May 18, 0000
Xxxxxxxxxxx X. Xxxxxxxx
Xxxxx 000
000 X. Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Dear Mr. Mulhauf:
Reference is made to that certain Agreement and Plan of Merger dated
as of May 19, 1999, by and among The Guardian Life Insurance Company of America
("Guardian"), Floss Acquisition Corp. and First Commonwealth, Inc. (the "Merger
Agreement"). Capitalized terms used herein and not otherwise defined herein
shall have the meaning ascribed thereto in the Merger Agreement.
Guardian agrees that, effective upon the consummation of the Merger,
it will cause First Commonwealth, Inc. to offer you employment as a senior
officer of First Commonwealth, Inc. on substantially the same terms set forth on
Exhibit A attached hereto. You and Guardian hereby agree that you will use your
reasonable best efforts to negotiate in good faith a definitive Employment
Agreement which will include among other things substantially the terms set
forth in Exhibit A attached hereto. Guardian hereby agrees that, to the extent
that you and Guardian agree upon the terms of such Employment Agreement,
Guardian will use its reasonable best efforts to cause First Commonwealth, Inc.
to enter into such Employment Agreement as promptly as possible and, in no event
later than the date on which the Merger Agreement is consummated.
Unless and until an employment agreement is executed by and between
Guardian and Xxxxxxxx, neither party shall be bound by any of the provisions of
this letter.
We look forward to concluding a mutually satisfactory employment
with you.
Very truly yours,
THE GUARDIAN LIFE INSURANCE
COMPANY OF AMERICA
By /s/ Xxxxxxx Xxxxxx
------------------------------
Name: Xxxxxxx Xxxxxx
Title: Sr. Vice President Human
Resources
By /s/ Xxxx Xxxxxxxxx
------------------------------
Name: Xxxx Xxxxxxxxx
Title: Assistant Counsel
Acknowledged this Eighteenth
Day of May, 1999
/s/ Xxxxxxxxxxx X. Xxxxxxxx
------------------------------
Xxxxxxxxxxx X. Xxxxxxxx
Exhibit A
Term Sheet
1. Position: Senior officer of First Commonwealth
2. Base Annual Salary $225,000
3. Annual Bonus: Will vary between $0% - 100% of Base Annual Salary. Target
plan performance shall be 75% Base Annual Salary and shall be based upon
financial performance of First Commonwealth, the components and criteria
for which are subject to further good faith negotiation between the
parties
This Annual Bonus Compensation arrangement will replace upon consummation
of the Merger the existing Management Bonus Plan in effect on the date of
this letter, solely with respect to Xxxxx X. Xxxxxxxx/Xxxxxxxxxxx X.
Xxxxxxxx.
First year Annual Bonus Compensation is guaranteed at 100% without
references to performance criteria.
4. Long Term Incentive Compensation: An award of up to 100% of Base Annual
Salary shall be based upon good performance in relation to criteria and
key indicators to be determined later. Awards in excess of 100% shall be
likewise based upon criteria and measurements which will be in good faith
determined later, but which shall be payable based upon exceptional
performance. Long-Term Compensation shall become vested as follows: 0% in
the first year, 25% in the second year, 50% in the third year, 75% in the
fourth year and 100% in the fifth year, following the award, and shall be
paid in the sixth year.
The Long-Term Compensation payable shall replace the amounts payable to
you under your current employment agreements with First Commonwealth, as
to which you agree not to claim any severance payment(s) prior to the
effective date and time of the Merger, except for the amounts payable to
you under the Incentive/Stay Bonus Agreement dated May 14, 1999 with First
Commonwealth.
It is agreed that the parties shall negotiate in good faith the terms of
the Long-Term Incentive Compensation.
5. Benefits: Employee Benefits currently maintained by First Commonwealth
shall remain in place through 1999, and it is not contemplated that
Benefits will be reduced. In addition, you will be covered by life
insurance with a $500,000 death benefit, and Guardian will match 3% of
your savings against salary. One or more deferred compensation agreement
may be negotiated.
6. Agreement Not to Compete: In the event of a termination of employment,
whether for cause or without cause, you agree not to compete directly or
indirectly with the Guardian,
First Commonwealth and any of Guardian's affiliates, subsidiaries and
business partners, for a period of three years, with respect to any dental
insurance, dental HMO/PPO indemnity or other dental coverage arrangement,
anywhere in the 50 states of the United States and Puerto Rico. The
non-compete provisions shall extend to any type or form of business in
which you have any interest, directly or indirectly, unless by indirect
ownership of less than 2% of a publicly traded company, limited
partnership or other business entity.
7. Severance. It is agreed that those provisions in your current employment
agreement relating to two years severance pay and benefits shall be
renegotiated and severance pay shall be two years Base Annual Salary,
average of two previous years Bonus and benefits upon termination without
cause.
8. Vacation. It is agreed that you will receive 31 vacation days per year.
9. Disability Insurance. To be negotiated.
