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                                                                    EXHIBIT 10.1

                         NATIONAL INTERSTATE CORPORATION
                            LONG TERM INCENTIVE PLAN

      1. PURPOSE OF THE PLAN. The purpose of this Plan is to attract, retain and
motivate directors, consultants, officers and other key employees of National
Interstate Corporation (the "Company") and its Subsidiaries and to provide to
such persons incentives and rewards for superior performance and contribution.
The Company previously adopted the 1998 National Interstate Corporation Stock
Option Plan, as amended (the "Prior Plan"). The Company has amended and restated
the Prior Plan as the National Interstate Corporation Long Term Incentive Plan,
effective as of August 5, 2004 (the "Effective Date"), subject to the approval
of the Company's stockholders. Upon the approval of the adoption of the Plan by
the Company's stockholders, the Plan will replace and supersede the Prior Plan,
provided that awards granted thereunder prior to the Effective Date will
continue in accordance with their terms.

      2. DEFINITIONS. Capitalized terms used herein shall have the meanings
assigned to such terms in this Section 2.

            "Applicable Laws" means the requirements relating to the
administration of equity-based compensation plans under U.S. state corporate
laws, U.S. federal and state securities laws, the Code, any stock exchange or
quotation system on which the Common Shares are listed or quoted and the
applicable laws of any other country or jurisdiction where awards are granted
under the Plan.

            "Appreciation Right" means a right granted pursuant to Section 5 or
Section 9 of this Plan, and shall include both Tandem Appreciation Rights and
Free-Standing Appreciation Rights.

            "Base Price" means the price to be used as the basis for determining
the Spread upon the exercise of a Free-Standing Appreciation Right and a Tandem
Appreciation Right.

            "Board" means the Board of Directors of the Company.

            "Change in Control" means any of the following events:

            (i) Any person or group of persons acting together (with or without
      the approval of the Board) becomes the beneficial owner directly or
      indirectly (within the meaning of Rule 13d-3 under the Securities Exchange
      Act of 1934, as amended (the "Exchange Act")) of thirty percent (30%) or
      more of the combined voting power of the Company's then outstanding voting
      securities entitled to vote generally in the election of Directors
      (collectively, the "Company Voting Securities"); provided that, if any
      such person's or persons' beneficial ownership of the Company Voting
      Securities reaches or exceeds thirty percent (30%) as a result of a
      transaction described in paragraph (c)(i) below, and such person or
      persons subsequently acquire beneficial ownership of additional voting
      securities of the Company, such subsequent acquisition shall be treated as
      an acquisition that causes such person or persons to own thirty percent

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      (30%) or more of the Company Voting Securities; and provided, further,
      that if at least a majority of the Board determines in good faith that
      such person or persons have acquired beneficial ownership (within the
      meaning of Rule 13d-3 promulgated under the Exchange Act) of thirty
      percent (30%) or more of the Company Voting Securities inadvertently, and
      such person or persons divests as promptly as practicable a sufficient
      number of shares so that such person or persons beneficially owns (within
      the meaning of Rule 13d-3 promulgated under the Exchange Act) less than
      thirty percent (30%) of the Company Voting Securities, then no Change in
      Control shall have occurred as a result of such acquisition. Except that,
      for the purpose of this paragraph:

                  (a) Beneficial ownership of thirty percent (30%) or more of
            the combined voting power of the Company Voting Securities by any of
            (x) the Company or any of its Subsidiaries, (y) a trustee or other
            fiduciary holding securities under an employee benefit plan (or
            related trust) sponsored or maintained by the Company or any of its
            Subsidiaries, or (z) a corporation owned directly or indirectly by
            the stockholders of the Company in substantially the same
            proportions as their ownership of the Company Voting Securities
            shall be ignored;

                  (b) Notwithstanding the foregoing, beneficial ownership,
            directly or indirectly, of Company Voting Securities by Great
            American Insurance Company ("GAIC") and any person acting together
            with GAIC shall not trigger a Change in Control under this
            definition unless and until GAIC (alone or together with such
            person(s)) beneficially owns, directly or indirectly, sixty-six and
            two thirds percent (66 2/3%) or more of the combined voting power of
            the Company Voting Securities; and

                  (c) The following acquisitions shall not be a Change in
            Control: (i) any acquisition directly from the Company, (ii) any
            acquisition by the Company, or (iii) any acquisition by any person
            or group of persons pursuant to a transaction that complies with the
            provisions of paragraph (ii)(A), (B) and (C) below.

            (ii) The stockholders of the Company approve a definitive agreement
      of reorganization, merger, consolidation, sale or other disposition of all
      or substantially all of the assets of the Company, acquisition of assets
      of another entity, or any similar transaction with any other entity
      (collectively, a "Business Combination") or, if the consummation of such
      Business Combination is subject, at the time of such approval by the
      stockholders, to the consent of any government or governmental agency, the
      obtaining of such consent (either explicitly or implicitly); excluding,
      however, such a Business Combination pursuant to which (A) all or
      substantially all of the individuals and entities who were the beneficial
      owners of the Company Voting Securities immediately prior to such Business
      Combination beneficially own, directly or indirectly, more than 51% of,
      respectively, the then outstanding common shares and the combined voting
      power of the then outstanding voting securities entitled to vote generally
      in the election of Directors, as the case may be, of the corporation
      resulting

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      from such Business Combination (including, without limitation, an entity
      that as a result of such Business Combination owns the Company or all or
      substantially all of the Company's assets, either directly or through one
      or more subsidiaries) in substantially the same proportions as their
      ownership immediately prior to such Business Combination, of the Company
      Voting Securities, (B) no person or group of persons acting together
      (excluding any employee benefit plan (or related trust) of the Company or
      the entity resulting from such Business Combination) beneficially owns,
      directly or indirectly, thirty percent (30%) or more of, respectively, the
      then outstanding common shares of the corporation resulting from the
      Business Combination or the combined voting power of the then outstanding
      voting securities of such corporation, except to the extent that such
      ownership existed prior to the Business Combination, and (C) at least a
      majority of the members of the board of directors of the corporation
      resulting from the Business Combination are Continuing Directors;

            (iii) Continuing Directors cease to constitute at least a majority
      of the Directors; or

            (iv) The stockholders of the Company approve a plan of complete
      liquidation or dissolution of the Company.

            "Code" means the Internal Revenue Code of 1986, as amended.

            "Committee" means the Compensation Committee described in Section 16
of the Plan.

            "Common Shares" means shares of common stock, par value $0.01, of
the Company or any security into which such Common Shares may be changed by
reason of any transaction or event of the type referred to in Section 12 of this
Plan.

            "Company" has the meaning given such term in Section 1 of the Plan.

            "Continuing Director" means any Director who either (i) was a
Director on the Effective Date, or (ii) becomes a Director after the Effective
Date and: (A) whose appointment or election was duly approved by the vote of a
majority of the Continuing Directors who were Directors at the time of the
appointment or election; or (B) whose nomination for election by the Company's
stockholders was included in the Company's proxy statement in which such
individual was named as one of the Company's Director nominees where such proxy
statement was approved by a majority of the Continuing Directors who were
Directors at the time of the nomination.

            "Covered Employee" means a Participant who is, or is determined by
the Committee to be likely to become, a "covered employee" within the meaning of
Section 162(m) of the Code (or any successor provision).

            "Date of Grant" means the date specified by the Committee on which a
grant of Option Rights, Appreciation Rights, Performance Units or Performance
Shares or a grant or sale

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of Restricted Shares or Deferred Shares, or awards granted under Section 10
shall become effective.

            "Deferral Period" means the period of time during which Deferred
Shares are subject to deferral limitations under Section 8 of this Plan.

