Document:

EX-10.u

		
			Exhibit 10(u)
		

		
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			PERFORMANCE BONUS AGREEMENT
		

		
			This PERFORMANCE BONUS AGREEMENT (this “Agreement”), dated as of February 22, 2018 and effective upon the closing date of the Sempra Energy transaction that is the subject of Public Utility Commission of Texas Docket No. 47675 (such date, the “Effective Date”), is entered into between Oncor Electric Delivery Company LLC (the “Company”) and James A. Greer (“Employee”). 
		

		
			WHEREAS, Employee is a valuable employee whom the Company wishes to retain and motivate; 
		

		
			WHEREAS, Employee is willing to continue in such employment; and 
		

		
			WHEREAS the Company and Employee desire to enter into this Agreement setting forth the terms and conditions of certain performance bonuses that may become payable to Employee. 
		

		
			NOW THEREFORE, in consideration of the foregoing and the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 
		

		
			1.    Performance Bonuses.  The Company agrees to pay Employee the performance bonuses as provided in this Section 1. 
		

		
			(a)    The First Performance Bonus.  If Employee remains in the continuous employ of the Company or an Affiliate through December 31, 2018 (the “First Vesting Date”), the Employee will earn and the Company will pay to Employee $165,000 (the “First Performance Bonus Award”) multiplied by the Performance Bonus Funding Percentage (as defined in Section 1(c)) based on the fiscal year beginning on January 1, 2018 and ending on December 31, 2018 (the “First Performance Bonus”).  Payment of any earned First Performance Bonus shall be made in accordance with the Company’s normal payroll practices and procedures on or before April 1, 2019, but in no event later than December 31, 2019, subject to the provisions below.
		

		
			(b)    The Second Performance Bonus.  If Employee remains in the continuous employ of the Company or an Affiliate through December 31, 2019 (the “Second Vesting Date”; together with the First Vesting Date, each a “Vesting Date”), the Employee will earn and the Company will pay to Employee $135,000 (the “Second Performance Bonus Award”; together with the First Performance Bonus Award, the “Performance Bonus Awards” and each, a “Performance Bonus Award”) multiplied by the Performance Bonus Funding Percentage based on the fiscal year beginning on January 1, 2019 and ending on December 31, 2019 (the “Second Performance Bonus”; together with the First Performance Bonus, the “Performance Bonuses” and each, a “Performance Bonus”).  Payment of any earned Second Performance Bonus shall be made in accordance with the Company’s normal payroll practices and procedures on or about April 1, 2020, but in no event later than December 31, 2020, subject to the provisions below. 
		

		
			(c)    The Performance Bonus Funding Percentage for each fiscal year described in Sections 1(a) and 1(b) (each period, a “Performance Period”) shall be certified by the Organization & Compensation Committee (the “O&C Committee”) of the Company’s board of directors (the “Board”).  For purposes of calculating any Performance Bonuses payable under this Agreement, if the Company’s net income achieved for the applicable Performance Period, as determined by and subject to adjustments as approved by the O&C Committee (the “Achieved Net Income”), is below 80% of the Company’s net income based on the Company’s Board-approved financial plan for such Performance Period, as determined by and subject to adjustments as approved by the O&C Committee (the “Plan Net Income”), the Performance Bonus Funding Percentage for that Performance Period equals zero and no Performance Bonus for that Performance Period will be payable.  The Performance Bonus Funding Percentage for a Performance Period shall equal 50% if the Achieved Net Income is 80% of the Plan Net Income, or 150% if the Achieved Net Income is 120% or more of the Plan Net Income.  The applicable Performance Bonus Funding Percentage for Achieved Net Income between 80% of the Plan Net Income and 120% of Plan Net Income 
		

		 

 

		
		

		
			shall be determined on a straight line interpolation basis.  In determining the Achieved Net Income and Plan Net Income and certifying the Performance Bonus Funding Percentage for each Performance Period, the O&C Committee shall have the discretion to make any adjustments that the O&C Committee deems necessary and advisable.  In exercising its discretion, the O&C Committee may use such objective or subjective factors as it determines to be appropriate in its sole discretion.  The determinations of the O&C Committee shall be conclusive and binding. 
		

		
			2.    Treatment of Performance Bonuses Under Certain Circumstances.  
		

		
			(a)    Separation After the End of a Performance Period.  If Employee is employed by the Company or an Affiliate on a Vesting Date, and Employee’s employment with the Company or Affiliate terminates for any reason other than by the Company or Affiliate for Cause prior to payment of the Performance Bonus for the Performance Period ending on such Vesting Date, Employee will receive the Performance Bonus (if any) for such Performance Period at the same time it would have been paid had Employee remained an employee.  Notwithstanding anything in this Agreement to the contrary, Employee will forfeit any unpaid Performance Bonus upon a termination for Cause. 
		

		
			(b)    Termination for Reasons Other Than Death, Disability, Retirement, or Termination following a Change in Control.  Upon Employee’s Separation from Service for reasons other than Employee’s death, Disability, Retirement, or a Termination following a Change-in-Control, except as provided in subsection (a) above, all of Employee’s outstanding and unpaid Performance Bonuses shall be forfeited and canceled, and Employee shall have no further rights of any kind with respect to such Performance Bonuses as of Employee’s termination date.  
		

