Exhibit 10.1

 RLI CORP.

NONEMPLOYEE DIRECTORS

DEFERRED COMPENSATION PLAN

(Restated as of January 1, 2009)

(Amended May 3, 2018)

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RLI CORP.

NONEMPLOYEE DIRECTORS

DEFERRED COMPENSATION PLAN

 

 

ARTICLE 1

 

INTRODUCTION

 

1.1.Establishment.  RLI established the RLI Corp. Nonemployee Directors Deferred
Compensation Plan (“Plan”) effective January 1, 2005.  Prior to that date, RLI
provided similar deferred compensation opportunities to its Directors under
certain Prior Agreements.  All obligations under the Prior Agreements (including
any predecessor arrangements) will be satisfied under the Prior Agreements,
rather than under this Plan.  RLI restated the Plan, effective January 1, 2009,
to comply with the requirements of the final regulations issued under
Section 409A of the Code (“Section 409A”) (“Restatement”).  RLI amended the
Plan, effective May 3, 2018, to clarify provisions with respect to the deferral
of restricted stock units and to make clear how partial (or fractional) shares
are paid in a single or final payment.

 

The Restatement applies to amounts deferred under the Plan on or after
January 1, 2009 (the “Restatement Date”), and to the payment of all amounts
deferred under the Plan (whether such amounts were deferred before, on, or after
the Restatement Date) that have not yet been distributed as of the Restatement
Date.  Except as set forth in Article 6, no amount deferred under the Plan is
intended to be “grandfathered” under Section 409A.

 

The obligation of RLI to make payments under the Plan constitutes an unsecured
(but legally enforceable) promise of RLI to make such payments and no person,
including any Participant or Beneficiary, shall have any lien, prior claim or
other security interest in any property of RLI as a result of the Plan.

 

1.2.Purpose.  The purpose of the Plan is to attract and retain qualified
Directors and to provide them with an opportunity to save on a pre-tax basis and
accumulate tax-deferred income to achieve their financial goals.

 

1.3.Definitions.  When the following terms are used herein with initial capital
letters, they shall have the following meanings:

 

1.3.1.Account - the separate recordkeeping account (unfunded and unsecured)
maintained for each Participant in connection with the Participant’s
participation in the Plan.

 

1.3.2.Affiliate - a business entity which is under a “common control” with RLI
or which is a member of an “affiliated service group” that includes RLI, as
those terms are defined in Code § 414(b), (c) and (m).

 

1.3.3.Beneficiary - the person or persons designated as such under Sec. 5.2.

 

1.3.4.Board - the Board of Directors of RLI.

 

1.3.5.Code - the Internal Revenue Code of 1986, as the same may be amended from
time to time.

 

1.3.6.Direct Compensation - the total amounts, as determined by RLI, payable to
a Director for services as a Director, whether payable in cash or in RLI Stock
(including restricted stock unit awards), but excluding amounts determined by
RLI to be expense reimbursements.

 

1.3.7.Director - an individual who is a member of the Board but who is not an
Employee of RLI or an Affiliate.

 

1.3.8.Employee - a common-law employee of RLI or an Affiliate (while it is an
Affiliate).

 

 

 

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1.3.9.ERISA - the Employee Retirement Income Security Act of 1974, as the same
may be amended from time to time.

 

1.3.10.Participant - a Director who enrolls as a Participant in the Plan under
Sec. 2.2.

 

1.3.11.Plan - the unfunded deferred compensation plan that is set forth in this
document, as the same may be amended from time to time.  The name of the Plan is
the “RLI Corp. Nonemployee Directors Deferred Compensation Plan.”

 

1.3.12.Prior Agreement - an individual agreement entered into by a Director and
RLI to provide deferred compensation opportunities to the Director.  In certain
cases, such Prior Agreement was a successor to an earlier arrangement known as
the Director Non-Qualified Deferred Compensation Plan.

 

1.3.13.RLI - RLI Corp. and any Successor Corporation.

 

1.3.14.RLI Stock - the common stock of RLI.

 

1.3.15.Successor Corporation - any entity that succeeds to the business of RLI
through merger, consolidation, acquisition of all or substantially all of its
assets, or any other means and which elects before or within a reasonable time
after such succession, by appropriate action evidenced in writing, to continue
the Plan.

