Document:

Exhibit
10.8

 

RLI CORP. KEY EMPLOYEES

EXCESS BENEFIT PLAN

 

ARTICLE 1

 

INTRODUCTION

 

1.1.         Establishment.

 

1.1.1.      New Plan.  RLI has established this Plan effective January 1,
2004.

 

1.1.2.      Transition
Rules.

 

(a)           Before 2004. For Years ending before 2004, benefits for the
Chairman of the Board and the Chief Executive Officer of RLI accrued under
certain Prior Agreements, which restored contributions and forfeitures that
could not be provided under the ESOP.

 

(b)           For 2004. For the 2004 Year, benefits for the Chairman of
the Board and the Chief Executive Officer of RLI shall accrue under the Prior
Agreements and under this Plan, as follows:

 

(1)           ESOP.  Benefits to
restore contributions and forfeitures that cannot be provided under the ESOP
shall accrue under the Prior Agreements in accordance with the terms of the
Prior Agreements.

 

(2)           401k Plan.  Benefits
to restore contributions and forfeitures that cannot be provided under the 401k
Plan shall accrue under this Plan in accordance with the terms of this Plan.

 

(c)           After 2004.  For Years
commencing after 2004, benefits for the Chairman of the Board and the Chief
Executive Officer of RLI shall accrue under this Plan to restore contributions
and forfeitures that cannot be provided under both Qualified Plans,
and no additional benefits shall accrue under the Prior Agreements.  All obligations under the Prior Agreements
with respect to ESOP contributions and forfeitures for Years ending before 2005
shall be satisfied under the Prior Agreements, rather than under this Plan.

 

1.2.         Purpose.  The purpose of the Plan is to restore
retirement benefits to those eligible Employees whose contributions and
forfeitures under the Qualified Plans are reduced by the limitations imposed by
the Code §§ 401(a)(17) and 415A or by reason of
their electing to defer receipt of compensation that would otherwise taken into
account in calculating contributions and forfeitures under the Qualified Plans.

 

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

 

1.3.1.      401k Plan — the RLI Corp. 401k Plan, as the same may be
amended from time to time.

 

 

1.3.2.      Account — the
separate recordkeeping account (unfunded and unsecured) maintained for each
Participant in connection with his/her participation in the Plan.

 

1.3.3.      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).

 

1.3.4.      Beneficiary —
the person or persons designated as such under Sec. 5.2.

 

1.3.5.      Board — the
Board of Directors of RLI.

 

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

 

1.3.7.      Committee
— the Executive Resources Committee of the Board.

 

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

 

1.3.9.      Employer
Provided Contribution — the amounts contributed to a Qualified Plans by RLI
on behalf of a Participant, specifically:

 

(a)           The “ESOP
Contribution” as defined in the ESOP, and

 

(b)           The “Basic
Contribution” and “Profit Sharing Contribution” as defined in the 401k Plan

 

Employer Provided Contributions do not include any “401k
Contributions”, “401k Catch-Up Contributions”, “Rollover Contributions”, as
defined in the 401k Plan, or any other amounts deferred under or contributed to
the Qualified Plans by the Participant.

 

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

 

1.3.11.    ESOP — the
RLI Corp. Employee Stock Ownership Plan, as the same may be amended from time
to time.

 

1.3.12.    Participant
— an Employee who becomes a Participant in the Plan under Sec. 2.1.  An Employee who becomes a Participant shall
remain a Participant in the Plan until the earlier of the following:

 

(a)           The
complete payment of the Participant’s Account balance after his/her Termination
of Employment; or

 

(b)           The
Participant’s death.

 

1.3.13.    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. Key Employees Excess Benefit
Plan.”

 

2

 

1.3.14.    Prior Agreement.
— an individual agreement entered into by an Employee
and RLI before January 1, 2004, to provide key employee excess benefits to
the Employee.