		
			(c)    Termination Due to Death, Disability, or Retirement.  If Employee has a Separation from Service prior to a Vesting Date due to death, Disability, or Retirement (other than a Retirement that also is a Termination following a Change in Control), Employee, or Employee’s beneficiary in the case of death, shall be entitled to an amount, for each outstanding and unpaid Performance Bonus, equal to the product of:  (i) a fraction, the numerator of which is the number of days in the Performance Period in which such Separation of Service occurs up to and including the date of the Employee’s Separation from Service, and the denominator of which is 365 (representing the total number of days in the Performance Period); and (ii) the Performance Bonus based on the Company’s actual Performance Bonus Funding Percentage, which amount shall be paid at the same time it would have been paid had Employee remained an employee.   
		

		
			(d)    Termination following a Change in Control.  In the event of Employee’s Termination following a Change in Control prior to a Vesting Date, Employee shall be entitled to an amount, for each outstanding and unpaid Performance Bonus, equal to the product of:  (i) a fraction, the numerator of which is the number of days in the Performance Period in which such Separation of Service occurs up to and including the date of the Employee’s Separation from Service, and the denominator of which is 365 (representing the total number of days in the Performance Period); and (ii) the Performance Bonus based on Company performance at the Plan Net Income level, which amount shall be paid within 60 days following Employee’s Separation from Service.
		

		
			(e)    Definitions. Capitalized terms used in this Agreement shall have the following meanings: 
		

		
			(i)    “Affiliate” means any entity that controls, is controlled by, or is under common control with the Company; and 
		

		
			(ii)    “Cause” means any one or more of the following: (A) Employee’s breach of any fiduciary duty to the Company or any Affiliate; (B) Employee’s gross negligence in the performance of Employee’s duties; (C) Employee’s failure or refusal to faithfully and diligently carry out the duties of Employee’s position with the Company or any Affiliate; (D) any action or failure to act on the part of Employee that results in material injury to the assets, business prospects, or reputation of the Company or any Affiliate; (E) Employee’s misappropriation of a material business opportunity of the Company or any Affiliate, including attempting to secure or securing any personal profit in connection with any transaction entered into by, or on behalf of, the Company or an Affiliate; (F) Employee’s breach of the Company’s Code of Conduct or a material employment policy or rule of the Company governing employee conduct; or (G) Employee’s indictment or plea of nolo contendere or guilty for a felony or other crime involving fraud, theft, embezzlement, or moral turpitude. 
		

		 

 

		
		

		
			(iii)    “Change in Control” means the occurrence of any of the following events: 
		

		
			(A)    following the closing of the Sempra Energy transaction that is the subject of Public Utility Commission of Texas Docket No. 47675, Sempra Energy ceases to beneficially own (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended) a majority of the outstanding equity interest of the Company or its successor (by consolidation or merger); 
		

		
			(B)    any sale, lease, exchange or other transfer (in one transaction or in a series of related transactions) of all, or substantially all, of the assets of the Company, other than to Sempra Energy or an entity (or entities) of which Sempra Energy beneficially owns a majority of the outstanding equity interest; or 
		

		
			(C)    individuals who as of the Effective Date constitute the board of directors of the Company (the “Incumbent Board”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the Effective Date whose election or nomination for election was approved by a vote of at least seventy-five percent (75%) of the directors comprising the Incumbent Board shall be, for purposes of this clause (C) considered as though such person were a member of the Incumbent Board. 
		

		
			(iv)    “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and any references to a particular section of the Code shall be deemed to include any successor provision thereto.
		

		
			(v)    “Disability” shall mean that Employee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.
		

		
			(vi)    “Good Reason” means any one or more of the following events or actions which are taken without the express, voluntary consent of Employee: (A) a material reduction in Employee’s base salary, other than a broad-based reduction of base salaries of all similarly situated employees of the Company or an Affiliate, as applicable; (B) a material reduction in the aggregate level or value of benefits for which Employee is eligible other than a broad-based reduction applicable on a comparable basis to all similarly situated employees of the Company or an Affiliate, as applicable; (C) a material reduction in Employee’s authority, duties, responsibilities or title, including a material reduction in the budget over which Employee retains authority; (D) Employee is required to permanently relocate outside of a fifty (50) mile radius of Employee’s principal residence in order to perform his or her duties; (E) Employee is asked or required to resign in connection with a Change in Control and does so resign; or (F) an adverse change in the Employee’s (i) reporting level or responsibilities, (ii) title and/or scope of responsibility, (iii) management authority, or (iv) the scope or size of the business or entity for which the Employee had responsibility, in each case as in effect immediately prior to the effective time of a Change in Control. 
		

		
			(vii)    “Retirement” shall mean Employee’s separation from service on or after age 55 with at least fifteen (15) years of accredited service with the Company or an Affiliate.
		

		
			(viii)    “Separation from Service” shall be as defined in Treasury Regulation § 1.409A-1(h).
		

		
			(ix)    “Termination following a Change in Control” shall mean a Separation from Service within two years after a Change in Control that is:
		

		
			(A)    initiated by the Company or an Affiliate for any reason other than for Cause; or
		

		
			(B)    initiated by Employee for Good Reason.
		

		
			3.    Employment At-Will.  This Agreement shall not be construed as giving Employee any right of employment or continued employment with the Company or any Affiliate. Employee recognizes and agrees that his/her employment is of an at-will nature and that this Agreement does not restrict or limit the Company’s right to terminate Employee, or Employee’s right to resign, at any time for any or no reason. Employee also understands that he/she is bound by all employment rules, policies, and procedures applicable to employees of the Company. 
		