 

1.3.16.Termination of Service - the Participant’s departure from the Board,
unless the Director then becomes an Employee.  Notwithstanding the foregoing, a
“Termination of Service” will be deemed not to have occurred if such departure
would not be considered a “separation from service” under Code § 409A (a) (2)
(A) (i) or any regulations or other guidance issued by the Treasury Department
under Code § 409A.  In such case, a Termination of Service will be deemed to
have occurred at the earliest time allowed under Code § 409A.

 

1.3.17.Vested - nonforfeitable.

 

1.3.18.Year - the calendar year.

 

1.4.Nonqualified Deferred Compensation.  The Plan is a nonqualified deferred
compensation plan subject to Code § 409A.  To the extent any provision of the
Plan does not satisfy the requirements contained in Code § 409A or in any
regulations or other guidance issued by the Treasury Department under Code
§ 409A, such provision will be applied in a manner consistent with such
requirements, regulations or guidance, notwithstanding any contrary provision of
the Plan or any inconsistent election made by a Participant.

  

ARTICLE 2

 

PARTICIPATION

 

2.1.Eligibility.  All Directors will be eligible to participate in the Plan.  A
Director may continue to participate in the Plan for so long as the Plan remains
in effect and remains a Director.

 

2.2.Enrollment.  A Director will be allowed to enroll in the Plan during the
thirty (30) day period coinciding with and following the date the individual
becomes a Director.  Such an enrollment will be effective as of the date it is
made.  Thereafter, a Director may elect to enroll for a Year during the
enrollment period established by RLI for such Year, which enrollment period will
be a period of not less than thirty (30) days that ends not later than the last
day of the prior Year.  Enrollment must be made in such manner and in accordance
with such rules as may be prescribed for this purpose by RLI (including by means
of a voice response or other electronic system under circumstances authorized by
RLI).

 

2.3.Direct Compensation Deferrals.

 

2.3.1.Elections.  A Director may elect to reduce any annual retainers, committee
fees, and, if applicable, committee chair fees earned in the applicable Year
(“Direct Compensation”) by any whole percent, but not more than

 

 

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one-hundred percent (100%).  A separate reduction percentage may apply to the
portion of Direct Compensation that is payable in cash and to the portion that
is payable in RLI Stock.  A Director may separately elect to defer the receipt
of RLI Stock otherwise issuable upon the vesting of any restricted stock unit
awards that are granted to such Director in the applicable Year, and such
election shall apply to all Years over which such restricted stock award vests.
   An election must be made in such manner and in accordance with such rules as
may be prescribed for this purpose by RLI (including by means of a voice
response or other electronic system under circumstances authorized by RLI).  An
election must be made as part of the enrollment described in Sec. 2.2.

 

2.3.2.Elections Relate to Services Performed After the Election and Are
Irrevocable.   An election will apply to all Direct Compensation attributable to
services performed in a given Year, regardless of when such Direct
Compensation would otherwise be provided to the Participant.  For example, an
election to defer an annual retainer attributable to services performed in a
given Year but payable in the next Year, must be made as part of the enrollment
election made prior to the Year in which the services are performed.  However,
an election will only be effective to defer Direct Compensation earned after the
election is made, and not before.  For example, an election made in connection
with a mid-year enrollment under Sec. 2.2 will only be effective for Direct
Compensation attributable to services performed on and after the effective date
of the enrollment as provided in Sec. 2.2.   An election to defer the shares of
RLI Stock otherwise issuable upon the vesting of a restricted stock unit award
will apply only to restricted stock unit awards granted in the applicable
Year. An election will apply solely with respect to the given Year - that is, an
election will not automatically be carried over and applied to the next Year.

 

In general, an election shall become irrevocable as of the last day of the
enrollment period applicable to it.  However, if a Participant incurs an
“unforeseeable emergency,” as defined in Section 4.7(h), or becomes entitled to
receive a hardship distribution pursuant to Treas. Reg. Sec. 1.401(k) -
1(d)(3) after the election otherwise becomes irrevocable, the election shall be
cancelled as of the date on which the Participant is determined to have incurred
the unforeseeable emergency or becomes eligible to receive the hardship
distribution and no further deferrals will be made under it. 

