Employment Agreement - H&S Holding Co. and Ronald V. Congemi
EMPLOYMENT AGREEMENT
AGREEMENT (this "Agreement") made as of March 1, 1999 by and
between H&S Holding Company, a Delaware corporation (the "Company"), and Ronald
V. Congemi (the "Executive").
WHEREAS, Star System, Inc., a Delaware corporation ("Star"),
and HONOR Technologies, Inc., a Delaware corporation ("Honor"), have entered
into an Agreement and Plan of Merger, dated as of October 2, 1998, as amended by
the First Amendment, dated February 4, 1999 (the "Merger Agreement"), pursuant
to which Star and Honor will become wholly owned subsidiaries (together with any
other subsidiaries of the Company, the "Subsidiaries") of the Company as of the
Closing Date (as defined in the Merger Agreement);
WHEREAS, the Company wishes to employ the Executive as Pres-
ident and Chief Executive Officer of the Company and its Subsidiaries;
WHEREAS, the Executive is willing to commit himself to serve
the Company and its Subsidiaries, on the terms and conditions herein provided;
and
WHEREAS, in order to effect the foregoing, the Company and the
Executive wish to enter into an employment agreement on the terms and conditions
set forth below.
NOW, THEREFORE, in consideration of the premises and the
respective covenants and agreements of the parties herein contained, and
intending to be legally bound hereby, the parties hereto agree as follows:
1. Employment. The Company hereby agrees to employ the
Executive, and the Executive hereby agrees to serve the Company, on the terms
and conditions set forth herein.
2. Term. The term of this Agreement (the "Term") shall
commence on the Closing Date (hereinafter, the "Effective Date") and end on the
last day of the month during which the fifth anniversary of the Closing Date
occurs (the "Initial Termination Date"), provided that, one year prior to the
Initial Termination Date, and each subsequent anniversary thereof during the
Term, the Term shall be automatically extended for an additional one year period
unless either party hereto gives notice to the other party 120 days prior to
such time that such party does not wish to so extend the Term.
3. Position and Duties. (a) The Executive shall serve as
President and Chief Executive Officer of the Company, and shall report only to
the Board of Directors of the Company (the "Board"). The Executive shall devote
substantially all his working time and efforts to the business and affairs of
the Company and its Subsidiaries, provided that, during the Term, it shall not
be a violation of this Agreement for the Executive to (i) serve on corporate,
civic, industry or charitable boards or committees, (ii) deliver lectures,
fulfill speaking engagements or teach at educational institutions, and (iii)
manage personal investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as an
employee of the Company in accordance with this Agreement. It is expressly
understood and agreed that the Executive may conduct activities that are
generally accepted for an executive in his position.
<PAGE>
(b) Executive shall be appointed to serve as a member of the
Board as of the Effective Date. In addition, during the Term, Executive shall be
nominated for election to the Board at each meeting of stockholders at which
directors are to be elected, and the Company shall use its best efforts to
provide for Executive's election to the Board of Directors at each such meeting.
Executive also agrees that effective upon notice being provided of his
termination of employment with the Company, he shall immediately resign from his
position as a member of the Board.
4. Compensation and Related Matters.
(a) Salary. During the period of the Executive's employment
hereunder, the Company shall pay to the Executive a salary at an annual rate of
$300,000 ("Base Salary"). The Base Salary shall be payable in accordance with
the Company's normal payroll practices, shall be reviewed at least annually and
may be increased (but not decreased) upon review; provided, that the Base Salary
shall be increased effective as of the first day of February during each
calendar year of the Term by a percentage not less than the percentage increase
in the Consumer Price Index for the Orlando metropolitan area for the
immediately preceding calendar year.
(b) Annual Bonus. The Company shall provide to the Executive
an annual target bonus opportunity of no less than 70% of Base Salary, based
upon the achievement of such corporate target performance goals as may be
established from time to time for this purpose by the Board of Directors of the
Company (the "Board"). The Executive shall also be entitled to a preestablished
percentage of Base Salary if corresponding minimum or maximum performance goals
are achieved.
(c) Long-Term Incentive Plan. Executive shall be entitled to
participate in Honor's existing Long-Term Incentive Plan, generally on terms in
effect as of the Closing Date, at a level commensurate with Executive's position
as President and Chief Executive Officer.
(d) Deferred Compensation. The Company shall continue
in effect Executive's existing deferred compensation and salary continuation
arrangements maintained for his benefit while an employee of Star.
