EMPLOYMENT AGREEMENT
RETENTION AGREEMENT
 
 
 
 
CHECKFREE CORPORATION
 
                              EMPLOYMENT AGREEMENT
 
         THIS EMPLOYMENT AGREEMENT is made this 1st day of May, 1997, (the
"Agreement") between CheckFree Corporation ("CheckFree"), a Delaware
corporation, and Peter J. Kight (the "Executive").
 
                                    RECITALS
 
         A.       Executive is currently employed as an executive of CheckFree
and 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 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.  The Company hereby employs Executive and
Executive accepts such employment upon the terms and conditions hereinafter set
forth to become effective on May 1, 1997 (the "Effective Time").
 
         2.       Duties.
 
                   (a) Executive shall be employed: (i) to serve as Chairman,
President, and Chief Executive Officer, 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.
 
 
<PAGE>   2
                  (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 $300,000 per year (the "Basic Salary"), payable monthly or in other more
frequent installments, as determined by the Company. The Basic Salary shall
increase to $375,000 on July 1, 1997, and thereafter may be increased, but not
decreased, from time to time, by the Board of Directors. Additionally,
Executive shall receive a stock option to purchase 200,000 shares of the
Company's common stock under the Company's 1995 Stock Option Plan at a purchase
price per share of $14.75, the closing price per share of the Company's common
stock on the Nasdaq National Market on May 1, 1997, expiring on the tenth
anniversary of the Effective Time. Such option will vest 100% on May 1, 2003
subject to Executive's continued employment by the Company; provided, however,
if Executive's employment is terminated without cause pursuant to Section 6(b)
or in connection with a Change in Control (as defined below) pursuant to
Section 6(e), the option will vest 100% on the Termination Date; provided,
further, 20% of the option shares will vest and become exercisable for each
fiscal year from 1998 through 2002 for which the Company's net income is 80% or
more of the Company's budgeted net income for that fiscal year, or the
Company's net loss is 120% or less of the Company's budgeted net loss for that
fiscal year, as the case may be, such earlier vesting and exercisability to be
effective upon the date of the Company's public announcement of its net income
or net loss for each such fiscal year. Furthermore, 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.
 
         6. Term; Termination.
 
            (a) The Company shall employ the Executive, and the Executive
accepts such employment, for an initial term commencing on the date of this
Agreement and ending on June 30, 2002. Thereafter, this Agreement shall be
extended automatically on each July 1 for an additional twelve-month period.
Executive's employment may be terminated at any time as provided in this
 
 
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<PAGE>   3
 
 
 
 
 
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) 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(b), 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 and
any incentive compensation under and consistent with plans adopted by the
Company prior to the Termination Date until the later of June 30, 2002 or the
second anniversary of 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 any incentive compensation until the first to occur of the
expiration of the Severance Period or the commencement of the other employment.
 
            (c) 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
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 a material and substantive 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 which in fact result in
         material and substantial injury to the Company;
 
                (iii) refusal to perform his assigned duties and
         responsibilities after receipt by Executive of written detailed notice
         and reasonable opportunity to cure;
 
                (iv) gross insubordination by Executive, which shall consist
         only of a willful refusal to comply with a lawful written directive to
         Executive issued pursuant to a duly authorized resolution adopted by
         the Company;
 
                (v) the clear violation of any of the material terms and
         conditions of this Agreement or any written agreement or agreements
         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) 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
 
 
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<PAGE>   4
 
 
 
 
 
         substance which materially and substantially prevents Executive from
         performing his duties hereunder; or
 
                (vii) the final and unappealable conviction of Executive of a
         crime which is a felony or 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(c), 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(c)(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(d) of this Agreement.
 
            (d) 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 180 days
from the ending of the previous period of disability. Upon a determination by
the Board of Directors of CheckFree that Executive's employment shall be
terminated under this Section 6(d), the Board of Directors shall give Executive
30 days' prior written notice of the termination. If a determination of the
Board of Directors under this Section 6(d) is disputed by Executive, the parties
agree to abide by the decision of a panel of three physicians. CheckFree will
select a physician, Executive will select a physician and the physicians
selected by CheckFree and Executive will select a third physician. Executive
agrees to make himself available for and submit to examinations by such
physicians as may be directed by the Company. Failure to submit to any
examination shall constitute a breach of a material part of this Agreement.
 
            (e) 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(c), or Executive terminates his employment upon making a good faith
determination that, following the Change in Control, 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 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 the greater
         of two times Executive's "Average Annual Compensation" or an amount
         equal to Executive's Basic Salary and incentive compensation at the
         100% targeted level from the Termination Date until June 30, 2002.  For
         this purpose "Average Annual Compensation" shall mean the average
         annual compensation from the Company includible in Executive's gross
         income for
 
 
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<PAGE>   5
 
 
 
 
 
         the period consisting of Executive's most recent five taxable years
         ending before the date on which the Change in Control occurs,
         exclusive of income attributable to the exercise of stock options.
 
