Document:

EX-10.1

Exhibit 10.1

AMENDMENT NO. 3 TO AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT

THIS AMENDMENT NO. 3 TO AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT, dated as of
February 27, 2009 (this “Amendment”), is entered into by and among:

(a) RPM Funding Corporation, a Delaware corporation (“Seller”),

(b) RPM International Inc., a Delaware corporation (“RPM-Delaware”), as initial Servicer,

(c) Victory Receivables Corporation, a Delaware corporation (“Victory” or a “Conduit”), and
Variable Funding Capital Company LLC, a Delaware limited liability company (“VFCC” or a
“Conduit”),

(d) The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch (as successor in interest to
The Bank of Tokyo-Mitsubishi UFJ, Ltd., Chicago Branch) and its assigns (together with Victory,
the “Victory Group”), and Wachovia Bank, National Association (together with VFCC, the “VFCC
Group”),

(e) The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as agent for the Victory Group
(in such capacity, a “Co-Agent”), and Wachovia Bank, National Association, as agent for the VFCC
Group (in such capacity, a “Co-Agent”), and

(f) Wachovia Bank, National Association, as administrative agent for the Victory Group, the
VFCC Group and each Co-Agent (in such capacity, together with its successors and assigns, the
“Administrative Agent” and, together with each of the Co-Agents, the “Agents”),

and pertains to that certain Amended and Restated Receivables Purchase Agreement dated as of May
10, 2006 among the parties hereto (as heretofore and hereby amended, the “Agreement”). Unless
defined elsewhere herein, capitalized terms used in this Amendment shall have the meanings
assigned to such terms in the Agreement.

PRELIMINARY STATEMENT

Seller wishes to amend the Agreement as hereinafter set forth, and the Agents and the
Purchasers are willing to agree to such amendments on the terms and subject to the
conditions set forth in this Amendment.

Section 1. Amendments.

(a) Section 9.1(h)(ii) of the Agreement is hereby amended and restated in its entirety to read
as follows:

(ii) the average of the Delinquency Ratios for the three months then most
recently ended shall exceed 3.00%; or

(b) Each reference in the Agreement to “The Bank of Tokyo-Mitsubishi UFJ, Ltd., Chicago
Branch” is hereby replaced with a reference to “The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York
Branch”.

Section 2. Representations and Warranties. In order to induce the Agents and the
Purchasers to enter into this Amendment, Seller hereby represents and warrants to the Agents and
the Purchasers, as of the date hereof, that (a) the execution and delivery by Seller of this
Amendment are within its corporate powers and authority and have been duly authorized by all
necessary corporate action on its part, (b) this Amendment has been duly executed and delivered by
Seller, (c) no event has occurred and is continuing that will constitute an Amortization Event or a
Potential Amortization Event, and (d) each of Seller’s representations and warranties set forth in
Section 5.1 of the Agreement (other than Section 5.1(m) thereof) is true and correct on and as of
the date hereof as though made on and as of the date hereof.

Section 3. Effectiveness. This Amendment shall become effective as of the date
hereof upon satisfaction of each of the following conditions precedent:

(a) receipt by the Administrative Agent of counterparts hereof, duly executed by each of the
parties hereto; and

(b) receipt by each Co-Agent of a fully earned and non-refundable fee in an amount equal to
0.075% on the Commitment for the Liquidity Banks in their respective Groups, payable in U.S.
dollars in immediately available funds.

Section 4. Bankruptcy Petition. With respect to each Conduit, each of the other
parties hereto hereby covenants and agrees that, prior to the date that is one year and one day
after the payment in full of all outstanding senior indebtedness of such Conduit, it will not
institute against, or join any other Person in instituting against, such Conduit any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding
under the laws of the United States or any state of the United States.

Section 5. CHOICE OF LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS
PRINCIPLES THEREOF OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW
WHICH SHALL APPLY HERETO).

Section 6. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN
ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AMENDMENT OR
THE OTHER TRANSACTION DOCUMENTS OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER.

Section 7. Binding Effect. This Amendment shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted assigns (including any
trustee in bankruptcy).

Section 8. Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together shall constitute
one and the same agreement. Delivery of an executed counterpart hereof via facsimile or electronic
mail of an executed .pdf copy thereof shall, to the fullest extent permitted by applicable law,
have the same force and effect and delivery of an originally executed counterpart hereof.

<Balance of page intentionally left blank>

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered
by their duly authorized officers as of the date hereof.

RPM FUNDING CORPORATION, as Seller

By: /s/ Keith R. Smiley

Name: Keith R. Smiley

Title: Vice President & Treasurer

RPM INTERNATIONAL INC., as Servicer

By: /s/ P. Kelly Tompkins 

Name: P. Kelly Tompkins

Title: Executive Vice President — Administration,

Chief Financial Officer and Assistant Secretary

VICTORY RECEIVABLES CORPORATION

By:/s/ Louise E. Colby

Name: Louise E. Colby

Title: Vice President

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH, as Victory Agent

By:/s/ Aditya Reddy

Name: Aditya Reddy

Title: VP and Manager

1

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH

By: /s/ Christine L. Howatt

Name: Christine Howatt

Title: Authorized Signatory

VARIABLE FUNDING CAPITAL COMPANY LLC

By: Wachovia Capital Markets, LLC, attorney-in fact

By: /s/ Haojin Wu

Name: Haojin Wu

Title: Vice President

2

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	WACHOVIA BANK, NATIONAL ASSOCIATION, individually, as VFCC Agent and as

	Administrative Agent

By:/s/ Michael J. Landry

Name: Michael J. Landry

Title: Vice President

4EX-10.1

SECOND AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

This SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT is made and entered into as of this
1st day of March, 2009, by and between Allied World Assurance Company Holdings, Ltd, a
Bermuda corporation (the “Company”), and Scott A. Carmilani (“Employee”).