(e) Life Insurance. The Company shall provide Executive with
term life insurance with a face value not less than three times Executive's Base
Salary as from time to time in effect.
(f) Long-Term Disability. The Company shall provide Executive
with long-term disability benefits in an amount not less than 80% of Executive's
Base Salary as from time to time in effect.
(g) Automobile Allowance. The Company shall provide Exec-
utive with an automobile allowance in an amount not less than $750 per month.
(h) Post-Retiree Medical Benefits. Following Executive's
retirement or other termination of employment with the Company under any
circumstances and for any reason, the Company shall, until Executive attains age
65, continue to provide Executive coverage under its group health plan (or shall
purchase equivalent coverage outside of such plan) at the same level of coverage
and benefits applicable from time to time to senior executives of the Company,
provided, that the Company may require Executive to pay the standard employee
group rate for such coverage, and provided, further, that such benefits shall be
reduced to the extent comparable benefits are actually received by or made
available to the Executive by a subsequent employer. Any such benefits actually
received by or made available to the Executive shall be promptly reported to the
Company by the Executive.
(i) Country Club Dues. The Company shall reimburse Executive
for the initiation fee (not to exceed $25,000) and the annual dues (not to
exceed $6,000 per year) at a country club of Executive's choice in the Orlando
metropolitan area.
<PAGE>
(j) Moving Expenses, Housing Costs. The Company shall
reimburse Executive for the cost of all moving expenses incurred by Executive in
relocating to the Orlando Metropolitan area, on terms consistent with Honor's
policy regarding moving expenses prior to the Closing Date, provided, that the
Company shall in addition provide Executive with a tax gross-up in an amount
sufficient to offset in full any federal or state income tax liability resulting
from such reimbursement. The Company shall also reimburse Executive for the
monthly association fees payable with respect to his existing condominium in San
Diego, on the understanding that such condominium shall be utilized for
necessary business travel.
(k) Other Benefits. The Executive shall be eligible, while
performing services hereunder, to participate in or to receive benefits, at a
level commensurate with the Executive's position with the Company and its
Subsidiaries, under all other incentive bonus, fringe benefit and other employee
benefit (including both welfare and retirement benefit) plans and arrangements
made available by the Company or its Subsidiaries to similarly situated
executives, subject to and on a basis consistent with the terms, conditions and
overall administration of such plans and arrangements.
(l) Expenses. The Executive shall be entitled to receive
prompt reimbursement for all reasonable expenses incurred by the Executive in
performing services hereunder, including all expenses of travel and living
expenses while away from home on business or at the request of and in the
service of the Company, provided that such expenses are incurred and accounted
for in accordance with the policies and procedures established by the Company.
(m) Vacations. The Executive shall be entitled to 25 vacation
days in each calendar year, and to compensation in respect of earned but unused
vacation days, determined in accordance with the Company's vacation practices
and policy. The Executive shall also be entitled to all paid holidays given by
the Company to its executives.
(n) Services Furnished. The Company shall furnish the
Executive with office space, secretarial support and such other facilities and
services, while the Executive is performing services hereunder, as shall be
suitable to the Executive's position and adequate for the performance of his
duties as set forth in Section 3 hereof.
5. Offices. The Executive agrees to serve without additional
compensation, if elected or appointed thereto, as a director of any of the
Company's direct or indirect subsidiaries or affiliates, provided that the
Executive is indemnified for serving in any and all such capacities on a basis
no less favorable than is currently provided to similarly situated executives of
the Company.
6. Termination. The termination of the Executive's
employment hereunder under the following circumstances shall not constitute a
breach of this Agreement:
(a) Death. The Executive's employment hereunder shall
terminate upon his death.
(b) Disability. If, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall have
been absent from his duties hereunder on a full-time basis for the entire
period of 180 consecutive days, and within 30 days after written notice of
termination is given (which may occur before or after the end of such 180-day
period) shall not have returned to the performance of his duties hereunder on
a full-time basis, the Company may terminate the Executive's employment
hereunder.