            "Deferred Shares" means an award made pursuant to Section 8 or
Section 9 of this Plan of the right to receive Common Shares at the end of a
specified Deferral Period.

            "Director" means a member of the Board of Directors of the Company.

            "Effective Date" has the meaning given such term in Section 1 of the
Plan.

            "Evidence of Award" means an agreement, certificate, resolution or
other type or form of writing or other evidence approved by the Committee which
sets forth the terms and conditions of the Option Rights, Appreciation Rights,
Performance Units, Performance Shares, Restricted Shares, Deferred Shares, or
awards granted under Section 10. An Evidence of Award may be in an electronic
medium, may be limited to a notation on the books and records of the Company
and, with the approval of the Committee, need not be signed by a representative
of the Company or a Participant.

            "Free-Standing Appreciation Right" means an Appreciation Right
granted pursuant to Section 5 of this Plan that is not granted in tandem with an
Option Right.

            "Incentive Stock Options" means Option Rights that are intended to
qualify as "incentive stock options" under Section 422 of the Code or any
successor provision. For purposes of clarity, Incentive Stock Options may only
be granted to officers and other key employees of the Company and its
Subsidiaries.

            "Management Objectives" means the measurable performance objective
or objectives established pursuant to this Plan for Participants who have
received grants of Performance Units or Performance Shares or, when so
determined by the Committee, Option Rights, Appreciation Rights and Restricted
Shares pursuant to this Plan. Management Objectives may be described in terms of
Company-wide objectives or objectives that are related to the performance of the
individual Participant or of the Subsidiary, division, department, region or
function within the Company or Subsidiary in which the Participant is employed.
The Management Objectives may be made relative to the performance of other
corporations. The Management Objectives applicable to any award to a Covered
Employee that is intended to qualify for the performance-based compensation
exception to Section 162(m) of the Code shall be based on specified levels of or
growth in one or more of the following criteria: revenues, earnings from
operations, earnings from underwriting activities, earnings from investment
activities, earnings before or after interest and taxes, net income, cash flow,
earnings per share, debt to capital ratio, economic value added, return on total
capital, return on invested capital, return on equity, return on assets, total
return to stockholders earnings before or after interest, depreciation,
amortization or extraordinary or special items, return on investment, free cash
flow, cash flow return on investment (discounted or otherwise), net cash
provided by

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operations, cash flow in excess of cost of capital, operating margin, profit
margin, stock price and/or strategic business criteria consisting of one or more
objectives based on meeting specified product development, strategic partnering,
research and development, market penetration, geographic business expansion
goals, cost targets, customer satisfaction, employee satisfaction, management of
employment practices and employee benefits, supervision of litigation and
information technology, and goals relating to acquisitions or divestitures of
subsidiaries, affiliates and joint ventures. Management Objectives may be stated
as a combination of the listed factors. If the Committee determines that a
change in the business, operations, corporate structure or capital structure of
the Company, or the manner in which it conducts its business, or other events or
circumstances (including those events and circumstances described in Section 12
of this Plan) render the Management Objectives unsuitable, the Committee may in
its discretion modify such Management Objectives or the related minimum
acceptable level of achievement, in whole or in part, as the Committee deems
appropriate and equitable, except in the case of a Covered Employee to the
extent that such action would result in the loss of the otherwise available
exemption of the award under Section 162(m) of the Code.

            "Market Value per Share" means, as of any particular date, (i) the
closing sale price per Common Share as reported on the principal exchange on
which Common Shares are then trading, if any, or if applicable the Nasdaq
National Market System, or if there are no sales on such day, on the next
preceding trading day during which a sale occurred, or (ii) if clause (i) does
not apply, the fair market value of a Common Share as determined by the
Committee.

            "Non-Employee Director" means a Director who is not an employee of
the Company or any Subsidiary.

            "Optionee" means the optionee named in an agreement evidencing an
outstanding Option Right.

            "Option Price" means the purchase price payable on exercise of an
Option Right.

            "Option Right" means the right to purchase Common Shares upon
exercise of an option granted pursuant to Section 4 or Section 9 of this Plan.

            "Participant" means a person who is selected by the Committee to
receive benefits under this Plan and who is at the time a consultant, an
officer, or other key employee of the Company or any of its Subsidiaries, or who
has agreed to commence serving in any such capacities within 90 days of the Date
of Grant, and shall also include each Non-Employee Director who receives an
award of Option Rights, Appreciation Rights, Restricted Shares, Deferred Shares
or any awards under Section 10.

            "Performance Period" means, in respect of a Performance Unit or
Performance Share, a period of time established pursuant to Section 6 of this
Plan within which the Management Objectives relating to such Performance Share
or Performance Unit are to be achieved.

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            "Performance Share" means a bookkeeping entry that records the
equivalent of one Common Share awarded pursuant to Section 6 of this Plan.

            "Performance Unit" means a bookkeeping entry that records a unit
equivalent to $1.00 awarded pursuant to Section 6 of this Plan.

            "Plan" means this National Interstate Corporation Long Term
Incentive Plan, as amended from time to time.

            "Prior Plan" has the meaning given such term in Section 1 of the
Plan.

            "Restricted Shares" means Common Shares granted or sold pursuant to
Section 7 or Section 9 of this Plan as to which neither the substantial risk of
forfeiture nor the prohibition on transfers referred to in such Section 7 has
expired.

            "Spread" means the excess of the Market Value per Share on the date
when an Appreciation Right is exercised, or on the date when Option Rights are
surrendered in payment of the Option Price of other Option Rights, over the per
share Option Price or per share Base Price provided for in the related Option
Right or Free-Standing Appreciation Right, respectively.

            "Subsidiary" means a corporation, company or other entity which is
designated by the Committee and in which the Company has a direct or indirect
ownership or other equity interest, provided, however, that for purposes of
determining whether any person may be a Participant for purposes of any grant of
Incentive Stock Options, the term "Subsidiary" has the meaning given to such
term in Section 424 of the Code, as interpreted by the regulations thereunder
and applicable law.

            "Tandem Appreciation Right" means an Appreciation Right granted
pursuant to Section 5 of this Plan that is granted in tandem with an Option
Right.

      3. SHARES AVAILABLE UNDER THE PLAN.

            b. Subject to adjustment as provided in Section 3(b) and Section 12
of this Plan, the number of Common Shares that may be issued or transferred (i)
upon the exercise of Option Rights (other than Option Rights granted prior to
the Effective Date under the Prior Plan) or Appreciation Rights, (ii) as
Restricted Shares, (iii) in payment of Deferred Shares, (iv) in payment of
Performance Units or Performance Shares that have been earned, (v) as awards to
Non-Employee Directors, (vi) in payment of awards granted under Section 10 of
the Plan or (vii) in payment of dividend equivalents paid with respect to awards
made under the Plan shall not exceed in the aggregate 4,606 Common Shares, plus
any shares described in Section 3(b). Notwithstanding the preceding sentence,
but subject to adjustment as provided in Section 12 of this Plan, the number of
Common Shares that may be issued or transferred upon the exercise of Option
Rights granted prior to the Effective Date under the Prior Plan may not exceed
4,440 Common Shares, provided, however, that the number of shares specified in
this sentence shall not be subject to Section 3(b). Such shares may be shares of
original issuance, treasury shares or a combination of the foregoing.