 

1.3.15.    Qualified Plans
— the ESOP and the 401k Plan.

 

1.3.16.    RLI — RLI
Corp. and any Successor Employer.

 

1.3.17.    RLI Stock — the
common stock of RLI.

 

1.3.18.    Specified
Employee — a “key employee” (as defined in Code § 416(i) without
regard to paragraph (5) thereof), as determined under Code § 409(A)(2)(B)(i) or any regulations or other guidance issued by
the Treasury Department thereunder.

 

1.3.19.    Successor
Employer — 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.

 

1.3.20.    Termination of
Employment — the Participant’s resignation, discharge, retirement, death,
failure to return to active work at the end of an authorized leave of absence or
the authorized extension or extensions thereof, failure to return to work when
duly called following a temporary layoff, or upon the happening of any other
event or circumstance which, under the policy of RLI or an Affiliate as in
effect from time to time, results in the termination of the employer-employee
relationship with RLI and its Affiliates. 
Notwithstanding anything provided above, a “Termination of Employment”
will be deemed not to have occurred if the event or circumstance would not be
considered a “separation from service” under Code § 409A(a)(2)(A)(i) or
any regulation or other guidance issued by the Treasury Department
thereunder.  In such case, a Termination
of Employment will be deemed to have occurred at the earliest time allowed
under Code § 409A.

 

1.3.21.    Vested — nonforfeitable.

 

1.3.22.    Year — the
calendar year.

 

1.4.         Type of
Plan.

 

1.4.1.      Top-Hat Plan.  The Plan is intended to be a “top-hat” plan –
that is, an unfunded plan maintained primarily for the purpose of providing
deferred compensation for a select group of management or highly compensated
individuals within the meaning of ERISA §§ 201(2), 301(a)(3)
and 401(a)(1), which is exempt from Parts 2, 3 and 4 of Title I of ERISA.

 

1.4.2.      Separate
Excess Benefit Plan.  To the extent
that a separable part of the Plan is maintained for the purpose of providing
benefits for eligible Employees in excess of the limitations on contributions
and benefits imposed by Code § 415, that part shall be treated as a
separate plan which is an “excess benefit plan” within the meaning of ERISA § 3(36)
and which is exempt from the participation, vesting, benefit accrual, funding
and fiduciary provisions of ERISA.

 

1.4.3.      Nonqualified
Deferred Compensation Plan.  The Plan
also 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

 

3

 

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
and Selection.  The Committee, in its
sole discretion, shall determine from time to time the Employees who will be
Participants in the Plan, provided that each such Employee must:

 

(a)           Have the
title of Vice President or above, and

 

(b)           Be
expected to have compensation in excess of the Code § 401(a)(17) limit in his/her initial year of participation.

 

An employee selected by the Committee will become a
Participant on the January 1 following the date he/she is selected by the
Committee.  However, for the 2004 Year,
each selected Employee shall become a Participant on January 1, 2004.

 

2.2.         Notification.  RLI shall provide each Participant with (i)
written notification of his/her participation in the Plan, and (ii) either a
copy of the Plan or written notification that such a copy is available upon
request.

 

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.      Contribution
Credits.

 

(a)           Amount.  A Participant’s
contribution credit for a Year with respect to each Qualified Plan is an amount
equal to A minus B, where:

 

“A” =     The
amount of Employer Provided Contributions that would have been contributed to
the Qualified Plan on behalf of the Participant for the Year if such Employer
Provided Contributions were determined without regard to:

 

(i)            The
limit on compensation taken into account under the Qualified Plan under Code § 401(a)(17);

 

(ii)           The
limit on annual additions under the Qualified Plan under Code § 415(c);
and

 

4

 

(iii)          The
exclusion of amounts deferred by the Participant under the RLI Corp. Executives
Deferred Compensation Plan from the compensation base used to determine the
Employer Provided Contributions under the Qualified Plan.

 

“B” =      The amount of Employer Provided Contributions actually
contributed to the Qualified Plan on behalf of the Participant for the Year.

