Document:

Exhibit

Exhibit 10.2

PERSONAL & CONFIDENTIAL

To:     Douglas Allen Pertz

From:    McAlister C. Marshall, II

Date:    June 9, 2016

Subject:    Inducement Stock Option Award Agreement

On June 9, 2016 (the “Grant Date”), the Compensation and Benefits Committee of the Board of Directors of The Brink’s Company (the “Company”), in accordance with the terms of The Brink’s Company 2013 Equity Incentive Plan (the “Plan”), granted you this award (this “Award”) of nonqualified stock options (the “Options”) to purchase 400,000 shares of common stock of the Company (each, a “Share”) at a price of $29.87 per Share.  Capitalized terms that are used but not defined herein or in the Terms and Conditions attached hereto (collectively, this “Award Agreement”) shall have the meanings ascribed to such terms in the Plan.  For purposes of this Award Agreement, the terms “Cause”, “Good Reason” and “Incapacity” shall have the meanings ascribed to such terms in the Offer Letter, dated as of June 9, 2016, between the Company and you (the “Offer Letter”).

Unless otherwise provided under this Award Agreement, subject to your continued employment by the Company or one of its Subsidiaries from the Grant Date through June 9, 2019 (the “Vesting Date”), and your continued holding of the “Purchased Stock” (as defined in the Offer Letter) through the Vesting Date (the “Holding Condition”), a number of Options determined as follows shall vest:

		
	•
	Options in respect of 133,334 Shares shall become vested if the average closing price of Shares over any 15 consecutive trading day period between the Grant Date and the Vesting Date is at least $37.34 (the “First Price Target”);

		
	•
	Options in respect of an additional 133,333 Shares shall become vested if the average closing price of Shares over any 15 consecutive trading day period between the Grant Date and the Vesting Date is at least $44.81;

		
	•
	Options in respect of an additional 133,333 Shares shall become vested if the average closing price of Shares over any 15 consecutive trading day period between the Grant Date and the Vesting Date is at least $47.79 (each of the foregoing price targets, a “Price Target”).

    

Except as expressly provided below, any Options with respect to which the applicable Price Target has not been attained as of the Vesting Date shall be forfeited automatically at such time.

The Company shall comply with federal, state and local tax withholding requirements with respect to the taxable income you will recognize from exercise of the Options (which may include withholding from delivery a sufficient number of Shares to provide for the payment of withholding taxes or withholding cash compensation, as permitted under relevant law).  
Prior to your acceptance of this Award, you will need to review this Award Agreement, which includes the following documents provided below:

		
	•
	The Terms and Conditions, which together with the Plan (receipt of a copy of which is hereby acknowledged by you) and the Offer Letter, govern this Award.

		
	•
	A copy of The Brink’s Company Compensation Recoupment Policy (as amended from time to time, the “Recoupment Policy”, the current version of which is attached hereto as Exhibit A), which provides that incentive compensation that meets the definition of Excessive Compensation under the Recoupment Policy will be recouped from executive officers and other responsible parties in the event the Company is required to provide an accounting restatement for any of the prior three fiscal years, due to material noncompliance with any financial reporting requirement under the Federal securities laws.  You must agree to the terms of the Recoupment Policy in order to receive this Award, as outlined in Section 8(a) of this Award Agreement. 

		
	•
	The Restrictive Covenant Agreement (which is attached hereto as Exhibit B), which will require that you refrain from certain activities in the event that you terminate employment with the Company and its Subsidiaries. You must agree to these restrictions in order to receive this Award, as outlined in Section 9 of the Terms and Conditions.

By your signature and the authorized Company signature below and on the final page of the Terms and Conditions, you and the Company agree that this Award is granted under and governed by the terms and conditions of this Award Agreement, the Offer Letter, and the Plan (receipt of a copy of which is hereby acknowledged, and which is incorporated by reference into this Award Agreement).
	
			
	/s/McAlister C. Marshall, II
	 
	As of June 9, 2016

	The Brink’s Company
	 
	Date

	 
	 
	 

	/s/Douglas A. Pertz
	 
	As of June 9, 2016

	Employee
	 
	Date

TERMS AND CONDITIONS

1.Subject to all the terms and conditions of the Plan, the employee identified above (the “Employee”) is granted this Award as set forth above.

2.(a)  Notwithstanding Section 11(a) of the Plan (which shall be inapplicable to this Award), if prior to a Change in Control and the Vesting Date, the Employee’s employment by the Company or one of its Subsidiaries is terminated by the Company or one of its Subsidiaries without Cause, by the Employee for Good Reason, or due to the Employee’s death or Incapacity, then (i) a number of unvested Options as to which the applicable Price Target has been attained (and, for this purpose, the First Price Target shall be deemed attained if not otherwise attained) equal to (x) the number of such Options multiplied by (y) a fraction, the numerator of which is the number of days from and including the Start Date through and including the date of termination plus 548 days (up to 1,095), and the denominator of which is 1,095 (the “Pro-Ration Fraction”) shall vest on the date of termination; and (ii) a number of unvested Options for which the applicable Price Target has not been attained or deemed attained as of the date of termination equal to the number of such Options multiplied by the Pro-Ration Fraction shall remain outstanding and eligible to vest subject to attaining the applicable Price Target during the six-month period following the date of termination.  Options that are not vested and that do not remain eligible to vest on the date of termination after the application of the preceding sentence shall be forfeited three months following the date of termination (except as provided in Section 3(c)), and Options that remain eligible to vest for six months following the date of termination pursuant to clause (ii) of the preceding sentence and as to which the applicable Price Target is not attained during such six-month period shall be forfeited automatically at the end of such six-month period.