                (ii) At Executive's option, the amount payable under Section
         6(e)(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.
 
                (iv) All outstanding stock options issued to Executive shall
         become 100% vested and exercisable in accordance with such governing
         stock option agreements and plans.
 
            (f) Executive's benefits under Section 6(e) 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.
 
            (g) For purposes of Section 6(e), a "Change in Control" of the
Company shall be deemed to have occurred as of the first day that any one or
more of the following conditions shall have been satisfied:
 
                (i) Any Person (other than a Person in control of the Company as
         of the Effective Date, or other than a trustee or other fiduciary
         holding securities under an employee benefit plan of the Company, or a
         company owned directly or indirectly by the stockholders of the Company
         in substantially the same proportions as their ownership of voting
         securities of the Company) becomes the Beneficial Owner, directly or
         indirectly, of securities of the Company representing a majority of the
         combined voting power of the Company's then outstanding securities;
 
                (ii) The stockholders of the Company approve: (x) a plan of
         complete liquidation of the Company; or (y) an agreement for the sale
         or disposition of all or substantially all the Company's assets; or (z)
         a merger, consolidation, or reorganization of the Company with or
         involving any other corporation, other than a merger, consolidation,
 
 
                                       5
 
 
<PAGE>   6
 
 
 
 
 
         or reorganization that would result in the voting securities of the
         Company outstanding immediately prior thereto continuing to represent
         (either by remaining outstanding or by being converted into voting
         securities of the surviving entity) at least a majority of the
         combined voting power of the voting securities of the Company (or such
         surviving entity) outstanding immediately after such merger,
         consolidation, or reorganization; or
 
                (iii) 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.
 
         However, in no event shall a "Change in Control" be deemed to have
occurred, with respect to Executive, if Executive is part of a purchasing group
which consummates the Change in Control transaction. Executive shall be deemed
"part of a purchasing group" for purposes of the preceding sentence if
Executive is an equity participant or has been identified as a potential equity
participant in the purchasing company or group except for: (i) passive
ownership of less than three percent (3%) of the stock of the purchasing
company; or (ii) ownership of equity participation in the purchasing company or
group which is otherwise not significant, as determined prior to the Change in
Control by a majority of the nonemployee continuing directors.
 
         For purposes of this definition of Change in Control, "Person" shall
have the meaning ascribed to such term in Section 3(a)(9) of the 1934 Act, and
used in Section 13(d) and 14(d) thereof, including a "group" as defined in
Section 13(d) thereof, and "Beneficial Owner" shall have the meaning ascribed
to such term in Rule 13d-3 of the General Rules and Regulations under the 1934
Act.
 
            (h) 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 Executive, except as provided in Sections 6(b), 6(c) and 6(e) 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.
 
            (i) After June 30, 2002, 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
 
 
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<PAGE>   7
 
 
 
 
 
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, 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, 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 one-year
         period prior to the Termination Date, 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.
 
            (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).
 
 
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<PAGE>   8
 
 
 
 
 
         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 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 Executive's 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;
 
 
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<PAGE>   9
 
 
 
 
 
                (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 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 of this Agreement 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 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
 
 
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<PAGE>   10
 
 
 
 
 
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
Superior Court of Fulton County, Georgia, or in the United States District Court
for the Northern District of Georgia. 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 Executive is
         indemnified pursuant to any directors and officers liability insurance
         purchased and maintained by the Company;
 
 
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<PAGE>   11
 
 
 
 
 
                 (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, 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
 
 
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<PAGE>   12
 
 
 
 
 
         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.
 
                 (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 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:
 
                  Peter J. Kight
                  9300 Chandler Bluff
                  Alpharetta, Georgia 30022
 
 
 
                                       12
 
 
<PAGE>   13
 
 
 
 
 
and to the Company at:
 
                  CheckFree Corporation
                  4411 East Jones Bridge Road
                  Norcross, Georgia 30092
                  Attention: 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 Georgia 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.
 
 
                                       13
 
 
<PAGE>   14
 
 
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
 
                                               EXECUTIVE:
 
                                               /s/ Peter J. Kight
                                               ---------------------------------
                                               Peter J. Kight
 
                                               CHECKFREE CORPORATION
 
                                               By: /s/ Peter F. Sinisgalli
                                                   -----------------------------
                                               Its: Chief Operating Officer
                                                    ----------------------------
 
 
 
                                       14

Top of the Document

 

Exhibit 10.2

 

RETENTION AGREEMENT

BETWEEN

CHECKFREE CORPORATION

AND

 

 


 

RETENTION AGREEMENT

 

 

 

 

 

1. Certain Definitions

 

 

1

 

 

 

 

 

 

2. Change in Control

 

 

2

 

 

 

 

 

 

3. Acceleration of Incentive Awards

 

 

3

 

 

 

 

 

 

4. Employment Period

 

 

3

 

 

 

 

 

 