 

ARTICLE 3

 

ACCOUNTS

 

3.1.Accounts.   RLI shall establish and maintain a separate Account for each
Participant.  The Account shall be for recordkeeping purposes only and shall not
represent a trust fund or other segregation of assets for the benefit of the
Participant.  The balance of each Participant’s Account will be maintained in
full and fractional shares of RLI Stock.

 

3.2.Credits to Accounts.  Each Participant’s Account shall be credited from time
to time as provided in this section.

 

3.2.1.Direct Compensation Deferrals.  The amount of each Direct Compensation
cash payment or RLI Stock grant (including restricted stock units) which the
Participant has elected to defer under the Plan shall be credited to the
Participant’s Account on, or as soon as administratively practicable after, the
date it would otherwise be payable to the Participant.  Any cash amount shall be
converted to RLI Stock credits, equal to the number of full and fractional
shares that could be purchased with such amount on, or as soon as
administratively feasible after, the date such amount is credited to the
Participant’s Account.

 

3.2.2.Dividends and Other Adjustments.  The Participant’s Account shall be
credited with additional RLI Stock credits, equal to the number of full and
fractional shares of RLI Stock that could be purchased with any cash dividends
which would be payable on the RLI Stock credited to the Participant’s Account. 
For this purposes, the share price on, or as soon as administratively
practicable after, the date the dividend is paid will be used.  The Account also
will be adjusted for any stock split, redemption or similar event, in a manner
determined to be reasonable by RLI.

 

3.3.Charges to Accounts.  As of the date any Plan benefit measured by the
Account is paid to the Participant or the Participant’s Beneficiary, the Account
shall be charged with the amount of such benefit payment.

 

 

 

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ARTICLE 4

 

BENEFITS

 

4.1.Vesting.   The Participant’s Account shall be fully (100%) Vested.

 

4.2.Payment of Plan Benefits on Termination of Service - General Rule.   If the
Participant has an Account balance at Termination of Service, RLI shall pay that
balance to the Participant in five (5) annual installments, as follows:

 

(a)

Time.  The first installment shall be paid on or about the January 1 following
the Year in which the Participant’s Termination of Service occurs.  The
remaining installments shall be paid on or about each subsequent January 1.

 

(b)

Amount.  The amount of each installment shall be determined using a “fractional”
method - by multiplying the Participant’s Account balance immediately before the
installment payment date by a fraction, the numerator of which is one and the
denominator of which is the number of installments remaining (including the
installment in question).  The result shall be rounded down to the next lower
full share of RLI Stock, except for the final installment, which shall
distribute the final shares and pay cash in lieu of any partial share.

 

4.3.Changing Payment Elections.

 

4.3.1.General Rule.  A Participant may elect to change the number of annual
installments the Participant receives under the Plan to ten (10) or fifteen (15)
installments, subject to the rules below.  Any such election must be made in
such manner and in accordance with such rules as may be prescribed for this
purpose by RLI (including by means of a voice response or other electronic
system under circumstances authorized by RLI).  The installments shall commence
on the date specified in Sec. 4.2(a), unless otherwise postponed by this
Article 4, and the amount of each installment shall be determined under the
fractional method described in Sec. 4.2(b).

 

4.3.2.Election upon Initial Plan Enrollment.  An election to extend the number
of installments may be made as part of the Participant’s initial enrollment in
the Plan, as described in Sec. 2.3. 

 

4.3.3.Subsequent Election.  If a Participant did not elect to extend the number
of installments upon initial enrollment, or if the Participant wants to further
change the number of installments after becoming a Participant, such Participant
may elect to change the number of installments in accordance with the following
rules:

 

(a)

The election must be received by RLI in writing and in proper form and must not
take effect for at least 12 months from the date on which it is submitted to
RLI;

 

(b)

The election must be submitted to RLI at least 12 months prior to the specified
date of distribution; and

 

(c)

The commencement of installments must be delayed at least five (5) years from
the date payments would otherwise commence without this subsequent election.

 

4.4.Special Rules.

