Unassociated Document


    
      

    


    BRISTOL
      WEST HOLDINGS, INC.

    EXECUTIVE
      OFFICER INCENTIVE PLAN

    As
      Adopted by the Board of Directors on February 21, 2006

    


    
      	
              1.

            	
              PURPOSE

            


    

    


    The
      purpose of the Plan is to establish and maintain a result and profit oriented
      environment and to motivate and reward eligible employees by making a portion
      of
      their compensation dependent on the achievement of certain Performance Goals
      related to the performance of Bristol West Holdings, Inc. (the “Company”)
      and
      its affiliates and operating units. The Plan aims to align
      the
      interests of management and the Company towards the completion of the Company’s
      strategic objectives, while providing incentives to constantly expand the
      Company’s earning power. The
      Plan
      also seeks to have direct ties to the Company’s business plan and encourage
      teamwork in accomplishing Company goals. The Plan is designed to preserve the
      income tax deductibility of incentives paid hereunder to Company executive
      officers who are subject to the limitations of Section 162(m) of the Internal
      Revenue Code of 1986, as amended, and the regulations and interpretations
      promulgated thereunder (the “Code”).
      Accordingly, the adoption of the Plan is subject to the approval of the
      Company’s stockholders pursuant to Code Section 162(m).

    


    
      	
              2.

            	
              DEFINITIONS

            


    

    


    The
      following definitions shall be applicable throughout the Plan:

    


    (a) “Award”
means
      the amount of bonus payable under the Plan to a Participant with respect to
      a
      Fiscal Year.

    


    (b) “Board”
means
      the Board of Directors of the Company.

    


    (c) “Business
      Plan”
means
      the Company’s Business Plan as approved by the Board from time to time (but in
      no event later than 90 days after the commencement of the applicable Fiscal
      Year).

    


    (d) “Committee”
means
      the Compensation Committee of the Board or another Committee designated by
      the
      Board that is comprised of two or more “outside directors” as defined in Code
      Section 162(m). 

    


    (e) “Covered
      Employees”
means
      those persons who are (or who in the Committee’s sole discretion may become)
      subject to the limitations of Code Section 162(m).

    


    (f) “Fiscal
      Year”
means
      the Company's fiscal year. 

    


    (g) “Individual
      Bonus Target”
means
      a
      Participant’s incentive target with respect to a Fiscal Year.

    


    (h) “Participant”
means
      each Covered Employee and any officer or key employee of the Company who is
      designated as a Participant by the Committee.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (i) 
      “Performance
      Goals”
means
      one or more objective measurable performance factors as determined by the
      Committee with respect to each Fiscal Year based upon one or more factors,
      including, but not limited to: (1) gross written premium; (2) net
      written premium; (3) underwriting income; (4) operating income;
      (5) earnings (including earnings before interest and taxes (EBIT), earnings
      before interest, taxes, depreciation and amortization (EBITDA), and earnings
      before interest, taxes, depreciation and amortization and other non-cash items);
      (6) net income; (7) cash flow; (8) loss ratio; (9) expense
      ratio; (10) combined ratio; (11) return on equity; (12) return on
      assets; (13) earnings or net income per share; (14) book value or book
      value per share; and/or (15) stock price, each with respect to the Company
      and/or one or more of its affiliates or operating units. For purposes of the
      Plan, such criteria may be measured by comparing actual results in a current
      period to either or both of the following: (i) comparable estimates in the
      Business Plan, or (ii) comparable actual results in prior
      periods. 

    


    (j) 
      “Plan”
means
      this Bristol West Holdings, Inc. Executive Officer Incentive Plan, as amended
      from time to time.

    


    
      	
              3.

            	
              ADMINISTRATION

            


    

    


    The
      Plan
      shall be administered by the Committee, which shall have the discretionary
      authority to interpret the provisions of the Plan and to take any actions and
      make any other determinations that it deems necessary or desirable for the
      administration of the Plan to the extent any such action would be permitted
      under Code Section 162(m), including, without limitation, all decisions on
      eligibility to participate, participation, the establishment of payment targets
      and the amount and terms of the Awards payable under the Plan. The decisions
      of
      the Committee shall be final and binding on all parties making claims under
      the
      Plan.

    


    
      	
              4.