2.(b)  If prior to a Change in Control and the Vesting Date, the Employee’s employment by the Company or one of its Subsidiaries terminates for any reason not contemplated by Section 2(a) of this Award Agreement, any unvested Options subject to this Award shall be forfeited automatically upon such termination.

2.(c)      Notwithstanding the above, the Holding Condition shall cease upon the Employee’s termination of employment.

3.(a) Notwithstanding Section 12(g) of the Plan, unless otherwise determined by the Board or the Committee, if, in the event of a Change in Control that occurs on or prior to the Vesting Date, this Award remains outstanding or the successor company assumes or provides a substitute award for this Award, with appropriate adjustments to the exercise price and number and kinds of shares underlying this Award, any portion of this Award that is unvested shall remain outstanding and eligible to vest and be exercised in accordance with the terms of this Award Agreement; provided, however, the Price Targets shall cease to apply following a Change in Control.  If, in the event of a Change in Control, this Award does not remain outstanding or the successor company does not so assume this Award or provide a substitute award, Section 12(g) of the Plan shall apply to this Award, and the Price Targets shall be deemed achieved.

3.    (b)  Notwithstanding Section 3(a) of this Agreement, if following a Change in Control, the Employee’s employment by the Company or one of its Subsidiaries terminates prior to the Vesting Date for any reason other than a termination by the Company or one of its Subsidiaries for Cause or by the Employee without Good Reason, then upon such termination, any unvested Options subject to this Award shall automatically vest in full without regard to the Price Targets.

3.    (c)  If the Employee’s employment by the Company or one of its Subsidiaries is terminated by the Company or one of its Subsidiaries without Cause or by the Employee for Good Reason during the three-month period prior to a Change in Control that occurs on or prior to the Vesting Date, then upon the Change in Control, any outstanding unvested Options subject to this Award shall automatically vest in full without regard to the Price Targets.

3.    (d)  Notwithstanding the above, the Holding Condition shall cease upon a Change in Control.

4.Options, to the extent vested, may be exercised by the Employee with respect to all or such portion of the Shares subject to this Award until the termination of the Options.  The Options shall automatically terminate and no longer be exercisable upon June 9, 2022 or, if earlier, (a) in the case of Options which are vested upon termination of employment, (X) the first anniversary of a termination due to death or Incapacity, (Y)  immediately upon a termination by the Company for Cause, and (Z) 90 days following  termination for any other reason, and (b)  in the case of Options that vest following termination of employment pursuant to Section 2(a)(ii) or 3(c) of this Award Agreement, 90 days following the applicable vesting date.

5.In order to exercise Options, the Employee shall provide written notice to the Company, specifying the number of Shares to be purchased, and shall tender the full purchase price of the Shares covered by such exercise, in accordance with Section 6(d) of the Plan.  Such payment may be made in Shares already owned by the Employee.  Such exercise shall be effective upon receipt by the Company of such notice and tender.  Notwithstanding the foregoing, in accordance with Section 12(h) of the Plan, the Options shall be automatically, and without any action by Employee, deemed exercised, by means of a “net exercise” procedure, immediately prior to the expiration of the Options if the then Fair Market Value of the underlying Shares at that time exceeds the exercise price of the Options.

6.In accordance with Section 14(b) of the Plan, if the Employee is subject to the income tax laws of the United States of America, the Company shall withhold from the payment to the Employee a sufficient number of Shares to provide for the payment of any taxes required to be withheld by federal, state or local law with respect to income resulting from such payment.

7.The Options are not transferable by the Employee otherwise than by will or by the laws of descent and distribution and shall be exercised during the lifetime of the Employee only by the Employee or by the Employee’s duly appointed legal representative.

8.(a) This Agreement is subject to the terms and conditions of the Recoupment Policy, a copy of which is attached as Exhibit A, and the provisions thereof are incorporated in this Award Agreement by reference.  The Employee further acknowledges and agrees that all cash-based or equity-based compensation, as defined in the Recoupment Policy (“Incentive Awards”), that the Employee receives or is eligible to receive contemporaneously with or after the date of this Agreement shall be subject to the terms and conditions of the Recoupment Policy, and the Employee may be required to forfeit such Incentive Awards, or return shares or other property (or any portion thereof) received in respect of such Incentive Awards, if the Employee is determined to be a Covered Employee and such Incentive Awards, shares or other property (or such portion thereof) is determined to be Excess Compensation (as such terms are defined in the Recoupment Policy).