<PAGE>
(c) Cause. The Company may terminate the Executive's
employment hereunder for Cause. For purposes of this Agreement, the Company
shall have "Cause" to terminate the Executive's employment hereunder upon (i)
the Executive's conviction of or guilty plea to the commission of an act or acts
constituting a felony under the laws of the United States or any state thereof,
(ii) action by the Executive toward the Company involving personal dishonesty,
theft or fraud in connection with the Executive's duties as an officer of the
Company and its Subsidiaries and intended to result in personal gain, or (iii)
the Executive's willful failure to abide by or follow lawful, reasonable written
directions of the Board, which does not cease within thirty (30) business days
after written notice regarding such refusal has been given to the Executive by
the Company. For purposes of this Section 7(c), no act or failure to act by the
Executive shall be deemed "willful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that the act or
failure to act was in the best interest of the Company. Notwithstanding the
foregoing, the Company may terminate the Executive's employment for "Cause" only
upon a vote of at least three-quarters of the members of the Board.
(d) Termination by the Executive for Good Reason. The
Executive may terminate his employment hereunder for Good Reason. For purposes
of this Agreement, "Good Reason" shall mean (i) a material breach by the Company
of the terms of this Agreement that has not been cured within thirty (30)
business days after written notice of such noncompliance has been given by the
Executive to the Company, (ii) action by the Company resulting in a substantial
diminution of the nature, responsibility or character of Executive's titles,
positions, duties, responsibilities or authorities with the Company, (iii)
Executive's removal as President and Chief Executive Officer of the Company,
(iv) Executive's being required to report to any person or entity other than the
Company's Board of Directors, or (v) any reduction in the Executive's Base
Salary or annual bonus opportunity.
(e) Termination by the Executive for Ill Health. The Executive
may terminate his employment hereunder if his health should become impaired to
an extent that makes his continued performance of his duties hereunder hazardous
to his physical or mental health or his life, provided that the Executive shall
have furnished the Company with a written statement from a qualified doctor to
such effect and provided, further, that, at the Company's request, the Executive
shall submit to an examination by a doctor selected by the Company and such
doctor shall have concurred in the conclusion of the Executive's doctor.
(f) Date of Termination; Notice of Termination. Any
termination of the Executive's employment by the Company or by the Executive
(other than termination pursuant to subsection (a) hereof) shall be communicated
by written Notice of Termination to the other party hereto. For purposes of this
Agreement, a "Notice of Termination" shall mean a written notice which shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated. "Date of Termination" shall mean (i) if the Executive's
employment is terminated by his death, the date of his death, (ii) if the
Executive's employment is terminated for Disability pursuant to subsection (b)
hereof, thirty (30) days after Notice of Termination is given (provided that the
Executive shall not have returned to the performance of his duties on a
full-time basis during such 30-day period), (iii) if the Executive's employment
is terminated for Cause pursuant to subsection (c) hereof, the date specified in
the Notice of Termination, and (iv) if the Executive's employment is terminated
for any other reason, sixty (60) days after Notice of Termination is given.
<PAGE>
7. Compensation During Disability or Upon Termination.
(a) Disability. During any period that the Executive fails to
perform his duties hereunder as a result of incapacity due to physical or mental
illness (the "Disability Period"), the Executive shall continue to receive his
full Base Salary at the rate then in effect for such period until his employment
is terminated pursuant to Section 7(b) hereof, provided that payments so made to
the Executive shall be reduced by the sum of the amounts, if any, payable to the
Executive at or prior to the time of any such payment under disability benefit
plans of the Company or under the Social Security disability insurance program,
and which amounts were not previously applied to reduce any such payment. If the
Company shall terminate the Executive's employment pursuant to Section 7(b)
hereof, the Company shall pay the Executive:
(i) his full Base Salary through the Date of
Termination at the rate in effect at the time Notice of Termination is
given ("Accrued Base Salary");
(ii) a pro rata Annual Bonus, in an amount equal to
70% of Base Salary at the rate in effect on the date Notice of
Termination is given, multiplied by a fraction, the numerator of which
is the number of days that have elapsed as of the Date of Termination
in the fiscal year in which such Date of Termination occurs and the
denominator of which is 365 ("Pro Rata Bonus");
(iii) an amount equal to the sum of (x) three (3)
times the sum of Executive's Base Salary at the rate in effect on the
date Notice of Termination is given and (y) the sum of the annual
incentive bonuses paid to Executive by the Company or Star, as
applicable, during the last three fiscal years ended prior to the date
of termination ("Lump-Sum Severance Payment"); and
(iv) in accordance with the terms of the applicable
plan or program, all other unpaid amounts to which the Executive is
then entitled under any compensation or benefit plan or program of the
Company (collectively, "Accrued Benefit Obligations"),and the Company
shall have no further obligations under this Agreement.