 

4.4.1.Specified Employee Exception.  If a Participant becomes an Employee and
subsequently has a “separation of service” (within the meaning of Code § 409A
(a) (2) (A) (i)), the initial installment (or lump-sum payment, if applicable)
shall be delayed to the extent necessary to comply with Code § 409A (a) (2) (B)
(i) or any regulations or other guidance issued by the Treasury Department
thereunder.

 

4.4.2.Cash-Out of Small Amounts.  Any contrary provision or election
notwithstanding, if the Participant’s Account balance is less than one hundred
thousand dollars ($100,000) as of the date installments are to commence, the
Account shall be paid to the Participant in a single lump-sum, as full
settlement of all benefits due

 

 

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under the Plan; provided that, for purposes of applying the one hundred thousand
dollar ($100,000) cash-out limit, all nonqualified deferred compensation amounts
payable to the Participant by RLI and its Affiliates shall be aggregated if and
to the extent required under Code § 409A or any regulations or other guidance
issued by the Treasury Department thereunder.

 

4.5.Medium of Payments.   All payments to a Participant shall be made in shares
of RLI Stock.  Unless the shares have been registered under the Securities Act
of 1933 (the “Act”), are otherwise exempt from the registration requirements of
the Act, are the subject of a favorable no action letter issued by the
Securities and Exchange Commission, or are the subject of an opinion of counsel
acceptable to RLI to the effect that such shares are exempt from the
registration requirements of the Act, the transfer of such shares shall be
subject to the provisions of Rule 144 of the Act, as the same may be amended
from time to time.

 

4.6.Delay in Distributions.  A payment under the Plan may be delayed by RLI
under any of the following circumstances so long as all payments to similarly
situated Participants are treated on a reasonably consistent basis:

 

(a)

RLI reasonably anticipates that if such payment were made as scheduled, RLI’s
deduction with respect to such payment would not be permitted under Section
162(m) of the Code, provided that the payment is made either during the first
calendar year in which RLI reasonably anticipates, or should reasonably
anticipate, that if the payment is made during such year, the deduction of such
payment will not be barred by application of Section 162(m) or during the period
beginning with the date of the Participant’s Termination of Employment and
ending on the later of the last day of RLI’s fiscal year in which the
Participant has a Termination of Employment or the 15th day of the third month
following the Termination of Employment.

 

(b)

RLI reasonably anticipates that the making of the payment will violate Federal
securities laws or other applicable law, provided that the payment is made at
the earliest date at which RLI reasonably anticipates that the making of the
payment will not cause such violation. 

 

(c)

Upon such other events as determined by RLI and according to such terms as are
consistent with Section 409A or are prescribed by the Commissioner of Internal
Revenue.

 

4.7Acceleration of Distributions.  RLI may, in its discretion, distribute all or
a portion of a participant’s Accounts at an earlier time and in a different form
than specified as otherwise provided in this Article 4, under the circumstances
described below:

 

(a)

As may be necessary to fulfill a Domestic Relations Order.  Distributions
pursuant to a Domestic Relations Order shall be made according to administrative
procedures established by RLI.

 

(b)

To the extent reasonably necessary to avoid the violation of ethics laws or
conflict of interest laws pursuant to Section 1.409A-3(j) (ii) of the Treasury
regulations.

 

(c)

To pay FICA on amounts deferred under the Plan and the income tax resulting from
such payment.

 

(d)

To pay the amount required to be included in income as a result of the Plan’s
failure to comply with Section 409A.

 

(e)

If RLI determines, in its discretion, that it is advisable to liquidate the Plan
in connection with a termination of the Plan subject to the requirements of
Section 409A.

 

(f)

As satisfaction of a debt of the Participant to an Affiliate, where such debt is
incurred in the ordinary course of the service relationship between the
Affiliate and the Participant, the entire amount of the reduction in any Year
does not exceed $5,000, and the reduction is made at the same time and in the
same amount as the debt otherwise would have been due and collected from the
Participant.

 

(g)

To pay state, local or foreign tax obligations that may arise with respect to
amounts deferred under the Plan and the income tax resulting from such payment.