 

(b)           Time.  The amount of
the Participant’s contribution credit for the Year with respect to each
Qualified Plan shall be credited to the Participant’s Account on, or as soon as
administratively practicable after, the date such amount would otherwise have
been contributed to the Qualified Plan. 
The 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.

 

(c)           2004 Transition. 
Notwithstanding the foregoing, the contribution credits for the 2004
Year for any Participant who was covered under a Prior Agreement shall be
limited to the amount determined with respect to the 401(k) Plan.  No contribution credits shall be added to
such Participant’s Account under this Plan for the 2004 Year with respect to
the ESOP.

 

3.2.2.      Forfeitures.

 

(a)           Amount.  A Participant’s
forfeiture credit for a Year with respect to each Qualified Plan is an amount
equal to A minus B, where:

 

“A” =     The amount of forfeitures that would have been allocated to
the Participant’s account under the Qualified Plan for the Year if such
allocation were determined without regard to:

 

(i)            The
limit on compensation taken into account under the Qualified Plan under Code § 401(a)(17);

 

(ii)           The
limit on annual additions under the Qualified Plan under Code § 415(c);
and

 

(iii)          The
exclusion of amounts deferred by the Participant under the RLI Corp. Executives
Deferred Compensation Plan from the compensation base used to allocate
forfeitures under the Qualified Plan.

 

“B” =      The amount of forfeitures actually allocated to the
Participant’s account under the Qualified Plan for the Year.

 

(b)           Time.  The amount of
the Participant’s forfeiture credit for the Year with respect to each Qualified
Plan shall be credited to the Participant’s Account on, or as soon as
administratively practicable after, the date such amount would otherwise have
been allocated under the Qualified Plan. 
The amount shall be converted to RLI Stock credits, equal to the number
of full and fractional shares that could be

 

5

 

purchased
with such amount on, or as soon as administratively feasible after, the date
such amount is credited to the Participant’s Account.

 

(c)           2004 Transition. 
Notwithstanding the foregoing, the forfeiture credits for the 2004 Year
for any Participant who was covered under a Prior Agreement shall be limited to
the amount determined with respect to the 401(k) Plan.  No forfeiture credits shall be added to such
Participant’s Account under this Plan for the 2004 Year with respect to the
ESOP.

 

3.2.3.      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 his/her
Beneficiary, the Account shall be charged with the amount of such benefit
payment.

 

ARTICLE 4

 

BENEFITS

 

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

 

4.2.         Early
Payment for Unforeseeable Emergency. 
A Participant may receive a payment from his/her Account in the event of
an Unforeseeable Emergency.  The payment
will be made as soon as administratively practicable after the Participant’s
written request is received and the Committee has determined the amount to be
paid from the Account to alleviate the Unforeseeable Emergency.  The Participant’s deferrals under the Plan
will automatically stop in the event of a payment for Unforeseeable Emergency,
and the Participant will not be allowed to enroll again until the first day of
the second Year following the date of the payment.  An “unforeseeable emergency” for this purpose
means a severe financial hardship to the Participant resulting from an illness
or accident of the Participant, his/her spouse or a dependent (as defined in
Code § 152(a)), a loss of the Participant’s property due to casualty, or
other similar extraordinary and unforeseeable circumstances arising as a result
of events beyond the control of the Participant, which is determined to qualify
as an Unforeseeable Emergency by the Committee. 
Cash needs arising from foreseeable events such as the purchase of a
residence or education expenses for children will not, by themselves, be
considered an Unforeseeable Emergency. 
The amount available from the Participant’s Account for the
Unforeseeable Emergency shall be limited to the amount necessary to satisfy
such emergency, plus amounts necessary to pay taxes reasonably anticipated to
become due as a result of the payment, after taking into account the extent to
which such hardship is or may be relieved through reimbursement or compensation
by insurance or otherwise or by liquidation of the Participant’s assets (to the
extent the liquidation of such assets would not itself cause severe financial
hardship), all as determined by the Committee.

