Exhibit 10.40
ASPEN INSURANCE HOLDINGS LIMITED
RESTRICTED SHARE UNIT AWARD AGREEMENT
     THIS AWARD AGREEMENT (the “Agreement”), is made effective as of the ___day
of ___, between Aspen Insurance Holdings Limited, a Bermuda corporation
(hereinafter called the “Company”), and NAME (hereinafter called the
“Participant”):
R E C I T A L S:
     WHEREAS, the Company has adopted the Aspen Insurance Holdings Limited 2003
Share Incentive Plan (the “Plan”); and
     WHEREAS, the Committee has determined that it would be in the best
interests of the Company and its shareholders to grant the Restricted Share
Units provided for herein (together, the “Grant”) to the Participant pursuant to
the Plan and the terms set forth herein.
     NOW THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties agree as follows:
1. Plan and Defined Terms. The Grant is made pursuant to the Plan, a copy of
which the Participant acknowledges having received. The terms and provisions of
the Plan are incorporated into this Agreement by this reference. All capitalized
terms that are used in this Agreement and not otherwise defined herein shall
have the meanings ascribed to them in the Plan.
2. Award. Pursuant to the provisions of the Plan, the Committee hereby awards to
the Participant, on the date hereof, subject to the terms and conditions of the
Plan and subject further to the terms and conditions herein set forth, XXXXX
Restricted Share Units.
3. Terms and Conditions. The award evidenced by this Agreement is subject to the
following terms and conditions:
     (a) The Participant shall not be entitled to receive payment for the value
of Restricted Share Units until vested;
     (b) The Company shall not issue any certificates representing Restricted
Share Units granted to Participants, and the grant of Restricted Share Units to
Participants shall not entitle such Participants to any rights of a holder of
Shares, including the right to vote; provided, however, that the Participant
shall receive Dividend Equivalents in accordance with the provisions of
Section 5 of this Agreement; and
     (c) Restricted Share Units and any interest of the Participant therein may
not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed
of. Any attempt to

 

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transfer Restricted Share Units in contravention of this Section 3(c) shall be
void. Restricted Share Units shall not be subject to execution, attachment or
other process.
4. Vesting.
     (a) Subject to earlier termination as provided in Sections 4(b) and 4(c),
and subject to the Participant’s continued Employment, Restricted Share Units
shall vest in tranches with one-third vesting on each of December 31, 2005,
December 31, 2006, and December 31, 2007.
     (b) If the Participant’s employment with the Company or one of its
Affiliates is terminated by the Company or an Affiliate for Cause or by the
Participant for any reason, all unvested Restricted Share Units shall be
forfeited on the date of such termination of employment.
     (c) If the Participant’s employment with the Company or one of its
Affiliates is terminated by the Company or an Affiliate without Cause (including
as a result of the Participant’s death or Disability), all unvested Restricted
Share Units shall vest on the date of such termination of employment.
5. Dividend Equivalents. If a cash dividend is declared on the Shares, the
Participant shall be credited with Dividend Equivalents in an amount equal to
the number of Restricted Share Units held by the Participant as of the dividend
record date, multiplied by the amount of the cash dividend per Share. Dividend
Equivalents shall be denominated in cash and paid in cash if and when the
underlying Restricted Share Units vest. Dividend Equivalents denominated in cash
shall not accrue interest during the period of restriction.
6. Payment. Except as otherwise elected by the Participant in accordance with
the provisions of Section 7, payment for the value of the Participant’s
Restricted Share Units shall be made to the Participant (or, in the event of the
Participant’s death, the Participant’s beneficiary, or, in the event that no
beneficiary shall have been designated, the Participant’s estate) as soon as
practicable following the date on which such Restricted Share Units vest.
Restricted Share Units shall be paid in Shares, less any Shares withheld in
accordance with the provisions of Section 9, with one (1) Share paid for each
Unit.
7. Deferral.
     (a) Form of Deferral. Subject to such terms and conditions as may be
established by the Committee, the Participant shall be eligible to defer receipt
of payment of the value of Restricted Share Units granted under the Plan by
filing a Deferral Agreement with the Company. The Deferral Agreement shall
specify the time of payment (the “Determination Date”) and the manner of
payment. An election to defer payment shall be effective upon receipt by the
Company and shall apply only to Restricted Share Units that vest in the
following calendar year or thereafter. Restricted Share Units deferred in
accordance with this Section shall be converted into an equal number of Deferred
Share Units. Dividend Equivalents credited with respect to Restricted Share
Units are not eligible for deferral under this Section 7.

