Document:

Exhibit 4.5

 

EMPLOYEE STOCKHOLDER’S AGREEMENT

 

This Employee
Stockholder’s Agreement (this “Agreement”) is entered into as of 
          
  , 200   between Bristol West Holdings, Inc., a Delaware
corporation (the “Company”), and the undersigned, as set forth on the
signature page hereof (the “Employee Stockholder”) (the Company and the
Employee Stockholder being hereinafter collectively referred to as the “Parties”).

 

WHEREAS, this
Agreement is one of several other agreements (“Other Employee and Management
Stockholders’ Agreements”) which have been, or which in the future will be,
entered into between the Company and other individuals who are or will be key
employees of the Company or one of its subsidiaries (collectively, the “Other
Employee and Management Stockholders”); and

 

WHEREAS, the
Company and the Employee Stockholder have agreed that the Employee Stockholder
may purchase a certain number of shares of common stock, par value $.01 per
share, of the Company (the “Common Stock”) and the Employee Stockholder
will receive a certain number of options to purchase Common Stock (“Options”)
pursuant to the terms of the 1998 Option Plan of the Company (the “Option
Plan”) and the “Non-Qualified Stock Option Agreement” attached hereto as
Exhibit A.

 

NOW THEREFORE,
to implement the foregoing and in consideration of the grant of Options and of
the mutual agreements contained herein, the Parties agree as follows:

 

1.                                       Common
Stock; Issuance of Options.  (a)
Subject to the terms and conditions hereinafter set forth, the Company may,
from time to time, choose to provide the Employee Stockholder with the
opportunity to purchase, and the Employee Stockholder may purchase shares of
Common Stock (the “Issued Stock”) at a purchase price per share to be
determined at such time as the Company offers the Employee Stockholder the
opportunity to purchase such stock.  The
number of shares of Issued Stock to be sold by the Company and purchased by the
Employee Stockholder is set forth on the signature page hereof.  The Company shall have no obligation to sell
any Issued Stock to any person who (i) is a resident or citizen of a state or
other jurisdiction in which the sale of the Issued Stock to him or her would
constitute a violation of the securities or “blue sky” laws of such jurisdiction
or (ii) is not an employee of the Company or any of its subsidiaries on the
date hereof.

 

(b)                                 Subject
to the terms and conditions hereinafter set forth, the Company shall issue to
the Employee Stockholder the Options and the Parties shall execute and deliver
to each other copies of the Non-Qualified Stock Option Agreement concurrently
with the issuance of the Options.  For
purposes of this Agreement, the “Base Price” shall be
$           per share of
Common Stock and the Effective Date shall be              
  , 200   (the “Effective Date”).

 

2.                                       Employee
Stockholder’s Representations, Warranties and Agreements.  (a) The Employee Stockholder agrees and
acknowledges that he will not, directly or indirectly, offer, transfer, sell,
assign, pledge, hypothecate or otherwise dispose of (any such act being
referred to herein as a “transfer”) any shares of the Issued Stock and, at the
time of exercise, the Common Stock issuable upon exercise of the Options (the “Option
Stock” and, collectively with

 

 

Contract A

 

the Issued Stock, the “Stock”)
unless such transfer complies with Section 3 of this Agreement.  If the Employee Stockholder is an
“affiliate” (as defined under Rule 405 of the rules and regulations promulgated
under the Act and as interpreted by the Board of Directors of the Company) of
the Company (an “Affiliate”), the Employee Stockholder also agrees and
acknowledges that he will not transfer any shares of the Stock unless:

 

(i)             the
transfer is pursuant to an effective registration statement under the
Securities Act of 1933, as amended, and the rules and regulations in effect
thereunder (the “Act”), and in compliance with applicable provisions of
state securities laws or

 

(ii)          (A)
counsel for the Employee Stockholder (which counsel shall be reasonably
acceptable to the Company) shall have furnished the Company with an opinion,
satisfactory in form and substance to the Company, that no such registration is
required because of the availability of an exemption from registration under
the Act and (B) if the Employee Stockholder is a citizen or resident of any
country other than the United States, or the Employee Stockholder desires to
effect any transfer in any such country, counsel for the Employee Stockholder
(which counsel shall be reasonably satisfactory to the Company) shall have
furnished the Company with an opinion or other advice reasonably satisfactory
in form and substance to the Company to the effect that such transfer will
comply with the securities laws of such jurisdiction.

 

Notwithstanding
the foregoing, the Company acknowledges and agrees that any of the following
transfers are deemed to be in compliance with the Act and this Agreement and no
opinion of counsel is required in connection therewith: (x) a transfer made
pursuant to Section 4, 5 or 6 hereof, (y) a transfer upon the death of the
Employee Stockholder to his executors, administrators, testamentary trustees,
legatees or beneficiaries (the “Employee Stockholder’s Estate”) or a
transfer to the executors, administrators, testamentary trustees, legatees or
beneficiaries of a person who has become a holder of Stock in accordance with
the terms of this Agreement, provided that it is expressly understood that any
such transferee shall be bound by the provisions of this Agreement and (z) a transfer
made after the Effective Date in compliance with the federal securities laws to
a trust or custodianship the beneficiaries of which may include only the
Employee Stockholder, his spouse or his lineal descendants (a “Employee
Stockholder’s Trust”), provided that such transfer is made expressly
subject to this Agreement and that the transferee agrees in writing to be bound
by the terms and conditions hereof.

 

(b)                                 The
certificate (or certificates) representing the Stock shall bear the following
legend:

 

“THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD, ASSIGNED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE
PROVISIONS OF THE EMPLOYEE STOCKHOLDER’S AGREEMENT DATED AS OF
                   
   , 200   BETWEEN BRISTOL WEST HOLDINGS, INC. (THE
“COMPANY”) AND THE EMPLOYEE STOCKHOLDER NAMED ON THE FACE HEREOF (A

 

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COPY OF WHICH
IS ON FILE WITH THE SECRETARY OF THE COMPANY).”

 

(c)                                  The
Employee Stockholder acknowledges that he has been advised that (i) a
restrictive legend in the form heretofore set forth shall be placed on the
certificates representing the Stock and (ii) a notation shall be made in the
appropriate records of the Company indicating that the Stock is subject to
restrictions on transfer and appropriate stop- transfer restrictions will be
issued to the Company’s transfer agent with respect to the Stock.  The Employee Stockholder also acknowledges
that (1) the Stock must be held indefinitely and the Employee Stockholder must
continue to bear the economic risk of the investment in the Stock unless it is
subsequently registered under the Act or an exemption from such registration is
available, (2) when and if shares of the Stock may be disposed of without
registration in reliance on Rule 144 of the rules and regulations promulgated
under the Act, such disposition can be made only in limited amounts in
accordance with the terms and conditions of such Rule and (3) if the Rule 144
exemption is not available, public sale without registration will require
compliance with some other exemption under the Act.

 

(d)                                 If
any shares of the Stock are to be disposed of in accordance with Rule 144 under
the Act or otherwise, the Employee Stockholder shall promptly notify the
Company of such intended disposition and shall deliver to the Company at or
prior to the time of such disposition such documentation as the Company may
reasonably request in connection with such sale and, in the case of a
disposition pursuant to Rule 144, shall deliver to the Company an executed copy
of any notice on Form 144 required to be filed with the Securities and Exchange
Commission (the “SEC”).

 

(e)                                  The
Employee Stockholder agrees that, if any shares of the Common Stock of the
Company are offered to the public pursuant to an effective registration
statement under the Act (other than registration of securities issued under an
employee plan), the Employee Stockholder will not effect any public sale or
distribution of any shares of the Common Stock not covered by such registration
statement from the time of the receipt of a notice from the Company that the
Company has filed or imminently intends to file such registration statement to,
or within 180 days after, the effective date of such registration statement,
unless otherwise agreed to in writing by the Company.

 

(f)                                    The
Employee Stockholder represents and warrants that (i) with respect to the
Issued Stock, if any, he has received and reviewed the document(s) comprising
the Private Placement Memorandum, dated
             ,
200  , (the “Private Placement Memorandum,”) relating to the
Issued Stock, if any, and the documents referred to therein, certain of which
documents set forth the rights, preferences, and restrictions relating to the
Issued Stock, and (ii) he has been given the opportunity to obtain any
additional information or documents and to ask questions and receive answers
about such information, the Company and the business and prospects of the
Company which he deems necessary to evaluate the merits and risks related to
his investment in the Issued Stock, if any, and to verify the Private Placement
Memorandum and the information contained in the information received as indicated
in this Section 2(f)(ii), and he has relied solely on such information.

 

(g)                                 The
Employee Stockholder further represents and warrants that (i) his

 

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financial condition is such that he can
afford to bear the economic risk of holding the Stock for an indefinite period
of time and has adequate means for providing for his current needs and personal
contingencies, (ii) he can afford to suffer a complete loss of his or her
investment in the Stock, (iii) he understands and has taken cognizance of all
risk factors related to the purchase of the Stock and (iv) his knowledge and
experience in financial and business matters are such that he is capable of
evaluating the merits and risks of his purchase of the Stock as contemplated by
this Agreement.

 

3.                                       Restriction
on Transfer.  Except for transfers
permitted by clauses (x), (y) and (z) of Section 2(a) or a sale of shares
of Stock pursuant to an effective registration statement under the Act filed by
the Company or pursuant to the Sale Participation Agreement (as defined below),
the Employee Stockholder agrees that he will not transfer any shares of the
Stock at any time prior to the fifth anniversary of the Effective Date.  No transfer of any such shares in violation
hereof shall be made or recorded on the books of the Company and any such
transfer shall be void and of no effect.

 

4.                                       Right
of First Refusal.  If, prior to the
later of the fifth anniversary of the Effective Date or a Public Offering (as
hereinafter defined), the Employee Stockholder receives a bona fide offer to
purchase any or all of his shares of Stock (the “Offer”) from a third
party (the “Offeror”) which the Employee Stockholder wishes to accept,
the Employee Stockholder shall cause the Offer to be reduced to writing and
shall notify the Company in writing of his wish to accept the Offer.  The Employee Stockholder’s notice shall
contain an irrevocable offer to sell such shares of Stock to the Company (in
the manner set forth below) at a purchase price equal to the price contained
in, and on the same terms and conditions of, the Offer, and shall be
accompanied by a copy of the Offer (which shall identify the Offeror).  At any time within 30 days after the date of
the receipt by the Company of the Employee Stockholder’s notice, the Company
shall have the right and option to purchase, or to arrange for a third party to
purchase, all of the shares of Stock covered by the Offer either (i) at the
same price and on the same terms and conditions as the Offer or (ii) if the
Offer includes any consideration other than cash, then at the sole option of
the Company, at the equivalent all cash price, determined in good faith by the
Company’s Board of Directors, by delivering a certified bank check or checks in
the appropriate amount (and any such non-cash consideration to be paid) to the
Employee Stockholder at the principal office of the Company against delivery of
certificates or other instruments representing the shares of Stock so
purchased, appropriately endorsed by the Employee Stockholder.  If at the end of such 30 day period, the
Company has not tendered the purchase price for such shares in the manner set
forth above, the Employee Stockholder may during the succeeding 60 day period
sell not less than all of the shares of Stock covered by the Offer to the
Offeror at a price and on terms no less favorable to the Employee Stockholder
than those contained in the Offer. 
Promptly after such sale, the Employee Stockholder shall notify the
Company of the consummation thereof and shall furnish such evidence of the
completion and time of completion of such sale and of the terms thereof as may
reasonably be requested by the Company. 
If, at the end of 60 days following the expiration of the 30 day period
for the Company to purchase the Stock, the Employee Stockholder has not
completed the sale of such shares of the Stock as aforesaid, all the
restrictions on sale, transfer or assignment contained in this Agreement shall
again be in effect with respect to such shares of the Stock.

 

5.                                       Employee
Stockholder’s Resale of Stock and Options to the Company

 

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Upon The
Employee Stockholder’s Death or Disability or in the Case of Certain
Terminations of Employment.  (a)  Except as otherwise
provided herein, if, prior to the fifth anniversary of the Effective Date,
(x)(i) the Employee Stockholder is still in the employ of the Company or any
subsidiary of the Company or (ii) the Employee Stockholder has retired from the
Company and its subsidiaries at age 65 or over (or such other age as may be
approved by the Board of Directors of the Company) after having been employed
by the Company or any subsidiary for at least three years after the Effective
Date and (y) the Employee Stockholder either dies or becomes permanently
disabled, then the Employee Stockholder, the Employee Stockholder’s Estate or a
Employee Stockholder’s Trust (each, an “Employee Stockholder Entity”),
shall, for twelve (12) months following the date of death or permanent
disability, have the right:

 

(A)      with respect to the Stock, to sell to the
Company, and the Company shall be required to purchase, on one occasion, all or
any portion of the shares of Stock then held by the applicable Employee
Stockholder Entities, at the Section 5(a) Repurchase Price, as determined
in accordance with Section 7; and

 

(B)        with respect to the Options, to require the
Company to pay to the applicable Employee Stockholder Entities, an additional
amount equal to the Option Excess Price, if any, as provided in
Section 8(b), in respect of the termination of all or any portion of
outstanding exercisable Options held by the applicable Employee Stockholder,
and all other outstanding Options will be dealt with in accordance with Section 8(c)
hereof.

 

(b)                                 In
the event the applicable Employee Stockholder Entities intend to exercise their
rights pursuant to Section 5(a), such Entities shall send written notice
to the Company of their intention to sell shares of Stock in exchange for the
payment referred in Section 5(a)(A) and/or to terminate such Options in
exchange for the payment referred to in Section 5(a)(B) and shall indicate
the number of shares of Stock to be sold and the number of Options to be
terminated with payment in respect thereof (the “Redemption Notice”).  The completion of the purchase shall take
place at the principal office of the Company on the tenth business day after
the giving of the Redemption Notice. 
The applicable Repurchase Price and any payment with respect to the
Options as described above shall be paid by delivery to the applicable Employee
Stockholder Entities, of a certified bank check or checks in the appropriate
amount payable to the order of each of the applicable Employee Stockholder
Entities, against delivery of certificates or other instruments representing
the Stock so purchased and appropriate documents cancelling the Options so
terminated appropriately endorsed or executed by the applicable Employee
Stockholder Entities or any duly authorized representative.  For purposes of this Agreement, the Employee
Stockholder shall be deemed to have a “permanent disability” if the Employee
Stockholder is unable to engage in the activities required by the Employee
Stockholder’s job by reason of any medically determined physical or mental
impairment which can be expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than twelve (12)
months.

 

(c)                                  Notwithstanding
anything in Section 5(a) to the contrary and subject to Section 11(a),
if there exists and is continuing a default or an event of default on the part
of the Company or any subsidiary of the Company under any loan, guarantee or
other agreement under which the Company or any subsidiary of the Company has
borrowed money or if the repurchase

 

5

 

referred to in Section 5(a) would result
in a default or an event of default on the part of the Company or any
subsidiary of the Company under any such agreement or if a repurchase would not
be permitted under the Delaware General Corporation Law (the “DGCL”) or
would otherwise violate the DGCL (or if the Company reincorporates in another
state, the business corporation law of such state) (each such occurrence being
an “Event”), the Company shall not be obligated to repurchase any of the
Stock or the Options from the applicable Employee Stockholder Entities, until
the first business day which is 10 calendar days after all of the foregoing
Events have ceased to exist (the “Repurchase Eligibility Date”); provided,
however, that (i) the number of shares of Stock subject to repurchase under
this Section 5(c) shall be that number of shares of Stock, and (ii) in the
case of a repurchase pursuant to Section 5(a), the number of Exercisable
Option Shares (as defined in Section 8) for purposes of calculating the
Option Excess Price payable under this Section 5(c) shall be the number of
Exercisable Option Shares, specified in the Redemption Notice and held by the
applicable Employee Stockholder Entities, at the time of delivery of a
Redemption Notice in accordance with Section 5(b) hereof; provided,
further, that the Repurchase Calculation Date shall be determined in
accordance with Section 7 as of the Repurchase Eligibility Date (unless,
in a repurchase pursuant to Section 5(a), the Section 5(a) Repurchase
Price would be greater if the Repurchase Calculation Date had been determined
as if no Event had occurred in which case, solely for purposes of this proviso,
the Repurchase Calculation Date shall be determined as if no Event had
occurred).  All Options exercisable as
of the date of a Redemption Notice, in the case of a repurchase pursuant to
Section 5(a), shall continue to be exercisable until the repurchase of
such Options pursuant to such Redemption Notice, provided that to the extent
any Options are exercised after the date of such Redemption Notice, the number
of Exercisable Option Shares for purposes of calculating the Option Excess
Price shall be reduced accordingly.

 

6.                                       The
Company’s Option to Repurchase Stock and Options of Employee Stockholder.
(a)  If, prior to the fifth anniversary
of the Effective Date, (i) the Employee Stockholder’s active employment with
the Company (and/or, if applicable, its subsidiaries) is terminated by the
Company with Cause, (ii) the beneficiaries of a Employee Stockholder’s Trust
shall include any person or entity other than the Employee Stockholder, his
spouse or his lineal descendants, or (iii) the Employee Stockholder shall
effect a transfer of any of the Stock other than as permitted in this Agreement
(each, a “Section 6(a) Call Event”), then the Company shall have
the right:

 

(A)      with respect to the Stock, to purchase all or any
portion of the shares of the Stock then held by the applicable Employee
Stockholder Entities at the Section 6(a) Repurchase Price determined in
accordance with Section 7 hereof; and

 

(B)        with respect to the Options, if the Company
exercises the call rights granted under this Section 6(a), all Options
(whether or not then exercisable) held by the applicable Employee Stockholder
Entities will terminate immediately without payment in respect thereof.