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            c. The Committee may adopt reasonable counting procedures to ensure
appropriate counting, avoid double counting (as, for example, in the case of
tandem or substitute awards) and make adjustments in the number of Common Shares
available in Section 3(a) above or otherwise specified in the Plan or in any
award granted hereunder if the number of Common Shares actually delivered
differs from the number of Common Shares previously counted in connection with
an award. Common Shares subject to an award that is canceled, expired,
forfeited, settled in cash or is otherwise terminated without a delivery of
Common Shares to the Participant will again be available for awards, and Common
Shares withheld in payment of the exercise price or taxes relating to an award
and Common Shares equal to the number surrendered in payment of any exercise
price or taxes relating to an award shall be deemed to constitute Common Shares
not delivered to the Participant and shall be deemed to again be available for
awards under the Plan. This Section 3(b) shall apply to the number of Common
Shares reserved and available for Incentive Stock Options only to the extent
consistent with applicable Treasury regulations relating to Incentive Stock
Options under the Code.

            d. Notwithstanding anything in this Section 3, or elsewhere in this
Plan, to the contrary and subject to adjustment as provided in Section 12 of
this Plan, following the Effective Date (i) the aggregate number of Common
Shares actually issued or transferred by the Company upon the exercise of
Incentive Stock Options shall not exceed 4,606 Common Shares; (ii) no
Participant shall be granted Option Rights and Appreciation Rights, in the
aggregate, for more than 576 Common Shares during any calendar year; and (iii)
no Non-Employee Director shall be granted Option Rights, Appreciation Rights,
Restricted Shares and Deferred Shares, in the aggregate, for more than 345
Common Shares during any calendar year.

            e. Notwithstanding any other provision of this Plan to the contrary,
in no event shall any Participant in any calendar year receive an award of (i)
Performance Shares, Restricted Shares specifying Management Objectives, or
awards granted under Section 10 of the Plan specifying Management Objectives, in
the aggregate, for more than 345 Common Shares or (ii) Performance Units having
an aggregate maximum value as of their respective Dates of Grant in excess of
$375,000.

      4. OPTION RIGHTS. The Committee may, from time to time and upon such terms
and conditions as it may determine, authorize the granting to Participants of
Option Rights. Each such grant may utilize any or all of the authorizations, and
shall be subject to all of the limitations, contained in the following
provisions:

            b. Each grant shall specify the number of Common Shares to which it
pertains, subject to adjustments as provided in Section 12 of this Plan.

            c. Each grant shall specify an Option Price per share, which may not
be less than the Market Value per Share on the Date of Grant.

            d. Each grant shall specify whether the Option Price shall be
payable (i) in cash or by check acceptable to the Company, (ii) with the
approval of the Committee, by the actual or constructive transfer to the Company
of Common Shares owned by the Optionee having a value at the time of exercise
equal to the total Option Price, or (iii) by a combination of such methods of
payment.

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            e. To the extent permitted by law, any grant may provide for (i)
deferred payment of the Option Price from the proceeds of sale through a bank or
broker on a date satisfactory to the Company of some or all of the shares to
which such exercise relates; (ii) payment of the Option Price, at the election
of the Optionee, in installments, with or without interest, upon terms
determined by the Committee; or (iii) any combination of such methods.

            f. Successive grants may be made to the same Participant whether or
not any Option Rights previously granted to such Participant remain unexercised.

            g. Each grant shall specify the period or periods of continuous
service by the Optionee with the Company or any Subsidiary that is necessary
before the Option Rights or installments thereof will become exercisable and may
provide for the earlier exercise of such Option Rights in the event of a Change
in Control, retirement, death or disability of the Optionee or other similar
transaction or event as approved by the Committee.

            h. Any grant of Option Rights may specify Management Objectives that
must be achieved as a condition to the exercise of such rights.

            i. Option Rights granted under this Plan may be (i) options,
including, without limitation, Incentive Stock Options, that are intended to
qualify under particular provisions of the Code, (ii) options that are not
intended so to qualify, or (iii) combinations of the foregoing.

            j. The exercise of an Option Right shall result in the cancellation
on a share-for-share basis of any Tandem Appreciation Right authorized under
Section 5 of this Plan.

            k. No Option Right shall be exercisable more than 10 years from the
Date of Grant.

            l. Each grant of Option Rights shall be evidenced by an Evidence of
Award which shall contain such terms and provisions, consistent with this Plan
and applicable sections of the Code, as the Committee may approve.

            m. The Committee may, at or after the Date of Grant of any Option
Rights (other than Incentive Stock Options), provide for the payment of dividend
equivalents to the Optionee on either a current or deferred or contingent basis
or may provide that such equivalents shall be credited against the Option Price.

      5. APPRECIATION RIGHTS.

            b. The Committee may authorize the granting (i) to any Optionee, of
Tandem Appreciation Rights in respect of Option Rights granted hereunder, and
(ii) to any Participant, of Free-Standing Appreciation Rights. A Tandem
Appreciation Right shall be a right of the Optionee, exercisable by surrender of
the related Option Right, to receive from the Company an amount determined by
the Committee, which shall be expressed as a percentage of the Spread (not
exceeding 100 percent) at the time of exercise. Tandem Appreciation Rights may
be granted at any time prior to the exercise or termination of the related
Option Rights; provided, however, that a Tandem Appreciation Right awarded in
relation to an Incentive Stock Option must be

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granted concurrently with such Incentive Stock Option. A Free-Standing
Appreciation Right shall be a right of the Participant to receive from the
Company an amount determined by the Committee, which shall be expressed as a
percentage of the Spread (not exceeding 100 percent) at the time of exercise.

            c. Each grant of Appreciation Rights may utilize any or all of the
authorizations, and shall be subject to all of the requirements, contained in
the following provisions:

                  (i) Any grant may specify that the amount payable on exercise
            of an Appreciation Right may be paid by the Company in cash, in
            Common Shares or in any combination thereof and may either grant to
            the Participant or retain in the Committee the right to elect among
            those alternatives.

                  (ii) Any grant may specify that the amount payable on exercise
            of an Appreciation Right may not exceed a maximum specified by the
            Committee at the Date of Grant.

                  (iii) Each grant shall specify the period or periods of
            continuous service by the Employee with the Company or any
            Subsidiary that is necessary before the Appreciation Right or
            installments thereof will become exercisable and may provide for the
            earlier exercise of such Appreciation Rights in the event of a
            Change in Control, retirement, death or disability of the Employee
            or other similar transaction or event as approved by the Committee.

                  (iv) Each grant of an Appreciation Right shall be evidenced by
            an Evidence of Award, which shall describe such Appreciation Right,
            identify any related Option Right, state that such Appreciation
            Right is subject to all the terms and conditions of this Plan, and
            contain such other terms and provisions, consistent with this Plan
            and applicable sections of the Code, as the Committee may approve.

                  (v) Any grant may provide for the payment to the Participant
            of dividend equivalents thereon in cash or Common Shares on a
            current, deferred or contingent basis.

            d. Any grant of Tandem Appreciation Rights shall provide that such
Rights may be exercised only at a time when the related Option Right is also
exercisable and at a time when the Spread is positive, and by surrender of the
related Option Right for cancellation.

            e. Regarding Free-Standing Appreciation Rights only:

                  (i) Each grant shall specify in respect of each Free-Standing
            Appreciation Right a Base Price, which shall not be less than the
            Market Value per Share on the Date of Grant;

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                  (ii) Successive grants may be made to the same Participant
            regardless of whether any Free-Standing Appreciation Rights
            previously granted to the Participant remain unexercised; and

                  (iii) No Free-Standing Appreciation Right granted under this
            Plan may be exercised more than 10 years from the Date of Grant.

            f. Any grant of Appreciation Rights may specify Management
Objectives that must be achieved as a condition to exercise such rights.

