Exhibit 10.1
[LETTERHEAD OF T/SF COMMUNICATIONS APPEARS HERE]
December 3, 1996
Mr. Xxxxxxx Xxxxxxx
00 Xxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Re: Employment Arrangement
Dear Xxxx:
This letter is to formalize our recently agreed-to employment arrangement.
Please review this carefully and, if it complies with your understanding of our
agreement, please execute the enclosed copy in the space provided and return it
to me as soon as possible. By executing this letter agreement, we have agreed
as follows:
1. You are employed as the President and Chief Executive Officer of the
"Exposition Services Division" of T/SF Communications Corporation ("T/SF").
Such division is an "on paper" unit of T/SF composed of two corporate entities,
Galaxy Registration, Inc. ("Galaxy") and Xxxxxx Convention Publishing, Inc.
("Xxxxxx"). As President of the "Exposition Services Division," you shall also
be President and Chief Executive Officer of each of Xxxxxx and Galaxy. From a
legal standpoint, you'll become an employee of Galaxy, but will spend sufficient
time at Xxxxxx to meet your leadership obligations to that entity.
2. Your employment will commence on December 9, 1996, and will extend
through December 31, 1997, subject to termination as described below and subject
to extension, on a year to year basis, by mutual agreement of the parties. We
have agreed that you will take an unpaid leave for the week of December 23,
1996.
3. As President and Chief Executive Officer of Galaxy and Xxxxxx you will
be expected to devote your full business time and attention and best efforts to
their business. As President and Chief Executive Officer, you will have the
authority, responsibility and accountability to supervise, manage, lead and
conduct all aspects of the business of Xxxxxx and Galaxy. This includes
providing the necessary leadership, strategic direction and long range planning,
as well as hiring and firing authority with respect to all of their employees
and the right to determine compensation of such employees. In the performance of
these duties, you will be subject at all times to the direction of the Board of
Directors of each of Xxxxxx and Galaxy and the budgets and business plan
approved by such Boards of Directors, as well as to the supervision as Chairman
of the Board of each of Xxxxxx and Galaxy (currently myself). During the term of
your employment, you will be a member of the Board of Directors of both Xxxxxx
and Galaxy and any other corporate entity which may become a part of the
"Exposition Services Division."
Mr. Xxxxxxx Xxxxxxx
December 3, 1996
Page 2
4. Your compensation shall consist of the following components:
A. A base salary of $160,000 annually ($13,333.38 per month), payable in
accordance with Galaxy's normal payment schedule (appropriately pro
rated for the employment time during December, 1996). You will have a
bonus possibility for 1997 of up to $50,000, determined and payable as
follows:
. One-third of the maximum bonus, or $16,667, based on Xxxxxx and
Galaxy achieving their combined Plans for 1997, which Plans are
currently being finalized. This will be payable based on one-half
of the bonus being paid if Galaxy and Xxxxxx achieve 90% of their
combined Plan with each additional 1% (up to 100%) of the amount of
Plan achieved over 90% earning an additional 5% of this possible
bonus amount. Thus, for example, if they earned 95% of their
combined Plan, you would receive 75% of this portion of the bonus,
or $12,500.
. An additional one-third of the maximum bonus, or $16,667, based on
Xxxxxx and Galaxy, on a combined basis, exceeding their combined
1997 Plan. This will be payable based on 5% of this portion of the
bonus being payable for each 1% over Plan achieved by Xxxxxx and
Galaxy on a combined basis. For example, if Xxxxxx and Galaxy, on a
combined basis, exceed their combined Plans by 10%, you would
receive 50% of this bonus amount or $8,333. One hundred percent of
this bonus amount is achieved at 120% of the combined Plans.
. The remaining one-third, or $16,667, will be discretionary and
determined by me, as Chairman of the Board of Xxxxxx and Galaxy. It
is intended that we will have discussions during the course of the
year to flesh out specific "MBO's" that can be guideposts to
measuring the achievement of this bonus potential.
