<PAGE>
As filed with the Securities and Exchange Commission on March 30,1999.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
RLI CORP.
(Exact name of registrant as specified in its charter)
Illinois 37-0889946
(State of incorporation) (I.R.S. Employer
identification number)
9025 North Lindbergh Drive, Peoria, Illinois 61615
(address of principal executive offices)
RLI CORP. EXECUTIVE DEFERRED COMPENSATION AGREEMENT
RLI CORP. DIRECTOR DEFERRED COMPENSATION PLAN
RLI CORP. KEY EMPLOYEE EXCESS BENEFIT PLAN
(Full Title of the plans)
Kim J. Hensey
Vice President and Corporate Secretary
RLI Corp.
9025 North Lindbergh Drive
Peoria, Illinois 61615
309-692-1000
(Name, address, and telephone number of agent for service)
Copy to:
Kurt W. Florian, Jr., Esq.
Katten Muchin & Zavis
525 West Monroe Street, Suite 1600
Chicago, Illinois 60661-3693
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Exhibit Index on Sequentially Numbered Page 10. Page 1 of 42.
1
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered Per Share(1) Price(1) Fee(1)
<S> <C> <C> <C> <C>
Common 230,000 $29.6563 $6,820,949.00 $1,896.22
Stock, par shares(2)
value $1
per share
- ------------------------------------------------------------------------------
</TABLE>
(1) Estimated pursuant to Rule 457(h) solely for the purpose of calculating
the aggregate offering price and the amount of the registration fee based
upon the average of the high and low prices reported for the shares on the
New York Stock Exchange on March 24, 1999.
(2) Pursuant to Rule 416 under the Securities Act of 1933, as amended, the
number of shares of the issuer's common stock registered hereunder will be
adjusted in the event of stock splits, stock dividends or similar transactions.
2
<PAGE>
Part I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The documents containing information specified in Part I (Plan information
and Registrant information) will be sent or given to each executive
participating in the RLI Corp. Executive Deferred Compensation Agreement and
the RLI Corp. Key Employee Excess Benefit Plan and to each director
participating in the RLI Corp. Director Deferred Compensation Plan as
specified by Rule 428(b)(1) under the Securities Act of 1933, as amended
("Securities Act"). Such documents need not be filed with the Securities and
Exchange Commission ("Commission") either as part of this Registration
Statement or as prospectuses or prospectus supplements pursuant to Rule 424
under the Securities Act. These documents and the documents incorporated by
reference in this Registration Statement, pursuant to Item 3 of Part II of
this Registration Statement, taken together, constitute a prospectus that
meets the requirements of Section 10(a) of the Securities Act.
Part II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed by RLI Corp. ("Company") with the Commission
are incorporated herein by reference, except to the extent that any statement
or information therein is modified, superseded or replaced by a statement or
information contained in this document, or in any other subsequently filed
document incorporated by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998.
2. The Company's Quarterly Reports on Form 10-Q filed pursuant to
Section 13 of the Securities Exchange Act of 1934, as amended ("Exchange
Act") for the quarterly periods ended March 31, 1998, June 30, 1998 and
September 30, 1998.
3. The description of the Company's Common Stock, par value $1.00
per share ("Common Stock"), contained in Item 4 of the Company's Registration
Statement on Form 8-B filed with the Commission pursuant to Section 12 of the
Exchange Act, on June 7, 1993.
3
<PAGE>
4. All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act after the date hereof and prior to
the filing of a post effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference herein and to be a
part hereof from the date of filing of such document.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
RLI Corp. is incorporated under the laws of the State of Illinois.
Under Section 8.75 of the Business Corporation Act of 1983 of the State of
Illinois ("Act"), an Illinois corporation may indemnify any person who was or
is a party, or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation)
by reason of the fact that such person is or was a director, officer,
employee or agent of the corporation, or who is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts to be paid
in settlement actually and reasonably incurred by such person in connection
with such action, suit or proceeding, if such person acted in good faith and
in a manner such person reasonably believed to be in, or not opposed to the
best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe that such person's conduct
was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in
good faith and in a manner which such person reasonably believed to be in or
not opposed to the best interests of the corporation or, with respect to any
criminal action or proceeding, that such person had reasonable cause to
believe that such person's conduct was unlawful.
4
<PAGE>
An Illinois corporation may indemnify any person who was or is a party, or is
threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that such person is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection with the defense or settlement of such action or suit,
if such person acted in good faith and in a manner that such person
reasonably believed to be in, or not opposed to, the best interest of the
corporation, provided that no indemnification shall be made with respect to
any claim, issue, or matter as to which such person has been adjudged to have
been liable to the corporation, unless, and only to the extent that the court
in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability, but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses as the court shall deem proper.
To the extent that a director, officer, employee or agent of a corporation
has been successful, on the merits or otherwise, in the defense of any
action, suit or proceeding referred to above, or in defense of any claim,
issue or matter therein, such person shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by such person
in connection therewith.
The Company's Articles of Incorporation and By-Laws provide for the
indemnification of directors and officers of the Company to the fullest
extent permitted by Section 8.75 of the Act; however, both provide that,
notwithstanding anything in Section 8.75 of the Act to the contrary, no
director or officer shall be indemnified or insured against any liability to
the Company or to its shareholders to which such person would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence with
respect to the duties involved in the conduct of such person's office.
The Company maintains directors' and officers' liability insurance with an
annual aggregate limit of $25,000,000 for the current policy period, subject
to a $100,000 deductible at the corporate level, for each wrongful act where
corporate reimbursement is not available to any director or officer. In
addition, the Company has entered into indemnification agreements with each
of its directors and officers which provide for the indemnification of such
directors and officers to the fullest extent authorized or permitted by
Illinois law.
5
<PAGE>
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
4.1 Articles of Incorporation (incorporated by reference to the
Company's Annual Report on Form 10-K for the fiscal year ending December 31,
1998.)
4.2 By-Laws of the Company (incorporated by reference to the Company's
Annual Report on Form 10-K for the fiscal year ending December 31, 1998).
4.3 RLI Corp. Executive Deferred Compensation Agreement (as attached at
Pages 11 through 22).
4.4 RLI Corp. Key Employee Excess Benefit Plan (as attached at Pages 23
through 30).
4.5 RLI Corp. Director Deferred Compensation Plan (as attached at Pages
31 through 38).
4.6 Form of Certificate representing shares of Common Stock of RLI
Corp., an Illinois corporation (incorporated by reference to Exhibit 4.3 of
the Amendment No. 1 to the Company's Registration Statement on Form S-3 as
filed June 11, 1993, Registration Number 33-61788)
5.1 Opinion of Katten Muchin & Zavis as to the legality of certain
shares of the Common Stock being registered (as attached at Pages 39, 40 and
41).
23.1 Consent of KPMG LLP (as attached at Page 42).
23.2 Consent of Katten Muchin & Zavis (included in the Opinion filed as
Exhibit 5.1)
24.1 Powers of Attorney (included in signature page)
Item 9. Undertakings
6
<PAGE>
The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being made a
post-effective amendment to this Registration Statement:
i. To include any Prospectus required by Section 10(a)(3) of the
Securities Act.
ii. To reflect in the Prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement;
iii. To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
Provided, however, that paragraphs 1(i) and 1(ii) shall not apply if the
information required to be included in a post effective amendment by such
paragraphs is contained in periodic reports filed by the Company pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in this Registration Statement.