W I T N E S S E T H:

WHEREAS, the Company and Employee previously entered into an employment agreement dated as of
November 1, 2006, which was amended and restated on October 1, 2008 (the “Former Employment
Agreement”) embodying the terms of Employee’s employment; and

WHEREAS, the Company and Employee desire to enter into a new agreement embodying the amended
and restated terms of Employee’s employment as set forth herein (this “Agreement”) and
agree that this Agreement shall supersede the Former Employment Agreement and that the Former
Employment Agreement shall be of no further force or effect;

NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are mutually
acknowledged, the Company and Employee hereby agree as follows:

Section 1. Definitions.

(a) “Accrued Obligations” shall mean (i) all accrued but unpaid Base Salary through
the date of termination of Employee’s employment; (ii) any unpaid or unreimbursed expenses incurred
in accordance with Company policy, including amounts due under Section 7 hereof, to the extent
incurred prior to termination of employment; (iii) any benefits provided under the Company’s
employee benefit plans upon a termination of employment, in accordance with the terms therein,
including rights to equity in the Company pursuant to any plan or grant and the right to receive
tax reimbursement payments accrued but unpaid for periods prior to the date of termination; and
(iv) rights to indemnification by virtue of Employee’s position as an officer or director of the
Company or its subsidiaries and the benefits under any directors’ and officers’ liability insurance
policy maintained by the Company, in accordance with its terms thereof.

(b) “Agreement” shall have the meaning set forth in the recitals hereto.

(c) “Annual Bonus” shall have the meaning set forth in Section 4(b) below.

(d) “Base Salary” shall mean the salary provided for in Section 4(a) or any increased
salary granted to Employee pursuant to Section 4(a) below.

(e) “Board” shall mean the Board of Directors of the Company.

(f) “Cause” shall mean (i) Employee’s willful failure (except where due to physical or
mental incapacity), willful neglect or willful refusal to substantially perform his duties; (ii)
any willful or intentional act of Employee with regard to the Company or its subsidiaries that has
the effect of injuring the reputation or business of the Company or its subsidiaries in a material
manner; (iii) Employee’s conviction of, or plea of guilty or nolo contendere to, the
commission of a criminal act that would constitute a felony in the United States; (iv) the
commission by Employee of an act of fraud, embezzlement or material dishonesty against the Company
or its subsidiaries (other than a good faith expense account dispute); or (v) Employee’s breach of
any material provision of this Agreement.

(g) “Change in Control” shall mean and be deemed to occur if (i) any “person” (as
such term is defined in Section 3(a)(9) and as used in Sections 13(d) and 14(d) of the Exchange
Act), excluding the Company or any or its subsidiaries, a trustee or any fiduciary holding
securities under an employee benefit plan of the Company or any of its subsidiaries, an initial
public offering of the Company’s securities pursuant to an effective registration statement filed
with the Securities and Exchange Commission, an underwriter temporarily holding the Company’s
securities pursuant to an offering of such securities or a corporation owned, directly or
indirectly, by shareholders of the Company in substantially the same proportion as their ownership
of the Company, is or becomes the “beneficial owner” as defined in Rule 13d-3 under the Exchange
Act, directly or indirectly, of securities of the Company representing 50% or more of the combined
voting power of the Company’s then outstanding securities (“Voting Securities”); (ii)
during any period of not more than two years, individuals who constitute the Board as of the
beginning of the period and any new director (other than a director designated by a person who has
entered into an agreement with the Company to effect a transaction described in clause (i) or (iii)
of this sentence) whose election by the Board or nomination for election by the Company’s
shareholders was approved by a vote of at least two-thirds (2/3) of the directors then still in
office who either were directors at such time or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof; (iii) the
shareholders of the Company approve a merger, consolidation, amalgamation or reorganization or a
court of competent jurisdiction approves a scheme of arrangement of the Company, other than a
merger, consolidation, amalgamation, reorganization or scheme of arrangement which would result in
the Voting Securities of the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into Voting Securities of the surviving
entity) at least 50% of the combined voting power of the Voting Securities of the Company or such
surviving entity outstanding immediately after such merger, consolidation, amalgamation,
reorganization or scheme of arrangement; or (iv) the shareholders of the Company approve a plan of
complete liquidation of the Company or any agreement for the sale or disposition by the Company of
all or substantially all of its assets.

(h) “Code” shall mean the United States Internal Revenue Code of 1986, as amended.

(i) “Commencement Date” shall mean November 1, 2006.

(j) “Company” except as otherwise expressly set forth herein, shall have the meaning
set forth in the preamble hereto.

(k) “Competitive Activities” shall mean any business activities in which the Company
or any of its subsidiaries are engaged, or have committed plans to engage, during the Term of
Employment.

(l) “Confidential Information” shall have the meaning set forth in Section 9(a) below.

(m) “Delay Period” shall have the meaning set forth in Section 16 below.

