years.
14.3 CONFIDENTIALITY OF AGREEMENT. Neither party will disclose any
terms of this Agreement except pursuant to a mutually agreeable press release,
as required by law, in an arbitration proceeding or court action between the
parties, or as otherwise agreed by the parties in writing. This clause shall
not be construed to prohibit either party from disclosing any facts or
information in the public domain generally known to the trade or the public,
the general nature of the Agreement or the existence of the licenses granted
herein, nor shall it prohibit the disclosure of the terms of the Agreement
under a confidentiality agreement to a third party contemplating acquisition of
a party or a product which is the subject of this Agreement.
14.4 GOVERNING LAW. The validity, construction and performance of this
Agreement shall be governed by the laws of the State of California without
giving effect to its conflict of law provisions.
14.5 NOTICE. All notices, demands, or consents required or permitted
under this Agreement shall be in writing and shall be delivered (1) personally,
or (2) by a national messenger, courier or delivery service that maintains
records of the date, time and circumstances of the delivery of items processed
by it, or (3) by registered or certified, return receipt requested mail to the
other party at the addresses first set forth above. All notices, demands, or
consents shall be deemed effective upon personal delivery or actual receipt.
14.6 NO PARTNERSHIP OR JOINT VENTURE. No agency, employment,
partnership, joint venture, or other joint relationship is created hereby, it
being understood that Checkfree and CyberCash are independent contractors
vis-a-vis one another and that neither has any authority to bind the other in
any respect whatsoever.
14.7 FORCE MAJEURE. Neither party shall be deemed to be in default of
or to have breached any provision of this Agreement as a result of any delay,
failure in performance, or interruption of service resulting directly or
indirectly from acts of God, acts of civil or military authority, civil
disturbance, war, strikes or other labor disputes, fires, transportation
contingencies, laws, regulations, acts or orders of any government agency
- 16 -
17
or office thereof, other catastrophes or any other circumstances beyond the
party's reasonable control.
14.8 EXPORT CONTROL. The parties acknowledge that the E-Payment
Software and associated documentation may be subject to the export control laws
of the United States of America, and hereby agree to obey any and all such
laws. The parties agree to comply with the U.S. Foreign Corrupt Practices Act
of 1977, as amended, and with all applicable foreign laws relating to the use,
importation, licensing or distribution of the E-Payment App.
14.9 ASSIGNMENT. Neither party may assign this Agreement or any of its
rights, duties or obligations under this Agreement to any third party without
the other party's prior written consent, which consent shall not be
unreasonably withheld. Notwithstanding the foregoing, either party may assign
its rights and delegate its obligations under this Agreement without the
consent of the other party to a purchaser of all or substantially all of is
voting stock or capital assets or to an entity with which such party merges or
is consolidated. This Agreement shall be binding upon the successors and
assigns of the parties.
14.10 TAXES. Checkfree shall be solely responsible for any and all
sales, use, transfer, value-added or other similar taxes or charges arising
from or levied as a result of any distribution by Checkfree of the Software or
licenses, excluding any taxes based on the income of CyberCash.
14.11 SEVERABILITY AND WAIVER. In the event any provision of this
Agreement is held to be invalid or unenforceable, the valid or enforceable
portion thereof and the remaining provisions of this Agreement will remain in
full force and effect. Any waiver (express or implied) by either party of any
default or breach of this Agreement shall not constitute a waiver of any other
or subsequent default or breach.
14.12 ENTIRE AGREEMENT. This Agreement embodies the entire
understanding of the parties with respect to the subject matter hereof and
shall supersede all previous communications, representations or understandings,
either oral or written, between the parties relating to the subject matter
hereof, including the Letter of Intent dated July 10, 1995.
14.13 HEADINGS. The section headings appearing in this Agreement are
inserted only as a matter of convenience and in no way define, limit, construe
or describe the scope or intent any such section nor in any way affect this
Agreement.
14.14 PARTIES ADVISED BY COUNSEL. This Agreement has been negotiated
between unrelated parties who are sophisticated and knowledgeable in the
matters contained in this Agreement and who have acted in their own self
interest. The provisions of this Agreement shall be interpreted in a
reasonable manner to effect the, purposes of the
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18
parties, and this Agreement shall not be interpreted or construed against any
party to this Agreement because that party or any attorney or representative
for that party drafted this Agreement or participated in the drafting of this
Agreement.
14.15 EXHIBITS. This Agreement consists of these terms and
conditions and the Exhibits attached hereto. In the event of conflict between
an exhibit and these terms and conditions, the provisions of such exhibit shall
control as to matters which are particularly addressed therein or which may
reasonably be inferred from the language of such provisions.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written above.
CYBERCASH, INC. CHECKFREE CORPORATION
By: /s/ B. Wilson By: /s/ M.D. Phelan
----------------------------------------------- -----------------------------------------------
Name: B. Wilson Name: M.D. Phelan
----------------------------------------------- -----------------------------------------------
Title: Chief Operating Officer Title: EVP
----------------------------------------------- -----------------------------------------------
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19
EXHIBIT A
DESCRIPTION OF SOFTWARE
I. E-PAYMENT SOFTWARE
A. APPLE/MACINTOSH PLATFORM
Product Name: Mac Wallet
Version: 1.0
System Requirements: The Mac Wallet requires System 7.1 and at least 3 MB of
free hard disk space and 8 MB of RAM.
Browsers that already have built in support for the Mac Wallet:
. NetShark for Macintosh
. TCP/Connect II 2.3 or later for Macintosh
Macintosh Browsers that support, via browser configuration, the Mac Wallet:
. NCSA Mosaic 2.0 for Macintosh
. Netscape 1.1 for Macintosh
. Netscape 2.0 for Macintosh
. Spyglass Mosaic 2.1 for Macintosh
. MacWeb 1.1
Features/Function:
. Available in both Macintosh and PowerMac native versions
. "Wallet" look and feel
. May link any number of credit cards to Wallet
. Support for Visa, MasterCard, Discover, and American Express credit card
types
. Provides underlying payment services
. RSA Encryption Capability
. TCP/IP Communication Capabilities
. Automatically launched by supported browsers
. Password protection to prevent unauthorized access
. Usage of credit card at payment time can be password protected
(optional)
. Transaction Detail Display and Printing
. Ability to create pending transactions for future payments
. Ability to cancel transactions
. Backup/Restore Data Files (Wallet ID information and security keys)
Note: Everything but the Transaction Log is backed up.
. Encryption of local data on Mac
20
B. IBM COMPATIBLE PLATFORM
Product Name: Wallet
Version: 1.0
System Requirements:
The Wallet software running on a PC requires at least an 80386, 25 MHZ machine
running Windows 3.1. The Wallet also requires at least 2 MB of free hard disk
space and 4 MB of RAM.
Supported Web browsers include, but are not limited to:
. NCSC Mosaic 2.0
. NetScape 1.1 and 2.0
. SpyGlass
. Air Mosaic
. NetBlazer
. Pipeline
Features/Function:
. Compatible with Windows 3.1 and higher, Windows 95 and Windows NT
. "Wallet" look and feel
. May link any number of credit cards to Wallet
. Support for Visa, MasterCard, Discover, and American Express credit card
types
. Provides underlying payment services
. RSA Encryption Capability
. TCP/IP Communication Capabilities
. Automatically launched by supported browsers
. Password protection to prevent unauthorized access
. Usage of credit card at payment time can be password protected
(optional)
. Transaction Detail Display and Printing
. Ability to create pending transactions for future payments
. Ability to cancel transactions
. Backup/Restore Data Files (Wallet ID information and security keys)
Note: Everything but the Transaction Log is backed up.
. Encryption of local data on PC
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21
II. MERCHANT SERVER SOFTWARE
Product Name: Secure Merchant Payment System (SMPS)
Version: 1.0.12
System Requirements:
The SMPS requires, at a minimum, 11 MB of free hard disk space and 5 MB of RAM.
Notes: (1) Actual sizes vary somewhat by OS.
(2) Admin server size will grow depending on amount of data
queried and activities performed.
(3) Disk logging is minimal for admin server, but is variable
for payment server related activities are dependent on
transaction volume. Disk space must be allocated for
system and database logs.
Operating Systems Supported:
. BSDI V2.0.1
. SunOS V4.1.3 and V4.1.4
. Solaris V2.4
. Windows NT V3.5.11
. HP-UX V9.0.7
. SGI Indy V5.3
. Linux Slackware 3.0
WebServers Supported:
. Most Unix(TM) web servers that can support standard CGI
. Windows NT, web servers Netscape and Website
Browsers Supported:
. NetScape 1.1N and 2.0
Processor Support:
. CES/Wellservice
. MAPP
. FDC
. Checkfree
. NOVA
. NDC
. American Express (authorization only)
Features/Function:
. Support for both host and terminal based data capture.
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22
. Secure Credit Card Processing
. Merchant Admin Functions
Manual Card Processing
Credit Processing
Transaction Status Checking
Database Backup and Restore
. GDBM Database
. Sample Storefront
. Major firewall proxy supported
. Implementation Documentation
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23
EXHIBIT B
CHECKFREE SOFTWARE
(RESERVED)
This Exhibit B will be updated should the parties agree to develop products
and/or features which incorporate software provided by Checkfree.
24
EXHIBIT C
END USER LICENSE TERMS
Attached hereto are the following agreements:
A. CyberCash Internet Payment Service for Credit Cards USER LICENSE
B. CyberCash Internet Payment Service for Credit Cards USER AGREEMENT
C. Registration Agreement and Software License - U.S.
25
EXHIBIT D
CYBERCASH(TM)
INTERNET PAYMENT SERVICE
PROCESSOR AGREEMENT
1. NATURE OF AGREEMENT; DEFINITIONS
(a) CyberCash is in the business of providing services to credit card
processors which make it possible to utilize the Internet for transport of
credit card sales data in a secure manner. Checkfree is in the business of
providing credit card transaction processing to merchants and banks. Checkfree
desires to use CyberCash's services and to offer such services to merchants
and/or financial institutions as further described herein to permit merchants
with which Checkfree has a business relationship (either directly or
indirectly) to engage in credit card sales over the Internet. The purpose of
this Agreement is to define the services to be provided by CyberCash to
Checkfree and the rights and obligations of the parties.
(b) In addition to words and phrases defined in the various sections of this
Agreement, the following words shall have the meanings ascribed to them:
"CyberCash Service" means transport of authorization and settlement transaction
messages between Merchants and Checkfree in a secure manner and in formats
compatible with Checkfree's system. For the purposes of this definition,
"secure" means that the messages are protected from unauthorized interception
("eavesdropping" or "wiretapping"), undetected unauthorized modification or
alteration after their origination, undetected initiation by Persons posing as
other persons or entities ("impostors"), and unauthorized replication
("counterfeiting").
"Merchant" means a merchant which Checkfree has identified as being desirous of
using the CyberCash Service and has authenticated to CyberCash as being
associated, either directly or indirectly, with Checkfree.
"Checkfree Specifications" means the technical specifications of Checkfree for
utilization and compatibility with Checkfree's system which are in effect as of
the date of this Agreement, or as such specifications may be changed by mutual
agreement of the parties, and which are hereby incorporated by reference.
26
"Checkfree's System" means the computer equipment, network facilities, software
and related equipment and documentation used at any time and from time to time
by Checkfree to provide transaction card processing services.
"Master Agreement" refers to the "Payment Services, Software Development, and
Marketing Agreement" to which this Exhibit D is attached and of which this
Exhibit D is a part.
2. UNDERTAKINGS OF CYBERCASH
(a) CyberCash agrees to maintain, subject to payment by Checkfree of the
monthly fees described below, a communication link between the CyberCash Server
and the location designated by Checkfree as the termination point of such
connection (herein, the "Server-to-Checkfree Link"). Such link shall comply
with the Checkfree Specifications.
(b) CyberCash agrees to configure its equipment to provide messages in ISO
8583 format. The content and field descriptions of such messages shall comply
with the message format(s) as described in the Checkfree Specifications.
(c) CyberCash agrees to provide the CyberCash Service to Checkfree to permit
Merchants to transmit authorization and settlement transactions between
Merchants and Checkfree in a secure manner.
(d) As a convenience to Checkfree, its customers and merchants, CyberCash
will provide Checkfree the option to receive credit card transactions which are
initiated by a Merchant and which are directly entered by such Merchant into
the Merchant Server Software for transport to a CyberCash-authorized server.
These transactions are hereinafter referred to as "Merchant Initiated
Transactions". In the event that Checkfree elects to receive Merchant
Initiated Transactions, Checkfree agrees that CyberCash bears no risk and shall
not be responsible for losses or costs arising directly or indirectly from
fraud and other causes from any such transaction (including theft and/or
unauthorized use of the credit card number) and that CyberCash retains the
right to cease providing Merchant Initiated Transactions should such
transactions constitute a violation of the rules of the applicable card issuing
association.
(e) CyberCash will act promptly on advice given by Checkfree (or a financial
institution or other entity that has a relationship with Checkfree) to prevent
a Merchant from using the CyberCash Service to transmit messages and/or credit
card data to Checkfree. Such advice shall be given pursuant to the Section 15
of this Agreement.
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3. UNDERTAKINGS OF CHECKFREE
(a) Checkfree (i) agrees to authenticate Merchants to CyberCash, either
directly or through a financial institution or other entity which has a
relationship with Checkfree, such authentication to be provided in accordance
with Section 15 of this Agreement; and (ii) authorizes CyberCash to transport
authorization and settlement transaction messages between Merchants and
Checkfree; and (iii) agrees to receive and process credit card data (including
authorization requests for credit card transactions) transmitted to it from
Merchants via the CyberCash Service by CyberCash and deliver a response to
CyberCash for transport back to the originating Merchant in a prompt fashion
consistent with industry standards. Checkfree further agrees to cooperate with
CyberCash in identifying, isolating and resolving any problems that arise in
connection with use of the CyberCash services, including providing such
information in Checkfree's possession or control as is reasonably necessary to
allow CyberCash to analyze and resolve the problem.
(b) Checkfree may modify any of the protocols, formats or interfaces of
Checkfree's System which communicates or interfaces with the software and/or
hardware of CyberCash (herein, a "System Change") and CyberCash agrees to
provide such reasonable assistance to Checkfree with respect to the CyberCash
interfaces as Checkfree may reasonable require to complete the System Change.
The cost of System Changes will be borne by Checkfree so long as the System
Change is not due to modifications made to the CyberCash Service or to the
Software or hardware in support thereof. Checkfree will provide CyberCash with
sufficient notice to allow reasonable scheduling of CyberCash software
modifications to accommodate System Changes and will cooperate with CyberCash
in implementing changes to the CyberCash Software necessary to adapt to a
System Change. In the event of System Changes initiated by Checkfree which are
not in response to a change dictated by a card association or required by
applicable law or regulation (i.e. changes for Checkfree's convenience),
CyberCash shall only be obligated to implement such modifications to its system
and/or software as can be accomplished in a commercially reasonable manner and
at a commercially reasonable cost as determined by CyberCash in the exercise of
its good faith discretion. Notwithstanding the foregoing, the cost of System
Changes and any changes to the CyberCash Service or software or hardware in
support thereof that are made to comply with requirements dictated by a
cardholder association or to comply with applicable laws or regulations (as
amended from time to time) will be borne by CyberCash.
(c) Checkfree agrees to pay the fees established in Annex A, subject to the
provisions of Section 7.
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4. JOINT UNDERTAKINGS
(a) Checkfree will work with CyberCash in the definition and resolution of
any regulatory issues (including issues connected with card association rules
and regulations) which may affect Checkfree's use and/or offering of the
CyberCash Service. CyberCash will diligently monitor regulatory issues and
developments to identify and attempt to resolve regulatory issues. CyberCash
and Checkfree will inform one another of regulatory and compliance issues of
which they become aware which may reasonably be expected to affect the payment
services contemplated under this Agreement, and to the extent possible without
jeopardizing their respective legal and commercial interests, will work jointly
to resolve any regulatory issues or concerns which may arise under existing or
anticipated rules, legislation or policies of governmental bodies. Nothing in
this provision shall require either party to divulge information which may be
protected by attorney-client privilege.
(b) Checkfree will provide CyberCash a written copy of any proposed
revisions in the Checkfree Specifications at least sixty (60) days in advance
of the effective date of such revisions. Within such sixty (60) day period,
CyberCash will advise Checkfree as to whether CyberCash intends to implement
such changes and any conditions to implementation. If the parties cannot agree
within the sixty (60) day period to a mutually satisfactory approach to
implementing the proposed revisions to the Processor Specifications, either
party may terminate this Agreement as provided in Section 14 hereof.
(c) Checkfree and CyberCash agree to coordinate their support activities
with respect to Merchants.
5. TERM AND RENEWAL; NON-EXCLUSIVE
(a) This Processor Agreement will begin on the effective date of Master
Agreement and will continue in effect for so long as the Master Agreement
remains in effect (including for the period as defined in Section 11.3(b) of
the Master Agreement as the "Extended Term"), unless terminated prior to that
time in accordance with the terms of the Master Agreement or by mutual
agreement of the parties.
(b) Checkfree may retain the services of other persons or entities to offer
merchants the same or similar services as the CyberCash Services, and Checkfree
may independently develop or acquire and offer to Merchants its own services
that are similar to, or competitive with, the CyberCash Services. The
agreement by CyberCash to furnish services to Checkfree is not exclusive, and
Checkfree understands that CyberCash may offer its services to other processors
and financial institutions, including those who are competitive with Checkfree.
- 4 -
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6. PRICE AND PAYMENT
(a) The fees to be paid by Checkfree for CyberCash services are set forth in
Schedule A. All fees and payments are in U.S. Dollars. Invoiced amounts for
services provided exclude any sales, use, excise, value-added or similar taxes,
which taxes are the responsibility of Checkfree. Invoices may include as a
separate item any sales, excise, value-added or similar taxes which are
collected and remitted by CyberCash. Checkfree agrees to pay all such itemized
taxes. Under no circumstances shall Checkfree be obligated to pay any taxes
based on CyberCash's net income.
(b) At the beginning of each calendar month, CyberCash shall invoice
Checkfree for:
(i) fees owed on messages transported to it from Merchants
via the CyberCash Service through a CyberCash authorized facility and for which
a response was delivered to CyberCash for transmission back to the originating
Merchant during previous calendar month. CyberCash may, at its option, adjust
the transport fees set forth in Schedule A annually on the anniversary of this
agreement by providing sixty (60) days' prior written notice. Any increase
shall not exceed the increase in the Consumer Price Index for all Urban
Consumers (1995 = 100) during the preceding twelve months; and
(ii) monthly connect fees from point-of-presence in Chicago,
Illinois to Columbus, Ohio. CyberCash may increase the monthly connect fee to
the extent that such fee is increased by CyberCash's suppliers.
Checkfree shall pay each invoice within thirty (30) days of receipt. Overdue
payments are subject to a late payment charge of 1.5% per month, or the maximum
legal rate, whichever is lower, provided that Checkfree shall not be assessed a
late payment charge on any sums which are disputed in good faith.
7. AVAILABILITY OF SERVICE; WARRANTY
(a) Checkfree acknowledges that the principal object of this Agreement is
the furnishing of a service by CyberCash to Checkfree. CyberCash does not
warrant that the service being furnished by CyberCash furnished in connection
therewith will meet Checkfree's requirements or that the operation of the
service or software will be uninterrupted or error-free. CyberCash agrees that
it will make reasonable efforts to make such adjustments, repairs or
replacements necessary to provide the Services pursuant to CyberCash's
specifications subject to the provisions of this Agreement, but does not
warrant that such efforts will be successful, and CyberCash reserves the right
to determine in its sole discretion the extent of such efforts and when and how
they should be terminated. Any other services, software and/or hardware
furnished with or accompanying the Services are not warranted by CyberCash.
Checkfree's exclusive
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remedies under this limited warranty are (1) the receipt of such reasonable
efforts as CyberCash elects to perform to correct any deficiencies in the
Services and/or any associated hardware or software furnished by CyberCash,
and/or (2) to terminate this Agreement on the expiration thirty (30) days prior
written notice specifying the uncorrected deficiencies and the failure of
CyberCash to correct said deficiencies within said thirty-day notice period.
(b) EXCEPT AS PROVIDED ABOVE, THE SERVICES ARE PROVIDED "AS IS" WITHOUT
WARRANTY OF ANY KIND, EITHER EXPRESSED OR IMPLIED, INCLUDING, BUT NOT LIMITED
TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, AND THE ENTIRE RISK AS TO THE QUALITY AND PERFORMANCE OF THE SERVICES
IS WITH CHECKFREE.
8. GENERAL INDEMNITY
(a) Each party will indemnify and save harmless the other from and against
all loss, liability, damage and expense, including reasonable counsel fees due
to any claim arising out of an act of omission of the employees or agents of
the indemnifying party in connection with the subject matter of this Agreement.
(b) Checkfree agrees that CyberCash may rely on advice provided by Checkfree
and/or a financial institution or other entity which has a relationship with
Checkfree to authorize a Merchant to use the CyberCash Service and to
subsequently prohibit such use. Checkfree will indemnify and save harmless
CyberCash from and against all loss, liability, damage and expense, including
reasonable counsel fees due to any claim arising out of such reliance.
9. OTHER PROVISIONS
Except as otherwise provided in this Exhibit D, the general terms of the Master
Agreement (including, without limitation, those relating to liability and
termination) shall apply to the performance of this Exhibit D.
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SCHEDULE A
SCHEDULE OF FEES AND CHARGES
CREDIT CARD TRANSPORT FEE - A transport fee is due CyberCash on messages
transmitted to Checkfree from Merchants via the CyberCash Service through a
CyberCash authorized facility for which a response was delivered to the
originating Merchant.
Transport Volume per Calendar Month Payment to CyberCash
- - ----------------------------------- -----------------------------
First Second
Transport Transport
(if required)
0 - 250,000 $ * $ *
250,000 - 1,000,000 $ * $ *
1,000,001 - 2,500,000 $ * $ *
2,500,001 - 5,000,000 $ * $ *
Over 5,000,000 $ * $ *
Example: For 500,000 message transports/responses in a calendar month, the
invoiced transport charges would be:
(250,000 X $ * ) + (250,000 X $ * ) = $ *
DEBIT CARD TRANSPORT FEE
The current release of the CyberCash Software supports credit card transactions
only. When and if the Software is revised to support debit card transactions,
Checkfree will be so advised and the parties will negotiate a mutually
acceptable amendment to this Agreement to implement such capability and
prescribe appropriate debit card transport fees.
MONTHLY CONNECT FEE: $ *
* Confidential material which has been omitted and filed
separately with the Securities and Exchange Commission
A-1
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EXHIBIT E
SCHEDULES FOR ADDITIONAL FEATURES AND JOINTLY DEVELOPED SOFTWARE
The following represent development efforts which are under consideration by
the parties for future inclusion in a schedule under this Exhibit E.
Task 1: Modify the E-Payment Software to facilitate ease of modification
of the branding of the software without the need to access the source code of
the software.
Implementation Schedule: TBD
Responsibility: CyberCash
Special Terms and Conditions: TBD
Task 2: Modify the E-Payment Software to facilitate easy pre-loading of
credit card numbers into such software in such a manner that the E-Payment
Software as preloaded may be distributed directly by a credit card issuer to
its cardholders.
Implementation Schedule: TBD
Responsibility: CyberCash
Special Terms and Conditions: TBD
Task 3. Modify the existing E-Payment Software to include clearly
defined APIs that facilitate the interoperation of third-party developed
software modules with the E-Payment Software, including modules developed by
Checkfree without the modification of, or access to, the source code of the
E-Payment Software.
Implementation Schedule: TBD
Responsibility: CyberCash
Special Terms and Conditions: TBD
33
EXHIBIT F
INVALIDATION PROCEDURE
A. Prior to invalidating a release of the E-Payment Software or the
Merchant Server Software, CyberCash shall make reasonable efforts (as
determined by the circumstances) to contact one of the following individuals at
Checkfree in the order provided:
1.
2.
3.
Reasonable efforts include a single attempt to call the phone numbers and pager
numbers provided by Checkfree for each individual listed above.