(2) For the purpose of determining any liability under the Securities
Act, each such post effective amendment shall be deemed to be a new
Registration Statement relating to the securities to be offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
to the Registration Statement any of the securities being registered which
remain unsold at the termination of the offering.
The Company hereby undertakes that, for the purposes of determining any
liability under the Securities Act, each filing of the Company's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
7
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has
been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer, or controlling person of the Company
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer, or controlling person in connection with the
securities being registered, the Company will, unless in the opinion of
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Act and will be governed
by the final adjudication of such issue.
Signatures
The Company, pursuant to the requirements of the Securities Act, certifies
that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized, in the City of Peoria, State of Illinois.
RLI Corp.
Dated: March 24, 1999 By: /s/ CAMILLE J. HENSEY
----------------------------------
Camille J. Hensey, Vice President
and Corporate Secretary
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, the undersigned constitute and appoint each
of Joseph E. Dondanville and Camille J. Hensey their true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for the undersigned, in any and all capacities (including any
capacity as a director and/or officer of RLI Corp.), to sign any and all
amendments (including, post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting upon said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as
8
<PAGE>
fully to all intents and purposes as the undersigned might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement and Power of Attorney have been signed by the undersigned in the
capacities and on the dates indicated.
Signature Capacity Date
/s/ GERALD D. STEPHENS President, Chief 03/24/99
- --------------------------- Executive Officer and
Gerald D. Stephens Director (Principal
Executive Officer)
/s/ JOSEPH E. DONDANVILLE Vice President, Chief 03/24/99
- --------------------------- Financial Officer
Joseph E. Dondanville (Principal Financial
and Accounting Officer)
/s/ BERNARD J. DAENZER Director 03/24/99
- ---------------------------
Bernard J. Daenzer
/s/ RICHARD J. HAAYEN Director 03/24/99
- ---------------------------
Richard J. Haayen
/s/ WILLIAM R. KEANE Director 03/24/99
- ---------------------------
William R. Keane
/s/ GERALD I. LENROW Director 03/24/99
- ---------------------------
Gerald I. Lenrow
/s/ JONATHAN E. MICHAEL Director 03/24/99
- ---------------------------
Jonathan E. Michael
/s/ EDWIN S. OVERMAN Director 03/24/99
- ---------------------------
Edwin S. Overman
/s/ EDWARD F. SUTKOWKSI Director 03/24/99
- ---------------------------
Edward F. Sutkowski
/s/ ROBERT O. VIETS Director 03/24/99
- ---------------------------
Robert O. Viets
9
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
No. Description of Exhibit Page
- ------- ---------------------- ------------
<S> <C> <C>
4.1 Articles of Incorporation (1)
4.2 By-Laws of the Company (1)
4.3 RLI Corp. Executive Deferred
Compensation Agreement
4.4 RLI Corp. Key Employee
Excess Benefit Plan
4.5 RLI Corp. Director Deferred
Compensation Agreement
4.6 Form of Certificate representing
shares of Common Stock of RLI Corp. (2)
5.1 Opinion of Katten Muchin & Zavis
23.1 Consent of KPMG LLP
23.2 Consent of Katten Muchin & Zavis
(included in Exhibit 5.1)
24.1 Powers of Attorney (included in
signature page of this
Registration Statement)
</TABLE>
(1) Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ending December 31, 1998.
(2) Incorporated by reference to Exhibit 4.3 of the Amendment No. 1 to the
Company's Registration Statement on Form S-3 as filed June 11, 1993,
Registration Number 33-61788.
10
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Exhibit 4.3
---------------------------------------------
THE RLI CORP./EXECUTIVE
DEFERRED COMPENSATION AGREEMENT
---------------------------------------------
11
<PAGE>
THIS RLI CORP./EXECUTIVE DEFERRED COMPENSATION AGREEMENT is made in duplicate
at Peoria, Illinois, effective on the Execution Date by and between RLI and
the Executive.
I. RECITALS
A. BACKGROUND: THE CORPORATION
RLI is a holding company which, through its subsidiaries, is engaged in the
Business, is possessed of the Accounting Year and reports its income and
expense on the Accounting Basis.
B. MVP EXECUTIVE PLAN
The Executive is a participant under the Market Value Potential Executive
Incentive Plan ("MVP Plan") incident to which the Executive may defer all or any
part of the cash bonus ("MVP Bonus") otherwise distributable to the Executive.
The Parties wish to supplement the MVP Plan with this Agreement which shall
control the distribution of any MVP Bonus otherwise distributable to the
Executive.
C. EXEMPTION FROM THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT
RLI has established the RLI Corp. Executive Deferred Compensation Irrevocable
Trust ("Trust") with an independent trustee ("Trustee") to which RLI may
periodically transfer shares of RLI and other assets designed to fund the
obligation of RLI to the Executive under this Agreement. Even though the Plan
Benefit may be satisfied from property transferred to the Trustee under the
Trust, this Agreement and the Plan Benefit are unfunded and are maintained
primarily for the purpose of providing deferred compensation for the
Executive.
If this Agreement is subject to the provisions of Title I of the Employee
Retirement Income Security Act of 1974 ("ERISA"), then subject to the filing
of the statement described in ERISA Labor Reg. Section 2520.104-23, this
Agreement shall be exempt from the participation, vesting, benefit accrual,
funding and fiduciary provisions of ERISA.
II. AGREEMENTS
NOW, THEREFORE, the Parties agree as follows:
1. REMUNERATION: DIRECT
RLI shall pay upon demand all reasonable expenses incurred by the Executive
incident to the Business.
Except as otherwise provided in the following sections, RLI shall pay the
Executive for services rendered as an employee of RLI or an Affiliate a base
salary ("Base Compensation") in an amount periodically determined to be
appropriate by the Parties, payable not less often than annually.
12
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2. REMUNERATION: BASE COMPENSATION DEFERRED
2.1 AMOUNT OF AND LIMITATIONS ON DEFERRED COMPENSATION
Subject to the limitations and the satisfaction of the conditions expressed
in the following sections, the Executive may defer not to exceed one hundred
percent (100%) of the Executive's Base Compensation attributable to services
to be rendered in respect of the period beginning on the Execution Date.
2.1(a) CURRENT ACCOUNTING YEAR: DELIVERY AND IRREVOCABILITY OF
DEFERRED COMPENSATION DIRECTION
Any Deferred Compensation Direction with respect to the period beginning on
the Execution Date and ending on December 31, 1998, must be delivered to RLI
prior to the expiration of the thirty (30) day period beginning on the
Execution Date and shall be irrevocable.
2.1(b) SUBSEQUENT ACCOUNTING YEAR: DELIVERY AND IRREVOCABILITY
OF DEFERRED COMPENSATION DIRECTION
Any Deferred Compensation Direction with respect to any Accounting Year
beginning on or after January 1, 1999, must be delivered to RLI prior to
January 1 of the subject Accounting Year and shall be irrevocable effective
December 31 of the preceding Accounting Year.