 

 

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(h)

If the Participant has an unforeseeable emergency.  For these purposes
an “unforeseeable emergency” is a severe financial hardship to the Participant,
resulting from an illness or accident of the Participant, the Participant’s
spouse, the Beneficiary, or the Participant’s dependent (as defined in
Section 152, without regard to Section 152(b)(1), (b)(2), and (d)(1)(B) of the
Code); loss of the Participant’s property due to casualty (including the need to
rebuild a home following damage to a home not otherwise covered by insurance);
or other similar extraordinary and unforeseeable circumstances arising as a
result of events beyond the control of the Participant.  For example, the
imminent foreclosure of or eviction from the Participant’s primary residence may
constitute an unforeseeable emergency.  In addition, the need to pay for medical
expenses, including non-refundable deductibles, as well as for the cost of
prescription drug medication, may constitute an unforeseeable emergency. 
Finally, the need to pay for funeral expenses of a spouse, Beneficiary, or a
dependent (as defined in Section 152, without regard to 152(b)(1), (b)(2),  and
(d)(1)(B) of the Code) may also constitute an unforeseeable emergency.  Except
as otherwise provided in this paragraph (h), the purchase of a home and the
payment of college tuition are not unforeseeable emergencies.  Whether a
Participant is faced with an unforeseeable emergency permitting a distribution
under this paragraph (h) is to be determined based on the relevant facts and
circumstances of each case, but, in any case a distribution on account of an
unforeseeable emergency may not be made to the extent that such emergency is or
may be relieved through reimbursement or compensation from insurance or
otherwise, by liquidation of the Participant’s assets, to the extent the
liquidation of such assets would not cause severe financial hardship, or by
cessation of Elective Deferrals.

 

Distributions because of an unforeseeable emergency must be limited to the
amount reasonably necessary to satisfy the emergency need (which may include
amounts necessary to pay any Federal, state, local, or foreign income taxes or
penalties reasonably anticipated to result from the distribution).  A
determination of the amounts reasonably necessary to satisfy the emergency need
must take into account any additional compensation that is available due to
cancellation of the Participant’s election as a result of this paragraph (h).

 

Notwithstanding anything in this Section 4.7 to the contrary, except for a
Participant’s election to request a distribution due to an unforeseeable
emergency under paragraph (h), above (which the Participant, in the
Participant’s discretion, may elect to make or not make), RLI shall not provide
the Participant with discretion or a direct or indirect election regarding
whether a payment is accelerated pursuant to this Section 4.7.

 

4.8When a Payment is Deemed to be Made.  Any payment that is due to be
distributed as of a particular date pursuant to the provisions of the Plan, will
be deemed to be distributed as of that date if it is distributed on such date or
a later date within the same calendar year, or, if later, by the 15th day of the
third calendar month following the date, and the Participant is not permitted,
directly or indirectly, to designate the calendar year of payment.  Further, a
payment will be treated as made on a date if it is made no earlier than 30 days
before the date, and the Participant is not permitted, directly or indirectly,
to designate the calendar year of payment.  For purposes of the foregoing, if
the payment is required to be made during a period of time, the specified date
is treated as the first day of the period of time.

 

ARTICLE 5

 

DEATH BENEFITS

 

5.1.Death Benefits.

 

5.1.1.Benefits When Participant Dies Before Commencement of Payments.  If the
Participant dies before installments commence, the Participant’s Account balance
shall be paid to the Participant’s Beneficiary as follows:

 

(a)

If the Participant has made a valid election under Sec. 4.3, payments shall be
made in ten (10) or fifteen (15) annual installments, as elected by the
Participant.

 

 

 

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(b)

Otherwise, payments shall be made in five (5) annual installments.

 

The first installment shall be paid on the January 1 following the Year in which
the Participant’s death occurs.  The remaining installments shall be paid on
each subsequent January 1.  The amount of each installment shall be determined
using the “fractional” method described in Sec. 4.2(b).

 

5.1.2.Benefits When Participant Dies After Commencement of Payments.  If the
Participant dies after installments commence and the Participant has an Account
balance at death, the remaining Account balance shall be paid to the
Participant’s Beneficiary in the same manner as if the Participant were still
living.

 

5.1.3.Medium of Payments.  All payments to a Beneficiary shall be made in shares
of RLI Stock.