B. If contact is made, CyberCash shall advise the contacted individual of
the circumstances necessitating the invalidation of the software, the time at
which the software will become invalid, and the steps being taken to minimize
disruption to the affected parties.
C. If contact is not made, CyberCash shall attempt to leave a message with
one or more of the individuals listed above, provided that CyberCash shall not
be required to await an response before proceeding with the invalidation.
D. CyberCash will provide Checkfree a reasonable amount of time as
circumstances dictate to permit Checkfree to contact merchants prior to the
actual invalidation of the Merchant Server Software.
1
EXHIBIT 10(B)
CHECKFREE CORPORATION
TERMINATION OF VOTING AGREEMENT
This Termination of Voting Agreement is made as of this 19th day of
April, 1996, among Peter J. Kight ("Kight"), Mark A. Johnson ("Johnson"),
Greylock Limited Partnership ("Greylock"), Highland Capital Partners Limited
Partnership ("Highland"), and Tribune Company ("Tribune").
RECITALS
A. The parties hereto entered into a Voting Agreement, dated as
of December 2, 1994 (the "Voting Agreement"), whereby they agreed to vote
their shares of common stock of Checkfree Corporation ("Checkfree"), $.01 par
value (the "Checkfree Common Stock"), in connection with the election of
Checkfree's Board of Directors.
B. William S. Kaiser, Greylock's nominee to the Checkfree Board
of Directors, resigned effective March 21, 1996 and Paul A. Maeder, Highland's
nominee to the Checkfree Board of Directors, resigned effective April 17, 1996.
C. The parties hereto desire to terminate all rights and
obligations under the Voting Agreement under the terms and conditions in this
Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual agreements and
covenants hereinafter contained, the parties hereto agree as follows:
Section 1. TERMINATION OF VOTING AGREEMENT. The Voting
Agreement is terminated effective the date of this Agreement, and none of the
parties thereto shall have any continuing rights or obligations under such
Voting Agreement.
Section 2. ENFORCEABILITY. This Agreement shall be specifically
enforceable in any court of competent jurisdiction in accordance with its
terms.
Section 3. GOVERNING LAW. The validity, interpretation, and
construction of this Agreement shall be governed by Delaware law, without
reference to Delaware's choice of law rules.
Section 4. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
2
IN WITNESS WHEREOF, the parties hereto have executed this Termination
of Voting Agreement as of the date set forth above.
/s/ Peter J. Kight
-----------------------------------
Peter J. Kight
/s/ Mark A. Johnson
-----------------------------------
Mark A. Johnson
GREYLOCK LIMITED PARTNERSHIP
By: /s/ William S. Kaiser
-----------------------------------
William S. Kaiser, A General Partner
HIGHLAND CAPITAL PARTNERS
LIMITED PARTNERSHIP
By: /s/ Paul A. Maeder
-----------------------------------
Paul A. Maeder, A General Partner
TRIBUNE COMPANY
By: /s/ Andrew J. Oleszczuk
-----------------------------------
Andrew J. Oleszczuk,
Vice President/Corporate Development
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EXHIBIT 10(C)
CHECKFREE CORPORATION
VOTING AGREEMENT
This Voting Agreement is made as of this 19th day of April, 1996,
among Peter J. Kight ("Kight"), Mark A. Johnson ("Johnson"), and Tribune
Company, a Delaware corporation ("Tribune").
RECITALS
A. Tribune and Checkfree Corporation, a Delaware corporation (the
"Company"), entered into a Stock Purchase Agreement, as of December 2, 1994
(the "Company Agreement"), whereby Tribune purchased from the Company shares of
common stock, $.01 par value, of the Company (the "Checkfree Common Stock"),
the consummation of which was conditional, inter alia, on the execution and
delivery of a voting agreement. All capitalized terms not otherwise defined
herein shall have the meaning ascribed to them in the Company Agreement.
B. Tribune and Kight entered into a Stock Purchase Agreement, as
of December 2, 1994 (the "Kight Agreement"), whereby Tribune purchased from
Kight shares of Checkfree Common Stock.
C. Kight and Johnson are directors of the Company and
beneficially own (including options which are exercisable within 60 days of
March 27, 1996) 6,515,379 and 1,573,802 shares of Checkfree Common Stock,
respectively.
D. Kight, Johnson, and Tribune entered into a Voting Agreement,
dated as of December 2, 1994 (the "Voting Agreement"), among Kight, Johnson,
Tribune, Greylock Limited Partnership ("Greylock"), and Highland Capital
Partners Limited Partnership ("Highland"), whereby they agreed to vote their
shares of Checkfree Common Stock in connection with the election of Checkfree's
Board of Directors.
E. Kight, Johnson, Tribune, Greylock, and Highland entered into a
Termination of Voting Agreement, dated as of an even date herewith, whereby the
Voting Agreement was terminated and none of the parties thereto has any
continuing rights or obligations under such Voting Agreement.
F. The parties hereto desire to enter into a new agreement to
vote their shares of Checkfree Common Stock in connection with the election of
directors to the Company's Board of Directors under the terms and conditions
set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual agreements and
covenants hereinafter contained, the parties hereto agree as follows:
Section 1. Voting Agreement. During the term of this Agreement:
2
(a) Kight and Johnson shall vote all of their shares of
Checkfree Common Stock in favor of the election to the Company's Board of
Directors of Eugene F. Quinn, David D. Hiller, Andrew J. Oleszczuk, or such
other employee of Tribune or any of its affiliates as Tribune shall nominate
and who is reasonably acceptable to Kight and Johnson. Additionally, if
Tribune's nominee to the Company's Board of Directors is so elected, Kight and
Johnson shall vote in their capacity as directors in favor of the election of
Tribune's nominee to the Audit Committee of the Company's Board of Director.
(b) Tribune shall vote all of its shares of Checkfree
Common Stock in favor of the election to the Company's Board of Directors of
Kight and Johnson.
Section 2. Changes in Checkfree Common Stock. In the event that
subsequent to the date of this Agreement, any common shares or other voting
securities of the Company are issued on, or in exchange for, any of the shares
of the Checkfree Common Stock held by the parties hereto by reason of any stock
dividend, stock split, consolidation, or reclassification of shares of the
Company, such common shares or other voting securities shall be deemed to be
Checkfree Common Stock for purposes of this Agreement.
Section 3. Enforceability. This Agreement shall be specifically
enforceable in any court of competent jurisdiction in accordance with its
terms.
Section 4. Term. This Agreement shall terminate on the earlier of
the date Tribune holds less than 50% of the Tribune Stock or September 28,
2000.
Section 5. Governing Law. The validity, interpretation, and
construction of this Agreement shall be governed by Delaware law, without
reference to Delaware's choice of law rules.
Section 6. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Voting
Agreement as of the date set forth above.
/s/ Peter J. Kight
------------------------------------
Peter J. Kight
/s/ Mark A. Johnson
------------------------------------
Mark A. Johnson
TRIBUNE COMPANY
By: /s/ Andrew J. Oleszczuk
------------------------------------
Andrew J. Oleszczuk
Vice President/Corporate Development
-2-
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EXHIBIT 10(d)
CHECKFREE CORPORATION
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made this 21st day of February, 1996, (the
"Agreement") between Checkfree Corporation ("Checkfree"), a Delaware
corporation, and Kenneth J. Benvenuto (the "Executive").
RECITALS
A. The Executive is currently employed as an executive of Checkfree or one of
its consolidated subsidiaries (individually the "Subsidiary" and collectively
the "Subsidiaries") (Checkfree and the Subsidiaries are hereinafter
collectively referred to as the "Company").
B. The parties desire to continue the Executive's employment by Checkfree
and/or the Subsidiaries on the terms and conditions stated herein.
STATEMENT OF AGREEMENT
In consideration of the foregoing, and of Executive's continued employment,
the parties agree as follows:
1. Employment. Checkfree hereby employs Executive and Executive accepts such
employment upon the terms and conditions hereinafter set forth to become
effective on September 1, 1996 (the "Effective Time") provided that neither
Checkfree nor Executive have terminated the present employment relationship
between the parties prior to the Effective Time, in which case this Agreement
shall terminate and be of no effect.
2. Duties.
(a) Executive shall be employed: (i) to serve as Executive Vice President
of Checkfree, and to serve in similar capacities for each of the Subsidiaries,
if so elected, subject to the authority and direction of the Board of Directors
of Checkfree or the Subsidiary, as the case may be; and (ii) to perform such
other duties and responsibilities similar to those performed by Executive prior
hereto and exercise such other authority, perform such other or additional
duties and responsibilities and have such other or different title (or have no
title) as the Board of Directors of Checkfree or the Subsidiary may, from time
to time, prescribe.
(b) So long as employed under this Agreement, Executive agrees to devote
full time and efforts exclusively on behalf of the Company and to competently,
diligently and effectively discharge all duties of Executive hereunder.
Executive shall not be prohibited from engaging in such personal, charitable,
or other nonemployment activities as do not interfere with full time employment
hereunder and which do not violate the other provisions of this Agreement.
Executive further agrees to comply fully with all reasonable policies of the
Company as are from time to time in effect.
3. Compensation. As full compensation for all services rendered to the
Company pursuant to this Agreement, in whatever capacity rendered, the Company
shall pay to Executive during the term hereof a minimum base salary at the rate
of $135,000.00 per year (the "Basic Salary"), payable monthly or in other more
frequent installments, as determined by the Company. The Basic Salary may be
increased, but not decreased, from time to time, by the Board of Directors.
2
In addition, Executive will be entitled to receive incentive compensation
pursuant to the terms of plans adopted by the Board of Directors from time to
time.
4. Business Expenses. The Company shall promptly pay directly, or reimburse
Executive for, all business expenses to the extent such expenses are paid or
incurred by Executive during the term of employment in accordance with Company
policy in effect from time to time and to the extent such expenses are
reasonable and necessary to the conduct by Executive of the Company's business
and properly substantiated.
5. Fringe Benefits. During the term of this Agreement and Executive's
employment hereunder, the Company shall provide to Executive such insurance,
vacation, sick leave and other like benefits as are provided from time to time
to its other employees holding equivalent executive positions with the Company
in accordance with the policy of the Company as may be established from time to
time; provided, however, that the Company shall maintain at least the level of
benefits as determined by Checkfree and in effect at the Effective Time.
6. Term; Termination.
(a) Executive is employed by the Company "at will." Executive's employment
may be terminated at any time as provided in this Section 6. For purposes of
this Section 6, "Termination Date" shall mean the date on which any notice
period required under this Section 6 expires or, if no notice period is
specified in this Section 6, the effective date of the termination referenced
in the notice.
(b) Executive may terminate his employment upon giving at least 30 days'
advance written notice to the Company and the Company will pay Executive the
earned but unpaid portion of Executive's Basic Salary through the Termination
Date. If Executive gives notice of termination hereunder, the Company shall
have the right to relieve Executive, in whole or in part, of his duties under
this Agreement and to advance the Termination Date from the date set by
Executive's notice to a date not less than 14 days from the receipt of
Executive's notice of termination.
(c) The Company may terminate Executive's employment without cause upon
giving 30 days' advance written notice to Executive. If Executive's employment
is terminated without cause under this Section 6(c), the Company will pay
Executive the earned but unpaid portion of Executive's Basic Salary through the
Termination Date and will continue to pay Executive his Basic Salary for six
months following the Termination Date (the "Severance Period"), and the Company
will provide executive level outplacement services by a firm selected and
contracted by the Company for up to six months following the Termination Date
(the "Outplacement Services"); provided, however, if Executive accepts other
employment during the Severance Period, the Company shall pay Executive's Basic
Salary and will provide the Outplacement Services until the first to occur of
the expiration of the Severance Period or the commencement of the other
employment.
(d) The Company may terminate Executive's employment upon a determination
by the Company that "good cause" exists for Executive's termination and the
Company serves written notice of such termination upon the Executive. As used
in this Agreement, the term "good cause" shall refer only to any one or more
of the following grounds:
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3
(i) commission of an act of dishonesty, including, but not limited to,
misappropriation of funds or any property of the Company;
(ii) engagement in activities or conduct clearly injurious to the best
interests or reputation of the Company;
(iii) refusal to perform his assigned duties and responsibilities;
(iv) gross insubordination by the Executive;
(v) the clear violation of any of the material terms and conditions
of this Agreement or any written agreement or agreements the Executive may
from time to time have with the Company (following 30-days' written notice
from the Company specifying the violation and Executive's failure to cure
such violation within such 30-day period);
(vi) the Executive's substantial dependence, as determined by the
Board of Directors of the Company, on alcohol, or any narcotic drug or
other controlled or illegal substance; or
(vii) commission of a crime which is a felony, a misdemeanor involving
an act of moral turpitude, or a misdemeanor committed in connection with his
employment by the Company which causes the Company a substantial detriment.
In the event of a termination under this Section 6(d), the Company will pay
Executive the earned but unpaid portion of Executive's Basic Salary through the
Termination Date. If any determination of substantial dependence under Section
6(d)(vi) is disputed by the Executive, the parties hereto agree to abide by the
decision of a panel of three physicians appointed in the manner as specified in
Section 6(e) of this Agreement.
(e) Executive's employment shall terminate upon the death or permanent
disability of Executive. For purposes hereof, "permanent disability," shall
mean the inability of the Executive, as determined by the Board of Directors of
Checkfree, by reason of physical or mental illness to perform the duties
required of him under this Agreement for more than 180 days in any one year
period. Successive periods of disability, illness or incapacity will be
considered separate periods unless the later period of disability, illness or
incapacity is due to the same or related cause and commences less than six
months from the ending of the previous period of disability. Upon a
determination by the Board of Directors of Checkfree that the Executive's
employment shall be terminated under this Section 6(e), the Board of Directors
shall give the Executive 30 days' prior written notice of the termination. If
a determination of the Board of Directors under this Section 6(e) is disputed
by the Executive, the parties agree to abide by the decision of a panel of
three physicians. Checkfree will select a physician, the Executive will select
a physician and the physicians selected by Checkfree and the Executive will
select a third physician. The Executive agrees to make himself available for
and submit to examinations by such physicians as may be directed by Checkfree.
Failure to submit to any examination shall constitute a breach of a material
part of this Agreement.
(f) If a "Change in Control" shall have occurred, Executive shall be
entitled to the benefits described below if his employment is terminated
following a Change in Control for other than good cause as specified in Section
6(d), or Executive terminates his employment upon making
3
4
a good faith determination that, following the Change in Control, the
Executive's employment status or employment responsibilities have been
materially and adversely affected thereby:
(i) Executive shall be entitled to the unpaid portion of his Basic
Salary plus credit for any vacation accrued but not taken and the amount
of any unpaid but earned bonus, incentive compensation or any other
benefit to which he is entitled under this Agreement through the date of
the termination as a result of a Change in Control, plus two times
Executive's "Average Annual Compensation." For this purpose
"Average Annual Compensation" shall mean the average annual compensation
includible in Executive's gross income for the period consisting of
Executive's most recent five taxable years ending before the date on
which the Change in Control occurs.
(ii) At Executive's option, the amount payable under Section
6(f)(i) shall be paid to him in one lump sum within 30 days after
termination of employment following a Change in Control or in 24 equal
consecutive monthly payments commencing on the first day of the month
after termination of employment following a Change in Control.
(iii) The Company shall maintain for Executive's benefit until
the earlier of (y) 24 months after termination of employment following
a Change in Control, or (z) Executive's commencement of full-time
employment with a new employer, all life insurance, medical, health and
accident, and disability plans or programs in which Executive shall have
been entitled to participate prior to termination of employment
following a Change in Control, provided Executive's continued
participation is permitted under the general terms of such plans and
programs after the Change in Control. In the event Executive's
participation in any such plan or program is not permitted, the Company
will provide directly the benefits to which Executive would be entitled
under such plans and programs.
(g) Executive's benefits under Section 6(f) above shall be payable to him as
severance pay in consideration of his past service and of his continued
services from the date hereof. Executive shall have no duty to mitigate his
damages by seeking other employment, and the Company shall not be entitled to
set off against amounts payable hereunder any compensation which Executive may
receive from future employment.
(h) For purposes of Section 6(f), a "Change in Control" shall be deemed to
have occurred if and when, after the date hereof, (i) Checkfree, or in one or
more transactions 50% or more of its assets or earning power, is acquired by or
combined with a person, partnership, corporation, trust or other entity
("Person") and less than a majority of the outstanding voting shares of the
Person surviving such transaction (or the ultimate parent of the surviving
Person) after such acquisition or combination is owned, immediately after the
acquisition or combination, by the owners of the voting shares of Checkfree
outstanding immediately prior to such acquisition or combination, unless the
acquisition or combination is approved by the Board of Directors of Checkfree
prior to any change to the Board of Directors that would constitute a "Change
of Control" under clause (ii) of this Section 6(h); or (ii) during any period
of two consecutive years during the term of this Agreement, individuals who at
the beginning of such period constitute the Board of Directors of Checkfree
cease for any reason to constitute at least a majority thereof, unless the
election of each director who was not a director at the beginning of such
period has been approved in advance by directors representing at least
two-thirds of the directors then in office who were directors at the beginning
of the period.
4
5
(i) Upon any termination or expiration of this Agreement or any cessation of
Executive's employment hereunder, the Company shall have no further obligations
under this Agreement and no further payments shall be payable by the Company to
the Executive, except as provided in Sections 6(c) and 6(d) above and except as
required under any benefit plans or arrangements maintained by the Company and
applicable to the Executive at the time of such termination, expiration or
cessation of Executive's employment, including, without limitation thereto,
salary, incentive compensation, sick leave, and vacation pay.
(j) If the payments and benefits provided under this Agreement to Executive,
either alone or with other payments and benefits, would constitute "excess
parachute payments" as defined in Section 280G of the Internal Revenue Code of
1986, as amended ("Code"), then the payments and other benefits under this
Agreement shall be reduced to the extent necessary so that no portion thereof
shall be subject to the excise tax imposed by Section 4999 of the Code. Either
the Company or Executive may request a determination as to whether the payments
or benefits would constitute an excess parachute payment and, if requested,
such determination shall be made by independent tax counsel selected by the
Company and approved by Executive. At Executive's election and to the extent
not otherwise paid, Executive may determine the amount of cash and/or elements
of non-cash fringe benefits to reduce so that such payments and benefits will
not constitute excess parachute payments.
7. Non-Competition.
(a) The Executive hereby acknowledges that, during and solely as a result of
his employment by the Company, he has received and shall continue to receive
unique training and experience with respect to the design, operation and
marketing of electronic commerce software, systems and processing, financial
software products, systems, and services, and other related matters, and access
to confidential information and business and professional contacts. In
consideration of the special and unique opportunities afforded to the Executive
by the Company as a result of the Executive's employment, as outlined in the
previous sentence, and in consideration of the Company's other promises
contained in this Agreement, the Executive hereby agrees that he will not
during the term of this Agreement, any extension hereof, and for a period of
one year after termination of employment with the Company, whether voluntary or
involuntary or with or without cause:
(i) engage or participate, directly or indirectly, either as
principal, agent, employee, employer, consultant, stockholder, or in any
other individual or representative capacity whatsoever, in the
operation, management or ownership of any business, firm, corporation,
association, or other entity engaged in the design, operation or
marketing of electronic commerce software, systems and processing,
financial software products, systems, and services, or any other
business engaged in by the Company at any time during the term of this
Agreement, on the Termination Date, or during the one-year period prior
to the dates thereof, within the United States and any other country in
which the Company conducts substantial business at such time or during
such period; and,
(ii) directly or indirectly, for himself or in conjunction with or
on behalf of any other individual or entity, solicit, divert, take away
or endeavor to take away from the Company any customer, account or
employee of the Company at any time during the term of this Agreement,
as of the date of Executive's termination of employment with the
Company, or during the one-year period prior to the dates thereof.
5
6
(b) The period of time during which the Executive is subject to the
prohibitions contained in this Section 7 shall be extended by any length of
time during which the Executive is in violation of such prohibitions.
(c) The restrictions of this Section 7 shall not be violated by the
ownership by Executive of no more than 2% of the outstanding securities of any
company whose stock is traded on a national securities exchange or is quoted in
the Automated Quotation System of the National Association of Securities
Dealers (NASDAQ).
8. Confidential Information; Assignment of Inventions.
(a) As used herein, the term "Confidential Information" includes, but is not
limited to, all information and materials belonging to, used by, or in the
possession of the Company (i) which have been disclosed or made known to, or
have come into the possession of the Executive as a consequence of or through
Executive's relationship with the Company prior to or after the date hereof,
(ii) which are related to the Company's customers, potential customers,
suppliers, distributors, alliance partners, business strategies or policies,
financial or sales results, sales and management techniques, marketing plans,
research or development, reports, records, software, systems, source or object
code, software documentation or instruction or user manuals, and (iii) which
have not generally been made available to the public (not including customers)
by the Company pursuant to a specific authorization in the ordinary course of
business by the Company of the release of such information to the public or
otherwise published and released by the Company to the general public.
Notwithstanding the foregoing, Executive may release Confidential Information,
in each case only with prior notice to the Company, if (1) required by law, (2)
necessary to establish a lawful claim or defense against the Company, (3)
necessary to establish a lawful claim or defense against a person or entity
other than the Company, but only with the permission, which shall not be
unreasonably withheld, of the Company, or (4) necessary to respond to process
or appropriate governmental inquiry.
(b) Executive agrees:
(i) that Executive will promptly disclose and grant and does hereby
grant to the Company his entire right, title and interest in and to all
customer lists, discoveries, developments, designs, improvements,
inventions, formulae, software, documentation, processes, techniques,
know-how, patents, trade secrets and trademarks, copyrights and all
other data conceived, developed or acquired by him during the period of
his employment with the Company, both prior to and after the execution
of this Agreement, whether or not patentable or registrable under
copyright or similar statutes, made or conceived or reduced to practice
or learned by Executive, either alone or jointly with others, that
result from or are conceived during the performance of tasks assigned to
Executive by the Company or result from use of property, equipment, or
premises owned, leased or contracted for by the Company ("Inventions").
Executive agrees to execute and deliver, from time to time, such
documents as may be necessary or convenient to effectuate the transfer
of such Confidential Information to the Company and shall cooperate with
and assist the Company in every proper way (at the expense of the
Company) in obtaining and from time to time enforcing patents,
copyrights, trade secrets, other proprietary rights and protections
relating to Inventions in any and all countries;
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(ii) that Executive will during the term of this Agreement and
thereafter safeguard all Confidential Information and, except as
specifically permitted below, Executive will never disclose or use for
any purpose or benefit (other than for the purpose or benefit of the
Company) any Confidential Information;
(iii) that, except in connection with the ordinary course of the
Company's business, Executive will not, either during the term of this
Agreement or thereafter directly or indirectly, disclose, disseminate or
otherwise make known or provide any Confidential Information, whether in
original form or in duplicated or copied form or extracts therefrom, and
whether orally or in writing, to any individual, partnership, company or
other entity, unless the Company has given its prior written consent
thereto;
(iv) that, except in connection with the ordinary course of the
Company's business, Executive will not, either during the term of this
Agreement or thereafter, remove any Confidential Information from the
premises of the Company either in original form or in duplicated or
copied form or extracts therefrom; and that upon any termination of
Executive's employment by the Company, Executive will immediately
surrender to the Company, without request, all Confidential Information,
whether in original or duplicated or copied form or extracts therefrom.
9. No Conflicts. Executive represents that the performance by Executive of
all the terms of this Agreement, as a former or continuing employee of the
Company does not and will not breach any agreement as to which Executive or
the Company is or was a party and which requires Executive to keep any
information in confidence or in trust. Executive has not entered into, and
will not enter into, any agreement either written or oral in conflict herewith.