2.1(c) INVESTMENT OF BASE COMPENSATION DEFERRED
RLI shall transfer to the Trustee either cash or such number of shares of RLI
as shall be equal in value to the amount of the Base Compensation deferred
not less often than monthly and in any event within the thirty (30) day
period beginning on the close of the subject Accounting Year. RLI shall
direct the Trustee to purchase additional shares of RLI with any cash
dividend. The value of each share of RLI to be transferred shall be equal to
the closing price of a share of RLI as of the close of the last business day
of the referent month.
3. REMUNERATION: MVP BONUS DEFERRED
3.1 AMOUNT OF AND LIMITATIONS ON DEFERRED COMPENSATION
Subject to the limitations and the satisfaction of the conditions expressed
in the following sections, the Executive may defer not to exceed one hundred
percent (100%) of the Executive's MVP Bonus to the extent not then
ascertainable, subject to forfeiture or attributable to services to be
rendered in respect of the period beginning on the Execution Date.
13
<PAGE>
3.1(a) CURRENT ACCOUNTING YEAR: DELIVERY AND IRREVOCABILITY OF
DEFERRED COMPENSATION DIRECTION
Any Deferred Compensation Direction with respect to the period beginning on the
Execution Date and ending on December 31, 1998, must be delivered to RLI prior
to the expiration of the thirty (30) day period beginning on the Execution Date
and shall be irrevocable.
3.1(b) SUBSEQUENT ACCOUNTING YEAR: DELIVERY AND IRREVOCABILITY
OF DEFERRED COMPENSATION DIRECTION
Any Deferred Compensation Direction with respect to any Accounting Year
beginning on or after January 1, 1999, must be delivered to RLI prior to
January 1 of the subject Accounting Year and shall be irrevocable effective
December 31 of the preceding Accounting Year.
3.1(c) INVESTMENT OF MVP BONUS DEFERRED
RLI shall transfer to the Trustee either cash or such number of shares of RLI
as shall be equal in value to the amount of the MVP Bonus within the thirty
(30) day period beginning on the date the amount of the MVP Bonus is finally
determined. RLI shall direct the Trustee to purchase additional shares of RLI
with any cash dividend. The value of each share of RLI to be transferred
shall be equal to the closing price of a share of RLI as of the close of the
last business day of the referent month.
3.2 DISTRIBUTION OF PLAN BENEFIT
3.2(a) PLAN BENEFIT DISTRIBUTION COMMENCEMENT DATE
Except as otherwise provided in the following paragraphs, the Plan Benefit
shall commence to be distributed to the Executive not earlier than thirty
(30) days after a Distribution Event.
If the Executive is the subject of an Unforeseeable Emergency that is caused
by an event beyond the control of the Executive which Unforeseeable Emergency
would result in severe financial hardship to the Executive but for the
distribution of the Plan Benefit before the Distribution Event, then, subject
to the satisfaction of the conditions expressed in the following paragraph,
the Plan Benefit may be distributed to the Executive as, when and to the
extent specified by the Executive Resources Committee.
The Executive Resources Committee must approve the payment period in respect
of any distribution. No payment shall be made to the extent that a hardship
may be relieved (i) through reimbursement or compensation by insurance or
otherwise, (ii) by liquidation of the participant's assets, to the extent the
liquidation of such assets would not itself cause severe financial hardship,
or (iii) by cessation of deferrals under the Plan. No payment shall be made
in excess of the amount reasonably required to satisfy the Unforeseeable
Emergency determined with regard to any Federal or state income tax payable
with respect to any distribution.
14
<PAGE>
3.2(b) DISTRIBUTION PERIOD
Except as otherwise provided in Section 3.2(a) Plan Benefit Distribution
Commencement Date with respect to an Unforeseeable Emergency and the
following paragraphs, the Plan Benefit shall be distributed in sixty (60)
substantially equal monthly installments. If the Executive is the subject of
a fraud, a theft, or an embezzlement from or with respect to either RLI or an
Affiliate, RLI may suspend, reduce or otherwise alter any payment of the
Executive's Plan Benefit in full or partial satisfaction of any direct or
indirect damage sustained or reasonably foreseeable by RLI or any Affiliate
with respect to any such act or omission. If any dispute arising with respect
to this paragraph shall not be resolved by the Parties, such dispute shall be
subject to arbitration in accordance with the Federal Arbitration Act 9
U.S.C. 1, et seq. from a location in the City of Peoria designated by
the Parties.
Subject to the satisfaction of the conditions expressed in the following
sentences, the Executive Resources Committee may, in its sole and
unrestricted discretion, upon application of the Executive, or the
Executive's beneficiary, periodically alter or amend the period over which
the Plan Benefit shall be distributed. The Executive Resources Committee may
require the presentation of such evidence as the Executive Resources
Committee periodically determines to be appropriate. The decision of the
Executive Resources Committee or the decision of the Executive Resources
Committee not to review the application of the Executive or the Executive's
beneficiary, shall not be the subject of any review by the Executive.
3.2(c) FORM OF DISTRIBUTION
The Plan Benefit shall be distributed in the form of RLI shares. Unless the
shares have been registered under the Act, are otherwise exempt from the
registration requirements of such Act, are the subject of a favorable no
action letter issued by the Securities and Exchange Commission, or are the
subject of an opinion of counsel acceptable to RLI to the effect that such
shares are exempt from the registration requirements of the Act, certificates
representing such shares shall contain a legend precluding the transfer of
such shares except in accordance with the provisions of Rule 144 of the Act.
3.2(d) BENEFICIARY
The Plan Benefit shall be distributed to the Executive and then to such
beneficiary as the Executive may periodically designate during the lifetime
of such beneficiary. If the Executive fails to designate a beneficiary or the
designated beneficiary dies before the Executive's Plan Benefit is fully
distributed, the undistributed balance shall be distributed to the
Executive's spouse, if living, and upon the death of the Executive's spouse,
to the Executive's then living descendants, per stirpes, and upon the death
of the last surviving descendant to the estate of the Executive.
15
<PAGE>
4. CLAIM PROCEDURE
This Agreement shall be administered by the Executive Resources Committee.
4.1 FILING OF A CLAIM FOR A PLAN BENEFIT
The Executive may present a claim for any Plan Benefit in writing to the
Executive Resources Committee. The Executive Resources Committee shall
determine the validity of any claim. If all or any part of the claim is
denied, a written notice of the denial will be provided to the Executive not
later than sixty (60) days following the receipt or filing of such claim. The
notice of denial must be expressed in a manner calculated to be understood by
the Executive and include the following: (a) the specific reason or reasons
for denial; (b) a specific reference to the pertinent Plan provisions on
which the denial is based; (c) description of any additional material or
information necessary for the Executive to perfect the claim; (d) an
explanation of why such material or information is necessary; and, (e) an
explanation of this review procedure.
4.2 APPEAL
Within ninety (90) days of the receipt by the Executive of written notice of
denial, or such later time as will be deemed reasonable, taking into account
the nature of any Plan Benefit claimed and any other circumstance, or if the
claim has not been granted within a reasonable period of time, the Executive
may file for a full review of the denial of the claim, including a hearing if
deemed necessary by the Board of Directors of RLI. In connection with such
review, the Executive may inspect pertinent documents and may submit issues
and comments in writing.