 

5.1.4.Cash-Out of Small Amounts.  Any contrary provision or election
notwithstanding, if the amount payable to the Beneficiary is less than one
hundred thousand dollars ($100,000) as of the date installments are to commence,
the benefit shall be paid to the Beneficiary in a single lump-sum, as full
settlement of all benefits due under the Plan, subject, however, to any
limitation on such cash-out under Code § 409A or any regulations or other
guidance issued by the Treasury Department thereunder.

 

5.2.Designation of Beneficiary.

 

5.2.1.Persons Eligible to Designate.  Any Participant may designate a
Beneficiary to receive any amount payable under the Plan as a result of the
Participant’s death, provided that the Beneficiary survives the Participant. 
The Beneficiary may be one or more persons, natural or otherwise.  By way of
illustration, but not by way of limitation, the Beneficiary may be an
individual, trustee, executor, or administrator.  A Participant may also change
or revoke a designation previously made, without the consent of any Beneficiary
named therein.

 

5.2.2.Form and Method of Designation.  Any designation or a revocation of a
prior designation of Beneficiary shall be in writing on a form acceptable to RLI
and shall be filed with RLI.  RLI and all other parties involved in making
payment to a Beneficiary may rely on the latest Beneficiary designation on file
with RLI at the time of payment or may make payment pursuant to Sec. 5.2.3 if an
effective designation is not on file, shall be fully protected in doing so, and
shall have no liability whatsoever to any person making claim for such payment
under a subsequently filed designation of Beneficiary or for any other reason.

 

5.2.3.No Effective Designation.  If there is not on file with RLI an effective
designation of Beneficiary by a deceased Participant, the Beneficiary shall be
the person or persons surviving the Participant in the first of the following
classes in which there is a survivor, share and share alike:

 

(a)

The Participant’s spouse.  (A “spouse” is a person of the opposite sex to whom
the    Participant is legally married, including a common-law spouse if the
marriage was entered into in a state that recognizes common-law marriages and
RLI has received acceptable proof and/or certification of common-law married
status.)

 

(b)

The Participant’s then living descendants, per stirpes.

 

(c)

The individuals entitled to inherit the Participant’s property under the law of
the state in which the Participant resides immediately before the Participant’s
death, in the proportions determined under such law.

Determination of the identity of the Beneficiary in each case shall be made by
RLI.

 

5.2.4.Successor Beneficiary.  If a Beneficiary who survives the Participant
subsequently dies before receiving the complete payment to which the Beneficiary
was entitled, the successor Beneficiary, determined in accordance with the
provisions of this section, shall be entitled to the payments remaining.  The
successor Beneficiary

 

 

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shall be the person or persons surviving the Beneficiary in the first of the
following classes in which there is a survivor, share and share alike:

 

(a)

The Beneficiary’s spouse. (A “spouse” is a person of the opposite sex to whom
the Beneficiary is legally married, including a common-law spouse if the
marriage was entered into in a state that recognizes common-law marriages and
RLI has received acceptable proof and/or certification of common-law married
status.)

 

(b)

The Beneficiary’s then living descendants, per stirpes.

 

(c)

The individuals entitled to inherit the Beneficiary’s property under the law of
the state in which the Beneficiary resides immediately before the Beneficiary’s
death, in the proportions determined under such law.

 

ARTICLE 6

 

PAYMENT PROCEDURES

 

6.1.Application for Benefits.  Benefits shall be paid to Participants
automatically (without a written request) at the time and in the manner
specified in the Plan.  Benefits shall be paid to a Beneficiary upon RLI’s
receipt of a written request for the benefits, including appropriate proof of
the Participant’s death and the Beneficiary’s identity and right to payment.

 

6.2.Deferral of Payment.   If there is a dispute regarding a Plan benefit, RLI,
in its sole discretion, may defer payment of the benefit until the dispute has
been resolved.

 

ARTICLE 7

 

ADMINISTRATION

 

7.1.Administrator.  RLI shall be the administrator of the Plan.  RLI shall
control and manage the administration and operation of the Plan and shall make
all decisions and determinations incident thereto.  Except with respect to the
ordinary day-to-day administration of the Plan, action on behalf of RLI must be
taken by one of the following:

 

(a)          The Board; or

 

(b)          The Nominating/Corporate Governance Committee of the Board.