. For purposes of determining bonus, "achieving Plan" means achieving
the operating income number, pre-tax, for Xxxxxx and Galaxy on a
combined basis determined under our historical accounting
practices. Bonuses are payable within 90 days after the end of the
year to allow for final accounting adjustments.
B. For 1997, we guarantee you a minimum bonus of $20,000 (the "Guaranteed
Bonus"), which will be reduced by any amount earned under the bonuses
described in A above. For example, if a total bonus of $15,000 is
earned under A, you will receive $5,000 of the Guaranteed Bonus. If,
however, $20,000 or
Mr. Xxxxxxx Xxxxxxx
December 3, 1996
Page 3
more is earned as a bonus under A, nothing will be paid from the
Guaranteed Bonus.
C. At the next meeting of the Board of Directors of T/SF anticipated to
be held in January, 1997, you will be granted options on 20,000 shares
of Common Stock of T/SF on the following terms:
. The options will be granted at a strike price equal to the market
value of the T/SF Common Stock on the date the options are granted.
. The options will be issued under T/SF's 1994 Incentive Stock Plan,
a copy of which is enclosed for your information.
. The options will vest 100% on the date which is three years
following the date of grant.
D. All payments to you will be made subject to normal deductions,
including social security and other withholding taxes.
E. You will be entitled to participate in Galaxy's group medical and
hospitalization insurance plan and any other group insurance or
general employee benefit plans, such as 401(k) plan, provided by
Galaxy, upon the same terms as all other employees of Galaxy.
F. In addition to the compensation described above, you will be entitled
to reimbursement of your actual out-of-pocket expenses incurred in the
conduct of the business of Xxxxxx and Galaxy, including, but not
limited to, appropriate professional dues and travel and entertainment
expenses related to the business of Xxxxxx and Galaxy, all of which
expenses will be limited to ordinary and necessary items and which
will be supported by vouchers, receipts or similar documentation to
the extent practicable and as required by law.
G. It is recognized that you currently live in Connecticut and do not
intend to move your family until the summer of 1997. Accordingly,
through August 31, 1997, Galaxy will reimburse you from time to time
for hotel or apartment expenses for time spent in the Frederick,
Maryland, area, as well as reimbursing you for hotel or apartment
expenses in the Overland Park, Kansas, area when visiting Xxxxxx. All
such expenses shall be reasonable and subject to discussion with the
Chairman of the Board of Galaxy. In addition, Galaxy
Mr. Xxxxxxx Xxxxxxx
December 3, 1996
Page 4
will reimburse you for the reasonable cost of relocating your family
to the Frederick, Maryland, area during the summer of 1997.
H. You will be entitled to an annual vacation of an aggregate of 15 work
days per year, with pay, at such times as will not unduly interfere or
hamper the operation of Xxxxxx'x and Galaxy's business and subject to
Galaxy's normal vacation policies.
5. This employment arrangement may be terminated only upon the occurrence of
one or more of the following events and, in the event of any such termination,
you will receive those amounts set forth below:
A. By Galaxy upon your permanent disability or a temporary disability for
a period in excess of four consecutive months or for six months in any
one year. For this purpose, "disability" means any physical or mental
disability rendering you unable to perform substantially all of your
usual duties and responsibilities. Disability will be determined by a
medical doctor selected by you and us together. In the event of
termination pursuant to this provision, you will be entitled to the
compensation and benefits provided in any long term disability
insurance policy, if any, maintained by Galaxy and Galaxy will
continue the payment of your base salary, at the monthly rate in
effect as of the date of disability, for a period of the greater of
six months or through December 31, 1997, plus the payment of the
Guaranteed Bonus on March 31, 1998.