The Board of Directors of RLI will deliver to the Executive a written
decision on the review of the claim not later than sixty (60) days after the
receipt of the request for such review, except that if there are special
circumstances which require an extension of time for processing, the sixty
(60) day period will be extended to one hundred twenty (120) days. A decision
on review will be in writing and will include specific reasons for the
decision, written in a manner calculated to be understood by the Executive
and with specific references to the applicable provisions of this Agreement.
5. GENERAL CONDITIONS
5.1 ABSENCE OF FUNDING AND CREDITOR CLAIMS
Except as otherwise provided in the following sentence, this Agreement and the
Plan Benefit are unfunded, are subject to the claims of the general creditors of
RLI, may not be assigned, sold, anticipated, pledged or otherwise transferred
and shall not be subject to any claim of the Executive, the Executive's spouse,
their respective creditors, or their respective successors or assigns. The
foregoing sentence shall not relieve RLI of its obligation to pay the Plan
Benefit as, when and to the extent distributable pursuant to this Agreement.
5.2 ADDITIONAL DOCUMENTS REQUIRED
Each Party shall execute, acknowledge and deliver such additional documents,
writings or assurances as the other may periodically require so as to give full
force and effect to the terms and provisions of this Agreement.
16
<PAGE>
5.3 AMENDMENT AND TERMINATION
Subject to the limitation expressed in the following sentence, this Agreement
may be altered, amended or terminated by RLI upon the vote of its directors
other than the Executive. No alteration, amendment or termination of this
Agreement shall reduce any Plan Benefit existent prior to the date of any
such alteration, amendment or termination.
5.4 BINDING EFFECT
The terms and provisions of this Agreement shall be binding upon and shall
inure to the benefit of the Parties and their respective successors and
assigns.
5.5 CHOICE OF LAW
The laws of the State of Illinois shall govern the validity, interpretation
and administration of this Agreement.
5.6 COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original and all of which shall constitute but one and the
same instrument.
5.7 INCAPACITATED BENEFICIARY
If any beneficiary is Incapacitated, the Trustee may distribute such
beneficiary's Plan Benefit to such beneficiary's parent, guardian,
conservator, or to any individual with whom such beneficiary is residing
without responsibility for its expenditure.
5.8 INCORPORATION BY REFERENCE; SCHEDULES
The paragraphs under the heading "I. RECITALS:" and any Schedule referred to
in this Agreement are a part of this Agreement.
5.9 INTERPRETIVE 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 extend the scope or intent of this Agreement or any provision hereof.
17
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5.10 NOTICES
Any notice, request, communication and demand hereunder shall be in writing
and shall be deemed to have been duly given if delivered in person or sent by
registered or certified mail, postage prepaid, to RLI at its principal place
of business, or to such other address as RLI shall periodically designate by
written notice, and in the case of the Executive, to the Executive's last
known principal place of residence or to such other address as the Executive
shall periodically designate by written notice.
5.11 RECEIPT AND RELEASE FOR PAYMENTS
Any payment to the Executive, any beneficiary or any guardian for either
shall, to the extent thereof, be in full satisfaction of any claim hereunder
against RLI. RLI may require the distributee, as a condition precedent to
such payment, to execute a receipt and release thereof in such form as shall
be determined by RLI.
5.12 WAIVER
The waiver by either Party of any breach of this Agreement, whether in a
single instance or repeatedly, shall not be construed as a waiver of rights
under this Agreement to terminate the same because of similar or additional
breaches. Further such waiver shall not in any manner be construed as a
waiver by any Party to strictly adhere to the terms and conditions of this
Agreement, nor as a waiver of any claim for damages or other remedy by reason
of any such breach.
5.13 DISPUTE RESOLUTION
Any claim, due, demand or dispute arising out of or with respect to this
Agreement not otherwise resolved, shall be subject to arbitration in
accordance with the Federal Arbitration Act 9 U.S.C, ss.1, et seq. from a
location in the City of Peoria designated by RLI.
[The balance of this page is intentionally left blank. The next page begins
with Section 6 GLOSSARY.]
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6. GLOSSARY
"Accounting Basis" means the accrual basis method of accounting.
"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
RLI shall change.
"Act" means the Securities Act of 1933, as periodically amended.
"Affiliate" of any particular Person means any other Person controlling,
controlled by or under common control with such particular Person, where
"control" means the possession, directly or indirectly, of the power to
direct the management and policies of a Person whether through the ownership
of voting securities, contract or otherwise.
"Base Compensation" is defined under Section 1 REMUNERATION: DIRECT.
"Business" means the underwriting of specialty property and casualty
insurance, and providing licensing services for agents and brokers .
"Business Organization" means a partnership, limited partnership, limited
liability company, estate, trust, or any other form of for-profit activity or
any combination of the foregoing.
"Capital Structure Change" means any stock dividend, stock split, reverse
stock split, or any other change in the number of outstanding RLI shares
occasioned by any reorganization, merger, consolidation, split-up,
combination or exchange, or any combination of the foregoing.
"Change in Control" means:
(a) any transfer, sale of substantially all of the shares or assets of
RLI, any exchange, reorganization, merger, recapitalization or other
capital adjustment, or any combination of the foregoing, incident to
which the shareholders before any such event shall own after such
event less than fifty-one percent (51%) of the issued and outstanding
shares of the surviving corporation, or less than fifty-one percent
(51%) of the capital or profits interest of any surviving Business
Organization; or
(b) any transaction or series of transactions after which a majority
of the board of directors of the surviving corporation or a majority
of the voting members of the surviving Business Organization may be
elected or appointed without the consent of the Executive or any
combination of the foregoing.
"Deferred Compensation Direction" means an instrument executed by the
Executive specifying (a) the amount, expressed in either a fixed dollar
amount or a percentage, of the Base Compensation which the Executive elects
to defer; (b) the amount, expressed in either a fixed dollar amount or a
percentage, of the MVP Bonus which the Executive elects to defer; and (c) any
other information as RLI may periodically request.
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"Disability" means the inability of the Executive, by reason of accident or
mental or physical illness reasonably expected to be of indefinite duration,
to continue to provide the services expressed in this Agreement as
conclusively determined by RLI.
"Distribution Event" means (a) the death of the Executive, (b) the Disability
of the Executive, (c) the termination of the Executive's employment with
either RLI or an Affiliate, or (d) a Change in Control.
"ERISA" is defined under I. RECITALS: C. EXEMPTION FROM THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT.
"Execution Date" means the date upon which this Agreement is signed by the
last Party to sign this Agreement.
"Executive" means the undersigned.
"Executive Resources Committee" means a committee of the members of the Board
of Directors of RLI other than the Executive.
"MVP Bonus" is defined under I. RECITALS: B. MVP EXECUTIVE PLAN.
"MVP Plan" is defined under I. RECITALS: B. MVP EXECUTIVE PLAN.
"Parties" means RLI and the Executive.
"Person" means any individual, partnership, corporation, unincorporated
organization, limited liability company, a government or any department or
agency thereof, or any combination of the foregoing.