		 

 

		
		

		
			4.    Non-Disclosure and Non-Solicitation.  Employee understands and agrees that Employee currently has, and in connection with the retention hereunder, will continue to acquire additional information of a proprietary and/or confidential nature relating to the business of the Company and its Affiliates.  Employee further understands that Employee would not be allowed to gain access to proprietary and/or confidential information without the promises and agreements contained in this Section 4.  Employee's obligations under this Section 4 are in addition to any other non-disclosure and non-solicitation obligations by which the Employee is otherwise bound and shall not reduce or override any such obligations. 
		

		
			(a)    Non-Disclosure Generally.  Employee acknowledges and agrees that, in Employee’s capacity as an employee of the Company, Employee is obligated to maintain all such proprietary and/or confidential information in the strictest confidence and not to use such information in any way except in the course and scope of properly carrying out Employee’s duties to the Company.  Without in any way limiting the foregoing, Employee hereby expressly confirms agreement to follow all Company policies and procedures, including, but not limited to, the Code of Conduct, the Procedures for Protection of Confidential Information Policy and all other policies and procedures of the Company pertaining to data privacy and the nondisclosure of confidential information. 
		

		
			(b)    Non-Solicitation.  Employee agrees that, during employee’s employment with the Company or any Affiliate and for a period of twelve (12) months thereafter, Employee will not, directly or indirectly, either as an employee, employer, independent contractor, consultant, agent, principal, partner, stockholder, officer, director, or in any other individual or representative capacity either for his/her own benefit or the benefit of any other person or entity, solicit, recruit, induce, encourage or in any way cause any employee of the Company or an Affiliate to terminate his or her employment with the Company or such Affiliate. 
		

		
			5.    Injunctive Relief.  Employee understands that in the event of Employee’s violation of the provisions of Section 4, the Company and/or its Affiliates, will suffer immediate and irreparable harm and that monetary damages alone will be inadequate to compensate the Company, or its Affiliates, for such violation.  Accordingly, Employee agrees that the Company, and or its Affiliates, will, in addition to any other remedies available to it at law or in equity, be entitled to temporary, preliminary, and permanent injunctive relief and specific performance to enforce the provisions of Section 4 without the necessity of proving inadequacy of legal remedies or irreparable harm or posting bond. 
		

		
			6.    Beneficiary Designation.  Employee may name any beneficiary or beneficiaries (who may be named contingently or successively) to receive the Performance Bonus granted under this Agreement in case of Employee’s death before such payment.  Each such designation shall be in a form prescribed by the Company, and shall be effective only when filed by Employee with the Company during Employee’s lifetime. In the absence of any such beneficiary designation, benefits payable, or rights exercisable, following Employee’s death, shall be paid to or exercised by Employee’s executor, administrator, or legal representative. 
		

		
			7.    Assignment.  No right of Employee hereunder may be assigned, sold, transferred, pledged, hypothecated or otherwise disposed of and any attempt to effect any such assignment, sale, transfer, pledge, hypothecation or disposition shall be null and void and of no force or effect whatsoever.  This Agreement is assignable by the Company to any Affiliate or to a non-affiliated successor in interest.
		

		
			8.    Withholding.  Employee shall be required to pay to the Company, and the Company shall have the right to deduct from any compensation paid to Employee pursuant to this Agreement, the amount of any required withholding taxes in respect of the Performance Bonuses and to take all such other action as the O&C Committee deems necessary to satisfy all obligations for the payment of such withholding taxes.  Notwithstanding any action the Company takes with respect to any or all income tax, social insurance, payroll tax, or other tax-related withholding (“Tax-Related Items”), the ultimate liability for all Tax-Related Items is and remains Employee’s responsibility and the Company (a) makes no representation or undertakings regarding the treatment of any Tax-Related Items in connection with the grant, vesting, or payment of the Performance Bonuses and (b) does not commit to structure the Performance Bonuses to reduce or eliminate Employee’s liability for Tax-Related Items.
		

		
			9.    Governing Law.  This Agreement shall be governed, construed, interpreted, and administered in accordance with the laws of the State of Texas.  This Agreement is being entered into and shall be performed, in whole or in 
		

		 

 

		
		

		
			part, in Dallas County, Texas, and the parties hereby acknowledge and agree that, in any dispute involving or arising under this Agreement, venue shall be in the appropriate court in Dallas County, Texas.
		

		
			10.    Severability.  In the event any provision of this Agreement shall be held invalid, illegal or unenforceable, in whole or in part, for any reason, such determination shall not affect the validity, legality, or enforceability of any remaining provision or portion of any provision, which shall remain in full force and effect as if this Agreement had not contained the invalid, illegal, or unenforceable provision or portion. 
		

		
			11.    Performance Bonus Not Benefit Eligible.  Employee understands and agrees that the Performance Bonus shall be considered as extraordinary, special incentive compensation, and it will not be included as “earnings,” “wages,” “salary” or “compensation” in any pension, welfare, life insurance, or other employee benefit plan or arrangement of the Company.
		