10. Reasonableness of Restrictions. It is understood by and between the
parties hereto that the Executive's covenants set forth in Sections 7, 8 and 9
are essential elements of this Agreement, and that, but for the agreement of
the Executive to comply with such covenants, the Company would not have agreed
to enter into this Agreement. Executive acknowledges that the restrictions
contained in this Agreement are reasonable but should any provisions of this
Agreement be determined to be invalid, illegal or otherwise unenforceable to
its full extent, or if any such restriction is found by a court of competent
jurisdiction to be unreasonable under applicable law, then the restriction
shall be enforced to the maximum extent permitted by law, and the parties
hereto hereby consent and agree that such scope of protection, time or
geographic area (or any one of them, as the case may be) shall be modified
accordingly in any proceeding brought to enforce such restriction. Executive
acknowledges that the validity, legality and enforceability of the other
provisions shall not be affected thereby, and that the existence of any claim
or cause of action of the Executive against the Company, whether predicated on
this Agreement, or otherwise, shall not constitute a defense to the enforcement
by the Company of such covenants.
11. Remedies; Venue; Process.
(a) The Executive hereby acknowledges and agrees that the Confidential
Information disclosed to the Executive prior to and during the term of this
Agreement is of a special, unique and extraordinary character, and that any
breach of this Agreement will cause the Company irreparable injury and damage,
and consequently the Company shall be entitled, in addition to all other
remedies available to it, to injunctive and equitable relief to prevent or
cease a breach of Sections
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7, 8 or 9 of this Agreement without further proof of harm and entitlement;
that the terms of this Agreement, if enforced by the Company, will not unduly
impair Executive's ability to earn a living or pursue his vocation; and
further, that the Company may withhold compensation and benefits if Executive
fails to comply with this Agreement, without restricting the Company from
other legal and equitable remedies. The parties agree that the prevailing
party shall be entitled to all costs and expenses (including reasonable legal
fees and expenses) which it incurs in successfully enforcing this Agreement
and in prosecuting or defending any litigation (including appellate
proceedings) arising out of this Agreement.
(b) The parties agree that jurisdiction and venue in any action brought
pursuant to this Agreement to enforce its terms or otherwise with respect to
the relationships between the parties shall properly lie in the Court of Common
Pleas of Franklin County, Ohio, or in the United States District Court for the
Southern District of Ohio. Such jurisdiction and venue is exclusive, except
that the Company may bring suit in any jurisdiction and venue where
jurisdiction and venue would otherwise be proper if Executive has breached
Sections 7, 8 or 9 of this Agreement. The parties agree that they will not
object that any action commenced in the foregoing jurisdictions is commenced in
a forum non conveniens. The parties further agree that the mailing by
certified or registered mail, return receipt requested, of any process required
by any such court shall constitute valid and lawful service of process against
them, without the necessity for service by any other means provided by statute
or rule of court.
12. Withholding. The Company may withhold from any payments to be made
hereunder such amounts as it may be required to withhold under applicable
federal, state or other law, and transmit such withheld amounts to the
appropriate taxing authority.
13. Indemnity.
(a) Subject only to the exclusions set forth in Section 13(b) hereof, the
Company hereby agrees to hold harmless and indemnify Executive against any and
all expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by Executive in connection with any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (including an action by or in the
right of the Company) to which Executive is, was or at any time becomes a
party, or is threatened to be made a party, by reason of the fact that
Executive is, was or at any time becomes a director, officer, employee or agent
of the Company, or is or was serving or at any time serves at the request of
the Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise to the fullest extent
authorized and permitted by the provisions of Section 145 of the Delaware
General Corporation Law (the "Delaware Statute"), or by any amendment thereof
or other statutory provisions authorizing or permitting such indemnification
which is adopted after the date hereof.
(b) No indemnity pursuant to Section 13(a) hereof shall be paid by the
Company:
(i) except to the extent the aggregate losses to be indemnified
hereunder exceed the amount of such losses for which the Executive is
indemnified pursuant to any directors and officers liability insurance
purchased and maintained by the Company;
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(ii) in respect to remuneration paid to Executive if it shall be
determined by a final judgment or other final adjudication that such
remuneration was in violation of law;
(iii) on account of any suit in which judgment is rendered against
Executive for an accounting of profits made from the purchase or sale by
Executive of securities of the Company pursuant to the provisions of
Section 16(b) of the Securities Exchange Act of 1934 and amendments
thereto or similar provisions of any federal, state or local statutory
law;
(iv) on account of Executive's breach of any provision of this
Agreement;
(v) on account of Executive's act or omission being finally
adjudged to have been not in good faith or involving intentional
misconduct or a knowing violation of law; or
(vii) if a final decision by a Court having jurisdiction in the
matter shall determine that such indemnification is not lawful.
(c) All agreements and obligations of the Company contained herein shall
continue during the period Executive is a director, officer, employee or agent
of the Company (or is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise) and shall continue thereafter so long as
Executive shall be subject to any possible claim or threatened, pending or
completed action, suit or proceeding, whether civil, criminal or investigative,
by reason of the fact that Executive was an officer or director of the Company
or serving in any other capacity referred to herein; provided, however, that
following the Termination Date, the Company shall have no further obligation
under this Section 13 in the event of a breach by Executive of any of his
continuing obligations under Sections 7 or 8 of this Agreement.
(d) Promptly after receipt by Executive of notice of the commencement of any
action, suit or proceeding, Executive will, if a claim in respect thereof is to
be made against the Company under this Section 13, notify the Company of the
commencement thereof; but the omission so to notify the Company will not
relieve it from any liability which it may have to Executive otherwise than
under this Section 13. With respect to any such action, suit or proceeding as
to which Executive notifies the Company under this Section 13(d):
(i) The Company will be entitled to participate therein at its
own expense.
(ii) Except as otherwise provided below, to the extent that it
may wish, the Company jointly with any other indemnifying party similarly
notified will be entitled to assume the defense thereof, with counsel
selected by the Company and reasonably satisfactory to Executive. After notice
from the Company to Executive of its election so to assume the defense thereof,
the Company will not be liable to Executive under this Section 13 for any legal
or other expenses subsequently incurred by Executive in connection with the
defense thereof other than reasonable costs of investigation or as otherwise
provided below. Executive shall have the right to employ his counsel in such
action, suit or proceeding but the fees and expenses of such counsel incurred
after notice from the Company of its assumption of the defense thereof shall be
at the expense of Executive, unless (A) the employment of counsel by Executive
has been authorized by the Company, (B) Executive shall have reasonably
concluded that there may be a conflict of interest between the
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Company and Executive in the conduct of the defense of such action, or
(C) the Company shall not in fact have employed counsel to assume the
defense of such action, in each of which cases the fees and expenses of
counsel shall be at the expense of the Company. The Company shall not
be entitled to assume the defense of any action, suit or proceeding
brought by or on behalf of the Company or as to which Executive shall
have made the conclusion provided for in clause (B) above.
(iii) The Company shall not be liable to indemnify Executive under
this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. The Company shall not settle in
any manner which would impose any penalty or limitation on Executive
without Executive's written consent. Neither the Company nor Executive
will unreasonably withhold their consent to any proposed settlement.
(e) Executive agrees that Executive will reimburse the Company for all
reasonable expenses paid by the Company in defending any civil or criminal
action, suit or proceeding against Executive in the event and only to the
extent that it shall be ultimately determined that Executive is not entitled to
be indemnified by the Company for such expenses under the provisions of the
Delaware Statute, the Company's By-laws, this Agreement or otherwise.
14. Assignment. This Agreement is personal to the Executive and Executive may
not assign or delegate any of his rights or obligations hereunder. Subject to
the foregoing, this Agreement shall be binding upon and inure to the benefit of
the respective parties hereto, their heirs, executors, administrators,
successors and assigns.
15. Waiver. The waiver by either party hereto of any breach or violation of
any provision of this Agreement by the other party shall not operate as or be
construed to be a waiver of any subsequent breach by such waiving party.
16. Notices. Any and all notices required or permitted to be given under this
Agreement will be sufficient and deemed effective three (3) days following
deposit in the United States mail if furnished in writing and sent by certified
mail to Executive at:
Kenneth J. Benvenuto
3131 Hunting Tweed Drive
Owings Mills, MD 21117
and to the Company at:
Checkfree Corporation
8275 North High Street
Columbus, OH 43235
Attention: William C. Buckham,
Vice President of Administration and General Counsel
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with a copy to:
Curtis A. Loveland, Esq.
Porter, Wright, Morris & Arthur
41 South High Street
Columbus, Ohio 43215
17. Governing Law. This Agreement shall be interpreted, construed and
governed according to the laws of the State of Ohio applicable to contracts
made and to be wholly performed within such state, except that the provisions
of Section 13 hereof shall be interpreted, construed and governed according to
the Delaware Statute.
18. Amendment. This Agreement may be amended in any and every respect by
agreement in writing executed by both parties hereto.
19. Section Headings. Section headings contained in this Agreement are for
convenience only and shall not be considered in construing any provision
hereof.
20. Entire Agreement. This Agreement terminates, cancels and supersedes all
previous employment or other agreements relating to the employment of Executive
with the Company or any predecessor, written or oral, and this Agreement
contains the entire understanding of the parties with respect to the subject
matter of this Agreement. This Agreement was fully reviewed and negotiated on
behalf of each party and shall not be construed against the interest of either
party as the drafter of this Agreement. EXECUTIVE ACKNOWLEDGES THAT, BEFORE
SIGNING THIS AGREEMENT, HE HAS READ THE ENTIRE AGREEMENT AND HAS THIS DAY
RECEIVED A COPY HEREOF.
21. Severability. The invalidity or unenforceability of any one or more
provisions of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement or parts thereof.
22. Survival. Sections 6 through 14 of this Agreement and this Section 22
shall survive any termination or expiration of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
EXECUTIVE:
/s/ Kenneth J. Benvenuto
---------------------------
Kenneth J. Benvenuto
CHECKFREE CORPORATION
By: /s/ Peter J. Kight
---------------------------
Peter J. Kight, President
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EXHIBIT 10(e)
CHECKFREE CORPORATION
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made this 21st day of February, 1996,
(the "Agreement") between Checkfree Corporation ("Checkfree"), a Delaware
corporation, and Robert E. Bowers (the "Executive").
RECITALS
A. The Executive is currently employed as an executive of
Checkfree or one of its consolidated subsidiaries (individually the
"Subsidiary" and collectively the "Subsidiaries") (Checkfree and the
Subsidiaries are hereinafter collectively referred to as the "Company").
B. The parties desire to continue the Executive's employment by
Checkfree and/or the Subsidiaries on the terms and conditions stated herein.
STATEMENT OF AGREEMENT
In consideration of the foregoing, and of Executive's continued
employment, the parties agree as follows:
1. Employment. Checkfree hereby employs Executive and Executive
accepts such employment upon the terms and conditions hereinafter set forth to
become effective on September 1, 1996 (the "Effective Time") provided that
neither Checkfree nor Executive have terminated the present employment
relationship between the parties prior to the Effective Time, in which case
this Agreement shall terminate and be of no effect.
2. Duties.
(a) Executive shall be employed: (i) to serve as Chief
Financial Officer of Checkfree, and to serve in similar capacities for each of
the Subsidiaries, if so elected, subject to the authority and direction of the
Board of Directors of Checkfree or the Subsidiary, as the case may be; and (ii)
to perform such other duties and responsibilities similar to those performed by
Executive prior hereto and exercise such other authority, perform such other or
additional duties and responsibilities and have such other or different title
(or have no title) as the Board of Directors of Checkfree or the Subsidiary
may, from time to time, prescribe.
(b) So long as employed under this Agreement, Executive
agrees to devote full time and efforts exclusively on behalf of the Company and
to competently, diligently and effectively discharge all duties of Executive
hereunder. Executive shall not be prohibited from engaging in such personal,
charitable, or other nonemployment activities as do not interfere with full
time employment hereunder and which do not violate the other provisions of this
Agreement. Executive further agrees to comply fully with all reasonable
policies of the Company as are from time to time in effect.
3. Compensation. As full compensation for all services rendered
to the Company pursuant to this Agreement, in whatever capacity rendered, the
Company shall pay to Executive during the term hereof a minimum base salary at
the rate of $165,000.00 per year (the "Basic Salary"), payable monthly or in
other more frequent installments, as determined by the Company. The Basic
Salary may be increased, but not decreased, from time to time, by the Board of
Directors.
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In addition, Executive will be entitled to receive incentive compensation
pursuant to the terms of plans adopted by the Board of Directors from time to
time.
4. Business expenses. The Company shall promptly pay directly,
or reimburse Executive for, all business expenses to the extent such expenses
are paid or incurred by Executive during the term of employment in accordance
with Company policy in effect from time to time and to the extent such expenses
are reasonable and necessary to the conduct by Executive of the Company's
business and properly substantiated.
5. Fringe Benefits. During the term of this Agreement and
Executive's employment hereunder, the Company shall provide to Executive such
insurance, vacation, sick leave and other like benefits as are provided from
time to time to its other employees holding equivalent executive positions with
the Company in accordance with the policy of the Company as may be established
from time to time; provided, however, that the Company shall maintain at least
the level of benefits as determined by Checkfree and in effect at the
Effective Time.
6. Term; Termination.
(a) Executive is employed by the Company "at will."
Executive's employment may be terminated at any time as provided in this
Section 6. For purposes of this Section 6, "Termination Date" shall mean the
date on which any notice period required under this Section 6 expires or, if no
notice period is specified in this Section 6, the effective date of the
termination referenced in the notice.
(b) Executive may terminate his employment upon giving at
least 30 days' advance written notice to the Company and the Company will pay
Executive the earned but unpaid portion of Executive's Basic Salary through the
Termination Date. If Executive gives notice of termination hereunder, the
Company shall have the right to relieve Executive, in whole or in part, of his
duties under this Agreement and to advance the Termination Date from the date
set by Executive's notice to a date not less than 14 days from the receipt of
Executive's notice of termination.
(c) The Company may terminate Executive's employment without
cause upon giving 30 days' advance written notice to Executive. If Executive's
employment is terminated without cause under this Section 6(c), the Company
will pay Executive the earned but unpaid portion of Executive's Basic Salary
through the Termination Date and will continue to pay Executive his Basic
Salary for six months following the Termination Date (the "Severance Period"),
and the Company will provide executive level outplacement services by a firm
selected and contracted by the Company for up to six months following the
Termination Date (the "Outplacement Services"); provided, however, if Executive
accepts other employment during the Severance Period, the Company shall pay
Executive's Basic Salary and will provide the Outplacement Services until the
first to occur of the expiration of the Severance Period or the commencement of
the other employment.
(d) The Company may terminate Executive's employment upon a
determination by the Company that "good cause" exists for Executive's
termination and the Company serves written notice of such termination upon the
Executive. As used in this Agreement, the term "good cause" shall refer only
to any one or more of the following grounds:
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(i) commission of an act of dishonesty, including,
but not limited to, misappropriation of funds or any property of the
Company;
(ii) engagement in activities or conduct clearly
injurious to the best interests or reputation of the Company;
(iii) refusal to perform his assigned duties and
responsibilities;
(iv) gross insubordination by the Executive;
(v) the clear violation of any of the material terms
and conditions of this Agreement or any written agreement or
agreements the Executive may from time to time have with the Company
(following 30-days' written notice from the Company specifying the
violation and Executive's failure to cure such violation within such
30-day period);
(vi) the Executive's substantial dependence, as
determined by the Board of Directors of the Company, on alcohol, or
any narcotic drug or other controlled or illegal substance; or
(vii) commission of a crime which is a felony, a
misdemeanor involving an act of moral turpitude, or a misdemeanor
committed in connection with his employment by the Company which
causes the Company a substantial detriment.
In the event of a termination under this Section 6(d), the Company will pay
Executive the earned but unpaid portion of Executive's Basic Salary through the
Termination Date. If any determination of substantial dependence under Section
6(d)(vi) is disputed by the Executive, the parties hereto agree to abide by the
decision of a panel of three physicians appointed in the manner as specified in
Section 6(e) of this Agreement.
(e) Executive's employment shall terminate upon the death or
permanent disability of Executive. For purposes hereof, "permanent
disability," shall mean the inability of the Executive, as determined by the
Board of Directors of Checkfree, by reason of physical or mental illness to
perform the duties required of him under this Agreement for more than 180 days
in any one year period. Successive periods of disability, illness or
incapacity will be considered separate periods unless the later period of
disability, illness or incapacity is due to the same or related cause and
commences less than six months from the ending of the previous period of
disability. Upon a determination by the Board of Directors of Checkfree that
the Executive's employment shall be terminated under this Section 6(e), the
Board of Directors shall give the Executive 30 days' prior written notice of
the termination. If a determination of the Board of Directors under this
Section 6(e) is disputed by the Executive, the parties agree to abide by the
decision of a panel of three physicians. Checkfree will select a physician,
the Executive will select a physician and the physicians selected by Checkfree
and the Executive will select a third physician. The Executive agrees to make
himself available for and submit to examinations by such physicians as may be
directed by Checkfree. Failure to submit to any examination shall constitute a
breach of a material part of this Agreement.
(f) If a "Change in Control" shall have occurred, Executive
shall be entitled to the benefits described below if his employment is
terminated following a Change in Control for other than good cause as specified
in Section 6(d), or Executive terminates his employment upon making
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a good faith determination that, following the Change in Control, the
Executive's employment status or employment responsibilities have been
materially and adversely affected thereby:
(i) Executive shall be entitled to the unpaid
portion of his Basic Salary plus credit for any vacation accrued but
not taken and the amount of any unpaid but earned bonus, incentive
compensation or any other benefit to which he is entitled under this
Agreement through the date of the termination as a result of a Change
in Control, plus two times Executive's "Average Annual Compensation."
For this purpose "Average Annual Compensation" shall mean the average
annual compensation includible in Executive's gross income for the
period consisting of Executive's most recent five taxable years ending
before the date on which the Change in Control occurs.
(ii) At Executive's option, the amount payable under
Section 6(f)(i) shall be paid to him in one lump sum within 30 days
after termination of employment following a Change in Control or in 24
equal consecutive monthly payments commencing on the first day of the
month after termination of employment following a Change in Control.
(iii) The Company shall maintain for Executive's
benefit until the earlier of (y) 24 months after termination of
employment following a Change in Control, or (z) Executive's
commencement of full-time employment with a new employer, all life
insurance, medical, health and accident, and disability plans or
programs in which Executive shall have been entitled to participate
prior to termination of employment following a Change in Control,
provided Executive's continued participation is permitted under the
general terms of such plans and programs after the Change in Control.
In the event Executive's participation in any such plan or program is
not permitted, the Company will provide directly the benefits to which
Executive would be entitled under such plans and programs.
(g) Executive's benefits under Section 6(f) above shall be
payable to him as severance pay in consideration of his past service and of his
continued services from the date hereof. Executive shall have no duty to
mitigate his damages by seeking other employment, and the Company shall not be
entitled to set off against amounts payable hereunder any compensation which
Executive may receive from future employment.
(h) For purposes of Section 6(f), a "Change in Control" shall
be deemed to have occurred if and when, after the date hereof, (i) Checkfree,
or in one or more transactions 50% or more of its assets or earning power, is
acquired by or combined with a person, partnership, corporation, trust or other
entity ("Person") and less than a majority of the outstanding voting shares of
the Person surviving such transaction (or the ultimate parent of the surviving
Person) after such acquisition or combination is owned, immediately after the
acquisition or combination, by the owners of the voting shares of Checkfree
outstanding immediately prior to such acquisition or combination, unless the
acquisition or combination is approved by the Board of Directors of Checkfree
prior to any change to the Board of Directors that would constitute a "Change
of Control" under clause (ii) of this Section 6(h); or (ii) during any period
of two consecutive years during the term of this Agreement, individuals who at
the beginning of such period constitute the Board of Directors of Checkfree
cease for any reason to constitute at least a majority thereof, unless the
election of each director who was not a director at the beginning of such
period has been approved in advance by directors representing at least
two-thirds of the directors then in office who were directors at the beginning
of the period.
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(i) Upon any termination or expiration of this Agreement or
any cessation of Executive's employment hereunder, the Company shall have no
further obligations under this Agreement and no further payments shall be
payable by the Company to the Executive, except as provided in Sections 6(c)
and 6(d) above and except as required under any benefit plans or arrangements
maintained by the Company and applicable to the Executive at the time of such
termination, expiration or cessation of Executive's employment, including,
without limitation thereto, salary, incentive compensation, sick leave, and
vacation pay.
(j) If the payments and benefits provided under this
Agreement to Executive, either alone or with other payments and benefits, would
constitute "excess parachute payments" as defined in Section 280G of the
Internal Revenue Code of 1986, as amended ("Code"), then the payments and other
benefits under this Agreement shall be reduced to the extent necessary so that
no portion thereof shall be subject to the excise tax imposed by Section 4999
of the Code. Either the Company or Executive may request a determination as to
whether the payments or benefits would constitute an excess parachute payment
and, if requested, such determination shall be made by independent tax counsel
selected by the Company and approved by Executive. At Executive's election and
to the extent not otherwise paid, Executive may determine the amount of cash
and/or elements of non-cash fringe benefits to reduce so that such payments and
benefits will not constitute excess parachute payments.
7. Non-Competition.
(a) The Executive hereby acknowledges that, during and solely
as a result of his employment by the Company, he has received and shall
continue to receive unique training and experience with respect to the design,
operation and marketing of electronic commerce software, systems and
processing, financial software products, systems, and services, and other
related matters, and access to confidential information and business and
professional contacts. In consideration of the special and unique
opportunities afforded to the Executive by the Company as a result of the
Executive's employment, as outlined in the previous sentence, and in
consideration of the Company's other promises contained in this Agreement, the
Executive hereby agrees that he will not during the term of this Agreement, any
extension hereof, and for a period of one year after termination of employment
with the Company, whether voluntary or involuntary or with or without cause:
(i) engage or participate, directly or indirectly,
either as principal, agent, employee, employer, consultant,
stockholder, or in any other individual or representative capacity
whatsoever, in the operation, management or ownership of any business,
firm, corporation, association, or other entity engaged in the design,
operation or marketing of electronic commerce software, systems and
processing, financial software products, systems, and services, or
any other business engaged in by the Company at any time during the
term of this Agreement, on the Termination Date, or during the
one-year period prior to the dates thereof, within the United States
and any other country in which the Company conducts substantial
business at such time or during such period; and,
(ii) directly or indirectly, for himself or in
conjunction with or on behalf of any other individual or entity,
solicit, divert, take away or endeavor to take away from the Company
any customer, account or employee of the Company at any time during
the term of this Agreement, as of the date of Executive's termination
of employment with the Company, or during the one-year period prior to
the dates thereof.
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(b) The period of time during which the Executive is subject
to the prohibitions contained in this Section 7 shall be extended by any length
of time during which the Executive is in violation of such prohibitions.
(c) The restrictions of this Section 7 shall not be violated
by the ownership by Executive of no more than 2% of the outstanding securities
of any company whose stock is traded on a national securities exchange or is
quoted in the Automated Quotation System of the National Association of
Securities Dealers (NASDAQ).
8. Confidential Information; Assignment of Inventions.
(a) As used herein, the term "Confidential Information"
includes, but is not limited to, all information and materials belonging to,
used by, or in the possession of the Company (i) which have been disclosed or
made known to, or have come into the possession of the Executive as a
consequence of or through Executive's relationship with the Company prior to or
after the date hereof, (ii) which are related to the Company's customers,
potential customers, suppliers, distributors, alliance partners, business
strategies or policies, financial or sales results, sales and management
techniques, marketing plans, research or development, reports, records,
software, systems, source or object code, software documentation or instruction
or user manuals, and (iii) which have not generally been made available to the
public (not including customers) by the Company pursuant to a specific
authorization in the ordinary course of business by the Company of the release
of such information to the public or otherwise published and released by the
Company to the general public. Notwithstanding the foregoing, Executive may
release Confidential Information, in each case only with prior notice to the
Company, if (1) required by law, (2) necessary to establish a lawful claim or
defense against the Company, (3) necessary to establish a lawful claim or
defense against a person or entity other than the Company, but only with the
permission, which shall not be unreasonably withheld, of the Company, or (4)
necessary to respond to process or appropriate governmental inquiry.