(n) “Developments” shall have the meaning set forth in Section 9(e) below.

(o) “Disability” shall mean any physical or mental disability or infirmity that has
prevented the performance of Employee’s duties in all material respects for a period of one hundred
eighty (180) consecutive calendar days.

(p) “Employee” shall have the meaning set forth in the preamble hereto.

(q) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

(r) “Good Reason” shall mean, without Employee’s written consent, (i) an adverse
change in Employee’s employment title; (ii) a material diminution in Employee’s employment duties,
responsibilities or authority, or the assignment to Employee of duties that are materially
inconsistent with his position; (iii) any reduction in Base Salary or target Annual Bonus
opportunity; (iv) a relocation of Employee’s principal place of employment to a location other than
Hamilton, Bermuda; or (v) any breach by the Company of any material provision of this Agreement.

(s) “Interfering Activities” shall mean (i) encouraging, soliciting or inducing, or in
any manner attempting to encourage, solicit or induce, any Person employed by, as agent of, or a
service provider to, the Company or any subsidiary thereof to terminate (or, in the case of an
agent or service provider, reduce) such Person’s employment, agency or service, as the case may be,
with the Company or such subsidiary; provided, that the foregoing shall not be violated by general
advertising not targeted at employees of the Company nor by serving as a reference upon an
employee’s request with regard to an entity with which Employee is not affiliated; or (ii)
encouraging, soliciting or inducing, or in any manner attempting to encourage, solicit or induce
any customer, supplier (including insurance brokers), licensee or other business relation of the
Company or any subsidiary thereof to cease doing business with or reduce the amount of business
conducted with the Company or such subsidiary, or in any way interfere with the relationship
between any such customer, supplier (including insurance brokers), licensee or business relation
and the Company or such subsidiary.

(t) “Person” shall mean any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust (charitable or non-charitable),
unincorporated organization or other form of business entity.

(u) “Non-Interference Period” shall mean the period commencing on the Commencement
Date and ending on the twenty-four (24) month anniversary of the date of termination.

(v) “Non-Compete Period” shall mean the period commencing on the Commencement Date
and:

(i) in the case of Employee’s termination of employment hereunder by the Company for
Cause, ending on the date of such termination;

(ii) in the case of Employee’s termination of employment hereunder by the Company
without Cause or by Employee for Good Reason, ending on the twenty-four (24) month
anniversary of the date of such termination; or

(iii) in the case of Employee’s termination of employment hereunder by the Employee
without Good Reason or as a result of his Disability, ending on the date of such
termination; provided, however, that the Company may elect to extend the
Non-Compete Period up to an additional twelve (12) months following the date of such
termination by providing Employee written notice of such election within five (5) business
days following such termination specifying the applicable period of extension, in which
case, the Company shall be required to continue, through the end of the Non-Compete Period,
as so extended, (A) to pay Employee his Base Salary, in accordance with the Company’s
regular payroll practices, and (B) to provide participation under the Company’s health and
other insurance plans, or if such continued participation in is not permissible, provide
Employee with coverage that is economically equivalent to Employee through alternative
arrangements, or the cash value of such coverage, in a manner that places the Employee in a
net economic position that is at least equivalent to the position in which the Employee
would have been had such alternative arrangements not been used by the Company;
provided, however, that if the cash value is paid to Employee, it shall be
paid to Employee no later than the date that is one day prior to two and one-half months
following the end of the Company’s fiscal year in which such termination occurs.

(w) “Release Expiration Date” shall have the meaning set forth in Section 8(g) below.

(x) “Severance Multiplier” shall mean an amount equal to two (2); provided,
however, if Employee’s termination occurs within the twelve (12) month period following a
Change in Control, the Severance Multiplier shall equal three (3).

(y) “Severance Term” shall mean the period specified in Section 8(d)(iii) below.

(z) “Term of Employment” shall mean the period specified in Section 2 below.

Section 2. Acceptance and Term of Employment.

The Company agrees to employ Employee and Employee agrees to serve the Company on the terms
and conditions set forth herein. The Term of Employment shall commence on the Commencement Date
and shall continue until Employee is terminated as provided in Section 8 hereof.

Section 3. Position, Duties and Responsibilities; Place of Performance.

(a) During the Term of Employment, Employee shall be employed and serve as the President and
Chief Executive Officer of the Company (together with such other position or positions consistent
with Employee’s title as the Board shall specify from time to time) and shall have such duties
typically associated with such title. Subject to the foregoing, Employee also agrees to serve as
an officer and/or director of the Company or any parent or subsidiary of the Company, in each case
without additional compensation.

(b) Subject to the terms and conditions set forth in this Agreement, Employee shall devote his
full business time, attention and efforts to the performance of his duties under this Agreement and
shall not engage in any other business or occupation during the Term of Employment, including,
without limitation, any activity that (x) conflicts with the interests of the Company or its
subsidiaries, (y) interferes with the proper and efficient performance of his duties for the
Company, or (z) interferes with the exercise of his judgment in the Company’s best interests.
Notwithstanding the foregoing, nothing herein shall preclude Employee from (i) serving, with the
prior written consent of the Board, as a member of the board of directors or advisory boards (or
their equivalents in the case of a non-corporate entity) of non-competing businesses and charitable
organizations, (ii) engaging in charitable activities and community affairs, and (iii) subject to
the terms and conditions set forth in Section 9 hereof, managing his personal investments and
affairs; provided, however, that the activities set out in clauses (i), (ii) and
(iii) shall be limited by Employee so as not to materially interfere, individually or in the
aggregate, with the performance of his duties and responsibilities hereunder.