5. Terms of Employment

 

 

3

 

 

 

 

 

 

(a) Position and Duties

 

 

3

 

 

 

 

 

 

(b) Compensation

 

 

4

 

 

 

 

 

 

6. Termination of Employment

 

 

5

 

 

 

 

 

 

(a) Death or Disability

 

 

5

 

 

 

 

 

 

(b) Cause

 

 

6

 

 

 

 

 

 

(c) Good Reason

 

 

6

 

 

 

 

 

 

(d) Notice of Termination

 

 

7

 

 

 

 

 

 

(e) Date of Termination

 

 

8

 

 

 

 

 

 

7. Obligations of the Company upon Termination

 

 

8

 

 

 

 

 

 

(a) Termination by Executive for Good Reason; Termination by the Company other than for Cause or Disability

 

 

8

 

 

 

 

 

 

(b) Death or Disability

 

 

9

 

 

 

 

 

 

(c) Cause; Other than for Good Reason

 

 

9

 

 

 

 

 

 

8. Non-exclusivity of Rights

 

 

9

 

 

 

 

 

 

9. Full Settlement; No Mitigation

 

 

9

 

 

 

 

 

 

10. Costs of Enforcement

 

 

10

 

 

 

 

 

 

11. Certain Additional Payments by the Company

 

 

10

 

 

 

 

 

 

12. Successors

 

 

12

 

 

 

 

 

 

13. Code Section 409A

 

 

13

 

 

 

 

 

 

14. Miscellaneous

 

 

14

 

 

 

 

 

 

(a) Governing Law

 

 

14

 

 

 

 

 

 

(b) Captions

 

 

14

 

 

 

 

 

 

(c) Amendments

 

 

14

 

 

 

 

 

 

(d) Notices

 

 

14

 

 

 

 

 

 

(e) Severability

 

 

14

 

 

 

 

 

 

(f) Withholding

 

 

14

 

 


 

 

 

 

 

 

(g) Waivers

 

 

14

 

 

 

 

 

 

(h) Status Before and After Change in Control Date

 

 

14

 

 

 

 

 

 

(i) Indemnification

 

 

15

 

 

 

 

 

 

(j) Related Agreements

 

 

15

 

 

 

 

 

 

(k) Action by the Company or the Board

 

 

15

 

 

 

 

 

 

(k) Counterparts

 

 

15

 

ii


 

RETENTION AGREEMENT

     AGREEMENT by and between CheckFree Corporation, a Delaware corporation (the “Company”) and                      (“Executive”), dated as of the ___day of ___, 2007.

     The Board of Directors of the Company (the “Board”), has determined that it is in the best interests of the Company and its stockholders to assure that the Company will have the continued dedication of Executive, notwithstanding the possibility, threat or occurrence of a Change in Control (as defined below) of the Company. The Board believes it is imperative to diminish the inevitable distraction of Executive by virtue of the personal uncertainties and risks created by a threatened or pending Change in Control and to encourage Executive’s full attention and dedication to the Company currently and in the event of any threatened or pending Change in Control, and to provide Executive with compensation and benefits arrangements upon a Change in Control. Therefore, in order to accomplish these objectives, the Board has caused the Company to enter into this Agreement.

     NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

     1. Certain Definitions.

          (a) The “Change in Control Date” shall mean the first date during the Protection Period (as defined in Section l(b)) on which a Change in Control (as defined in Section 2) occurs. Anything in this Agreement to the contrary notwithstanding, if a Change in Control occurs and if Executive’s employment with the Company is terminated (either by the Company without Cause or by Executive for Good Reason, as provided later in this Agreement) within six (6) months prior to the date on which the Change in Control occurs, and if it is reasonably demonstrated by Executive that such termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect a Change in Control or (ii) otherwise arose in connection with or anticipation of a Change in Control, then for all purposes of this Agreement the “Change in Control Date” shall mean the date immediately prior to the date of such termination of employment.

          (b) The “Protection Period” shall mean the period commencing on the date hereof and ending on the second anniversary of the date hereof; provided, however, that commencing on the date one year after the date hereof, and on each annual anniversary of such date (such date and each annual anniversary thereof shall be hereinafter referred to as the “Renewal Date”), unless previously terminated, the Protection Period shall be automatically extended so as to terminate two years from such Renewal Date, unless at least 60 days prior to the Renewal Date the Company shall give notice to Executive that the Protection Period shall not be so extended.

 


 

          (c) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and includes a reference to the underlying proposed or final regulations, as applicable.