"Plan Benefit" means the sum of (a) such number of shares of RLI transferred
to the Trustee pursuant to the Executive's Deferred Compensation Direction,
equitably adjusted for any Capital Structure Change; (b) any uninvested
dividends; and (c) any cash or cash equivalents.
"RLI" means RLI Corp.
"Securities Act" means any provision of ss.10(b) of the Securities Exchange
Act of 1934, as periodically amended.
"Trust" is defined under I. RECITALS: C. EXEMPTION FROM THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT.
"Trustee" is defined under I. RECITALS: C. EXEMPTION FROM THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT.
"Unforeseeable Emergency" means severe financial hardship to the Executive
resulting from a sudden illness or accident of the Executive or of a
dependent of the Executive, loss of the Executive's property due to a
casualty, or other similar extraordinary or unforeseeable circumstance
arising as a result of events beyond the control of a participant.
[The balance of this page is intentionally left blank. The next page begins
with Section III. EXECUTION:.]
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III. EXECUTION
Dated at Peoria, Illinois as of the day and year noted above, on the Execution
Date noted below.
RLI: Executive:
RLI Corp. __________________________________
By: __________________________
Its: _____________________ Dated: ___________________________
Dated: _______________________
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----------------------------------------------
DEFERRED COMPENSATION ELECTION
----------------------------------------------
1998 BASE COMPENSATION: I elect to defer:
(a) ___% (or $________) of my Base Compensation attributable to the
period beginning on the Execution Date and otherwise payable to me
during 1998; and,
(b) ___% (or $________) of my MVP Bonus, if any, attributable to the
period beginning on the Execution Date and otherwise payable to me
during 1999.
(c) ___% of my MVP Bonus, if any, attributable to the period beginning
on the Execution Date and otherwise payable to me during 1999,
exceeding $______________, not to exceed $_______________.
Dated: ____________, 1998. _____________________________________________
Executive
Received this ____ day of __________, 1998
RLI Corp.
By: ______________________________________
Its: _________________________________
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Exhibit 4.4
-------------------------------------------------------
THE RLI CORP. KEY EMPLOYEE
EXCESS BENEFIT PLAN
-------------------------------------------------------
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THIS (KEY EMPLOYEE)/RLI CORP. KEY EMPLOYEE EXCESS BENEFIT PLAN is made in
duplicate at Peoria, Illinois on the Execution Date by and between RLI Corp.
("Corporation") and __________________ ("Key Employee").
I. RECITALS
A. BACKGROUND: THE CORPORATION
The Corporation is a holding company which, through its subsidiaries,
underwrites specialty property and casualty insurance, administers extended
service programs, markets computers and automated practice management systems
to the ophthalmic industry, distributes contact lenses and provides licensing
services for agents and brokers (the "Business"), reports its income and
expense on the accrual basis method of accounting, and is possessed of a
fiscal year ("Accounting Year") beginning January 1.
B. BACKGROUND: THE ESOP AND THE KEY EMPLOYEE
The Corporation sponsors the RLI Corp. Stock Ownership Plan and Trust
("ESOP"). Prior to January 1, 1984, the Key Employee was entitled to a share
of the contribution to the ESOP and an allocation of forfeitures in respect
of the ESOP based upon the Key Employee's then current compensation. In
determining the Key Employee's compensation, the Parties assumed that then
current law would remain constant and permit a contribution to the ESOP in
respect of the Key Employee without regard to any limit on the Key Employee's
compensation which might be considered for purposes of computing such
contribution.
Applicable law now limits the amount of the Key Employee's compensation which
could be considered for ESOP purposes, thus depriving the Key Employee of the
Key Employee's share of contributions attributable to compensation in excess
of such limit, as may periodically be amended. The Parties desire to emulate
the Key Employee's participation in the ESOP notwithstanding any limitation
on the compensation of the Key Employee which may be considered for ESOP
purposes.
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C. EXEMPTION FROM THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT
The Corporation has established an irrevocable trust ("Trust") with an
independent trustee ("Trustee") to which the Corporation may periodically
transfer shares of the Corporation and other assets designed to fund the
obligation of the Corporation to the Key Employee under this Plan.
Notwithstanding the fact that the Plan Benefit may be satisfied from property
transferred to the Trustee under the Trust, this Plan and the Plan Benefit
are unfunded and are maintained primarily for the purpose of providing
deferred compensation for the Key Employee. If this Plan is subject to the
provisions of Title I of the Employee Retirement Income Security Act of 1974
("ERISA"), then subject to the filing of the statement described in ERISA
Labor Reg. Section 2520.104-23, this Plan shall be exempt from the
participation, vesting, benefit accrual, funding and fiduciary provisions of
ERISA.
II. AGREEMENTS
NOW, THEREFORE, the Parties agree as follows:
1. EXCESS COMPENSATION CONTRIBUTION
The Corporation shall transfer to the Trustee assets equal to (a) the
contribution which would have been made on behalf of the Key Employee to the
ESOP but for the limitation imposed upon the compensation which the ESOP may
consider for contribution purposes, determined as if the Key Employee did not
defer any portion of the Key Employee's compensation pursuant to the RLI
Corp./Executive Deferred Compensation Agreement adopted by the Corporation on
August 6, 1998; plus (b) the Key Employee's share of forfeitures which would
have been allocated to the Key Employee under the ESOP, but for the
limitation imposed upon compensation.
The Corporation shall direct the Trustee to purchase additional shares of the
Corporation with any cash dividend. The value of each share of the
Corporation to be transferred shall be equal to the closing price of a share
of the Corporation as of the close of the last business day of the referent
Accounting Year.
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2. DISTRIBUTION OF PLAN BENEFIT
2.1 (a) AMOUNT
The Corporation shall cause the Plan Benefit to be distributable to the Key
Employee before the expiration of the thirty-five (35) day period beginning
on the date ("Distribution Date") of the termination of the Key Employee's
employment with the Corporation.
2.1 (b) DISTRIBUTION PERIOD
Absent a designation by the Key Employee to the contrary delivered to the
Corporation more than ten (10) days prior to the Distribution Event, the Plan
Benefit shall be distributed in five (5) substantially equal annual
installments.
2.1 (c) FORM OF DISTRIBUTION
The Plan Benefit shall be distributed in the form of shares of the Corporation.
2.1 (d) BENEFICIARY
Absent a designation by the Key Employee to the contrary delivered to the
Corporation more than ninety (90) days prior to the Distribution Event, the
Plan Benefit shall be distributed to the Key Employee during the lifetime of
the Key Employee.
The Key Employee may designate a beneficiary of the Key Employee's Plan
Benefit. If a Key Employee fails to designate a beneficiary, the Key
Employee's Plan Benefit shall be distributed to the individuals described in
the following phrases after the death of the Key Employee and in the order in
which each phrase appears. The Key Employee's spouse. The Key Employee's then
living descendants, per stirpes. The individuals entitled to inherit the Key
Employee's property under the law of the state in which the Key Employee
resided immediately before the death of the Key Employee and in the
proportions determined under such law.