 

7.1.1.Delegation.  The ordinary day-to-day administration of the Plan may be
delegated by the chief executive officer of RLI to an individual or a
committee.  Such individual or committee shall have the authority to delegate or
redelegate to one or more persons, jointly or severally, such functions assigned
to such individual or committee as such individual or committee may from time to
time deem advisable.

 

7.1.2.Automatic Removal.  If any individual or committee member to whom
responsibility under the Plan is allocated is a director, officer or employee of
RLI or an Affiliate when responsibility is so allocated, then such individual
shall be automatically removed as a member of a committee at the earliest time
such individual ceases to be a director, officer or employee of RLI or an
Affiliate.  This removal shall occur automatically and without any requirement
for action by RLI or any notice to the individual so removed.

 

7.1.3.Conflict of Interest.  If any individual or committee member to whom
responsibility under the Plan is allocated is also a Participant or Beneficiary,
such individual shall have no authority as such member with respect to any
matter specifically affecting such Participant or Beneficiary’s individual
interest hereunder (as distinguished from the interests of all Participants and
Beneficiaries or a broad class of Participants and Beneficiaries), all such

 

 

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authority being reserved exclusively to the other members to the exclusion of
such Participant or Beneficiary, and such Participant or Beneficiary shall act
only in an individual capacity in connection with any such matter.

 

7.1.4.Binding Effect.   The determination of the Board or the
Nominating/Corporate Governance Committee of the Board in any matter within its
authority shall be binding and conclusive upon RLI and all persons having any
right or benefit under the Plan.

 

7.1.5.Third-Party Service Providers.  RLI may from time to time appoint or
contract with an administrator, recordkeeper or other third-party service
provider for the Plan.  Any such administrator, recordkeeper or other
third-party service provider will serve in a nondiscretionary capacity and will
act in accordance with directions given and procedures established by RLI.

 

7.2.Benefits Not Transferable.  No Participant or Beneficiary shall have the
power to transmit, alienate, dispose of, pledge or encumber any benefit payable
under the Plan before its actual payment to the Participant or Beneficiary.  Any
such effort by a Participant or Beneficiary to convey any interest in the Plan
shall not be given effect under the Plan.  No benefit payable under the Plan
shall be subject to attachment, garnishment, execution following judgment or
other legal process before its actual payment to the Participant or Beneficiary.

 

7.3.Benefits Not Secured.  The rights of each Participant and Beneficiary shall
be solely those of an unsecured, general creditor of RLI.  No Participant or
Beneficiary shall have any lien, prior claim or other security interest in any
property of RLI.

 

7.4.RLI’s Obligations.  RLI shall provide the benefits under the Plan.  RLI’s
obligation may be satisfied by distributions from a trust fund created and
maintained by RLI, in its sole discretion, for such purpose.  However, the
assets of any such trust fund shall be subject to claims by the general
creditors of RLI in the event RLI is (i) unable to pay its debts as they become
due, or (ii) is subject to a pending proceeding as a debtor under the United
States Bankruptcy Code.

 

7.5.Withholding Taxes.  RLI shall have the right to withhold (and transmit to
the proper taxing authority) such federal, state or local taxes as it may be
required to withhold by applicable laws.  Such taxes may be withheld from any
benefits due under the Plan or from any other compensation to which the
Participant is entitled from RLI and its Affiliates.

 

7.6.Service of Process.  The chief executive officer of RLI is designated as the
appropriate and exclusive agent for the receipt of service of process directed
to the Plan in any legal proceeding, including arbitration, involving the Plan.

 

7.7.Limitation on Liability.  Neither RLI’s officers nor any member of its Board
nor any individual or committee to whom RLI delegates responsibility under the
Plan in any way secures or guarantees the payment of any benefit or amount which
may become due and payable hereunder to or with respect to any Participant. 
Each Participant and other person entitled at any time to payments hereunder
shall look solely to the assets of RLI for such payments as an unsecured,
general creditor.  After benefits have been paid to or with respect to a
Participant and such payment purports to cover in full the benefit hereunder,
such former Participant or other person(s), as the case may be, shall have no
further right or interest in the other assets of RLI in connection with the
Plan.  Neither RLI nor any of its officers nor any member of its Board nor any
individual or committee to whom RLI delegates responsibility under the Plan
shall be under any liability or responsibility for failure to effect any of the
objectives or purposes of the Plan by reason of the insolvency of RLI.