     2. Change in Control. For the purposes of this Agreement, a “Change in Control” shall mean the occurrence of any of the following events:

          (a) individuals who, at the beginning of any twelve-month period, constitute the Board (the “Incumbent Directors”) cease for any reason to constitute at least a majority of such Board during such period, provided that any person becoming a director during such period and whose election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors then on the Board shall be an Incumbent Director; provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest with respect to the election or removal of directors (“Election Contest”) or other actual or threatened solicitation of proxies or consents by or on behalf of any “person” (such term for purposes of this definition being as defined in Section 3(a)(9) of the Exchange Act of 1934, as amended (“Exchange Act”), and as used in Section 13(d)(3) and 14(d)(2) of the Exchange Act) other than the Board (“Proxy Contest”), including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest, shall be deemed an Incumbent Director; or

          (b) any person is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of either (A) 30% or more of the then-outstanding shares of common stock of the Company (“Company Common Stock”) or (B) securities of the Company representing 30% or more of the combined voting power of the Company’s then outstanding securities eligible to vote for the election of directors (the “Company Voting Securities”); or

          (c) the consummation of a reorganization, merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or a subsidiary (a “Reorganization”), or the sale or other disposition of all or substantially all of the Company’s assets (a “Sale”) or the acquisition of assets or stock of another corporation (an “Acquisition”), unless immediately following such Reorganization, Sale or Acquisition: (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the outstanding Company Common Stock and outstanding Company Voting Securities immediately prior to such Reorganization, Sale or Acquisition beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Reorganization, Sale or Acquisition (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets or stock either directly or through one or more subsidiaries, the “Surviving Corporation”) in substantially the same proportions as their ownership, immediately prior to such Reorganization, Sale or Acquisition, of the outstanding Company Common Stock and the outstanding Company

-2-


 

Voting Securities, as the case may be, and (B) no person (other than (i) the Company or any subsidiary of the Company, (ii) the Surviving Corporation or its ultimate parent corporation, or (iii) any employee benefit plan or related trust sponsored or maintained by any of the foregoing) is the beneficial owner, directly or indirectly, of 30% or more of the total common stock or 30% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Surviving Corporation, and (C) at least a majority of the members of the board of directors of the Surviving Corporation were Incumbent Directors at the time of the Board’s approval of the execution of the initial agreement providing for such Reorganization, Sale or Acquisition (any Reorganization, Sale or Acquisition which satisfies all of the criteria specified in (A), (B) and (C) above shall be deemed to be a “Non-Qualifying Transaction”).

     3. Acceleration of Incentive Awards. In the event that a Change in Control occurs during the Protection Period, all then-outstanding equity awards issued to Executive pursuant to the Company’s incentive plans shall become immediately and fully vested and exercisable, and/or all restrictions thereon shall lapse, notwithstanding any contrary waiting or vesting periods specified in the Company’s incentive plans or the applicable award agreement.

     4. Employment Period. The Company hereby agrees to continue Executive in its employ (or in the employ of CheckFree Services Corporation, as the case may be, the actual employing company being referred to herein as the “Employer”), and Executive hereby agrees to remain in the employ of the Employer subject to the terms and conditions of this Agreement, for the period commencing on the Change in Control Date and ending eighteen months following such date (the “Employment Period”).

     5. Terms of Employment.

          (a) Position and Duties.

               (i) During the Employment Period, (A) Executive’s position (including status, offices, titles and reporting requirements), authority, duties and responsibilities with the Company shall be at least commensurate in all material respects with the most significant of those held, exercised and assigned at any time during the 120-day period immediately preceding the Change in Control Date, and (B) Executive’s services shall be performed at the location where Executive was employed immediately preceding the Change in Control Date or any office or location less than 50 miles from such location.

               (ii) During the Employment Period, and excluding any periods of vacation and sick leave to which Executive is entitled, Executive agrees to devote reasonable attention and time during normal business hours to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to Executive hereunder, to use Executive’s reasonable best efforts to perform faithfully and efficiently such responsibilities. During the Employment Period it shall not be a violation of this Agreement for Executive to (A) serve on corporate, civic or charitable

-3-


 

boards or committees, (B) deliver lectures, fulfill speaking engagements or teach at educational institutions and (C) manage personal investments, so long as such activities do not significantly interfere with the performance of Executive’s responsibilities as an employee of the Employer in accordance with this Agreement. It is expressly understood and agreed that to the extent that any such activities have been conducted by Executive prior to the Change in Control Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Change in Control Date shall not thereafter be deemed to interfere with the performance of Executive’s responsibilities to the Employer.

          (b) Compensation.

               (iBase Salary. During the Employment Period, Executive shall receive an annual base salary (“Annual Base Salary”) at a rate at least equal to the rate of base salary in effect on the date of this Agreement or, if greater, on the Change in Control Date, paid or payable (including any base salary which has been earned but deferred) to Executive by the Company and its affiliated companies. During the Employment Period, the Annual Base Salary shall be reviewed no more than 12 months after the last salary increase awarded to Executive prior to the Change in Control Date and thereafter at least annually. Any increase in Annual Base Salary shall not serve to limit or reduce any other obligation to Executive under this Agreement. Annual Base Salary shall not be reduced after any such increase and the term Annual Base Salary as used in this Agreement shall refer to Annual Base Salary as so increased. As used in this Agreement, the term “affiliated companies” shall include any company controlled by, controlling or under common control with the Company.