		
			12.    Section 409A.  This Agreement is intended to comply with the applicable requirements of section 409A of the Code and its corresponding regulations and related guidance (“Section 409A”), and shall be administered in accordance with Section 409A to the extent Section 409A applies to this Agreement.  Notwithstanding anything in this Agreement to the contrary, payment of any Performance Bonuses under this Agreement can only be made in a manner and upon an event permitted by Section 409A, to the extent applicable.  All payments to be made upon a termination of employment under this Agreement may only be made upon a “separation from service” under Section 409A.  For purposes of the limitations on nonqualified deferred compensation under Section 409A, each payment of compensation under this Agreement shall be treated as a separate payment of compensation.  Notwithstanding anything in this Agreement to the contrary, if Employee is a “specified employee” of a publicly traded corporation under Section 409A and if payment of any amount under this Agreement is required to be delayed for a period of six months after Separation from Service pursuant to Section 409A, payment of such amount shall be delayed as required by Section 409A, and the accumulated postponed amount shall be paid in a lump sum payment within ten days after the end of the six-month period (or within 60 days after death, if earlier).  In no event may Employee, directly or indirectly, designate the calendar year of a payment.  No action or failure to act pursuant to this Section 12 shall subject the Company or any Affiliate thereof to any claim, liability, or expense, and neither the Company nor any Affiliate thereof shall have any obligation to indemnify or otherwise protect Employee from the obligation to pay any taxes pursuant to Section 409A.  
		

		
			13.    Amendments.
		

		
			(a)    The Board may at any time and from time to time alter, amend, suspend, or terminate any Performance Bonus Awards granted pursuant to this Agreement in whole or in part, provided, however, that no such termination or amendment may, without the consent of the Employee, terminate or adversely affect any material right of Employee or material obligation of the Company under this Agreement, except to bring this Agreement and/or any Performance Bonuses into compliance with the requirements of section 409A of the Code or to qualify for an exemption under such section. 
		

		
			(b)    Upon a Change in Control, the Board of Directors of the Company may, in its discretion cancel all outstanding and unpaid Performance Bonus Awards, provided that such termination complies with the requirements of Section 409A.  Upon a termination of any Performance Bonus Awards in connection with a Change in Control, Employee shall be entitled to an amount, for each outstanding and unpaid Performance Bonus Award, equal to the product of:  (a) a fraction, the numerator of which is the number of days in the Performance Period up to and including the date of the Performance Bonus Award termination and the denominator of which is 365 (representing the number of days in the Performance Period); and (b) the Performance Bonus based on Company performance at the Plan Net Income level, which amount shall be paid within 90 days following the termination of the Performance Bonus Award.
		

		
			14.    Entire Agreement, Modification, and Waiver.  This Agreement and the Exhibits hereto contain the entire understanding of the parties regarding the subject matter hereof, and they may not be amended or modified other than by a written agreement executed by the parties, nor may a provision hereof be waived except by a writing signed by the party waiving such provision. 
		

		 

 

		
		

		
			15.    Headings.  Headings of the several sections of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof.  
		

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

		
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						ONCOR ELECTRIC DELIVERY COMPANY LLC

					
					
						 

				
	
					
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						/s/ Robert S. Shapard

					
					
						 

				
	
					
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						Robert S. Shapard

					
					
						 

				
	
					
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						Chief Executive

					
					
						 

				
	
					
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						EMPLOYEE

					
					
						 

				
	
					
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						/s/ James A. Greer

					
					
						 

				
	
					
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						James A. Greer

					
					
						 

				

		
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			﻿rli_Ex10-1

		
			Exhibit 10.1
		

		
			 
		

		
			 
		

		
			_____________________________________________________________________________________
		

		
			The RLI Corp. Directors’ Irrevocable Trust Agreement
		

		
			_____________________________________________________________________________________
		

		
			 
		

		
			

		 

			

					

						 

					

					

						 

				

		

			 

		

 

		

		
			 
		

		
			Table of Contents
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						I.

					
					
						Recitals

					
					
						1

				
	
					
						A.

					
					
						Adoption of Plan

					
					
						1

				
	
					
						B.

					
					
						This Agreement

					
					
						1

				
	
					
						C.

					
					
						Unfunded Status

					
					
						1

				
	
					
						II.

					
					
						Agreements

					
					
						1

				
	
					
						1.

					
					
						Irrevocability: Irrevocable Deposits

					
					
						1

				
	
					
						 

					
					
						1.1

					
					
						Date of Irrevocability

					
					
						1

				
	
					
						 

					
					
						1.2

					
					
						Initial Deposit

					
					
						1

				
	
					
						 

					
					
						1.3

					
					
						Additional Deposits

					
					
						1

				
	
					
						 

					
					
						1.4

					
					
						Absence of Reversion

					
					
						2

				
	
					
						 

					
					
						1.5

					
					
						Corporation Creditor Claims

					
					
						2

				
	
					
						2

					
					
						Distributions Pursuant to the Plan

					
					
						2

				
	
					
						 

					
					
						2.1

					
					
						Distribution Dates, Amounts and Form

					
					
						2

				
	
					
						 

					
					
						2.2

					
					
						Reporting and Withholding of Applicable Taxes

					
					
						2

				
	
					
						3

					
					
						Trustee Responsibility Regarding Distributions in the Event of the Insolvency of the Corporation

					
					
						2

				
	
					
						4

					
					
						Investment Authority

					
					
						2

				
	
					
						 

					
					
						4.1

					
					
						Nature of the Investments

					
					
						2

				
	
					
						 

					
					
						4.2

					
					
						Substitution of Assets

					
					
						2

				
	
					
						5

					
					