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If a designated beneficiary dies before the Key Employee's Plan Benefit is
fully distributed, the undistributed portion of the Key Employee's Plan
Benefit shall be distributed to the individuals described in the following
phrases and in the order in which each phrase appears. The spouse of the
designated beneficiary. The then living descendants of the designated
beneficiary, per stirpes. The individuals entitled to inherit the designated
beneficiary's property under the law of the state in which the designated
beneficiary resided immediately before the death of the designated beneficiary
and in the proportions determined under those laws.
3. GENERAL CONDITIONS
3.1 ABSENCE OF FUNDING AND CREDITOR CLAIMS
Except as otherwise provided in the following sentence, this Plan and the
Plan Benefit are unfunded, are subject to the claims of the general creditors
of the Corporation, may not be assigned, sold, anticipated, pledged or
otherwise transferred and shall not be subject to any claim of the Key
Employee, the Key Employee's spouse, their respective creditors, or their
respective successors or assigns. The foregoing sentence shall not relieve
the Corporation of its obligation to pay the Plan Benefit as, when and to the
extent distributable pursuant to this Plan.
3.2 ADDITIONAL DOCUMENTS REQUIRED
Each Party shall execute, acknowledge and deliver such additional documents,
writings or assurances as the other may periodically require so as to give
full force and effect to the terms and provisions of this Plan.
3.3 AMENDMENT AND TERMINATION
Subject to the limitation expressed in the following sentence, this Plan may
be altered, amended or terminated by the Corporation upon the vote of its
directors other than the Key Employee. No alteration, amendment or
termination of this Plan shall alter, amend or terminate any provision with
respect to any Plan Benefit existent prior to the date of any such
alteration, amendment or termination, which Plan Benefit shall be distributed
in accordance with the terms of this Plan notwithstanding any such
alteration, amendment or termination.
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3.4 BINDING EFFECT
The terms and provisions of this Plan shall be binding upon and shall inure
to the benefit of the Parties and their respective successors and assigns.
3.5 CHOICE OF LAW
The laws of the State of Illinois shall govern the validity, interpretation
and administration of this Plan.
3.6 COUNTERPARTS
This Plan may be executed in any number of counterparts, each of which shall
be deemed an original and all of which shall constitute but one and the same
instrument.
3.7 INCAPACITATED BENEFICIARY
If any beneficiary is Incapacitated, the Trustee may distribute such
beneficiary's Plan Benefit to such beneficiary's parent, guardian,
conservator, or to any individual with whom such beneficiary is residing
without responsibility for its expenditure.
3.8 INCORPORATION BY REFERENCE; SCHEDULES
The paragraphs under the heading "I. RECITALS:" and any Schedule referred to
in this Plan are a part of this Plan.
3.9 INTERPRETIVE 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 Plan 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 Plan 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 extend the scope or intent of this Plan or any provision hereof.
28
<PAGE>
3.10 NOTICES
Any notice, request, communication and demand hereunder shall be in writing
and shall be deemed to have been duly given if delivered in person or sent by
registered or certified mail, postage prepaid, to the Corporation at its
principal place of business, or to such other address as the Corporation
shall periodically designate by written notice, and in the case of the Key
Employee, to the Key Employee's last known principal place of residence or to
such other address as the Key Employee shall periodically designate by
written notice.
3.11 RECEIPT AND RELEASE FOR PAYMENTS
Any payment to the Key Employee, any beneficiary or any guardian for either
shall, to the extent thereof, be in full satisfaction of any claim hereunder
against the Corporation. The Corporation may require the distributee, as a
condition precedent to such payment, to execute a receipt and release thereof
in such form as shall be determined by the Corporation.
3.12 VENUE
As a substantial portion of the duties and obligation of the Parties created
hereunder are performable in Peoria, Illinois, Peoria, Illinois, shall be the
sole and exclusive venue for any arbitration, litigation, special
proceedings, or other proceedings as between the Parties that may be brought,
or arise out of, or in connection with or by reason of this Plan.
3.13 WAIVER
The waiver by either Party of any breach of this Plan, whether in a single
instance or repeatedly, shall not be construed as a waiver of rights under
this Plan to terminate the same because of similar or additional breaches.
Further such waiver shall not in any manner be construed as a waiver by any
Party to strictly adhere to the terms and conditions of this Plan, nor as a
waiver of any claim for damages or other remedy by reason of any such breach.
29
<PAGE>
4. 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
RLI shall change.
"Business " is defined under I. RECITALS.
"Corporation " means RLI Corp.
"Execution Date " means the date upon which this Plan is signed by the last
Party to sign this Plan.
"Parties " means the Corporation and the Key Employee.
"Plan Benefit" means the sum of (i) such number of shares of RLI owned by the
Trustee in respect of the Key Employee equitably adjusted for any capital
change; plus (ii) uninvested dividends in respect of (i); plus (iii) any
other asset owned by the Trust in respect of the Key Employee.
III. EXECUTION
Dated at Peoria, Illinois as of the day and year noted above, on the
Execution Date noted below.
Corporation: Key Employee:
RLI Corp. ___________________________________
Key Employee
By: ______________________________
Its: _________________________
Dated: ____________________________
Dated: ___________________________
30
<PAGE>
EXHIBIT 4.5
THIS (OUTSIDE DIRECTOR)/RLI CORP. DIRECTOR DEFERRED COMPENSATION PLAN is
made in duplicate at Peoria, Illinois on the Execution Date by and between
RLI Corp. ("Corporation") and (Outside Director) ("Director").
I. RECITALS
A. BACKGROUND: THE CORPORATION
The Corporation is a holding company which, through its subsidiaries,
underwrites specialty property and casualty insurance, administers extended
service programs, markets computers and automated practice management systems
to the ophthalmic industry, distributes contact lenses and provides licensing
services for agents and brokers (the "Business"), reports its income and
expense on the accrual basis method of accounting, and is possessed of a
fiscal year ("Accounting Year") beginning January 1.
B. BACKGROUND: THE DIRECTOR
The shareholders of the Corporation have elected the Director to serve as a
director of the Corporation. In order to encourage the Director's
contribution to and the continued financial success of the Corporation, the
Corporation desires to provide a financial incentive to the Director.
C. BACKGROUND: THE ESOP
The Corporation sponsors the RLI Corp. Stock Ownership Plan and Trust
("ESOP"). The Director, as an independent contractor, is unable to
participate in the ESOP. The Parties desire to permit the Director to defer
the payment of any fee associated with the Director's performance of services
on behalf of the Corporation, and to cause such fee to purchase shares of the
Corporation as if the Director were employed by the Corporation and thus able
to participate in the ESOP.
D. EXEMPTION FROM THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT
The Corporation shall establish an irrevocable trust ("Trust") with an
independent trustee ("Trustee") to which the Corporation may periodically
transfer shares of the Corporation and other assets designed to fund the
obligation of the Corporation to the Director under this Plan.
Notwithstanding the fact that the Plan Benefit may be satisfied from
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<PAGE>
property transferred to the Trustee under the Trust, this Plan and the Plan
Benefit are unfunded and are maintained primarily for the purpose of
providing deferred compensation for the Director. If this Plan is subject to
the provisions of Title I of the Employee Retirement Income Security Act of
1974 ("ERISA"), then subject to the filing of the statement described in
ERISA Labor Reg. Sec. 2520.104-23, this Plan shall be exempt from the
participation, vesting, benefit accrual, funding and fiduciary provisions of
ERISA.