(b) Death. If the Executive's employment is terminated by his
death, the Company shall pay the Executive the Accrued Base Salary, a Pro Rata
Bonus and the Accrued Benefit Obligations, and the Company shall have no further
obligations to the Executive under this Agreement.
(c) Cause. If the Executive's employment shall be terminated
by the Company for Cause, the Company shall pay the Executive the Accrued Base
Salary and Accrued Benefit Obligations, and the Company shall have no further
obligations to the Executive under this Agreement.
(d) Resignation. If the Executive's employment shall be
terminated by the Executive other than for Good Reason or if the Executive shall
resign for reasons of ill health pursuant to Section 7(e), the Company shall pay
the Executive the Accrued Base Salary, a Pro Rata Bonus and the Accrued Benefit
Obligations, and the Company shall have no further obligations to the Executive
under this Agreement.
(e) Termination by the Company other than for Disability or
Cause or by the Executive for Good Reason. If the Company shall terminate the
Executive's employment other than pursuant to Section 7(b) (Disability) or 7(c)
(Cause) hereof (it being understood that a purported termination pursuant to
Section 7(b) or 7(c) hereof which is disputed and finally determined not to have
been proper shall be a termination by the Company other than pursuant to Section
7(b) or 7(c) hereof) or if the Executive shall terminate his employment
hereunder pursuant to Section 7(d) (Good Reason) hereof, then the Company shall
pay the Executive the Accrued Base Salary, a Pro Rata Bonus, the Lump-Sum
Severance Payment and the Accrued Benefit Obligations, and the Company shall
have no further obligations to the Executive under this Agreement.
<PAGE>
(f) Mitigation; Set-Off. The Executive shall not be under any
obligation to seek employment by another employer. No amount of the Lump-Sum
Severance Payment or Pro Rata Bonus shall be reduced by any salary, bonus or
benefits earned by the Executive as the result of employment by another
employer, and such amount may not be reduced by offset against any amount owed
by the Executive to the Company.
8. Confidentiality; Noncompetition.
(a) The Executive shall hold in a fiduciary capacity for the
benefit of the Company and its Subsidiaries all trade secrets and confidential
information relating to the Company, its Subsidiaries and their respective
businesses that shall have been obtained by the Executive during the Executive's
employment by the Company and that shall not have been or now or hereafter have
become public knowledge (other than by acts by the Executive or representatives
of the Executive in violation of this Agreement). The Executive shall not,
without the prior written consent of the Company or as may otherwise be required
by law or legal process, knowingly communicate or divulge any such trade secrets
or information to anyone other than the Company and those designated by the
Company. Any termination of the Executive's employment or of this Agreement
shall have no effect on the continuing operation of this Section 9(a).
(b) The Executive shall not engage in any Competitive Activity
while he is employed by the Company. In the event of the termination of the
Executive's employment by (i) the Company for Cause or (ii) the Executive other
than for Good Reason, the Executive shall not engage in any Competitive Activity
for a period of twelve (12) months following the Date of Termination.
For purposes of this Agreement, "Competitive Activity" shall
mean (i) activity, without the written consent of an authorized officer of the
Company, consisting of the Executive's participation in the management of, or
his acting as a consultant for or employee of, any business operation of any
enterprise if such operation (a "Competitive Operation") is then in substantial
and direct competition with a Principal Business; (ii) the soliciation, on
behalf of the Executive or for any Competitive Operation, directly or
indirectly, of any customers (determined as of the Date of Termination) of the
Company or its Subsidiaries; or (iii) the solicitation, enticement or
encouragement of any employee (determined as of the Date of Termination) of the
Company or its Subsidiaries to terminate such employee's employment.
Notwithstanding the foregoing, Competitive Activity shall not include (x) the
mere passive ownership of up to five percent (5%) of the outstanding securities
in any enterprise, including without limitation a Competitive Operation; or (y)
the participation in the management of, or acting as a consultant for or
employee of, any enterprise or any business operation thereof, other than in
connection with a Competitive Operation of such enterprise, provided that the
Executive does not furnish advice to any Competitive Operation of such
enterprise. If, at any time, the provisions of this Section 9(b) shall be
determined to be invalid or unenforceable, by reason of being vague or
unreasonable as to area, duration or scope of activity, this Section 9(b) shall
be considered divisible and shall become and be immediately amended to only such
area, duration and scope of activity as shall be determined to be reasonable and
enforceable by the court or other body having jurisdiction over the matter; and
the Executive agrees that this Section 9(b) as so amended shall be valid and
binding as though any invalid or unenforceable provision had not been included
herein.