 

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     (b) Accounts for Deferred Share Units.

  (i)   A Deferral Account shall be maintained for the Participant’s Deferred
Share Units, which shall be utilized solely as a device for the measurement and
determination of the amounts to be paid to the Participant pursuant to this
Agreement, and which shall not constitute or be treated as a trust fund of any
kind. The balance of the Participant’s Deferral Account shall be adjusted to
reflect Dividend Equivalents credited in accordance with the provisions of
Section 7(b)(ii) and distributions pursuant to Section 7(c) through 7(e).    
(ii)   If a cash dividend is declared on the Shares, the Participant shall be
credited with Dividend Equivalents in an amount equal to the number of Deferred
Share Units in the Participant’s Deferral Account as of the dividend record
date, multiplied by the amount of the cash dividend per Share. Dividend
Equivalents shall be denominated in cash and paid in cash at such times as the
underlying Deferred Share Units are paid. Dividend Equivalents denominated in
cash shall not accrue interest during the deferral period.     (iii)   Any
Deferred Share Units and Dividend Equivalents denominated in cash hereunder
credited to the Participant’s Deferral Account will represent only an unsecured
promise of the Company to pay or deliver the amount so credited in accordance
with the terms of this Section 7. Neither the Participant nor any beneficiary of
the Participant will acquire any right, title, or interest in any asset of the
Company as a result of any amount credited to the Participant’s Deferral
Account. At all times, the Participant’s rights with respect to the amount
credited to his Deferral Account will be only those of an unsecured creditor of
the Company. The Company will not be obligated or required in any manner to
restrict the use of any of its assets as a result of any amount credited to the
Participant’s Deferral Account. No right or benefit under the Agreement shall be
subject to anticipation, alienation, sale, assignment, pledge, lien, encumbrance
or charge, and any attempt to take any such action shall be void.

(c)   Time of Payment. The Participant’s Deferral Account shall be distributed
at such times as elected by the Participant in his Deferral Agreement.

     (d)  Form of Payment.

  (i)   If the Participant has elected to receive payment of all or a portion of
his Deferral Account in a lump sum, the Participant’s Deferral Account shall be
valued as of the Determination Date and paid by the Company to him (or, in the
event of the Participant’s death, to his beneficiary) as soon as practicable
thereafter.

 

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  (ii)   If the Participant has elected to receive payment of all or a portion
of his Deferral Account in installments, the Company shall make annual payments
from the portion of the Participant’s Deferral Account subject to the election.
Each installment shall commence as soon as practicable following the applicable
Determination Date. Each installment payment shall be in an amount equal to the
portion of the Participant’s Deferral Account subject to the election multiplied
by a fraction, the numerator of which is one (1) and the denominator of which is
the number of remaining installments (including the installment being paid). The
portion of the Participant’s Deferral Account denominated in Deferred Share
Units that is not distributed shall be credited with additional Dividend
Equivalents through the subsequent installment date pursuant to
Section 7(b)(ii).