II. AGREEMENTS
NOW, THEREFORE, the Parties agree as follows:
1. REMUNERATION: DIRECT
The Corporation shall pay any reasonable expense incurred by the Director not
less often than annually related to services provided by the Director as a
director. Except as otherwise provided in the following sections, the
Corporation shall pay the Director for services as a director an amount
("Direct Compensation") periodically determined to be appropriate by the
Parties, payable not less often than annually.
2. REMUNERATION: DEFERRED
2.1 AMOUNT OF AND LIMITATION ON DEFERRED COMPENSATION
Subject to the limitations and the satisfaction of the conditions expressed
in the following sections, the Director may defer all or any portion of the
Director's Direct Compensation.
2.1(a) DELIVERY AND IRREVOCABILITY OF DEFERRED COMPENSATION
DIRECTOR
Except as to any deferral with respect to the current Accounting Year which
must be evidenced by a Deferred Compensation Direction delivered to the
Corporation prior to the expiration of the thirty (30) day period beginning
on the Execution Date, the deferral must be evidenced by a Deferred
Compensation Direction, delivered to the Corporation prior to the beginning
of the referent Accounting Year. Except as to any Deferred Compensation
Direction with respect to the current Accounting Year, any Deferred
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<PAGE>
Compensation Direction may be revoked prior to the referent Accounting Year
by the delivery of a new Deferred Compensation Direction to the Corporation
prior to the referent Accounting Year. The Deferred Compensation Direction
with respect to the current Accounting Year may not be revoked. No other
Deferred Compensation Direction may be revoked on or after the beginning of
the referent Accounting Year.
"Deferred Compensation Direction" means an instrument executed by the
Director specifying the amount of the Direct Compensation which the Director
elects to defer, and any other information as the Corporation may
periodically request.
2.1(b) INVESTMENT OF DIRECT COMPENSATION DEFERRED
The Corporation shall transfer to the Trustee such number of shares of the
Corporation as shall be equal to the number of shares allocated to the
Director under the terms of the Old Plan within the thirty (30) day period
beginning on the Execution Date. The Corporation shall direct the Trustee to
purchase additional shares of the Corporation with any cash dividend.
The Corporation shall transfer to the Trustee such number of shares of the
Corporation as shall be equal in value to the amount of the Direct
Compensation ascertainable by the Corporation prior to the end of the
referent Accounting Year, within the thirty (30) day period beginning on the
close of the referent Accounting Year. The Corporation shall direct the
Trustee to purchase additional shares of the Corporation with any cash
dividend. The value of each share of the Corporation to be transferred shall
be equal to the closing price of a share of the Corporation as of the close
of the last business day of the referent Accounting Year.
The Corporation shall transfer to the Trustee such number of shares of the
Corporation as shall be equal to the amount of the Direct Compensation not
ascertainable by the Corporation prior to the end of the referent Accounting
Year within the thirty (30) day period beginning on the date of such Direct
Compensation is ascertained by the Corporation upon the exercise of
reasonable diligence. The Corporation shall direct the Trustee to purchase
additional shares of the Corporation with any cash dividend. The value of
such share of the Corporation to be transferred shall be equal to the closing
price of a share of the Corporation as of the close of the last business day
of the referent Accounting Year.
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2.2 DISTRIBUTION OF PLAN BENEFIT
2.2(a) AMOUNT
The Corporation shall cause the Plan Benefit to be distributable to the
Director before the expiration of the thirty-five (35) day period beginning
on the date ("Distribution Date") of the termination of the Director's status
as a director of the Corporation.
"Plan Benefit" means the sum of (i) such number of shares of the Corporation
as are equal in value to the Plan Benefit determined under the Old Plan as of
the Execution Date; (ii) such number of shares of the Corporation transferred
to the Trustee pursuant to the Director's Deferred Compensation Direction;
and (iii) both (i) and (ii), equitably adjusted for any capital change, plus
uninvested dividends.
2.2(b) DISTRIBUTION PERIOD
Absent a written designation by the Director to the contrary delivered to the
Corporation more than ninety (90) days prior to the Distribution Event, the
Plan Benefit shall be distributed in five (5) substantially equal annual
installments.
2.2(c) FORM OF DISTRIBUTION
The Plan Benefit shall be distributed in the form of shares of the
Corporation. Unless the shares have been registered under the Securities Act
of 1933 (the "Act"), are otherwise exempt from the registration requirements
of such Act, are the subject of a favorable no action letter issued by the
Securities and Exchange Commission, or are the subject of an opinion of
counsel acceptable to the Corporation to the effect that such shares are
exempt from the registration requirements of the Act, certificates
representing such shares shall contain a legend precluding the transfer of
such shares except in accordance with the provisions of Rule 144 of the Act.
2.2(d) BENEFICIARY
Absent a designation by the Director to the contrary delivered to the
Corporation more than ninety (90) days prior to the Distribution Event, the
Plan Benefit shall be distributed to the Director during the lifetime of the
Director.
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<PAGE>
The Director may designate a beneficiary of the Director's Plan Benefit. If a
Director fails to designate a beneficiary, the Director's Plan Benefit shall
be distributed to the individuals described in the following phrases after
the death of the Director and in the order in which each phrase appears. The
Director's spouse. The Director's then living descendants, per stirpes. The
individuals entitled to inherit the Director's property under the law of the
state in which the Director resides immediately before the death of the
Director and in the proportions determined under such law.
If a designated beneficiary dies before the Director's Plan Benefit is fully
distributed, the undistributed portion of the Director's Plan Benefit shall
be distributed to the individuals described in the following phrases and in
the order in which each phrase appears. The spouse of the designated
beneficiary. The then living descendants of the designated beneficiary, per
stirpes. The individuals entitled to inherit the designated beneficiary's
property under the law of the state in which the designated beneficiary
resided immediately before the death of the designated beneficiary and in the
proportions determined under those laws.
3. GENERAL CONDITIONS
3.1 ABSENCE OF FUNDING AND CREDITOR CLAIMS
Except as otherwise provided in the following sentence, this Plan and the
Plan Benefit are unfunded, are subject to the claims of the general creditors
of the Corporation, may not be assigned, sold, anticipated, pledged or
otherwise transferred and shall not be subject to any claim of the Director,
the Director's spouse, their respective creditors, or their respective
successors or assigns. The foregoing sentence shall not relieve the
Corporation of its obligation to pay the Plan Benefit as, when and to the
extent distributable pursuant to this Plan.
3.2 ADDITIONAL DOCUMENTS REQUIRED
Each Party shall execute, acknowledge and deliver such additional documents,
writings or assurances as the other may periodically require so as to give
full force and effect to the terms and provisions of this Plan.
3.3 AMENDMENT AND TERMINATION
Subject to the limitation expressed in the following sentence, this Plan may
be altered, amended or terminated by the Corporation upon the vote of
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<PAGE>
its directors other than any director who is a party to this or any
comparable Plan. No alteration, amendment or termination of this Plan shall
alter, amend or terminate any provision with respect to any Plan Benefit
existent prior to the date of any such alteration, amendment or termination,
which Plan Benefit shall be distributed in accordance with the terms of this
Plan notwithstanding any such alteration, amendment or termination.