(c) Employee’s principal place of employment shall be at the Company’s corporate headquarters
in Hamilton, Bermuda, although Employee understands and agrees that he may be required to travel
from time to time for business reasons.

Section 4. Compensation.

During the Term of Employment, Employee shall be entitled to the following compensation:

(a) Base Salary. Employee shall be paid an annualized Base Salary, payable in
accordance with the regular payroll practices of the Company, of not less than $970,000, subject to
increase, if any, as may be approved in writing by the Board, but not to decrease from the then
current Base Salary.

(b) Annual Bonus. Employee shall be eligible for an annual incentive bonus award
determined by the Board in respect of each fiscal year during the Term of Employment (the
“Annual Bonus”). The Annual Bonus shall be earned and payable in accordance with the terms
of the Company’s annual bonus plan as in effect from time to time.

(c) Change in Control Acceleration. Notwithstanding any contrary terms of any Company
equity plan or other agreement pursuant to which equity-based awards have been granted to Employee,
upon the occurrence of a Change in Control, all such equity-based awards shall fully vest
immediately prior to such Change in Control.

Section 5. Employee Benefits.

(a) General. During the Term of Employment, Employee shall be entitled to participate
in health, insurance, retirement and other perquisites and benefits generally provided to other
senior executives of the Company that are made available from time to time, including, without
limitation, participation in the Company’s home leave policy, relocation policy, tax return
preparation policy and repatriation policy, each as in effect from time to time. Employee shall
also be entitled to the same number of holidays, vacation and sick days as are generally allowed to
senior executives of the Company in accordance with the Company policy in effect from time to time.

(b) Additional Benefits. During the Term of Employment, in addition to any
perquisites and benefits provided generally to Employee pursuant to subsection (a) above, Employee
shall be entitled to the following benefits:

(i) Reimbursement or payment of the cost of financial and tax planning, such
reimbursement not to exceed $10,000 per year;

(ii) A housing and utility allowance for a residence in Bermuda equal to $17,200 per
month, subject to periodic review for increase; and

(iii) Reimbursement of an annual subscription to a club in Bermuda not to exceed $6,000
in membership fees per year.

Section 6. “Key-Man” Insurance.

At any time during the Term of Employment, the Company shall have the right to insure the life
of Employee for the sole benefit of the Company, in such amounts, and with such terms, as it may
determine. All premiums payable thereon shall be the obligation of the Company. Employee shall
have no interest in any such policy, but agrees to reasonably cooperate with the Company in taking
out such insurance by submitting to physical examinations, supplying all information reasonably
required by the insurance company, and executing all necessary documents, provided that no
financial obligation or liability is imposed on Employee by any such documents.

Section 7. Reimbursement of Business Expenses.

Employee is authorized to incur reasonable business expenses in carrying out his duties and
responsibilities under this Agreement and the Company shall promptly reimburse him for all such
reasonable business expenses incurred in connection with carrying out the business of the Company,
subject to documentation in accordance with the Company’s policy, as in effect from time to time.

Section 8. Termination of Employment.

(a) General. The Term of Employment shall terminate upon the earliest to occur of (i)
Employee’s death, (ii) a termination by reason of a Disability, (iii) a termination by the Company
with or without Cause, and (iv) a termination by Employee with or without Good Reason. Upon any
termination of Employee’s employment for any reason, except as may otherwise be requested by the
Company in writing and agreed upon in writing by Employee, Employee shall resign from any and all
directorships, committee memberships or any other positions Employee holds with the Company or any
of its subsidiaries.

(b) Termination due to Death or Disability. Employee’s employment shall terminate
automatically upon his death. The Company may terminate Employee’s employment immediately upon the
occurrence of a Disability, such termination to be effective upon Employee’s receipt of written
notice of such termination. In the event Employee’s employment is terminated due to his death or
Disability, Employee or his estate or his beneficiaries, as the case may be, shall be entitled to:

(i) The Accrued Obligations;

(ii) Any unpaid Annual Bonus in respect to any completed fiscal year which has ended
prior to the date of such termination, such amount to be paid at the same time it would
otherwise be paid to Employee had no such termination occurred, but in no event later than
the date that is one day prior to two and one-half months following the end of the Company’s
fiscal year in which such termination occurs;

(iii) A pro rata Annual Bonus (determined using the target Annual Bonus if such
termination occurs during the fiscal year in which the Commencement Date falls, and using
the highest Annual Bonus paid or payable for the two immediately prior fiscal years for
terminations after the fiscal year in which the Commencement Date falls) based on the number
of days elapsed from the commencement of such fiscal year through and including the date of
such termination, such amount to be paid within five (5) business days of such termination;
and

(iv) Vesting, as of the date of such termination, in the number of equity-based awards,
if any, which would otherwise have vested during the one (1) year period immediately
following such termination (without regard to any subsequent vesting events).

Except as set forth in this Section 8(b), following Employee’s termination by reason of his death
or Disability, Employee shall have no further rights to any compensation or any other benefits
under this Agreement.

(c) Termination by the Company for Cause.