For purposes of this Agreement, "Principal Business" shall
mean the furnishing of electronic funds transfer and related services consisting
of automated teller machine, point of sale transactions and related services,
data processing services related to terminal driving, card authorization and
card production and other payment system services.
<PAGE>
(c) The Executive shall assign to the Company or its
Subsidiaries or the designee thereof, without further compensation, his entire
right, title and interest in all Developments. For purposes of this Agreement,
"Developments" shall mean all inventions, discoveries, enhancements,
improvements and ideas and all related patents, copyrights, patent applications
and copyright applications, in the United States and elsewhere, created by the
Executive, alone or with others (x) as a result of the material use of the
Company or its Subsidiaries' time, materials or facilities or (y) resulting from
or suggested by the Executive's work at the Company or its Subsidiaries, either
(A) during his employment with the Company and its Subsidiaries or (B) for one
year after the Date of Termination if conceived and reduced to practice as a
result of, and attributable to, work done by the Executive during the
Executive's employment in connection with the Principal Business. The Executive
shall execute, at the Company's request and expense, specific assignments to any
such Development as well as any documents that the Company or its Subsidiaries
consider necessary or desirable to obtain or defend letters patent and to vest
title in such Developments in the Company or its Subsidiaries or its assigns.
(d) In the event that the Executive's employment is subject to
the California Labor Code, this Agreement does not apply to a Development which
qualifies as a nonassignable Invention under Section 2870 of the California
Labor Code. The Executive acknowledges that the Executive has reviewed the
Executive-Owned Invention Notification attached hereto as Exhibit A and agrees
that the Executive's signature on that Notification acknowledges his or her
receipt thereof.
(e) In the event of a breach or threatened breach of
subsections (a), (b) or (c) of this Section 9, the Executive agrees that the
Company shall be entitled to injunctive relief in a court of appropriate
jurisdiction to remedy any such breach or threatened breach, the Executive
acknowledging that damages would be inadequate and insufficient.
(f) Any termination of the Executive's employment or of this
Agreement shall have no effect on the continuing operation of this Section 9.
9. Successors; Binding Agreement; Indemnification.
(a) Neither this Agreement nor any rights hereunder shall be
assignable or otherwise subject to hypothecation by the Executive (except by
will or by operation of the laws of intestate succession) or by the Company,
except that 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, by agreement in form and substance
reasonably satisfactory to the Executive, to expressly assume 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 herein before
defined and any successor to its business and/or assets as aforesaid which
executes and delivers the agreement provided for in this Section 10 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.
(b) This Agreement and all rights of the Executive hereunder
shall inure to the benefit of and be enforceable by the Executive's personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die while any
amounts would still be payable to him hereunder if he had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to the Executive's devisee, legatee, or other
designee or, if there be no such designee, to the Executive's estate.
<PAGE>
(c) The Company shall indemnify, hold harmless and defend the
Executive for all acts or omissions taken or not taken by him in good faith
while performing services for the Company to the same extent and upon the same
terms and conditions as other similarly situated officers and directors of the
Company. If and to the extent that the Company maintains, at any time during the
Term, an insurance policy covering the other officers and directors of the
Company against lawsuits, the Company shall use its best efforts to cause the
Executive to be covered under such policy upon the same terms and conditions as
other similarly situated officers and directors.
10. Notice. For the purposes of this Agreement, notices,
demands and all other communications provided for in this Agreement shall be in
writing and shall be deemed to have been duly given when delivered or (unless
otherwise specified) mailed by United States registered mail, return receipt
requested, postage prepaid, addressed, if to the Executive, to the address
printed on the signature page of this Agreement, and if to the Company, as
follows:
If to the Company:
H&S Holding Company
2600 Lake Lucien Drive, Ste. 180
Maitland, Florida 32751
Attn. Corporate Secretary
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
11. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and the Chairman of the Board or
such other officer as may be specifically designated by the Board. No waiver by
either party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Florida without regard to its conflicts of law
principles. Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law and any
additional withholding to which the Executive has agreed. The obligations of the
Company and the Executive under this Agreement which by their nature may require
either partial or total performance after the expiration of the Term shall
survive such expiration.
12. Validity. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
13. Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original but
all of which together will constitute one and the same instrument.
14. Settlement of Disputes:Arbitration.
(a) All claims by the Executive for benefits under this
Agreement shall be directed to and determined by the Board of Directors and
shall be in writing.