               (iiAnnual Bonus. In addition to Annual Base Salary, Executive shall be awarded for each fiscal year ending during the Employment Period an annual target bonus opportunity in cash at least equal to Executive’s target bonus opportunity for the last full fiscal year prior to the Change in Control Date (annualized in the event that Executive was not employed for the whole of such fiscal year) (the “Target Annual Bonus”).

               (iii) Incentive, Savings and Retirement Plans. During the Employment Period, Executive shall be entitled to participate in all incentive, savings and retirement plans, practices, policies and programs applicable generally to other peer executives of the Company and its affiliated companies, but in no event shall such plans, practices, policies and programs provide Executive with incentive opportunities, savings opportunities and retirement benefit opportunities, in each case, less favorable, in the aggregate, than the most favorable of those provided by the Company and its affiliated companies for Executive under such plans, practices, policies and programs as in effect at any time during the 120-day period immediately preceding the Change in Control Date or if more favorable to Executive, those provided generally at any time after the Change in Control Date to other peer executives of the Company and its affiliated companies.

-4-


 

               (iv) Welfare Benefit Plans. During the Employment Period, Executive and/or Executive’s eligible dependents, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company and its affiliated companies to the extent applicable generally to other peer executives of the Company and its affiliated companies, but in no event shall such plans, practices, policies and programs provide Executive with benefits which are less favorable, in the aggregate, than the most favorable of such plans, practices, policies and programs in effect for Executive at any time during the 120-day period immediately preceding the Change in Control Date or, if more favorable to Executive, those provided generally at any time after the Change in Control Date to other peer executives of the Company and its affiliated companies.

               (v) Expenses, Fringe Benefits and Paid Time Off. During the Employment Period, Executive shall be entitled to expense reimbursement, fringe benefits and paid time off in accordance with the most favorable plans, practices, programs and policies of the Company and its affiliated companies in effect for Executive at any time during the 120-day period immediately preceding the Change in Control Date or, if more favorable to Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies.

     6. Termination of Employment.

          (a) Death or Disability. Executive’s employment shall terminate automatically upon Executive’s death during the Employment Period. If the Employer determines in good faith that the Disability of Executive has occurred during the Employment Period (pursuant to the definition of Disability set forth below), it may give to Executive written notice of its intention to terminate Executive’s employment. In such event, Executive’s employment with the Employer shall terminate effective on the 30th day after receipt of such written notice by Executive (the “Disability Effective Date”), provided that, within the 30 days after such receipt, Executive shall not have returned to full-time performance of Executive’s duties. For purposes of this Agreement, “Disability” has the meaning assigned such term in the Company’s long-term disability plan, from time to time in effect. In the absence of such a plan, “Disability” shall mean the inability of Executive, as determined by the Employer, to perform the essential functions of his regular duties and responsibilities, with or without reasonable accommodation, due to a medically determinable physical or mental impairment that has lasted (or can reasonably be expected to last) for a period of 12 consecutive months. At the request of Executive or his personal representative, the Employer’s determination that the Disability of Executive has occurred shall be certified by two physicians mutually agreed upon by Executive, or his personal representative, and the Employer. Failing such independent certification (if so requested by Executive), Executive’s termination shall be deemed a termination by the Employer without Cause and not a termination by reason of his Disability.

-5-


 

          (b) Cause. The Employer may terminate Executive’s employment during the Employment Period for Cause. For purposes of this Agreement, “Cause” shall mean:

               (i) the willful and continued failure of Executive to perform substantially Executive’s duties with the Employer (other than any such failure resulting from incapacity due to physical or mental illness, and specifically excluding any failure by Executive, after reasonable efforts, to meet performance expectations), after a written demand for substantial performance is delivered to Executive by Board which specifically identifies the manner in which such Board believes that Executive has not substantially performed Executive’s duties;

               (ii) the conviction of Executive of any criminal act that constitutes a felony or that involves fraud, theft, misappropriation, embezzlement, or dishonesty;

               (iii) material breach by Executive of the Company’s written code of conduct or code of ethics; or

               (iv) conduct by Executive in Executive’s service with the Company that is grossly inappropriate and demonstrably likely to lead to material injury to the Company, as determined by the Board acting reasonably and in good faith;

provided, however, that in the case of clauses (i), (iii) and (iv) above, such conduct shall not constitute Cause unless the Employer shall have delivered to Executive notice setting forth with specificity (x) the conduct deemed to qualify as Cause, (y) reasonable action, if any, that would remedy such objection, and (z) if such conduct is of a nature that may be remedied, a reasonable time (not less than thirty (30) days) within which Executive may take such remedial action, and Executive shall not have taken such specified remedial action to the satisfaction of the Board or the Compensation Committee of the Board within such specified reasonable time.