 

(b)                                 If,
prior to the fifth anniversary of the Effective Date, (i) the Employee
Stockholder’s employment is terminated as a result of the death or permanent
disability of the Employee Stockholder or (ii) if the Employee Stockholder dies
or becomes permanently disabled after the retirement of the Employee
Stockholder from the Company or any of its subsidiaries at

 

6

 

age 65 or over (or such other age as may be
approved by the Board of Directors of the Company) after having been employed
by the Company or any subsidiary for at least three years after the Effective
Date, (each a “Section 6(b) Call Event”), then the Company shall
have the right:

 

(A)      with respect to the Stock, to purchase all or any
portion of the shares of Stock then held by the applicable Employee Stockholder
Entities at the Section 5(a) Repurchase Price determined in accordance
with Section 7 hereof; and

 

(B)        with respect to the Options, if the Company
exercises the call rights granted under this Section 6(b) to an additional
amount equal to the Option Excess Price, if any, as provided in
Section 8(b), in respect of the outstanding exercisable Options so called
to be paid by the Company and all other outstanding Options shall be dealt with
in accordance with Section 8(c) hereof.

 

(c)                                  If,
prior to the fifth anniversary of the Effective Date, the Employee
Stockholder’s employment is terminated as a result of a termination (i) by the
Employee Stockholder with Good Reason or (ii) upon the retirement of the
Employee Stockholder from the Company or any of its subsidiaries at age 65 or
over (or such other age as may be approved by the Board of Directors of the
Company) after having been employed by the Company or any subsidiary for at
least three years after the Effective Date, or (iii) by the Company without
Cause (each, a “Section 6(c) Call Event”), then the Company shall
have the right:

 

(A)      with respect to the Stock, to purchase all or any
portion of the shares of Stock then held by the applicable Employee Stockholder
Entities at the Section 6(c) Repurchase Price determined in accordance
with Section 7 hereof; and

 

(B)        with respect to the Options, if the Company
exercises the call rights granted under this Section 6(c), then the
Company may purchase all or any portion of exercisable Options for an amount
equal to the Option Excess Price, as provided in Section 8(b), and all
other outstanding Options will be dealt with in accordance with the terms of
Section 8(b) and 8(c) hereof.

 

(d)                                 If,
prior to the fifth anniversary of the Effective Date, the Employee
Stockholder’s active employment with the Company (and/or, if applicable, its
subsidiaries) is terminated by the Employee Stockholder without Good Reason (a
“Section 6(d) Call Event”), then the Company shall have the right:

 

(i)             with
respect to the Stock, to purchase all or any portion of the shares of the Stock
then held by the applicable Employee Stockholder Entities at the
Section 6(d) Repurchase Price determined in accordance with Section 7
hereof; and

 

(ii)          with
respect to the Options, if the Company exercises the call rights granted under
this Section 6(d), the Company may purchase all or any portion of
exercisable Options held by the applicable Employee Stockholder Entities, for
an amount equal to the Option Excess Price, as provided in Section 8(b),
and all other outstanding Options will be dealt with in accordance with the
terms of Section 8(b) and 8(c) hereof.

 

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(e)                                  The
Company shall have a period of (i) twelve (12) months from the date of a
Section 6(b) Call Event and (ii) sixty (60) days from the date of any
other Call Event (or, if later, with respect to a Section 6(a) Call Event,
the date of discovery of an impermissible transfer constituting a
Section 6(a) Call Event), in which to give notice in writing to the
Employee Stockholder of its election to exercise its rights pursuant to this
Section 6 (“Call Notice”). 
The completion of the purchases pursuant to the foregoing shall take
place at the principal office of the Company on the tenth business day after
the giving of the Call Notice.  The
applicable Repurchase Price and any payment with respect to the Options as
described in this Section 6 shall be paid by delivery to the applicable
Employee Stockholder Entities of a certified bank check or checks in the
appropriate amount payable to the order of each of the applicable Employee
Stockholder Entities against delivery of certificates or other instruments
representing the Stock so purchased and appropriate documents cancelling the
Options so terminated, appropriately endorsed or executed by the applicable
Employee Stockholder Entities or its authorized representative.

 

(f)                                    Notwithstanding
any other provision of this Section 6 to the contrary and subject to
Section 11(a), if there exists and is continuing any Event, the Company
shall delay the repurchase of any of the Stock or the Options (pursuant to a
Call Notice timely given in accordance with Section 6(e) hereof) from the
applicable Employee Stockholder Entities until the Repurchase Eligibility Date;
provided, however, that (i) the number of shares of Stock subject
to repurchase under this Section 6 shall be that number of shares of
Stock, and (ii) in the case of a repurchase pursuant to Section 6(c) or
6(d), the number of Exercisable Option Shares for purposes of calculating the
Option Excess Price payable under this Section 6 shall be the number of
Exercisable Option Shares, held by the applicable Employee Stockholder Entities
at the time of delivery of a Call Notice in accordance with Section 6(e)
hereof; and provided, further, that the Repurchase Calculation
Date shall be determined in accordance with Section 7 based on the
Repurchase Eligibility Date (unless (x) in the case of a Section 6(b) Call
Event, a Section 6(c) Call Event or a Section 6(d) Call Event, the
applicable Repurchase Price would be greater if the Repurchase Calculation Date
had been determined as if no Event had occurred, in which case the Repurchase
Calculation Date shall be determined as if no Event had occurred, and (y) in
the case of a Section 6(a) Call Event, the applicable Repurchase Price
would be less if the Repurchase Calculation Date had been determined as if no
Event had occurred, in which case the Repurchase Calculation Date shall be
determined as if no Event had occurred); and provided, further,
that such delay shall in no event exceed twelve months.  All Options exercisable as of the date of a
Call Notice, in the case of a repurchase pursuant to Section 6(c) or 6(d),
shall continue to be exercisable until the repurchase of such Options pursuant
to such Call Notice, provided that to the extent that any Options are exercised
after the date of such Call Notice, the number of Exercisable Option Shares for
purposes of calculating the Option Excess Price shall be reduced accordingly.

 

(g)                                 Section 6(a)
Call Events, Section 6(b) Call Events, Section 6(c) Call Events, and
Section 6(d) Call Events shall be collectively referred to as “Call
Events.”

 

7.                                       Determination
of Repurchase Price. 
(a)     The Section 5(a) Repurchase Price,
Section 6(a) Repurchase Price, Section 6(c) Repurchase Price and the
Section 6(d) Repurchase Price are hereinafter collectively referred to as
the “Repurchase Price”.  The
Repurchase Price shall be calculated as of the last day of the month preceding
the later of (i) the

 

8

 

month in which the event giving
rise to the repurchase occurs and (ii) the month in which the Repurchase
Eligibility Date occurs (hereinafter called the “Repurchase Calculation Date”);
provided, however, for the purpose of the calculation of the
Section 5(a) Repurchase Price, the Repurchase Calculation Date shall be
the last day of the month preceding the month in which the Redemption Notice is
served.  The event giving rise to the
repurchase shall be the death, permanent disability, retirement or termination
of employment, of the Employee Stockholder, not the giving of any notice
required pursuant to Section 5 or 6.

 

(b)                                 The
Section 5(a) Repurchase Price shall be a per share Repurchase Price equal
to the Fair Market Value Per Share (as defined in Section 7(g)) as of the
Repurchase Calculation Date.

 

(c)                                  The
Section 6(a) Repurchase Price shall be a per share Repurchase Price equal
to the lesser of (i) the Base Price and (ii) the Book Value Per Share (or,
after a Public Offering, the Market Price Per Share) as of the Repurchase Calculation
Date (but shall not be less than zero).

 

(d)                                 The
Section 6(c) Repurchase Price shall be a per share Repurchase Price (i)
with respect to all Stock other than Option Stock, equal to the Fair Market
Value Per Share and (ii) with respect to Option Stock, (A) in the event that a
Section 6(c) Call Event described in Section 6(ii) has occurred,
equal to the Book Value Per Share (or, after a Public Offering, the Market
Price Per Share) and (B) in the event that a Section 6(c) Call Event described
in Section 6(c)(i) or (iii) has occurred, equal to the Fair Market Value
Per Share.

 

(e)                                  The
Section 6(d) Repurchase Price shall be a per share Repurchase Price (i)
with respect to all Stock other than Option Stock, (A) prior to a Public
Offering, equal to the lesser of (x) Fair Market Value Per Share and (y) the
Base Price plus (1) the Applicable Percentage multiplied by (2) the
excess, if any, of Fair Market Value Per Share over the Base Price and (B)
after a Public Offering, equal to Market Price Per Share and (ii) with respect
to all Option Stock, equal to the lesser of (x) the Book Value Per Share (or,
after a Public Offering, the Market Price Per Share) and (y) the Base Price
plus (1) the Applicable Percentage multiplied by (2) the excess, if any,
of Book Value Per Share over the Base Price. 
The “Applicable  Percentage” shall mean zero prior to the
first anniversary of the Effective Date, twenty-five percent (25%) during the
period commencing on the first anniversary of the Effective Date, fifty percent
(50%) during the period commencing the second anniversary of Effective Date,
seventy-five percent (75%) during the period commencing on the third
anniversary of Effective Date and on and after the fourth anniversary of the
Effective Date, 100%.

 

(f)                                    For
purposes of this Agreement the following definitions shall apply: “Cause”
shall mean (i) the Employee Stockholder’s willful and continued failure to
perform Employee Stockholder’s duties with respect to the Company or its
subsidiaries which continues after a demand for substantial performance is
delivered to Employee Stockholder by the Company, (ii) willful misconduct by
Employee Stockholder involving dishonesty or breach of trust in connection with
Employee Stockholder’s employment, (iii) an indictment of Employee Stockholder
for a felony or misdemeanor involving moral turpitude, or (iv) any material
breach by the Employee Stockholder of the provisions of Section 25 hereof
or (v) violation of any written Company policy, and “Good Reason” shall
mean (i) a reduction in Employee

 

9

 

Stockholder’s base salary (other than any
general salary reduction affecting at least the majority of the employees of
the Company), (ii) a material and adverse change in the Employee Stockholder’s
duties and responsibilities or (iii) a transfer of the Employee Stockholder’s
primary workplace by more than fifty (50) miles from the Employee Stockholder’s
workplace as of the date hereof.

 

(g)                                 As
used herein, “Fair Market Value Per Share” shall mean (i) after a Public
Offering, Market Price Per Share, or (ii) prior to a Public Offering, the fair
market value per share of Common Stock, as determined within six (6) months of
the Repurchase Calculation Date by the Board of Directors of the Company in good
faith (the “Board Determination”).

 

(h)                                 As
used herein, “Book Value Per Share” shall be the quotient of (a) (i) $92,120,000 plus (ii) the aggregate
net income of the Company from and after July 10, 1998 (as
decreased by any net losses from and after July 10, 1998) excluding the
effect of adjustments required or permitted by Accounting Principals Board
Opinions Nos. 16 and 17 with respect to assets acquired or liabilities assumed
by the Company in the Closing transactions and any related transactions plus
(iii) the aggregate dollar amount contributed to (or credited to common
stockholders’ equity of) the Company after the July 10, 1998 as equity of
the Company (including consideration to be received upon exercise of the
Options and other stock equivalents) plus (iv) to the extent reflected
as deductions to Book Value Per Share in clause (ii) above (or minus, to
the extent reflected as additions to Book Value Per Share in clause (ii) above)
unusual or other items recognized by the Company (including, without
limitation, extraordinary charges, one time or accelerated write-offs of good
will), in each case, if and to the extent determined in the sole discretion of
the Board of Directors of the Company, minus (v) the aggregate dollar
amount of any dividends paid by the Company after July 10, 1998 and a
Public Offering, divided by (b) the sum of the number of shares of
Common Stock then outstanding and the number of shares of Common Stock issuable
upon the exercise of all outstanding stock options and other rights to acquire
Common Stock and the conversion of all securities convertible into shares of
Common Stock.  The items referred to in
the calculations set forth in clauses (a)(ii) through (a)(iv) of the
immediately preceding sentence shall be determined in good faith and, to the
extent possible, in accordance with generally accepted accounting principles
applied on a basis consistent with any prior periods as reflected in the
consolidated financial statements of the Company.

 

(i)                                     As
used herein the term “Public Offering” shall mean the sale of shares of
Common Stock to the public subsequent to the date hereof pursuant to a
registration statement under the Act which has been declared effective by the
SEC (other than a registration statement on Form S-8 or any other similar
form).  A “Qualified Public Offering”
shall mean a Public Offering pursuant to an effective registration statement
and either (i) such registration statement is for the sale of shares of the
Common Stock held by Kohlberg Kravis Roberts & Co. L.P. (the “KKR
Partnership”) or its affiliates under such registration statement or (ii)
thereafter an active trading market in 40% or more of the Common Stock exists.

 

(j)                                     As
used herein, the term “Market Price Per Share” shall mean the price per
share equal to the average of the last sale price of the Common Stock on the
Repurchase Calculation Date on each exchange on which the Common Stock may at
the time be listed or, if there shall have been no sales on any of such
exchanges on the Repurchase Calculation Date, the

 

10

 

average of the closing bid and asked prices
on each such exchange at the end of the Repurchase Calculation Date or if there
is no such bid and asked price on the Repurchase Calculation Date on the next
preceding date when such bid and asked price occurred or, if the Common Stock
shall not be so listed, the average of the closing sales prices as reported by
NASDAQ at the end of the Repurchase Calculation Date in the over-the-counter
market.

 

(k)                                  In
determining the Repurchase Price, appropriate adjustments shall be made for any
stock dividends, splits, combinations, recapitalizations or any other
adjustment in the number of outstanding shares of Common Stock in order to
maintain, as nearly as practicable, the intended operation of the provisions of
this Section 7.

 

8.                                       Stock
Issued to Employee Stockholder Upon Exercise of Stock Options; Termination and
Expiration of Options.  (a) The
Company may from time to time grant to the Employee Stockholder, in addition to
the Options, options under the Option Plan to purchase shares of Common Stock
at the Base Price or at a different option exercise price.

 

(b)                                 (i)  In the case of an exercise of the put rights
described above in Section 5(a)(B) or of the call rights described above
in Sections 6(b)(B), 6(c)(B) or 6(d)(ii), all outstanding exercisable Options
for which such put or call is exercised that had been granted to the Employee
Stockholder under the Option Plan will be automatically terminated upon the payment
by the Company to the Employee Stockholder of an amount equal to the applicable
Option Excess Price, as provided below; provided, however, in the
event the Option Excess Price is zero or a negative number, all outstanding
exercisable stock options granted to the Employee Stockholder under the Option
Plan shall be automatically terminated without any payment in respect
thereof.  In the event the Employee
Stockholder’s employment is terminated for any reason, all unexercisable
Options (whose exercisability is not otherwise accelerated pursuant to the
terms of a Non-Qualified Stock Option Agreement) automatically and immediately
upon such termination of employment, terminate without payment in respect
thereof.

 

(ii)                                  In
the case of an exercise of the put rights described above in Section 5(a)
or of the call rights described above in Section 6(b), with respect to
each Option, the “Option Excess Price” is the excess, if any, of the
Section 5(a) Repurchase Price over the Option Exercise Price (as defined
below), multiplied by the number of Exercisable Option Shares thereunder.

 

(iii)                               In
the case of an exercise of the call rights described above in
Section 6(c), with respect to each Option, the “Option Excess Price”
is the excess, if any, of the Section 6(c) Repurchase Price, as such price
is determined on the basis of Section 7(d) (ii), over the Option Exercise
Price, multiplied by the number of Exercisable Option Shares thereunder.

 

(iv)                              In
the case of an exercise of the call rights described above in Section 6(d),
with respect to each Option, the “Option Excess Price” is the (x)
Applicable Percentage multiplied by (y) the excess, if any, of Book Value Per
Share over the Option Exercise Price, multiplied by (z) the number of
Exercisable Option Shares thereunder.

 

For purposes
hereof,  “Option Exercise Price”
shall mean the exercise price of the shares of Common Stock covered by the
applicable Option and “Exercisable Option Shares” shall mean the shares
of Common Stock which, at the time of determination of the Option

 

11

 

Excess Price could be purchased
by the Employee Stockholder upon exercise of his or her outstanding Options.

 

(c)                                  With
respect to the Options in the event that any termination of employment or other
event giving rise to the right to put or call Stock or Options occurs and no
such put or call is exercised in accordance with the provisions of this
Agreement, then the remaining portion of any outstanding exercisable Options
shall expire, subject to Sections 5(c) and 6(f) hereof, in accordance with the
terms of Article 3 of the Employee Stockholder’s Non-Qualified Stock
Option Agreement.

 

9.                                       The
Company’s Representations and Warranties. 
(a) The Company represents and warrants to the Employee Stockholder that
(i) this Agreement has been duly authorized, executed and delivered by the
Company and (ii) the Issued Stock, when issued and delivered in accordance with
the terms hereof, will be duly and validly issued, fully paid and
nonassessable.

 

(b)                                 The
Company will file the reports required to be filed by it under the Act and the
Exchange Act and the rules and regulations adopted by the SEC thereunder, to
the extent required from time to time to enable the Employee Stockholder to
sell shares of Stock without registration under the Act within the limitations
of the exemptions provided by (A) Rule 144 under the Act, as such Rule may be
amended from time to time, or (B) any similar rule or regulation hereafter
adopted by the SEC.  Notwithstanding
anything contained in this Section 9(b), the Company may de-register under
Section 12 of the Exchange Act if it is then permitted to do so pursuant
to the Exchange Act and the rules and regulations thereunder and, in such
circumstances, shall not be required hereby to file any reports which may be
necessary in order for Rule 144 or any similar rule or regulation under the Act
to be available.  Nothing in this
Section 9(b) shall be deemed to limit in any manner the restrictions on
sales of Stock contained in this Agreement.