     (e) Medium of Payment. The portion of the Participant’s Deferral Account
denominated in Deferred Share Units shall be paid in Shares and the portion
denominated in cash shall be paid in cash. One (1) Share shall be paid for each
whole Deferred Share Unit contained therein, and any fractional Deferred Share
Units shall be paid in cash.
     (f) Change in Law. If, due to a change in applicable law, deferral
elections are no longer permitted, all affected Deferral Agreements
automatically shall be deemed null and void and, if and to the extent that any
amount in the Participant’s Deferral Account shall be deemed immediately taxable
to such Participant, the balance of such Participant’s Deferral Account shall be
immediately distributed to him.
8. Definitions. For purposes of this Agreement, the following terms, when
capitalized, shall have the meanings set forth below:
     (a) “Cause” means (i) the Participant’s willful misconduct that is
materially injurious to Aspen Re America, Inc. or any of its affiliates;
(ii) the Participant’s intentional failure to act subject to and in accordance
with any proper and lawful specific material direction of Aspen Insurance U.S.
Services Inc. or of Aspen Re America, Inc., which breach is not promptly cured
by the Participant after written notice of such breach; (iii) the Participant’s
having been convicted of, or entered a plea of nolo contendere to, a crime that
constitutes a felony under the laws of the United States or any State; (iv) the
Participant’s violation of any applicable federal or state law governing the
business of Aspen Re America, Inc. or of any application rules or regulations
promulgated by any regulatory body, the violation of which shall either
disqualify the Participant from employment or association with Aspen Insurance
U.S. Services Inc. or Aspen Re America, Inc. as an executive or have a material
adverse effect on the business of Aspen Re America, Inc.; provided, however,
that any such violation shall not constitute “Cause” if it results from action
taken by the Participant in accordance with instructions from the Chief
Executive Officer of the Company or his designee or the Board of Directors of
Aspen Insurance U.S. Services Inc. or Aspen Re America, Inc., or upon the advice
of internal or outside counsel to Aspen Insurance U.S. Services Inc. or Aspen Re
America, Inc.; or (v) the intentional breach by the Participant of any written
covenant or agreement with Aspen Insurance U.S. Services Inc. or Aspen Re
America, Inc. or any of their

 

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affiliates not to disclose any information pertaining to Aspen Re America, Inc.
or any of its affiliates or not to compete or otherwise interfere with Aspen Re
America, Inc. or any of its affiliates.
     (b) “Deferral Account” means the bookkeeping account maintained on the
books of the Company for the Participant in accordance with the provisions of
Section 7 hereof.
     (c) “Deferral Agreement” means an agreement in such form as the Committee
may prescribe filed by a Participant in accordance with the provisions of
Section 7(a) hereof.
     (d) “Deferred Share Unit” means a vested Restricted Share Unit for which
the Participant has elected to defer payment in accordance with the provisions
of Section 7 and any Dividend Equivalents credited thereto.
     (e) “Disability” means (i) the Participant’s entitlement to long-term
disability benefits under the long-term disability plan or policy, as the case
may be, of Aspen Insurance U.S. Services Inc. as in effect on the date specified
in the notice of termination, or (ii) if no such plan or policy is maintained,
the Participant’s inability to perform the duties provided for in the Employment
Agreement for 180 consecutive days.
     (f) “Dividend Equivalent” means, with respect to Restricted Share Units or
Deferred Share Units, the right to receive an amount equal to cash dividends
declared on an equal number of outstanding Shares.
     (g) “Employment Agreement” means the Participant’s employment agreement
with Aspen Insurance U.S. Services Inc., dated as of EMPLOYMENT DATE, as may be
amended from time to time.
     (h) “Restricted Share Units” means a Share-denominated unit with a value
equal to the Fair Market Value of a specified number of Shares that is subject
to vesting requirements. Restricted Share Units are bookkeeping units and do not
represent ownership of Shares or any other equity security.
     (i) “Share” means an ordinary share, par value 0.15144558 cents per share,
in the capital of the Company.
9. Taxes. The Company shall make such provisions as are necessary or appropriate
for the withholding of all applicable taxes on this Grant, in accordance with
Section 4(d) of the Plan. With respect to any minimum statutory tax withholding
required upon vesting or payment of benefits hereunder, the Participant may
elect to satisfy all or a portion of such withholding requirement by having the
Company withhold Shares.
10. Regulatory Compliance and Listing. The issuance or delivery of any
certificates representing Shares issuable pursuant to this Agreement may be
postponed by the Committee for such period as may be required to comply with any
applicable requirements under the federal or state securities laws, any
applicable listing requirements of any national securities exchange or the
NASDAQ system, and any applicable requirements under any other law, rule