      6. PERFORMANCE UNITS AND PERFORMANCE SHARES. The Committee may also
authorize the granting to Participants of Performance Units and Performance
Shares that will become payable (or payable early) to a Participant upon
achievement of specified Management Objectives. Each such grant may utilize any
or all of the authorizations, and shall be subject to all of the limitations,
contained in the following provisions:

            b. Each grant shall specify the number of Performance Units or
Performance Shares to which it pertains, which number may be subject to
adjustment to reflect changes in compensation or other factors; provided,
however, that no such adjustment shall be made in the case of a Covered Employee
where such action would result in the loss of the otherwise available exemption
of the award under Section 162(m) of the Code.

            c. The Performance Period with respect to each Performance Unit or
Performance Share shall be such period of time commencing with the Date of Grant
as shall be determined by the Committee at the time of grant.

            d. Any grant of Performance Units or Performance Shares shall
specify Management Objectives which, if achieved, will result in payment or
early payment of the award, and each grant may specify in respect of such
specified Management Objectives a minimum acceptable level of achievement and
shall set forth a formula for determining the number of Performance Units or
Performance Shares that will be earned if performance is at or above the minimum
level, but falls short of full achievement of the specified Management
Objectives. The grant of Performance Units or Performance Shares shall specify
that, before the Performance Shares or Performance Units shall be earned and
paid, the Committee must determine that the Management Objectives have been
satisfied.

            e. Each grant shall specify the time and manner of payment of
Performance Units or Performance Shares that have been earned. Any grant may
specify that the amount payable with respect thereto may be paid by the Company
to the Participant in cash, in Common Shares or in any combination thereof, and
may either grant to the Participant or retain in the Committee the right to
elect among those alternatives.

            f. Any grant of Performance Units may specify that the amount
payable or the number of Common Shares issued with respect thereto may not
exceed maximums specified by the Committee at the Date of Grant. Any grant of
Performance Shares may specify that the amount payable with respect thereto may
not exceed a maximum specified by the Committee at the Date of Grant.

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            g. Each grant of Performance Units or Performance Shares shall be
evidenced by an Evidence of Award, which shall contain such terms and
provisions, consistent with this Plan and applicable sections of the Code, as
the Committee may approve.

            h. The Committee may, at or after the Date of Grant of Performance
Shares, provide for the payment of dividend equivalents to the holder thereof on
either a current or deferred or contingent basis, either in cash or in
additional Common Shares.

      7. RESTRICTED SHARES. The Committee may also authorize the grant or sale
of Restricted Shares to Participants. Each such grant or sale may utilize any or
all of the authorizations, and shall be subject to all of the limitations,
contained in the following provisions:

            b. Each such grant or sale shall constitute an immediate transfer of
the ownership of Common Shares to the Participant in consideration of the
performance of services, entitling such Participant to voting, dividend and
other ownership rights, but subject to the substantial risk of forfeiture and
restrictions on transfer hereinafter referred to.

            c. Each such grant or sale may be made without additional
consideration or in consideration of a payment by such Participant that is less
than Market Value per Share at the Date of Grant.

            d. Each such grant or sale shall provide that the Restricted Shares
covered by such grant or sale shall be subject to a "substantial risk of
forfeiture" within the meaning of Section 83 of the Code for a period to be
determined by the Committee at the Date of Grant and may provide for the earlier
lapse of such substantial risk of forfeiture in the event of a Change in
Control, retirement, or death or disability of the Employee or other similar
transaction or event as approved by the Committee.

            e. Each such grant or sale shall provide that during the period for
which such substantial risk of forfeiture is to continue, the transferability of
the Restricted Shares shall be prohibited or restricted in the manner and to the
extent prescribed by the Committee at the Date of Grant (which restrictions may
include, without limitation, rights of repurchase or first refusal in the
Company or provisions subjecting the Restricted Shares to a continuing
substantial risk of forfeiture in the hands of any transferee).

            f. Any grant of Restricted Shares may specify Management Objectives
that, if achieved, will result in termination or early termination of the
restrictions applicable to such shares. Each grant may specify in respect of
such Management Objectives a minimum acceptable level of achievement and may set
forth a formula for determining the number of Restricted Shares on which
restrictions will terminate if performance is at or above the minimum level, but
falls short of full achievement of the specified Management Objectives.

            g. Any such grant or sale of Restricted Shares may require that any
or all dividends or other distributions paid thereon during the period of such
restrictions be automatically deferred and reinvested in additional Restricted
Shares, which may be subject to the same restrictions as the underlying award.

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            h. Each grant or sale of Restricted Shares shall be evidenced by an
Evidence of Award, which shall contain such terms and provisions, consistent
with this Plan and applicable sections of the Code, as the Committee may
approve. Unless otherwise directed by the Committee, all certificates
representing Restricted Shares shall be held in custody by the Company until all
restrictions thereon shall have lapsed, together with a stock power or powers
executed by the Participant in whose name such certificates are registered,
endorsed in blank and covering such Shares.

      8. DEFERRED SHARES. The Committee may also authorize the grant or sale of
Deferred Shares to Participants. Each such grant or sale may utilize any or all
of the authorizations, and shall be subject to all of the requirements contained
in the following provisions:

            b. Each such grant or sale shall constitute the agreement by the
Company to deliver Common Shares to the Participant in the future in
consideration of the performance of services, but subject to the fulfillment of
such conditions during the Deferral Period as the Committee may specify.

            c. Each such grant or sale may be made without additional
consideration or in consideration of a payment by such Participant that is less
than the Market Value per Share at the Date of Grant.

            d. Each such grant or sale shall be subject to a Deferral Period as
determined by the Committee at the Date of Grant, and may provide for the
earlier lapse or other modification of such Deferral Period in the event of a
Change in Control, retirement, or death or disability of the Employee or other
similar transaction or event as approved by the Committee.

            e. During the Deferral Period, the Participant shall have no right
to transfer any rights under his or her award and shall have no rights of
ownership in the Deferred Shares and shall have no right to vote them, but the
Committee may, at or after the Date of Grant, authorize the payment of dividend
equivalents on such Shares on either a current or deferred or contingent basis,
either in cash or in additional Common Shares.

            f. Each grant or sale of Deferred Shares shall be evidenced by an
Evidence of Award, which shall contain such terms and provisions, consistent
with this Plan and applicable sections of the Code, as the Committee may
approve.

      9. AWARDS TO NON-EMPLOYEE DIRECTORS. The Board may, from time to time and
upon such terms and conditions as it may determine, authorize the grant to
Non-Employee Directors of Option Rights under Section 4, Appreciation Rights
under Section 5, Restricted Shares under Section 7, Deferred Shares under
Section 8, other awards under Section 10, or any combination of the foregoing.

      10. OTHER AWARDS.

            b. The Committee is authorized, subject to limitations under
applicable law, to grant to any Participant such other awards that may be
denominated or payable in, valued in whole or in part by reference to, or
otherwise based on, or related to, Common Shares or factors

                                       12
<PAGE>

that may influence the value of Common Shares, including, without limitation,
convertible or exchangeable debt securities, other rights convertible or
exchangeable into Common Shares, purchase rights for Common Shares, awards with
value and payment contingent upon performance of the Company or business units
thereof or any other factors designated by the Committee, and awards valued by
reference to the book value of Common Shares or the value of securities of, or
the performance of specified Subsidiaries or affiliates or other business units
of, the Company. The Committee shall determine the terms and conditions of such
awards. Common Shares delivered pursuant to an award in the nature of a purchase
right granted under this Section 10 shall be purchased for such consideration,
paid for at such times, by such methods, and in such forms, including, without
limitation, cash, Common Shares, other awards, notes or other property, as the
Committee shall determine.

            c. Cash awards, as an element of or supplement to any other award
granted under this Plan, may also be granted pursuant to this Section 10 of the
Plan.

            d. The Committee is authorized to grant Common Shares as a bonus, or
to grant Common Shares or other awards in lieu of obligations of the Company or
a Subsidiary to pay cash or deliver other property under the Plan or under other
plans or compensatory arrangements, subject to such terms as shall be determined
by the Committee.