<PAGE>
(b) Any further dispute or controversy arising under or in
connection with this Agreement hereof) shall be settled exclusively by
arbitration, conducted before a panel of three arbitrators in Orlando, Florida
in accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that the Company shall be entitled to seek a
restraining order or injunction in any court of competent jurisdiction to
prevent any anticipated or continued violation of the provisions of Section 9
hereof, and the Executive hereby consents that such restraining order or
injunction may be granted without the necessity of the Company's posting any
bond.
(c) The Executive and the Company shall each pay its own legal
fees and expenses incurred in connection with any dispute or controversy arising
under this Agreement.
15. Entire Agreement. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter contained herein is
hereby terminated and cancelled. No agreements or representations, oral or
otherwise express or implied, with respect to the subject matter hereof have
been made by either party which are not set forth expressly in this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date and year first above written.
H&S HOLDING COMPANY
By: /s/ C.L. Wilson III
C. Leon Wilson III
Chairman of the Board
of Directors
/s/ Ronald V. Congemi
Ronald V. Congemi
Address:
<PAGE>
1
A-
Exhibit A
EXECUTIVE-OWNED INVENTION NOTIFICATION
This Executive-Owned Invention Notification ("Notification")
is to inform the Executive in accordance with Section 2872 of the California
Labor Code that the Agreement between the Company and the Executive does not
require the Executive to assign or offer to assign to the Company any invention
that the Executive developed or develops entirely on his or her own time without
using the Company's equipment, supplies, facilities or trade secret information
except for those inventions that either:
(i) Relate at the time of conception or reduction to practice of
the invention to the Company's business, or actual or demonstrably
anticipated research or development of the Company; or
(ii) Result from any work performed by the Executive for the
Company.
To the extent a provision in the Agreement purports to require
the Executive to assign an invention otherwise excluded from the preceding
paragraph, the provision is against the public policy of the State of California
and is unenforceable.
This Notification does not apply to any patent or invention
covered by a contract between the Company and the United States or any of its
agencies requiring full title to such patent or invention to be in the United
States.
The Executive acknowledges receipt of a copy of this
Notification:
By:_______________________________
(Printed Name of Executive)
Date:______________________________
Witnessed By:
------------------------------
(Printed Name of Representative)
Dated:_________________________
<PAGE>
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment (the "Amendment") is made and entered into as
of this 6th day of October, 2000 by and between Star Systems, Inc., a Delaware
corporation (the "Company"), Concord EFS, Inc., a Delaware corporation
("Parent"), and Ronald V. Congemi (the "Executive") as an amendment to the
Employment Agreement between H&S Holding Company (renamed Star Systems, Inc.)
and the Executive, dated as of March 1, 1999 (the "Agreement").
WHEREAS, concurrently with this Amendment, the Company, Parent
and Orion Acquisition Corp., a Delaware corporation and a direct wholly-owned
subsidiary of Parent ("Sub"), are entering into an Agreement and Plan of Merger
(the "Merger Agreement") pursuant to which Sub will merge with and into the
Company (the "Merger"); and
WHEREAS, the Company, Parent and the Executive mutually
desire to amend the Agreement as set forth herein.
NOW, THEREFORE, in consideration of the mutual promises
contained herein and other good and valuable consideration, the parties hereby
agree to amend the Agreement as set forth herein. The provisions of this
Amendment shall become effective immediately, provided, however, that if the
Merger Agreement is terminated, then (i) this Amendment shall automatically
terminate at the same time, (ii) each party's obligations hereunder shall
automatically cease to be of any effect and (iii) the Agreement shall remain in
effect as if it had not been amended by this Amendment.
1. The first sentence of Section 3(a) of the Agreement is
hereby amended to read as follows: The Executive shall serve
as President and Chief Executive Officer of the Company, and
shall report to the Board of Directors of the Company;
provided, however, that on and after the Effective Time of
the Merger, as such terms are defined in the Agreement and
Plan of Merger (the "Merger Agreement"), entered into
concurrently with the First Amendment hereto, among the
Company, Concord EFS, Inc., a Delaware corporation
("Parent"), and Orion Acquisition Corp., a Delaware
corporation and a direct wholly-owned subsidiary of Parent
("Sub"), the Executive shall report to the President of
Parent, and shall serve as President of the Star network and
any successor thereto, including any network that is created
by the combination of Parent's MAC network and the Star
network (such position, the "Network President") or, subject
to Section 6(d) hereof, in such other position or having
such other responsibilities and authority as may from time
to time be authorized or directed by Parent.