(b) Executive agrees:
(i) that Executive will promptly disclose and grant
and does hereby grant to the Company his entire right, title and
interest in and to all customer lists, discoveries, developments,
designs, improvements, inventions, formulae, software, documentation,
processes, techniques, know-how, patents, trade secrets and
trademarks, copyrights and all other data conceived, developed or
acquired by him during the period of his employment with the Company,
both prior to and after the execution of this Agreement, whether or
not patentable or registrable under copyright or similar statutes,
made or conceived or reduced to practice or learned by Executive,
either alone or jointly with others, that result from or are conceived
during the performance of tasks assigned to Executive by the Company
or result from use of property, equipment, or premises owned, leased
or contracted for by the Company ("Inventions"). Executive agrees to
execute and deliver, from time to time, such documents as may be
necessary or convenient to effectuate the transfer of such
Confidential Information to the Company and shall cooperate with and
assist the Company in every proper way (at the expense of the Company)
in obtaining and from time to time enforcing patents, copyrights,
trade secrets, other proprietary rights and protections relating to
Inventions in any and all countries;
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(ii) that Executive will during the term of this
Agreement and thereafter safeguard all Confidential Information and,
except as specifically permitted below, Executive will never disclose
or use for any purpose or benefit (other than for the purpose or
benefit of the Company) any Confidential Information;
(iii) that, except in connection with the ordinary
course of the Company's business, Executive will not, either during
the term of this Agreement or thereafter directly or indirectly,
disclose, disseminate or otherwise make known or provide any
Confidential Information, whether in original form or in duplicated or
copied form or extracts therefrom, and whether orally or in writing,
to any individual, partnership, company or other entity, unless the
Company has given its prior written consent thereto;
(iv) that, except in connection with the ordinary
course of the Company's business, Executive will not, either during
the term of this Agreement or thereafter, remove any Confidential
Information from the premises of the Company either in original form
or in duplicated or copied form or extracts therefrom; and that upon
any termination of Executive's employment by the Company, Executive
will immediately surrender to the Company, without request, all
Confidential Information, whether in original or duplicated or copied
form or extracts therefrom.
9. No Conflicts. Executive represents that the performance by
Executive of all the terms of this Agreement, as a former or continuing
employee of the Company does not and will not breach any agreement as to which
Executive or the Company is or was a party and which requires Executive to keep
any information in confidence or in trust. Executive has not entered into, and
will not enter into, any agreement either written or oral in conflict herewith.
10. Reasonableness Of Restrictions. It is understood by and
between the parties hereto that the Executive's covenants set forth in Sections
7, 8 and 9 are essential elements of this Agreement, and that, but for the
agreement of the Executive to comply with such covenants, the Company would not
have agreed to enter into this Agreement. Executive acknowledges that the
restrictions contained in this Agreement are reasonable but should any
provisions of this Agreement be determined to be invalid, illegal or otherwise
unenforceable to its full extent, or if any such restriction is found by a
court of competent jurisdiction to be unreasonable under applicable law, then
the restriction shall be enforced to the maximum extent permitted by law, and
the parties hereto hereby consent and agree that such scope of protection, time
or geographic area (or any one of them, as the case may be) shall be modified
accordingly in any proceeding brought to enforce such restriction. Executive
acknowledges that the validity, legality and enforceability of the other
provisions shall not be affected thereby, and that the existence of any claim
or cause of action of the Executive against the Company, whether predicated on
this Agreement, or otherwise, shall not constitute a defense to the enforcement
by the Company of such covenants.
11. Remedies; Venue; Process.
(a) The Executive hereby acknowledges and agrees that the
Confidential Information disclosed to the Executive prior to and during the
term of this Agreement is of a special, unique and extraordinary character, and
that any breach of this Agreement will cause the Company irreparable injury and
damage, and consequently the Company shall be entitled, in addition to all
other remedies available to it, to injunctive and equitable relief to prevent
or cease a breach of Sections
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7, 8 or 9 of this Agreement without further proof of harm and entitlement; that
the terms of this Agreement, if enforced by the Company, will not unduly impair
Executive's ability to earn a living or pursue his vocation; and further, that
the Company may withhold compensation and benefits if Executive fails to comply
with this Agreement, without restricting the Company from other legal and
equitable remedies. The parties agree that the prevailing party shall be
entitled to all costs and expenses (including reasonable legal fees and
expenses) which it incurs in successfully enforcing this Agreement and in
prosecuting or defending any litigation (including appellate proceedings)
arising out of this Agreement.
(b) The parties agree that jurisdiction and venue in any
action brought pursuant to this Agreement to enforce its terms or otherwise
with respect to the relationships between the parties shall properly lie in the
Court of Common Pleas of Franklin County, Ohio, or in the United States
District Court for the Southern District of Ohio. Such jurisdiction and venue
is exclusive, except that the Company may bring suit in any jurisdiction and
venue where jurisdiction and venue would otherwise be proper if Executive has
breached Sections 7, 8 or 9 of this Agreement. The parties agree that they
will not object that any action commenced in the foregoing jurisdictions is
commenced in a forum non conveniens. The parties further agree that the
mailing by certified or registered mail, return receipt requested, of any
process required by any such court shall constitute valid and lawful service of
process against them, without the necessity for service by any other means
provided by statute or rule of court.
12. Withholding. The Company may withhold from any payments to be
made hereunder such amounts as it may be required to withhold under applicable
federal, state or other law, and transmit such withheld amounts to the
appropriate taxing authority.
13. Indemnity.
(a) Subject only to the exclusions set forth in Section 13(b)
hereof, the Company hereby agrees to hold harmless and indemnify Executive
against any and all expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by Executive in
connection with any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (including
an action by or in the right of the Company) to which Executive is, was or at
any time becomes a party, or is threatened to be made a party, by reason of the
fact that Executive is, was or at any time becomes a director, officer,
employee or agent of the Company, or is or was serving or at any time serves at
the request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise to the
fullest extent authorized and permitted by the provisions of Section 145 of the
Delaware General Corporation Law (the "Delaware Statute"), or by any amendment
thereof or other statutory provisions authorizing or permitting such
indemnification which is adopted after the date hereof.
(b) No indemnity pursuant to Section 13(a) hereof shall be
paid by the Company:
(i) except to the extent the aggregate losses to be
indemnified hereunder exceed the amount of such losses for which the
Executive is indemnified pursuant to any directors and officers
liability insurance purchased and maintained by the Company;
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(ii) in respect to remuneration paid to Executive
if it shall be determined by a final judgment or other final
adjudication that such remuneration was in violation of law;
(iii) on account of any suit in which judgment is
rendered against Executive for an accounting of profits made from the
purchase or sale by Executive of securities of the Company pursuant to
the provisions of Section 16(b) of the Securities Exchange Act of 1934
and amendments thereto or similar provisions of any federal, state or
local statutory law;
(iv) on account of Executive's breach of any
provision of this Agreement;
(v) on account of Executive's act or omission being
finally adjudged to have been not in good faith or involving
intentional misconduct or a knowing violation of law; or
(vii) if a final decision by a Court having
jurisdiction in the matter shall determine that such indemnification
is not lawful.
(c) All agreements and obligations of the Company contained
herein shall continue during the period Executive is a director, officer,
employee or agent of the Company (or is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise) and shall continue
thereafter so long as Executive shall be subject to any possible claim or
threatened, pending or completed action, suit or proceeding, whether civil,
criminal or investigative, by reason of the fact that Executive was an officer
or director of the Company or serving in any other capacity referred to herein;
provided, however, that following the Termination Date, the Company shall have
no further obligation under this Section 13 in the event of a breach by
Executive of any of his continuing obligations under Sections 7 or 8 of this
Agreement.
(d) Promptly after receipt by Executive of notice of the
commencement of any action, suit or proceeding, Executive will, if a claim in
respect thereof is to be made against the Company under this Section 13, notify
the Company of the commencement thereof; but the omission so to notify the
Company will not relieve it from any liability which it may have to Executive
otherwise than under this Section 13. With respect to any such action, suit or
proceeding as to which Executive notifies the Company under this Section 13(d):
(i) The Company will be entitled to participate
therein at its own expense.
(ii) Except as otherwise provided below, to the
extent that it may wish, the Company jointly with any other
indemnifying party similarly notified will be entitled to assume the
defense thereof, with counsel selected by the Company and reasonably
satisfactory to Executive. After notice from the Company to Executive
of its election so to assume the defense thereof, the Company will not
be liable to Executive under this Section 13 for any legal or other
expenses subsequently incurred by Executive in connection with the
defense thereof other than reasonable costs of investigation or as
otherwise provided below. Executive shall have the right to employ
his counsel in such action, suit or proceeding but the fees and
expenses of such counsel incurred after notice from the Company of its
assumption of the defense thereof shall be at the expense of
Executive, unless (A) the employment of counsel by Executive has been
authorized by the Company, (B) Executive shall have reasonably
concluded that there may be a conflict of interest between the
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Company and Executive in the conduct of the defense of such action, or
(C) the Company shall not in fact have employed counsel to assume the
defense of such action, in each of which cases the fees and expenses
of counsel shall be at the expense of the Company. The Company shall
not be entitled to assume the defense of any action, suit or
proceeding brought by or on behalf of the Company or as to which
Executive shall have made the conclusion provided for in clause (B)
above.
(iii) The Company shall not be liable to indemnify
Executive under this Agreement for any amounts paid in settlement of
any action or claim effected without its written consent. The Company
shall not settle in any manner which would impose any penalty or
limitation on Executive without Executive's written consent. Neither
the Company nor Executive will unreasonably withhold their consent to
any proposed settlement.
(e) Executive agrees that Executive will reimburse the
Company for all reasonable expenses paid by the Company in defending any civil
or criminal action, suit or proceeding against Executive in the event and only
to the extent that it shall be ultimately determined that Executive is not
entitled to be indemnified by the Company for such expenses under the
provisions of the Delaware Statute, the Company's By-laws, this Agreement or
otherwise.
14. Assignment. This Agreement is personal to the Executive and
Executive may not assign or delegate any of his rights or obligations
hereunder. Subject to the foregoing, this Agreement shall be binding upon and
inure to the benefit of the respective parties hereto, their heirs, executors,
administrators, successors and assigns.
15. Waiver. The waiver by either party hereto of any breach or
violation of any provision of this Agreement by the other party shall not
operate as or be construed to be a waiver of any subsequent breach by such
waiving party.
16. Notices. Any and all notices required or permitted to be
given under this Agreement will be sufficient and deemed effective three (3)
days following deposit in the United States mail if furnished in writing and
sent by certified mail to Executive at:
Robert E. Bowers
3450 Aubusson Trace
Alpharetta, GA 30202
and to the Company at:
Checkfree Corporation
8275 North High Street
Columbus, OH 43235
Attention: William C. Buckham,
Vice President of Administration and General Counsel
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with a copy to:
Curtis A. Loveland, Esq.
Porter, Wright, Morris & Arthur
41 South High Street
Columbus, Ohio 43215
17. Governing Law. This Agreement shall be interpreted, construed
and governed according to the laws of the State of Ohio applicable to contracts
made and to be wholly performed within such state, except that the provisions
of Section 13 hereof shall be interpreted, construed and governed according to
the Delaware Statute.
18. Amendment. This Agreement may be amended in any and every
respect by agreement in writing executed by both parties hereto.
19. Section Headings. Section headings contained in this
Agreement are for convenience only and shall not be considered in construing
any provision hereof.
20. Entire Agreement. This Agreement terminates, cancels and
supersedes all previous employment or other agreements relating to the
employment of Executive with the Company or any predecessor, written or oral,
and this Agreement contains the entire understanding of the parties with
respect to the subject matter of this Agreement. This Agreement was fully
reviewed and negotiated on behalf of each party and shall not be construed
against the interest of either party as the drafter of this Agreement.
EXECUTIVE ACKNOWLEDGES THAT, BEFORE SIGNING THIS AGREEMENT, HE HAS READ THE
ENTIRE AGREEMENT AND HAS THIS DAY RECEIVED A COPY HEREOF.
21. Severability. The invalidity or unenforceability of any one
or more provisions of this Agreement shall not affect the validity or
enforceability of any other provisions of this Agreement or parts thereof.
22. Survival. Sections 6 through 14 of this Agreement and this
Section 22 shall survive any termination or expiration of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
EXECUTIVE:
/s/ Robert E. Bowers
-------------------------------
Robert E. Bowers
CHECKFREE CORPORATION
By: /s/ Peter J. Kight
---------------------------
Peter J. Kight, President
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EXHIBIT 10(f)
CHECKFREE CORPORATION
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made this 21st day of February, 1996, (the
"Agreement") between Checkfree Corporation ("Checkfree"), a Delaware
corporation, and Lynn D. Busing (the "Executive").
RECITALS
A. The Executive is currently employed as an executive of
Checkfree or one of its consolidated subsidiaries (individually the
"Subsidiary" and collectively the "Subsidiaries") (Checkfree and the
Subsidiaries are hereinafter collectively referred to as the "Company").
B. The parties desire to continue the Executive's employment by
Checkfree and/or the Subsidiaries on the terms and conditions stated herein.
STATEMENT OF AGREEMENT
In consideration of the foregoing, and of Executive's continued
employment, the parties agree as follows:
1. Employment. Checkfree hereby employs Executive and Executive
accepts such employment upon the terms and conditions hereinafter set forth to
become effective on September 1, 1996 (the "Effective Time") provided that
neither Checkfree nor Executive have terminated the present employment
relationship between the parties prior to the Effective Time, in which case
this Agreement shall terminate and be of no effect.
2. Duties.
(a) Executive shall be employed: (i) to serve as Senior
Vice President of Checkfree, and to serve in similar capacities for each of the
Subsidiaries, if so elected, subject to the authority and direction of the
Board of Directors of Checkfree or the Subsidiary, as the case may be; and (ii)
to perform such other duties and responsibilities similar to those performed by
Executive prior hereto and exercise such other authority, perform such other or
additional duties and responsibilities and have such other or different title
(or have no title) as the Board of Directors of Checkfree or the Subsidiary
may, from time to time, prescribe.
(b) So long as employed under this Agreement, Executive
agrees to devote full time and efforts exclusively on behalf of the Company and
to competently, diligently and effectively discharge all duties of Executive
hereunder. Executive shall not be prohibited from engaging in such personal,
charitable, or other nonemployment activities as do not interfere with full
time employment hereunder and which do not violate the other provisions of this
Agreement. Executive further agrees to comply fully with all reasonable
policies of the Company as are from time to time in effect.
3. Compensation. As full compensation for all services rendered
to the Company pursuant to this Agreement, in whatever capacity rendered, the
Company shall pay to Executive during the term hereof a minimum base salary at
the rate of $140,000.00 per year (the "Basic Salary"), payable monthly or in
other more frequent installments, as determined by the Company. The Basic
Salary may be increased, but not decreased, from time to time, by the Board of
Directors.
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In addition, Executive will be entitled to receive incentive compensation
pursuant to the terms of plans adopted by the Board of Directors from time to
time.
4. Business Expenses. The Company shall promptly pay directly,
or reimburse Executive for, all business expenses to the extent such expenses
are paid or incurred by Executive during the term of employment in accordance
with Company policy in effect from time to time and to the extent such expenses
are reasonable and necessary to the conduct by Executive of the Company's
business and properly substantiated.
5. Fringe Benefits. During the term of this Agreement and
Executive's employment hereunder, the Company shall provide to Executive such
insurance, vacation, sick leave and other like benefits as are provided from
time to time to its other employees holding equivalent executive positions with
the Company in accordance with the policy of the Company as may be established
from time to time; provided, however, that the Company shall maintain at least
the level of benefits as determined by Checkfree and in effect at the
Effective Time.
6. Term; Termination.
(a) Executive is employed by the Company "at will."
Executive's employment may be terminated at any time as provided in this
Section 6. For purposes of this Section 6, "Termination Date" shall mean the
date on which any notice period required under this Section 6 expires or, if no
notice period is specified in this Section 6, the effective date of the
termination referenced in the notice.
(b) Executive may terminate his employment upon giving at
least 30 days' advance written notice to the Company and the Company will pay
Executive the earned but unpaid portion of Executive's Basic Salary through the
Termination Date. If Executive gives notice of termination hereunder, the
Company shall have the right to relieve Executive, in whole or in part, of his
duties under this Agreement and to advance the Termination Date from the date
set by Executive's notice to a date not less than 14 days from the receipt of
Executive's notice of termination.
(c) The Company may terminate Executive's employment without
cause upon giving 30 days' advance written notice to Executive. If Executive's
employment is terminated without cause under this Section 6(c), the Company
will pay Executive the earned but unpaid portion of Executive's Basic Salary
through the Termination Date and will continue to pay Executive his Basic
Salary for six months following the Termination Date (the "Severance Period"),
and the Company will provide executive level outplacement services by a firm
selected and contracted by the Company for up to six months following the
Termination Date (the "Outplacement Services"); provided, however, if Executive
accepts other employment during the Severance Period, the Company shall pay
Executive's Basic Salary and will provide the Outplacement Services until the
first to occur of the expiration of the Severance Period or the commencement of
the other employment.
(d) The Company may terminate Executive's employment upon a
determination by the Company that "good cause" exists for Executive's
termination and the Company serves written notice of such termination upon the
Executive. As used in this Agreement, the term "good cause" shall refer only
to any one or more of the following grounds:
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(i) commission of an act of dishonesty, including,
but not limited to, misappropriation of funds or any property of the
Company;
(ii) engagement in activities or conduct clearly
injurious to the best interests or reputation of the Company;
(iii) refusal to perform his assigned duties and
responsibilities;
(iv) gross insubordination by the Executive;
(v) the clear violation of any of the material terms
and conditions of this Agreement or any written agreement or
agreements the Executive may from time to time have with the Company
(following 30-days' written notice from the Company specifying the
violation and Executive's failure to cure such violation within such
30-day period);
(vi) the Executive's substantial dependence, as
determined by the Board of Directors of the Company, on alcohol, or
any narcotic drug or other controlled or illegal substance; or
(vii) commission of a crime which is a felony, a
misdemeanor involving an act of moral turpitude, or a misdemeanor
committed in connection with his employment by the Company which
causes the Company a substantial detriment.
In the event of a termination under this Section 6(d), the Company will pay
Executive the earned but unpaid portion of Executive's Basic Salary through the
Termination Date. If any determination of substantial dependence under Section
6(d)(vi) is disputed by the Executive, the parties hereto agree to abide by the
decision of a panel of three physicians appointed in the manner as specified in
Section 6(e) of this Agreement.
(e) Executive's employment shall terminate upon the death or
permanent disability of Executive. For purposes hereof, "permanent
disability," shall mean the inability of the Executive, as determined by the
Board of Directors of Checkfree, by reason of physical or mental illness to
perform the duties required of him under this Agreement for more than 180 days
in any one year period. Successive periods of disability, illness or
incapacity will be considered separate periods unless the later period of
disability, illness or incapacity is due to the same or related cause and
commences less than six months from the ending of the previous period of
disability. Upon a determination by the Board of Directors of Checkfree that
the Executive's employment shall be terminated under this Section 6(e), the
Board of Directors shall give the Executive 30 days' prior written notice of
the termination. If a determination of the Board of Directors under this
Section 6(e) is disputed by the Executive, the parties agree to abide by the
decision of a panel of three physicians. Checkfree will select a physician,
the Executive will select a physician and the physicians selected by Checkfree
and the Executive will select a third physician. The Executive agrees to make
himself available for and submit to examinations by such physicians as may be
directed by Checkfree. Failure to submit to any examination shall constitute a
breach of a material part of this Agreement.
(f) If a "Change in Control" shall have occurred, Executive
shall be entitled to the benefits described below if his employment is
terminated following a Change in Control for other than good cause as specified
in Section 6(d), or Executive terminates his employment upon making
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a good faith determination that, following the Change in Control, the
Executive's employment status or employment responsibilities have been
materially and adversely affected thereby:
(i) Executive shall be entitled to the unpaid
portion of his Basic Salary plus credit for any vacation accrued but
not taken and the amount of any unpaid but earned bonus, incentive
compensation or any other benefit to which he is entitled under this
Agreement through the date of the termination as a result of a Change
in Control, plus two times Executive's "Average Annual Compensation."
For this purpose "Average Annual Compensation" shall mean the average
annual compensation includible in Executive's gross income for the
period consisting of Executive's most recent five taxable years ending
before the date on which the Change in Control occurs.
(ii) At Executive's option, the amount payable under
Section 6(f)(i) shall be paid to him in one lump sum within 30 days
after termination of employment following a Change in Control or in 24
equal consecutive monthly payments commencing on the first day of the
month after termination of employment following a Change in Control.
(iii) The Company shall maintain for Executive's
benefit until the earlier of (y) 24 months after termination of
employment following a Change in Control, or (z) Executive's
commencement of full-time employment with a new employer, all life
insurance, medical, health and accident, and disability plans or
programs in which Executive shall have been entitled to participate
prior to termination of employment following a Change in Control,
provided Executive's continued participation is permitted under the
general terms of such plans and programs after the Change in Control.
In the event Executive's participation in any such plan or program is
not permitted, the Company will provide directly the benefits to which
Executive would be entitled under such plans and programs.
(g) Executive's benefits under Section 6(f) above shall be
payable to him as severance pay in consideration of his past service and of his
continued services from the date hereof. Executive shall have no duty to
mitigate his damages by seeking other employment, and the Company shall not be
entitled to set off against amounts payable hereunder any compensation which
Executive may receive from future employment.
(h) For purposes of Section 6(f), a "Change in Control" shall
be deemed to have occurred if and when, after the date hereof, (i) Checkfree,
or in one or more transactions 50% or more of its assets or earning power, is
acquired by or combined with a person, partnership, corporation, trust or other
entity ("Person") and less than a majority of the outstanding voting shares of
the Person surviving such transaction (or the ultimate parent of the surviving
Person) after such acquisition or combination is owned, immediately after the
acquisition or combination, by the owners of the voting shares of Checkfree
outstanding immediately prior to such acquisition or combination, unless the
acquisition or combination is approved by the Board of Directors of Checkfree
prior to any change to the Board of Directors that would constitute a "Change
of Control" under clause (ii) of this Section 6(h); or (ii) during any period
of two consecutive years during the term of this Agreement, individuals who at
the beginning of such period constitute the Board of Directors of Checkfree
cease for any reason to constitute at least a majority thereof, unless the
election of each director who was not a director at the beginning of such
period has been approved in advance by directors representing at least
two-thirds of the directors then in office who were directors at the beginning
of the period.
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(i) Upon any termination or expiration of this Agreement or
any cessation of Executive's employment hereunder, the Company shall have no
further obligations under this Agreement and no further payments shall be
payable by the Company to the Executive, except as provided in Sections 6(c)
and 6(d) above and except as required under any benefit plans or arrangements
maintained by the Company and applicable to the Executive at the time of such
termination, expiration or cessation of Executive's employment, including,
without limitation thereto, salary, incentive compensation, sick leave, and
vacation pay.
(j) If the payments and benefits provided under this
Agreement to Executive, either alone or with other payments and benefits, would
constitute "excess parachute payments" as defined in Section 280G of the
Internal Revenue Code of 1986, as amended ("Code"), then the payments and other
benefits under this Agreement shall be reduced to the extent necessary so that
no portion thereof shall be subject to the excise tax imposed by Section 4999
of the Code. Either the Company or Executive may request a determination as to
whether the payments or benefits would constitute an excess parachute payment
and, if requested, such determination shall be made by independent tax counsel
selected by the Company and approved by Executive. At Executive's election and
to the extent not otherwise paid, Executive may determine the amount of cash
and/or elements of non-cash fringe benefits to reduce so that such payments and
benefits will not constitute excess parachute payments.
7. Non-Competition.
(a) The Executive hereby acknowledges that, during and solely
as a result of his employment by the Company, he has received and shall
continue to receive unique training and experience with respect to the design,
operation and marketing of electronic commerce software, systems and
processing, financial software products, systems, and services, and other
related matters, and access to confidential information and business and
professional contacts. In consideration of the special and unique
opportunities afforded to the Executive by the Company as a result of the
Executive's employment, as outlined in the previous sentence, and in
consideration of the Company's other promises contained in this Agreement, the
Executive hereby agrees that he will not during the term of this Agreement, any
extension hereof, and for a period of one year after termination of employment
with the Company, whether voluntary or involuntary or with or without cause:
(i) engage or participate, directly or indirectly,
either as principal, agent, employee, employer, consultant,
stockholder, or in any other individual or representative capacity
whatsoever, in the operation, management or ownership of any business,
firm, corporation, association, or other entity engaged in the design,
operation or marketing of electronic commerce software, systems and
processing, financial software products, systems, and services, or
any other business engaged in by the Company at any time during the
term of this Agreement, on the Termination Date, or during the
one-year period prior to the dates thereof, within the United States
and any other country in which the Company conducts substantial
business at such time or during such period; and,
(ii) directly or indirectly, for himself or in
conjunction with or on behalf of any other individual or entity,
solicit, divert, take away or endeavor to take away from the Company
any customer, account or employee of the Company at any time during
the term of this Agreement, as of the date of Executive's termination
of employment with the Company, or during the one-year period prior to
the dates thereof.
