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Exhibit 10.1
Execution Version
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of
December
23, 2004 by and between GMH Holding Company, a Delaware corporation
(the
"Company"), and Dan McCarthy ("Executive").
WHEREAS, Executive entered into an Employment Agreement dated June
28,
2002 by and between Gallarus Media, Inc., a Delaware corporation,
Gallarus Media
Holdings, Inc., a Delaware corporation and Executive.
WHEREAS, this Agreement is being entered into in connection with
the
consummation of the transactions contemplated by the Agreement and
Plan of
Merger dated as of the date hereof (as amended from time to time,
the "Merger
Agreement") by and between Gallarus Media Holdings, Inc.
("Gallarus"), the
Company, GMH Acquisition Corp., and solely for certain limited
purposes, ABRY
Partners, LLC. Capitalized terms used herein and not otherwise
defined have, the
meanings assigned to such terms in Section 14 hereof.
In consideration of the mutual covenants contained herein and
other
good and valuable consideration, the receipt and sufficiency of
which are hereby
acknowledged, the parties hereto agree as follows:
1. Employment. The Company will employ Executive, and Executive
accepts employment with the Company, upon the terms and conditions
set forth in
this Agreement, for the period beginning on the date of the closing
of the
merger contemplated by the Merger Agreement and ending as provided
in Section 5
(the "Employment Period").
2. Position and Duties. During the Employment Period, Executive
will
serve as Chairman of the Board of Directors of the Company (the
"Board") and as
the Chief Executive Officer of the Company and its Subsidiaries,
and render such
managerial, supervisory and other executive services to the Company
and its
Subsidiaries as are from time to time necessary in connection with
the
management and affairs of the Company and its Subsidiaries, in each
case subject
to the authority of the Board. Executive will devote his best
efforts and
substantially all of his business time and attention (except for
permitted
vacation periods and reasonable periods of illness or other
incapacity) to the
business and affairs of the Company and its Subsidiaries. Executive
will report
directly to the Board. All other employees of the Company and its
Subsidiaries
will report, directly or indirectly, to Executive. Executive will
perform his
duties and responsibilities to the best of his abilities in a
trustworthy and
businesslike manner. The Company acknowledges that Executive will
maintain his
home in New York so as to have a residence in proximity to his
children and will
commute to New York to spend most weekends with his children.
Notwithstanding
the preceding sentence, Executive acknowledges that the time and
attention
required of him under this Section 2 shall be no less than a
"normal" work week
and shall otherwise be as directed by the Board from time to time
in writing.
3. Salary and Benefits.
(a) Salary. During the Employment Period, the Company will pay
Executive an amount equal to $375,000 per annum (as in effect from
time to time,
the "Salary") as
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compensation for services. The Salary will increase per annum by an
amount equal
to 5% of the annual amount of the Salary in effect prior to such
increase,
effective on the first day of January of each year, starting on
January 1, 2006.
The Salary will be payable in regular installments in accordance
with the
general payroll practices of the Company and its Subsidiaries.
(b) Benefits. During the Employment Period, the Company shall
provide
Executive with family health and dental, life, long-term disability
and
Directors' and Officers' liability insurance and other benefits
offered under
such plans as the Board may establish or maintain from time to time
for senior
executive officers of the Company and its Subsidiaries
(collectively, the
"Benefits"). Executive shall be entitled to four (4) weeks of paid
vacation each
year.
(c) Reimbursement of Expenses. During the Employment Period,
the
Company will reimburse Executive for (i) all reasonable
out-of-pocket expenses
incurred by him in the course of performing his duties under this
Agreement
which are consistent with the Company's policies in effect from
time to time
with respect to travel, entertainment and other business expenses,
and (ii)
commuting expenses, and the expense of maintaining an apartment in
the Atlanta,
Georgia metropolitan area, which commuting and apartment
maintenance expenses
shall not in the aggregate exceed $3,000 per month. Reimbursement
by the Company
for the expenses set forth in each of clause (i) and (ii) above
will be subject
to the Company's requirements with respect to reporting and
documentation of
such expenses. In addition, the Company shall reimburse Executive
for all
reasonable third-party professional fees incurred by Executive in
connection
with the review of this Agreement, the Merger Agreement and the
Selling
Stockholders Agreement up to an aggregate amount equal to
$10,000.