2. Clause (i) of the second sentence of Section 3(a) of the
Agreement is hereby amended to read as follows: (i) serve on
corporate, civic, industry or charitable boards or
committees, provided that after the Effective Time such
service is approved by the President of Parent,
3. Section 3(b) of the Agreement is hereby deleted in its
entirety.
<PAGE>
4. The second sentence of Section 4(a) of the Agreement is
hereby amended to read as follows: The Base Salary shall be
payable in accordance with the Company's normal payroll
practices, shall be reviewed at least annually and may be
increased (but not decreased) upon review.
5. Section 4(b) of the Agreement is hereby amended by adding
the following at the end thereof: Notwithstanding the
foregoing, on and after the Effective Time, as defined in
the Merger Agreement, the Company shall provide to the
Executive an annual incentive bonus in an amount
commensurate with the Executive's senior management
position, as determined by the Board of Directors of Parent.
6. Section 4(c) of the Agreement is hereby amended to read
as follows: (c) Long-Term Incentive Plan. After the
Effective Time, as defined in the Merger Agreement, the
Executive shall be entitled to participate in an equity
compensation plan maintained by Parent, at a level
commensurate with the Executive's senior management
position, taking into account the Option to be granted under
Section 9 of this Agreement.
7. Section 6(c) of the Agreement is hereby amended to read
as follows: (c) Cause. The Company may terminate the
Executive's employment hereunder for Cause. For purposes of
this Agreement, the Company shall have "Cause" to termi-
nate the Executive's employment hereunder upon (i) the
Executive's conviction of or guilty plea to the commission
of an act or acts constituting a felony under the laws of
the United States or any state thereof, (ii) action by the
Executive toward the Company involving personal dishonesty,
theft or fraud in connection with the Executive's duties as
an officer of the Company and its Subsidiaries and intended
to result in personal gain, (iii) the Executive's willful
failure to abide by or follow lawful, reasonable written
directions of the Board or Parent, which does not cease
within fifteen (15) business days after written notice
regarding such refusal has been given to the Executive by
the Company or (iv) the Executive's breach of Section 8
hereof. For purposes of this Section 6(c), no act or failure
to act by the Executive shall be deemed "willful" unless
done, or omitted to be done, by the Executive not in good
faith and without reasonable belief that the act or failure
to act was in the best interest of the Company.
8. The second sentence of Section 6(d) of the Agreement is
hereby amended to read as follows: For purposes of this
Agreement, "Good Reason" shall mean any of the following
events which shall not have been cured within fifteen (15)
business days after written notice of such event has been
given by the Executive to the Company: (i) a material breach
by the Company of the terms of this Agreement, (ii) action
by the Company resulting in a substantial diminution of the
nature, responsibility or character of the Executive's
titles, positions, duties, responsibilities or authorities
with the Company, as held by the Executive in his position
as Network President, taking into account the fact that as a
result of the Merger (A) the Company will be in the process
<PAGE>
of integrating its operations with those of Sub and Parent
and that such integration process will likely result in
certain changes in the Executive's duties, including that
assistance with such integration may take priority over the
Executive's customary job duties, and (B) the Company will
cease to be an independent company and will become a
subsidiary of Parent, and the duties and responsibilities of
the Executive will change in accordance with this change in
the ownership of the Company, or (iii) any reduction in the
Executive's Base Salary.
9. Section 7(e) of the Agreement is hereby amended to read
as follows: If the Company shall terminate the Executive's
employment other than pursuant to Section 7(a) (Disability)
or 7(c) (Cause) hereof (it being understood that a purported
termination pursuant to Section 7(a) or 7(c) hereof which is
disputed and finally determined not to have been proper
shall be a termination by the Company other than pursuant to
Section 7(a) or 7(c) hereof) or if the Executive shall
terminate his employment hereunder pursuant to Section 7(d)
(Good Reason) hereof, then the Company shall pay to the
Executive the Accrued Base Salary, a Pro Rata Bonus and the
Accrued Benefit Obligations. In addition, the Company shall
pay to the Executive in equal payments on each of the
Company's regular payroll dates during the 24-month period
following the Date of Termination an amount which, when
multiplied by the number of scheduled payroll dates during
such period, is equal to the Lump-Sum Severance Payment;
provided, however that no further payments shall be made on
or after the first date on which the Executive breaches any
of the covenants set forth in Section 8 hereof. Upon the
payment of all amounts prescribed in this Section 7(e), the
Company shall have no further obligations to the Executive
under this Agreement.