 

10.                                 “Piggyback”
Registration Rights.  (a) Effective
upon the date of this Agreement, until the later of (i) five years from the
date hereof and (ii) the first occurrence of a Qualified Public Offering (as
defined in Section 7(j) above), the Employee Stockholder hereby agrees to
be bound by all of the terms, conditions and obligations of the Registration
Rights Agreement dated as of July 9, 1998 among the Company, Bristol West
Associates LLC, a Delaware limited liability company (“Associates”), KKR
1996 Fund L.P. and KKR Partners II, L.P. (the “Registration Rights Agreement”)
and, in the case of a Qualified Public Offering and subject to the limitations
set forth in this Section 10, shall have all of the rights and privileges
of the Registration Rights Agreement, in each case as if the Employee
Stockholder were an original party (other than the Company) thereto; provided,
however, that at no time shall the Employee Stockholder have any rights to
request registration under Section 3 of the Registration Rights Agreement;
and provided further, that the Employee Stockholder shall not be bound by any
amendments to the Registration Rights Agreement unless the Employee Stockholder
consents thereto provided that such consent will not be unreasonably withheld.  Notwithstanding anything to the contrary
contained in the Registration Rights Agreement, the Employee Stockholder’s
rights and obligations under the Registration Rights Agreement shall be subject
to the limitations and additional obligations set forth in this Section 10.  All Stock purchased or held by the
applicable Employee Stockholder Entities pursuant to this Agreement shall be
deemed to be

 

12

 

Registrable Securities as
defined in the Registration Rights Agreement.

 

(b)                                 The
Company will promptly notify the Employee Stockholder in writing (a “Notice”)
of any proposed registration (a “Proposed Registration”) in connection
with a Qualified Public Offering.  If
within 15 days of the receipt by the Employee Stockholder of such Notice, the
Company receives from the applicable Employee Stockholder Entities a written
request (a “Request”) to register shares of Stock held by the applicable
Employee Stockholder Entities (which Request will be irrevocable unless
otherwise mutually agreed to in writing by the Employee Stockholder and the
Company), shares of Stock will be so registered as provided in this
Section 10; provided, however, that for each such
registration statement only one Request, which shall be executed by the
applicable Employee Stockholder Entities, may be submitted for all Registrable
Securities held by the applicable Employee Stockholder Entities.

 

(c)                                  The
maximum number of shares of Stock which will be registered pursuant to a
Request will be the lowest of (i) the number of shares of Stock then held by
the Employee Stockholder Entities, including all shares of Stock which the
Employee Stockholder Entities are then entitled to acquire under an unexercised
Option to the extent then exercisable, multiplied by a fraction, the numerator
of which is the number of shares of Stock being sold by Associates and
investment partnerships and investment limited liability companies affiliated
with the KKR Partnership and the denominator of which is the number of shares of
Stock owned by Associates and investment partnerships and investment limited
liability companies affiliated with the KKR Partnership or (ii) the maximum
number of shares of Stock which the Company can register in the Proposed
Registration without adverse effect on the offering in the view of the managing
underwriters (reduced pro rata with all Other Employee Stockholders and all
Other Employee Stockholders) as more fully described in subsection (d) of
this Section 10 or (iii) the maximum number of shares which the Employee
Stockholder (pro rata based upon the aggregate number of shares of Common Stock
the Employee Stockholder, all Other Employee Stockholders, and all Other
Employee Stockholders have requested to be registered) and all Other Employee
Stockholders are permitted to register under the Registration Rights Agreement.

 

(d)                                 If
a Proposed Registration involves an underwritten offering and the managing
underwriter advises the Company in writing that, in its opinion, the number of
shares of Stock requested to be included in the Proposed Registration exceeds
the number which can be sold in such offering, so as to be likely to have an
adverse effect on the price, timing or distribution of the shares of Stock
offered in such Qualified Public Offering as contemplated by the Company, then
the Company will include in the Proposed Registration (i) first, 100% of the
shares of Stock the Company proposes to sell and (ii) second, to the extent of
the number of shares of Stock requested to be included in such registration
which, in the opinion of such managing underwriter, can be sold without having
the adverse effect referred to above, the number of shares of Stock which the
“Holders” (as defined in the Registration Rights Agreement), including, without
limitation, the Employee Stockholder, Other Employee Stockholders, and all
Other Employee Stockholders have requested to be included in the Proposed
Registration, such amount to be allocated pro rata among all requesting Holders
on the basis of the relative number of shares of Stock then held by each such
Holder (including the exercisable Options) (provided that any shares thereby
allocated to any such Holder that exceed such Holder’s request will be
reallocated among the remaining requesting Holders in like manner).

 

13

 

(e)                                  Upon
delivering a Request the Employee Stockholder will, if requested by the
Company, execute and deliver a custody agreement and power of attorney in form
and substance satisfactory to the Company with respect to the shares of Stock
to be registered pursuant to this Section 10 (a “Custody Agreement and
Power of Attorney”).  The Custody
Agreement and Power of Attorney will provide, among other things, that the
Employee Stockholder will deliver to and deposit in custody with the custodian
and attorney-in-fact named therein a certificate or certificates representing
such shares of Stock (duly endorsed in blank by the registered owner or owners
thereof or accompanied by duly executed stock powers in blank) and irrevocably
appoint said custodian and attorney-in-fact as the Employee Stockholder’s agent
and attorney-in-fact with full power and authority to act under the Custody
Agreement and Power of Attorney on the Employee Stockholder’s behalf with respect
to the matters specified therein.

 

(f)                                    The
Employee Stockholder agrees that he or she will execute such other agreements
as the Company may reasonably request to further evidence the provisions of
this Section 10.

 

11.                                 Pro
Rata Repurchases; Dividends.  (a)
Notwithstanding anything to the contrary contained in Section 5, 6 or 7,
if at any time consummation of all purchases and payments to be made by the
Company pursuant to this Agreement and the Other Employee Stockholders’
Agreements would result in an Event, then the Company shall make purchases
from, and payments to, the Employee Stockholder and Other Employee Stockholders
pro rata (on the basis of the proportion of the number of shares of Stock and
the number of Options each such Employee Stockholder and all Other Employee
Stockholders have elected or are required to sell to the Company) for the
maximum number of shares of Stock and shall pay the Option Excess Price for the
maximum number of Options permitted without resulting in an Event (the “Maximum
Repurchase Amount”).  The provisions
of Section 5(c) and 6(f) shall apply in their entirety to payments and
repurchases with respect to Options and shares of Stock which may not be made
due to the limits imposed by the Maximum Repurchase Amount under this Section 11(a).  Until all of such Stock and Options are
purchased and paid for by the Company, the Employee Stockholder and the Other
Employee Stockholders whose Stock and Options are not purchased in accordance with
this Section 11(a) shall have priority, on a pro rata basis, over other
purchases of Common Stock and Options by the Company pursuant to this Agreement
and Other Employee Stockholders’ Agreements.

 

(b)                                 No
dividends on the common stock are expected to be paid by the Company prior to a
Public Offering.  In the event any
dividends are paid with respect to the Common Stock, the Employee Stockholder
will be treated in the same manner as all other stockholders with respect to
shares of Common Stock then owned by the Employee Stockholder.

 

12.                                 Rights
to Negotiate Repurchase Price. 
Nothing in this Agreement shall be deemed to restrict or prohibit the
Company from purchasing shares of Stock or Options from the Employee
Stockholder, at any time, upon such terms and conditions, and for such price,
as may be mutually agreed upon between the Parties, whether or not at the time
of such purchase circumstances exist which specifically grant the Company the
right to purchase, or the Employee Stockholder the right to sell, shares of
Stock or the Company has the right to pay, or the Employee Stockholder has the
right to receive, the Option Excess Price under the terms of this

 

14

 

Agreement.

 

13.                                 Covenant
Regarding 83(b) Election.  Except as
the Company may otherwise agree in writing, the Employee Stockholder hereby
covenants and agrees that he will make an election provided pursuant to
Treasury Regulation 1.83-2 with respect to the Stock, including without
limitation, the Stock to be acquired pursuant to Section 1 and the Stock
to be acquired upon each exercise of the Employee Stockholder’s Non-Qualified
Options; and Employee Stockholder further covenants and agrees that he will
furnish the Company with copies of the forms of election the Employee
Stockholder files within 30 days after the date hereof, and within 30 days
after each exercise of Employee Stockholder’s Non-Qualified Options and with
evidence that each such election has been filed in a timely manner.

 

14.                                 Notice
of Change of Beneficiary. 
Immediately prior to any transfer of Stock to a Employee Stockholder’s
Trust, the Employee Stockholder shall provide the Company with a copy of the
instruments creating the Employee Stockholder’s Trust and with the identity of
the beneficiaries of the Employee Stockholder’s Trust.  The Employee Stockholder shall notify the
Company as soon as practicable prior to any change in the identity of any
beneficiary of the Employee Stockholder’s Trust.

 

15.                                 Expiration
of Certain Provisions.  The
provisions contained in Sections 4, 5 and 6 of this Agreement and the portion
of any other provision of this Agreement which incorporates the provisions of
Sections 4, 5 and 6, shall terminate and be of no further force or effect with
respect to any shares of Stock sold by the Employee Stockholder (i) pursuant to
an effective registration statement filed by the Company pursuant to
Section 10 hereof or (ii) pursuant to the terms of the Sale Participation
Agreement of even date herewith, among the Employee Stockholder, KKR 1996 Fund
L.P., Associates and KKR Partners II, L.P.

 

16.                                 Recapitalizations,
etc.  The provisions of this
Agreement shall apply, to the full extent set forth herein with respect to the
Stock or the Options, to any and all shares of capital stock of the Company or
any capital stock, partnership units or any other security evidencing ownership
interests in any successor or assign of the Company (whether by merger,
consolidation, sale of assets or otherwise) which may be issued in respect of,
in exchange for, or substitution of the Stock or the Options, by reason of any
stock dividend, split, reverse split, combination, recapitalization,
liquidation, reclassification, merger, consolidation or otherwise.

 

17.                                 State
Securities Laws.  The Company hereby
agrees to use its best efforts to comply with all state securities or “blue
sky” laws which might be applicable to the sale of the Stock and the issuance
of the Options to the Employee Stockholder.

 

18.                                 Binding
Effect.  The provisions of this
Agreement shall be binding upon and accrue to the benefit of the parties hereto
and their respective heirs, legal representatives, successors and assigns.  In the case of a transferee permitted under
Section 2(a) hereof, such transferee shall be deemed the Employee
Stockholder hereunder; provided, however, that no transferee (including without
limitation, transferees referred to in Section 2(a) hereof) shall derive
any rights under this Agreement unless and until such transferee has delivered
to the Company a valid undertaking and becomes bound by the terms of this
Agreement.

 

15

 

19.                                 Amendment.  This Agreement may be amended only by a
written instrument signed by the Parties hereto.

 

20.                                 Closing.  Except as otherwise provided herein, the
closing of each purchase and sale of shares of Stock and the payment of the
Option Excess Price, if any, pursuant to this Agreement shall take place at the
principal office of the Company on the tenth business day following delivery of
the notice by either Party to the other of its exercise of the right to
purchase or sell such Stock hereunder or to cause the payment of the Option
Excess Price, if any.

 

21.                                 Applicable
Law.  The laws of the state of New
York shall govern the interpretation, validity and performance of the terms of
this Agreement, regardless of the law that might be applied under principles of
conflicts of law.  Any suit, action or
proceeding against the Employee Stockholder or the Company, with respect to
this Agreement, or any judgment entered by any court in respect of any thereof,
may be brought in any court of competent jurisdiction in the State of Delaware
(or if the Company reincorporates in another state, in that state) or New York
and the Company and the Employee Stockholder each hereby submits to the exclusive
jurisdiction of such courts for the purpose of any such suit, action,
proceeding or judgment.  The Company and
the Employee Stockholder hereby irrevocably waive any objections which either
of them may now or hereafter have to the laying of the venue of any suit,
action or proceeding arising out of or relating to this Agreement brought in
any court of competent jurisdiction in the State of Delaware (or if the Company
reincorporates in another state, in that state) or New York, and hereby further
irrevocably waive any claim that any such suit, action or proceeding brought in
any such court has been brought in any inconvenient forum.  No suit, action or proceeding against the
Company or the Employee Stockholder with respect to this Agreement may be brought
in any court, domestic or foreign, or before any similar domestic or foreign
authority other than in a court of competent jurisdiction in the State of
Delaware (or if the Company reincorporates in another state, in that state) or
New York, and the Company and the Employee Stockholder hereby irrevocably waive
any right which either of them may otherwise have had to bring such an action
in any other court, domestic or foreign, or before any similar domestic or
foreign authority.  Each Party hereto
hereby irrevocably and unconditionally waives trial by jury in any legal action
or proceeding in relation to this Agreement and for any counterclaim therein.

 

22.                                 Assignability
of Certain Rights by the Company. 
The Company shall have the right to assign any or all of its rights or
obligations to purchase shares of Stock pursuant to Sections 4, 5 and 6 hereof;
provided, however, that the Company shall remain obligated to perform its
obligations notwithstanding such assignment in the event that such assignee fails
to perform the obligations so assigned to it.

 

23.                                 Miscellaneous.  (a) 
In this Agreement all references to “dollars” or “$” are to United
States dollars.

 

(b)                                 If
any provision of this Agreement shall be declared illegal, void or
unenforceable by any court of competent jurisdiction, the other provisions
shall not be affected, but shall remain in full force and effect.

 

(c)                                  The
Company shall have the right to deduct from any cash payment made

 

16

 

under this Agreement to the applicable
Employee Stockholder Entities any federal, state or  local income or other taxes required by law to be withheld with
respect to such payment.

 

24.                                 Notices.  All notices and other communications
provided for herein shall be in writing and shall be deemed to have been duly
given if delivered by hand (whether by overnight courier or otherwise) or sent
by registered or certified mail, return receipt requested, postage prepaid, or
by overnight delivery or telecopy, to the Party to whom it is directed:

 

	
  (a)

  	
  If to the
  Company, to it at the following address:

  
	
   

  	
   

  
	
   

  	
  Bristol West
  Holdings, Inc.

  
	
   

  	
  5701
  Stirling Road

  
	
   

  	
  Davie,
  FL  33314

  
	
   

  	
   

  
	
   

  	
  Attn:  General Counsel

  
	
   

  	
   

  
	
  with a copy
  to:

  
	
   

  	
   

  
	
   

  	
  Kohlberg
  Kravis Roberts & Co.

  
	
   

  	
  9 West 57th
  Street

  
	
   

  	
  New York,
  New York  10019

  
	
   

  	
  Attn:  Perry Golkin

  
	
   

  	
   

  
	
  with a copy
  to:

  
	
   

  	
   

  
	
   

  	
  Simpson
  Thacher & Bartlett LLP

  
	
   

  	
  425
  Lexington Avenue

  
	
   

  	
  New York,
  New York  10017-3909

  
	
   

  	
  Attn:

  	
  Alvin Brown,
  Esq.

  
	
   

  	
   

  	
  Gary
  Horowitz, Esq.

  

 

(b)                                 If
to the Employee Stockholder, to him at the address set forth below under his
signature; or at such other address as either party shall have specified by
notice in writing to the other.

 

25.                                 Covenant
Not to Compete; Severance; Confidential Information.  (a) In consideration of the Company entering
into this Agreement with the Employee Stockholder, the Employee Stockholder
hereby agrees effective as of the Effective Date, without the Company’s prior
written consent, the Employee Stockholder shall not, directly or indirectly,
(i) at any time during or after the Employee Stockholder’s employment with the
Company, disclose any Confidential Information (as hereinafter defined)
pertaining to the business of the Company or any of its subsidiaries, except
when required by law; or (ii) at any time during the Employee Stockholder’s
employment with the Company and for one year thereafter, directly or indirectly
(A) be engaged in or have financial interest (other than an ownership position
of less than 5% in any company whose shares are publicly traded or any non-voting
non-convertible debt securities in any company) in any business in Competition
(as hereinafter defined) or (B) solicit or offer employment to any person who
has been employed by the Company or any of its subsidiaries at any time during
the 12 months immediately preceding such solicitation.  In the event of a

 

17

 

termination of employment by
the Company or one of its subsidiaries without Cause or by the Employee
Stockholder for Good Reason, for a period for twelve months following either
such termination, so long as the Employee Stockholder does not violate the
restrictive covenants of this Section 25(a), the Company shall pay, or
shall cause the applicable subsidiary to pay, the Employee Stockholder an
amount equal to the Employee Stockholder’s annual compensation as such
compensation was in effect for the year prior to the year in which the
termination of employment occurred. 
Such amount shall be paid in substantially equal installments in a
manner consistent with the normal payroll practices of the Company or the
applicable subsidiary.  As used in this
Agreement, the term “Confidential Information” means all non-public information
concerning the financial data, strategic business plans, and other non-public,
proprietary, and confidential information of the Company, its subsidiaries, the
KKR Partnership, and their affiliates (the “Restricted Group”) as in existence
during the Employee Stockholder’s employment with the Company and as of the
date of any termination of such employment. 
As used in this Agreement, a business shall be in “Competition” if it is
principally engaged in any business active in the personal auto insurance
industry within the United States or any state thereof; provided, however, that
the Employee Stockholder’s new employer shall not be in Competition, even if
other subsidiaries, divisions or business units controlling, controlled by or
under common control with such new employer are otherwise in Competition with
the Restricted Group, so long as the Employee Stockholder is employed by a
subsidiary, division or other business unit which is not in the personal auto
insurance industry, and which provides no advice, services or other assistance
to such competing entities.  If the
Employee Stockholder is bound by any other agreement with the Company regarding
the use or disclosure of confidential information, the provisions of this
Agreement shall be read in such a way as to further restrict and not to permit
any more extensive use or disclosure of confidential information.

 

(b)                                 Notwithstanding
clause (a) above, if at any time a court holds that the restrictions stated in
such clause (a) are unreasonable or otherwise unenforceable under circumstances
then existing, the parties hereto agree that the maximum period, scope or
geographic area determined to be reasonable under such circumstances by such
court will be substituted for the stated period, scope or area.  Because the Employee Stockholder’s services
are unique and because the Employee Stockholder has had access to Confidential
Information, the parties hereto agree that money damages will be an inadequate
remedy for any breach of this Agreement. 
In the event of a breach or threatened breach of this Agreement, the
Company or its successors or assigns may, in addition to other rights and
remedies existing in their favor, apply to any court of competent jurisdiction
for specific performance and/or injunctive relief in order to enforce, or
prevent any violations of, the provisions hereof (without the posting of a bond
or other security).

 

18

 

IN WITNESS
WHEREOF, the Parties have executed this Agreement as of the date first above
written.