 

ARTICLE 8

 

AMENDMENT AND TERMINATION

 

8.1.Amendment.  RLI reserves the power to amend the Plan either prospectively or
retroactively or both, in any respect, by action of its Board; provided that, no
amendment shall be effective to reduce or divest benefits payable with respect
to the Account of any Participant or Beneficiary without consent.  No amendment
of the Plan shall be

 

 

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effective unless it is in writing and signed on behalf of RLI by a person
authorized to execute such writing.  No oral representation concerning the
interpretation or effect of the Plan shall be effective to amend the Plan.

 

8.2.Termination.  RLI reserves the right to terminate the Plan at any time by
action of its Board; provided that, the termination of the Plan shall not reduce
or divest benefits payable with respect to the Account of any Participant or
Beneficiary or negate the Participant’s or Beneficiary’s rights with respect to
such benefits.  Any such termination will be done in accordance with the
requirements of Section 409A.

 

ARTICLE 9

 

MISCELLANEOUS

 

9.1.Effect on Other Plans.  This Plan shall not alter, enlarge or diminish any
person’s rights or obligations under any other benefit plan maintained by RLI or
any Affiliate.

 

9.2.Effect on Service.  Neither the terms of this Plan nor the benefits
hereunder nor the continuance thereof shall be a term of the service of any
Director.  RLI shall not be obliged to continue the Plan.  The terms of this
Plan shall not give any Director the right to continue serving as a member of
the Board, nor shall it create any obligation on the part of the Board to
nominate any Director for reelection by RLI’s stockholders.

 

9.3.Disqualification.  Notwithstanding any other provision of the Plan or any
designation made under the Plan, any individual who feloniously and
intentionally kills a Participant shall be deemed for all purposes of the Plan
and all elections and designations made under the Plan to have died before such
Participant.  A final judgment of conviction of felonious and intentional
killing is conclusive for this purpose.  In the absence of a conviction of
felonious and intentional killing, RLI shall determine whether the killing was
felonious and intentional for this purpose.

 

9.4.Rules of Document Construction.   Whenever appropriate, words used herein in
the singular may be read in the plural, or words used herein in the plural may
be read in the singular; and the words “hereof,” “herein” or “hereunder” or
other similar compounds of the word “here” shall mean and refer to the entire
Plan and not to any particular article, section or paragraph of the Plan unless
the context clearly indicates to the contrary.  The titles given to the various
articles and sections of the Plan are inserted for convenience of reference only
and are not part of the Plan, and they shall not be considered in determining
the purpose, meaning or intent of any provision hereof.  Written notification
under the Plan shall include such other methods (for example, facsimile or
e-mail) as RLI, in its sole discretion, may authorize from time to time.

 

9.5.References to Laws.  Any reference in the Plan to a statute shall be
considered also to mean and refer to the applicable regulations for that
statute. Any reference in the Plan to a statute or regulation shall be
considered also to mean and refer to any subsequent amendment or replacement of
that statute or regulation.

 

9.6.Choice of Law.   The Plan has been executed in the State of Illinois and has
been drawn in conformity to the laws of that state and shall, except to the
extent that federal law is controlling, be construed and enforced in accordance
with the laws of the State of Illinois (without regard to its conflict of law
principles).

 

9.7.Binding Effect.   The Plan shall be binding upon and inure to the benefit of
the successors and assigns of RLI, and the Beneficiaries, personal
representatives and heirs of the Participant.

  

IN WITNESS WHEREOF, RLI has cause the Plan to be executed by its duly authorized
officers as of the

3rd day of May, 2018.

 

 

 

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RLI Corp.

 

By: Jonathan E. Michael

 

Its: Chairman & CEO

 

And

 

By: Jean M. Stephenson

 

Its: Vice President, Corporate Secretary

 

 

 

 

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