						General Responsibilities of and With Respect to the Trustee

					
					
						3

				
	
					
						 

					
					
						5.1

					
					
						Annual Accountings Required of the Trustee

					
					
						3

				
	
					
						 

					
					
						5.2

					
					
						Application of Proceeds

					
					
						3

				
	
					
						 

					
					
						5.3

					
					
						Identity of Trustee

					
					
						3

				
	
					
						 

					
					
						5.4

					
					
						Merger of Trusts

					
					
						3

				
	
					
						 

					
					
						5.5

					
					
						Responsibility of Successor Trustee for Acts of Predecessor

					
					
						3

				
	
					
						 

					
					
						5.6

					
					
						Trustee’s Fees; Income and Principal Charges

					
					
						3

				
	
					
						 

					
					
						5.7

					
					
						Trustee’s Reliance Upon Information

					
					
						3

				
	
					
						 

					
					
						5.8

					
					
						Waiver of Bond

					
					
						4

				
	
					
						6

					
					
						Trustee’s Powers 

					
					
						4

				
	
					
						 

					
					
						6.1

					
					
						Allocation of the Fund

					
					
						4

				
	
					
						 

					
					
						6.2

					
					
						Ancillary Administration

					
					
						4

				
	
					
						 

					
					
						6.3

					
					
						Ascertainment and Allocation of Principal and Income

					
					
						4

				
	
					
						 

					
					
						6.4

					
					
						Conservation of the Fund

					
					
						4

				
	
					
						 

					
					
						6.5

					
					
						Depreciation of Tangible Property

					
					
						4

				
	
					
						 

					
					
						6.6

					
					
						Distribution or Division of any Portion of the Fund

					
					
						4

				
	
					
						 

					
					
						6.7

					
					
						Employment of Assistants

					
					
						4

				
	
					
						 

					
					
						6.8

					
					
						Transfer of Situs of a Trust

					
					
						4

				
	
					
						7

					
					
						Indemnification, Amendment and Termination

					
					
						5

				
	
					
						 

					
					
						7.1

					
					
						Indemnification

					
					
						5

				
	
					
						 

					
					
						7.2

					
					
						Amendment

					
					
						5

				
	
					
						 

					
					
						7.3

					
					
						Termination

					
					
						5

				
	
					
						8

					
					
						Choice of Law, Incorporation by Reference, and Interpretive Guidelines

					
					
						5

				
	
					
						 

					
					
						8.1

					
					
						Choice of Law

					
					
						5

				
	
					
						 

					
					
						8.2

					
					
						Incorporation by Reference: Internal Revenue Code Sections

					
					
						5

				
	
					
						 

					
					
						8.3

					
					
						Interpretive Guidelines

					
					
						5

				
	
					
						9

					
					
						Glossary

					
					
						5

				
	
					
						 

					
					
						Accounting Year

					
					
						5

				
	
					
						 

					
					
						Corporation

					
					
						5

				
	
					
						 

					
					
						Execution Date

					
					
						5

				
	
					
						 

					
					
						Person

					
					
						5

				
	
					
						 

					
					
						Plans

					
					
						5

				
	
					
						III.

					
					
						Execution

					
					
						5

				

		
			 
		

		
			

		 

		

			i

		

		

			 

		

 

		

		
			 
		

		
			THIS DIRECTORS’ IRREVOCABLE TRUST AGREEMENT is made on the Execution Date by and between RLI Corp. (“Corporation”) and the undersigned (“Trustee”).
		

		
			 
		

			
					
						 

					
					
						 

				
	
					
						I. 

					
					
						Recitals

					
						 

				
	
					
						A.    

					
					
						Adoption of Plans

				

		
			 
		

		
			The Corporation has adopted the Director Deferred Compensation Plans for the benefit of its current directors in the form attached hereto and may periodically adopt similar plans for the benefit of future directors (collectively defined as the “New Plans”).  The Corporation has adopted predecessor versions of the New Plans (the “Old Plans”) which the directors and the Corporation have restated in the form of the New Plans.  The New Plans and the Old Plans are collectively defined as the “Plans”.
		

		
			 
		

			
					
						 

					
					
						 

				
	
					
						B.

					
					
						This Agreement 

				

		
			 
		

		
			The Corporation has incurred or expects to incur liability under the Plans.  With a view toward providing the Corporation with a source of funds to assist it in satisfying its liabilities under the Plans, the Corporation wishes to establish this Agreement and to transfer assets to the Trustee to be held and disposed of as provided in this Agreement, subject to the claims of the Corporation’s creditors in the event of the Corporation’s insolvency, to be held by the Trustee until distribution pursuant to the Plans.  This Agreement is intended to be a grantor trust, of which the Corporation is the grantors, within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended (“Code”) and shall be construed accordingly.
		

		
			 
		

			
					
						 

					
					
						 

				
	
					
						C.

					
					
						Unfunded Status

				

		
			 
		

		
			Notwithstanding the fact that the Plan Benefit under the Plans shall be satisfied from property held by the Trustee, this Agreement shall constitute an unfunded arrangement as defined in Title I of the Employee Retirement Income Security Act of 1974 (“ERISA”).  If this Agreement is subject to the provisions of ERISA, then such transfer shall not affect the status of the Plans as unfunded plans maintained for the purpose of providing deferred compensation for a select group of management or highly compensated individuals under ERISA.
		