8.    (b) In exchange for this Award, and the opportunity to be eligible to receive future Incentive Awards, the Employee expressly agrees and consents that all Incentive Awards previously granted shall be subject to the terms and conditions of the Recoupment Policy from and after the date hereof.  For the avoidance of doubt, the Employee may be required to forfeit Incentive Awards or return shares or other property (or any portion thereof) already received in respect of such Incentive Awards, if the Employee is determined to be a Covered Employee and such Incentive Awards, shares or other property (or such portion thereof) is determined to be Excess Compensation.  The parties acknowledge that the Employee would not be eligible for the benefits described in the first sentence of this Section 8(b) without agreeing to the consent in this Section 8(b).

9.In connection with the Employee’s acceptance of this Award and in consideration of the promises contained in this Award Agreement, the receipt and adequacy of which are hereby acknowledged, the Employee agrees to comply with the terms of the Restrictive Covenant Agreement set forth on Exhibit B of this Award Agreement, the provisions of which are incorporated in this Award Agreement by reference.  This Award shall expire and may no longer become earned and/or payable on and after the time the Employee breaches the terms of the Restrictive Covenant Agreement, and the Employee expressly agrees to (a) return to the Company any Shares previously delivered pursuant to this Award Agreement, (b) reimburse the Company for all withholding taxes paid in connection with settlement of this Award and (c) pay to the Company the aggregate proceeds received from any sale or disposition of Shares previously delivered pursuant to this Award Agreement, promptly upon a breach of such Restrictive Covenant Agreement.

10.All other provisions contained in the Plan are incorporated in this Award Agreement by reference.  The Board or the Committee may amend the Plan at any time, provided that if such amendment shall adversely affect the rights of the Employee with respect to this Award, the Employee’s consent shall be required except to the extent any such amendment is made to comply with any applicable law, stock exchange rules and regulations or accounting or tax rules and regulations.  This Award Agreement may at any time be amended by mutual agreement of the Board or the Committee (or a designee thereof) and the Employee.  The Company shall provide, by registered or certified mail, the Employee with written notice of any amendment to this Award Agreement or the Plan that requires the consent or agreement of the Employee, which amendment, if adopted prior to a Change in Control, shall become automatically effective unless the Employee, 

within 30 days of the date the Company provides such notice, gives written notice to the Company that such amendment is not accepted by the Employee, in which case the terms of this Award Agreement and the Plan shall remain unchanged.  Subject to any applicable provisions of the Company’s bylaws or of the Plan, any applicable determinations, order, resolutions or other actions of the Committee or of the Board shall be final, conclusive and binding on the Company and the Employee.

11.All notices hereunder shall be in writing and (a) if to the Company, shall be delivered personally to the Secretary of the Company or mailed to its principal office address, 1801 Bayberry Court, P.O. Box 18100, Richmond, VA 23226-8100 USA, to the attention of the Secretary, and (b) if to the Employee, shall be delivered personally or mailed to the Employee at the address set forth below.  Such addresses may be changed at any time by notice from one party to the other.

12.This Award Agreement shall bind and inure to the benefit of the parties hereto and the successors and assigns of the Company and, to the extent provided in the Plan, the legal representatives of the Employee.  As used in this Award Agreement, the “Company” means the Company as defined herein and any successor.

IN WITNESS WHEREOF, the parties hereto have executed this Award Agreement as of the day and year first above written.

	
			
	/s/McAlister C. Marshall, II
	 
	As of June 9, 2016

	The Brink’s Company
	 
	Date

	/s/Douglas A. Pertz
	 
	

As of June 9, 2016

	Employee
	 
	Date

	 

	Street address, City, State & ZIP

EXHIBIT A

The Brink’s Company
Compensation Recoupment Policy

The compensation recoupment policy of The Brink’s Company (the “Company”) shall apply if the Company is required to provide an accounting restatement for any of the prior three fiscal years for which audited financial statements have been completed, due to material noncompliance with any financial reporting requirement under the Federal securities laws (a “Restatement”).
In the event of a Restatement, the Compensation and Benefits Committee will recoup “Excess Compensation” (as defined below) from “Covered Employees” (as defined below).  In addition to the recoupment of any Excess Compensation, the Compensation and Benefits Committee will take such actions as it deems necessary or appropriate against a particular Covered Employee, depending on all the facts and circumstances as determined during its review, including (i) recommending disciplinary actions to the Board of Directors, up to and including termination, and/or (ii) the pursuit of other available remedies.
“Excess Compensation” means the difference between (i) the actual amount of cash-based or equity-based incentive compensation received by the Covered Employee and (ii) the compensation that would have been received based on the restated financial results during the three-year period preceding the date on which the Company is required to prepare such restatement (the “Covered Period”).  
“Covered Employees” means (i) the executive officers of the Company, as designated by the Board of Directors from time to time and (ii) any employee whose acts or omissions were directly responsible for the events that led to the Restatement and who received Excess Compensation during the Covered Period.
For purposes of this policy, “cash-based or equity-based incentive compensation” includes awards under the Key Employees Incentive Plan (“KEIP”), the Management Performance Improvement Plan (“MPIP”), the 2005 Equity Incentive Plan, as amended (the “2005 Incentive Plan”), the 2013 Equity Incentive Plan (the “2013 Incentive Plan”) and any successor plan or plans.
This policy shall be communicated to all participants in the Company’s KEIP, MPIP, 2005 Incentive Plan, and 2013 Incentive Plan.
This policy is separate from and in addition to the requirements of Section 304 of the Sarbanes-Oxley Act of 2002 (Forfeiture of Certain Bonuses and Profits) that are applicable to the Company’s Chief Executive Officer and Chief Financial Officer (“Section 304”), and the Compensation and Benefits Committee shall reduce the recoupment under this policy for any amounts paid to the Company by the Chief Executive Officer and Chief Financial Officer pursuant to Section 304.