 

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

 

6

 

(a)           Time.  The first
installment shall be paid on, or as soon as
administratively practicable after, the January 1 following the Year in
which the Participant’s Termination of Employment occurs.  The remaining installments shall be paid on, or as soon as administratively practicable after, 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 be rounded up to the next higher full share of
RLI Stock.

 

4.4.         Extended
Installment Payments.

 

4.4.1.      Election to
Extend Installments – General Rule. 
A Participant may elect to extend the number of annual installments
he/she 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 extended 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).

 

4.4.2.      Election to
Extend Installments 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. 2.2.

 

4.4.3.      Subsequent
Election to Extend Installments.  If
a Participant did not elect to extend the number of installments upon initial
enrollment, or if the Participant wants to further extend the number of
installments after becoming a Participant, he/she may elect to extend the
number of installments in accordance with the following rules:

 

(a)           The
election must be received by RLI in proper form not later than twelve (12)
months prior to the date payments are to commence to the Participant;

 

(b)           The
commencement of installments may be delayed five (5) years from the date
payments would otherwise commence without this subsequent election, if and to
the extent required by Code § 409A or any regulations or other guidance
issued by the Treasury Department thereunder; and

 

(c)           A
subsequent election cannot reduce the number of annual installments the
Participant will receive.

 

4.5.         Special
Rules.

 

4.5.1.      Key Employee
Exception.  If a Participant is a
Specified Employee, his/her initial installment (or lump-sum payment, if
applicable) shall be delayed, if necessary, so that it does not occur earlier
than the first day of the calendar month which begins six (6) months after the
Participant’s Termination of Employment. 
Any remaining annual installments shall be paid

 

7

 

as
described in Sec. 4.3(a).  However,
this delay shall not apply in the event of the Specified Employee’s death.

 

4.5.2.      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 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.

 

4.6.         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 certificates
representing such shares shall contain a legend precluding the transfer of such
shares except in accordance with the provisions of Rule 144 of the Act, as the
same may be amended from time to 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 his/her
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. 4.4, payments shall
be made in ten (10) or fifteen (15) annual installments, as elected by the
Participant.

 

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

 

The first installment shall be paid on,
or as soon as administratively practicable after, the January 1 following
the Year in which the Participant’s death occurs.  The remaining installments shall be paid on, or as soon as administratively practicable after, each
subsequent January 1.  The amount of
each installment shall be determined using the “fractional” method described in
Sec. 4.3(b).

 

5.1.2.      Benefits When
Participant Dies After Commencement of Payments.  If the Participant dies after his/her
installments commence and the Participant has an Account balance at his/her
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, subject to any legend
precluding transfer that is required under Sec. 4.6.

 

8

 

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.

 

Notwithstanding any provision of this Sec. 5.2 to the
contrary, any Beneficiary designation made under the Prior Agreements will
continue in effect under this Plan until modified by the Participant pursuant
to this Sec. 5.2.

 

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 Participant’s
estate.

 

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 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:

 

9

 

(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
Participant’s estate.

 

ARTICLE 6

 

CLAIMS AND REVIEW 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.  This written request shall be considered a
claim for the purposes of this article.

 

6.2.         Claims and
Review Procedures.  The claims and
review procedures set forth in this article shall be the mandatory claims
and review procedures for the resolution of disputes and disposition of claims
filed under the Plan.

 

6.2.1.      Initial Claim.  An individual may, subject to any applicable
deadline, file with the Committee a written claim for benefits under the Plan
in a form and manner prescribed by RLI.

 

(a)           If
the claim is denied in whole or in part, the Committee shall notify the
claimant of the adverse benefit determination within ninety (90) days after
receipt of the claim.