 

	
   

  	
  BRISTOL WEST
  HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Employee
  Stockholder

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address of
  the Employee Stockholder

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Number of
  Shares to be Purchased

  by the Employee Stockholder

  

 

 

Exhibit A

 

NON-QUALIFIED STOCK OPTION AGREEMENT

 

THIS
AGREEMENT, dated as of
             ,
200  , is made by and between BRISTOL WEST HOLDINGS, INC. a Delaware
corporation (hereinafter referred to as the “Company”), and
          , an employee of
the Company or a Subsidiary (as defined below) or Affiliate (as defined below)
of the Company (hereinafter referred to as “Optionee”).

 

WHEREAS, the
Company wishes to afford the Optionee the opportunity to purchase shares of its
Common Stock, par value $.01 per share (the “Common Stock”);

 

WHEREAS, the
Company wishes to carry out the Plan (as hereinafter defined), the terms of
which are hereby incorporated by reference and made a part of this Agreement;
and

 

WHEREAS, the
Committee (as hereinafter defined), appointed to administer the Plan, has
determined that it would be to the advantage and best interest of the Company
and its stockholders to grant the Non-Qualified Options provided for herein to
the Optionee as an incentive for increased efforts during his term of office
with the Company or its Subsidiaries or Affiliates, and has advised the Company
thereof and instructed the undersigned officers to issue said Options;

 

NOW,
THEREFORE, in consideration of the mutual covenants herein contained and other
good and valuable consideration, receipt of which is hereby acknowledged, the
parties hereto do hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Whenever the
following terms are used in this Agreement, they shall have the meaning
specified in the Plan or below unless the context clearly indicates to the
contrary.

 

Section 1.1                                      Affiliate

 

“Affiliate”
shall mean, with respect to the Company, any person or entity directly or
indirectly controlling, controlled by, or under common control with, the
Company or any other entity designated by the Board of Directors of the Company
in which the Company or an Affiliate has an interest.  For purposes of this definition and the definition of
“Subsidiary” set forth below, the term “control” of a person or entity means
the possession, direct or indirect, of the power to (i) vote 50% or more of the
voting securities of such person or entity or (ii) direct or cause the
direction of the management and policies of such person or entity, whether by
contract or otherwise.

 

Section 1.2                                      Cause

 

“Cause” shall
mean (i) the Optionee’s willful and continued failure to perform Optionee’s
duties with respect to the Company or its subsidiaries after a demand by
Optionee’s superior for substantial performance is made or delivered to the
Optionee by the Company, (ii)

 

 

willful misconduct by Optionee
involving dishonesty or breach of trust in connection with Optionee’s
employment, (iii) an indictment of Optionee for a felony or misdemeanor
involving moral turpitude, (iv) if applicable, any material breach by an
Optionee of the provisions of Section 25 of the Employee Stockholder’s Agreement,
or (v) violation of any written Company policy.

 

Section 1.3                                      Change
of Control

 

“Change of
Control” means (i) sales of all or substantially all of the assets of the
Company to a Person who is not an Affiliate of Kohlberg Kravis Roberts &
Co., LLC (“KKR”), (ii) a sale by KKR or any of its respective Affiliates
resulting in more than 50% of the voting stock of the Company being held by a
person or group that does not include KKR or any of its Affiliates or (iii) a
merger or consolidation of the Company into another Person which is not an
Affiliate of KKR; if and only if any such event results in the inability of KKR
or any of its Affiliates to elect a majority of the Board of Directors of the
Company (or the resulting entity).

 

Section 1.4                                      Code

 

“Code” shall
mean the Internal Revenue Code of 1986, as amended.

 

Section 1.5                                      Committee

 

“Committee”
shall mean the Compensation Committee of the Company.

 

Section 1.6                                      Effective
Date

 

“Effective
Date” shall mean
             
  , 200  .

 

Section 1.7                                      Employee
Stockholder’s Agreement

 

“Employee
Stockholder’s Agreement” shall mean that certain Employee Stockholder’s
Agreement dated as of  the date
hereof between the Optionee and the Company.

 

Section 1.8                                      Group

 

“Group” means
two or more Persons acting together as a partnership, limited partnership,
syndicate or other group for the purpose of acquiring, holding or disposing of
securities of the Company.

 

Section 1.9                                      Options

 

“Options”
shall mean the non-qualified options to purchase Common Stock granted under
this Agreement.

 

Section 1.10                                Permanent
Disability

 

The Optionee
shall be deemed to have a “Permanent Disability” if the Optionee is unable to
engage in the activities required by the Optionee’s job by reason of any
medically

 

2

 

determined physical or mental
impairment which can be expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than twelve (12)
months.

 

Section 1.11                                Person

 

“Person” means
an individual, partnership, corporation, business trust, joint stock company,
trust, unincorporated association, joint venture, governmental authority or
other entity of whatever nature.

 

Section 1.12                                Plan

 

“Plan” shall
mean the 1998 Stock Option Plan for Management and Key Employees of BRW
Acquisition, Inc. and Subsidiaries.

 

Section 1.13                                Pronouns

 

The masculine
pronoun shall include the feminine and neuter, and the singular the plural,
where the context so indicates.

 

Section 1.14                                Retirement

 

“Retirement”
shall mean the time at which the Optionee terminates his/her employment at age
65 or over (or such other age as may be approved by the Board of Directors of
the Company) after having been employed by the Company or a Subsidiary for at
least three (3) years after the Effective Date.

 

Section 1.15                                Secretary

 

“Secretary”
shall mean the Secretary of the Company.

 

Section 1.16                                Subsidiary

 

“Subsidiary”
shall mean any corporation, partnership, joint venture or other entity which
the Company controls, directly or indirectly through one or more
intermediaries.

 

ARTICLE II

 

GRANT OF
OPTIONS

 

Section 2.1                                      Grant
of Options

 

For good and
valuable consideration, on and as of the date hereof the Company irrevocably
grants to the Optionee an Option to purchase any part or all of the number of
shares of the Company’s Common Stock set forth on the signature page hereof
upon the terms and conditions set forth in this Agreement.

 

3

 

Section 2.2                                      Exercise
Price

 

Subject to
Section 2.4, the exercise price of the shares of stock covered by the
Options (the “Option Exercise Price”) shall be$         per share without
commission or other charge.

 

Section 2.3                                      No
Right to Employment

 

Nothing in
this Agreement or in the Plan shall confer upon the Optionee any right to
continue in the employ of the Company or any Subsidiary or Affiliate or shall
interfere with or restrict in any way the rights of the Company and its
Subsidiaries or Affiliates, which are hereby expressly reserved, to terminate
the employment of the Optionee at any time for any reason whatsoever, with or
without Cause.

 

Section 2.4                                      Adjustments
in Options Pursuant to Merger, Consolidation, etc.

 

Subject to
Section 9 of the Plan, in the event that the outstanding shares of the
stock subject to an Option are, from time to time, changed into or exchanged
for a different number or kind of shares of the Company or other securities of
the Company by reason of a merger, consolidation, recapitalization,
reclassification, stock split, stock dividend, combination of shares, or
otherwise, the Committee shall make an adjustment in the number and kind of
shares and/or the amount of consideration as to which or for which, as the case
may be, such Option, or portions thereof then unexercised, shall be exercisable,
in such manner as the Committee determines is reasonably necessary to maintain
as nearly as practicable the rights, benefits and obligations that the parties
would have had absent such event.  Any
such adjustment made by the Committee shall be final and binding upon the
Optionee, the Company and all other interested persons.

 

ARTICLE III

 

PERIOD OF
EXERCISABILITY

 

Section 3.1                                      Commencement
of Exercisability

 

(a)                                  Unless
otherwise provided in this Agreement, the Option shall become exercisable as
follows:

 

	
  Date Option Becomes Exercisable

  	
   

  	
  Percentage
  of Option Shares Granted

  as to Which Option Is Exercisable

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  After the first anniversary of the
  Effective Date

  	
   

  	
  20

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  After the second anniversary of the
  Effective Date

  	
   

  	
  40

  	
  %

  

 

4

 

	
  After the third anniversary of the
  Effective Date

  	
   

  	
  60

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  After the fourth anniversary of the
  Effective Date

  	
   

  	
  80

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  After the fifth anniversary of the
  Effective Date

  	
   

  	
  100

  	
  %

  

 

(b)                                 Notwithstanding
the foregoing, no Option shall become exercisable as to any additional shares
of Common Stock following the termination of employment of the Optionee for any
reason, and any Option which is not and does not become exercisable as of the
Optionee’s termination of employment shall be immediately cancelled.

 

Section 3.2                                      Acceleration
Events

 

Notwithstanding
anything in this Article III to the contrary. the Option shall become
immediately exercisable as to 100% of the shares of Common Stock subject to
such Option (but only to the extent such Option has not otherwise terminated or
become exercisable) upon a Change of Control.

 

Section 3.3                                      Expiration
of Options

 

Except as
otherwise provided in Section 5 or 6 of the Employee Stockholder’s
Agreement, the Options may not be exercised to any extent by the Optionee after
the first to occur of the following events:

 

(a)                                  The
tenth anniversary of the Effective Date; or

 

(b)                                 The
first anniversary of the date of the Optionee’s termination of employment by
reason of death, Permanent Disability or Retirement; or

 

(c)                                  Immediately
upon Optionee’s termination of employment for Cause; or

 

(d)                                 The
first business day which is ninety (90) calendar days after termination of
employment of the Optionee for any reason other than death, Permanent
Disability, Retirement or termination for Cause; provided, however, that such
Options shall not terminate where the extension of the exercise of a put or
call right is delayed in accordance with the terms of the Employee
Stockholder’s Agreement; or

 

(e)                                  The
date of purchase of the Option pursuant to a put or call right under the
Employee Stockholder’s Agreement; or

 

(f)                                    At
the discretion of the Company, in the event of certain business combinations
(including, without limitation, any acquisition, merger, consolidation, exchange,
liquidation, dissolution or other event) after the Optionee has had a
reasonable opportunity to exercise his Options prior to such business
combination.

 

5

 

ARTICLE IV

 

EXERCISE OF
OPTIONS

 

Section 4.1                                      Person
Eligible to Exercise

 

Except as
provided in the Employee Stockholder’s Agreement, during the lifetime of the
Optionee, only the Optionee may exercise an Option or any portion thereof.  After the death of the Optionee, any
exercisable portion of an Option may, prior to the time when an Option becomes
unexercisable under Section 3.2, be exercised by the Optionee’s personal
representative or by any person empowered to do so under the Optionee’s will or
under the then applicable laws of descent and distribution.

 

Section 4.2                                      Partial
Exercise

 

Any
exercisable portion of an Option or the entire Option, if then wholly
exercisable, may be exercised in whole or in part at any time prior to the time
when the Option or portion thereof becomes unexercisable under
Section 3.2; provided, however, that any partial exercise shall be for
whole shares of Common Stock only.

 

Section 4.3                                      Manner
of Exercise

 

An Option, or
any exercisable portion thereof, may be exercised solely by delivering to the
Secretary or his office all of the following prior to the time when the Option
or such portion becomes unexercisable under Section 3.3:

 

(a)                                  Notice
in writing signed by the Optionee or the other person then entitled to exercise
the Option or portion thereof, stating that the Option or portion thereof is
thereby exercised, such notice complying with all applicable rules established
by the Committee;

 

(b)                                 Full
payment in cash, by check or by a combination thereof or, subject to
limitations imposed by the Committee, in shares of Common Stock or by a
combination thereof, for the shares with respect to which such Option or
portion thereof is exercised;

 

(c)                                  A
bona fide written representation and agreement, in a form satisfactory to the
Committee, signed by the Optionee or other person then entitled to exercise
such Option or portion thereof, stating that the shares of stock are being
acquired for his own account, for investment and without any present intention
of distributing or reselling said shares or any of them except as may be permitted
under the Securities Act of 1933, as amended (the “Act”), and then applicable
rules and regulations thereunder, and that the Optionee or other person then
entitled to exercise such Option or portion thereof will indemnify the Company
against and hold it free and harmless from any loss, damage, expense or
liability resulting to the Company if any sale or distribution of the shares by
such person is contrary to the representation and agreement referred to above;
provided, however, that the Committee may, in its absolute discretion, take
whatever reasonable additional actions it deems appropriate to ensure the
observance and performance of such representation and agreement and to effect
compliance with the Act and any other federal or state securities laws or
regulations;

 

6

 

(d)                                 Full
payment to the Company at the time of exercise of the Option of all amounts
which, under federal, state or local law, it is required to withhold upon
exercise of the Option, which amounts may, at the Optionee’s election, be paid
in full from wages or other income payable to the Optionee by the Company in
lieu of any direct payment of such withholding payment; and

 

(e)                                  In
the event the Option or portion thereof shall be exercised pursuant to
Section 4.1 by any person or persons other than the Optionee, appropriate
proof of the right of such person or persons to exercise the option.

 

Without
limiting the generality of the foregoing, the Committee may require an opinion
of counsel acceptable to it to the effect that any subsequent transfer of
shares acquired on exercise of an Option does not violate the Act, and may
issue stop-transfer orders covering such shares.  Share certificates evidencing stock issued on exercise of this Option
shall bear an appropriate legend referring to the provisions of
subsection (c) above and the agreements herein.  The written representation and agreement referred to in
subsection (c) above shall, however, not be required if the shares to be
issued pursuant to such exercise have been registered under the Act, and such
registration is then effective in respect of such shares.

 

Section 4.4                                      Conditions
to Issuance of Stock Certificates

 

The shares of
stock deliverable upon the exercise of an Option, or any portion thereof, may
be either previously authorized but unissued shares or issued shares which have
then been reacquired by the Company. 
Such shares shall be validly issued, fully paid and nonassessable.  The Company shall not be required to issue
or deliver any certificate or certificates for shares of stock purchased upon
the exercise of an Option or portion thereof prior to fulfillment of all of the
following conditions:

 

(a)                                  The
obtaining of approval or other clearance from any state or federal governmental
agency which the Committee shall, in its absolute discretion, determine to be
reasonably necessary or advisable; and

 

(b)                                 The
lapse of such reasonable period of time following the exercise of the Option as
the Committee may from time to time establish for reasons of administrative
convenience.

 

Section 4.5                                      Rights
as Stockholder

 

The holder of
an Option shall not be, nor have any of the rights or privileges of, a
stockholder of the Company in respect of any shares purchasable upon the
exercise of the Option or any portion thereof unless and until certificates
representing such shares shall have been issued by the Company to such holder.

 

7

 

ARTICLE V

 

MISCELLANEOUS

 

Section 5.1                                      Administration

 

The Committee
shall have the power to interpret the Plan and this Agreement and to adopt such
rules for the administration, interpretation and application of the Plan as are
consistent therewith and to interpret or revoke any such rules.  All actions taken and all interpretations
and determinations made by the Committee shall be final and binding upon the
Optionee, the Company and all other interested persons.  No member of the Committee shall be
personally liable for any action, determination or interpretation made in good
faith with respect to the Plan or the Options. 
In its absolute discretion, the Board of Directors may at any time and
from time to time exercise any and all rights and duties of the Committee under
the Plan and this Agreement.

 

Section 5.2                                      Options
Not Transferable

 

Except as
provided in the Employee Stockholder’s Agreement, neither the Options nor any
interest or right therein or part thereof shall be liable for the debts,
contracts or engagements of the Optionee or his successors in interest or shall
be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be
voluntary or involuntary or by operation of law by judgment, levy, attachment,
garnishment or any other legal or equitable proceedings (including bankruptcy),
and any attempted disposition thereof shall be null and void and of no effect;
provided, however, that this Section 5.2 shall not prevent transfers by
will or by the applicable laws of descent and distribution.

 

Section 5.3                                      Shares
to Be Reserved

 

The Company
shall at all times during the term of the Options reserve and keep available
such number of shares of stock as will be sufficient to satisfy the
requirements of this Agreement.

 

Section 5.4                                      Notices

 

Any notice to
be given under the terms of this Agreement to the Company shall be addressed to
the Company in care of its Secretary, and any notice to be given to the
Optionee shall be addressed to him at the address given beneath his signature
hereto.  By a notice given pursuant to
this Section 5.4, either party may hereafter designate a different address
for notices to be given to him.  Any
notice which is required to be given to the Optionee shall, if the Optionee is
then deceased, be given to the Optionee’s personal representative if such
representative has previously informed the Company of his status and address by
written notice under this Section 5.4. 
Any notice shall have been deemed duly given when enclosed in a properly
sealed envelope or wrapper addressed as aforesaid, deposited (with postage
prepaid) in a post office or branch post office regularly maintained by the
United States Postal Service, or when sent by overnight delivery or telecopy.

 

8

 

Section 5.5                                      Titles

 

Titles are
provided herein for convenience only and are not to serve as a basis for
interpretation or construction of this Agreement.

 

Section 5.6                                      Applicability
of Plan and Employee Stockholder’s Agreement

 

The Options
and the shares of Common Stock issued to the Optionee upon exercise of the
Options shall be subject to all of the terms and provisions of the Plan and the
Employee Stockholder’s Agreement, to the extent applicable to the Options and
such shares.  In the event of any
conflict between this Agreement and the Plan, the terms of the Plan shall
control.  In the event of any conflict
between this Agreement or the Plan and the Employee Stockholder’s Agreement,
the terms of the Employee Stockholder’s Agreement shall control.

 

Section 5.7                                      Amendment

 

This Agreement
may be amended only by a writing executed by the parties hereto which
specifically states that it is amending this Agreement.

 

Section 5.8                                      Governing
Law

 

The laws of
the State of Delaware (or if the Company reincorporates in another state, the
laws of that state) shall govern the interpretation, validity and performance
of the terms of this Agreement regardless of the law that might be applied
under principles of conflicts of laws.