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(b) The period of time during which the Executive is subject
to the prohibitions contained in this Section 7 shall be extended by any length
of time during which the Executive is in violation of such prohibitions.
(c) The restrictions of this Section 7 shall not be violated
by the ownership by Executive of no more than 2% of the outstanding securities
of any company whose stock is traded on a national securities exchange or is
quoted in the Automated Quotation System of the National Association of
Securities Dealers (NASDAQ).
8. Confidential Information; Assignment of Inventions.
(a) As used herein, the term "Confidential Information"
includes, but is not limited to, all information and materials belonging to,
used by, or in the possession of the Company (i) which have been disclosed or
made known to, or have come into the possession of the Executive as a
consequence of or through Executive's relationship with the Company prior to or
after the date hereof, (ii) which are related to the Company's customers,
potential customers, suppliers, distributors, alliance partners, business
strategies or policies, financial or sales results, sales and management
techniques, marketing plans, research or development, reports, records,
software, systems, source or object code, software documentation or instruction
or user manuals, and (iii) which have not generally been made available to the
public (not including customers) by the Company pursuant to a specific
authorization in the ordinary course of business by the Company of the release
of such information to the public or otherwise published and released by the
Company to the general public. Notwithstanding the foregoing, Executive may
release Confidential Information, in each case only with prior notice to the
Company, if (1) required by law, (2) necessary to establish a lawful claim or
defense against the Company, (3) necessary to establish a lawful claim or
defense against a person or entity other than the Company, but only with the
permission, which shall not be unreasonably withheld, of the Company, or (4)
necessary to respond to process or appropriate governmental inquiry.
(b) Executive agrees:
(i) that Executive will promptly disclose and grant
and does hereby grant to the Company his entire right, title and
interest in and to all customer lists, discoveries, developments,
designs, improvements, inventions, formulae, software, documentation,
processes, techniques, know-how, patents, trade secrets and
trademarks, copyrights and all other data conceived, developed or
acquired by him during the period of his employment with the Company,
both prior to and after the execution of this Agreement, whether or
not patentable or registrable under copyright or similar statutes,
made or conceived or reduced to practice or learned by Executive,
either alone or jointly with others, that result from or are conceived
during the performance of tasks assigned to Executive by the Company
or result from use of property, equipment, or premises owned, leased
or contracted for by the Company ("Inventions"). Executive agrees to
execute and deliver, from time to time, such documents as may be
necessary or convenient to effectuate the transfer of such
Confidential Information to the Company and shall cooperate with and
assist the Company in every proper way (at the expense of the Company)
in obtaining and from time to time enforcing patents, copyrights,
trade secrets, other proprietary rights and protections relating to
Inventions in any and all countries;
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(ii) that Executive will during the term of this
Agreement and thereafter safeguard all Confidential Information and,
except as specifically permitted below, Executive will never disclose
or use for any purpose or benefit (other than for the purpose or
benefit of the Company) any Confidential Information;
(iii) that, except in connection with the ordinary
course of the Company's business, Executive will not, either during
the term of this Agreement or thereafter directly or indirectly,
disclose, disseminate or otherwise make known or provide any
Confidential Information, whether in original form or in duplicated or
copied form or extracts therefrom, and whether orally or in writing,
to any individual, partnership, company or other entity, unless the
Company has given its prior written consent thereto;
(iv) that, except in connection with the ordinary
course of the Company's business, Executive will not, either during
the term of this Agreement or thereafter, remove any Confidential
Information from the premises of the Company either in original form
or in duplicated or copied form or extracts therefrom; and that upon
any termination of Executive's employment by the Company, Executive
will immediately surrender to the Company, without request, all
Confidential Information, whether in original or duplicated or copied
form or extracts therefrom.
9. No Conflicts. Executive represents that the performance by
Executive of all the terms of this Agreement, as a former or continuing
employee of the Company does not and will not breach any agreement as to which
Executive or the Company is or was a party and which requires Executive to keep
any information in confidence or in trust. Executive has not entered into, and
will not enter into, any agreement either written or oral in conflict herewith.
10. Reasonableness of Restrictions. It is understood by and
between the parties hereto that the Executive's covenants set forth in Sections
7, 8 and 9 are essential elements of this Agreement, and that, but for the
agreement of the Executive to comply with such covenants, the Company would not
have agreed to enter into this Agreement. Executive acknowledges that the
restrictions contained in this Agreement are reasonable but should any
provisions of this Agreement be determined to be invalid, illegal or otherwise
unenforceable to its full extent, or if any such restriction is found by a
court of competent jurisdiction to be unreasonable under applicable law, then
the restriction shall be enforced to the maximum extent permitted by law, and
the parties hereto hereby consent and agree that such scope of protection, time
or geographic area (or any one of them, as the case may be) shall be modified
accordingly in any proceeding brought to enforce such restriction. Executive
acknowledges that the validity, legality and enforceability of the other
provisions shall not be affected thereby, and that the existence of any claim
or cause of action of the Executive against the Company, whether predicated on
this Agreement, or otherwise, shall not constitute a defense to the enforcement
by the Company of such covenants.
11. Remedies; Venue; Process.
(a) The Executive hereby acknowledges and agrees that the
Confidential Information disclosed to the Executive prior to and during the
term of this Agreement is of a special, unique and extraordinary character, and
that any breach of this Agreement will cause the Company irreparable injury and
damage, and consequently the Company shall be entitled, in addition to all
other remedies available to it, to injunctive and equitable relief to prevent
or cease a breach of Sections
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7, 8 or 9 of this Agreement without further proof of harm and
entitlement; that the terms of this Agreement, if enforced by the
Company, will not unduly impair Executive's ability to earn a living
or pursue his vocation; and further, that the Company may withhold
compensation and benefits if Executive fails to comply with this
Agreement, without restricting the Company from other legal and
equitable remedies. The parties agree that the prevailing party shall
be entitled to all costs and expenses (including reasonable legal fees
and expenses) which it incurs in successfully enforcing this Agreement
and in prosecuting or defending any litigation (including appellate
proceedings) arising out of this Agreement.
(b) The parties agree that jurisdiction and venue in any
action brought pursuant to this Agreement to enforce its terms or otherwise
with respect to the relationships between the parties shall properly lie in the
Court of Common Pleas of Franklin County, Ohio, or in the United States
District Court for the Southern District of Ohio. Such jurisdiction and venue
is exclusive, except that the Company may bring suit in any jurisdiction and
venue where jurisdiction and venue would otherwise be proper if Executive has
breached Sections 7, 8 or 9 of this Agreement. The parties agree that they
will not object that any action commenced in the foregoing jurisdictions is
commenced in a forum non conveniens. The parties further agree that the
mailing by certified or registered mail, return receipt requested, of any
process required by any such court shall constitute valid and lawful service of
process against them, without the necessity for service by any other means
provided by statute or rule of court.
12. Withholding. The Company may withhold from any payments to be
made hereunder such amounts as it may be required to withhold under applicable
federal, state or other law, and transmit such withheld amounts to the
appropriate taxing authority.
13. Indemnity.
(a) Subject only to the exclusions set forth in Section 13(b)
hereof, the Company hereby agrees to hold harmless and indemnify Executive
against any and all expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by Executive in
connection with any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (excluding
an action by or in the right of the Company) to which Executive is, was or at
any time becomes a party, or is threatened to be made a party, by reason of the
fact that Executive is, was or at any time becomes a director, officer,
employee or agent of the Company, or is or was serving or at any time serves at
the request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise.
(b) No indemnity pursuant to Section 13(a) hereof shall be
paid by the Company:
(i) except to the extent the aggregate losses to be
indemnified hereunder exceed the amount of such losses for which the
Executive is indemnified pursuant to any directors and officers
liability insurance purchased and maintained by the Company;
(ii) in respect to remuneration paid to Executive if
it shall be determined by a final judgment or other final adjudication
that such remuneration was in violation of law;
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(iii) on account of any suit in which
judgment is rendered against Executive for an accounting of profits
made from the purchase or sale by Executive of securities of the
Company pursuant to the provisions of Section 16(b) of the Securities
Exchange Act of 1934 and amendments thereto or similar provisions of
any federal, state or local statutory law;
(iv) on account of Executive's breach of any
provision of this Agreement;
(v) on account of Executive's act or omission being
finally adjudged to have been not in good faith or involving
intentional misconduct, a knowing violation of law, or grossly
negligent conduct; or
(vii) if a final decision by a Court having
jurisdiction in the matter shall determine that such indemnification
is not lawful.
(c) All agreements and obligations of the Company contained
herein shall continue during the period Executive is a director, officer,
employee or agent of the Company (or is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise) and shall continue
thereafter so long as Executive shall be subject to any possible claim or
threatened, pending or completed action, suit or proceeding, whether civil,
criminal or investigative, by reason of the fact that Executive was an officer
or director of the Company or serving in any other capacity referred to herein;
provided, however, that following the Termination Date, the Company shall have
no further obligation under this Section 13 in the event of a breach by
Executive of any of his continuing obligations under Sections 7 or 8 of this
Agreement.
(d) Promptly after receipt by Executive of notice of the
commencement of any action, suit or proceeding, Executive will, if a claim in
respect thereof is to be made against the Company under this Section 13, notify
the Company of the commencement thereof; but the omission so to notify the
Company will not relieve it from any liability which it may have to Executive
otherwise than under this Section 13. With respect to any such action, suit or
proceeding as to which Executive notifies the Company under this Section 13(d):
(i) The Company will be entitled to participate
therein at its own expense.
(ii) Except as otherwise provided below, to the
extent that it may wish, the Company jointly with any other
indemnifying party similarly notified will be entitled to assume the
defense thereof, with counsel selected by the Company. After notice
from the Company to Executive of its election so to assume the defense
thereof, the Company will not be liable to Executive under this
Section 13 for any legal or other expenses subsequently incurred by
Executive in connection with the defense thereof other than reasonable
costs of investigation or as otherwise provided below. Executive
shall have the right to employ his counsel in such action, suit or
proceeding but the fees and expenses of such counsel incurred after
notice from the Company of its assumption of the defense thereof shall
be at the expense of Executive, unless (A) the employment of counsel
by Executive has been authorized by the Company, or (B) the Company
shall not in fact have employed counsel to assume the defense of such
action, in each of which cases the fees and expenses of counsel shall
be at the expense of the Company. The Company shall not be entitled
to assume the defense of any action, suit or proceeding brought by or
on behalf of the Company.
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(iii) The Company shall not be liable to indemnify
Executive under this Agreement for any amounts paid in settlement of
any action or claim effected without its written consent. The Company
shall not settle in any manner which would impose any penalty or
limitation on Executive without Executive's written consent. Neither
the Company nor Executive will unreasonably withhold their consent to
any proposed settlement.
(e) Executive agrees that Executive will reimburse the
Company for all reasonable expenses paid by the Company in defending any civil
or criminal action, suit or proceeding against Executive in the event and only
to the extent that it shall be ultimately determined that Executive is not
entitled to be indemnified by the Company for such expenses under the
provisions of Section 145 of the Delaware General Corporation Law (the
"Delaware Statute"), the Company's By-laws, this Agreement or otherwise.
14. Assignment. This Agreement is personal to the Executive and
Executive may not assign or delegate any of his rights or obligations
hereunder. Subject to the foregoing, this Agreement shall be binding upon and
inure to the benefit of the respective parties hereto, their heirs, executors,
administrators, successors and assigns.
15. Waiver. The waiver by either party hereto of any breach or
violation of any provision of this Agreement by the other party shall not
operate as or be construed to be a waiver of any subsequent breach by such
waiving party.
16. Notices. Any and all notices required or permitted to be
given under this Agreement will be sufficient and deemed effective three (3)
days following deposit in the United States mail if furnished in writing and
sent by certified mail to Executive at:
Lynn D. Busing
720 Mt. Oglethorpe Trail
Alpharetta, GA 30202
and to the Company at:
Checkfree Corporation
8275 North High Street
Columbus, OH 43235
Attention: William C. Buckham,
Vice President of Administration and General Counsel
with a copy to:
Curtis A. Loveland, Esq.
Porter, Wright, Morris & Arthur
41 South High Street
Columbus, Ohio 43215
17. Governing Law. This Agreement shall be interpreted, construed
and governed according to the laws of the State of Ohio applicable to contracts
made and to be wholly performed
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within such state, except that the provisions of Section 13 hereof
shall be interpreted, construed and governed according to the Delaware
Statute.
18. Amendment. This Agreement may be amended in any and every
respect by agreement in writing executed by both parties hereto.
19. Section Headings. Section headings contained in this
Agreement are for convenience only and shall not be considered in construing
any provision hereof.
20. Entire Agreement. This Agreement terminates, cancels and
supersedes all previous employment or other agreements relating to the
employment of Executive with the Company or any predecessor, written or oral,
and this Agreement contains the entire understanding of the parties with
respect to the subject matter of this Agreement. This Agreement was fully
reviewed and negotiated on behalf of each party and shall not be construed
against the interest of either party as the drafter of this Agreement.
EXECUTIVE ACKNOWLEDGES THAT, BEFORE SIGNING THIS AGREEMENT, HE HAS READ THE
ENTIRE AGREEMENT AND HAS THIS DAY RECEIVED A COPY HEREOF.
21. Severability. The invalidity or unenforceability of any one
or more provisions of this Agreement shall not affect the validity or
enforceability of any other provisions of this Agreement or parts thereof.
22. Survival. Sections 6 through 14 of this Agreement and this
Section 22 shall survive any termination or expiration of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
EXECUTIVE:
/s/ Lynn D. Busing
---------------------------------
Lynn D. Busing
CHECKFREE CORPORATION
By: /s/ Peter J. Kight
---------------------------------
Peter J. Kight, President
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EXHIBIT 10(g)
CHECKFREE CORPORATION
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made this 21st day of February, 1996,
(the "Agreement") between Checkfree Corporation ("Checkfree"), a Delaware
corporation, and James M. Garrett (the "Executive").
RECITALS
A. The Executive is currently employed as an executive of
Checkfree or one of its consolidated subsidiaries (individually the
"Subsidiary" and collectively the "Subsidiaries") (Checkfree and the
Subsidiaries are hereinafter collectively referred to as the "Company").
B. The parties desire to continue the Executive's employment by
Checkfree and/or the Subsidiaries on the terms and conditions stated herein.
STATEMENT OF AGREEMENT
In consideration of the foregoing, and of Executive's continued
employment, the parties agree as follows:
1. Employment. Checkfree hereby employs Executive and Executive
accepts such employment upon the terms and conditions hereinafter set forth to
become effective on September 1, 1996 (the "Effective Time") provided that
neither Checkfree nor Executive have terminated the present employment
relationship between the parties prior to the Effective Time, in which case
this Agreement shall terminate and be of no effect.
2. Duties.
(a) Executive shall be employed: (i) to serve as Executive
Vice President of Checkfree, and to serve in similar capacities for each of the
Subsidiaries, if so elected, subject to the authority and direction of the
Board of Directors of Checkfree or the Subsidiary, as the case may be; and (ii)
to perform such other duties and responsibilities similar to those performed by
Executive prior hereto and exercise such other authority, perform such other or
additional duties and responsibilities and have such other or different title
(or have no title) as the Board of Directors of Checkfree or the Subsidiary
may, from time to time, prescribe.
(b) So long as employed under this Agreement, Executive
agrees to devote full time and efforts exclusively on behalf of the Company and
to competently, diligently and effectively discharge all duties of Executive
hereunder. Executive shall not be prohibited from engaging in such personal,
charitable, or other nonemployment activities as do not interfere with full
time employment hereunder and which do not violate the other provisions of this
Agreement. Executive further agrees to comply fully with all reasonable
policies of the Company as are from time to time in effect.
3. Compensation. As full compensation for all services rendered
to the Company pursuant to this Agreement, in whatever capacity rendered, the
Company shall pay to Executive during the term hereof a minimum base salary at
the rate of $140,000.00 per year (the "Basic Salary"), payable monthly or in
other more frequent installments, as determined by the Company. The Basic
Salary may be increased, but not decreased, from time to time, by the Board of
Directors.
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In addition, Executive will be entitled to receive incentive compensation
pursuant to the terms of plans adopted by the Board of Directors from time to
time.
4. Business Expenses. The Company shall promptly pay directly,
or reimburse Executive for, all business expenses to the extent such expenses
are paid or incurred by Executive during the term of employment in accordance
with Company policy in effect from time to time and to the extent such expenses
are reasonable and necessary to the conduct by Executive of the Company's
business and properly substantiated.
5. Fringe Benefits. During the term of this Agreement and
Executive's employment hereunder, the Company shall provide to Executive such
insurance, vacation, sick leave and other like benefits as are provided from
time to time to its other employees holding equivalent executive positions with
the Company in accordance with the policy of the Company as may be established
from time to time; provided, however, that the Company shall maintain at least
the level of benefits as determined by Checkfree and in effect at the
Effective Time.
6. Term; Termination.
(a) Executive is employed by the Company "at will."
Executive's employment may be terminated at any time as provided in this
Section 6. For purposes of this Section 6, "Termination Date" shall mean the
date on which any notice period required under this Section 6 expires or, if no
notice period is specified in this Section 6, the effective date of the
termination referenced in the notice.
(b) Executive may terminate his employment upon giving at
least 30 days' advance written notice to the Company and the Company will pay
Executive the earned but unpaid portion of Executive's Basic Salary through the
Termination Date. If Executive gives notice of termination hereunder, the
Company shall have the right to relieve Executive, in whole or in part, of his
duties under this Agreement and to advance the Termination Date from the date
set by Executive's notice to a date not less than 14 days from the receipt of
Executive's notice of termination.
(c) The Company may terminate Executive's employment without
cause upon giving 30 days' advance written notice to Executive. If Executive's
employment is terminated without cause under this Section 6(c), the Company
will pay Executive the earned but unpaid portion of Executive's Basic Salary
through the Termination Date and will continue to pay Executive his Basic
Salary for six months following the Termination Date (the "Severance Period"),
and the Company will provide executive level outplacement services by a firm
selected and contracted by the Company for up to six months following the
Termination Date (the "Outplacement Services"); provided, however, if Executive
accepts other employment during the Severance Period, the Company shall pay
Executive's Basic Salary and will provide the Outplacement Services until the
first to occur of the expiration of the Severance Period or the commencement of
the other employment.
(d) The Company may terminate Executive's employment upon a
determination by the Company that "good cause" exists for Executive's
termination and the Company serves written notice of such termination upon the
Executive. As used in this Agreement, the term "good cause" shall refer only
to any one or more of the following grounds:
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(i) commission of an act of dishonesty, including,
but not limited to, misappropriation of funds or any property of the
Company;
(ii) engagement in activities or conduct clearly
injurious to the best interests or reputation of the Company;
(iii) refusal to perform his assigned duties and
responsibilities;
(iv) gross insubordination by the Executive;
(v) the clear violation of any of the material
terms and conditions of this Agreement or any written agreement or
agreements the Executive may from time to time have with the Company
(following 30-days' written notice from the Company specifying the
violation and Executive's failure to cure such violation within such
30-day period);
(vi) the Executive's substantial dependence, as
determined by the Board of Directors of the Company, on alcohol, or
any narcotic drug or other controlled or illegal substance; or
(vii) commission of a crime which is a felony, a
misdemeanor involving an act of moral turpitude, or a misdemeanor
committed in connection with his employment by the Company which
causes the Company a substantial detriment.
In the event of a termination under this Section 6(d), the Company will pay
Executive the earned but unpaid portion of Executive's Basic Salary through the
Termination Date. If any determination of substantial dependence under Section
6(d)(vi) is disputed by the Executive, the parties hereto agree to abide by the
decision of a panel of three physicians appointed in the manner as specified in
Section 6(e) of this Agreement.
(e) Executive's employment shall terminate upon the death or
permanent disability of Executive. For purposes hereof, "permanent
disability," shall mean the inability of the Executive, as determined by the
Board of Directors of Checkfree, by reason of physical or mental illness to
perform the duties required of him under this Agreement for more than 180 days
in any one year period. Successive periods of disability, illness or
incapacity will be considered separate periods unless the later period of
disability, illness or incapacity is due to the same or related cause and
commences less than six months from the ending of the previous period of
disability. Upon a determination by the Board of Directors of Checkfree that
the Executive's employment shall be terminated under this Section 6(e), the
Board of Directors shall give the Executive 30 days' prior written notice of
the termination. If a determination of the Board of Directors under this
Section 6(e) is disputed by the Executive, the parties agree to abide by the
decision of a panel of three physicians. Checkfree will select a physician,
the Executive will select a physician and the physicians selected by Checkfree
and the Executive will select a third physician. The Executive agrees to make
himself available for and submit to examinations by such physicians as may be
directed by Checkfree. Failure to submit to any examination shall constitute a
breach of a material part of this Agreement.
(f) If a "Change in Control" shall have occurred,
Executive shall be entitled to the benefits described below if his employment
is terminated following a Change in Control for other than good cause as
specified in Section 6(d), or Executive terminates his employment upon
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making a good faith determination that, following the Change in Control, the
Executive's employment status or employment responsibilities have been
materially and adversely affected thereby:
(i) Executive shall be entitled to the unpaid
portion of his Basic Salary plus credit for any vacation accrued but
not taken and the amount of any unpaid but earned bonus, incentive
compensation or any other benefit to which he is entitled under this
Agreement through the date of the termination as a result of a Change
in Control, plus two times Executive's "Average Annual Compensation."
For this purpose "Average Annual Compensation" shall mean the average
annual compensation includible in Executive's gross income for the
period consisting of Executive's most recent five taxable years ending
before the date on which the Change in Control occurs.
(ii) At Executive's option, the amount payable under
Section 6(f)(i) shall be paid to him in one lump sum within 30 days
after termination of employment following a Change in Control or in 24
equal consecutive monthly payments commencing on the first day of the
month after termination of employment following a Change in Control.
(iii) The Company shall maintain for Executive's
benefit until the earlier of (y) 24 months after termination of
employment following a Change in Control, or (z) Executive's
commencement of full-time employment with a new employer, all life
insurance, medical, health and accident, and disability plans or
programs in which Executive shall have been entitled to participate
prior to termination of employment following a Change in Control,
provided Executive's continued participation is permitted under the
general terms of such plans and programs after the Change in Control.
In the event Executive's participation in any such plan or program is
not permitted, the Company will provide directly the benefits to which
Executive would be entitled under such plans and programs.
(g) Executive's benefits under Section 6(f) above shall be
payable to him as severance pay in consideration of his past service and of his
continued services from the date hereof. Executive shall have no duty to
mitigate his damages by seeking other employment, and the Company shall not be
entitled to set off against amounts payable hereunder any compensation which
Executive may receive from future employment.
(h) For purposes of Section 6(f), a "Change in Control" shall
be deemed to have occurred if and when, after the date hereof, (i) Checkfree,
or in one or more transactions 50% or more of its assets or earning power, is
acquired by or combined with a person, partnership, corporation, trust or other
entity ("Person") and less than a majority of the outstanding voting shares of
the Person surviving such transaction (or the ultimate parent of the surviving
Person) after such acquisition or combination is owned, immediately after the
acquisition or combination, by the owners of the voting shares of Checkfree
outstanding immediately prior to such acquisition or combination, unless the
acquisition or combination is approved by the Board of Directors of Checkfree
prior to any change to the Board of Directors that would constitute a "Change
of Control" under clause (ii) of this Section 6(h); or (ii) during any period
of two consecutive years during the term of this Agreement, individuals who at
the beginning of such period constitute the Board of Directors of Checkfree
cease for any reason to constitute at least a majority thereof, unless the
election of each director who was not a director at the beginning of such
period has been approved
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in advance by directors representing at least two-thirds of the directors then
in office who were directors at the beginning of the period.