            	
              ELIGIBILITY

            


    

    


    Officers
      and key employees of the Company shall be eligible to participate in the Plan
      as
      determined at the sole discretion of the Committee.

    


    
      	
              5.

            	
              AMOUNT
                OF BONUS

            


    

    


    With
      respect to each Participant, the Committee will establish the Participant’s
      Individual Bonus Target for the Fiscal Year and the Participant’s Performance
      Goal or Goals for the Fiscal Year (increased or decreased, in each case in
      accordance with factors adopted by the Committee with respect to the Fiscal
      Year
      that relate to unusual or extraordinary items). With respect to each
      Participant, the Committee will also determine whether the terms and conditions
      underlying the payment of the Participant’s Award have been satisfied. The
      selection and adjustment of applicable Performance Goals and Individual Bonus
      Targets and determination of Awards for Participants shall be made in compliance
      with the rules of Code Section 162(m). The maximum amount of any Awards that
      can
      be paid under the Plan to any Participant during any Fiscal Year is $1,000,000.
      The Committee reserves the right, in its sole discretion, to reduce or eliminate
      the amount of an Award otherwise payable to a Participant with respect to any
      Fiscal Year in its sole discretion.

     

    
      
        
        

      

      
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              6.

            	
              PAYMENT
                OF BONUS

            


    

    


    (a)  Unless
      otherwise determined by the Committee, a Participant must be on the Company’s
      payroll on the date the Award is to be paid. The Committee may make exceptions
      to this requirement in the case of retirement, death or disability or under
      other circumstances, as determined by the Committee in its sole
      discretion.

    


    (b)  Payments
      of Awards may be made (i) in cash; and/or (ii) in the form of any award
      available under the Bristol West Holdings, Inc. 2004 Stock Incentive Plan as
      it
      may be replaced, modified, amended or supplemented from time to time (the
“Stock
      Incentive Plan”),
      as
      determined by the Committee in its sole discretion. The number of shares
      underlying any award granted under the Stock Incentive Plan shall be determined
      by dividing the applicable cash amount to be converted into a stock award by
      the
      fair market value of the shares on the applicable grant date. Fair market value
      for such purpose shall be determined based on any objective and appropriate
      method determined by the Committee in its sole discretion. 

    


    (c)  Any
      distribution or payment made under the Plan shall occur within a reasonable
      period of time after the end of the Fiscal Year in which the Participant has
      earned the Award (but in no event later than two and one-half months following
      the Fiscal Year in which the Award is no longer subject to a substantial risk
      of
      forfeiture as determined under Code Section 409A and all applicable guidance
      and
      Treasury regulations); provided, that no Award shall become payable to a
      Participant with respect to any Fiscal Year until the Committee has certified
      in
      writing (in the manner prescribed under applicable regulations under Code
      Section 162(m)) that the terms and conditions underlying the payment of
      such Award have been satisfied. The Committee, in its sole discretion, may
      permit a Participant to defer receipt of cash that would otherwise be delivered
      to the Participant under the Plan. Any such deferral elections shall be subject
      to such rules and procedures as determined by the Committee in its sole
      discretion.

    


    (d)  If
      a
      Participant entitled to the payment of an Award under the Plan dies prior to
      the
      distribution of such Award, the distribution shall be made to the Participant’s
      beneficiary or legal representative in accordance with Section 7(d) of the
      Plan within the same time period in which the Award otherwise would have been
      paid to the Participant.

    


    
      	
              7.

            	
              GENERAL

            


    

    


    (a)  TAX
      WITHHOLDING. The Company shall have the right to deduct from all Awards paid
      in
      cash any federal, state or local income and/or payroll taxes required by law
      to
      be withheld with respect to such payments. In the case of Awards settled by
      an
      award granted under the Stock Incentive Plan, the terms of the Stock Incentive
      Plan regarding tax withholding shall govern or, if the Stock Incentive Plan
      does
      not address tax withholding, the person receiving such common stock may be
      required to pay to the Company the amount of any such taxes which the Company
      is
      required to withhold with respect to such common stock or, at the Committee’s
      sole discretion, the Company may withhold a number of shares of Company common
      stock which have a fair market value equal to the amount of such withholdings.
      The Company also may withhold from any other amount payable by the Company
      or
      any affiliate to the Participant an amount equal to the taxes required to be
      withheld from any Award.