(i) A termination for Cause shall not take effect unless the provisions of this
subsection (i) are complied with. Employee shall be given not less than fifteen (15) days
prior written notice by the Board of the intention to terminate his employment for Cause,
such notice to state in detail the particular act or acts or failure or failures to act that
constitute the grounds on which the proposed termination for Cause is based. Employee shall
have fifteen (15) days after the date that such written notice has been given to Employee in
which to cure such act or acts or failure or failures to act, to the extent such cure is
possible. If he fails to cure such act or acts or failure or failures to act, the
termination shall be effective on the date immediately following the expiration of the
fifteen (15) day notice period. If cure is not possible, the termination shall be effective
on the date of receipt of such notice by Employee. During any cure period provided
hereunder, the Board may, in its sole and absolute discretion, prohibit Employee from
entering the premises of the Company (or any subsidiary thereof) or otherwise performing his
duties hereunder, and any such prohibition shall in no event constitute an event pursuant to
which Employee may terminate employment with Good Reason; provided, however,
that if cure is possible, and Employee can reasonably demonstrate to the Board that he
desires to enter the premises of the Company (or a subsidiary thereof) or to otherwise
perform his duties hereunder solely to attempt to cure the act or acts or failure or
failures to act that constitute the grounds on which the proposed termination for Cause is
based, Employee shall be permitted to enter the premises of the Company (or a subsidiary
thereof) or otherwise to perform his duties hereunder solely for the purposes of curing such
act or acts or failure or failures to act.

(ii) In the event the Company terminates Employee’s employment for Cause, he shall be
entitled only to the Accrued Obligations. Following such termination of Employee’s
employment for Cause, except as set forth in this Section 8(c)(ii), Employee shall have no
further rights to any compensation or any other benefits under this Agreement.

(d) Termination by the Company without Cause. The Company may terminate Employee’s
employment at any time without Cause, effective upon Employee’s receipt of written notice of such
termination. In the event Employee’s employment is terminated by the Company without Cause (other
than due to death or Disability), Employee shall be entitled to:

(i) The Accrued Obligations;

(ii) Any unpaid Annual Bonus in respect to any completed fiscal year which has ended
prior to the date of such termination, such amount to be paid at the same time it would
otherwise be paid to Employee had no such termination occurred, but in no event later than
the date that is one day prior to two and one-half months following the end of the Company’s
fiscal year in which such termination occurs;

(iii) An amount equal to the Severance Multiplier multiplied by the sum of his then
current Base Salary and Annual Bonus (determined using the target Annual Bonus if such
termination occurs during the fiscal year in which the Commencement Date falls, and using
the highest Annual Bonus paid or payable for the two immediately prior fiscal years for
terminations after the fiscal year in which the Commencement Date falls), payable in
substantially equal monthly installments over the period commencing on the date of
termination and ending on the date that is one day prior to two and one-half months
following the end of the Company’s fiscal year in which such termination occurs (the
“Severance Term”);

(iv) Continuation of participation under the Company’s health and other insurance plans
for a period of years equal to the Severance Multiplier, or if such continued participation
in is not permissible, provide Employee with coverage that is economically equivalent to
Employee through alternative arrangements, or the cash value of such coverage, in a manner
that places the Employee in a net economic position that is at least equivalent to the
position in which the Employee would have been had such alternative arrangements not been
used by the Company; provided, however, that if the cash value is paid to
Employee, it shall be paid to Employee no later than the date that is one day prior to two
and one-half months following the end of the Company’s fiscal year in which such termination
occurs; and

(v) Vesting, as of the date of such termination, in the number of equity-based awards,
if any, which would otherwise have vested during the two (2) year period immediately
following such termination (without regard to any subsequent vesting events).

Notwithstanding the foregoing, the payments and benefits described in subsections (ii) through (iv)
above shall immediately cease, and the Company shall have no further obligations to Employee with
respect thereto, in the event that Employee breaches any provision of Section 9 hereof.

Following such termination of Employee’s employment by the Company without Cause, except as
set forth in this Section 8(d), Employee shall have no further rights to any compensation or any
other benefits under this Agreement.

(e) Termination by Employee with Good Reason. Employee may terminate his employment
with Good Reason by providing the Company fifteen (15) days prior written notice setting forth in
reasonable specificity the event that constitutes Good Reason, which written notice, to be
effective, must be provided to the Company within ninety (90) days of the occurrence of such event.
During such fifteen (15) day notice period, the Company shall have a cure right (if curable), and
if not cured within such period, Employee’s termination will be effective upon the date immediately
following the expiration of the fifteen (15) day notice period, and Employee shall be entitled to
the same payments and benefits as provided in Section 8(d) above for a termination without Cause,
it being agreed that Employee’s right to any such payments and benefits shall be subject to the
same terms and conditions as described in Section 8(d) above. Following such termination of
Employee’s employment by Employee with Good Reason, except as set forth in this Section 8(e),
Employee shall have no further rights to any compensation or any other benefits under this
Agreement.

(f) Termination by Employee without Good Reason. Employee may terminate his
employment without Good Reason by providing the Company thirty (30) days prior written notice of
such termination. In the event of a termination of employment by Employee under this Section 8(f),
Employee shall be entitled only to the Accrued Obligations. In the event of termination of
Employee’s employment under this Section 8(f), the Company may, in its sole and absolute
discretion, by written notice accelerate such date of termination and still have it treated as a
termination without Good Reason. Following such termination of Employee’s employment by Employee
without Good Reason, except as set forth in this Section 8(f), and, if applicable, such additional
compensation and benefits described in Section 1(x)(iii), Employee shall have no further rights to
any compensation or any other benefits under this Agreement.