          (c) Good Reason. Executive’s employment may be terminated by Executive for Good Reason. For purposes of this Agreement, “Good Reason” shall mean, without the written consent of Executive:

               (ia diminution in Executive’s Base Salary and Target Annual Bonus, as in effect immediately prior to the Change in Control Date, as the same may be increased from time to time;

               (ii) a diminution in Executive’s annual long-term incentive awards, as compared to the last annual grant of long-term incentive awards to Executive occurring prior to the Change in Control Date, measured with respect to the grant date value of such awards;

               (iii) a diminution in the Executive’s authority, duties, or responsibilities (including a diminution due to the change in Executive’s duties or responsibilities resulting from the Company or its successor becoming a private company), or the authority, duties, or

-6-


 

responsibilities of the supervisor to whom the Executive is required to report (including a requirement that the Executive report to a corporate officer or employee instead of reporting directly to the Board or a committee of the Board), excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by Executive;

               (iv) a material diminution in the budget over which the Executive retains authority;

               (v) the Company’s requiring Executive to be based at any office or location other than as provided in Section 5(a)(i)(B) hereof; or

               (vi) any other action or inaction that constitutes a material breach of this Agreement by the Company following the Change in Control Date.

          Good Reason shall not include Executive’s death or Disability. Executive’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason hereunder. A termination by Executive shall not constitute termination for Good Reason unless Executive shall first have delivered to the Employer, within 90 days of the occurrence of the first event giving rise to Good Reason, written notice setting forth with specificity the occurrence deemed to give rise to a right to terminate for Good Reason, and there shall have passed a reasonable time (not less than 30 days and not more than 60 days) within which the Employer may take action to correct, rescind or otherwise substantially reverse the occurrence supporting termination for Good Reason as identified by Executive. Executive’s separation for Good Reason must occur within two years following the initial occurrence of an event giving rise to Good Reason. In the event of a separation following such two-year period, no “Good Reason” shall be deemed to exist.

          (d) Notice of Termination. Any termination by the Employer or Executive shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 14(d) of this Agreement. For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated, and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date. The failure by Executive or the Employer to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of Executive or the Employer, respectively, hereunder or preclude Executive or the Employer, respectively, from asserting such fact or circumstance in enforcing Executive’s or the Employer’s rights hereunder.

-7-


 

          (e) Date of Termination. “Date of Termination” means (i) if the Executive’s employment is terminated by the Executive for Good Reason, the date specified in the Notice of Termination, which may not be less than 60 days after the date of delivery of the Notice of Termination; provided that the Employer may specify any earlier Date of Termination, (ii) if the Executive’s employment is terminated by the Employer for Cause, the date specified in the Notice of Termination, which in the case of a termination for Cause as defined in Section 6(b) may not be less than 30 days after the date of delivery of the Notice of Termination, (iii) if the Executive’s employment is terminated by the Employer other than for Cause or Disability, the Date of Termination shall be the date on which the Employer notifies the Executive of such termination or any later date specified in such notice, and (iv) if the Executive’s employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Effective Date, as the case may be.

     7. Obligations of the Company upon Termination. The payments and provision of benefits under this Section 7 shall be subject to Section 13 of this Agreement.

          (a) Termination by Executive for Good Reason; Termination by the Company other than for Cause, Death or Disability. If, during the Employment Period the Employer shall terminate Executive’s employment other than for Cause, death or Disability, or Executive shall terminate employment for Good Reason, then:

               (ithe Company shall pay to Executive in a single lump sum cash payment within 30 days after the Date of Termination, the aggregate of the following amounts:

                    A. the sum of (1) Executive’s Annual Base Salary through the Date of Termination to the extent not theretofore paid and (2) any accrued vacation pay to the extent not theretofore paid (the sum of the amounts described in clauses (1) and (2) shall be hereinafter referred to as the “Accrued Obligations”); and

                    B. a severance payment (the “Severance Payment”) equal to two times the sum of Executive’s Annual Base Salary and Target Annual Bonus for the year in which the Date of Termination occurs; and

               (ii) subject to Section 13 hereof, if Executive elects to continue participation in any group medical, dental, vision and/or prescription drug plan benefits to which Executive and/or Executive’s eligible dependents would be entitled under Section 4980B of the Code (COBRA), then during the period that Executive is entitled to such coverage under COBRA (the “Coverage Period”), the Company shall pay the excess of (i) the COBRA cost of such coverage, over (ii) the amount that Executive would have had to pay for such coverage if he had remained employed during the Coverage Period and paid the active employee rate for such coverage, provided, however, that the cost so paid on behalf of Executive by the Company will be deemed taxable income to Executive to the extent required by law, and provided, further, that if Executive becomes eligible to

-8-


 

receive group health benefits under a program of a subsequent employer or otherwise (including coverage available to Executive’s spouse), the Company’s obligation to pay the cost of health coverage as described herein shall cease, except as otherwise provided by law; and

               (iii) subject to Section 13 and 14(j) hereof, to the extent not theretofore paid or provided, the Company shall timely pay or provide to Executive any other amounts or benefits required to be paid or provided or which Executive is eligible to receive under any plan, program, policy or practice or contract or agreement of the Company and its affiliated companies (such other amounts and benefits shall be hereinafter referred to as the “Other Benefits”).