      11. TRANSFERABILITY.

            b. Except as otherwise determined by the Committee, no Option Right,
Appreciation Right or other derivative security granted under the Plan shall be
transferable by a Participant other than by will or the laws of descent and
distribution. Except as otherwise determined by the Committee, Option Rights and
Appreciation Rights shall be exercisable during the Optionee's lifetime only by
him or her or by his or her guardian or legal representative.

            c. The Committee may specify at the Date of Grant that part or all
of the Common Shares that are (i) to be issued or transferred by the Company
upon the exercise of Option Rights or Appreciation Rights, upon the termination
of the Deferral Period applicable to Deferred Shares or upon payment under any
grant of Performance Units or Performance Shares or (ii) no longer subject to
the substantial risk of forfeiture and restrictions on transfer referred to in
Section 7 of this Plan, shall be subject to further restrictions on transfer.

      12. ADJUSTMENTS. The Committee may make or provide for such adjustments in
the numbers of Common Shares covered by outstanding Option Rights, Appreciation
Rights, Performance Shares, Deferred Shares and share-based awards described in
Section 10 of the Plan granted hereunder, in the Option Price and Base Price
provided in outstanding Appreciation Rights, and in the kind of shares covered
thereby, as the Committee, in its sole discretion, exercised in good faith, may
determine is equitably required to prevent dilution or enlargement of the rights
of Participants or Optionees that otherwise would result from (a) any stock
dividend, stock split, combination of shares, recapitalization or other change
in the capital structure of the Company, including the share split that is
contemplated to be effective prior to the Company's proposed initial public
offering (if any), or (b) any merger, consolidation, spin-off, split-off,
spin-out, split-up, reorganization, partial or complete liquidation or other
distribution of assets

                                       13
<PAGE>

(including, without limitation, a special or large non-recurring dividend),
issuance of rights or warrants to purchase securities, or (c) any other
corporate transaction or event having an effect similar to any of the foregoing.
Moreover, in the event of any such transaction or event, the Committee, in its
discretion, may provide in substitution for any or all outstanding awards under
this Plan such alternative consideration as it, in good faith, may determine to
be equitable in the circumstances and may require in connection therewith the
surrender of all awards so replaced. The Committee may also make or provide for
such adjustments in the numbers of shares specified in Section 3 of this Plan as
the Committee in its sole discretion, exercised in good faith, may determine is
appropriate to reflect any transaction or event described in this Section 12;
provided, however, that any such adjustment to the number specified in Section
3(c)(i) shall be made only if and to the extent that such adjustment would not
cause any Option intended to qualify as an Incentive Stock Option to fail so to
qualify.

      13. FRACTIONAL SHARES. The Company shall not be required to issue any
fractional Common Shares pursuant to this Plan. The Committee may provide for
the elimination of fractions or for the settlement of fractions in cash.

      14. WITHHOLDING TAXES. The Company shall have the right to deduct from any
payment under this Plan an amount equal to the federal, state, local, foreign
and other taxes which in the opinion of the Company are required to be withheld
by it with respect to such payment and to the extent that the amounts available
to the Company for such withholding are insufficient, it shall be a condition to
the receipt of such payment or the realization of such benefit that the
Participant or such other person make arrangements satisfactory to the Company
for payment of the balance of such taxes required to be withheld. At the
discretion of the Committee, such arrangements may include relinquishment of a
portion of such benefit pursuant to procedures adopted by the Committee from
time to time.

      15. FOREIGN EMPLOYEES. In order to facilitate the making of any grant or
combination of grants under this Plan, the Committee may provide for such
special terms for awards to Participants who are foreign nationals or who are
employed by the Company or any Subsidiary outside of the United States of
America as the Committee may consider necessary or appropriate to accommodate
differences in local law, tax policy or custom. Moreover, the Committee may
approve such supplements to or amendments, restatements or alternative versions
of this Plan as it may consider necessary or appropriate for such purposes,
without thereby affecting the terms of this Plan as in effect for any other
purpose, and the Corporate Secretary or other appropriate officer of the Company
may certify any such document as having been approved and adopted in the same
manner as this Plan. No such special terms, supplements, amendments or
restatements, however, shall include any provisions that are inconsistent with
the terms of this Plan as then in effect unless this Plan could have been
amended to eliminate such inconsistency without further approval by the
stockholders of the Company.

      16. ADMINISTRATION OF THE PLAN.

            b. This Plan shall be administered by the Compensation Committee of
the Board. A majority of the Committee shall constitute a quorum, and the action
of the members of the Committee present at any meeting at which a quorum is
present, or acts unanimously approved in writing, shall be the acts of the
Committee. The Board may perform any function of

                                       14
<PAGE>

the Committee hereunder, and the Board shall perform all functions of the
Committee with respect to any award for a Non-Employee Director, in which case
the term "Committee" shall refer to the Board.

            c. The interpretation and construction by the Committee of any
provision of this Plan or of any agreement, notification or document evidencing
the grant of Option Rights, Appreciation Rights, Restricted Shares, Deferred
Shares, Performance Units, Performance Shares or any awards granted under
Section 10 of the Plan and any determination by the Committee pursuant to any
provision of this Plan or of any such agreement, notification or document shall
be final and conclusive. No member of the Committee shall be liable for any such
action or determination made in good faith.

      17. AMENDMENTS AND OTHER MATTERS.

            b. The Board may at any time and from time to time amend the Plan in
whole or in part; provided, however, that any amendment which must be approved
by the stockholders of the Company in order to comply with applicable law or the
rules of the Nasdaq National Market System or, if the Common Shares are not
traded on the Nasdaq National Market System, the principal national securities
exchange upon which the Common Shares are traded or quoted, shall not be
effective unless and until such approval has been obtained. Presentation of this
Plan or any amendment thereof for stockholder approval shall not be construed to
limit the Company's authority to offer similar or dissimilar benefits under
other plans or otherwise with or without stockholder approval. Without limiting
the generality of the foregoing, the Board of Directors may amend this Plan to
eliminate provisions which are no longer necessary as a result in changes in tax
or securities laws or regulations, or in the interpretation thereof.

            c. Except as otherwise expressly provided in Section 19 hereof, the
Committee shall not, without the further approval of the stockholders of the
Company, authorize the amendment of any outstanding Option Right or Appreciation
Right to reduce the Option Price or Base Price. Furthermore, no Option Right or
Appreciation Right shall be cancelled and replaced with awards having a lower
Option Price or Base Price, respectively, without further approval of the
stockholders of the Company. This Section 17(b) is intended to prohibit the
repricing of "underwater" Option Rights and Appreciation Rights and shall not be
construed to prohibit the adjustments provided for in Section 12 of this Plan.

            d. The Committee also may permit Participants to elect to defer the
issuance of Common Shares or the settlement of awards in cash under the Plan
pursuant to such rules, procedures or programs as it may establish for purposes
of this Plan. The Committee also may provide that deferred issuances and
settlements include the payment or crediting of dividend equivalents or interest
on the deferral amounts.

            e. The Committee may condition the grant of any award or combination
of awards authorized under this Plan on the deferral by the Participant of his
or her right to receive a cash bonus or other compensation otherwise payable by
the Company or a Subsidiary to the Participant.