(g) Release. Notwithstanding any provision herein to the contrary, the Company may
require that, prior to payment of any amount or provision of any benefit pursuant to subsections
(d) or (e) of this Section 8, Employee shall have executed a general release in favor of the
Company and its subsidiaries and related parties in the form as is reasonably required by the
Company, and any waiting periods contained in such release shall have expired. Such release, if
required by the Company, shall be delivered to Employee within twenty (20) business days following
the termination of Employee’s employment hereunder, and failure to deliver such release within such
twenty (20) business day period shall be deemed to constitute a waiver of such requirement.
Assuming delivery of the release by the Company, if Employee fails to execute such release on or
prior to the Release Expiration Date, Employee shall not be entitled to any payments or benefits
pursuant to (d) or (e) of this Section 8 (other than the Accrued Obligations). Notwithstanding
anything contained in this subsection (g) to the contrary, in any case where the date of
termination and the last day of the applicable waiting period fall in two separate taxable years,
any payments required to be made to Employee that are treated as deferred compensation for purposes
of Section 409A of the Code shall be made in the later taxable year at times provided by this
Section 8. For purposes of this Agreement, “Release Expiration Date” means the date which
is twenty-one (21) days following the date upon which the Company delivers to Employee the release
contemplated herein, or in the event that such termination of employment is “in connection with an
exit incentive or other employment termination program” (as such phrase is defined in the Age
Discrimination in Employment Act of 1967), the date that is forty-five (45) days following such
delivery date.

Section 9. Restrictive Covenants.

Employee acknowledges and agrees that (A) the agreements and covenants contained in this
Section 9 are (i) reasonable and valid in geographical and temporal scope and in all other
respects, and (ii) essential to protect the value of the Company’s business and assets; and (B) by
his employment with the Company, Employee will obtain knowledge, contacts, know-how, training and
experience and there is a substantial probability that such knowledge, contacts, know-how, training
and experience could be used to the substantial advantage of a competitor of the Company and to the
Company’s substantial detriment. For purposes of this Section 9, references to the Company shall
be deemed to include its subsidiaries.

(a) Confidential Information. At any time during and after the end of the Term of
Employment, without the prior written consent of the Board, except to the extent required by an
order of a court having jurisdiction or under subpoena from an appropriate government agency, in
which event, Employee shall, to the extent legally permitted, consult with the Board prior to
responding to any such order or subpoena, and except as he in good faith believes necessary or
desirable in the performance of his duties hereunder, Employee shall not disclose to or use for the
benefit of any third party any confidential or proprietary trade secrets, customer lists, drawings,
designs, information regarding product development (including types of insurance products),
marketing plans, sales plans, management organization information, operating policies (including
underwriting policies and risk assessment policies) or manuals, business plans, financial records,
packaging design or other financial, commercial, business or technical information (i) relating to
the Company, or (ii) that the Company may receive belonging to suppliers, customers or others who
do business with the Company (including insurance brokers) as a result of his position with the
Company (collectively, “Confidential Information”). Employee’s obligation under this
Section 9(a) shall not apply to any information that is publicly available or hereafter becomes
publicly available, in each case without the breach by Employee of this Section 9(a).

(b) Non-Competition. Employee covenants and agrees that during the Non-Compete
Period, with respect to Bermuda (including any province thereof), any State of the United States of
America or any other jurisdiction in which the Company engages (or has committed plans to engage)
in business during the Term of Employment, or, following termination of Employee’s employment, was
engaged in business (or had committed plans to engage) at the time of such termination of
employment, Employee shall not, directly or indirectly, individually or jointly, own any interest
in, operate, join, control or participate as a partner, director, principal, officer, or agent of,
enter into the employment of, act as a consultant to, or perform any services for any Person (other
than the Company), that engages in any Competitive Activities. Notwithstanding anything herein to
the contrary, this Section 9(b) shall not prevent Employee from acquiring as an investment
securities representing not more than three percent (3%) of the outstanding voting securities of
any publicly-held corporation or from being a passive investor in any mutual fund, hedge fund,
private equity fund or similar pooled account so long as Employee’s interest therein is less than
three percent (3%) and he has no role in selecting or managing investments thereof.

(c) Non-Interference. During the Non-Interference Period, Employee shall not,
directly or indirectly, for his own account or for the account of any other Person, engage in
Interfering Activities.

(d) Return of Documents. In the event of the termination of Employee’s employment for
any reason, Employee shall deliver to the Company all of (i) the property of the Company, and (ii)
the documents and data of any nature and in whatever medium of the Company, and he shall not take
with him any such property, documents or data or any reproduction thereof, or any documents
containing or pertaining to any Confidential Information.