		
			 
		

			
					
						 

					
					
						 

				
	
					
						II.

					
					
						Agreements

				

		
			 
		

		
			NOW, THEREFORE, the Parties hereby agree as follows:
		

		
			 
		

		
			1.Irrevocability: Irrevocable Deposits
		

		
			 
		

		
			1.1Date of Irrevocability
		

		
			This Agreement shall become irrevocable ten (10) days after the first to occur of the issuance of a favorable private letter ruling regarding the Federal income tax aspects of this Agreement and the Plans from the Internal Revenue Service, the receipt by the Trustee of an opinion of counsel to the Corporation regarding the Federal income tax aspects of this Agreement and the Plans, or the advice to the Trustee by the Corporation that neither condition expressed in the preceding phrases shall be satisfied.
		

		
			 
		

		
			1.2Initial Deposit
		

		
			The Corporation hereby deposits with the Trustee the number of its shares as are equivalent to the Plan Benefits earned under the Plans determined as of the Execution Date.  The Corporation may periodically deposit such additional number of its shares or other assets as are equivalent to the Plan Benefits periodically earned under the terms of the Plans subsequent to the Execution Date.
		

		
			 
		

		
			The shares, other assets, income, gains and earnings thereon (collectively defined as the “Fund”) shall be held and disposed of as provided in this Agreement.
		

		
			 
		

		
			1.3 Additional Deposits 
		

		
			The Corporation shall irrevocably deposit additional shares or other property in an amount sufficient to discharge all liability of the Corporation under the Plans within the thirty (30) day period beginning on the close of each Accounting Year.  No Person shall have any right to compel any additional deposit.
		

		
			 
		

		
			1.4Absence of Reversion 
		

		
			The Corporation may not direct the Trustee to return to the Corporation or to divert to any Person other than as provided under the Plans any portion of the Fund after this Agreement has become irrevocable and before all Plan Benefits have been distributed pursuant to the Plans.
		

		
			

		 

		

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			1.5 Corporation Creditor Claims
		

		
			Except as otherwise provided in the following paragraph, the Fund shall be held separate and apart from other assets of the Corporation and shall be held and distributed pursuant to the Plans. No Plan participant or beneficiary shall have any preferred claim on or any beneficial ownership interest in any portion of the Fund. Any right created under the Plans and this Agreement shall constitute unsecured contractual rights of Plan participants and their beneficiaries against the Corporation.
		

		
			 
		

		
			The Fund shall at all times be subject to the claims of the Corporation's general creditors under all applicable Federal and state law.
		

		
			 
		

		
			2.Distributions Pursuant to the Plan 
		

		
			 
		

		
			2.1Distribution Dates, Amounts and Form
		

		
			The Trustee shall distribute the Fund as, when, to the extent and in the form expressed in the Plans or as otherwise directed by the corporation. If the Fund is not sufficient to make all payments pursuant to the Plans, the Trustee shall notify the Corporation of any such shortfall. The Corporation shall make any shortfall payment.
		

		
			 
		

		
			2.2Reporting and Withholding of Applicable Taxes
		

		
			The Trustee shall make provision for the reporting and withholding of any Federal, state or local taxes that may be required to be withheld with respect to distributions pursuant to the Plans.
		

		
			 
		

		
			3.Trustee Responsibility Regarding Distributions in the Event of the Insolvency of the Corporation
		

		
			If the Corporation shall become insolvent, the Trustee shall stop making distributions pursuant to the Plans during the period of the Corporation's insolvency. If the Trustee stops making distributions pursuant to the Plans and subsequently resumes such distributions, the first distribution shall include the sum of all distributions due pursuant to the Plans, less the sum of the payments made by the Corporation during the period beginning with the cessation of distributions by the Trustee.
		

		
			 
		

		
			The Corporation must inform the Trustee of the Corporation's insolvency. Absent actual knowledge of the Corporation's insolvency by the Trustee, the Trustee shall have no duty to inquire as to the insolvency status of the corporation. Notwithstanding the failure of  the Corporation to advise the Corporation of the Corporation's insolvency, if a Person who claims to be a creditor of the Corporation and alleges the existence of the Corporation's insolvency, the Trustee shall stop making distributions pursuant to the Plans until the Trustee shall have determined that the Corporation is not insolvent. The Corporation shall be considered insolvent if the Corporation is unable to pay its debts as they become due, or if the Corporation is subject to a pending proceeding as a debtor under the United States Bankruptcy Code, or if the Corporation is determined to be insolvent by applicable Federal and state regulatory agencies.
		

		
			 
		

		
			4. Investment Authority
		

		
			 
		

		
			4.1Nature of Investments 
		

		
			 
		

		
			The Trustee shall invest in shares of the corporation and shall purchase additional shares of the Corporation with any cash dividend. Except with respect to voting rights with respect to any share of the Corporation, the Trustee shall exercise all rights with respect to the Fund. The Corporation shall exercise any voting right with respect to any share of the Corporation.
		

		
			 
		

		
			Notwithstanding any provision in this Agreement to the contrary, the Trustee may not loan any portion of the Fund to the Corporation, to any director or to any other Person, directly or indirectly associated with the Corporation, and may not permit the Corporation, a director or any other Person to direct the Trustee with respect to the investment of the Fund.
		

		
			 
		

		
			4.2 Substitution of Assets
		

		
			 
		

		
			The Corporation may periodically substitute assets of equal fair market value for any asset held by the Trustee, exercisable by the Corporation in a non-fiduciary capacity without the approval or consent of any Person in any fiduciary capacity.
		