EXHIBIT B

Restrictive Covenant Agreement (“RCA”)

1. Definitions:

a. “Company” means The Brink’s Company.  

b. “Competing Business” means any person or entity that provides products or services in the business of armored vehicle transportation, secure international transportation of valuables, coin processing services, currency processing services, cash management services, safe and safe control services, payment services, security and guarding services, deposit processing services/daily overnight credit, check imaging, or jewel or precious metal vaulting, that are the same as or substantially similar to, and competitive with, the products or services provided by the Company or its subsidiaries at any time during the twenty-four (24) months prior to the cessation of Employee’s employment.  

c. “Confidential Information” means all valuable and/or proprietary information (in oral, written, electronic or other forms) belonging to or pertaining to the Company, its Customers and Vendors, that is not generally known or publicly available, and which would be useful to competitors of the Company or otherwise damaging to the Company if disclosed.  Confidential Information may include, but is not necessarily limited to:  (i) the identity of Company Customers, their purchasing histories, and the terms or proposed terms upon which Company offers or may offer its products and services to such Customers, (ii) the identity of Company Vendors or potential Vendors, and the terms or proposed terms upon which the Company may purchase products and services from such Vendors, (iii) the terms and conditions upon which the Company employs its employees and independent contractors, (iv) marketing and/or business plans and strategies, (v) financial reports and analyses regarding the revenues, expenses, profitability and operations of the Company, (vi) technology used by the Company to provide its services, and (vii) information provided to the Company by third parties under a duty to maintain the confidentiality of such information.  Notwithstanding the foregoing, Confidential Information does not include information that:  (i) has been voluntarily disclosed to the public by the Company, except where such public disclosure has been made by Employee without authorization from the Company; (ii) has been independently developed and disclosed by others, or (iii) which has otherwise entered the public domain through lawful means.  

d. “Employee” means the employee identified in the Award Agreement to which this RCA is attached as Exhibit B.

e. “Material Contact” means with respect to an employee or independent contractor of the Company, Employee worked with the employee or independent contractor of the Company in furtherance of the business interests of the Company and within twelve (12) months prior to the cessation of 

Employee’s employment or, with respect to an employee or independent contractor of the Company, Customer (defined below) or Vendor (defined below), Employee personally   communicated with the employee or independent contractor of the Company, Customer  or Vendor in person, by telephone or by paper or electronic correspondence in furtherance of the business interests of the Company and within twelve (12) months prior to the cessation of Employee’s employment.

f. “Restricted Period” means the period while Employee is employed by the Company and for twenty-four (24) months following the cessation of Employee’s employment with the Company.

g. “Restricted Territory” means those geographic areas described on Exhibit 1 to this RCA.  Employee acknowledges and agrees that this geographic area consists of those states or countries (i) in which Employee was physically located at the time Employee provided services in furtherance of the business interests of the Company, (ii) for which Employee had supervisory responsibility (in whole or in part), if any, on behalf of the Company, or (iii) to which Employee was assigned by the Company; provided, however, that in all cases the Restricted Territory shall be limited to those states or countries where Employee provided such services or had such responsibility or assignment within twenty-four (24) months prior to the cessation of Employee’s employment; provided, further, that the “Restricted Territory” shall not include any state or country where the Company either does not provide or has ceased providing products and services.  

h. “Customer” means any person or entity who or which purchased products or services from the Company in exchange for compensation within twenty-four (24) months prior to the cessation of Employee’s employment with the Company.
i. “Vendor” means any person or entity who or which has provided products or services to the Company in exchange for compensation within twenty-four (24) months prior to the cessation of Employee’s employment with the Company.
j. “Lines of Business of the Company” means any Company-recognized department, division or subdivision of the Company, or any of its subsidiaries or affiliates, to which Employee was assigned or which Employee supervised (directly or indirectly or in whole or in part) or for which Employee provided services as part of Employee’s employment duties within twenty-four (24) months prior to the cessation Employee’s employment.  