(e) Works for Hire. Employee agrees that the Company shall own all right, title and
interest throughout the world in and to any and all inventions, original works of authorship,
developments, concepts, know-how, improvements or trade secrets, whether or not patentable or
registerable under copyright or similar laws, which Employee may solely or jointly conceive or
develop or reduce to practice, or cause to be conceived or developed or reduced to practice during
the Term of Employment, whether or not during regular working hours, provided they either (i)
relate at the time of conception or development to the actual or demonstrably proposed business or
research and development activities of the Company; (ii) result from or relate to any work
performed for the Company; or (iii) are developed through the use of Confidential Information
and/or Company resources or in consultation with Company personnel (collectively referred to as
“Developments”). Employee hereby assigns all right, title and interest in and to any and
all of these Developments to the Company. Employee agrees to assist the Company, at the Company’s
expense (but for no other consideration of any kind), to further evidence, record and perfect such
assignments, and to perfect, obtain, maintain, enforce and defend any rights specified to be so
owned or assigned. Employee hereby irrevocably designates and appoints the Company and its agents
as attorneys-in-fact to act for and on Employee’s behalf to execute and file any document and to do
all other lawfully permitted acts to further the purposes of the foregoing with the same legal
force and effect as if executed by Employee. In addition, and not in contravention of any of the
foregoing, Employee acknowledges that all original works of authorship which are made by him
(solely or jointly with others) within the scope of employment and which are protectable by
copyright are “works made for hire,” as that term is defined in the United States Copyright Act (17
USC Sec. 101) or any similar Bermuda law or regulation. To the extent allowed by law, this
includes all rights of paternity, integrity, disclosure and withdrawal and any other rights that
may be known as or referred to as “moral rights.” To the extent Employee retains any such moral
rights under applicable law, Employee hereby waives such moral rights and consents to any action
consistent with the terms of this Agreement with respect to such moral rights, in each case, to the
full extent of such applicable law. Employee will confirm any such waivers and consents from time
to time as requested by the Company.

(f) Blue Pencil. If any court of competent jurisdiction shall at any time deem the
duration or the geographic scope of any of the provisions of this Section 9 unenforceable, the
other provisions of this Section 9 shall nevertheless stand and the duration and/or geographic
scope set forth herein shall be deemed to be the longest period and/or greatest size permissible by
law under the circumstances, and the parties hereto agree that such court shall reduce the time
period and/or geographic scope to a permissible duration or size.

Section 10. Breach of Restrictive Covenants.

Without limiting the remedies available to the Company, Employee acknowledges that a breach of
any of the covenants contained in Section 9 hereof may result in material irreparable injury to the
Company or its subsidiaries for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event of such a breach or
threat thereof, the Company shall be entitled to obtain a temporary restraining order and/or a
preliminary or permanent injunction, without the posting of a bond or the necessity of proving
irreparable harm or injury as a result of such breach or threatened breach of Section 9 hereof,
restraining Employee from engaging in activities prohibited by Section 9 hereof or such other
relief as may be required specifically to enforce any of the covenants in Section 9 hereof.
Notwithstanding any other provision to the contrary, the Non-Compete Period, in the case of the
covenants contained in Section 9(b), and the Non-Interference Period, in the case of the covenants
contained in Section 9(c), shall be tolled during any period of violation of any of such covenants
and during any other period required for litigation during which the Company seeks to enforce such
covenants against Employee or another Person with whom Employee is affiliated if it is ultimately
determined that Employee was in breach of such covenants.

Section 11. Representations and Warranties of Employee.

Employee represents and warrants to the Company that:

(a) Employee’s employment will not conflict with or result in his breach of any agreement to
which he is a party or otherwise may be bound;

(b) Employee has not violated, and in connection with his employment with the Company will not
violate, any non-solicitation, non-competition or other similar covenant or agreement of a prior
employer by which he is or may be bound; and

(c) In connection with Employee’s employment with the Company, he will not use any
confidential or proprietary information that he may have obtained in connection with employment
with any prior employer.

Section 12. Indemnification.

Subject to the terms and conditions of the Memorandum of Association and Bye-Laws of the
Company (in each case, as in effect from time to time), the Company agrees to indemnify and hold
Employee harmless to the fullest extent permitted by the laws of Bermuda, as in effect at the time
of the subject act or omission. In connection therewith, Employee shall be entitled to the
protection of any insurance policies which the Company elects to maintain generally for the benefit
of the Company’s directors and officers, against all costs, charges and expenses whatsoever
incurred or sustained by Employee in connection with any action, suit or proceeding to which he may
be made a party by reason of his being or having been a director, officer or employee of the
Company. This provision shall survive any termination of Employee’s employment hereunder.

Section 13. Taxes.

The Company may withhold from any payments made under this Agreement all applicable taxes,
including, but not limited to, income, employment and social insurance taxes, as shall be required
by law.

Section 14. No Mitigation or Set Off.

Employee shall not be required to mitigate the amount of any payment provided for pursuant to
this Agreement by seeking other employment or otherwise and the amount of any payment provided for
pursuant to this Agreement shall not be reduced by any compensation earned as a result of
Employee’s other employment or otherwise.

Section 15. Successors and Assigns; No Third-Party Beneficiaries.

(a) The Company. This Agreement shall inure to the benefit of and be enforceable by,
and may be assigned by the Company to, any purchaser of all or substantially all of the Company’s
business or assets or any successor to the Company (whether direct or indirect, by purchase,
merger, consolidation or otherwise). The Company will require, in a writing delivered to Employee,
any such purchaser, successor or assignee to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be required to perform it if no
such purchase, succession or assignment had taken place. The Company may make no other assignment
of this Agreement or its obligations hereunder.

(b) Employee. Employee’s rights and obligations under this Agreement shall not be
transferable by Employee by assignment or otherwise, without the prior written consent of the
Company; provided, however, that if Employee shall die, all amounts then payable to
Employee hereunder shall be paid in accordance with the terms of this Agreement to Employee’s
devisee, legatee or other designee or, if there be no such designee, to Employee’s estate.