B. Upon your death, in which event Galaxy will continue the payment of
your base salary, at the monthly rate in effect as of the date of
death, for the later of six months or December 31, 1997, plus the
payment of the Guaranteed Bonus on March 31, 1998. Such amounts shall
be paid to your estate or designated beneficiary. You will also be
entitled to the benefit of any life insurance maintained on your
behalf by Galaxy in keeping with normal benefit plans for all
employees of Galaxy.
C. You have the right to terminate this agreement in the event of a
substantial breach of this agreement by Galaxy, T/SF or Xxxxxx. To
effect termination by reason of a substantial breach, you must give
notice to the President of T/SF detailing the nature of the breach and
we will have 30 days (10 days in the case of a non-payment breach) of
receipt of such notice to cure the problem. In the event of your
termination of this agreement for a substantial breach, you will be
entitled to receive your base salary, at the then monthly amount,
through the later of twelve months after the termination or December
31, 1997, and to receive the payment of the Guaranteed Bonus on March
31, 1998.
Mr. Xxxxxxx Xxxxxxx
December 3, 1996
Page 5
D. Galaxy may terminate this agreement for any reason. If this agreement
is terminated other than "for cause," you shall be entitled to receive
a severance payment equal to 12 months salary (plus, as to 1997, the
Guaranteed Bonus) on March 31, 1998 at the then current monthly base
pay. This severance right shall continue during your entire employment
by Galaxy, even after December 31, 1997, unless superseded by a
written agreement executed by you and T/SF. If your employment is
terminated "for cause," you will be entitled to severance pay equal to
one month's base pay. For this purpose, "for cause" shall only mean
one of the following:
. Your material breach of your duties or obligations under the terms
and provisions of this Agreement;
. Your dishonesty, fraud, misappropriation or embezzlement in the
course of, related to or connected with, the business of Xxxxxx,
Galaxy or T/SF;
. Your conviction of a felony; or
. Your failure to act in accordance with the directions and
guidelines established from time to time by the Board of Directors
and/or the Chairman of the Board of Xxxxxx or Galaxy, provided that
such directions and guidelines are put in place to meet Xxxxxx'x,
Galaxy's or T/SF's legitimate business objectives.
Prior to termination of this Agreement "for cause," you will be given
written notice detailing the nature of the "for cause" and, except in
the case of termination for conviction of a felony or employee
dishonesty, fraud, misappropriation or embezzlement, you shall have 30
days from the date of receipt of such notice to cure the issues. Your
failure to cure the same within such 30 days will give Galaxy the
right to proceed with the termination.
6. You agree that during or subsequent to your employment with Xxxxxx,
Galaxy and T/SF, you will not divulge, disclose or make accessible to any person
or company any knowledge or information, customer or client information,
processes, trade secrets, plans or material with respect to any secret,
confidential or sensitive research or development work, business plans, products
or production methods of Xxxxxx, Galaxy or T/SF, except as may be necessary in
the furtherance and conduct of their business as an employee of theirs during
the period you are so employed.
Mr. Xxxxxxx Xxxxxxx
December 3, 1996
Page 6
If the foregoing correctly sets forth your understanding of our agreement,
please execute in the space provided below and return one copy for our files.
Yours very truly,
T/SF COMMUNICATIONS CORPORATION
/s/ Xxxxxx X. Xxxxxxx, Xx.
Xxxxxx X. Xxxxxxx, Xx.
Xxxxxxxx, President and Chief Executive Officer
"T/SF"
GALAXY REGISTRATION, INC.
/s/ Xxxxxx X. Xxxxxxx, Xx.
Xxxxxx X. Xxxxxxx, Xx.
Chairman of the Board and Chief Executive
Officer "Galaxy"
XXXXXX CONVENTION PUBLISHING, INC.
/s/ Xxxxxx X. Xxxxxxx, Xx.
Xxxxxx X. Xxxxxxx, Xx.
Chairman of the Board and Chief Executive
Officer "Xxxxxx"
/s/ Xxxxxxx Xxxxxxx
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XXXXXXX XXXXXXX
"Employee"