 

Section 5.9                                      Jurisdiction

 

Any suit,
action or proceeding against the Optionee or the Company with respect to this
Agreement, or any judgment entered by any court in respect of any thereof, may
be brought in any court of competent jurisdiction in the State of Delaware (or
if the Company reincorporates in another state, in that state) or New York, as
the Company may elect in its sole discretion, and the Optionee and the Company
each hereby submit to the exclusive jurisdiction of such courts for the purpose
of any such suit, action, proceeding or judgment.  The Optionee or the Company each hereby irrevocably waive any
objections which either of them may now or hereafter have to the laying of the
venue of any suit, action or proceeding arising out of or relating to this
Agreement brought in any court of competent jurisdiction in the State of
Delaware (or if the Company reincorporates in another state, in that state) or
New York, and hereby further irrevocably waive any claim that any such suit,
action or proceeding brought in any such court has been brought in any
inconvenient forum.  No suit, action or
proceeding against the Company or the Optionee with respect to this Agreement
may be brought in any court, domestic or foreign, or before any similar
domestic or foreign authority other than in a court of competent jurisdiction
in the State of Delaware (or if the Company reincorporates in another state, in
that state) or New York, and the Optionee and the Company each hereby
irrevocably waive any right which either of them may otherwise have had to
bring such an action in any other court, domestic or foreign, or before any
similar domestic or foreign authority. 
The Company and the Optionee each hereby submit to the jurisdiction of
such courts for the purpose of any such suit, action or proceeding.  The Optionee and the Company each hereby
irrevocably

 

9

 

and unconditionally waive trial
by jury in any legal action or proceeding in relation to this Agreement and for
any counterclaim therein.

 

10

 

IN WITNESS
WHEREOF, this Agreement has been executed and delivered by the parties hereto.

 

 

	
   

  	
  BRISTOL WEST
  HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Number of
  Shares Subject

  to the Option

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Optionee’s
  Taxpayer

  Identification Number:Exhibit
4.6

 

EMPLOYEE STOCKHOLDER’S
AGREEMENT

 

This Employee Stockholder’s Agreement (this “Agreement”)
is entered into as of
                     ,   200  
between Bristol West Holdings, Inc., a Delaware corporation (the “Company”),
and the undersigned, as set forth on the signature page hereof (the “Employee
Stockholder”) (the Company and the Employee Stockholder being hereinafter
collectively referred to as the “Parties”).

 

WHEREAS, this Agreement is one of several other
agreements (“Other Employee and Management Stockholders’ Agreements”)
which have been, or which in the future will be, entered into between the
Company and other individuals who are or will be key employees of the Company
or one of its subsidiaries (collectively, the “Other Employee and Management
Stockholders”); and

 

WHEREAS, the Company and the Employee Stockholder
have agreed that the Employee Stockholder may purchase a certain number of
shares of common stock, par value $.01 per share, of the Company (the “Common
Stock”) and the Employee Stockholder will receive a certain number of
options to purchase Common Stock (“Options”) pursuant to the terms of
the 1998 Option Plan of the Company (the “Option Plan”) and the
“Non-Qualified Stock Option Agreement” attached hereto as Exhibit A.

 

NOW THEREFORE, to implement the foregoing and in
consideration of the grant of Options and of the mutual agreements contained
herein, the Parties agree as follows:

 

1.               Common Stock; Issuance of Options. 
(a)  Subject to the terms and
conditions hereinafter set forth, the Company may, from time to time, choose to
provide the Employee Stockholder with the opportunity to purchase, and the
Employee Stockholder may purchase shares of Common Stock (the “Issued Stock”)
at a purchase price per share to be determined at such time as the Company
offers the Employee Stockholder the opportunity to purchase such stock.  The number of shares of Issued Stock to be
sold by the Company and purchased by the Employee Stockholder at such time
shall be set forth on Schedule 1 to be attached hereto.  The Company shall have no obligation to sell
any Issued Stock to any person who (i) is a resident or citizen of a state or
other jurisdiction in which the sale of the Issued Stock to him or her would
constitute a violation of the securities or “blue sky” laws of such
jurisdiction or (ii) is not an employee of the Company or any of its
subsidiaries on the date hereof.

 

(b)         Subject
to the terms and conditions hereinafter set forth, the Company shall issue to
the Employee Stockholder the Options and the Parties shall execute and deliver
to each other copies of the Non-Qualified Stock Option Agreement concurrently
with the issuance of the Options.  For
purposes of this Agreement, the “Base Price” shall be
$            per share
of Common Stock and the Effective Date shall be
                     
   , 200   (the “Effective Date”).

 

2.               Employee Stockholder’s Representations,
Warranties and Agreements.  (a) 
The Employee Stockholder agrees and acknowledges that he will not,
directly or indirectly, offer, transfer, sell, assign, pledge, hypothecate or
otherwise dispose of (any such act being referred to herein as a “transfer”)
any shares of the Issued Stock and, at the time of exercise, the Common Stock
issuable upon exercise of the Options (the “Option Stock” and,
collectively with

 

 

the
Issued Stock, the “Stock”) unless such transfer complies with
Section 3 of this Agreement.  If
the Employee Stockholder is an “affiliate” (as defined under Rule 405 of the
rules and regulations promulgated under the Act and as interpreted by the Board
of Directors of the Company) of the Company (an “Affiliate”), the
Employee Stockholder also agrees and acknowledges that he will not transfer any
shares of the Stock unless:

 

(i)             the
transfer is pursuant to an effective registration statement under the
Securities Act of 1933, as amended, and the rules and regulations in effect
thereunder (the “Act”), and in compliance with applicable provisions of
state securities laws or

 

(ii)          (A)
counsel for the Employee Stockholder (which counsel shall be reasonably
acceptable to the Company) shall have furnished the Company with an opinion,
satisfactory in form and substance to the Company, that no such registration is
required because of the availability of an exemption from registration under
the Act and (B) if the Employee Stockholder is a citizen or resident of any
country other than the United States, or the Employee Stockholder desires to
effect any transfer in any such country, counsel for the Employee Stockholder
(which counsel shall be reasonably satisfactory to the Company) shall have
furnished the Company with an opinion or other advice reasonably satisfactory
in form and substance to the Company to the effect that such transfer will
comply with the securities laws of such jurisdiction.

 

Notwithstanding
the foregoing, the Company acknowledges and agrees that any of the following
transfers are deemed to be in compliance with the Act and this Agreement and no
opinion of counsel is required in connection therewith: (x) a transfer made
pursuant to Section 4, 5 or 6 hereof, (y) a transfer upon the death of the
Employee Stockholder to his executors, administrators, testamentary trustees,
legatees or beneficiaries (the “Employee Stockholder’s Estate”) or a
transfer to the executors, administrators, testamentary trustees, legatees or
beneficiaries of a person who has become a holder of Stock in accordance with
the terms of this Agreement, provided that it is expressly understood that any
such transferee shall be bound by the provisions of this Agreement and (z) a
transfer made after the Effective Date in compliance with the federal
securities laws to a trust or custodianship the beneficiaries of which may
include only the Employee Stockholder, his spouse or his lineal descendants (a
“Employee Stockholder’s Trust”), provided that such transfer is made
expressly subject to this Agreement and that the transferee agrees in writing
to be bound by the terms and conditions hereof.

 

(b)         The
certificate (or certificates) representing the Stock shall bear the following
legend:

 

2

 

“THE SHARES REPRESENTED BY THIS CERTIFICATE
MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR
OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE EMPLOYEE STOCKHOLDER’S
AGREEMENT DATED AS OF
               
   , 200   BETWEEN BRISTOL WEST HOLDINGS, INC. (THE
“COMPANY”) AND THE EMPLOYEE STOCKHOLDER NAMED ON THE FACE HEREOF (A COPY OF
WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY).”

 

(c)          The
Employee Stockholder acknowledges that he has been advised that (i) a
restrictive legend in the form heretofore set forth shall be placed on the
certificates representing the Stock and (ii) a notation shall be made in the
appropriate records of the Company indicating that the Stock is subject to
restrictions on transfer and appropriate stop- transfer restrictions will be
issued to the Company’s transfer agent with respect to the Stock.  The Employee Stockholder also acknowledges
that (1) the Stock must be held indefinitely and the Employee Stockholder must
continue to bear the economic risk of the investment in the Stock unless it is
subsequently registered under the Act or an exemption from such registration is
available, (2) when and if shares of the Stock may be disposed of without
registration in reliance on Rule 144 of the rules and regulations promulgated
under the Act, such disposition can be made only in limited amounts in accordance
with the terms and conditions of such Rule and (3) if the Rule 144 exemption is
not available, public sale without registration will require compliance with
some other exemption under the Act.

 

(d)         If any
shares of the Stock are to be disposed of in accordance with Rule 144 under the
Act or otherwise, the Employee Stockholder shall promptly notify the Company of
such intended disposition and shall deliver to the Company at or prior to the
time of such disposition such documentation as the Company may reasonably
request in connection with such sale and, in the case of a disposition pursuant
to Rule 144, shall deliver to the Company an executed copy of any notice on
Form 144 required to be filed with the Securities and Exchange Commission (the
“SEC”).

 

(e)          The
Employee Stockholder agrees that, if any shares of the Common Stock of the
Company are offered to the public pursuant to an effective registration
statement under the Act (other than registration of securities issued under an
employee plan), the Employee Stockholder will not effect any public sale or
distribution of any shares of the Common Stock not covered by such registration
statement from the time of the receipt of a notice from the Company that the
Company has filed or imminently intends to file such registration statement to,
or within 180 days after, the effective date of such registration statement,
unless otherwise agreed to in writing by the Company.

 

(f)            The
Employee Stockholder represents and warrants that (i) with respect to the Issued
Stock, if any, he has received and reviewed the document(s) comprising the
Private Placement Memorandum, dated
                     
   , 200  , (the “Private Placement Memorandum,”)
relating to the Issued Stock, if any, and the documents referred to therein,
certain of which

 

3

 

documents
set forth the rights, preferences, and restrictions relating to the Issued
Stock, and (ii) he has been given the opportunity to obtain any additional
information or documents and to ask questions and receive answers about such
information, the Company and the business and prospects of the Company which he
deems necessary to evaluate the merits and risks related to his investment in
the Issued Stock, if any, and to verify the Private Placement Memorandum and
the information contained in the information received as indicated in this
Section 2(f)(ii), and he has relied solely on such information.

 

(g)         The
Employee Stockholder further represents and warrants that (i) his financial
condition is such that he can afford to bear the economic risk of holding the
Stock for an indefinite period of time and has adequate means for providing for
his current needs and personal contingencies, (ii) he can afford to suffer a
complete loss of his or her investment in the Stock, (iii) he understands and
has taken cognizance of all risk factors related to the purchase of the Stock
and (iv) his knowledge and experience in financial and business matters are
such that he is capable of evaluating the merits and risks of his purchase of
the Stock as contemplated by this Agreement.

 

3.               Restriction on Transfer. 
Except for transfers permitted by clauses (x), (y) and (z) of
Section 2(a) or a sale of shares of Stock pursuant to an effective
registration statement under the Act filed by the Company or pursuant to the
Sale Participation Agreement (as defined below), the Employee Stockholder
agrees that he will not transfer any shares of the Stock at any time prior to
the fifth anniversary of the Effective Date. 
No transfer of any such shares in violation hereof shall be made or
recorded on the books of the Company and any such transfer shall be void and of
no effect.

 

4.               Right of First Refusal.  If,
prior to the later of the fifth anniversary of the Effective Date or a Public
Offering (as hereinafter defined), the Employee Stockholder receives a bona
fide offer to purchase any or all of his shares of Stock (the “Offer”)
from a third party (the “Offeror”) which the Employee Stockholder wishes
to accept, the Employee Stockholder shall cause the Offer to be reduced to
writing and shall notify the Company in writing of his wish to accept the
Offer.  The Employee Stockholder’s
notice shall contain an irrevocable offer to sell such shares of Stock to the
Company (in the manner set forth below) at a purchase price equal to the price
contained in, and on the same terms and conditions of, the Offer, and shall be
accompanied by a copy of the Offer (which shall identify the Offeror).  At any time within 30 days after the date of
the receipt by the Company of the Employee Stockholder’s notice, the Company
shall have the right and option to purchase, or to arrange for a third party to
purchase, all of the shares of Stock covered by the Offer either (i) at the
same price and on the same terms and conditions as the Offer or (ii) if the
Offer includes any consideration other than cash, then at the sole option of
the Company, at the equivalent all cash price, determined in good faith by the
Company’s Board of Directors, by delivering a certified bank check or checks in
the appropriate amount (and any such non-cash consideration to be paid) to the
Employee Stockholder at the principal office of the Company against delivery of
certificates or other instruments representing the shares of Stock so
purchased, appropriately endorsed by the Employee Stockholder.  If at the end of such 30 day period, the
Company has not tendered the purchase price for such shares in the manner set
forth above, the Employee Stockholder may during the succeeding 60 day period
sell not less than all of the shares of Stock covered by the Offer to the
Offeror at a price and on

 

4

 

terms no less favorable to the Employee Stockholder than those
contained in the Offer.  Promptly after
such sale, the Employee Stockholder shall notify the Company of the
consummation thereof and shall furnish such evidence of the completion and time
of completion of such sale and of the terms thereof as may reasonably be
requested by the Company.  If, at the
end of 60 days following the expiration of the 30 day period for the Company to
purchase the Stock, the Employee Stockholder has not completed the sale of such
shares of the Stock as aforesaid, all the restrictions on sale, transfer or
assignment contained in this Agreement shall again be in effect with respect to
such shares of the Stock.

 

5.               Employee Stockholder’s Resale of Stock and
Options to the Company Upon The Employee Stockholder’s Death or Disability or
in the Case of Certain Terminations of Employment. 
(a)  Except as otherwise provided
herein, if, prior to the fifth anniversary of the Effective Date, (x)(i) the
Employee Stockholder is still in the employ of the Company or any subsidiary of
the Company or (ii) the Employee Stockholder has retired from the Company and
its subsidiaries at age 65 or over (or such other age as may be approved by the
Board of Directors of the Company) after having been employed by the Company or
any subsidiary for at least three years after the Effective Date and (y) the
Employee Stockholder either dies or becomes permanently disabled, then the
Employee Stockholder, the Employee Stockholder’s Estate or a Employee
Stockholder’s Trust (each, an “Employee Stockholder Entity”), shall, for
twelve (12) months following the date of death or permanent disability, have
the right:

 

(A)      with
respect to the Stock, to sell to the Company, and the Company shall be required
to purchase, on one occasion, all or any portion of the shares of Stock then
held by the applicable Employee Stockholder Entities, at the Section 5(a)
Repurchase Price, as determined in accordance with Section 7; and

 

(B)        with
respect to the Options, to require the Company to pay to the applicable
Employee Stockholder Entities, an additional amount equal to the Option Excess
Price, if any, as provided in Section 8(b), in respect of the termination
of all or any portion of outstanding exercisable Options held by the applicable
Employee Stockholder, and all other outstanding Options will be dealt with in
accordance with Section 8(c) hereof.

 

(b)         In the
event the applicable Employee Stockholder Entities intend to exercise their
rights pursuant to Section 5(a), such Entities shall send written notice
to the Company of their intention to sell shares of Stock in exchange for the
payment referred in Section 5(a)(A) and/or to terminate such Options in
exchange for the payment referred to in Section 5(a)(B) and shall indicate
the number of shares of Stock to be sold and the number of Options to be
terminated with payment in respect thereof (the “Redemption Notice”).  The completion of the purchase shall take
place at the principal office of the Company on the tenth business day after
the giving of the Redemption Notice. 
The applicable Repurchase Price and any payment with respect to the
Options as described above shall be paid by delivery to the applicable Employee
Stockholder Entities, of a certified bank check or checks in the appropriate
amount payable to the order of each of the applicable Employee Stockholder
Entities, against delivery of certificates or other instruments representing
the Stock so purchased and appropriate documents canceling the Options so
terminated appropriately endorsed or executed by the applicable Employee

 

5

 

Stockholder Entities or any duly authorized representative.  For purposes of this Agreement, the Employee
Stockholder shall be deemed to have a “permanent disability” if the Employee
Stockholder is unable to engage in the activities required by the Employee
Stockholder’s job by reason of any medically determined physical or mental
impairment which can be expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than twelve (12) months.

 

(c)          Notwithstanding
anything in Section 5(a) to the contrary and subject to
Section 11(a), if there exists and is continuing a default or an event of
default on the part of the Company or any subsidiary of the Company under any
loan, guarantee or other agreement under which the Company or any subsidiary of
the Company has borrowed money or if the repurchase referred to in
Section 5(a) would result in a default or an event of default on the part
of the Company or any subsidiary of the Company under any such agreement or if
a repurchase would not be permitted under the Delaware General Corporation Law
(the “DGCL”) or would otherwise violate the DGCL (or if the Company
reincorporates in another state, the business corporation law of such state)
(each such occurrence being an “Event”), the Company shall not be
obligated to repurchase any of the Stock or the Options from the applicable
Employee Stockholder Entities, until the first business day which is 10
calendar days after all of the foregoing Events have ceased to exist (the “Repurchase
Eligibility Date”); provided, however, that (i) the number of shares
of Stock subject to repurchase under this Section 5(c) shall be that
number of shares of Stock, and (ii) in the case of a repurchase pursuant to
Section 5(a), the number of Exercisable Option Shares (as defined in
Section 8) for purposes of calculating the Option Excess Price payable
under this Section 5(c) shall be the number of Exercisable Option Shares,
specified in the Redemption Notice and held by the applicable Employee
Stockholder Entities, at the time of delivery of a Redemption Notice in
accordance with Section 5(b) hereof; provided, further, that the
Repurchase Calculation Date shall be determined in accordance with
Section 7 as of the Repurchase Eligibility Date (unless, in a repurchase
pursuant to Section 5(a), the Section 5(a) Repurchase Price would be
greater if the Repurchase Calculation Date had been determined as if no Event
had occurred in which case, solely for purposes of this proviso, the
Repurchase Calculation Date shall be determined as if no Event had
occurred).  All Options exercisable as
of the date of a Redemption Notice, in the case of a repurchase pursuant to
Section 5(a), shall continue to be exercisable until the repurchase of
such Options pursuant to such Redemption Notice, provided that to the extent
any Options are exercised after the date of such Redemption Notice, the number
of Exercisable Option Shares for purposes of calculating the Option Excess
Price shall be reduced accordingly.