 

(b)           The
ninety (90) day period for making the claim determination may be extended for
ninety (90) days if the Committee determines that special circumstances require
an extension of time for determination of the claim, provided that the
Committee notifies the claimant, prior to the expiration of the initial ninety
(90) day period, of the special circumstances requiring an extension and the
date by which a claim determination is expected to be made.

 

6.2.2.      Notice of
Initial  Adverse Determination.  A notice of an adverse determination shall
set forth in a manner calculated to be understood by the claimant:

 

(a)           The
specific reasons for the adverse determination;

 

(b)           References
to the specific provisions of the Plan (or other applicable document) on which
the adverse determination is based;

 

(c)           A
description of any additional material or information necessary to perfect the
claim and an explanation of why such material or information is necessary; and

 

10

 

(d)           A
description of the claims review procedures, including
the time limits applicable to such procedures.

 

6.2.3.      Request for
Review.  Within ninety (90) days
after receipt of an initial adverse benefit determination notice, the claimant
may file with the Board a written request for a review of the adverse
determination and may, in connection therewith submit
written comments, documents, records and other information relating to the
claim benefits.  Any request for review
of the initial adverse determination not filed within ninety (90) days after
receipt of the initial adverse determination notice shall be untimely.

 

6.2.4.      Claim on
Review.  If the claim, upon review,
is denied in whole or in part, the Board shall notify the claimant of the
adverse benefit determination within sixty (60) days after receipt of such a
request for review.

 

(a)           The
sixty (60) day period for deciding the claim on review may be extended for
sixty (60) days if the Board determines that special circumstances require an
extension of time for determination of the claim, provided that the Board
notifies the claimant, prior to the expiration of the initial sixty (60) day
period, of the special circumstances requiring an extension and the date by
which a claim determination is expected to be made.

 

(b)           In
the event that the time period is extended due to a claimant’s failure to
submit information necessary to decide a claim on review, the claimant shall
have sixty (60) days within which to provide the necessary information and the
period for making the claim determination on review shall be tolled from the
date on which the notification of the extension is sent to the claimant until
the date on which the claimant responds to the request for additional
information or, if earlier, the expiration of sixty (60) days.

 

(c)           The
Board’s review of a denied claim shall take into account all comments,
documents, records, and other information submitted by the claimant relating to
the claim, without regard to whether such information was submitted or
considered in the initial benefit determination.

 

6.2.5.      Notice of
Adverse Determination for Claim on Review. 
A notice of an adverse determination for a claim on review shall set
forth in a manner calculated to be understood by the claimant:

 

(a)           The
specific reasons for the denial;

 

(b)           References
to the specific provisions of the Plan (or other applicable document) on which
the adverse determination is based; and

 

(c)           A
statement that the claimant is entitled to receive, upon request and free of
charge, reasonable access to, and copies of, all documents, records, and other
information relevant to the claimant’s claim for benefits.

 

6.3.         Claims
Rules.

 

(a)           No
inquiry or question shall be deemed to be a claim or a request for a review of
a denied claim unless made in accordance with the established claims and review

 

11

 

procedures.  RLI may require that any claim for benefits
and any request for a review of a denied claim be filed on forms to be
furnished by RLI upon request.

 

(b)           All
decisions on claims and on requests for a review of denied claims shall be made
by RLI.

 

(c)           Claimants
may be represented by a lawyer or other representative at their own expense,
but RLI reserves the right to (i) require the claimant to furnish written
authorization and (ii) establish reasonable procedures for determining whether
an individual has been authorized to act on behalf of a claimant.  A claimant’s representative shall be entitled
to copies of all notices given to the claimant.

 

(d)           The
decision of RLI on a claim and on a request for a review of a denied claim may
be provided to the claimant in electronic form instead of in writing at the
discretion of RLI.

 

(e)           In
connection with the review of a denied claim, the claimant or the claimant’s
representative shall be provided, upon request and free of charge, reasonable
access to, and copies of, all documents, records, and other information
relevant to the claimant’s claim for benefits.