2. Assignment of Work Product and Inventions.  Employee hereby assigns and grants to the Company (and will upon request take any actions needed to formally assign and grant to the Company and/or obtain patents, trademark registrations or copyrights belonging to the Company) the sole and exclusive ownership of any and all inventions, information, reports, computer software or programs, writings, technical information or work product collected or developed by Employee, alone or with others, during the term of Employee's employment relating to the Company.  This duty applies whether or not the forgoing inventions or information are made or prepared in the course of employment with the Company, so long as such inventions or information relate to the business of the Company and have been developed in whole or in part during the term of Employee's 

employment. Employee agrees to advise the Company in writing of each invention that Employee, alone or with others, makes or conceives during the term of Employee's employment and which relate to the Business of the Company. Notwithstanding any provision of this RCA, Employee shall not be required to assign, nor shall Employee be deemed to have assigned, any of Employee’s rights in any invention that Employee develops entirely on his own time without using the Company’s equipment, supplies, facilities, trade secrets or Confidential Information, except for inventions that either: (1) relate, at the time that the invention is conceived or reduced to practice, to the business of the Company or to actual or demonstrably anticipated research or development of the Company; or (2) result from any work performed by Employee for the Company on behalf of the Company.  Inventions which Employee developed before Employee came to work for the Company, if any, are described in the attached Exhibit 2 and excluded from this Section.  The failure of the parties to attach any Exhibit 2 to this RCA shall be deemed an admission by Employee that Employee does not have any pre-existing inventions.

3. Return of Property and Information.  Employee agrees not to remove any Company property from Company premises, except when authorized by the Company.  Employee agrees to return all Company property and information (whether confidential or not) within Employee’s possession or control within seven (7) calendar days following the cessation of Employee’s employment with the Company.  Such property and information includes, but is not limited to, the original and any copy (regardless of the manner in which it is recorded) of all information provided by the Company to Employee or which Employee has developed or collected in the scope of Employee’s employment with the Company, as well as all Company-issued equipment, supplies, accessories, vehicles, keys, instruments, tools, devices, computers, cell phones, pagers, materials, documents, plans, records, notebooks, drawings, or papers.  Upon request by the Company, Employee shall certify in writing that Employee has complied with this provision, and has permanently deleted all Company information from any computers or other electronic storage devices or media owned by Employee.  Employee may retain information relating to Employee’s benefit plans and compensation only to the extent such information reflects employee’s individual financial and benefit information, as opposed to information and plan terms that are applicable to others.

4. Duty of Confidentiality. The Company agrees, and Employee acknowledges, that the Company shall provide Confidential Information to Employee as part of the employment relationship between Company and Employee and that such information is necessary for Employee to perform Employee's duties for Company.  Employee agrees that during employment with the Company and thereafter, Employee shall not, directly or indirectly, divulge or make use of any Confidential Information other than in the performance of Employee’s duties for the Company.  While employed by the Company, Employee shall make all reasonable efforts to protect and maintain the confidentiality of the Confidential Information.  In the event that Employee becomes aware of unauthorized disclosures of the Confidential Information by anyone at any time, whether intentionally or by accident, Employee shall promptly notify the Company. This RCA does not limit the remedies available to the Company under common or statutory law as to trade secrets or other types of confidential information, which may impose longer duties of non-disclosure.

5. Non-Competition. 
a. Employee agrees that during the Restricted Period, and within the Restricted Territory, Employee shall not, directly or indirectly, whether on Employee’s own behalf or on behalf of any other person or entity, own, manage, control, or participate in the ownership, management, or control of, a Competing Business in regard to products or services that are the same as or substantially similar to, and in competition with, those offered by any Lines of Business of the Company (as defined herein) within twenty-four (24) months prior to Employee’s termination or resignation.  
b. Employee agrees that during the Restricted Period, and within the Restricted Territory, Employee shall not, directly or indirectly, whether on Employee’s own behalf or on behalf of any other person or entity, perform services for a Competing Business which are the same as or substantially similar to the services conducted, authorized, offered, or provided by Employee to any Lines of Business of the Company within twenty-four (24) months prior to Employee’s termination or resignation.  
c. Nothing in this RCA shall prohibit Employee from owning 5% or less of the outstanding equity or debt securities of any publicly traded Competing Business. 
6. Non-Recruitment of Company Employees and Contractors.  Employee agrees that during the Restricted Period, Employee shall not, directly or indirectly, whether on Employee’s own behalf or on behalf of any other person or entity, solicit or induce any employee or independent contractor of the Company with whom Employee had Material Contact, to terminate or lessen such employment or contract with the Company. 
7. Non-Solicitation of Company Customers. Employee agrees that during the Restricted Period, Employee shall not, directly or indirectly, whether on Employee’s own behalf or on behalf of any other person or entity, solicit any Customers of the Company with whom Employee had Material Contact, for the purpose of selling any products or services for a Competing Business.

8. Non-Solicitation of Company Vendors. Employee agrees that during the Restricted Period, Employee shall not, directly or indirectly, whether on Employee’s own behalf or on behalf of any other person or entity, solicit any actual or prospective Vendor of the Company with whom Employee had Material Contact, for the purpose of purchasing products or services to support a Competing Business.