		
			 
		

		
			5.General Responsibilities of and With Respect to the Trustee
		

		
			 
		

		
			The Trustee shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a 1ike character and with like aims; however, the Trustee shall incur no liability to any Person for any action taken or omitted pursuant to the Plans, or a direction given to the Trustee by the Corporation.
		

		
			 
		

		
			

		 

		

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			5.1Annual Accountings Required of Trustee
		

		
			 
		

		
			The Trustee shall render an account of its receipts and disbursements and the then current fair market value of the Fund to the Corporation not less often than annually.
		

		
			 
		

		
			5.2Application of Proceeds
		

		
			 
		

		
			No Person paying money or delivering any property to a Trustee need see to its application.
		

		
			 
		

		
			5.3Identity of Trustee
		

		
			 
		

		
			Bank One, Peoria shall act as Trustee.  If at anytime Bank One, Peoria resigns, refuses or is unable or unwilling to act as Trustee, then such Independent Person as the Corporation periodically appoints shall act as Trustee.
		

		
			 
		

		
			“Independent Person” means any corporation authorized to transact trust business in the State of Illinois, no shares of which are owned directly or indirectly by the Corporation or any director of the Corporation.
		

		
			 
		

		
			Any Trustee may be removed by the Corporation; however, no removal shall be effective unless on or before the effective date of the removal, another Trustee is appointed. Any Trustee may resign by giving written notice to the Corporation.
		

		
			 
		

		
			5.4Merger of Trusts
		

		
			 
		

		
			If a Trustee is holding any trust under this Agreement for the benefit of the Corporation pursuant to the Plans having substantially similar terms, it may consolidate them and hold them as a single trust.
		

		
			 
		

		
			5.5 Responsibility of Successor Trustee for Acts of Predecessor
		

		
			 
		

		
			No successor Trustee shall be responsible for any act or omission of a predecessor. Any successor Trustee shall, with the written approval of such Persons appointing it, accept the accounts rendered without examination or review and the Fund delivered without incurring any liability or responsibility for so doing. Any successor Trustee shall have all the title, powers and discretion of the Trustee succeeded without the necessity of any conveyance or transfer.
		

		
			 
		

		
			Any corporate successor to the trust business of any corporate Trustee shall become Trustee in place of its predecessor without the necessity of any conveyance or transfer.
		

		
			 
		

		
			5.6Trustee’s Fees; Income and Principal Charges
		

		
			 
		

		
			Any Trustee shall be entitled to a reasonable fee for services rendered and reimbursement for reasonable expenses incurred and paid. The Trustee's regular annual compensation shall be paid by the Corporation and if not paid within thirty (30) days from the date the Corporation receives the Trustee's statement, shall be charged half against income and half against principal, except that the Trustee shall have full discretion to periodically charge a larger portion or all against income without being limited to circumstances specified by state law.
		

		
			 
		

		
			5.7Trustee’s Reliance Upon Information
		

		
			 
		

		
			A Trustee may rely upon any notice, certificate, affidavit, letter, telegram, or other paper or document believed to be genuine or upon any evidence deemed by it to be sufficient in making any payment or distribution hereunder. The Trustee Shall incur no liability for any payment or distribution made in good faith and without actual notice or knowledge of a changed condition or status affecting any Person's interest in any trust created.
		

		
			 
		

		
			5.8Waiver of Bond
		

		
			 
		

		
			To the extent that any such requirements can legally be waived, no Trustee shall be required to give any bond as Trustee, to qualify before, be appointed by or, in the absence of breach of trust, account to any court, or to obtain the order or approval of any court in the execution of any power or discretion hereunder.
		

		
			 
		

		
			6.Trustee’s Powers
		

		
			 
		

		
			Except as otherwise provided in the following sentence, the Trustee shall have the powers expressed in the following sections and, except to the extent inconsistent with any such power, any others that may be granted by law, none of which may be exercised 

		 

		

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by either the Corporation or any other Person. The Trustee may not carry on a business and dividing gains therefrom within the meaning of Code Regs. §301.7701-2 as periodically amended.
		

		
			 
		

		
			6.1Allocation of the Fund
		

		
			 
		

		
			The Trustee may allocate different kinds or disproportionate in property or undivided interests in property in accordance with the provisions of the Plans.
		

		
			 
		

		
			6.2 Ancillary Administration
		

		
			 
		

		
			The Trustee may appoint a corporation authorized under the laws of the United States or of any state to administer trusts with respect to any portion of the Fund situated in any jurisdiction in which the then acting Trustee is unable or unwilling to act. The Trustee so appointed shall have all the title, powers and discretion with respect to that property that are given to the principal Trustee. The net income from that portion of the Fund and any net proceeds of its sale shall be paid over to the principal Trustee.
		

		
			 
		

		
			6.3Ascertainment and Allocation of Principal and Income
		

		
			 
		

		
			The Trustee may determine the manner of ascertainment of income and principal and the allocation or apportionment between income and principal of all receipts and disbursements.
		

		
			 
		

		
			6.4Conservation of the Fund
		

		
			 
		

		
			The Trustee may take any action with respect to conserving or realizing upon the value of any portion of the Fund, and with respect to foreclosures, reorganizations or other changes affecting the Fund. Further, the Trustee may collect, pay, contest, compromise or abandon claims of or against the trust estate wherever situated, and may execute contracts, notes, conveyances and other instruments, including instruments containing covenants and warranties binding upon and creating a charge against the Fund and containing provisions excluding personal liability.
		