                                       15
<PAGE>

            f. In case of a Change in Control of the Company, or in the case of
a termination of employment of a Participant by reason of death, disability or
normal or early retirement, or in the case of hardship of a Participant or other
special circumstances, the Committee may, in its sole discretion, accelerate the
time at which any Option Right or Appreciation Right may be exercised or the
time when a Performance Unit or Performance Share shall be deemed to have been
fully earned or the time when a substantial risk of forfeiture or prohibition on
transfer of Restricted Shares shall lapse or the time when a Deferral Period
shall end. In addition, the Committee may, in its sole discretion, modify any
Option Right or Appreciation Right to extend the period following termination of
a Participant's employment to the Company or any Subsidiary during which such
award will remain outstanding and be exercisable, provided that no such
extension shall result in any award being exercisable more than ten years after
the Date of Grant.

            g. This Plan shall not confer upon any Participant any right with
respect to continuance of employment or other service with the Company or any
Subsidiary, nor shall it interfere in any way with any right the Company or any
Subsidiary would otherwise have to terminate such Participant's employment or
other service at any time.

            h. To the extent that any provision of this Plan would prevent any
Option Right that was intended to qualify as an Incentive Stock Option from
qualifying as such, that provision shall be null and void with respect to such
Option Right. Such provision, however, shall remain in effect for other Option
Rights and there shall be no further effect on any provision of this Plan.

            i. Subject to Section 20, this Plan shall continue in effect until
the date on which all Common Shares available for issuance or transfer under
this Plan have been issued or transferred and the Company has no further
obligation hereunder.

            j. Neither a Participant nor any other person shall, by reason of
participation in the Plan, acquire any right or title to any assets, funds or
property of the Company or any Subsidiary, including without limitation, any
specific funds, assets or other property which the Company or any Subsidiary may
set aside in anticipation of any liability under the Plan. A Participant shall
have only a contractual right to an award or the amounts, if any, payable under
the Plan, unsecured by any assets of the Company or any Subsidiary, and nothing
contained in the Plan shall constitute a guarantee that the assets of the
Company or any Subsidiary shall be sufficient to pay any benefits to any person.

            k. This Plan and each Evidence of Award shall be governed by the
laws of the State of Ohio, excluding any conflicts or choice of law rule or
principle that might otherwise refer construction or interpretation of the Plan
to the substantive law of another jurisdiction.

            l. If any provision of the Plan is or becomes invalid, illegal or
unenforceable in any jurisdiction, or would disqualify the Plan or any award
under any law deemed applicable by the Committee, such provision shall be
construed or deemed amended or limited in scope to conform to applicable laws
or, in the discretion of the Committee, it shall be stricken and the remainder
of the Plan shall remain in full force and effect.

                                       16
<PAGE>

      18. APPLICABLE LAWS. The obligations of the Company with respect to awards
under the Plan shall be subject to all Applicable Laws and such approvals by any
governmental agencies as the Committee determines may be required.

      19. PRIOR PLAN. Option Rights and dividend equivalents granted prior to
the Effective Date under the Prior Plan shall be subject to the limitations
contained in the following provisions:

            b. Unless and until forfeited, cancelled or terminated, and except
as otherwise provided in this Section 19, each Option Right will become
exercisable to the extent of one-fifth of the Common Shares specified in the
Evidence of Award on December 31 of the year in which occurs the Date of Grant
and on each of the first four anniversaries of such December 31. A Participant's
Option Rights shall be forfeited (to the extent they have not become exercisable
pursuant to the preceding sentence), if he or she ceases to be continuously
employed by the Company and its Subsidiaries for any reason.

            c. A Participant's Option Rights and related dividend equivalents
will terminate on the earliest of the following dates: (i) sixty days following
the date of the Participant's termination of employment with the Company and its
Subsidiaries for any reason; or (ii) ten years from the Date of Grant. Any
dividend equivalents also shall terminate upon the exercise, forfeiture or
cancellation of the related Option Rights.

            d. Any dividend equivalents shall be credited against the Option
Price with respect to unvested Option Rights and shall be paid in cash with
respect to vested Option Rights.

            e. Notwithstanding anything contained in this Plan to the contrary:
(i) with respect to Option Rights granted under the Prior Plan before January 1,
2004, the Company, in its sole discretion, may at any time require Participants
to exercise all vested Option Rights, all unvested Option Rights, or both, and
the Option Price of such Option Rights shall be reduced by 25%; and (ii) with
respect to Option Rights granted under the Prior Plan on or after January 1,
2004, the Company, in its sole discretion, may at any time require Participants
to exercise all vested Option Rights (without a reduction in the Option Price)
and forfeit all unvested Option Rights.

      20. TERMINATION. No grant shall be made under this Plan more than 10 years
after the date on which this amended Plan is approved by the Board of Directors
of the Company, but all grants effective on or prior to such date shall continue
in effect thereafter subject to the terms thereof and of this Plan.

                                 END OF DOCUMENT

                                       17<PAGE>

                                                                    EXHIBIT 10.2

                         NATIONAL INTERSTATE CORPORATION
                           DEFERRED COMPENSATION PLAN

      National Interstate Corporation hereby establishes, effective as of
         , 2004, the National Interstate Corporation Deferred Compensation Plan
on the terms and conditions hereinafter set forth. The Plan provides certain
eligible employees and directors with the opportunity to defer portions of their
base salary, bonus, and director fees, and receive certain other benefits, all
in accordance with the provisions of the Plan.

                                    SECTION I
                                   DEFINITIONS

      For the purposes hereof, the following words and phrases shall have the
meanings set forth below, unless their context clearly requires a different
meaning:

      "ACCOUNT" means the bookkeeping account maintained by the Committee on
behalf of each Participant pursuant to Section 2.4.

      "AFFILIATE" means any corporation, limited liability company, joint
venture, partnership, unincorporated association or other entity that is
affiliated, directly or indirectly, with the Company and which is designated as
such under the Plan by the Committee from time to time.

      "BASE SALARY" means the annual base rate of cash compensation (which, in
the case of a Participant who is a Director, shall include his annual retainer,
meeting fees or other similar amounts payable in cash) payable by the Company
and/or by any Affiliate to a Participant.

      "BENEFICIARY" OR "BENEFICIARIES" means the person or persons, including
one or more trusts, designated by a Participant in accordance with the Plan to
receive payment of the remaining balance of the Participant's Account in the
event of the death of the Participant prior to the Participant's receipt of the
entire amount credited to his Account.

      "BOARD" means the Board of Directors of the Company.

      "BONUS" means cash incentive compensation payable to a Participant
pursuant to a bonus or other incentive compensation plan, whether such plan is
now in effect or hereafter established by the Company, which the Committee may
designate from time to time.

      "COMMITTEE" means the committee appointed by the Board to administer the
Plan. Unless and until otherwise specified, the Committee under the Plan at any
time shall be the Compensation Committee of the Board.

<PAGE>

      "COMPANY" means National Interstate Corporation and its successors,
including, without limitation, the surviving corporation resulting from any
merger or consolidation of National Interstate Corporation with any corporation,
limited liability company, joint venture, partnership, unincorporated
association or other entity.

      "COMPANY CONTRIBUTIONS" has the meaning given to such term in
Section 2.11.

      "DIRECTOR" means a member of the Board.

      "ELECTION AGREEMENT" means a Participant's agreement, on a form provided
by the Committee, to defer his Base Salary and/or Bonus.

      "ELIGIBLE EMPLOYEE" means an employee of the Company or an Affiliate who
is, as determined by the Committee, a member of a "select group of management or
highly compensated employees," within the meaning of Sections 201, 301 and 401
of ERISA, and who is selected by the Committee to participate in the Plan.
Unless otherwise determined by the Committee, an Eligible Employee shall
continue as such until termination of employment.

      "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

      "INSOLVENT" means that the Company or an Affiliate, whichever is
applicable, has become subject to a pending voluntary or involuntary proceeding
as a debtor under the United States Bankruptcy Code or has become unable to pay
its debts as they mature.

      "PARTICIPANT" means any Eligible Employee or Director who has at any time
elected to defer the receipt of Base Salary or Bonus in accordance with the Plan
and who, in conjunction with his Beneficiary, has not received a complete
distribution of the amount credited to his Account.