4. Performance Bonus and Other Bonus.
(a) For the fiscal year ended March 31, 2005, Executive shall
be
eligible to receive (i) a bonus (the "2005 Performance Bonus I") in
an amount
not to exceed 17.5% of the average Salary in effect during such
fiscal year
based on the degree to which the Company's EBITDA for such fiscal
year meets
$26,741,000 ("Target I") and (ii) a bonus (the "2005 Performance
Bonus II") in
an amount not to exceed 17.5% of the average Salary in effect
during such fiscal
year based on the degree to which the Company's EBITDA for such
fiscal year
meets Budget Target (as defined in Section 4(c) below), in each
case as follows:
<TABLE>
<CAPTION>
AMOUNT OF 2005 PERFORMANCE BONUS I OR II
PERCENTAGE OF TARGET I OR BUDGET TARGET (AS APPLICABLE) (AS A % OF
THE AVERAGE SALARY
(AS APPLICABLE)
ACTUALLY ACHIEVED
IN EFFECT DURING SUCH FISCAL YEAR)
---------------------------------------
---------------------------------------------
<S>
<C>
Less than 90%
0%
At least 90% but no more than 100%
(% of Target I or Budget Target
(as applicable) Actually Achieved- 90%)
Greater than 100% but no more than 120% 12.5% + (% of Target I or
Budget Target
(as applicable) Actually Achieved-100%)/4
Greater than 120%
17.5%
</TABLE>
2
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(b) For each fiscal year of the Employment Period, other than
the
fiscal year ended March 31, 2005, Executive shall be eligible to
receive a bonus
("Performance Bonus") in an amount not to exceed 75% of the average
Salary in
effect during such fiscal year based on the degree to which the
Company's EBITDA
for such fiscal year meets the Performance Bonus Target (as defined
in Section
4(c) below) as follows:
<TABLE>
<CAPTION>
AMOUNT OF PERFORMANCE BONUS (AS A % OF
PERCENTAGE OF PERFORMANCE BONUS THE AVERAGE SALARY IN
EFFECT DURING SUCH
TARGET
ACTUALLY ACHIEVED
FISCAL YEAR)
-------------------------------
----------------------------------------
<S>
<C>
Less than 90%
0%
At least 90% but less than 100%
10%
At least 100% but less than 110%
25%
At least 110% but less than 120%
50%
At least 120% or greater
75%
</TABLE>
In calculating EBITDA for purposes of this subsection (b), any
businesses
acquired during the relevant period will be given effect as though
such
acquisition had occurred at the beginning of the relevant
period.
(c) Any 2005 Performance Bonus I, 2005 Performance Bonus II, or
Performance Bonus earned by Executive shall be paid promptly after
delivery to
the Board of the audited financial statements for the fiscal year
in question.
As used herein, the term "Budget Target" shall mean EBITDA in the
amount set
forth in the annual budget adopted by the Board for the fiscal year
ended March
31, 2005. As used herein, the term "Performance Bonus Target" shall
mean EBITDA
in the amount set forth in the annual budget adopted by the Board
after
consultation with Executive for the fiscal year in question.
5. Termination.
(a) The Employment Period will commence upon consummation of
the
merger contemplated by the Merger Agreement and will continue until
the earlier
of: (i) the fifth anniversary of the date hereof; (ii) Executive's
resignation,
death or disability or other incapacity (as reasonably determined
by the Board
in good faith, such determination being based upon the report of a
physician
selected by the Board and reasonably acceptable to Executive if
Executive so
requests. In such event, Executive agrees to make himself
reasonably available
for examination by the physician selected by the Board); or (iii)
the giving of
notice of termination by the Company or a majority of the members
of the Board
(A) for Cause or (B) for any other reason or for no reason (a
termination
described in this clause (iii) (B) being a termination by the
Company "Without
Cause"); provided, however, that, notwithstanding anything to the
contrary
contained herein, in the event the Merger Agreement is terminated
without
consummation of the merger thereunder, this Agreement will
automatically
terminate without any liability or obligation on the part of either
party
hereunder. For the purposes of this Agreement, "Cause" shall mean
(a) conviction
of, or a plea of guilty or no-contest or similar plea with respect
to, a felony
or the commission of any act or omission involving actual fraud or
embezzlement
with respect to the Company or any of its Subsidiaries, (b) conduct
bringing the
Company or any of its Subsidiaries into substantial public disgrace
or
disrepute, (c) willful misconduct or breach of fiduciary duty with
respect to
the Company or any of its Subsidiaries or (d) material breach
of
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Section 2, 7 or 8 of this Agreement (provided, that to the extent a
material
breach of Section 2 of this Agreement may be cured, Executive shall
have 20
business days to cure such breach from the date on which the Board
delivers
written notice to Executive reasonably identifying such
breach).