 

6

 

6.               The Company’s Option to Repurchase Stock and
Options of Employee Stockholder.  (a) 
If, prior to the fifth anniversary of the Effective Date, (i) the
Employee Stockholder’s active employment with the Company (and/or, if
applicable, its subsidiaries) is terminated by the Company with Cause, (ii) the
beneficiaries of a Employee Stockholder’s Trust shall include any person or
entity other than the Employee Stockholder, his spouse or his lineal
descendants, or (iii) the Employee Stockholder shall effect a transfer of any
of the Stock other than as permitted in this Agreement (each, a “Section 6(a)
Call Event”), then the Company shall have the right:

 

(A)      with
respect to the Stock, to purchase all or any portion of the shares of the Stock
then held by the applicable Employee Stockholder Entities at the
Section 6(a) Repurchase Price determined in accordance with Section 7
hereof; and

 

(B)        with
respect to the Options, if the Company exercises the call rights granted under
this Section 6(a), all Options (whether or not then exercisable) held by
the applicable Employee Stockholder Entities will terminate immediately without
payment in respect thereof.

 

(b)         If,
prior to the fifth anniversary of the Effective Date, (i) the Employee
Stockholder’s employment is terminated as a result of the death or permanent
disability of the Employee Stockholder or (ii) if the Employee Stockholder dies
or becomes permanently disabled after the retirement of the Employee Stockholder
from the Company or any of its subsidiaries at age 65 or over (or such other
age as may be approved by the Board of Directors of the Company) after having
been employed by the Company or any subsidiary for at least three years after
the Effective Date, (each a “Section 6(b) Call Event”), then the
Company shall have the right:

 

(A)      with
respect to the Stock, to purchase all or any portion of the shares of Stock
then held by the applicable Employee Stockholder Entities at the
Section 5(a) Repurchase Price determined in accordance with Section 7
hereof; and

 

(B)        with
respect to the Options, if the Company exercises the call rights granted under
this Section 6(b) to an additional amount equal to the Option Excess
Price, if any, as provided in Section 8(b), in respect of the outstanding
exercisable Options so called to be paid by the Company and all other
outstanding Options shall be dealt with in accordance with Section 8(c)
hereof.

 

(c)          If,
prior to the fifth anniversary of the Effective Date, the Employee
Stockholder’s employment is terminated as a result of a termination (i) by the
Employee Stockholder with Good Reason or (ii) upon the retirement of the
Employee Stockholder from the Company or any of its subsidiaries at age 65 or
over (or such other age as may be approved by the Board of Directors of the
Company) after having been employed by the Company or any subsidiary for at
least three years after the Effective Date, or (iii) by the Company without
Cause (each, a “Section 6(c) Call Event”), then the Company shall
have the right:

 

7

 

(A)      with
respect to the Stock, to purchase all or any portion of the shares of Stock
then held by the applicable Employee Stockholder Entities at the
Section 6(c) Repurchase Price determined in accordance with Section 7
hereof; and

 

(B)        with
respect to the Options, if the Company exercises the call rights granted under
this Section 6(c), then the Company may purchase all or any portion of
exercisable Options for an amount equal to the Option Excess Price, as provided
in Section 8(b), and all other outstanding Options will be dealt with in
accordance with the terms of Section 8(b) and 8(c) hereof.

 

(d)         If,
prior to the fifth anniversary of the Effective Date, the Employee Stockholder’s
active employment with the Company (and/or, if applicable, its subsidiaries) is
terminated by the Employee Stockholder without Good Reason (a “Section 6(d)
Call Event”), then the Company shall have the right:

 

(i)             with
respect to the Stock, to purchase all or any portion of the shares of the Stock
then held by the applicable Employee Stockholder Entities at the
Section 6(d) Repurchase Price determined in accordance with Section 7
hereof; and

 

(ii)          with
respect to the Options, if the Company exercises the call rights granted under
this Section 6(d), the Company may purchase all or any portion of
exercisable Options held by the applicable Employee Stockholder Entities, for
an amount equal to the Option Excess Price, as provided in Section 8(b), and
all other outstanding Options will be dealt with in accordance with the terms
of Section 8(b) and 8(c) hereof.

 

(e)          The
Company shall have a period of (i) twelve (12) months from the date of a
Section 6(b) Call Event and (ii) sixty (60) days from the date of any
other Call Event (or, if later, with respect to a Section 6(a) Call Event,
the date of discovery of an impermissible transfer constituting a
Section 6(a) Call Event), in which to give notice in writing to the
Employee Stockholder of its election to exercise its rights pursuant to this
Section 6 (“Call Notice”). 
The completion of the purchases pursuant to the foregoing shall take
place at the principal office of the Company on the tenth business day after
the giving of the Call Notice.  The
applicable Repurchase Price and any payment with respect to the Options as
described in this Section 6 shall be paid by delivery to the applicable
Employee Stockholder Entities of a certified bank check or checks in the
appropriate amount payable to the order of each of the applicable Employee
Stockholder Entities against delivery of certificates or other instruments
representing the Stock so purchased and appropriate documents canceling the
Options so terminated, appropriately endorsed or executed by the applicable
Employee Stockholder Entities or its authorized representative.

 

(f)            Notwithstanding
any other provision of this Section 6 to the contrary and subject to
Section 11(a), if there exists and is continuing any Event, the Company
shall delay the repurchase of any of the Stock or the Options (pursuant to a
Call Notice timely given in accordance with Section 6(e) hereof) from the
applicable Employee Stockholder Entities until the Repurchase Eligibility Date;
provided, however, that (i) the number of shares of Stock

 

8

 

subject to repurchase under this Section 6 shall be that number of
shares of Stock, and (ii) in the case of a repurchase pursuant to
Section 6(c) or 6(d), the number of Exercisable Option Shares for purposes
of calculating the Option Excess Price payable under this Section 6 shall
be the number of Exercisable Option Shares, held by the applicable Employee
Stockholder Entities at the time of delivery of a Call Notice in accordance
with Section 6(e) hereof; and provided, further, that the
Repurchase Calculation Date shall be determined in accordance with
Section 7 based on the Repurchase Eligibility Date (unless (x) in the case
of a Section 6(b) Call Event, a Section 6(c) Call Event or a
Section 6(d) Call Event, the applicable Repurchase Price would be greater
if the Repurchase Calculation Date had been determined as if no Event had
occurred, in which case the Repurchase Calculation Date shall be determined as
if no Event had occurred, and (y) in the case of a Section 6(a) Call
Event, the applicable Repurchase Price would be less if the Repurchase
Calculation Date had been determined as if no Event had occurred, in which case
the Repurchase Calculation Date shall be determined as if no Event had occurred);
and provided, further, that such delay shall in no event exceed
twelve months.  All Options exercisable
as of the date of a Call Notice, in the case of a repurchase pursuant to
Section 6(c) or 6(d), shall continue to be exercisable until the
repurchase of such Options pursuant to such Call Notice, provided that to the
extent that any Options are exercised after the date of such Call Notice, the
number of Exercisable Option Shares for purposes of calculating the Option
Excess Price shall be reduced accordingly.

 

(g)         Section 6(a)
Call Events, Section 6(b) Call Events, Section 6(c) Call Events, and
Section 6(d) Call Events shall be collectively referred to as “Call
Events.”

 

7.               Determination of Repurchase Price.  (a) 
The Section 5(a) Repurchase Price, Section 6(a) Repurchase
Price, Section 6(c) Repurchase Price and the Section 6(d) Repurchase
Price are hereinafter collectively referred to as the “Repurchase Price”.  The Repurchase Price shall be calculated as
of the last day of the month preceding the later of (i) the month in which the
event giving rise to the repurchase occurs and (ii) the month in which the
Repurchase Eligibility Date occurs (hereinafter called the “Repurchase
Calculation Date”); provided, however, for the purpose of the
calculation of the Section 5(a) Repurchase Price, the Repurchase
Calculation Date shall be the last day of the month preceding the month in
which the Redemption Notice is served. 
The event giving rise to the repurchase shall be the death, permanent
disability, retirement or termination of employment, of the Employee
Stockholder, not the giving of any notice required pursuant to Section 5
or 6.

 

(b)         The
Section 5(a) Repurchase Price shall be a per share Repurchase Price equal
to the Fair Market Value Per Share (as defined in Section 7(g)) as of the
Repurchase Calculation Date.

 

(c)          The
Section 6(a) Repurchase Price shall be a per share Repurchase Price equal
to the lesser of (i) the Base Price and (ii) the Book Value Per Share (or,
after a Public Offering, the Market Price Per Share) as of the Repurchase
Calculation Date (but shall not be less than zero).

 

(d)         The
Section 6(c) Repurchase Price shall be a per share Repurchase Price (i)
with respect to all Stock other than Option Stock, equal to the Fair Market
Value Per Share and

 

9

 

(ii) with respect to Option Stock, (A) in the event that a
Section 6(c) Call Event described in Section 6(ii) has occurred,
equal to the Book Value Per Share (or, after a Public Offering, the Market Price
Per Share) and (B) in the event that a Section 6(c) Call Event described
in Section 6(c)(i) or (iii) has occurred, equal to the Fair Market Value
Per Share.

 

(e)          The
Section 6(d) Repurchase Price shall be a per share Repurchase Price (i)
with respect to all Stock other than Option Stock, (A) prior to a Public
Offering, equal to the lesser of (x) Fair Market Value Per Share and (y) the
Base Price plus (1) the Applicable Percentage multiplied by (2) the
excess, if any, of Fair Market Value Per Share over the Base Price and (B)
after a Public Offering, equal to Market Price Per Share and (ii) with respect
to all Option Stock, equal to the lesser of (x) the Book Value Per Share (or,
after a Public Offering, the Market Price Per Share) and (y) the Base Price
plus (1) the Applicable Percentage multiplied by (2) the excess, if any,
of Book Value Per Share over the Base Price. 
The “Applicable  Percentage” shall mean zero prior to the
first anniversary of the Effective Date, twenty-five percent (25%) during the period
commencing on the first anniversary of the Effective Date, fifty percent (50%)
during the period commencing the second anniversary of Effective Date,
seventy-five percent (75%) during the period commencing on the third
anniversary of Effective Date and on and after the fourth anniversary of the
Effective Date, 100%.

 

(f)            For
purposes of this Agreement the following definitions shall apply: “Cause”
shall mean (i) the Employee Stockholder’s willful and continued failure to
perform Employee Stockholder’s duties with respect to the Company or its
subsidiaries which continues after a demand for substantial performance is
delivered to Employee Stockholder by the Company, (ii) willful misconduct by
Employee Stockholder involving dishonesty or breach of trust in connection with
Employee Stockholder’s employment, (iii) an indictment of Employee Stockholder
for a felony or misdemeanor involving moral turpitude, or (iv) any material
breach by the Employee Stockholder of the provisions of Section 25 hereof or
(v) violation of any written Company policy, and “Good Reason” shall
mean (i) a reduction in Employee Stockholder’s base salary (other than any
general salary reduction affecting at least the majority of the employees of
the Company), (ii) a material and adverse change in the Employee Stockholder’s
duties and responsibilities or (iii) a transfer of the Employee Stockholder’s
primary workplace by more than fifty (50) miles from the Employee Stockholder’s
workplace as of the date hereof.

 

(g)         As
used herein, “Fair Market Value Per Share” shall mean (i) after a Public
Offering, Market Price Per Share, or (ii) prior to a Public Offering, the fair
market value per share of Common Stock, as determined within six (6) months of
the Repurchase Calculation Date by the Board of Directors of the Company in
good faith (the “Board Determination”).

 

(h)         As
used herein, “Book Value Per Share” shall be the quotient of (a) (i)
$92,120,000 plus (ii) the aggregate net income of the Company from and
after July 10, 1998 (as decreased by any net losses from and after
July 10, 1998) excluding the effect of adjustments required or permitted
by Accounting Principals Board Opinions Nos. 16 and 17 with respect to assets
acquired or liabilities assumed by the Company in the Closing transactions and
any related transactions plus (iii) the aggregate dollar amount
contributed to (or credited to common stockholders’ equity of) the Company
after the July 10, 1998 as equity of the Company

 

10

 

(including consideration to be received upon exercise of the Options
and other stock equivalents) plus (iv) to the extent reflected as
deductions to Book Value Per Share in clause (ii) above (or minus, to
the extent reflected as additions to Book Value Per Share in clause (ii) above)
unusual or other items recognized by the Company (including, without
limitation, extraordinary charges, one time or accelerated write-offs of good
will), in each case, if and to the extent determined in the sole discretion of
the Board of Directors of the Company, minus (v) the aggregate dollar
amount of any dividends paid by the Company after July 10, 1998 and a
Public Offering, divided by (b) the sum of the number of shares of
Common Stock then outstanding and the number of shares of Common Stock issuable
upon the exercise of all outstanding stock options and other rights to acquire
Common Stock and the conversion of all securities convertible into shares of
Common Stock.  The items referred to in
the calculations set forth in clauses (a)(ii) through (a)(iv) of the
immediately preceding sentence shall be determined in good faith and, to the
extent possible, in accordance with generally accepted accounting principles
applied on a basis consistent with any prior periods as reflected in the
consolidated financial statements of the Company.

 

(i)             As
used herein the term “Public Offering” shall mean the sale of shares of
Common Stock to the public subsequent to the date hereof pursuant to a
registration statement under the Act which has been declared effective by the
SEC (other than a registration statement on Form S-8 or any other similar
form).  A “Qualified Public Offering”
shall mean a Public Offering pursuant to an effective registration statement
and either (i) such registration statement is for the sale of shares of the
Common Stock held by Kohlberg Kravis Roberts & Co. L.P. (the “KKR
Partnership”) or its affiliates under such registration statement or (ii)
thereafter an active trading market in 40% or more of the Common Stock exists.

 

(j)             As
used herein, the term “Market Price Per Share” shall mean the price per
share equal to the average of the last sale price of the Common Stock on the
Repurchase Calculation Date on each exchange on which the Common Stock may at
the time be listed or, if there shall have been no sales on any of such
exchanges on the Repurchase Calculation Date, the average of the closing bid
and asked prices on each such exchange at the end of the Repurchase Calculation
Date or if there is no such bid and asked price on the Repurchase Calculation
Date on the next preceding date when such bid and asked price occurred or, if
the Common Stock shall not be so listed, the average of the closing sales
prices as reported by NASDAQ at the end of the Repurchase Calculation Date in
the over-the-counter market.

 

(k)          In
determining the Repurchase Price, appropriate adjustments shall be made for any
stock dividends, splits, combinations, recapitalizations or any other
adjustment in the number of outstanding shares of Common Stock in order to
maintain, as nearly as practicable, the intended operation of the provisions of
this Section 7.

 

11

 

8.               Stock Issued to Employee Stockholder Upon
Exercise of Stock Options; Termination and Expiration of Options. 
(a)  The Company may from time to
time grant to the Employee Stockholder, in addition to the Options, options
under the Option Plan to purchase shares of Common Stock at the Base Price or
at a different option exercise price.

 

(b)         (i)  In the case of an exercise of the put rights
described above in Section 5(a)(B) or of the call rights described above
in Sections 6(b)(B), 6(c)(B) or 6(d)(ii), all outstanding exercisable Options
for which such put or call is exercised that had been granted to the Employee
Stockholder under the Option Plan will be automatically terminated upon the
payment by the Company to the Employee Stockholder of an amount equal to the
applicable Option Excess Price, as provided below; provided, however,
in the event the Option Excess Price is zero or a negative number, all
outstanding exercisable stock options granted to the Employee Stockholder under
the Option Plan shall be automatically terminated without any payment in
respect thereof.  In the event the
Employee Stockholder’s employment is terminated for any reason, all
unexercisable Options (whose exercisability is not otherwise accelerated
pursuant to the terms of a Non-Qualified Stock Option Agreement) automatically
and immediately upon such termination of employment, terminate without payment
in respect thereof.

 

(ii)          In
the case of an exercise of the put rights described above in Section 5(a)
or of the call rights described above in Section 6(b), with respect to
each Option, the “Option Excess Price” is the excess, if any, of the
Section 5(a) Repurchase Price over the Option Exercise Price (as defined
below), multiplied by the number of Exercisable Option Shares thereunder.

 

(iii)       In the
case of an exercise of the call rights described above in Section 6(c),
with respect to each Option, the “Option Excess Price” is the excess, if
any, of the Section 6(c) Repurchase Price, as such price is determined on
the basis of Section 7(d) (ii), over the Option Exercise Price, multiplied
by the number of Exercisable Option Shares thereunder.

 

(iv)      In the
case of an exercise of the call rights described above in Section 6(d),
with respect to each Option, the “Option Excess Price” is the (x)
Applicable Percentage multiplied by (y) the excess, if any, of Book Value Per
Share over the Option Exercise Price, multiplied by (z) the number of
Exercisable Option Shares thereunder.

 

For purposes hereof,  “Option Exercise Price” shall mean the exercise price of
the shares of Common Stock covered by the applicable Option and “Exercisable
Option Shares” shall mean the shares of Common Stock which, at the time of
determination of the Option Excess Price could be purchased by the Employee
Stockholder upon exercise of his or her outstanding Options.

 

(c)          With
respect to the Options in the event that any termination of employment or other
event giving rise to the right to put or call Stock or Options occurs and no
such put or call is exercised in accordance with the provisions of this
Agreement, then the remaining portion of any outstanding exercisable Options
shall expire, subject to Sections 5(c) and 6(f) hereof, in accordance with the
terms of Article 3 of the Employee Stockholder’s Non-Qualified Stock
Option Agreement.

 

12

 

9.               The Company’s Representations and Warranties.  (a)                             The Company represents and warrants to the
Employee Stockholder that (i) this Agreement has been duly authorized, executed
and delivered by the Company and (ii) the Issued Stock, when issued and
delivered in accordance with the terms hereof, will be duly and validly issued,
fully paid and nonassessable.