3.4 BINDING EFFECT
The terms and provisions of this Plan shall be binding upon and shall inure
to the benefit of the Parties and their respective successors and assigns.
3.5 CHOICE OF LAW
The laws of the State of Illinois shall govern the validity, interpretation
and administration of this Plan.
3.6 COUNTERPARTS
This Plan may be executed in any number of counterparts, each of which shall
be deemed an original and all of such which constitute but one and the same
instrument.
3.7 INCAPACITATED BENEFICIARY
If any beneficiary is Incapacitated, the Trustee may distribute such
beneficiary's Plan Benefit to such beneficiary's parent, guardian,
conservator, or to any individual with whom such beneficiary is residing
without responsibility for its expenditure.
3.8 INCORPORATION BY REFERENCE; SCHEDULES
The paragraphs under the heading "I. RECITALS:" and any Schedule referred to
in this Plan are a part of this Plan.
36
<PAGE>
3.9 INTERPRETIVE 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 Plan 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 Plan 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 extend the scope or intent of this Plan or any provision hereof.
3.10 NOTICES
Any notice, request, communication and demand hereunder shall be in writing
and shall be deemed to have been duly given if delivered in person or sent by
registered or certified mail, postage prepaid, to the Corporation at its
principal place of business, or to such other address as the Corporation
shall periodically designate by written notice, and in the case of the
Director, to the Director's last known principal place of residence or to
such other address as the Director shall periodically designate by written
notice.
3.11 RECEIPT AND RELEASE FOR PAYMENTS
Any payment to the Director, any beneficiary or any guardian for either
shall, to the extent thereof, be in full satisfaction of any claim hereunder
against the Corporation. The Corporation may require the distributee, as a
condition precedent to such payment, to execute a receipt and release thereof
in such form as shall be determined by the Corporation.
3.12 VENUE
As a substantial portion of the duties and obligations of the Parties created
hereunder are performable in Peoria, Illinois, Peoria, Illinois, shall be the
sole and exclusive venue for any arbitration, litigation, special
proceedings, or other proceedings as between the Parties that may be brought,
or arise out of, or in connection with or by reason of this Plan.
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3.13 WAIVER
The waiver by either Party of any breach of this Plan, whether in a single
instance or repeatedly, shall not be construed as a waiver of rights under
this Plan to terminate the same because of similar or additional breaches.
Further, such waiver shall not in any manner be construed as a waiver by any
Party to strictly adhere to the terms and conditions of this Plan, nor as a
waiver of any claim for damages or other remedy by reason of any such breach.
4. 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.
"Business" is defined under I. RECITALS.
"Corporation" means RLI Corp.
"Deferred Compensation Direction" is defined at Section 2.1(a) DELIVERY AND
IRREVOCABILITY OF DEFERRED COMPENSATION DIRECTION.
"Execution Date" means the date upon which this Plan is signed by the last
Party to sign this Plan.
"Parties" means the Corporation and the Director.
III. EXECUTION
Dated at Peoria, Illinois as of the day and year noted above, on the
Execution Date noted below.
Corporation: Director:
RLI Corp. _____________________________
(Name of Outside Director)
By: ______________________________
Its President
Dated: ______________________
Dated:____________________________
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EXHIBIT 5.1
KATTEN MUCHIN & ZAVIS
West Monroe Street, Suite 1600
Chicago, Illinois 60661-3693
(312) 902-5200
March 24, 1999
RLI Corp.
9025 North Lindbergh Drive
Peoria, Illinois 61615
Re: RLI Corp.
Registration Statement on Form S-8
Ladies and Gentlemen:
We have acted as special counsel to RLI Corp. (the "Company") in
connection with the proposed registration by the Company of up to 230,000
shares of the Company's Common Stock, par value $1 per share (the "Common
Stock"), which are issuable under the RLI Corp. Executive Deferred
Compensation Agreement, the RLI Corp. Director Deferred Compensation Plan and
the RLI Corp. Key Employee Excess Benefit Plan (collectively referred to as
the "Plans"), pursuant to a Registration Statement on Form S-8 filed with the
Securities and Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended (the "Act") (such Registration Statement, as amended
or supplemented, is hereinafter referred to as the "Registration Statement").
The opinions contained in this letter (herein called "our opinion") are
based exclusively upon the Business Corporation Act of 1983 of the State of
Illinois, as now constituted. We express no opinion as to the applicability
of, compliance with, or effect of any other law or governmental requirement
with respect to the Company. For purposes of our opinions we have assumed
without independent investigation that factual information supplied to us for
purposes of our opinions is complete and accurate.
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RLI Corp.
March 24, 1999
Page 2
Based upon and subject to the foregoing, we hereby advise you that in
our opinion:
(1) The Company is a corporation existing and in good standing under
the laws of the State of Illinois.
(2) Each share of Common Stock registered under the Registration
Statement and issuable under the Plans, when issued as authorized by the
Company upon payment of the consideration to be paid therefor, will be
validly issued, fully paid and non-assessable.
For purposes of this letter we have relied upon (i) information
contained in one or more certificates provided by the Illinois Secretary of
State and (ii) factual information supplied to us by the Company. We have
assumed without investigation that there has been no relevant change or
development between the dates as of which the information cited in the
preceding sentence was given and the date of this letter and that the
information upon which we have relied is accurate and does not omit disclosures
necessary to prevent such information from being misleading. For purposes of
each opinion in paragraph 1, we have relied exclusively upon a certificate
issued by the Illinois Secretary of State, and such opinion is not intended to
provide any conclusion or assurance beyond that conveyed by that certificate.
We hereby consent to the filing of this opinion with the Commission as
Exhibit 5.1 to the Registration Statement. We also consent to the reference
to our firm in the Registration Statement. In giving this consent, we do not
thereby admit that we are in the category of persons whose consent is
required under Section 7 of the Act or the rules and regulations of the
Commission thereunder.
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RLI Corp.
March 24, 1999
Page 3
We do not find it necessary for the purposes of this opinion, and
accordingly we do not purport to cover herein, the application of the
securities or "Blue Sky" laws of the various states to the issuance and sale
of each share of Common Stock registered under the Registration Statement.
This opinion is limited to the specific issues addressed herein, and no
opinion may be inferred or implied beyond that expressly stated herein. We
assume no obligation to revise or supplement this opinion should the present
laws of the State of Illinois be changed by legislative action, judicial
decision or otherwise.
Sincerely,
/s/ Katten Muchin & Zavis
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EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
RLI Corp.:
We consent to the use of our reports incorporated herein by reference in this
Registration Statement of RLI Corp. on Form S-8 (relating to the registration
of 230,000 RLI Corp. Common Shares for the RLI Corp. Executive Deferred
Compensation Agreement, the RLI Corp. Director Deferred Compensation Plan and
the RLI Corp. Key Employee Excess Benefit Plan) and to the reference to our
firm under the heading "Experts" in the Prospectuses.
/s/ KPMG LLP
Chicago, Illinois
March 24, 1999
42