      "PLAN" means this deferred compensation plan, which shall be known as the
National Interstate Corporation Deferred Compensation Plan.

      "TERMINATION OF SERVICE DATE" means the date a Participant ceases to be an
employee of the Company and its Affiliates for any reason. The "Termination of
Service Date" of any Participant who is a Director and who is not an Eligible
Employee shall be the date such Participant ceases to be a member of the Board.

      "YEAR" means a calendar year.

                                   SECTION II
                      DEFERRALS, CONTRIBUTIONS AND ACCOUNTS

      2.1. ELIGIBILITY. Subject to Section 2.3, an Eligible Employee or Director
may elect to defer receipt of all or a specified part of his Base Salary, Bonus
or both for any Year in accordance with Section 2.2. An Eligible Employee's or
Director's entitlement to defer shall cease with respect to the Year following
the Year in which he ceases to be an Eligible Employee or Director, as
applicable.

                                       2
<PAGE>

      2.2. ELECTION TO DEFER. Unless otherwise provided by the Committee, an
Eligible Employee or Director who desires to defer all or part of his Base
Salary, Bonus or both pursuant to the Plan must complete and deliver an Election
Agreement to the Committee before the first day of the Year for which such
compensation would otherwise be paid. An Eligible Employee or Director who
timely delivers an executed Election Agreement to the Committee shall be a
Participant. An Election Agreement that is timely delivered to the Committee
shall be effective, in accordance with its terms, unless such Election Agreement
is revoked or modified with the consent of the Committee or until terminated
automatically upon either the termination of the Plan, the Company or any
Affiliate which employs the Participant (or for which the Participant serves as
a Director) becoming Insolvent or the Participant's Termination of Service Date.
Notwithstanding the above, in the event that an individual first becomes an
Eligible Employee or Director during the course of a Year, rather than as of the
first day of a Year, the individual's Election Agreement must be filed no later
than thirty (30) days following the date he first becomes an Eligible Employee
or Director, as applicable, and such Election Agreement shall be effective only
with regard to Base Salary and Bonuses earned following the filing of the
Election Agreement with the Committee.

      2.3. AMOUNT DEFERRED. A Participant shall designate on the Election
Agreement the portion of his Base Salary, Bonus or both that is to be deferred
in accordance with the following rules. A Participant may defer up to 100% of
the Base Salary and up to 100% of the Bonus that the Participant would otherwise
receive during the Year for services performed as an Eligible Employee or
Director; provided, however, that the Participant shall not be permitted to
defer less than $5,000 during any one Year, and any such attempted deferral
shall not be effective; provided, further, that the portion of such Base Salary
and Bonus that is eligible for deferral will be reduced by applicable taxes and
other amounts if such reduction is determined by the Committee to be necessary
or appropriate in order to provide the Company or its Affiliates with a source
of funds, from such Base Salary or Bonus, with which to pay taxes or other
obligations with respect to the Participant.

      2.4. ACCOUNTS. Base Salary and Bonus that a Participant elects to defer
shall be treated as if it were set aside in one or more Accounts on the date the
Base Salary or Bonus, as applicable, would otherwise have been paid to the
Participant, in accordance with procedures established from time to time by the
Committee. Each Participant's Account will be credited with gains, losses and
earnings based on investment directions made by the Participant in accordance
with investment deferral crediting options and procedures established from time
to time by the Committee. The Committee specifically retains the right in its
sole discretion to change the investment deferral crediting options and
procedures from time to time. By electing to defer any amount pursuant to the
Plan, each Participant shall thereby acknowledge and agree that the Company or
any Affiliate is not and shall not be required to make any investment in
connection with the Plan.

      2.5. DATE OF DISTRIBUTION. The distribution or commencement of the
distribution of a Participant's Account will be made in January of the Year
commencing immediately after the Year in which occurs the Participant's
Termination of Service Date.

      2.6. FORM OF DISTRIBUTION. A Participant's Account shall be distributed to
the Participant in cash in a single lump sum. Notwithstanding the preceding
sentence, a Participant may elect, on

                                       3
<PAGE>

the first Election Agreement that he delivers to the Committee under the Plan,
to receive his Account in a number of annual installments (over a period not in
excess of ten years). The lump sum payment or the first installment, as the case
may be, shall be made at the time provided in Section 2.5. In the event that the
Account is paid in installments, the amount of such Account remaining unpaid
shall continue to be credited with gains, losses and earnings as provided in
Section 2.4. The payment to a Participant of a lump sum amount or the number of
annual installments elected by the Participant pursuant to this Section shall
discharge all obligations of the Company and the Affiliates to such Participant
under the Plan. If a Participant elects to receive his Account in a number of
annual installments (over a period not in excess of ten years), the amount of
each installment shall be determined in accordance with procedures established
by the Committee. Notwithstanding the foregoing, if at the time of a
Participant's Termination of Service Date his Account balance is less than
$20,000, the entire amount of the Participant's Account will be paid in a single
lump sum as soon as practicable after the Participant's Termination of Service
Date.

      2.7. MODIFICATION OF FORM OF DISTRIBUTION. Notwithstanding the payment
terms designated by a Participant on the first Election Agreement that he
delivers to the Committee under the Plan, a Participant may elect to change the
form of payment of an Account to a form of payment otherwise permitted under
Section 2.6; provided, however, that such election shall be made on a form
provided by the Committee; provided, further, that any election made less than
one year prior to the Participant's Termination of Service Date shall not be
valid, and in such case, the distribution of his Account shall be made in
accordance with the latest valid election of the Participant.

      2.8. DEATH OF A PARTICIPANT. In the event of the death of a Participant,
the remaining amount of his Account shall be paid to his Beneficiary or
Beneficiaries as described in this Section 2.8. If the Participant dies after
payment of his Account has commenced, the remaining balance of his Account will
continue to be paid to his Beneficiary or Beneficiaries in accordance with the
payment schedule that has already commenced. Unless otherwise provided by the
Committee, if the Participant dies before payments from his Account have
commenced, his Account will be paid to his Beneficiary or Beneficiaries in
accordance with the form of payment elected by the Participant, commencing as
soon as administratively practicable following the date of the Participant's
death. Each Participant shall designate a Beneficiary or Beneficiaries on a
Beneficiary designation form provided by the Committee. A Participant's
Beneficiary designation may be changed at any time prior to his death by the
execution and delivery of a new Beneficiary designation. The Beneficiary
designation on file with the Company that bears the latest date at the time of
the Participant's death shall govern. Notwithstanding anything in this Section
2.8 to the contrary, in the absence of a Beneficiary designation, the amount of
the Participant's Account shall be paid to the Participant's estate in a lump
sum amount within 90 days after the appointment of an executor or administrator
or as otherwise determined by the Committee.

      2.9. TERMINATION OF PARTICIPATION. Notwithstanding any other provision of
the Plan, no Participant who is an Eligible Employee shall be permitted to
continue to participate in the Plan upon a determination by the Committee that
such Participant is not a member of a select group of management or highly
compensated employees of his employer, within the meaning of ERISA. Upon such a
determination, the Committee may direct that the Participant receive an
immediate lump sum payment equal to the amount credited to his Account.

                                       4
<PAGE>

      2.10. VESTING OF ACCOUNTS. Subject to the following sentence, each
Participant shall at all times have a nonforfeitable interest in his Account
balance. Notwithstanding the preceding sentence, the portion of each
Participant's Account, if any, attributable to Company Contributions shall be
subject to such vesting schedule as may be determined by the Company or
Affiliate from time to time in accordance with the provisions of Section 2.11.