          (b) Death or Disability. If Executive’s employment is terminated by reason of Executive’s death or Disability during the Employment Period, this Agreement shall terminate without further obligations to Executive or Executive’s legal representatives under this Agreement, other than the obligation to pay the Accrued Benefits. Executive or Executive’s estate and/or beneficiaries shall be entitled to receive benefits under such plans, programs, practices and policies relating to death or disability benefits, if any, and any Other Benefits (as defined in Section 7(a)(iii) hereof) as are applicable to Executive on the Date of Termination, in each case to the extent then unpaid.

          (c) Cause; Other than for Good Reason. If Executive’s employment shall be terminated for Cause during the Employment Period, or if Executive voluntarily terminates employment during the Employment Period other than for Good Reason, this Agreement shall terminate without further obligations to Executive under this Agreement other than the obligation to pay the Accrued Benefits. Executive shall be entitled to receive any Other Benefits (as defined in Section 7(a)(iii) hereof) as are applicable to Executive on the Date of Termination, to the extent then unpaid.

     8. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit Executive’s continuing or future participation in any plan, program, policy or practice provided by the Company or any of its affiliated companies and for which Executive may qualify, nor, subject to Section 14(j), shall anything herein limit or otherwise affect such rights as Executive may have under any contract or agreement with the Company or any of its affiliated companies. Amounts which are vested benefits or which Executive is otherwise entitled to receive under any plan, policy, practice or program of or any contract or agreement with the Company or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement.

     9. Full Settlement; No Mitigation. The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against Executive or others. In

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no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not Executive obtains other employment.

     10. Costs of Enforcement. In any action taken in good faith relating to the enforcement of this Agreement or any provision herein, Executive shall be entitled to prompt reimbursement of all reasonable legal fees and expenses incurred by him in enforcing or establishing his rights thereunder, whether suit be brought or not, and whether or not incurred in arbitration, trial, bankruptcy or appellate proceedings, but only if and to the extent Executive is successful in asserting such rights. In addition, subject to Section 11 hereof, Executive shall be entitled to prompt reimbursement of all reasonable legal fees and expenses, if any, incurred by him in connection with any tax audit or proceeding to the extent attributable to the application of Section 4999 of the Code to any payment or benefit hereunder. All such payments shall be made within 10 business days after delivery of Executive’s respective written requests for payment accompanied with such evidence of fees and expenses incurred as the Company may reasonably require, but in no event shall any such payment be made later than the last day of the Executive’s tax year following the Executive’s tax year in which the expense was incurred. Notwithstanding the foregoing, the Company’s reimbursement obligations pursuant to this Section 10 shall be limited to expenses incurred during Executive’s lifetime, and the amount of expenses eligible for reimbursement during Executive’s taxable year shall not affect the expenses eligible for reimbursement in any other taxable year. Executive’s right to reimbursement pursuant to this Section 10 shall not be subject to liquidation or exchange for another benefit.

     11. Certain Additional Payments by the Company.

          (a) Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 11) (a “Payment”) would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.

          (b) Subject to the provisions of Section 11(c), all determinations required to be made under this Section 11, including whether and when a Gross-Up

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Payment is required and the amount of such Gross-Up Payment and the assumptions to be used in arriving at such determination, shall be made by a nationally recognized accounting firm selected by the Company and reasonably acceptable to the Executive (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and Executive within 15 business days of the receipt of notice from Executive that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, Executive shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 11, shall be paid by the Company to Executive within five business days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon the Company and Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 11(c) and Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of Executive, but no later than December 31 of the year after the year in which Executive remits the Excise Tax.

          (c) Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies Executive in writing prior to the expiration of such period that it desires to contest such claim, Executive shall:

               (i) give the Company any information reasonably requested by the Company relating to such claim,

               (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company,

               (iii) cooperate with the Company in good faith in order effectively to contest such claim, and

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               (iv) permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation of the foregoing provisions of this Section 11(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to Executive, on an interest-free basis and shall indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

          (d) If, after the receipt by Executive of an amount advanced by the Company pursuant to Section 11(c), Executive becomes entitled to receive any refund with respect to such claim, Executive shall (subject to the Company’s complying with the requirements of Section 11(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by Executive of an amount advanced by the Company pursuant to Section 11(c), a determination is made that Executive shall not be entitled to any refund with respect to such claim and the Company does not notify Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

     12. Successors.

          (a) This Agreement is personal to Executive and without the prior written consent of the Company shall not be assignable by Executive otherwise than by

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will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by Executive’s legal representatives.

          (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

          (c) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.