(b) In the event of Executive's resignation (other than within 30
days
of a Good Reason Event), death, disability or other incapacity or
the
termination of the Employment Period for Cause or in connection
with a Sale of
the Company, Executive will not be entitled to receive his Salary
or any fringe
benefits or Performance Bonus for periods after the termination of
the
Employment Period but, in the case of death, disability or other
incapacity,
Executive will be entitled to receive a pro rata portion of his
Performance
Bonus for the period during which Executive was employed by the
Company at the
time the Performance Bonus would normally be paid and based upon
the Company's
actual performance for the relevant fiscal year. In the event the
Employment
Period is terminated by the Company Without Cause, or by Executive
within 30
days after a Good Reason Event, then so long as Executive continues
to comply
with Sections 7, 8 and 9, Executive shall be entitled to receive
(i) severance
payments in an aggregate amount equal to two year's Salary based on
the Salary
in effect at the time the Employment Period is terminated and (ii)
Benefits at
the same level and on the same terms as they are provided from time
to time to
the Company's senior management employees, for a period equal to
two years from
the date of such termination. Any such severance payments paid to
Executive by
the Company will be paid in equal monthly installments; provided,
that Executive
shall be required to sign a release of all past, present and future
claims
against CVC and the NCI Companies as a condition to receiving such
payments and
benefits.
6. Resignation as Officer or Director. Upon the termination of
the
Employment Period, Executive will resign each position (if any)
that he then
holds as an officer or director of the Company or any of its
Subsidiaries
(including his membership on the Board).
7. Confidential Information. Executive acknowledges that the
information, observations and data that have been or may be
obtained by him
during his employment relationship with, or through his involvement
as a
stockholder or director of, the Company or any Subsidiary or
predecessor thereof
(each of the Company, any Subsidiary or affiliate or any such
affiliate
predecessor being an "NCI Company"), prior to and after the date of
this
Agreement concerning the business or affairs of the NCI Companies
(collectively,
"Confidential Information") are and will be the property of the NCI
Companies.
Therefore, Executive agrees that he will not disclose to any
unauthorized Person
or use for the account of himself or any other Person any
Confidential
Information without the prior written consent of the Company (by
the action of
the Board), unless and to the extent that such Confidential
Information has
become generally known to and available for use by the public other
than as a
result of Executive's improper acts or omissions to act, or is
required to be
disclosed by law. Executive will deliver or cause to be delivered
to the Company
at the termination of the Employment Period, or at any other time
the Company or
any of its predecessors or Subsidiaries may request, all memoranda,
notes,
plans, records, reports, computer tapes and software and other
documents and
data (and copies thereof) containing or relating to Confidential
Information or
the business of any NCI Company which he may then possess or have
under his
control.
8. Non-Compete, Non-Solicitation.
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(a) Non-Compete. Executive acknowledges that during his
employment
relationship with, or through his involvement as a stockholder or
director of,
any NCI Company he has and will become familiar with trade secrets
and other
Confidential Information concerning such NCI Companies, and with
investment
opportunities relating to the Business, and that his services have
been and will
be of special, unique and extraordinary value to the foregoing
entities.
Therefore, Executive agrees that, during the Employment Period and
for a period
of two years thereafter (the "Noncompete Period"), he will not
directly or
indirectly own, manage, control, participate in, consult with,
render services
for, or in any other manner engage in any business, or as an
investor in or
lender to any business (in each case including on his own behalf or
on behalf of
another Person) which constitutes or is competitive with the
Business (as and
where the same is conducted or proposed to be conducted (if actions
have been
taken by any NCI Company to implement the proposed business) by the
NCI
Companies during the Employment Period, or as of the end of the
Employment
Period if the Employment Period has then ended). Nothing in this
Section 8 will
prohibit Executive from being a passive owner of less than 5% of
the outstanding
stock of a corporation of any class which is publicly traded, so
long as
Executive has no direct or indirect participation in the business
of such
corporation. By initialing in the space provided below, Executive
acknowledges
that he has read carefully and had the opportunity to consult with
legal counsel
regarding the provisions of this Section 8(a).
_____________[INITIAL].
(b) Non-Solicitation. During the Noncompete Period, Executive will
not
directl