9. Acknowledgements.  Employee acknowledges and agrees that the provisions of this RCA are reasonable as to time, scope and territory given the Company’s need to protect its Confidential Information and its relationships and goodwill with its customers, suppliers, employees and contractors, all of which have been developed at great time and expense to the Company.   Employee represents that Employee has the skills and abilities to obtain alternative employment that would not violate this RCA in the event that Employee leaves employment with the Company, and that this RCA does not pose an undue hardship on Employee.  Employee further acknowledges that Employee’s breach of any provision of this RCA would likely cause irreparable injury to the 

Company, and therefore the Company may seek, at its option, injunctive relief and the recovery of its reasonable attorney’s fees and costs incurred in defending or enforcing this RCA (in the event the Company is the prevailing party), in addition to or in place of any other remedies available in law or equity, including any remedies available under the Award Agreement to which this RCA is attached as Exhibit B.  
10. Caveat.  Nothing in this RCA shall prohibit Employee from working in any role or engaging in any job or activity that is not in competition with the products and services provided by the Company at the time Employee’s employment ceases.
11. Breach does not excuse performance.  Employee agrees that a breach or an alleged breach by the Company of any provision of this RCA or any other agreement shall not excuse Employee’s obligation to adhere to the provisions of this RCA and shall not constitute a defense to the enforcement thereof by the Company.  
12. Non-Disparagement.  Employee agrees that Employee will not make any untrue, misleading, or defamatory statements concerning the Company or any of its subsidiaries or affiliates or any of its or their officers or directors, and will not directly or indirectly make, repeat or publish any false, disparaging, negative, unflattering, accusatory, or derogatory remarks or references, whether oral or in writing, concerning the Company or any of its subsidiaries or affiliates, or otherwise take any action which might reasonably be expected to cause damage or harm to the Company or any of its subsidiaries or affiliates or any of its or their officers or directors.  Nothing in this RCA, however, prohibits Employee from communicating with or cooperating in any investigations of any governmental agency on matters within their jurisdictions, provided that this RCA does prohibit Employee from recovering any relief, including without limitation monetary relief, as a result of such activities.  In agreeing not to make disparaging statements regarding the Company or its subsidiaries or affiliates or its or their officers or directors, Employee acknowledges that he is making a knowing, voluntary and intelligent waiver of any and all rights he may have to make disparaging comments about the Company or its subsidiaries or affiliates or its or their officers or directors, including rights under any applicable federal and state constitutional rights.  
13. Governing Law.  The terms of this RCA and any disputes arising out of it shall be governed by and construed in accordance with the laws of the State of Texas, except that any Texas conflict-of-law principles that might require application of the laws of another jurisdiction shall not apply.
14. Venue.  Any dispute arising from or relating to this RCA shall be resolved exclusively in the United States District Court for the Northern District of Texas or any state court sitting in Dallas County, Texas, at the sole option of the Company, and Employee expressly consents to the personal jurisdiction in these courts and in the State of Texas, and hereby waives all objections to venue and jurisdiction, as well as Employee’s right to removal, if any.
15. Construction.  This RCA shall not be construed more strictly against one party than any other by virtue of the fact that it may have been prepared by counsel for one of the parties.  The headings 

to the sections of this RCA are included for convenience only and shall not affect the interpretation of this RCA.
16. Modification.  The parties expressly agree that should a court find any provision of this RCA, or part thereof, to be unenforceable or unreasonable, the court may modify the provision, or part thereof, in a manner which renders that provision reasonable, enforceable, and in conformity with public policy.
17. Severability.  If any provision of this RCA, or part thereof, is determined to be unenforceable for any reason whatsoever, and cannot or will not be modified to render it enforceable, it shall be severable from the remainder of this RCA and shall not invalidate or affect the other provisions of this RCA, which shall remain in full force and effect and shall be enforceable according to their terms. No covenant shall be dependent upon any other covenant or provision herein, each of which stands independently. 

18. Notices.  All notices hereunder shall be in writing and (a) if to the Company, shall be delivered personally to the Secretary of the Company or mailed to its principal office address, 1801 Bayberry Court, P.O. Box 18100, Richmond, VA 23226-8100 USA, to the attention of the Secretary, and (b) if to the Employee, shall be delivered personally or mailed to the Employee at the address set forth below.  Such addresses may be changed at any time by notice from one party to the other.

19. Assignability.  This RCA shall bind and inure to the benefit of the parties hereto and the successors and assigns of the Company.  This RCA may be assigned by the Company to a successor in interest without the prior consent of the Employee.

20. Waivers and Further Agreements.  Neither this RCA nor any term or condition hereof, may be waived or modified in whole or in part as against the Company or Employee, except by written instrument executed by or on behalf of the party other than the party seeking such waiver or modification, expressly stating that it is intended to operate as a waiver or modification of this agreement or the applicable term or condition hereof.  

Exhibit 1

In accordance with Section 1.g, “Restricted Territory” includes:
	
		
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	 U.S.A.