 

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or regulation applicable to the issuance or delivery of such Shares, and the
Company shall not be obligated to deliver any such Shares to the Participant if
either delivery thereof would constitute a violation of any provision of any law
or of any regulation of any governmental authority, any national securities
exchange or the NASDAQ system, or the Participant shall not yet have complied
fully with the provisions of Section 9 hereof.
11. Bermuda Government Regulations. No Shares shall be issued pursuant to this
Agreement unless and until all licenses, permissions and authorizations required
to be granted by the Government of Bermuda, or by any authority or agency
thereof, shall have been duly received.
12. Investment Representations and Related Matters. The Participant acknowledges
and agrees that any sale or distribution of Shares issued pursuant to this
Agreement may be made only pursuant to either (a) a registration statement on an
appropriate form under the Securities Act of 1933, as amended (the “Securities
Act”), which registration statement has become effective and is current with
regard to the Shares being sold, or (b) a specific exemption from the
registration requirements of the Securities Act that is confirmed in a favorable
written opinion of counsel, in form and substance satisfactory to counsel for
the Company, prior to any such sale or distribution. The Participant hereby
consents to such action as the Committee or the Company deems necessary or
appropriate from time to time to prevent a violation of, or to perfect an
exemption from, the registration requirements of the Securities Act or to
implement the provisions of this Agreement, including but not limited to placing
restrictive legends on certificates evidencing Shares issued pursuant to this
Agreement and delivering stop transfer instructions to the Company’s stock
transfer agent.
13. Arbitration. In the event of any controversy between the Participant and the
Company arising out of, or relating to, the Plan or this Agreement which cannot
be settled amicably by the parties, such controversy shall be finally,
exclusively and conclusively settled by mandatory arbitration conducted
expeditiously in accordance with the American Arbitration Association rules, by
a single independent arbitrator. If the parties are unable to agree on the
selection of an arbitrator, then either the Participant or the Company may
petition the American Arbitration Association for the appointment of the
arbitrator, which appointment shall be made within ten (10) days of the petition
therefor. Either party to the dispute may institute such arbitration proceeding
by giving written notice to the other party. A hearing shall be held by the
arbitrator in New York, London or Bermuda as agreed by the parties (or, failing
such agreement, in Bermuda) within thirty (30) days of his or her appointment.
The decision of the arbitrator shall be final and binding upon the parties and
shall be rendered pursuant to a written decision that contains a detailed
recital of the arbitrator’s reasoning. Judgment upon the award rendered may be
entered in any court having jurisdiction thereof.
14. No Right To Continued Employment. This Agreement does not confer upon the
Participant any right to continued Employment, nor shall it interfere in any way
with the right of the Participant’s employer to terminate the Participant’s
Employment at any time for any reason or no reason.

 

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15. Construction. The Plan and this Agreement will be construed by and
administered under the supervision of the Committee, and all determinations of
the Committee will be final and binding on the Participant and the Company.
16. Notices. Any notice necessary under this Agreement shall be addressed to the
Company in care of its Secretary at the principal executive office of the
Company and to the Participant at the address appearing in the personnel records
of the Company for the Participant or to either party at such other address as
either party hereto may hereafter designate in writing to the other. Any such
notice shall be deemed effective upon receipt thereof by the addressee.
17. Failure to Enforce Not a Waiver. The failure of either party hereto to
enforce at any time any provision of this Agreement shall in no way be construed
to be a waiver of such provision or of any other provision hereof.
18. Governing Law. This Agreement shall be governed by and construed according
to the laws of Bermuda, without regard to the conflicts of laws provisions
thereof.
19. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be an original but all of which together shall represent one
and the same agreement.
20. Miscellaneous. This Agreement can be changed or terminated only in a writing
signed by both parties hereto. This Agreement and the Plan contain the entire
agreement between the parties relating to the subject matter hereof. The section
headings herein are intended for reference only and shall not affect the
interpretation hereof.
     IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first written above.

            ASPEN INSURANCE HOLDINGS LIMITED
             By:        Its:                                       FULL NAME