 

(f)            The
time period within which a benefit determination will be made shall begin to
run at the time a claim or request for review is filed in accordance with the
claims and review procedures, without regard to whether all the information
necessary to make a benefit determination accompanies the filing.

 

(g)           The
claims and review procedures shall be administered with appropriate safeguards
so that benefit claim determinations are made in accordance with governing Plan
documents and, where appropriate, the Plan provisions have been applied
consistently with respect to similarly situated claimants.

 

(h)           For
the purpose of this article, a document, record, or other information shall be
considered “relevant” if such document, record, or other information:  (i) was relied upon in making the benefit
determination; (ii) was submitted, considered, or generated in the course of
making the benefit determination, without regard to whether such document,
record, or other information was relied upon in making the benefit
determination; or (iii) demonstrates compliance with the administration
processes and safeguards designed to ensure that the benefit claim
determination was made in accordance with governing Plan documents and that,
where appropriate, the Plan provisions have been applied consistently with
respect to similarly situated claimants.

 

(i)            RLI
may, in its discretion, rely on any applicable statute of limitation or
deadline as a basis for denial of any claim.

 

6.4.         Deadline to
File Claim.  To be considered timely
under the Plan’s claims and review procedures, a claim must be filed with the
Committee within one (1) year after the claimant knew or reasonably should
have known of the principal facts upon which the claim is based.

 

6.5.         Exhaustion
of Administrative  Remedies.  The exhaustion of the claims and review
procedures is mandatory for resolving every claim and dispute arising under the
Plan.  As to such

 

12

 

claims and disputes no claimant shall be permitted to
commence an arbitration action to recover Plan benefits or to enforce or
clarify rights under the Plan or under any provision of the law, whether or not
statutory, until the claims and review procedures set forth herein have been
exhausted in their entirety.

 

6.6.         Arbitration.  Any claim, dispute or other matter in
question of any kind relating to the Plan which is not resolved by the claims
and review procedures shall be settled by arbitration in accordance with the
Federal Arbitration Act 9 U.S.C. §1, et seq. 
Notice of demand for arbitration must be made in writing to the opposing
party within the time period specified in Sec. 6.7.  In no event will a demand for arbitration be
made after the date when the applicable statute of limitations would bar the
institution of a legal or equitable proceeding based on such claim, dispute or
other matter in question.  The decision
of the arbitrator(s) will be final and may be enforced in any court of
competent jurisdiction.  The
arbitrator(s) may award reasonable fees and expenses to the prevailing party in
any dispute hereunder and will award reasonable fees and expenses in the event
that the arbitrator(s) find that the losing party acted in bad faith or with
intent to harass, hinder or delay the prevailing party in the exercise of its
rights in connection with the matter under dispute.  The arbitration will take place in Peoria,
Illinois, unless otherwise agreed by the parties.

 

6.7.         Deadline to
File an Arbitration Action.  No
arbitration action to recover Plan benefits or to enforce or clarify rights
under the Plan under or under any provision of the law, whether or not
statutory, may be brought by any claimant on any matter pertaining to the Plan
unless the action is commenced before the earlier of:

 

(a)           Thirty (30) months
after the claimant knew or reasonably should have known of the principal facts
on which the claim is based, or

 

(b)           Six (6) months
after the claimant has exhausted the claims and review procedures.

 

6.8.         Knowledge
of Fact by Participant Imputed to Beneficiary.  Knowledge of all facts that a Participant
knew or reasonably should have known shall be imputed to every claimant who is
or claims to be a Beneficiary of the Participant or otherwise claims to derive
an entitlement by reference to the Participant for the purpose of applying the
previously specified periods.

 

6.9.         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 to 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
Committee.