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	 Argentina

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	 Australia

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	Belgium

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	Bolivia

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	Brazil

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	Canada

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	Chile

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	China

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	Colombia

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	France

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	Germany

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	Greece

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	Hong Kong SAR

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	Hungary

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	India

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	Ireland

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	Israel

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	Italy

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	Japan

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	Jordan

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	Korea

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	Luxembourg

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	Macau

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	Madagascar

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	Mauritius

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	Mexico

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	Morocco

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	Panama

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	Reunion

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	Russia

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	Singapore

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	South Africa

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	Switzerland

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	Taiwan

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	Turkey

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	United Arab Emirates

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	United Kingdom

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	Venezuela

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	VietnamExhibit

Exhibit 10.1

RETIREMENT AGREEMENT

This AGREEMENT (the “Agreement”) is made and entered into on the 28th day of July,  2016, by and between ERIE INDEMNITY COMPANY, a Pennsylvania corporation with its principal place of business in Erie, Pennsylvania (the “Company”), and Terrence W. Cavanaugh, residing in Fairview, Pennsylvania (the “Executive”).

RECITALS:

A.  The Executive announced to the Company in October 2015 that he planned to retire from the Company at the close of 2016, and the Board of Directors of the Company acknowledged at that time that the timeframe provided by the Executive would allow for a thoughtful and effective transition of leadership.

B.  The Board of Directors appreciates and respects the leadership provided by the Executive, the talent development he supported, the multitude of contributions he made, the relationships he fostered, and the Company’s business and financial performance during his career with the Company.

C.  The Board has determined that the experience of the Executive’s designated successor makes it unnecessary to hold the Executive to his agreement to continue to serve as both President and Chief Executive Officer until the close of 2016.

D.  The Board desires that the Executive continue to serve the Company until the close of 2016 in the capacity described in this Agreement, and the Executive is willing to do so.  

E.  The Company and the Executive agree that it is in their respective best interests to make certain provisions related to the Executive's retirement from the Company.

NOW, THEREFORE, in consideration of the premises and mutual covenants contained in this Agreement, and intending to be legally bound, the Company and the Executive agree as follows:

1.Effective Date.  This Agreement will become effective only if it is fully executed on or before July 28, 2016, and, if it is fully executed on or before that date, the date of execution will be the Effective Date of the Agreement. 
2.Continued Employment; Officer Status; Retirement.  
a.    The Employment Period under this Agreement is the period beginning on the Effective Date and ending on December 31, 2016, subject to paragraph (h).

b.    During the Employment Period, the Company shall pay the Executive  his salary at the rate in effect on the Effective Date and shall maintain for him the same employee benefits, fringe benefits, and perquisites that are maintained for executive officers of the Company during the Employment Period, provided, however, that the Executive’s eligibility to participate under the Company’s employee benefit plans (within the meaning of the Employee Retirement Income Security Act) during the Employment Period will be determined under the terms of the plans.
c.    The Executive shall step down from his positions as the Chief Executive Officer and a director of the Company effective on July 31, 2016, at 11:59 p.m. Erie time, or, if earlier, on the termination of his employment with the Company.  The Executive shall also step down from his positions as a director, officer, and employee of each Affiliated Company (as defined below), effective at the same time.
d.    The Executive shall step down from his position as the President of the Company effective on December 31, 2016, at 11:59 p.m. Erie time, or, if earlier, on the termination of his employment with the Company.
e.    On August 1, 2016, the responsibilities, powers, and authority of the office of the President and Chief Executive Officer of the Company will become the responsibilities, powers, and authority of the office of the Chief Executive Officer of the Company, except for the responsibilities, powers, and authority set out in the Appendix, which will be reserved to the office of the President of the Company.  The Executive Compensation and Development Committee of the Board or its delegate may modify Appendix A without the Executive’s consent unless the modification would increase the Executive’s responsibilities.
f.    The Executive shall retire from employment with the Company at the end of the Employment Period, unless the termination of his employment has occurred earlier.  Except as provided in paragraph (h), the termination of the Executive’s employment before December 31, 2016, will not end the Employment Period. 
g.    After the end of the Employment Period, the Company will have no further obligation to the Executive, except as provided in Section 3.
h.    The Employment Period will end before December 31, 2016, upon the occurrence of any of the following: (i) the Executive’s death; (ii) the Executive’s permanent total disability (as defined in the Company’s long-term disability plan); (iii)  the Executive’s breach of this Agreement; or (iv)  the Company’s termination of the Executive’s employment on account of (A) the Executive’s engagement in misconduct that is materially and demonstrably inimical to the best interests, monetary or otherwise, of the Company; or (B) the Executive’s conviction of, or plea of guilty or nolo contendere to, a felony or any crime involving moral turpitude, fraud, deceit, or financial impropriety.
i.    For the purposes of this Agreement and the Release, “Affiliated Company” will refer to each of the following: Erie Insurance Exchange and each entity that is a subsidiary or affiliated company of the Company or of Erie Insurance Exchange.