10. All references in Section 8 to Section 9 shall be
changed to references to Section 8.
11. All references in Section 8 to "Subsidiaries" shall be
changed to references to "Parent and Subsidiaries of
Parent."
12. The second sentence of Section 8(a) is hereby amended to
read as follows: The Executive shall not, without the prior
written consent of Parent or as may be required by law or
legal process, use, communicate or divulge any such trade
secrets or confidential information to anyone other than the
Company and those designated by the Company. Immediately
upon the Company's request or on the termination date of the
Executive's employment, whichever occurs first, the
Executive shall return to the Company all of the property of
the Company, its affiliates, and the actual and prospective
clients of any of them, including, without limitation, all
documents and things containing any trade secrets or
confidential information, computer programs and diskettes,
files, forms, notes, records, charts, and all copies.
13. The first paragraph of Section 8(b) of the Agreement is
hereby amended to read as follows: The Executive shall not
engage in any Competitive Activity while he is employed by
<PAGE>
the Company or for a period of 24 months following the
termination of his employment for any reason (the
"Noncompetition Period"). In consideration for the
Executive's agreements hereunder, the Company shall pay the
Executive a lump sum of $600,000 in cash at the Effective
Time, as defined in the Merger Agreement, subject to
applicable tax withholding requirements, provided that the
Executive is still employed by the Company at the Effective
Time and has not breached the terms of this Agreement.
14. The second paragraph of Section 8(b) of the Agreement is
hereby amended by deleting the phrase "without the written
consent of an authorized officer of the Company," where it
appears in the first sentence thereof, and by inserting the
phrase "without the written consent of Parent" in lieu
thereof.
15. Sections 9 through 15 of the Agreement, and all
references thereto, are hereby renumbered as Sections 10
through 16, respectively, and the following new Section 9 is
hereby added thereto: 9. Option Grant. (a) In consideration
for the Executive's agreements hereunder, including but not
limited to Section 8 of this Agreement, Parent will grant
the Executive the option as described in this Section. If,
at the Effective Time, as defined in the Merger Agreement,
the Executive is still employed by the Company and has not
breached the terms of this Agreement, then Parent shall,
immediately after the Effective Time, cause to be granted to
the Executive an option to purchase 200,000 shares of
Parent's common stock (the "Option") pursuant to the terms
of Parent's 1993 Incentive Stock Option Plan, as amended
(the "Plan"). Consistent with the Plan, the Option will have
a 10-year term and an exercise price equal to the fair
market value of Parent's common stock at the time of the
grant. The Option will become vested with respect to 25% of
the shares subject to the Option on each anniversary of the
Effective Time as long as the Executive remains employed by
the Company.
(b) Notwithstanding the provisions of Section 9(a)
above, if, prior to the last day of the Noncompetition
Period, the Executive breaches any of the provisions of
Section 8 of this Agreement or is terminated for Cause, then
(i) the Option shall immediately terminate, and (ii) the
Executive shall promptly pay to the Company an amount of
cash equal to the Gain Realized (as defined below) on any
shares acquired through the exercise of the Option (the
"Option Shares") during the Restricted Period (as defined
below). For purposes of this Section 9(b), "Restricted
Period" shall refer to the period of time commencing 90 days
prior to the termination of the Executive's employment and
ending on the last day of the Noncompetition Period; and
"Gain Realized" shall equal the difference between (x) the
fair market value of the Option Shares on the date the
Option is granted and (y) the greater of the fair market
value of the Option Shares (A) on the date of acquisition of
such Option Shares or (B) on the first date any of the
provisions of Section 8 of this Agreement were breached or
the Date of Termination if the Executive was terminated for
Cause.
<PAGE>
IN WITNESS WHEREOF, the Company and Parent have caused this
Amendment to be signed by their duly authorized representatives and the
Executive has signed this Amendment as of the day and year first above written.
STAR SYSTEMS, INC.
By: /s/ E. Miles Kilburn
Name: E. Miles Kilburn
Title: Group EVP & CFO
CONCORD EFS, INC.
By: /s/ E. T. Haslam
Name: Edward T. Haslam
Title: CFO & CAO
/s/ Ronald V. Congemi
Ronald V. Congemi