(i) Upon any termination or expiration of this Agreement or
any cessation of Executive's employment hereunder, the Company shall have no
further obligations under this Agreement and no further payments shall be
payable by the Company to the Executive, except as provided in Sections 6(c)
and 6(d) above and except as required under any benefit plans or arrangements
maintained by the Company and applicable to the Executive at the time of such
termination, expiration or cessation of Executive's employment, including,
without limitation thereto, salary, incentive compensation, sick leave, and
vacation pay.
(j) If the payments and benefits provided under this
Agreement to Executive, either alone or with other payments and benefits, would
constitute "excess parachute payments" as defined in Section 280G of the
Internal Revenue Code of 1986, as amended ("Code"), then the payments and other
benefits under this Agreement shall be reduced to the extent necessary so that
no portion thereof shall be subject to the excise tax imposed by Section 4999
of the Code. Either the Company or Executive may request a determination as to
whether the payments or benefits would constitute an excess parachute payment
and, if requested, such determination shall be made by independent tax counsel
selected by the Company and approved by Executive. At Executive's election and
to the extent not otherwise paid, Executive may determine the amount of cash
and/or elements of non-cash fringe benefits to reduce so that such payments and
benefits will not constitute excess parachute payments.
7. Non-Competition.
(a) The Executive hereby acknowledges that, during and solely
as a result of his employment by the Company, he has received and shall
continue to receive unique training and experience with respect to the design,
operation and marketing of electronic commerce software, systems and
processing, financial software products, systems, and services, and other
related matters, and access to confidential information and business and
professional contacts. In consideration of the special and unique
opportunities afforded to the Executive by the Company as a result of the
Executive's employment, as outlined in the previous sentence, and in
consideration of the Company's other promises contained in this Agreement, the
Executive hereby agrees that he will not during the term of this Agreement, any
extension hereof, and for a period of one year after termination of employment
with the Company, whether voluntary or involuntary or with or without cause:
(i) engage or participate, directly or indirectly,
either as principal, agent, employee, employer, consultant,
stockholder, or in any other individual or representative capacity
whatsoever, in the operation, management or ownership of any business,
firm, corporation, association, or other entity engaged in the design,
operation or marketing of electronic commerce software, systems and
processing, financial software products, systems, and services, or
any other business engaged in by the Company at any time during the
term of this Agreement, on the Termination Date, or during the
one-year period prior to the dates thereof, within the United States
and any other country in which the Company conducts substantial
business at such time or during such period; and,
(ii) directly or indirectly, for himself or in
conjunction with or on behalf of any other individual or entity,
solicit, divert, take away or endeavor to take away from the
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Company any customer, account or employee of the Company at any time
during the term of this Agreement, as of the date of Executive's
termination of employment with the Company, or during the one-year
period prior to the dates thereof.
(b) The period of time during which the Executive is subject
to the prohibitions contained in this Section 7 shall be extended by any length
of time during which the Executive is in violation of such prohibitions.
(c) The restrictions of this Section 7 shall not be violated
by the ownership by Executive of no more than 2% of the outstanding securities
of any company whose stock is traded on a national securities exchange or is
quoted in the Automated Quotation System of the National Association of
Securities Dealers (NASDAQ).
8. Confidential Information; Assignment of Inventions.
(a) As used herein, the term "Confidential Information"
includes, but is not limited to, all information and materials belonging to,
used by, or in the possession of the Company (i) which have been disclosed or
made known to, or have come into the possession of the Executive as a
consequence of or through Executive's relationship with the Company prior to or
after the date hereof, (ii) which are related to the Company's customers,
potential customers, suppliers, distributors, alliance partners, business
strategies or policies, financial or sales results, sales and management
techniques, marketing plans, research or development, reports, records,
software, systems, source or object code, software documentation or instruction
or user manuals, and (iii) which have not generally been made available to the
public (not including customers) by the Company pursuant to a specific
authorization in the ordinary course of business by the Company of the release
of such information to the public or otherwise published and released by the
Company to the general public. Notwithstanding the foregoing, Executive may
release Confidential Information, in each case only with prior notice to the
Company, if (1) required by law, (2) necessary to establish a lawful claim or
defense against the Company, (3) necessary to establish a lawful claim or
defense against a person or entity other than the Company, but only with the
permission, which shall not be unreasonably withheld, of the Company, or (4)
necessary to respond to process or appropriate governmental inquiry.
(b) Executive agrees:
(i) that Executive will promptly disclose and grant
and does hereby grant to the Company his entire right, title and
interest in and to all customer lists, discoveries, developments,
designs, improvements, inventions, formulae, software, documentation,
processes, techniques, know-how, patents, trade secrets and
trademarks, copyrights and all other data conceived, developed or
acquired by him during the period of his employment with the Company,
both prior to and after the execution of this Agreement, whether or
not patentable or registrable under copyright or similar statutes,
made or conceived or reduced to practice or learned by Executive,
either alone or jointly with others, that result from or are conceived
during the performance of tasks assigned to Executive by the Company
or result from use of property, equipment, or premises owned, leased
or contracted for by the Company ("Inventions"). Executive agrees to
execute and deliver, from time to time, such documents as may be
necessary or convenient to effectuate the transfer of such
Confidential Information to the Company and shall cooperate with and
assist the Company in every
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proper way (at the expense of the Company) in obtaining and from time
to time enforcing patents, copyrights, trade secrets, other
proprietary rights and protections relating to Inventions in any and
all countries;
(ii) that Executive will during the term of this
Agreement and thereafter safeguard all Confidential Information and,
except as specifically permitted below, Executive will never disclose
or use for any purpose or benefit (other than for the purpose or
benefit of the Company) any Confidential Information;
(iii) that, except in connection with the ordinary
course of the Company's business, Executive will not, either during
the term of this Agreement or thereafter directly or indirectly,
disclose, disseminate or otherwise make known or provide any
Confidential Information, whether in original form or in duplicated or
copied form or extracts therefrom, and whether orally or in writing,
to any individual, partnership, company or other entity, unless the
Company has given its prior written consent thereto;
(iv) that, except in connection with the ordinary
course of the Company's business, Executive will not, either during
the term of this Agreement or thereafter, remove any Confidential
Information from the premises of the Company either in original form
or in duplicated or copied form or extracts therefrom; and that upon
any termination of Executive's employment by the Company, Executive
will immediately surrender to the Company, without request, all
Confidential Information, whether in original or duplicated or copied
form or extracts therefrom.
9. No Conflicts. Executive represents that the performance by
Executive of all the terms of this Agreement, as a former or continuing
employee of the Company does not and will not breach any agreement as to which
Executive or the Company is or was a party and which requires Executive to keep
any information in confidence or in trust. Executive has not entered into, and
will not enter into, any agreement either written or oral in conflict herewith.
10. Reasonableness of Restrictions. It is understood by and
between the parties hereto that the Executive's covenants set forth in Sections
7, 8 and 9 are essential elements of this Agreement, and that, but for the
agreement of the Executive to comply with such covenants, the Company would not
have agreed to enter into this Agreement. Executive acknowledges that the
restrictions contained in this Agreement are reasonable but should any
provisions of this Agreement be determined to be invalid, illegal or otherwise
unenforceable to its full extent, or if any such restriction is found by a
court of competent jurisdiction to be unreasonable under applicable law, then
the restriction shall be enforced to the maximum extent permitted by law, and
the parties hereto hereby consent and agree that such scope of protection, time
or geographic area (or any one of them, as the case may be) shall be modified
accordingly in any proceeding brought to enforce such restriction. Executive
acknowledges that the validity, legality and enforceability of the other
provisions shall not be affected thereby, and that the existence of any claim
or cause of action of the Executive against the Company, whether predicated on
this Agreement, or otherwise, shall not constitute a defense to the enforcement
by the Company of such covenants.
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11. Remedies; Venue; Process.
(a) The Executive hereby acknowledges and agrees that the
Confidential Information disclosed to the Executive prior to and during the
term of this Agreement is of a special, unique and extraordinary character, and
that any breach of this Agreement will cause the Company irreparable injury and
damage, and consequently the Company shall be entitled, in addition to all
other remedies available to it, to injunctive and equitable relief to prevent
or cease a breach of Sections 7, 8 or 9 of this Agreement without further proof
of harm and entitlement; that the terms of this Agreement, if enforced by the
Company, will not unduly impair Executive's ability to earn a living or pursue
his vocation; and further, that the Company may withhold compensation and
benefits if Executive fails to comply with this Agreement, without restricting
the Company from other legal and equitable remedies. The parties agree that
the prevailing party shall be entitled to all costs and expenses (including
reasonable legal fees and expenses) which it incurs in successfully enforcing
this Agreement and in prosecuting or defending any litigation (including
appellate proceedings) arising out of this Agreement.
(b) The parties agree that jurisdiction and venue in any
action brought pursuant to this Agreement to enforce its terms or otherwise
with respect to the relationships between the parties shall properly lie in the
Court of Common Pleas of Franklin County, Ohio, or in the United States
District Court for the Southern District of Ohio. Such jurisdiction and venue
is exclusive, except that the Company may bring suit in any jurisdiction and
venue where jurisdiction and venue would otherwise be proper if Executive has
breached Sections 7, 8 or 9 of this Agreement. The parties agree that they
will not object that any action commenced in the foregoing jurisdictions is
commenced in a forum non conveniens. The parties further agree that the
mailing by certified or registered mail, return receipt requested, of any
process required by any such court shall constitute valid and lawful service of
process against them, without the necessity for service by any other means
provided by statute or rule of court.
12. Withholding. The Company may withhold from any payments to be
made hereunder such amounts as it may be required to withhold under applicable
federal, state or other law, and transmit such withheld amounts to the
appropriate taxing authority.
13. Indemnity.
(a) Subject only to the exclusions set forth in Section 13(b)
hereof, the Company hereby agrees to hold harmless and indemnify Executive
against any and all expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by Executive in
connection with any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (including
an action by or in the right of the Company) to which Executive is, was or at
any time becomes a party, or is threatened to be made a party, by reason of the
fact that Executive is, was or at any time becomes a director, officer,
employee or agent of the Company, or is or was serving or at any time serves at
the request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise to the
fullest extent authorized and permitted by the provisions of Section 145 of the
Delaware General Corporation Law (the "Delaware Statute"), or by any amendment
thereof or other statutory provisions authorizing or permitting such
indemnification which is adopted after the date hereof.
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(b) No indemnity pursuant to Section 13(a) hereof shall be
paid by the Company:
(i) except to the extent the aggregate losses to be
indemnified hereunder exceed the amount of such losses for which the
Executive is indemnified pursuant to any directors and officers
liability insurance purchased and maintained by the Company;
(ii) in respect to remuneration paid to Executive if
it shall be determined by a final judgment or other final adjudication
that such remuneration was in violation of law;
(iii) on account of any suit in which judgment is
rendered against Executive for an accounting of profits made from the
purchase or sale by Executive of securities of the Company pursuant to
the provisions of Section 16(b) of the Securities Exchange Act of 1934
and amendments thereto or similar provisions of any federal, state or
local statutory law;
(iv) on account of Executive's breach of any
provision of this Agreement;
(v) on account of Executive's act or omission being
finally adjudged to have been not in good faith or involving
intentional misconduct or a knowing violation of law; or
(vii) if a final decision by a Court having
jurisdiction in the matter shall determine that such indemnification
is not lawful.
(c) All agreements and obligations of the Company contained
herein shall continue during the period Executive is a director, officer,
employee or agent of the Company (or is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise) and shall continue
thereafter so long as Executive shall be subject to any possible claim or
threatened, pending or completed action, suit or proceeding, whether civil,
criminal or investigative, by reason of the fact that Executive was an officer
or director of the Company or serving in any other capacity referred to herein;
provided, however, that following the Termination Date, the Company shall have
no further obligation under this Section 13 in the event of a breach by
Executive of any of his continuing obligations under Sections 7 or 8 of this
Agreement.
(d) Promptly after receipt by Executive of notice of the
commencement of any action, suit or proceeding, Executive will, if a claim in
respect thereof is to be made against the Company under this Section 13, notify
the Company of the commencement thereof; but the omission so to notify the
Company will not relieve it from any liability which it may have to Executive
otherwise than under this Section 13. With respect to any such action, suit or
proceeding as to which Executive notifies the Company under this Section 13(d):
(i) The Company will be entitled to participate
therein at its own expense.
(ii) Except as otherwise provided below, to the
extent that it may wish, the Company jointly with any other
indemnifying party similarly notified will be entitled to assume the
defense thereof, with counsel selected by the Company and reasonably
satisfactory to Executive. After notice from the Company to Executive
of its election so to assume the defense thereof, the Company will not
be liable to Executive under this Section 13 for any legal or other
expenses subsequently incurred by Executive in connection with the
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defense thereof other than reasonable costs of investigation or as
otherwise provided below. Executive shall have the right to employ
his counsel in such action, suit or proceeding but the fees and
expenses of such counsel incurred after notice from the Company of its
assumption of the defense thereof shall be at the expense of
Executive, unless (A) the employment of counsel by Executive has been
authorized by the Company, (B) Executive shall have reasonably
concluded that there may be a conflict of interest between the Company
and Executive in the conduct of the defense of such action, or (C) the
Company shall not in fact have employed counsel to assume the defense
of such action, in each of which cases the fees and expenses of
counsel shall be at the expense of the Company. The Company shall not
be entitled to assume the defense of any action, suit or proceeding
brought by or on behalf of the Company or as to which Executive shall
have made the conclusion provided for in clause (B) above.
(iii) The Company shall not be liable to indemnify
Executive under this Agreement for any amounts paid in settlement of
any action or claim effected without its written consent. The Company
shall not settle in any manner which would impose any penalty or
limitation on Executive without Executive's written consent. Neither
the Company nor Executive will unreasonably withhold their consent to
any proposed settlement.
(e) Executive agrees that Executive will reimburse the
Company for all reasonable expenses paid by the Company in defending any civil
or criminal action, suit or proceeding against Executive in the event and only
to the extent that it shall be ultimately determined that Executive is not
entitled to be indemnified by the Company for such expenses under the
provisions of the Delaware Statute, the Company's By-laws, this Agreement or
otherwise.
14. Assignment. This Agreement is personal to the Executive and
Executive may not assign or delegate any of his rights or obligations
hereunder. Subject to the foregoing, this Agreement shall be binding upon and
inure to the benefit of the respective parties hereto, their heirs, executors,
administrators, successors and assigns.
15. Waiver. The waiver by either party hereto of any breach or
violation of any provision of this Agreement by the other party shall not
operate as or be construed to be a waiver of any subsequent breach by such
waiving party.
16. Notices. Any and all notices required or permitted to be
given under this Agreement will be sufficient and deemed effective three (3)
days following deposit in the United States mail if furnished in writing and
sent by certified mail to Executive at:
James M. Garrett
6035 Virginia Drive
Cumming, GA 30131
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and to the Company at:
Checkfree Corporation
8275 North High Street
Columbus, OH 43235
Attention: William C. Buckham,
Vice President of Administration and General Counsel
with a copy to:
Curtis A. Loveland, Esq.
Porter, Wright, Morris & Arthur
41 South High Street
Columbus, Ohio 43215
17. Governing Law. This Agreement shall be interpreted, construed
and governed according to the laws of the State of Ohio applicable to contracts
made and to be wholly performed within such state, except that the provisions
of Section 13 hereof shall be interpreted, construed and governed according to
the Delaware Statute.
18. Amendment. This Agreement may be amended in any and every
respect by agreement in writing executed by both parties hereto.
19. Section Headings. Section headings contained in this
Agreement are for convenience only and shall not be considered in construing
any provision hereof.
20. Entire Agreement. This Agreement terminates, cancels and
supersedes all previous employment or other agreements relating to the
employment of Executive with the Company or any predecessor, written or oral,
and this Agreement contains the entire understanding of the parties with
respect to the subject matter of this Agreement. This Agreement was fully
reviewed and negotiated on behalf of each party and shall not be construed
against the interest of either party as the drafter of this Agreement.
EXECUTIVE ACKNOWLEDGES THAT, BEFORE SIGNING THIS AGREEMENT, HE HAS READ THE
ENTIRE AGREEMENT AND HAS THIS DAY RECEIVED A COPY HEREOF.
21. Severability. The invalidity or unenforceability of any one
or more provisions of this Agreement shall not affect the validity or
enforceability of any other provisions of this Agreement or parts thereof.
22. Survival. Sections 6 through 14 of this Agreement and this
Section 22 shall survive any termination or expiration of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
EXECUTIVE
/s/ James M. Garrett
-------------------------------
James M. Garrett
CHECKFREE CORPORATION
By: /s/ Peter J. Kight
-------------------------------
Peter J. Kight, President
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EXHIBIT 10(h)
CHECKFREE CORPORATION
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made this 27th day of February, 1996,
(the "Agreement") between Checkfree Corporation ("Checkfree"), a Delaware
corporation, and Robert J. Lewis, III (the "Executive").
RECITALS
A. The Executive is currently employed as an executive of
Checkfree or one of its consolidated subsidiaries (individually the
"Subsidiary" and collectively the "Subsidiaries") (Checkfree and the
Subsidiaries are hereinafter collectively referred to as the "Company").
B. The parties desire to continue the Executive's employment by
Checkfree and/or the Subsidiaries on the terms and conditions stated herein.
STATEMENT OF AGREEMENT
In consideration of the foregoing, and of Executive's continued
employment, the parties agree as follows:
1. Employment. Checkfree hereby employs Executive and Executive
accepts such employment upon the terms and conditions hereinafter set forth to
become effective on September 1, 1996 (the "Effective Time") provided that
neither Checkfree nor Executive have terminated the present employment
relationship between the parties prior to the Effective Time, in which case
this Agreement shall terminate and be of no effect.
2. Duties.
(a) Executive shall be employed: (i) to serve as Senior
Vice President of Checkfree, and to serve in similar capacities for each of the
Subsidiaries, if so elected, subject to the authority and direction of the
Board of Directors of Checkfree or the Subsidiary, as the case may be; and (ii)
to perform such other duties and responsibilities similar to those performed by
Executive prior hereto and exercise such other authority, perform such other or
additional duties and responsibilities and have such other or different title
(or have no title) as the Board of Directors of Checkfree or the Subsidiary
may, from time to time, prescribe.
(b) So long as employed under this Agreement, Executive
agrees to devote full time and efforts exclusively on behalf of the Company and
to competently, diligently and effectively discharge all duties of Executive
hereunder. Executive shall not be prohibited from engaging in such personal,
charitable, or other nonemployment activities as do not interfere with full
time employment hereunder and which do not violate the other provisions of this
Agreement. Executive further agrees to comply fully with all reasonable
policies of the Company as are from time to time in effect.
3. Compensation. As full compensation for all services rendered
to the Company pursuant to this Agreement, in whatever capacity rendered, the
Company shall pay to Executive during the term hereof a minimum base salary at
the rate of $120,000.00 per year (the "Basic Salary"), payable monthly or in
other more frequent installments, as determined by the Company. The Basic
Salary may be increased, but not decreased, from time to time, by the Board of
Directors.
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In addition, Executive will be entitled to receive incentive compensation
pursuant to the terms of plans adopted by the Board of Directors from time to
time.
4. Business Expenses. The Company shall promptly pay directly,
or reimburse Executive for, all business expenses to the extent such expenses
are paid or incurred by Executive during the term of employment in accordance
with Company policy in effect from time to time and to the extent such expenses
are reasonable and necessary to the conduct by Executive of the Company's
business and properly substantiated.
5. Fringe Benefits. During the term of this Agreement and
Executive's employment hereunder, the Company shall provide to Executive such
insurance, vacation, sick leave and other like benefits as are provided from
time to time to its other employees holding equivalent executive positions with
the Company in accordance with the policy of the Company as may be established
from time to time; provided, however, that the Company shall maintain at least
the level of benefits as determined by Checkfree and in effect at the
Effective Time.
6. Term; Termination.
(a) Executive is employed by the Company "at will."
Executive's employment may be terminated at any time as provided in this
Section 6. For purposes of this Section 6, "Termination Date" shall mean the
date on which any notice period required under this Section 6 expires or, if no
notice period is specified in this Section 6, the effective date of the
termination referenced in the notice.
(b) Executive may terminate his employment upon giving at
least 30 days' advance written notice to the Company and the Company will pay
Executive the earned but unpaid portion of Executive's Basic Salary through the
Termination Date. If Executive gives notice of termination hereunder, the
Company shall have the right to relieve Executive, in whole or in part, of his
duties under this Agreement and to advance the Termination Date from the date
set by Executive's notice to a date not less than 14 days from the receipt of
Executive's notice of termination.
(c) The Company may terminate Executive's employment without
cause upon giving 30 days' advance written notice to Executive. If Executive's
employment is terminated without cause under this Section 6(c), the Company
will pay Executive the earned but unpaid portion of Executive's Basic Salary
through the Termination Date and will continue to pay Executive his Basic
Salary for six months following the Termination Date (the "Severance Period"),
and the Company will provide executive level outplacement services by a firm
selected and contracted by the Company for up to six months following the
Termination Date (the "Outplacement Services"); provided, however, if Executive
accepts other employment during the Severance Period, the Company shall pay
Executive's Basic Salary and will provide the Outplacement Services until the
first to occur of the expiration of the Severance Period or the commencement of
the other employment.
(d) The Company may terminate Executive's employment upon a
determination by the Company that "good cause" exists for Executive's
termination and the Company serves written notice of such termination upon the
Executive. As used in this Agreement, the term "good cause" shall refer only
to any one or more of the following grounds:
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(i) commission of an act of dishonesty, including,
but not limited to, misappropriation of funds or any property of the
Company;
(ii) engagement in activities or conduct clearly
injurious to the best interests or reputation of the Company;
(iii) refusal to perform his assigned duties and
responsibilities;
(iv) gross insubordination by the Executive;
(v) the clear violation of any of the material terms
and conditions of this Agreement or any written agreement or
agreements the Executive may from time to time have with the Company
(following 30-days' written notice from the Company specifying the
violation and Executive's failure to cure such violation within such
30-day period);
(vi) the Executive's substantial dependence, as
determined by the Board of Directors of the Company, on alcohol, or
any narcotic drug or other controlled or illegal substance; or
(vii) commission of a crime which is a felony, a
misdemeanor involving an act of moral turpitude, or a misdemeanor
committed in connection with his employment by the Company which
causes the Company a substantial detriment.
In the event of a termination under this Section 6(d), the Company will pay
Executive the earned but unpaid portion of Executive's Basic Salary through the
Termination Date. If any determination of substantial dependence under Section
6(d)(vi) is disputed by the Executive, the parties hereto agree to abide by the
decision of a panel of three physicians appointed in the manner as specified in
Section 6(e) of this Agreement.
(e) Executive's employment shall terminate upon the death or
permanent disability of Executive. For purposes hereof, "permanent
disability," shall mean the inability of the Executive, as determined by the
Board of Directors of Checkfree, by reason of physical or mental illness to
perform the duties required of him under this Agreement for more than 180 days
in any one year period. Successive periods of disability, illness or
incapacity will be considered separate periods unless the later period of
disability, illness or incapacity is due to the same or related cause and
commences less than six months from the ending of the previous period of
disability. Upon a determination by the Board of Directors of Checkfree that
the Executive's employment shall be terminated under this Section 6(e), the
Board of Directors shall give the Executive 30 days' prior written notice of
the termination. If a determination of the Board of Directors under this
Section 6(e) is disputed by the Executive, the parties agree to abide by the
decision of a panel of three physicians. Checkfree will select a physician,
the Executive will select a physician and the physicians selected by Checkfree
and the Executive will select a third physician. The Executive agrees to make
himself available for and submit to examinations by such physicians as may be
directed by Checkfree. Failure to submit to any examination shall constitute a
breach of a material part of this Agreement.