(c) No Third-Party Beneficiaries. Except as otherwise set forth in Section 8(b) or
Section 15(b) hereof, nothing expressed or referred to in this Agreement will be construed to give
any Person other than the Company and Employee any legal or equitable right, remedy or claim under
or with respect to this Agreement or any provision of this Agreement.

Section 16. Delay in Payment.

Notwithstanding any provision in this Agreement to the contrary, but taking into account
Treas. Reg. 1.409A-1(b)(9)(iii), any payment of nonqualified deferred compensation otherwise
required to be made hereunder to Employee at any date as a result of the termination of Employee’s
employment shall be delayed for such period of time as may be necessary to meet the requirements of
Section 409A(a)(2)(B)(i) of the Code (the “Delay Period”). On the earliest date on which
such payments can be made after the Delay Period, there shall be paid to the Employee, in a single
cash lump sum, an amount equal to the aggregate amount of all payments delayed pursuant to the
preceding sentence. Notwithstanding the foregoing, to the extent that the first sentence applies
to the provision of any ongoing health and other insurance plan benefits, Employee shall pay the
full cost for such health and other insurance plan benefits during the Delay Period and the Company
shall pay Employee an amount equal to the amount of such premiums paid by Employee during the Delay
Period within ten (10) days after the end of the Delay Period.

Section 17. Waiver and Amendments.

Any waiver, alteration, amendment or modification of any of the terms of this Agreement shall
be valid only if made in writing and signed by each of the parties hereto; provided,
however, that any such waiver, alteration, amendment or modification is consented to on the
Company’s behalf by the Board. No waiver by either of the parties hereto of their rights hereunder
shall be deemed to constitute a waiver with respect to any subsequent occurrences or transactions
hereunder unless such waiver specifically states that it is to be construed as a continuing waiver.

Section 18. Severability.

If any covenants or such other provisions of this Agreement are found to be invalid or
unenforceable by a final determination of a court of competent jurisdiction: (a) the remaining
terms and provisions hereof shall be unimpaired, and (b) the invalid or unenforceable term or
provision hereof shall be deemed replaced by a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or unenforceable term or provision
hereof.

Section 19. Governing Law.

THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK (WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES THEREOF) APPLICABLE TO CONTRACTS
MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.

Section 20. Dispute Resolution.

Any controversy arising out of or relating to this Agreement or the breach hereof (other than
claims for injunctive relief pursuant to Section 10 hereof) shall be settled by binding arbitration
in accordance with the Employment Dispute Resolution Rules of the American Arbitration Association
(before a single arbitrator) and judgment upon the award rendered may be entered in any court
having jurisdiction thereof. The costs of any such arbitration proceedings shall be borne equally
by the Company and Employee; provided, however, that the arbitrator shall have the
right to award to either party reasonable attorneys’ fees and costs expended in the course of such
arbitration or enforcement of the awarded rendered thereunder. Any award made by such arbitrator
shall be final, binding and conclusive on the parties for all purposes, and judgment upon the award
rendered by the arbitrators may be entered in any court having jurisdiction thereof.

Section 21. Notices.

(a) Every notice or other communication relating to this Agreement shall be in writing, and
shall be mailed to or delivered to the party for whom it is intended at such address as may from
time to time be designated by it in a notice mailed or delivered to the other party as herein
provided, provided that, unless and until some other address be so designated, all notices or
communications by Employee to the Company shall be mailed or delivered to the Company at its
principal executive office, and all notices or communications by the Company to Employee may be
given to Employee personally or may be mailed to Employee at Employee’s last known address, as
reflected in the Company’s records.

(b) Any notice so addressed shall be deemed to be given: (i) if delivered by hand, on the
date of such delivery; (ii) if mailed by courier or by overnight mail, on the first business day
following the date of such mailing; and (iii) if mailed by registered or certified mail, on the
third business day after the date of such mailing.

Section 22. Section Headings.

The headings of the sections and subsections of this Agreement are inserted for convenience
only and shall not be deemed to constitute a part thereof, affect the meaning or interpretation of
this Agreement or of any term or provision hereof.

Section 23. Entire Agreement.

This Agreement constitutes the entire understanding and agreement of the parties hereto
regarding the employment of Employee. This Agreement supersedes all prior negotiations,
discussions, correspondence, communications, understandings and agreements between the parties
relating to the subject matter of this Agreement.

Section 24. Survival of Operative Sections.

Upon any termination of Employee’s employment, the provisions of Section 8 through Section 26
of this Agreement (together with any related definitions set forth in Section 1 hereof) shall
survive to the extent necessary to give effect to the provisions thereof.

Section 25. Currency.

All sums of money expressed in this Agreement are in the lawful money of the United States of
America.

Section 26. Counterparts.

This Agreement may be executed in two or more counterparts, each of which shall be deemed to
be an original but all of which together shall constitute one and the same instrument. The
execution of this Agreement may be by actual or facsimile signature.

[Signatures to appear on the following page.]

1

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

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD

By:       /s/ Wesley D. Dupont      

Name: Wesley D. Dupont

Title: Senior Vice President & General Counsel

EMPLOYEE

By:       /s/ Scott A. Carmilani      

Scott A. Carmilani

2

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