     

    
      
        
        

      

      
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    (b)  CLAIM
      TO
      AWARDS AND EMPLOYMENT RIGHTS. Nothing in the Plan shall confer on any
      Participant the right to continued employment with the Company or any of its
      affiliates, or affect in any way the right of the Company or any affiliate
      to
      terminate the Participant’s employment at any time, and for any reason, or
      change the Participant’s responsibilities. Awards represent unfunded and
      unsecured obligations of the Company and a holder of any right hereunder in
      respect of any Award shall have no rights other than those of a general
      unsecured creditor to the Company.

    


    (c)  BENEFICIARIES.
      To the extent the Committee permits beneficiary designations, any payment of
      Awards due under the Plan to a deceased Participant shall be paid to the
      beneficiary duly designated by the Participant in accordance with the Company’s
      practices. If no such beneficiary has been designated or survives the
      Participant, payment shall be made to the Participant’s legal representative. A
      beneficiary designation may be changed or revoked by a Participant at any time,
      provided the change or revocation is filed with the Company prior to the
      Participant’s death.

    


    (d)  NONTRANSFERABILITY.
      A person’s rights and interests under the Plan, including any Award previously
      made to such person or any amounts payable under the Plan, may not be assigned,
      pledged, or transferred except, in the event of a Participant’s death, to a
      designated beneficiary as provided in the Plan, or in the absence of such
      designation, by will or the laws of descent and distribution.

    


    (e)  INDEMNIFICATION.
      Each person who is or shall have been a member of the Committee and each
      employee of the Company or an affiliate who is delegated a duty under the Plan
      shall be indemnified and held harmless by the Company from and against any
      loss,
      cost, liability or expense that may be imposed upon or reasonably incurred
      by
      him in connection with or resulting from any claim, action, suit or proceeding
      to which he may be a party or in which he may be involved by reason of any
      action or failure to act under the Plan and against and from any and all amounts
      paid by him in satisfaction of judgment in any such action, suit or proceeding
      against him, provided such loss, cost, liability or expense is not attributable
      to such person’s willful misconduct. Any person seeking indemnification under
      this provision shall give the Company prompt notice of any claim and shall
      give
      the Company an opportunity, at its own expense, to handle and defend the same
      before the person undertakes to handle and defend it on his own behalf. The
      foregoing right of indemnification shall not be exclusive of any other rights
      of
      indemnification to which such persons may be entitled under the Company’s
      Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or
      any
      power that the Company may have to indemnify them or hold them
      harmless.

    


    (f)  EXPENSES.
      The expenses of administering the Plan shall be borne by the
      Company.

    


    (g)  PRONOUNS.
      Masculine pronouns and other words of masculine gender shall refer to both
      men
      and women.

    


    (h)  TITLES
      AND HEADINGS. The titles and headings of the sections in the Plan are for
      convenience of reference only, and in the event of any conflict, the text of
      the
      Plan, rather than such titles or headings, shall control.

     

    
      
        
        

      

      
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    (i)  INTENT.
      The intention of the Company and the Committee is to administer the Plan in
      compliance with Code Section 162(m) so that the Awards paid under the Plan
      to
      Covered Employees will be treated as performance-based compensation under Code
      Section 162(m)(4)(C). If any provision of the Plan applicable to Covered
      Employees does not comply with the requirements of Code Section 162(m), then
      such provision shall be construed or deemed amended to the extent necessary
      to
      conform to such requirements. The Company and/or the Committee, in their sole
      discretion, may pay bonuses outside of and independent of the Plan to any
      Participant.

    


    (j)  GOVERNING
      LAW. The validity, construction, and effect of the Plan, any rules and
      regulations relating to the Plan, and any Award shall be determined in
      accordance with the laws of the State of Delaware (without giving effect to
      principles of conflicts of laws thereof) and applicable Federal
      law.

    


    (k)  AMENDMENTS
      AND TERMINATION. The Board may terminate the Plan at any time, provided such
      termination shall not affect the payment of any Awards accrued under the Plan
      prior to the date of the termination. The Board may, at any time, or from time
      to time, amend or suspend and, if suspended, reinstate, the Plan in whole or
      in
      part, provided however, that any amendment of the Plan shall be subject to
      the
      approval of the Company’s stockholders to the extent required to comply with the
      requirements of Code Section 162(m), or any other applicable laws, regulations
      or rules.

     

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