(f) If a "Change in Control" shall have occurred, Executive
shall be entitled to the benefits described below if his employment is
terminated following a Change in Control for other than good cause as specified
in Section 6(d), or Executive terminates his employment upon making
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a good faith determination that, following the Change in Control, the
Executive's employment status or employment responsibilities have been
materially and adversely affected thereby:
(i) Executive shall be entitled to the unpaid portion of his
Basic Salary plus credit for any vacation accrued but not taken and the
amount of any unpaid but earned bonus, incentive compensation or any
other benefit to which he is entitled under this Agreement through the
date of the termination as a result of a Change in Control, plus two
times Executive's "Average Annual Compensation." For this purpose
"Average Annual Compensation" shall mean the average annual compensation
includible in Executive's gross income for the period consisting of
Executive's most recent five taxable years ending before the date on
which the Change in Control occurs.
(ii) At Executive's option, the amount payable under Section
6(f)(i) shall be paid to him in one lump sum within 30 days after
termination of employment following a Change in Control or in 24 equal
consecutive monthly payments commencing on the first day of the month
after termination of employment following a Change in Control.
(iii) The Company shall maintain for Executive's benefit until
the earlier of (y) 24 months after termination of employment following
a Change in Control, or (z) Executive's commencement of full-time
employment with a new employer, all life insurance, medical, health and
accident, and disability plans or programs in which Executive shall have
been entitled to participate prior to termination of employment
following a Change in Control, provided Executive's continued
participation is permitted under the general terms of such plans and
programs after the Change in Control. In the event Executive's
participation in any such plan or program is not permitted, the Company
will provide directly the benefits to which Executive would be entitled
under such plans and programs.
(g) Executive's benefits under Section 6(f) above shall be
payable to him as severance pay in consideration of his past service and of his
continued services from the date hereof. Executive shall have no duty to
mitigate his damages by seeking other employment, and the Company shall not be
entitled to set off against amounts payable hereunder any compensation which
Executive may receive from future employment.
(h) For purposes of Section 6(f), a "Change in Control" shall
be deemed to have occurred if and when, after the date hereof, (i) Checkfree,
or in one or more transactions 50% or more of its assets or earning power, is
acquired by or combined with a person, partnership, corporation, trust or other
entity ("Person") and less than a majority of the outstanding voting shares of
the Person surviving such transaction (or the ultimate parent of the surviving
Person) after such acquisition or combination is owned, immediately after the
acquisition or combination, by the owners of the voting shares of Checkfree
outstanding immediately prior to such acquisition or combination, unless the
acquisition or combination is approved by the Board of Directors of Checkfree
prior to any change to the Board of Directors that would constitute a "Change
of Control" under clause (ii) of this Section 6(h); or (ii) during any period
of two consecutive years during the term of this Agreement, individuals who at
the beginning of such period constitute the Board of Directors of Checkfree
cease for any reason to constitute at least a majority thereof, unless the
election of each director who was not a director at the beginning of such
period has been approved in advance by directors representing at least
two-thirds of the directors then in office who were directors at the beginning
of the period.
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(i) Upon any termination or expiration of this Agreement or
any cessation of Executive's employment hereunder, the Company shall have no
further obligations under this Agreement and no further payments shall be
payable by the Company to the Executive, except as provided in Sections 6(c)
and 6(d) above and except as required under any benefit plans or arrangements
maintained by the Company and applicable to the Executive at the time of such
termination, expiration or cessation of Executive's employment, including,
without limitation thereto, salary, incentive compensation, sick leave, and
vacation pay.
(j) If the payments and benefits provided under this
Agreement to Executive, either alone or with other payments and benefits, would
constitute "excess parachute payments" as defined in Section 280G of the
Internal Revenue Code of 1986, as amended ("Code"), then the payments and other
benefits under this Agreement shall be reduced to the extent necessary so that
no portion thereof shall be subject to the excise tax imposed by Section 4999
of the Code. Either the Company or Executive may request a determination as to
whether the payments or benefits would constitute an excess parachute payment
and, if requested, such determination shall be made by independent tax counsel
selected by the Company and approved by Executive. At Executive's election and
to the extent not otherwise paid, Executive may determine the amount of cash
and/or elements of non-cash fringe benefits to reduce so that such payments and
benefits will not constitute excess parachute payments.
7. Non-Competition.
(a) The Executive hereby acknowledges that, during and solely
as a result of his employment by the Company, he has received and shall
continue to receive unique training and experience with respect to the design,
operation and marketing of electronic commerce software, systems and
processing, financial software products, systems, and services, and other
related matters, and access to confidential information and business and
professional contacts. In consideration of the special and unique
opportunities afforded to the Executive by the Company as a result of the
Executive's employment, as outlined in the previous sentence, and in
consideration of the Company's other promises contained in this Agreement, the
Executive hereby agrees that he will not during the term of this Agreement, any
extension hereof, and for a period of one year after termination of employment
with the Company, whether voluntary or involuntary or with or without cause:
(i) engage or participate, directly or indirectly,
either as principal, agent, employee, employer, consultant,
stockholder, or in any other individual or representative capacity
whatsoever, in the operation, management or ownership of any business,
firm, corporation, association, or other entity engaged in the design,
operation or marketing of electronic commerce software, systems and
processing, financial software products, systems, and services, or
any other business engaged in by the Company at any time during the
term of this Agreement, on the Termination Date, or during the
one-year period prior to the dates thereof, within the United States
and any other country in which the Company conducts substantial
business at such time or during such period; and,
(ii) directly or indirectly, for himself or in
conjunction with or on behalf of any other individual or entity,
solicit, divert, take away or endeavor to take away from the Company
any customer, account or employee of the Company at any time during
the term of this Agreement, as of the date of Executive's termination
of employment with the Company, or during the one-year period prior
to the dates thereof.
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(b) The period of time during which the Executive is subject
to the prohibitions contained in this Section 7 shall be extended by any length
of time during which the Executive is in violation of such prohibitions.
(c) The restrictions of this Section 7 shall not be violated
by the ownership by Executive of no more than 2% of the outstanding securities
of any company whose stock is traded on a national securities exchange or is
quoted in the Automated Quotation System of the National Association of
Securities Dealers (NASDAQ).
8. Confidential Information; Assignment of Inventions.
(a) As used herein, the term "Confidential Information"
includes, but is not limited to, all information and materials belonging to,
used by, or in the possession of the Company (i) which have been disclosed or
made known to, or have come into the possession of the Executive as a
consequence of or through Executive's relationship with the Company prior to or
after the date hereof, (ii) which are related to the Company's customers,
potential customers, suppliers, distributors, alliance partners, business
strategies or policies, financial or sales results, sales and management
techniques, marketing plans, research or development, reports, records,
software, systems, source or object code, software documentation or instruction
or user manuals, and (iii) which have not generally been made available to the
public (not including customers) by the Company pursuant to a specific
authorization in the ordinary course of business by the Company of the release
of such information to the public or otherwise published and released by the
Company to the general public. Notwithstanding the foregoing, Executive may
release Confidential Information, in each case only with prior notice to the
Company, if (1) required by law, (2) necessary to establish a lawful claim or
defense against the Company, (3) necessary to establish a lawful claim or
defense against a person or entity other than the Company, but only with the
permission, which shall not be unreasonably withheld, of the Company, or (4)
necessary to respond to process or appropriate governmental inquiry.
(b) Executive agrees:
(i) that Executive will promptly disclose and grant
and does hereby grant to the Company his entire right, title and
interest in and to all customer lists, discoveries, developments,
designs, improvements, inventions, formulae, software, documentation,
processes, techniques, know-how, patents, trade secrets and
trademarks, copyrights and all other data conceived, developed or
acquired by him during the period of his employment with the Company,
both prior to and after the execution of this Agreement, whether or
not patentable or registrable under copyright or similar statutes,
made or conceived or reduced to practice or learned by Executive,
either alone or jointly with others, that result from or are conceived
during the performance of tasks assigned to Executive by the Company
or result from use of property, equipment, or premises owned, leased
or contracted for by the Company ("Inventions"). Executive agrees to
execute and deliver, from time to time, such documents as may be
necessary or convenient to effectuate the transfer of such
Confidential Information to the Company and shall cooperate with and
assist the Company in every proper way (at the expense of the Company)
in obtaining and from time to time enforcing patents, copyrights,
trade secrets, other proprietary rights and protections relating to
Inventions in any and all countries;
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(ii) that Executive will during the term of this
Agreement and thereafter safeguard all Confidential Information and,
except as specifically permitted below, Executive will never disclose
or use for any purpose or benefit (other than for the purpose or
benefit of the Company) any Confidential Information;
(iii) that, except in connection with the ordinary
course of the Company's business, Executive will not, either during
the term of this Agreement or thereafter directly or indirectly,
disclose, disseminate or otherwise make known or provide any
Confidential Information, whether in original form or in duplicated or
copied form or extracts therefrom, and whether orally or in writing,
to any individual, partnership, company or other entity, unless the
Company has given its prior written consent thereto;
(iv) that, except in connection with the ordinary
course of the Company's business, Executive will not, either during
the term of this Agreement or thereafter, remove any Confidential
Information from the premises of the Company either in original form
or in duplicated or copied form or extracts therefrom; and that upon
any termination of Executive's employment by the Company, Executive
will immediately surrender to the Company, without request, all
Confidential Information, whether in original or duplicated or copied
form or extracts therefrom.
9. No Conflicts. Executive represents that the performance by
Executive of all the terms of this Agreement, as a former or continuing
employee of the Company does not and will not breach any agreement as to which
Executive or the Company is or was a party and which requires Executive to keep
any information in confidence or in trust. Executive has not entered into, and
will not enter into, any agreement either written or oral in conflict herewith.
10. Reasonableness of Restrictions. It is understood by and
between the parties hereto that the Executive's covenants set forth in Sections
7, 8 and 9 are essential elements of this Agreement, and that, but for the
agreement of the Executive to comply with such covenants, the Company would not
have agreed to enter into this Agreement. Executive acknowledges that the
restrictions contained in this Agreement are reasonable but should any
provisions of this Agreement be determined to be invalid, illegal or otherwise
unenforceable to its full extent, or if any such restriction is found by a
court of competent jurisdiction to be unreasonable under applicable law, then
the restriction shall be enforced to the maximum extent permitted by law, and
the parties hereto hereby consent and agree that such scope of protection, time
or geographic area (or any one of them, as the case may be) shall be modified
accordingly in any proceeding brought to enforce such restriction. Executive
acknowledges that the validity, legality and enforceability of the other
provisions shall not be affected thereby, and that the existence of any claim
or cause of action of the Executive against the Company, whether predicated on
this Agreement, or otherwise, shall not constitute a defense to the enforcement
by the Company of such covenants.
11. Remedies; Venue; Process.
(a) The Executive hereby acknowledges and agrees that the
Confidential Information disclosed to the Executive prior to and during the
term of this Agreement is of a special, unique and extraordinary character, and
that any breach of this Agreement will cause the Company irreparable injury and
damage, and consequently the Company shall be entitled, in addition to all
other remedies available to it, to injunctive and equitable relief to prevent
or cease a breach of Sections
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7, 8 or 9 of this Agreement without further proof of harm and entitlement;
that the terms of this Agreement, if enforced by the Company, will not unduly
impair Executive's ability to earn a living or pursue his vocation; and
further, that the Company may withhold compensation and benefits if Executive
fails to comply with this Agreement, without restricting the Company from other
legal and equitable remedies. The parties agree that the prevailing party
shall be entitled to all costs and expenses (including reasonable legal fees
and expenses) which it incurs in successfully enforcing this Agreement and in
prosecuting or defending any litigation (including appellate proceedings)
arising out of this Agreement.
(b) The parties agree that jurisdiction and venue in any
action brought pursuant to this Agreement to enforce its terms or otherwise
with respect to the relationships between the parties shall properly lie in the
Court of Common Pleas of Franklin County, Ohio, or in the United States
District Court for the Southern District of Ohio. Such jurisdiction and venue
is exclusive, except that the Company may bring suit in any jurisdiction and
venue where jurisdiction and venue would otherwise be proper if Executive has
breached Sections 7, 8 or 9 of this Agreement. The parties agree that they
will not object that any action commenced in the foregoing jurisdictions is
commenced in a forum non conveniens. The parties further agree that the
mailing by certified or registered mail, return receipt requested, of any
process required by any such court shall constitute valid and lawful service of
process against them, without the necessity for service by any other means
provided by statute or rule of court.
12. Withholding. The Company may withhold from any payments to be
made hereunder such amounts as it may be required to withhold under applicable
federal, state or other law, and transmit such withheld amounts to the
appropriate taxing authority.
13. Indemnity.
(a) Subject only to the exclusions set forth in Section 13(b)
hereof, the Company hereby agrees to hold harmless and indemnify Executive
against any and all expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by Executive in
connection with any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (excluding
an action by or in the right of the Company) to which Executive is, was or at
any time becomes a party, or is threatened to be made a party, by reason of the
fact that Executive is, was or at any time becomes a director, officer,
employee or agent of the Company, or is or was serving or at any time serves at
the request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise.
(b) No indemnity pursuant to Section 13(a) hereof shall be
paid by the Company:
(i) except to the extent the aggregate losses to be
indemnified hereunder exceed the amount of such losses for which the
Executive is indemnified pursuant to any directors and officers
liability insurance purchased and maintained by the Company;
(ii) in respect to remuneration paid to Executive if
it shall be determined by a final judgment or other final adjudication
that such remuneration was in violation of law;
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(iii) on account of any suit in which
judgment is rendered against Executive for an accounting of
profits made from the purchase or sale by Executive of
securities of the Company pursuant to the provisions of
Section 16(b) of the Securities Exchange Act of 1934 and
amendments thereto or similar provisions of any federal, state
or local statutory law;
(iv) on account of Executive's breach of any
provision of this Agreement;
(v) on account of Executive's act or omission being
finally adjudged to have been not in good faith or involving
intentional misconduct, a knowing violation of law, or grossly
negligent conduct; or
(vii) if a final decision by a Court having
jurisdiction in the matter shall determine that such indemnification
is not lawful.
(c) All agreements and obligations of the Company contained
herein shall continue during the period Executive is a director, officer,
employee or agent of the Company (or is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise) and shall continue
thereafter so long as Executive shall be subject to any possible claim or
threatened, pending or completed action, suit or proceeding, whether civil,
criminal or investigative, by reason of the fact that Executive was an officer
or director of the Company or serving in any other capacity referred to herein;
provided, however, that following the Termination Date, the Company shall have
no further obligation under this Section 13 in the event of a breach by
Executive of any of his continuing obligations under Sections 7 or 8 of this
Agreement.
(d) Promptly after receipt by Executive of notice of the
commencement of any action, suit or proceeding, Executive will, if a claim in
respect thereof is to be made against the Company under this Section 13, notify
the Company of the commencement thereof; but the omission so to notify the
Company will not relieve it from any liability which it may have to Executive
otherwise than under this Section 13. With respect to any such action, suit or
proceeding as to which Executive notifies the Company under this Section 13(d):
(i) The Company will be entitled to participate
therein at its own expense.
(ii) Except as otherwise provided below, to the
extent that it may wish, the Company jointly with any other
indemnifying party similarly notified will be entitled to assume the
defense thereof, with counsel selected by the Company. After notice
from the Company to Executive of its election so to assume the defense
thereof, the Company will not be liable to Executive under this
Section 13 for any legal or other expenses subsequently incurred by
Executive in connection with the defense thereof other than reasonable
costs of investigation or as otherwise provided below. Executive
shall have the right to employ his counsel in such action, suit or
proceeding but the fees and expenses of such counsel incurred after
notice from the Company of its assumption of the defense thereof shall
be at the expense of Executive, unless (A) the employment of counsel
by Executive has been authorized by the Company, or (B) the Company
shall not in fact have employed counsel to assume the defense of such
action, in each of which cases the fees and expenses of counsel shall
be at the expense of the Company. The Company shall not be entitled
to assume the defense of any action, suit or proceeding brought by or
on behalf of the Company.
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(iii) The Company shall not be liable to indemnify
Executive under this Agreement for any amounts paid in settlement of
any action or claim effected without its written consent. The Company
shall not settle in any manner which would impose any penalty or
limitation on Executive without Executive's written consent. Neither
the Company nor Executive will unreasonably withhold their consent to
any proposed settlement.
(e) Executive agrees that Executive will reimburse the
Company for all reasonable expenses paid by the Company in defending any civil
or criminal action, suit or proceeding against Executive in the event and only
to the extent that it shall be ultimately determined that Executive is not
entitled to be indemnified by the Company for such expenses under the
provisions of Section 145 of the Delaware General Corporation Law (the
"Delaware Statute"), the Company's By-laws, this Agreement or otherwise.
14. Assignment. This Agreement is personal to the Executive and
Executive may not assign or delegate any of his rights or obligations
hereunder. Subject to the foregoing, this Agreement shall be binding upon and
inure to the benefit of the respective parties hereto, their heirs, executors,
administrators, successors and assigns.
15. Waiver. The waiver by either party hereto of any breach or
violation of any provision of this Agreement by the other party shall not
operate as or be construed to be a waiver of any subsequent breach by such
waiving party.
16. Notices. Any and all notices required or permitted to be
given under this Agreement will be sufficient and deemed effective three (3)
days following deposit in the United States mail if furnished in writing and
sent by certified mail to Executive at:
Robert J. Lewis, III
4195 Treaddur Bay Lane
Norcross, GA 30092
and to the Company at:
Checkfree Corporation
8275 North High Street
Columbus, OH 43235
Attention: William C. Buckham,
Vice President of Administration and General Counsel
with a copy to:
Curtis A. Loveland, Esq.
Porter, Wright, Morris & Arthur
41 South High Street
Columbus, Ohio 43215
17. Governing Law. This Agreement shall be interpreted, construed
and governed according to the laws of the State of Ohio applicable to contracts
made and to be wholly performed
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within such state, except that the provisions of Section 13 hereof shall be
interpreted, construed and governed according to the Delaware Statute.
18. Amendment. This Agreement may be amended in any and every
respect by agreement in writing executed by both parties hereto.
19. Section Headings. Section headings contained in this
Agreement are for convenience only and shall not be considered in construing
any provision hereof.
20. Entire Agreement. This Agreement terminates, cancels and
supersedes all previous employment or other agreements relating to the
employment of Executive with the Company or any predecessor, written or oral,
and this Agreement contains the entire understanding of the parties with
respect to the subject matter of this Agreement. This Agreement was fully
reviewed and negotiated on behalf of each party and shall not be construed
against the interest of either party as the drafter of this Agreement.
EXECUTIVE ACKNOWLEDGES THAT, BEFORE SIGNING THIS AGREEMENT, HE HAS READ THE
ENTIRE AGREEMENT AND HAS THIS DAY RECEIVED A COPY HEREOF.
21. Severability. The invalidity or unenforceability of any one
or more provisions of this Agreement shall not affect the validity or
enforceability of any other provisions of this Agreement or parts thereof.
22. Survival. Sections 6 through 14 of this Agreement and this
Section 22 shall survive any termination or expiration of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
EXECUTIVE
/s/ Robert J. Lewis, III
-------------------------------
Robert J. Lewis, III
CHECKFREE CORPORATION
By: /s/ Peter J. Kight
-------------------------------
Peter J. Kight, President
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EXHIBIT 10(i)
CHECKFREE CORPORATION
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made this 9th day of
May, 1996, between CHECKFREE CORPORATION ("Checkfree"), a Delaware
corporation, and JAY N. WHIPPLE, III ("Executive").
RECITALS
A. Executive is currently President of Security APL, Inc.
("Security"), an Illinois corporation.
B. Checkfree is acquiring the stock of Security pursuant to the
Agreement and Plan of Merger, dated as of March 21, 1996, among Checkfree, ISC
Acquisition Corporation, an Ohio corporation and wholly owned subsidiary of
Checkfree ("Acquisition"), and Security (the "Merger Agreement"), whereby
Acquisition will merge with and into Security and Security will become a wholly
owned subsidiary of Checkfree (the "Subsidiary").
C. Checkfree desires to employ Executive, and Executive desires
to be employed by Checkfree and/or the Subsidiary on the terms and conditions
stated herein. (Checkfree and the Subsidiary are hereinafter collectively
referred to as the "Company").
STATEMENT OF AGREEMENT
In consideration of the foregoing, and of Executive's employment, the
parties agree as follows:
1. Employment. Checkfree hereby employs Executive and Executive
accepts such employment upon the terms and conditions hereinafter set forth to
become effective as of the date of this Agreement (the "Effective Time").
2. Duties.
(a) Executive shall be employed: (i) to serve as Executive
Vice President of Checkfree, and to serve as President for the Subsidiary,
subject to the authority and direction of the Board of Directors of Checkfree
or the Subsidiary, as the case may be; and (ii) to perform such other
comparable duties and responsibilities similar to those performed by Executive
prior hereto and exercise such other authority, perform such other or
additional duties and responsibilities and have such other or different title
(or have no title) as the Board of Directors of Checkfree or the Subsidiary
may, from time to time, prescribe. Executive's principal office for the
performance of duties and responsibilities hereunder shall be in the Chicago
metropolitan area.
(b) So long as employed under this Agreement, Executive
agrees to devote full time and efforts exclusively on behalf of the Company and
to competently, diligently and effectively discharge all duties of Executive
hereunder; provided, however, that Executive may continue to serve as a broker
and investment analyst for Jay N. Whipple, Inc., a broker-dealer firm,
consistent with his practice during the past 12 months and so long as such
activities do not interfere with full time employment hereunder and do not
violate the other provisions of this Agreement. Executive
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shall not be prohibited from engaging in such personal, charitable, or other
nonemployment activities as do not interfere with full time employment
hereunder and which do not violate the other provisions of this Agreement.
Executive further agrees to comply fully with all reasonable policies of the
Company as are from time to time in effect.
3. Compensation. As full compensation for all services rendered
to the Company pursuant to this Agreement, in whatever capacity rendered, the
Company shall pay to Executive a base salary (the "Basic Salary") of
$250,000.00 for the first year of employment under the terms of this Agreement.
In addition, for the initial year Executive will be entitled to receive
incentive compensation pursuant to the terms of plans adopted by the Board of
Directors that could increase compensation up to an additional 50% of the Basic
Salary based on the performance of businesses led by Executive. During the
second year of employment under the terms of this Agreement, the Company shall
pay Executive a Basic Salary of $175,000.00. In addition, for the second year,
Executive will be entitled to receive incentive compensation pursuant to the
terms of plans adopted by the Board of Directors that could increase
compensation up to an additional 100% of the Basic Salary based on the
performance of businesses led by Executive. The Basic Salary and bonus plans
for subsequent years shall be determined by the Company based upon the
businesses led by Executive, except that the Basic Salary shall not be less
than $175,000 annually. The Basic Salary shall be paid monthly or in other
more frequent installments, as determined by the Company.
4. Business Expenses. The Company shall promptly pay directly,
or reimburse Executive for, all business expenses to the extent such expenses
are paid or incurred by Executive during the term of employment in accordance
with Company policy in effect from time to time and to the extent such expenses
are reasonable and necessary to the conduct by Executive of the Company's
business and properly substantiated.
5. Fringe Benefits. During the term of this Agreement and
Executive's employment hereunder, the Company shall provide to Executive such
insurance, vacation, sick leave and other like benefits as are provided from
time to time to its other employees holding equivalent executive positions with
the Company in accordance with the policy of the Company as may be established
from time to time.
6. Term; Termination.
(a) Executive is employed by the Company "at will."
Executive's employment may be terminated at any time as provided in this
Section 6. For purposes of this Section 6, "Termination Date" shall mean the
date on which any notice period required under this Section 6 expires or, if no
notice period is specified in this Section 6, the effective date of the
termination referenced in the notice.
(b) Executive may terminate his employment upon giving at
least 30 days' advance written notice to the Company, and the Company will pay
Executive the earned but unpaid portion of Executive's Basic Salary through the
Termination Date. If Executive gives notice of termination hereunder, the
Company shall have the right to relieve Executive, in whole or in part, of his
duties under this Agreement and to advance the Termination Date from the date
set by Executive's notice to a date not less than 14 days from the receipt of
Executive's notice of termination.
