Be a good leader and they will follow. You worked with this guy before you should have a good relationship with him right from the start. Hopefully.
I never had any formal education running a business or managing people. I was not allowed to interview prospective employees at a big firm I used to work for due to this. Go figure.
I have the distinct honor of hiring and firing and pruning my staff. I find the loosers will leave on their own in time. If not then I nudge them out. The words "your not working out, I have to let you go", work well. I have an almost friendship with my employees. I treat them good pay them well, do not over work them, and thank them for doing a good job. This has served me wel over the years. The reall A-holes have either weeded themselves out or have been asked to leave. I can only think of 4 people in the 8 years I have owned this place that did not work out. The crew I have now, gold!
If all else fails, you need to get Terry on your team then all your problems are over.
http://video.google.com/videoplay?docid=-6238953685626218421