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EXHIBIT 10-7
July 30, 1996
Mr. Michael J. Abdallah
48 Ince Road
Burwood Park
Walton on Thames
Surrey KT 125BJ
England
Dear Mike:
This letter confirms our agreement to the terms and conditions applying to your
employment as President of the Somerset Companies.
I. RESPONSIBILITY
You will have the responsibility for the Group's worldwide Marine, Aviation,
Offshore and Onshore Energy and related activities, which currently account
for approximately eighty percent of our existing insurance and reinsurance
business. You will be expected to report directly to me. You will also be
responsible for our London and International operations, as well as having
joint responsibility (as part of the Senior Management Team) for managing
outwards reinsurance for the Group.
II. COMPENSATION AND BENEFITS
A. Your base salary will be $250,000 per annum.
B. As a member of the executive committee, you will participate in our
executive incentive bonus program, based upon an earnings formula, where
you can earn up to a further one hundred percent of your base salary.
Insofar as we are halfway through the year, we have agreed we will pay
you a flat $125,000 bonus for 1996 and then for future years you will be
on the same formula basis as the rest of the staff. These bonuses are
generally paid in March, once the results are finalized.
C. To compensate you for the loss of bonus from CIGNA, which you have
told me was $55,000 after tax last year, we will pay you a one time sum
of $80,000.
D. You will receive twenty working days vacation each year.
III. MONEY PURCHASE PLAN
You will participate in the Company's Money Purchase Plan which is invested
on a tax deferred basis for you. Please refer to the Employee Manual for
more details on how the plan works and for the many other benefits provided
by the Company.
In addition, in the event of your termination prior to your being fully
vested, we will pay you a bonus equivalent to the difference between the
amount vested and the fully vested amount at that point in time.
IV. STOCK OPTIONS
The company has an stock option program and as an incentive to you, you will
be granted 50,000 options, or warrants, on Navigators' stock. Depending on
your performance, and the company's results, you can expect to receive
further options as circumstances permit.
As a general rule, these "options" have been granted at a price approximately
10% below the market price at the time of the grant.
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V. MOVING EXPENSES
A. The Company will provide you and your family with business class
airfare and reimburse your travel expenses for your relocation to the
United States. It is understood that, insofar as for the first few
months you wish to rent a house before deciding to purchase one, we will
likely be picking up moving costs twice. For a period of up to two
months, while you search for your rental accommodation, we will
reimburse you for reasonable temporary hotel accommodation.
When you decide to purchase your first house, we will reimburse you for
the reasonable closing costs and lawyers fees.
B. The Company will pay for packing and shipping your household and
personal effects, furniture and furnishings to the United States.
C. To help you and your family assimilate into a new community and
culture, until the end of 1998, the Company will assist you with the
expenses of domestic help.
VI. EMERGENCY HOME LEAVE
In the event of a death or serious illness of a member of your or your
spouse's immediate family, or other personal emergency requiring your and
your spouse's presence in Sydney, Australia, emergency leave and
transportation expenses will be provided.
VII. TAX RETURN PREPARATION
The Company's accounting firm will assist you in the preparation and filing
of your United States, U.K., and Australian income tax returns. The fees for
this service will be paid by the Company.
VIII. TERMINATION
Your employment will be continuous subject to six months prior written notice
by either party of termination, except for reasons of sexual harassment or
suspected dishonesty. We further both agree, except for the aforementioned
reasons, that no notice will be given prior to January 1, 1999, unless, you
decide to leave the company, against our wishes but for your own family
reasons. If this occurs before January 1, 1999, we will pay you three months
salary to help you get relocated back to Sydney, Australia.
IX. RELOCATION COSTS
In the event of termination of your employment, either at your own, or the
Company's initiative, the Company will pay for moving you, your family, and
your household goods back to Sydney, Australia subject to a maximum of
$50,000. These expenses will be paid providing that you return to your home
Country within 30 days of termination and do not accept other employment in
the insurance business within a six month period.
If you find these terms satisfactory, would you please sign and return a Copy
of this letter to me, retaining the Original for your own records.
Sincerely,
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President, Somerset Marine, Inc. Date
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Michael J. Abdallah Date