 

(b)         The
Company will file the reports required to be filed by it under the Act and the
Exchange Act and the rules and regulations adopted by the SEC thereunder, to
the extent required from time to time to enable the Employee Stockholder to
sell shares of Stock without registration under the Act within the limitations
of the exemptions provided by (A) Rule 144 under the Act, as such Rule may be
amended from time to time, or (B) any similar rule or regulation hereafter
adopted by the SEC.  Notwithstanding
anything contained in this Section 9(b), the Company may de-register under
Section 12 of the Exchange Act if it is then permitted to do so pursuant
to the Exchange Act and the rules and regulations thereunder and, in such
circumstances, shall not be required hereby to file any reports which may be
necessary in order for Rule 144 or any similar rule or regulation under the Act
to be available.  Nothing in this
Section 9(b) shall be deemed to limit in any manner the restrictions on
sales of Stock contained in this Agreement.

 

10.         “Piggyback”
Registration Rights.  (a)                   Effective upon the date of this Agreement, until the later of (i) five
years from the Effective Date hereof and (ii) the first occurrence of a
Qualified Public Offering (as defined in Section 7(j) above), the Employee
Stockholder hereby agrees to be bound by all of the terms, conditions and
obligations of the Registration Rights Agreement dated as of July 9, 1998
among the Company, Bristol West Associates LLC, a Delaware limited liability
company (“Associates”), KKR 1996 Fund L.P. and KKR Partners II, L.P.
(the “Registration Rights Agreement”) and, in the case of a Qualified
Public Offering and subject to the limitations set forth in this
Section 10, shall have all of the rights and privileges of the
Registration Rights Agreement, in each case as if the Employee Stockholder were
an original party (other than the Company) thereto; provided, however,
that at no time shall the Employee Stockholder have any rights to request
registration under Section 3 of the Registration Rights Agreement; and provided
further, that the Employee Stockholder shall not be bound by any amendments
to the Registration Rights Agreement unless the Employee Stockholder consents
thereto provided that such consent will not be unreasonably withheld.  Notwithstanding anything to the contrary
contained in the Registration Rights Agreement, the Employee Stockholder’s
rights and obligations under the Registration Rights Agreement shall be subject
to the limitations and additional obligations set forth in this
Section 10.  All Stock purchased or
held by the applicable Employee Stockholder Entities pursuant to this Agreement
shall be deemed to be Registrable Securities as defined in the Registration
Rights Agreement.

 

(b)         The
Company will promptly notify the Employee Stockholder in writing (a “Notice”)
of any proposed registration (a “Proposed Registration”) in connection
with a Qualified Public Offering.  If
within 15 days of the receipt by the Employee Stockholder of such Notice, the
Company receives from the applicable Employee Stockholder Entities a written
request (a “Request”) to register shares of Stock held by the applicable
Employee Stockholder Entities (which Request will be irrevocable unless
otherwise mutually agreed to in writing by the Employee Stockholder and the
Company), shares of Stock will be so registered as provided in

 

13

 

this Section 10; provided, however, that for each
such registration statement only one Request, which shall be executed by the
applicable Employee Stockholder Entities, may be submitted for all Registrable
Securities held by the applicable Employee Stockholder Entities.

 

(c)          The
maximum number of shares of Stock which will be registered pursuant to a
Request will be the lowest of (i) the number of shares of Stock then held by
the Employee Stockholder Entities, including all shares of Stock which the
Employee Stockholder Entities are then entitled to acquire under an unexercised
Option to the extent then exercisable, multiplied by a fraction, the numerator
of which is the number of shares of Stock being sold by Associates and
investment partnerships and investment limited liability companies affiliated
with the KKR Partnership and the denominator of which is the number of shares
of Stock owned by Associates and investment partnerships and investment limited
liability companies affiliated with the KKR Partnership or (ii) the maximum number
of shares of Stock which the Company can register in the Proposed Registration
without adverse effect on the offering in the view of the managing underwriters
(reduced pro rata with all Other Employee Stockholders and all Other Employee
Stockholders) as more fully described in subsection (d) of this
Section 10 or (iii) the maximum number of shares which the Employee
Stockholder (pro rata based upon the aggregate number of shares of Common Stock
the Employee Stockholder, all Other Employee Stockholders, and all Other
Employee Stockholders have requested to be registered) and all Other Employee
Stockholders are permitted to register under the Registration Rights Agreement.

 

(d)         If a
Proposed Registration involves an underwritten offering and the managing underwriter
advises the Company in writing that, in its opinion, the number of shares of
Stock requested to be included in the Proposed Registration exceeds the number
which can be sold in such offering, so as to be likely to have an adverse
effect on the price, timing or distribution of the shares of Stock offered in
such Qualified Public Offering as contemplated by the Company, then the Company
will include in the Proposed Registration (i) first, 100% of the shares of
Stock the Company proposes to sell and (ii) second, to the extent of the number
of shares of Stock requested to be included in such registration which, in the
opinion of such managing underwriter, can be sold without having the adverse
effect referred to above, the number of shares of Stock which the “Holders” (as
defined in the Registration Rights Agreement), including, without limitation,
the Employee Stockholder, Other Employee Stockholders, and all Other Employee
Stockholders have requested to be included in the Proposed Registration, such amount
to be allocated pro rata among all requesting Holders on the basis of the
relative number of shares of Stock then held by each such Holder (including the
exercisable Options) (provided that any shares thereby allocated to any such
Holder that exceed such Holder’s request will be reallocated among the
remaining requesting Holders in like manner).

 

(e)          Upon
delivering a Request the Employee Stockholder will, if requested by the
Company, execute and deliver a custody agreement and power of attorney in form
and substance satisfactory to the Company with respect to the shares of Stock
to be registered pursuant to this Section 10 (a “Custody Agreement and
Power of Attorney”).  The Custody
Agreement and Power of Attorney will provide, among other things, that the
Employee Stockholder will deliver to and deposit in custody with the custodian
and attorney-in-fact named therein a certificate or certificates representing
such shares of Stock (duly endorsed in blank by the registered owner or owners
thereof or accompanied by duly executed stock powers in blank) and irrevocably
appoint

 

14

 

said custodian and attorney-in-fact as the Employee Stockholder’s agent
and attorney-in-fact with full power and authority to act under the Custody
Agreement and Power of Attorney on the Employee Stockholder’s behalf with
respect to the matters specified therein.

 

(f)            The
Employee Stockholder agrees that he or she will execute such other agreements
as the Company may reasonably request to further evidence the provisions of
this Section 10.

 

11.         Pro
Rata Repurchases; Dividends.  (a)              Notwithstanding
anything to the contrary contained in Section 5, 6 or 7, if at any time
consummation of all purchases and payments to be made by the Company pursuant
to this Agreement and the Other Employee Stockholders’ Agreements would result
in an Event, then the Company shall make purchases from, and payments to, the
Employee Stockholder and Other Employee Stockholders pro rata (on the basis of
the proportion of the number of shares of Stock and the number of Options each
such Employee Stockholder and all Other Employee Stockholders have elected or
are required to sell to the Company) for the maximum number of shares of Stock
and shall pay the Option Excess Price for the maximum number of Options
permitted without resulting in an Event (the “Maximum Repurchase Amount”).  The provisions of Section 5(c) and 6(f)
shall apply in their entirety to payments and repurchases with respect to
Options and shares of Stock which may not be made due to the limits imposed by
the Maximum Repurchase Amount under this Section 11(a).  Until all of such Stock and Options are
purchased and paid for by the Company, the Employee Stockholder and the Other
Employee Stockholders whose Stock and Options are not purchased in accordance
with this Section 11(a) shall have priority, on a pro rata basis, over
other purchases of Common Stock and Options by the Company pursuant to this
Agreement and Other Employee Stockholders’ Agreements.

 

(b)         No
dividends on the common stock are expected to be paid by the Company prior to a
Public Offering.  In the event any
dividends are paid with respect to the Common Stock, the Employee Stockholder
will be treated in the same manner as all other stockholders with respect to
shares of Common Stock then owned by the Employee Stockholder.

 

12.         Rights
to Negotiate Repurchase Price.  Nothing in this Agreement shall be deemed to
restrict or prohibit the Company from purchasing shares of Stock or Options
from the Employee Stockholder, at any time, upon such terms and conditions, and
for such price, as may be mutually agreed upon between the Parties, whether or
not at the time of such purchase circumstances exist which specifically grant
the Company the right to purchase, or the Employee Stockholder the right to
sell, shares of Stock or the Company has the right to pay, or the Employee
Stockholder has the right to receive, the Option Excess Price under the terms
of this Agreement.

 

13.         Covenant
Regarding 83(b) Election.  Except as the Company may otherwise agree in
writing, the Employee Stockholder hereby covenants and agrees that he will make
an election provided pursuant to Treasury Regulation 1.83-2 with respect to the
Stock, including without limitation, the Stock to be acquired pursuant to
Section 1 and the Stock to be acquired upon each exercise of the Employee
Stockholder’s Non-Qualified Options; and Employee Stockholder further covenants
and agrees that he will furnish the Company with copies of the

 

15

 

forms of election the Employee Stockholder files within 30 days after
the date hereof, and within 30 days after each exercise of Employee
Stockholder’s Non-Qualified Options and with evidence that each such election
has been filed in a timely manner.

 

14.         Notice
of Change of Beneficiary.  Immediately prior to any transfer of Stock
to a Employee Stockholder’s Trust, the Employee Stockholder shall provide the
Company with a copy of the instruments creating the Employee Stockholder’s
Trust and with the identity of the beneficiaries of the Employee Stockholder’s
Trust.  The Employee Stockholder shall
notify the Company as soon as practicable prior to any change in the identity of
any beneficiary of the Employee Stockholder’s Trust.

 

15.         Expiration
of Certain Provisions.  The provisions contained in Sections 4, 5
and 6 of this Agreement and the portion of any other provision of this
Agreement which incorporates the provisions of Sections 4, 5 and 6, shall
terminate and be of no further force or effect with respect to any shares of
Stock sold by the Employee Stockholder (i) pursuant to an effective
registration statement filed by the Company pursuant to Section 10 hereof
or (ii) pursuant to the terms of the Sale Participation Agreement of even date
herewith, among the Employee Stockholder, KKR 1996 Fund L.P., Associates and
KKR Partners II, L.P.  

 

16.         Recapitalizations,
etc.  The provisions of this Agreement shall
apply, to the full extent set forth herein with respect to the Stock or the
Options, to any and all shares of capital stock of the Company or any capital
stock, partnership units or any other security evidencing ownership interests
in any successor or assign of the Company (whether by merger, consolidation,
sale of assets or otherwise) which may be issued in respect of, in exchange
for, or substitution of the Stock or the Options, by reason of any stock
dividend, split, reverse split, combination, recapitalization, liquidation,
reclassification, merger, consolidation or otherwise.

 

17.         State
Securities Laws.  The Company hereby agrees to use its best
efforts to comply with all state securities or “blue sky” laws which might be
applicable to the sale of the Stock and the issuance of the Options to the
Employee Stockholder.

 

18.         Binding
Effect.  The provisions of this Agreement shall be
binding upon and accrue to the benefit of the parties hereto and their
respective heirs, legal representatives, successors and assigns.  In the case of a transferee permitted under
Section 2(a) hereof, such transferee shall be deemed the Employee
Stockholder hereunder; provided, however, that no transferee (including without
limitation, transferees referred to in Section 2(a) hereof) shall derive
any rights under this Agreement unless and until such transferee has delivered
to the Company a valid undertaking and becomes bound by the terms of this
Agreement.

 

19.         Amendment. 
This Agreement may be amended only by a written instrument signed by the
Parties hereto.

 

20.         Closing. 
Except as otherwise provided herein, the closing of each purchase and
sale of shares of Stock and the payment of the Option Excess Price, if any,
pursuant to this Agreement shall take place at the principal office of the
Company on the tenth business day

 

16

 

following delivery of the notice by either Party to the other of its
exercise of the right to purchase or sell such Stock hereunder or to cause the
payment of the Option Excess Price, if any.

 

21.         Applicable
Law.  The laws of the state of New York shall
govern the interpretation, validity and performance of the terms of this
Agreement, regardless of the law that might be applied under principles of
conflicts of law.  Any suit, action or
proceeding against the Employee Stockholder or the Company, with respect to
this Agreement, or any judgment entered by any court in respect of any thereof,
may be brought in any court of competent jurisdiction in the State of Delaware
(or if the Company reincorporates in another state, in that state) or New York
and the Company and the Employee Stockholder each hereby submits to the
exclusive jurisdiction of such courts for the purpose of any such suit, action,
proceeding or judgment.  The Company and
the Employee Stockholder hereby irrevocably waive any objections which either
of them may now or hereafter have to the laying of the venue of any suit,
action or proceeding arising out of or relating to this Agreement brought in
any court of competent jurisdiction in the State of Delaware (or if the Company
reincorporates in another state, in that state) or New York, and hereby further
irrevocably waive any claim that any such suit, action or proceeding brought in
any such court has been brought in any inconvenient forum.  No suit, action or proceeding against the
Company or the Employee Stockholder with respect to this Agreement may be
brought in any court, domestic or foreign, or before any similar domestic or
foreign authority other than in a court of competent jurisdiction in the State
of Delaware (or if the Company reincorporates in another state, in that state)
or New York, and the Company and the Employee Stockholder hereby irrevocably
waive any right which either of them may otherwise have had to bring such an
action in any other court, domestic or foreign, or before any similar domestic
or foreign authority.  Each Party hereto
hereby irrevocably and unconditionally waives trial by jury in any legal action
or proceeding in relation to this Agreement and for any counterclaim therein.

 

22.         Assignability
of Certain Rights by the Company.  The Company shall have the
right to assign any or all of its rights or obligations to purchase shares of
Stock pursuant to Sections 4, 5 and 6 hereof; provided, however, that the
Company shall remain obligated to perform its obligations notwithstanding such
assignment in the event that such assignee fails to perform the obligations so
assigned to it.

 

23.         Miscellaneous. 
(a)  In this Agreement all
references to “dollars” or “$” are to United States dollars.

 

(b)         If any
provision of this Agreement shall be declared illegal, void or unenforceable by
any court of competent jurisdiction, the other provisions shall not be
affected, but shall remain in full force and effect.

 

(c)          The
Company shall have the right to deduct from any cash payment made under this
Agreement to the applicable Employee Stockholder Entities any federal, state
or  local income or other taxes required
by law to be withheld with respect to such payment.

 

24.         Notices.  All
notices and other communications provided for herein shall be in writing and
shall be deemed to have been duly given if delivered by hand (whether by
overnight

 

17

 

courier or otherwise) or sent by registered or certified mail, return
receipt requested, postage prepaid, or by overnight delivery or telecopy, to
the Party to whom it is directed:

 

(a)          If to
the Company, to it at the following address:

 

BRW Acquisition, Inc.

c/o Kohlberg Kravis Roberts & Co.

9 West 57th Street

New York, New York 
10019

 

Attn:  Perry
Golkin

 

with a copy to:

 

Bristol West Holdings, Inc.

5701 Stirling Road

Davie, FL 
33314

Attn: 
General Counsel

 

with a copy to:

 

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, New York 
10017-3909

Attn:                    Alvin Brown, Esq.

Gary Horowitz, Esq.

 

(b)         If to
the Employee Stockholder, to him at the address set forth below under his
signature; or at such other address as either party shall have specified by
notice in writing to the other.

 

25.         Confidential
Information.  (a)               In
consideration of the Company entering into this Agreement with the Employee
Stockholder, the Employee Stockholder hereby agrees effective as of the
Effective Date, without the Company’s prior written consent, the Employee
Stockholder shall not, directly or indirectly, at any time during or after the
Employee Stockholder’s employment with the Company, disclose any Confidential
Information (as hereinafter defined) pertaining to the business of the Company
or any of its subsidiaries, except when required by law.  As used in this Agreement, the term “Confidential
Information” means all non-public information concerning the financial
data, strategic business plans, and other non-public, proprietary, and
confidential information of the Company, its subsidiaries, the KKR Partnership,
and their affiliates (the “Restricted Group”) as in existence during the
Employee Stockholder’s employment with the Company and as of the date of any
termination of such employment.  If the
Employee Stockholder is bound by any other agreement with the Company regarding
the use or disclosure of confidential information, the provisions of this
Agreement

 

18

 

shall be read in such a way as to further restrict and not to permit
any more extensive use or disclosure of confidential information.

 

(b)         Notwithstanding
clause (a) above, if at any time a court holds that the restrictions stated in
such clause (a) are unreasonable or otherwise unenforceable under circumstances
then existing, the parties hereto agree that the maximum period, scope or
geographic area determined to be reasonable under such circumstances by such
court will be substituted for the stated period, scope or area.  Because the Employee Stockholder’s services
are unique and because the Employee Stockholder has had access to Confidential
Information, the parties hereto agree that money damages will be an inadequate
remedy for any breach of this Agreement. 
In the event of a breach or threatened breach of this Agreement, the
Company or its successors or assigns may, in addition to other rights and
remedies existing in their favor, apply to any court of competent jurisdiction
for specific performance and/or injunctive relief in order to enforce, or
prevent any violations of, the provisions hereof (without the posting of a bond
or other security).

 

19

 

IN WITNESS WHEREOF, the Parties have executed this
Agreement as of the date first above written.

 

	
   

  	
  BRISTOL WEST HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Employee Stockholder

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address of the Employee Stockholder

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Number of Shares Purchased by

  Employee Stockholder

  

 

20

 

Form of Non-Qualified Stock Option Agreement

 

 

NON-QUALIFIED STOCK OPTION
AGREEMENT

 

THIS AGREEMENT, dated as of
                    
   , 200  , is made by and between BRISTOL WEST
HOLDINGS, INC. a Delaware corporation (hereinafter referred to as the “Company”),
and                  ,
an employee of the Company or a Subsidiary (as defined below) or Affiliate (as
defined below) of the Company (hereinafter referred to as “Optionee”).

 

WHEREAS, the Company wishes to afford the Optionee
the opportunity to purchase shares of its Common Stock, par value $.01 per
share (the “Common Stock”);

 

WHEREAS, the Company wishes to carry out the Plan
(as hereinafter defined), the terms of which are hereby incorporated by
reference and made a part of this Agreement; and

 

WHEREAS, the Committee (as hereinafter defined),
appointed to administer the Plan, has determined that it would be to the
advantage and best interest of the Company and its stockholders to grant the
Non-Qualified Options provided for herein to the Optionee as an incentive for increased
efforts during his term of office with the Company or its Subsidiaries or
Affiliates, and has advised the Company thereof and instructed the undersigned
officers to issue said Options;

 

NOW, THEREFORE, in consideration of the mutual
covenants herein contained and other good and valuable consideration, receipt
of which is hereby acknowledged, the parties hereto do hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Whenever the following terms are used in this
Agreement, they shall have the meaning specified in the Plan or below unless
the context clearly indicates to the contrary.