     13. Code Section 409A. Notwithstanding anything in this Agreement to the contrary, if any amount or benefit that would constitute non-exempt “deferred compensation” for purposes of Section 409A of the Code would otherwise be payable or distributable under this Agreement by reason of Executive’s separation from service during a period in which he is a Specified Employee (as defined below), then, subject to any permissible acceleration of payment by the Company under Treas. Reg. Section 1.409A-3(j)(4)(ii) (domestic relations order), (j)(4)(iii) (conflicts of interest), or (j)(4)(vi) (payment of employment taxes):

          (a) if the payment or distribution is payable in a lump sum, Executive’s right to receive payment or distribution of such non-exempt deferred compensation will be delayed until the earlier of Executive’s death or the first day of the seventh month following Executive’s separation from service; and

          (b) if the payment or distribution is payable over time, the amount of such non-exempt deferred compensation that would otherwise be payable during the six- month period immediately following Executive’s separation from service will be accumulated and Executive’s right to receive payment or distribution of such accumulated amount will be delayed until the earlier of Executive’s death or the first day of the seventh month following Executive’s separation from service, whereupon the accumulated amount will be paid or distributed to Executive and the normal payment or distribution schedule for any remaining payments or distributions will resume.

     For purposes of this Agreement, the term “Specified Employee” has the meaning given such term in Code Section 409A and the final regulations thereunder, provided, however, that, as permitted in such final regulations, the Company’s Specified Employees and its application of the six-month delay rule of Code Section 409A(a)(2)(B)(i) shall be determined in accordance with rules adopted by the Board, which shall be applied consistently with respect to all nonqualified deferred compensation arrangements of the Company, including this Agreement.

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     14. Miscellaneous.

          (a) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without reference to principles of conflict of laws.

          (b) Captions. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.

          (c) Amendments. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.

          (d) Notices. All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

 

 

 

 

 

 

 

If to Executive:

 

the address set forth below under Executive’s signature

 

 

 

 

 

 

 

If to the Company:

 

CheckFree Corporation
 
4411 East Jones Bridge Road
Norcross, Georgia
30092
Attention: General Counsel

or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee.

          (e) Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and the Agreement shall be construed in all respects as if the invalid or unenforceable provision were omitted.

          (f) Withholding. The Company may withhold from any amounts payable under this Agreement such federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

          (g) Waivers. Executive’s or the Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right Executive or the Company may have hereunder, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

          (h) Status Before and After Change in Control Date. Executive and the Company acknowledge that, except as may otherwise be provided under any other written agreement between Executive and the Company, the employment of Executive by

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the Company is “at will” and, subject to Section 1(a) hereof, Executive’s employment and/or this Agreement may be terminated by either Executive or the Company at any time prior to the Change in Control Date, in which case Executive shall have no further rights under this Agreement. From and after the Change in Control Date this Agreement shall supersede any other agreement between the parties with respect to the subject matter hereof, except as otherwise provided in Section 14(j) hereof.

          (i) Indemnification. Executive shall be entitled to the benefits of the indemnity provided by the Company’s certificate of incorporation and bylaws, by agreement, or otherwise immediately prior to Change in Control Date, or any greater rights to indemnification thereafter provided to executive officers of the Company, and any subsequent changes to the certificate of incorporation, bylaws, agreement, or otherwise reducing the indemnity granted to such Executive shall not affect the rights granted hereunder. The Company may not reduce these indemnity benefits confirmed to Executive hereunder without the written consent of Executive.

          (j) Related Agreements. During the Protection Period, this Agreement supersedes all prior written or unwritten severance pay plans, practices or programs offered or established by the Company or the Employer except for rights to severance compensation and severance benefits under individual agreements between the Company and Executive (the “Other Agreements”), which rights shall be deemed to have been satisfied only to the extent that comparable benefits are provided under this Agreement. This Section 14(j) is intended to avoid duplication of payments and benefits under this Agreement and under the Other Agreements, and this Section shall be interpreted as being intended to ensure that, in circumstances in which the Executive is entitled to severance pay and other benefits under this Agreement and under the Other Agreements, the total severance amounts and value of benefits received by the Executive will be equal to the total amounts and benefits provided under the agreement that provides for the greatest aggregate amounts and benefits, but the Executive shall not be entitled to duplication of such amounts and benefits.

          (k) Action by the Company or the Board. Whenever this Agreement calls for action to be taken by the Company, such action may be taken by the Board or by the Compensation Committee of the Board. Whenever this Agreement calls for action to be taken by the Board, or if the Board takes action on behalf of the Company for purposes of this Agreement, such action shall be taken by a majority vote of the members of the Board, excluding Executive if Executive is then a member of the Board.

          (l) Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

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          IN WITNESS WHEREOF, Executive has hereunto set Executive’s hand and, pursuant to the authorization from its Board of Directors, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Executive]

 

 

 

 

 

 

 

 

 

 

 

Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CHECKFREE CORPORATION

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

 

 

 

 

 

Name:

 

 

 

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

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