 

13

 

7.1.1.      Delegation.  The ordinary day-to-day administration of the
Plan may be delegated by the Chief Executive Officer 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 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.  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, he/she shall have no
authority as such member with respect to any matter specifically affecting
his/her individual interest hereunder (as distinguished from the interests of
all Participants and Beneficiaries or a broad class of Participants and
Beneficiaries), all such 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 his/her individual capacity in
connection with any such matter.

 

7.1.4.      Binding
Effect.  The determination of the
Board, the Committee or the Chief Executive Officer 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, including (but not limited to) FICA and FUTA taxes, as it may be
required to withhold by applicable laws. 
Such taxes may be withheld from

 

14

 

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 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 his/her consent.  No amendment of the Plan shall be 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.

 

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
Employment.  Neither the terms of this
Plan nor the benefits hereunder nor the continuance thereof shall be a term of
the employment of any Employee.  RLI
shall not be obliged to continue the Plan. 
The terms of this Plan shall not give any Employee the right to be
retained in the service of RLI or any Affiliate.

 

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

 

15

 

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
caused the Plan to be executed by its duly authorized officers as of the 23rd
day of December, 2004.

 

	
   

  	
  RLI
  CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kim J. Hensey

  
	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
  Vice President/Corporate Secretary

  
	
   

  	
   

  
	
   

  	
   

  	
  And

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jean M. Stephenson

  
	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
  Assistant Corporate Secretary

  

 

16Exhibit 10.1

 

AMENDMENT TO EXECUTIVE EMPLOYMENT
AGREEMENT

 

This
AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT, effective December 1, 2004, amends
the EXECUTIVE EMPLOYMENT AGREEMENT effective December 1, 2000, by and between
SPORT-HALEY, INC., a Colorado corporation (the “Company”) and PATRICK W. HURLEY
(the “Executive”).

 

WHEREAS,
the Company and Executive entered into an Executive Employment Agreement
effective December 1, 2000 (the “Executive Employment Agreement”);

 

WHEREAS,
the Company and Executive desire to amend the Executive Employment Agreement in
certain respects, as set forth herein;

 

NOW,
THEREFORE, in consideration of the mutual covenants contained herein, the
parties agree as follows:

 

1.                                       Amendment. 
Except for the amendments to the Executive Employment Agreement
contained herein, all of the terms and conditions of the Executive Employment
Agreement shall remain in full force and effect.

 

2.                                       Base Salary.  The
Base Salary as set forth in Section 2.1 of the Executive Employment Agreement
is amended to be $110,000 per year. Schedule 1, referenced in the Executive
Employment Agreement, is also amended to reflect this
amended Base Salary.

 

3.                                       Termination by the Executive Without Cause.  Section 3.5 of the Executive
Employment Agreement is amended and superseded in its entirety as follows:

 

Section 3.5 
Termination by the Executive Without Cause. The Executive, without cause, may terminate
this Agreement upon 90 days’ written notice to the Company. In such event, in
addition to compensating the Executive during such 90-day notice period, the
Company shall be obligated to compensate the Executive with severance pay equal
to 90 additional days’ compensation as of the date of such termination.
Accordingly, in the event the Executive terminates this Agreement without cause
or chooses not to renew this Agreement upon its expiration, the Executive shall
receive an aggregate of six months’ salary from and after the date of the
Company’s receipt of notice of termination. In addition to the foregoing, the
Executive shall receive a bonus which shall be equivalent to 50% of the annual
bonus last received by the Executive. Such bonus provision shall be in addition
to the compensation and severance package hereinabove specified. Compensation
for vacation time not taken by the Executive shall be paid to the Executive at
the date of termination.

 

1

 

	
   

  	
  SPORT-HALEY,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Mark J. Stevenson

  	
   

  
	
   

  	
   

  	
  Mark
  J. Stevenson, Chairman of the

  
	
   

  	
   

  	
  Compensation
  Committee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/
  Patrick W. Hurley

  	
   

  
	
   

  	
   

  	
  Patrick
  W. Hurley

  

 

2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00078-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00078-of-00352.parquet"}]]