 

Section 1.1                                      Affiliate

 

“Affiliate” shall mean, with respect to the Company,
any person or entity directly or indirectly controlling, controlled by, or
under common control with, the Company or any other entity designated by the
Board of Directors of the Company in which the Company or an Affiliate has an
interest.  For purposes of this
definition and the definition of “Subsidiary” set forth below, the term
“control” of a person or entity means the possession, direct or indirect, of
the power to (i) vote 50% or more of the voting securities of such person or
entity or (ii) direct or cause the direction of the management and policies of
such person or entity, whether by contract or otherwise.

 

Section 1.2                                      Cause

 

“Cause” shall mean (i) the Optionee’s willful and
continued failure to perform Optionee’s duties with respect to the Company or
its subsidiaries after a demand by Optionee’s superior for substantial
performance is made or delivered to the Optionee by the Company, (ii) willful
misconduct by Optionee involving dishonesty or breach of trust in connection
with Optionee’s employment, (iii) an indictment of Optionee for a felony or
misdemeanor involving moral turpitude, (iv) if applicable, any material breach
by an Optionee of the provisions of

 

 

Exhibit A

 

Section 25
of the Employee Stockholder’s Agreement, or (v) violation of any written
Company policy.

 

Section 1.3                                      Change of Control

 

“Change of Control” means (i) sales of all or
substantially all of the assets of the Company to a Person who is not an
Affiliate of Kohlberg Kravis Roberts & Co., LLC (“KKR”), (ii) a sale by KKR
or any of its respective Affiliates resulting in more than 50% of the voting
stock of the Company being held by a person or group that does not include KKR
or any of its Affiliates or (iii) a merger or consolidation of the Company into
another Person which is not an Affiliate of KKR; if and only if any such event
results in the inability of KKR or any of its Affiliates to elect a majority of
the Board of Directors of the Company (or the resulting entity).

 

Section 1.4                                      Code

 

“Code” shall mean the Internal Revenue Code of 1986,
as amended.

 

Section 1.5                                      Committee

 

“Committee” shall mean the Compensation Committee of
the Company.

 

Section 1.6                                      Effective Date

 

“Effective Date” shall mean
                       
   , 2000  .

 

Section 1.7                                      Employee Stockholder’s Agreement

 

“Employee Stockholder’s Agreement” shall mean that
certain Employee Stockholder’s Agreement dated as of  the date hereof between the Optionee and the Company.

 

Section 1.8                                      Group

 

“Group” means two or more Persons acting together as
a partnership, limited partnership, syndicate or other group for the purpose of
acquiring, holding or disposing of securities of the Company.

 

Section 1.9                                      Options

 

“Options” shall mean the non-qualified options to
purchase Common Stock granted under this Agreement.

 

Section 1.10                                Permanent Disability

 

The Optionee shall be deemed to have a “Permanent
Disability” if the Optionee is unable to engage in the activities required by
the Optionee’s job by reason of any medically determined physical or mental
impairment which can be expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than twelve (12)
months.

 

2

 

Section 1.11                                Person

 

“Person” means an individual, partnership,
corporation, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.

 

Section 1.12                                Plan

 

“Plan” shall mean the 1998 Stock Option Plan for
Management and Key Employees of BRW Acquisition, Inc. and Subsidiaries.

 

Section 1.13                                Pronouns

 

The masculine pronoun shall include the feminine and
neuter, and the singular the plural, where the context so indicates.

 

Section 1.14                                Retirement

 

“Retirement” shall mean the time at which the
Optionee terminates his/her employment at age 65 or over (or such other age as
may be approved by the Board of Directors of the Company) after having been
employed by the Company or a Subsidiary for at least three (3) years after the
Effective Date.

 

Section 1.15                                Secretary

 

“Secretary” shall mean the Secretary of the Company.

 

Section 1.16                                Subsidiary

 

“Subsidiary” shall mean any corporation,
partnership, joint venture or other entity which the Company controls, directly
or indirectly through one or more intermediaries.

 

ARTICLE II

 

GRANT OF OPTIONS

 

Section 2.1                                      Grant of Options

 

For good and valuable consideration, on and as of
the date hereof the Company irrevocably grants to the Optionee an Option to
purchase any part or all of the number of shares of the Company’s Common Stock
set forth on the signature page hereof upon the terms and conditions set forth
in this Agreement.

 

Section 2.2                                      Exercise Price

 

Subject to Section 2.4, the exercise price of
the shares of stock covered by the Options (the “Option Exercise Price”) shall
be  $           
per share without commission or other charge.

 

3

 

Section 2.3                                      No Right to Employment

 

Nothing in this Agreement or in the Plan shall
confer upon the Optionee any right to continue in the employ of the Company or
any Subsidiary or Affiliate or shall interfere with or restrict in any way the
rights of the Company and its Subsidiaries or Affiliates, which are hereby
expressly reserved, to terminate the employment of the Optionee at any time for
any reason whatsoever, with or without Cause.

 

Section 2.4                                      Adjustments in Options Pursuant to Merger,
Consolidation, etc.

 

Subject to Section 9 of the Plan, in the event
that the outstanding shares of the stock subject to an Option are, from time to
time, changed into or exchanged for a different number or kind of shares of the
Company or other securities of the Company by reason of a merger,
consolidation, recapitalization, reclassification, stock split, stock dividend,
combination of shares, or otherwise, the Committee shall make an adjustment in
the number and kind of shares and/or the amount of consideration as to which or
for which, as the case may be, such Option, or portions thereof then
unexercised, shall be exercisable, in such manner as the Committee determines
is reasonably necessary to maintain as nearly as practicable the rights,
benefits and obligations that the parties would have had absent such
event.  Any such adjustment made by the
Committee shall be final and binding upon the Optionee, the Company and all
other interested persons.

 

ARTICLE III

 

PERIOD OF EXERCISABILITY

 

Section 3.1                                      Commencement of Exercisability

 

(i)             Unless otherwise provided in this Agreement,
the Option shall become exercisable as follows:

 

	
  Date
  Option Becomes Exercisable

  	
   

  	
  Percentage of Option Shares Granted

  as to Which Option Is Exercisable

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  After the first anniversary of the Effective Date

  	
   

  	
  20

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  After the second anniversary of the Effective Date

  	
   

  	
  40

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  After the third anniversary of the Effective Date

  	
   

  	
  60

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  After the fourth anniversary of the Effective Date

  	
   

  	
  80

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  After the fifth anniversary of the Effective Date

  	
   

  	
  100

  	
  %

  

 

(ii)          Notwithstanding the foregoing, no Option shall become exercisable as to
any additional shares of Common Stock following the termination of employment
of the Optionee

 

4

 

for any reason, and any Option which is not and does
not become exercisable as of the Optionee’s termination of employment shall be
immediately cancelled.

 

Section 3.2                                      Acceleration Events

 

Notwithstanding anything in this Article III to
the contrary. the Option shall become immediately exercisable as to 100% of the
shares of Common Stock subject to such Option (but only to the extent such
Option has not otherwise terminated or become exercisable) upon a Change of
Control.

 

Section 3.3                                      Expiration of Options

 

Except as otherwise provided in Section 5 or 6
of the Employee Stockholder’s Agreement, the Options may not be exercised to
any extent by the Optionee after the first to occur of the following events:

 

(i)             The tenth anniversary of the Effective Date;
or

 

(ii)          The first anniversary of the date of the Optionee’s termination of
employment by reason of death, Permanent Disability or Retirement; or

 

(iii)       Immediately upon Optionee’s termination of employment for Cause; or

 

(iv)      The first business day which is ninety (90) calendar days after
termination of employment of the Optionee for any reason other than death,
Permanent Disability, Retirement or termination for Cause; provided, however,
that such Options shall not terminate where the extension of the exercise of a
put or call right is delayed in accordance with the terms of the Employee
Stockholder’s Agreement; or

 

(v)         The date of purchase of the Option pursuant to a put or call right
under the Employee Stockholder’s Agreement; or

 

(vi)      At the discretion of the Company, in the event of certain business
combinations (including, without limitation, any acquisition, merger,
consolidation, exchange, liquidation, dissolution or other event) after the
Optionee has had a reasonable opportunity to exercise his Options prior to such
business combination.

 

ARTICLE IV

 

EXERCISE OF OPTIONS

 

Section 4.1                                      Person Eligible to Exercise

 

Except as provided in the Employee Stockholder’s
Agreement, during the lifetime of the Optionee, only the Optionee may exercise
an Option or any portion thereof.  After
the death of the Optionee, any exercisable portion of an Option may, prior to
the time when an Option becomes unexercisable under Section 3.2, be
exercised by the Optionee’s personal representative or by any person empowered
to do so under the Optionee’s will or under the then applicable laws of descent
and distribution.

 

5

 

Section 4.2                                      Partial Exercise

 

Any exercisable portion of an Option or the entire
Option, if then wholly exercisable, may be exercised in whole or in part at any
time prior to the time when the Option or portion thereof becomes unexercisable
under Section 3.2; provided, however, that any partial exercise shall be
for whole shares of Common Stock only.

 

Section 4.3                                      Manner of Exercise

 

An Option, or any exercisable portion thereof, may
be exercised solely by delivering to the Secretary or his office all of the
following prior to the time when the Option or such portion becomes
unexercisable under Section 3.3:

 

(i)             Notice in writing signed by the Optionee or
the other person then entitled to exercise the Option or portion thereof,
stating that the Option or portion thereof is thereby exercised, such notice
complying with all applicable rules established by the Committee;

 

(ii)          Full payment in cash, by check or by a combination thereof or, subject
to limitations imposed by the Committee, in shares of Common Stock or by a
combination thereof, for the shares with respect to which such Option or
portion thereof is exercised;

 

(iii)       A bona fide written representation and agreement, in a form
satisfactory to the Committee, signed by the Optionee or other person then
entitled to exercise such Option or portion thereof, stating that the shares of
stock are being acquired for his own account, for investment and without any
present intention of distributing or reselling said shares or any of them
except as may be permitted under the Securities Act of 1933, as amended (the
“Act”), and then applicable rules and regulations thereunder, and that the
Optionee or other person then entitled to exercise such Option or portion
thereof will indemnify the Company against and hold it free and harmless from
any loss, damage, expense or liability resulting to the Company if any sale or
distribution of the shares by such person is contrary to the representation and
agreement referred to above; provided, however, that the Committee may, in its
absolute discretion, take whatever reasonable additional actions it deems
appropriate to ensure the observance and performance of such representation and
agreement and to effect compliance with the Act and any other federal or state
securities laws or regulations;

 

(iv)      Full payment to the Company at the time of exercise of the Option of
all amounts which, under federal, state or local law, it is required to
withhold upon exercise of the Option, which amounts may, at the Optionee’s
election, be paid in full from wages or other income payable to the Optionee by
the Company in lieu of any direct payment of such withholding payment; and

 

(v)         In the event the Option or portion thereof shall be exercised pursuant
to Section 4.1 by any person or persons other than the Optionee,
appropriate proof of the right of such person or persons to exercise the option.

 

Without limiting the generality of the foregoing, the Committee may
require an opinion of counsel acceptable to it to the effect that any
subsequent transfer of shares acquired on exercise of an Option does not
violate the Act, and may issue stop-transfer orders covering such shares.  Share certificates evidencing stock issued
on exercise of this Option shall bear an appropriate legend referring to the
provisions of subsection (c) above and the agreements herein.  The written

 

6

 

representation and agreement referred to in subsection (c) above
shall, however, not be required if the shares to be issued pursuant to such
exercise have been registered under the Act, and such registration is then
effective in respect of such shares.

 

Section 4.4                                      Conditions to Issuance of Stock Certificates

 

The shares of stock deliverable upon the exercise of
an Option, or any portion thereof, may be either previously authorized but
unissued shares or issued shares which have then been reacquired by the
Company.  Such shares shall be validly
issued, fully paid and nonassessable. 
The Company shall not be required to issue or deliver any certificate or
certificates for shares of stock purchased upon the exercise of an Option or
portion thereof prior to fulfillment of all of the following conditions:

 

(i)             The obtaining of approval or other clearance
from any state or federal governmental agency which the Committee shall, in its
absolute discretion, determine to be reasonably necessary or advisable; and

 

(ii)          The lapse of such reasonable period of time following the exercise of
the Option as the Committee may from time to time establish for reasons of
administrative convenience.

 

Section 4.5                                      Rights as Stockholder

 

The holder of an Option shall not be, nor have any
of the rights or privileges of, a stockholder of the Company in respect of any
shares purchasable upon the exercise of the Option or any portion thereof
unless and until certificates representing such shares shall have been issued
by the Company to such holder.

 

ARTICLE V

 

MISCELLANEOUS

 

Section 5.1                                      Administration

 

The Committee shall have the power to interpret the
Plan and this Agreement and to adopt such rules for the administration,
interpretation and application of the Plan as are consistent therewith and to
interpret or revoke any such rules.  All
actions taken and all interpretations and determinations made by the Committee
shall be final and binding upon the Optionee, the Company and all other
interested persons.  No member of the
Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or the Options.  In its absolute discretion, the Board of
Directors may at any time and from time to time exercise any and all rights and
duties of the Committee under the Plan and this Agreement.

 

Section 5.2                                      Options Not Transferable

 

Except as provided in the Employee Stockholder’s
Agreement, neither the Options nor any interest or right therein or part
thereof shall be liable for the debts, contracts or engagements of the Optionee
or his successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether

 

7

 

such
disposition be voluntary or involuntary or by operation of law by judgment,
levy, attachment, garnishment or any other legal or equitable proceedings
(including bankruptcy), and any attempted disposition thereof shall be null and
void and of no effect; provided, however, that this Section 5.2 shall not
prevent transfers by will or by the applicable laws of descent and
distribution.

 

Section 5.3                                      Shares to Be Reserved

 

The Company shall at all times during the term of
the Options reserve and keep available such number of shares of stock as will
be sufficient to satisfy the requirements of this Agreement.

 

Section 5.4                                      Notices

 

Any notice to be given under the terms of this
Agreement to the Company shall be addressed to the Company in care of its
Secretary, and any notice to be given to the Optionee shall be addressed to him
at the address given beneath his signature hereto.  By a notice given pursuant to this Section 5.4, either party
may hereafter designate a different address for notices to be given to
him.  Any notice which is required to be
given to the Optionee shall, if the Optionee is then deceased, be given to the
Optionee’s personal representative if such representative has previously
informed the Company of his status and address by written notice under this
Section 5.4.  Any notice shall have
been deemed duly given when enclosed in a properly sealed envelope or wrapper
addressed as aforesaid, deposited (with postage prepaid) in a post office or
branch post office regularly maintained by the United States Postal Service, or
when sent by overnight delivery or telecopy.

 

Section 5.5                                      Titles

 

Titles are provided herein for convenience only and
are not to serve as a basis for interpretation or construction of this
Agreement.

 

Section 5.6                                      Applicability of Plan and Employee
Stockholder’s Agreement

 

The Options and the shares of Common Stock issued to
the Optionee upon exercise of the Options shall be subject to all of the terms
and provisions of the Plan and the Employee Stockholder’s Agreement, to the
extent applicable to the Options and such shares.  In the event of any conflict between this Agreement and the Plan,
the terms of the Plan shall control.  In
the event of any conflict between this Agreement or the Plan and the Employee
Stockholder’s Agreement, the terms of the Employee Stockholder’s Agreement
shall control.

 

Section 5.7                                      Amendment

 

This Agreement may be amended only by a writing
executed by the parties hereto which specifically states that it is amending
this Agreement.

 

Section 5.8                                      Governing Law

 

The laws of the State of Delaware (or if the Company
reincorporates in another state, the laws of that state) shall govern the
interpretation, validity and performance of the terms of this Agreement
regardless of the law that might be applied under principles of conflicts of
laws.

 

8

 

Section 5.9                                      Jurisdiction

 

Any suit, action or proceeding against the Optionee
or the Company with respect to this Agreement, or any judgment entered by any
court in respect of any thereof, may be brought in any court of competent
jurisdiction in the State of Delaware (or if the Company reincorporates in
another state, in that state) or New York, as the Company may elect in its sole
discretion, and the Optionee and the Company each hereby submit to the
exclusive jurisdiction of such courts for the purpose of any such suit, action,
proceeding or judgment.  The Optionee or
the Company each hereby irrevocably waive any objections which either of them may
now or hereafter have to the laying of the venue of any suit, action or
proceeding arising out of or relating to this Agreement brought in any court of
competent jurisdiction in the State of Delaware (or if the Company
reincorporates in another state, in that state) or New York, and hereby further
irrevocably waive any claim that any such suit, action or proceeding brought in
any such court has been brought in any inconvenient forum.  No suit, action or proceeding against the
Company or the Optionee with respect to this Agreement may be brought in any
court, domestic or foreign, or before any similar domestic or foreign authority
other than in a court of competent jurisdiction in the State of Delaware (or if
the Company reincorporates in another state, in that state) or New York, and
the Optionee and the Company each hereby irrevocably waive any right which
either of them may otherwise have had to bring such an action in any other
court, domestic or foreign, or before any similar domestic or foreign authority.  The Company and the Optionee each hereby
submit to the jurisdiction of such courts for the purpose of any such suit,
action or proceeding.  The Optionee and
the Company each hereby irrevocably and unconditionally waive trial by jury in
any legal action or proceeding in relation to this Agreement and for any
counterclaim therein.

 

9

 

IN WITNESS WHEREOF, this Agreement has been executed
and delivered by the parties hereto.

 

 

	
   

  	
  BRISTOL WEST HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Number of Shares Subject

  to the Option

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Optionee’s Taxpayer

  Identification Number:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
					

 

10

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