		
			 
		

		
			6.5Depreciation of Tangible Property
		

		
			 
		

		
			The Trustee may establish out of income and credit to principal reasonable reserves for the depreciation of tangible property.
		

		
			 
		

		
			6.6 Distribution or Division of any Portion of the Fund
		

		
			 
		

		
			Except as otherwise provided in the Plans, the Trustee may make any distribution or division of the Fund in cash or in kind, or both, and may continue to exercise any powers and discretion hereunder for a reasonable period after the termination of the Trust, but only for so long as no rule of law relating to perpetuities would be violated.
		

		
			 
		

		
			6.7Employment of Assistants
		

		
			 
		

		
			The Trustee may employ attorneys, auditors, depositaries, proxies and agents with or without discretionary powers, and may keep any property in the name of a Trustee or a nominee with or without disclosure of any fiduciary relationship, or in bearer form.
		

		
			 
		

		
			6.8Transfer of Situs of a  Trust
		

		
			 
		

		
			The Trustee may transfer the situs of any trust to any other jurisdiction as often as the Trustee deems it advantageous to the trust, appointing a substitute Trustee to itself to act with respect thereto. The Trustee may delegate to the substitute Trustee any or all of the powers given to the Trustee which may elect to act as advisor to the substitute Trustee and shall receive a reasonable fee for so acting. Further, the Trustee may remove any acting substitute Trustee and appoint another or reappoint itself at will.
		

		
			 
		

		
			7.Indemnification, Amendment and Termination
		

		
			 
		

		
			7.1Indemnification
		

		
			 
		

		
			The Corporation must indemnify, pay and hold harmless the Trustee from or in respect of any claim, due or demand, including any reasonable attorneys' fee, cost and expense incurred, asserted by any Person arising out of any act or omission taken or omitted by the Trustee pursuant   to the terms of this Agreement, the Plans or direction by the Corporation.
		

		
			 
		

		
			

		 

		

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			7.2Amendment
		

		
			 
		

		
			This Agreement may be amended by a written instrument executed by the Trustee and the Corporation before this Agreement becomes irrevocable.
		

		
			 
		

		
			7.3 Termination
		

		
			 
		

		
			The Agreement shall terminate immediately after all Plan Benefits are distributed pursuant to the terms of the Plans. Upon the termination of this Agreement, the excess of the Fund over all Plan Benefits shall be returned to the Corporation.
		

		
			 
		

		
			8.Choice of Law, Incorporation by Reference, and Interpretive Guidelines
		

		
			 
		

		
			8.1Choice of Law
		

		
			 
		

		
			The laws of the State of Illinois shall govern the validity, interpretation and administration of this Agreement.
		

		
			 
		

		
			8.2Incorporation by Reference; Internal Revenue Code Sections
		

		
			 
		

		
			The paragraphs under the heading “I. RECITALS:” are referred to in this Agreement are a part of this Agreement.
		

		
			 
		

		
			8.3Interpretive Guidelines
		

		
			 
		

		
			The words and phrases set off by quotation marks in the Glossary have the meanings therein indicated. Any word or phrase which appears in this Agreement in parenthesis, set off by quotation marks and capitalized has the meaning denoted by its context. Whenever the words and phrases defined either in the Glossary or elsewhere in this Agreement are intended to have their defined meanings, the first letter of such word or the first letters of all substantive words in such phrase shall be capitalized. When the context permits, a word or phrase used in the singular includes the plural, and when used in any gender, its meaning also includes all genders. Captions of Sections are inserted as a matter of convenience only and do not define, limit or extent the scope or intent of this Agreement or any provision hereof.
		

		
			 
		

		
			9.Glossary
		

		
			 
		

		
			“Accounting Year” means the twelve (12) consecutive month period beginning January 1, which shall change as, when and to the extent the fiscal year of the Corporation shall change.
		

		
			 
		

		
			“Corporation” means RLI Corp.
		

		
			 
		

		
			“Execution Date” means the date upon which this Plan is signed by the last Party to sign this Plan.
		

		
			 
		

		
			“Person” means an individual, partnership, corporation, trust, unincorporated organization, a government or any department or agency thereof, other business or other entity, or any combination of one or more of the foregoing.
		

		
			 
		

		
			“Plans” is defined at Recital A. Adoption of Plans.
		

		
			
		

		
			

		 

		

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						III.

					
					
						Execution:

				

		
			 
		

			
					
						 

					
					
						 

				
	
					
						Corporation:

					
					
						 

					
					
						Trustee:

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						RLI Corp.

					
					
						 

					
					
						Bank One, Peoria

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						By: /s/ James E. Zogby                     

					
					
						 

					
					
						By: /s/ Kevin A. Jones

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						Its: Treasurer

					
					
						 

					
					
						Its: Senior Vice President

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						Attest: /s/ Joseph E. Dondanville

					
					
						 

					
					
						Attest: /s/ Donna L. Miller

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						Its: Senior Vice President and CFO

					
					
						 

					
					
						Its: Trust Officer

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						Dated: June 18, 1993

					
					
						 

					
					
						Dated: June 18, 1993

				

		
			 
		

		
			 
		

		 

		

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