      2.11. COMPANY CONTRIBUTIONS. The Company or any Affiliate may, in its
discretion, provide contributions ("Company Contributions") under this Plan with
respect to one or more Participants. Any such Company Contributions shall be
allocated to the Participant's Account. The amount and vesting schedule of such
Company Contributions, if any, shall be determined by the Company or Affiliate
in its sole discretion.

                                   SECTION III
                                 ADMINISTRATION

            The Company, through the Committee, shall be responsible for the
general administration of the Plan and for carrying out the provisions hereof.
The Committee shall have all such powers as may be necessary to carry out the
provisions of the Plan, including the power to (i) resolve all questions
relating to eligibility for participation in the Plan and the amount in the
Account of any Participant and all questions pertaining to claims for benefits
and procedures for claim review, (ii) resolve all other questions arising under
the Plan, including any factual questions and questions of construction, and
(iii) take such further action as the Company shall deem advisable in the
administration of the Plan. The actions taken and the decisions made by the
Committee hereunder shall be final and binding upon all interested parties. In
accordance with the provisions of Section 503 of ERISA, the Committee shall
provide a procedure for handling claims of Participants or their Beneficiaries
under the Plan. Such procedure shall be in accordance with regulations issued by
the Secretary of Labor and shall provide adequate written notice within a
reasonable period of time with respect to the denial of any such claim as well
as a reasonable opportunity for a full and fair review by the Committee of any
such denial. Except as otherwise specifically provided, no action taken in
accordance with the Plan shall be construed or relied upon as a precedent for
similar action under similar circumstances. The Committee may delegate some or
all of its authorities or duties hereunder, and in such case references
hereunder to the "Committee" shall be deemed to refer to such delegate. Unless
the context clearly requires otherwise, the masculine pronoun wherever used
herein shall be construed to include the feminine pronoun.

                                   SECTION IV
                            AMENDMENT AND TERMINATION

      4.1 AMENDMENT. Subject to the following sentence, the Company reserves the
right to amend the Plan at any time by action of the Board; provided, however,
that no such action shall adversely affect any Participant or Beneficiary who
has an Account, or result in any change in the timing or manner of payment of
the amount of any Account (except as otherwise permitted under the Plan),
without the consent of the Participant or Beneficiary. Notwithstanding the
provisions of this Section 4.1 to the contrary, the Plan may be amended by the
Board at any time, retroactively if

                                       5
<PAGE>

required, if found necessary, in the opinion of the Company, in order to conform
the Plan to the provisions and requirements of any applicable law (including
ERISA and the Internal Revenue Code of 1986, as amended). No such amendment
shall be considered prejudicial to any interest of a Participant or a
Beneficiary hereunder.

      4.2 TERMINATION. The Company reserves the right to terminate the Plan at
any time by action of the Board. In the event that the Company terminates the
Plan, each Participant shall receive a distribution of his Account, at the
discretion of the Company, either (a) in a single lump sum as soon as
administratively practicable following termination of the Plan or (b) in the
form of payment elected by the Participant commencing as soon as
administratively practicable following termination of the Plan.

                                    SECTION V
                                  MISCELLANEOUS

      5.1. NON-ALIENATION OF DEFERRED COMPENSATION. Except as permitted by the
Plan, no right or interest under the Plan of any Participant or Beneficiary
shall, without the written consent of the Company, be (i) assignable or
transferable in any manner, (ii) subject to alienation, anticipation, sale,
pledge, encumbrance, attachment, garnishment or other legal process or (iii) in
any manner liable for or subject to the debts or liabilities of the Participant
or Beneficiary.

      5.2. PARTICIPATION BY EMPLOYEES OF AFFILIATES. An Eligible Employee who is
employed by or performs services for an Affiliate and who elects to participate
in the Plan shall participate on the same basis as an Eligible Employee of the
Company as allowed by law.

      5.3. INTEREST OF PARTICIPANT.

            (a) The obligation of the Company and the Affiliates under the Plan
to make payment of amounts reflected in an Account merely constitutes the
unsecured promise of the Company and the Affiliates to make payments from their
general assets and no Participant or Beneficiary shall have any interest in, or
a lien or prior claim upon, any property of the Company or any Affiliate.
Nothing in the Plan shall be construed as guaranteeing future employment to
Eligible Employees or future Board service to Directors. It is the intention of
the Company and the Affiliates that the Plan be unfunded for tax purposes and
for purposes of Title I of ERISA. The Company may create a trust to hold funds
to be used in payment of its and the Affiliates' obligations under the Plan, and
may fund such trust; provided, however, that any funds contained therein shall
remain liable for the claims of the Company's and any Affiliate's general
creditors.

            (b) In the event that, in the discretion of the Committee, the
Company and/or its Affiliates purchases an insurance policy or policies insuring
the life of any Participant (or any other property) to allow the Company and/or
its Affiliates to recover the cost of providing the benefits, in whole or in
part, hereunder, neither the Participants nor their Beneficiaries or other
distributees shall have nor acquire any rights whatsoever therein or in the
proceeds therefrom. The Company and/or its Affiliates shall be the sole owner
and beneficiary of any such policy or policies and, as such, shall possess and
may exercise all incidents of ownership therein. The Company may require a

                                       6
<PAGE>

Participant's participation in the underwriting or other steps necessary to
acquire such policy or policies and, if required, shall not be a suggestion of
any beneficial interest in such policy or policies to such Participant or any
other person.

      5.4. CLAIMS OF OTHER PERSONS. The provisions of the Plan shall in no event
be construed as giving any other person, firm or corporation any legal or
equitable right as against the Company or any Affiliate or the officers,
employees or directors of the Company or any Affiliate, except any such rights
as are specifically provided for in the Plan or are hereafter created in
accordance with the terms and provisions of the Plan.

      5.5. SEVERABILITY. The invalidity and unenforceability of any particular
provision of the Plan shall not affect any other provision hereof, and the Plan
shall be construed in all respects as if such invalid or unenforceable provision
were omitted.

      5.6. GOVERNING LAW. Except to the extent preempted by federal law, the
provisions of the Plan shall be governed and construed in accordance with the
laws of the State of Ohio.

      5.7. RELATIONSHIP TO OTHER PLANS. The Plan is intended to serve the
purposes of and to be consistent with any bonus or incentive compensation plan
approved by the Committee for purposes of the Plan.

      5.8. SUCCESSORS. The Company shall require any successor (whether direct
or indirect, by purchase, merger, consolidation, reorganization or otherwise) to
all or substantially all of the business and/or assets of the Company expressly
to assume this Plan. This Plan shall be binding upon and inure to the benefit of
the Company and any successor of or to the Company, including without limitation
any persons acquiring directly or indirectly all or substantially all of the
business and/or assets of the Company whether by sale, merger, consolidation,
reorganization or otherwise (and such successor shall thereafter be deemed the
"Company" for the purposes of this Plan), and the heirs, beneficiaries,
executors and administrators of each Participant. In the event that any
successor to the Company shall fail to assume this Plan, the Plan shall
immediately terminate and each Participant shall immediately receive
distribution of his Account in a single lump sum.

      5.9. WITHHOLDING OF TAXES. The Company and its Affiliates may withhold or
cause to be withheld from any amounts deferred or payable under the Plan all
federal, state, local and other taxes as shall be legally required.

      5.10. ELECTRONIC OR OTHER MEDIA. Notwithstanding any other provision of
the Plan to the contrary, including any provision that requires the use of a
written instrument, the Committee may establish procedures for the use of
electronic or other media in communications and transactions between the Plan or
the Committee and Participants and Beneficiaries. Electronic or other media may
include, but are not limited to, e-mail, the Internet, intranet systems and
automated telephonic response systems.

                                       7
<PAGE>

            EXECUTED at ______________ on this ____ day of _______, 2004.

NATIONAL INTERSTATE CORPORATION

By: ______________________________

Title: ___________________________

                                       8

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