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(c) The Company may terminate Executive's employment without
cause upon giving 30 days' advance written notice to Executive. If Executive's
employment is terminated without cause under this Section 6(c), the Company
will pay Executive the earned but unpaid portion of Executive's Basic Salary
through the Termination Date and will continue to pay Executive his Basic
Salary to the later of the second anniversary date of the Effective Time or six
months following the Termination Date (the "Severance Period"), and the Company
will provide executive level outplacement services by a firm selected and
contracted by the Company for up to six months following the Termination Date
(the "Outplacement Services"); provided, however, if Executive accepts other
employment during the Severance Period, the Company shall pay Executive's Basic
Salary and will provide the Outplacement Services until the first to occur of
the expiration of the Severance Period or the commencement of the other
employment.
(d) The Company may terminate Executive's employment upon a
determination by the Company that "good cause" exists for Executive's
termination and the Company serves written notice of such termination upon the
Executive. As used in this Agreement, the term "good cause" shall refer only
to any one or more of the following grounds:
(i) commission of an act of dishonesty, including,
but not limited to, misappropriation of funds or any property of the
Company;
(ii) engagement in activities or conduct clearly
injurious to the best interests or reputation of the Company;
(iii) refusal to perform his assigned duties and
responsibilities;
(iv) gross insubordination by the Executive;
(v) the clear violation of any of the material terms
and conditions of this Agreement or any written agreement or
agreements the Executive may from time to time have with the Company
(following 30-days' written notice from the Company specifying the
violation and Executive's failure to cure such violation within such
30-day period);
(vi) the Executive's substantial dependence, as
determined by the Board of Directors of the Company, on alcohol, or
any narcotic drug or other controlled or illegal substance; or
(vii) commission of a crime which is a felony, a
misdemeanor involving an act of moral turpitude, or a misdemeanor
committed in connection with his employment by the Company which
causes the Company a substantial detriment.
In the event of a termination under this Section 6(d), the Company will pay
Executive the earned but unpaid portion of Executive's Basic Salary through the
Termination Date. If any determination of substantial dependence under Section
6(d)(vi) is disputed by the Executive, the parties hereto agree to abide by the
decision of a panel of three physicians appointed in the manner as specified in
Section 6(e) of this Agreement.
(e) Executive's employment shall terminate upon the death or
permanent disability of Executive. For purposes hereof, "permanent
disability," shall mean the inability of the Executive,
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as determined by the Board of Directors of either Checkfree or the
Subsidiary, by reason of physical or mental illness to perform the
duties required of him under this Agreement for more than 180 days in
any one year period. Successive periods of disability, illness or
incapacity will be considered separate periods unless the later period
of disability, illness or incapacity is due to the same or related
cause and commences less than six months from the ending of the
previous period of disability. Upon a determination by the Board of
Directors of either Checkfree or the Subsidiary, that Executive's
employment shall be terminated under this Section 6(e), the respective
Board of Directors shall give the Executive 30 days' prior written
notice of the termination. If a determination of either Board of
Directors under this Section 6(e) is disputed by the Executive, the
parties agree to abide by the decision of a panel of three physicians.
Checkfree or the Subsidiary will select a physician, the Executive
will select a physician and the physicians selected by either
Checkfree or the Subsidiary and the Executive, will select a third
physician. The Executive agrees to make himself available for and
submit to examinations by such physicians as may be directed by
Checkfree or the Subsidiary. Failure to submit to any examination
shall constitute a breach of a material part of this Agreement.
(f) If a "Change in Control" shall have occurred, Executive
shall be entitled to the benefits described below if either Executive's
employment is terminated following a Change in Control for other than good
cause as specified in Section 6(d), or Executive terminates his employment upon
making a good faith determination that, following the Change in Control, the
Executive's employment status or employment responsibilities have been
materially and adversely affected thereby:
(i) Executive shall be entitled to the unpaid
portion of his Basic Salary plus credit for any vacation accrued but
not taken and the amount of any unpaid but earned bonus, incentive
compensation or any other benefit to which he is entitled under this
Agreement through the date of the termination as a result of a Change
in Control, plus two times Executive's "Average Annual Compensation"
during employment by the Company. For this purpose "Average Annual
Compensation" shall mean the average annual compensation from the
Company includible in Executive's gross income for the period
consisting of Executive's most recent five taxable years ending before
the date on which the Change in Control occurs.
(ii) At Executive's option, the amount payable under
Section 6(f)(i) shall be paid to him in one lump sum within 30 days
after termination of employment following a Change in Control or in 24
equal consecutive monthly payments commencing on the first day of the
month after termination of employment following a Change in Control.
(iii) The Company shall maintain for Executive's
benefit until the earlier of (y) 24 months after termination of
employment following a Change in Control, or (z) Executive's
commencement of full-time employment with a new employer, all life
insurance, medical, and health and accident plans or programs in which
Executive shall have been entitled to participate prior to termination
of employment following a Change in Control, provided Executive's
continued participation is permitted under the general terms of such
plans and programs after the Change in Control. In the event
Executive's participation in any such plan or program is not
permitted, the Company will provide directly the benefits to which
Executive would be entitled under such plans and programs.
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(g) Executive's benefits under Section 6(f) above
shall be payable to him as severance pay in consideration of his
services from the date hereof. Executive shall have no duty to
mitigate his damages by seeking other employment, and the Company
shall not be entitled to set off against amounts payable hereunder any
compensation which Executive may receive from future employment.
(h) For purposes of Section 6(f), a "Change in Control" shall
be deemed to have occurred if and when, after the date hereof, (i) Checkfree,
or in one or more transactions 50% or more of its assets or earning power, is
acquired by or combined with a person, partnership, corporation, trust or other
entity ("Person") and less than a majority of the outstanding voting shares of
the Person surviving such transaction (or the ultimate parent of the surviving
Person) after such acquisition or combination is owned, immediately after the
acquisition or combination, by the owners of the voting shares of Checkfree
outstanding immediately prior to such acquisition or combination, unless the
acquisition or combination is approved by the Board of Directors of Checkfree
prior to any change to the Board of Directors that would constitute a "Change
of Control" under clause (ii) of this Section 6(h); or (ii) during any period
of two consecutive years during the term of this Agreement, individuals who at
the beginning of such period constitute the Board of Directors of Checkfree
cease for any reason to constitute at least a majority thereof, unless the
election of each director who was not a director at the beginning of such
period has been approved in advance by directors representing at least
two-thirds of the directors then in office who were directors at the beginning
of the period.
(i) Upon any termination or expiration of this Agreement or
any cessation of Executive's employment hereunder, the Company shall have no
further obligations under this Agreement and no further payments shall be
payable by the Company to the Executive, except as provided in Sections 6(c),
6(d) and 6(f) above and except as required under any benefit plans or
arrangements maintained by the Company and applicable to Executive at the time
of such termination, expiration or cessation of Executive's employment,
including, without limitation thereto, salary, incentive compensation, sick
leave, and vacation pay.
(j) If the payments and benefits provided under this
Agreement to Executive, either alone or with other payments and benefits, would
constitute "excess parachute payments" as defined in Section 280G of the
Internal Revenue Code of 1986, as amended ("Code"), then the payments and other
benefits under this Agreement shall be reduced to the extent necessary so that
no portion thereof shall be subject to the excise tax imposed by Section 4999
of the Code. Either the Company or Executive may request a determination as to
whether the payments or benefits would constitute an excess parachute payment
and, if requested, such determination shall be made by independent tax counsel
selected by the Company and approved by Executive. At Executive's election and
to the extent not otherwise paid, Executive may determine the amount of cash
and/or elements of non-cash fringe benefits to reduce so that such payments and
benefits will not constitute excess parachute payments.
7. Non-Competition.
(a) Executive hereby acknowledges that, during and solely as a
result of his employment by the Company, he has received and shall continue to
receive unique training and experience with respect to the design, operation
and marketing of electronic commerce software, systems and processing,
financial software products, systems, and services, and other related matters,
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and access to confidential information and business and professional contacts.
In consideration of the special and unique opportunities afforded to Executive
by the Company as a result of Executive's employment, as outlined in the
previous sentence, and in consideration of the Company's other promises
contained in this Agreement, Executive hereby agrees that he will not during
the term of this Agreement, and in connection with a termination of employment
with the Company, whether voluntary or involuntary or with or without cause,
during the period from the Termination Date to the date ending on the later of
the second anniversary of the Effective Time or six months after the
Termination Date:
(i) engage or participate, directly or indirectly,
either as principal, agent, employee, employer, consultant,
stockholder, or in any other individual or representative capacity
whatsoever, in the operation, management or ownership of any business,
firm, corporation, association, or other entity engaged in the design,
operation or marketing of electronic commerce software, systems and
processing, financial software products, systems, and services, or
any other business engaged in by the Company at any time during the
term of this Agreement, on the Termination Date, or during the
one-year period prior to the date thereof, within the United States
and any other country in which the Company conducts substantial
business at such time or during such period; and,
(ii) directly or indirectly, for himself or in
conjunction with or on behalf of any other individual or entity,
solicit, divert, take away or endeavor to take away from the Company
any customer, account or employee of the Company at any time during
the term of this Agreement, as of the date of Executive's termination
of employment with the Company, or during the one-year period prior to
the date thereof.
(b) The period of time during which Executive is subject to
the prohibitions contained in this Section 7 shall be extended by any length of
time during which Executive is in violation of such prohibitions.
(c) The restrictions of this Section 7 shall not be violated
by the ownership by Executive of no more than 2% of the outstanding securities
of any company whose stock is traded on a national securities exchange or is
quoted in the Automated Quotation System of the National Association of
Securities Dealers (NASDAQ).
8. Confidential Information; Assignment of Inventions.
(a) As used herein, the term "Confidential Information"
includes, but is not limited to, all information and materials belonging to,
used by, or in the possession of the Company (i) which have been disclosed or
made known to, or have come into the possession of the Executive as a
consequence of or through Executive's relationship with the Company prior to or
after the date hereof, (ii) which are related to the Company's customers,
potential customers, suppliers, distributors, alliance partners, business
strategies or policies, financial or sales results, sales and management
techniques, marketing plans, research or development, reports, records,
software, systems, source or object code, software documentation or instruction
or user manuals, and (iii) which have not generally been made available to the
public (not including customers) by the Company pursuant to a specific
authorization in the ordinary course of business by the Company of the release
of such information to the public or otherwise published and released by the
Company to the general public. Notwithstanding the foregoing, Executive may
release Confidential
6
7
Information, in each case only with prior notice to the Company, if
(1) required by law, (2) necessary to establish a lawful claim or
defense against the Company, (3) necessary to establish a lawful claim
or defense against a person or entity other than the Company, but only
with the permission, which shall not be unreasonably withheld, of the
Company, or (4) necessary to respond to process or appropriate
governmental inquiry.
(b) Executive agrees:
(i) that Executive will promptly disclose and grant
and does hereby grant to the Company his entire right, title and
interest in and to all customer lists, discoveries, developments,
designs, improvements, inventions, formulae, software, documentation,
processes, techniques, know-how, patents, trade secrets and
trademarks, copyrights and all other data conceived, developed or
acquired by him during the period of his employment with the Company,
both prior to and after the execution of this Agreement, whether or
not patentable or registrable under copyright or similar statutes,
made or conceived or reduced to practice or learned by Executive,
either alone or jointly with others, that result from or are conceived
during the performance of tasks assigned to Executive by the Company
or result from use of property, equipment, or premises owned, leased
or contracted for by the Company ("Inventions"). Executive agrees to
execute and deliver, from time to time, such documents as may be
necessary or convenient to effectuate the transfer of such
Confidential Information to the Company and shall cooperate with and
assist the Company in every proper way (at the expense of the Company)
in obtaining and from time to time enforcing patents, copyrights,
trade secrets, other proprietary rights and protections relating to
Inventions in any and all countries;
(ii) that Executive will during the term of this
Agreement and thereafter safeguard all Confidential Information and,
except as specifically permitted below, Executive will never disclose
or use for any purpose or benefit (other than for the purpose or
benefit of the Company) any Confidential Information;
(iii) that, except in connection with the ordinary
course of the Company's business, Executive will not, either during
the term of this Agreement or thereafter directly or indirectly,
disclose, disseminate or otherwise make known or provide any
Confidential Information, whether in original form or in duplicated or
copied form or extracts therefrom, and whether orally or in writing,
to any individual, partnership, company or other entity, unless the
Company has given its prior written consent thereto;
(iv) that, except in connection with the ordinary
course of the Company's business, Executive will not, either during
the term of this Agreement or thereafter, remove any Confidential
Information from the premises of the Company either in original form
or in duplicated or copied form or extracts therefrom; and that upon
any termination of Executive's employment by the Company, Executive
will immediately surrender to the Company, without request, all
Confidential Information, whether in original or duplicated or copied
form or extracts therefrom.
9. No Conflicts. Executive represents that the performance by
Executive of all the terms of this Agreement, as a former or continuing
employee of the Company does not and will not breach any agreement as to which
Executive or the Company is or was a party and which requires Executive
7
8
to keep any information in confidence or in trust. Executive has not
entered into, and will not enter into, any agreement either written or
oral in conflict herewith.
10. Reasonableness of Restrictions. It is understood by and
between the parties hereto that Executive's covenants set forth in Sections 7,
8 and 9 are essential elements of this Agreement, and that, but for the
agreement of Executive to comply with such covenants, the Company would not
have agreed to enter into this Agreement. Executive acknowledges that the
restrictions contained in this Agreement are reasonable but should any
provisions of this Agreement be determined to be invalid, illegal or otherwise
unenforceable to its full extent, or if any such restriction is found by a
court of competent jurisdiction to be unreasonable under applicable law, then
the restriction shall be enforced to the maximum extent permitted by law, and
the parties hereto hereby consent and agree that such scope of protection, time
or geographic area (or any one of them, as the case may be) shall be modified
accordingly in any proceeding brought to enforce such restriction. Executive
acknowledges that the validity, legality and enforceability of the other
provisions shall not be affected thereby, and that the existence of any claim
or cause of action of Executive against the Company, whether predicated on this
Agreement, or otherwise, shall not constitute a defense to the enforcement by
the Company of such covenants.
11. Remedies; Venue; Process.
(a) Executive hereby acknowledges and agrees that the
Confidential Information disclosed to the Executive prior to and during the
term of this Agreement is of a special, unique and extraordinary character, and
that any breach of this Agreement will cause the Company irreparable injury and
damage, and consequently the Company shall be entitled, in addition to all
other remedies available to it, to injunctive and equitable relief to prevent
or cease a breach of Sections 7, 8 or 9 of this Agreement without further proof
of harm and entitlement; that the terms of this Agreement, if enforced by the
Company, will not unduly impair Executive's ability to earn a living or pursue
his vocation; and further, that the Company may withhold compensation and
benefits if Executive fails to comply with this Agreement, without restricting
the Company from other legal and equitable remedies. The parties agree that
the prevailing party shall be entitled to all costs and expenses (including
reasonable legal fees and expenses) which it incurs in successfully enforcing
this Agreement and in prosecuting or defending any litigation (including
appellate proceedings) arising out of this Agreement.
(b) The parties agree that jurisdiction and venue in any
action brought pursuant to this Agreement to enforce its terms or otherwise
with respect to the relationships between the parties shall properly lie in the
Court of Common Pleas of Franklin County, Ohio, or in the United States
District Court for the Southern District of Ohio. Such jurisdiction and venue
is exclusive, except that the Company may bring suit in any jurisdiction and
venue where jurisdiction and venue would otherwise be proper if Executive has
breached Sections 7, 8 or 9 of this Agreement. The parties agree that they
will not object that any action commenced in the foregoing jurisdictions is
commenced in a forum non conveniens. The parties further agree that the
mailing by certified or registered mail, return receipt requested, of any
process required by any such court shall constitute valid and lawful service of
process against them, without the necessity for service by any other means
provided by statute or rule of court.
8
9
12. Withholding. The Company may withhold from any payments to be
made hereunder such amounts as it may be required to withhold under applicable
federal, state or other law, and transmit such withheld amounts to the
appropriate taxing authority.
13. Indemnity.
(a) Subject only to the exclusions set forth in Section 13(b)
hereof, the Company hereby agrees to hold harmless and indemnify Executive
against any and all expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by Executive in
connection with any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (including
an action by or in the right of the Company) to which Executive is, was or at
any time becomes a party, or is threatened to be made a party, by reason of the
fact that Executive is, was or at any time becomes a director, officer,
employee or agent of the Company, or is or was serving or at any time serves at
the request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise to the
fullest extent authorized and permitted by the provisions of Section 145 of the
Delaware General Corporation Law (the "Delaware Statute"), or by any amendment
thereof or other statutory provisions authorizing or permitting such
indemnification which is adopted after the date hereof.
(b) No indemnity pursuant to Section 13(a) hereof shall be
paid by the Company:
(i) except to the extent the aggregate losses to be
indemnified hereunder exceed the amount of such losses for which the
Executive is indemnified pursuant to any directors and officers
liability insurance purchased and maintained by the Company;
(ii) in respect to remuneration paid to Executive if
it shall be determined by a final judgment or other final adjudication
that such remuneration was in violation of law;
(iii) on account of any suit in which judgment is
rendered against Executive for an accounting of profits made from the
purchase or sale by Executive of securities of the Company pursuant to
the provisions of Section 16(b) of the Securities Exchange Act of 1934
and amendments thereto or similar provisions of any federal, state or
local statutory law;
(iv) on account of Executive's breach of any
provision of this Agreement;
(v) on account of Executive's act or omission being
finally adjudged to have been not in good faith or involving
intentional misconduct or a knowing violation of law; or
(vii) if a final decision by a Court having
jurisdiction in the matter shall determine that such indemnification
is not lawful.
(c) All agreements and obligations of the Company contained
herein shall continue during the period Executive is a director, officer,
employee or agent of the Company (or is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise) and shall continue
thereafter so long as Executive shall be subject to any possible claim or
threatened, pending or completed action, suit or proceeding, whether civil,
criminal or investigative, by reason of the fact that Executive was an
9
10
officer or director of the Company or serving in any other capacity
referred to herein; provided, however, that following the Termination
Date, the Company shall have no further obligation under this Section
13 in the event of a breach by Executive of any of his continuing
obligations under Sections 7 or 8 of this Agreement.
(d) Promptly after receipt by Executive of notice of the
commencement of any action, suit or proceeding, Executive will, if a claim in
respect thereof is to be made against the Company under this Section 13, notify
the Company of the commencement thereof; but the omission so to notify the
Company will not relieve it from any liability which it may have to Executive
otherwise than under this Section 13. With respect to any such action, suit or
proceeding as to which Executive notifies the Company under this Section 13(d):
(i) The Company will be entitled to participate
therein at its own expense.
(ii) Except as otherwise provided below, to the
extent that it may wish, the Company jointly with any other
indemnifying party similarly notified will be entitled to assume the
defense thereof, with counsel selected by the Company and reasonably
satisfactory to Executive. After notice from the Company to Executive
of its election so to assume the defense thereof, the Company will not
be liable to Executive under this Section 13 for any legal or other
expenses subsequently incurred by Executive in connection with the
defense thereof other than reasonable costs of investigation or as
otherwise provided below. Executive shall have the right to employ
his counsel in such action, suit or proceeding but the fees and
expenses of such counsel incurred after notice from the Company of its
assumption of the defense thereof shall be at the expense of
Executive, unless (A) the employment of counsel by Executive has been
authorized by the Company, (B) Executive shall have reasonably
concluded that there may be a conflict of interest between the Company
and Executive in the conduct of the defense of such action, or (C) the
Company shall not in fact have employed counsel to assume the defense
of such action, in each of which cases the fees and expenses of
counsel shall be at the expense of the Company. The Company shall not
be entitled to assume the defense of any action, suit or proceeding
brought by or on behalf of the Company or as to which Executive shall
have made the conclusion provided for in clause (B) above.
(iii) The Company shall not be liable to indemnify
Executive under this Agreement for any amounts paid in settlement of
any action or claim effected without its written consent. The Company
shall not settle in any manner which would impose any penalty or
limitation on Executive without Executive's written consent. Neither
the Company nor Executive will unreasonably withhold their consent to
any proposed settlement.
(e) Executive agrees that Executive will reimburse the
Company for all reasonable expenses paid by the Company in defending any civil
or criminal action, suit or proceeding against Executive in the event and only
to the extent that it shall be ultimately determined that Executive is not
entitled to be indemnified by the Company for such expenses under the
provisions of the Delaware Statute, the Company's By-Laws, this Agreement or
otherwise.
14. Assignment. This Agreement is personal to Executive and
Executive may not assign or delegate any of his rights or obligations
hereunder. Subject to the foregoing, this Agreement shall
10
11
be binding upon and inure to the benefit of the respective parties
hereto, their heirs, executors, administrators, successors and
assigns.
15. Waiver. The waiver by either party hereto of any breach or
violation of any provision of this Agreement by the other party shall not
operate as or be construed to be a waiver of any subsequent breach by such
waiving party.
16. Notices. Any and all notices required or permitted to be
given under this Agreement will be sufficient and deemed effective three (3)
days following deposit in the United States mail if furnished in writing and
sent by certified mail to Executive at:
Jay N. Whipple, III
275 Mayflower Road
Lake Forest, IL 60045
and to the Company at:
Checkfree Corporation
8275 North High Street
Columbus, OH 43235
Attention: William C. Buckham,
Vice President of Administration and General Counsel
with a copy to:
Curtis A. Loveland, Esq.
Porter, Wright, Morris & Arthur
41 South High Street
Columbus, Ohio 43215
17. Governing Law. This Agreement shall be interpreted, construed
and governed according to the laws of the State of Ohio applicable to contracts
made and to be wholly performed within such state, except that the provisions
of Section 13 hereof shall be interpreted, construed and governed according to
the Delaware Statute.
18. Amendment. This Agreement may be amended in any and every
respect by agreement in writing executed by both parties hereto.
19. Section Headings. Section headings contained in this
Agreement are for convenience only and shall not be considered in construing
any provision hereof.
20. Entire Agreement. This Agreement terminates, cancels and
supersedes all previous employment or other agreements relating to the
employment of Executive with the Company or any predecessor, written or oral,
and this Agreement contains the entire understanding of the parties with
respect to the subject matter of this Agreement. This Agreement was fully
reviewed and negotiated on behalf of each party and shall not be construed
against the interest of either party as the drafter of this Agreement.
EXECUTIVE ACKNOWLEDGES THAT, BEFORE SIGNING THIS
11
12
AGREEMENT, HE HAS READ THE ENTIRE AGREEMENT AND HAS THIS DAY RECEIVED A COPY
HEREOF.
21. Severability. The invalidity or unenforceability of any one
or more provisions of this Agreement shall not affect the validity or
enforceability of any other provisions of this Agreement or parts thereof.
22. Survival. Sections 6 through 14 of this Agreement and this
Section 22 shall survive any termination or expiration of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
EXECUTIVE:
/s/ Jay N. Whipple, III
------------------------------------------
Jay N. Whipple, III
CHECKFREE CORPORATION
By: /s/ Mark A. Johnson
------------------------------------------
Mark A. Johnson, Executive Vice President
12
5
3-MOS
DEC-31-1995
JAN-01-1996
MAR-31-1996
29,680,052
17,424,797
32,494,581
2,211,339
0
82,688,923
36,594,613
6,622,694
177,216,232
36,233,620
6,965,946
390,143
0
0
124,795,969
177,216,232
0
21,688,760
0
29,235,698
93,757,586
0
156,042
(100,431,421)
(3,318,832)
(97,112,589)
0
(364,374)
0
(97,476,963)
(2.81)
(2.81)
5
3-MOS
DEC-31-1995
JAN-01-1995
MAR-31-1995
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
10,992,653
0
11,385,348
0
0
166,153
(278,458)
(125,307)
(153,151)
0
0
0
(153,151)
(.01)
(.01)
5
12-MOS
DEC-31-1995
JAN-01-1995
DEC-31-1995
63,839,854
21,012,141
3,421,745
32,661
0
90,466,710
18,140,586
5,620,897
115,641,928
8,675,130
7,157,465
328,648
0
0
98,996,216
115,641,928
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