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3.Consideration.  
a.    In consideration of the execution and performance of this Agreement by the Executive, and subject to the remaining provisions of this Section 3 and to Sections 4 and 8, the Executive will receive from the Company the following payments, which include payments to which the Executive would not otherwise be entitled:
(i) With respect to the Company's Annual Incentive Plan (“AIP”) and the award made to the Executive for the 2016 performance period under the AIP:
(A)   In accordance with the terms of the AIP, for the 2016 performance period, the Committee: (1) will measure the Company’s performance for the performance period against the performance goals set out in the Executive’s award agreement for the performance period and will calculate the Company incentive award earned by the Executive for the performance period (or, if applicable, that would have been earned by the Executive for the performance period had the Executive remained employed through the last day of the performance period), based on the Company’s achievement of the applicable performance goals (the “earned Company incentive award” for the performance period), and (2) will calculate the amount of the Executive’s target award based on his individual performance goals for the 2016 performance period (the “target individual incentive award” for the performance period).  
(B)  If the Committee exercises its discretion to reduce or eliminate Company incentive awards that would otherwise have been earned by executive officers as a class under the AIP for the 2016 performance period, the Committee may reduce the Executive’s earned Company incentive award for the performance period by a percentage reduction that is not more than the average of the percentage reductions applied to the Company incentive awards of the executive officers.  
(C)  The Executive will have a vested interest of 100 percent in his earned Company incentive and target individual incentive awards for the 2016 performance period.  The earned Company incentive award taken into account in calculating the Executive’s vested interest will be after any reduction imposed under paragraph (B).
(D)  The Company shall pay to the Executive his vested interest in his earned Company incentive and target individual incentive awards for the 2016 performance period at the time provided under the AIP, which will be no later than December 31, 2017.  

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(E)  The Committee's determination of the amount of award to be paid shall be in accordance with the terms of the AIP and shall be final and binding on all interested parties.
(ii)  With respect to the Company's Long Term Incentive Plan (“LTIP”) and the award made to the Executive for the 2014‐2016 performance period under the LTIP:  
(A)  In accordance with the terms of the LTIP, for the award made for the 2014-2016 performance period, the Committee shall measure the Company’s performance for the performance period against the performance goals set out in the Executive’s award agreement for the performance period and shall calculate the award earned by the Executive for the performance period (or, if applicable, that would have been earned by the Executive for the performance period had the Executive remained employed through the last day of the performance period), based on the Company’s achievement of the applicable performance goals (the “earned award” for the performance period). 
(B)  If the Committee exercises its discretion to reduce or eliminate awards that would otherwise have been earned by executive officers as a class under the LTIP for the 2014-2016 performance period, the Committee may reduce the Executive’s earned award for that performance period by a percentage reduction that is not more than the average of the percentage reductions applied to the awards of the executive officers for that performance period.  
(C)  The Executive will have a vested interest of 100 percent in his earned award for the 2014-2016 performance period.  The earned award taken into account in calculating the Executive’s vested interest for the 2014-2016 performance period will be after any reduction imposed under paragraph (B).
(D)  The Company shall pay to the Executive his vested interest in his earned awards for the 2014-2016 performance period in 2017 at the time provided in the LTIP, which will be no later than December 31, 2017.  
(E)  The Committee's determination of the amount of award to be paid shall be in accordance with the terms of the LTIP and shall be final and binding on all interested parties.
(iii)  The Company shall pay to the Executive, as consideration for the waiver and release described in Section 4 and his covenants described in Section 6, additional retirement compensation, as follows:  

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 (A)  The Company shall pay to the Executive in 2018, as additional retirement compensation, the amount of $2,000,000 (two million dollars), on or about June 30, 2018.  
(B)  The Company shall pay to the Executive in 2019, as additional retirement compensation, the amount of $1,000,000 (one million dollars), on or about June 30, 2019.  
(iv)  The Company shall also reimburse the Executive for any legal fees and related expenses he incurs in connection with his entry into this Agreement, provided however that the reimbursement shall not exceed, in the aggregate, $15,000 (fifteen thousand dollars), and provided further that the Executive provides the Company with reasonable substantiating documentation by November 30 of the calendar year following the calendar year in which such fees and expenses were incurred.  The Company shall pay the amount to be reimbursed under this paragraph within thirty days after receipt of such documentation.
b.    If the Employment Period ends before December 31, 2016, pursuant to Section 2(h)(iii) or (iv) (referring to Executive’s breach of this Agreement and the Company’s termination of the Executive’s employment under certain circumstances),  the Executive will forfeit all rights to payment under Section 3(a). 
c.    If the Executive dies before payment of a benefit described in Section 3(a) to which the Executive is otherwise entitled under this Agreement, the Company shall pay the benefit at the scheduled time to the beneficiary or beneficiaries designated by the Executive from time to time in accordance with the terms of the AIP or LTIP, as applicable; provided, however, that if the Executive has not designated a beneficiary in accordance with the terms of the relevant plan, or if no designated beneficiary with respect to the plan survives the Executive, the Company shall pay the benefit to the default beneficiary indicated in the relevant plan.
d.    Payments under this Section 3 and Section 2(b) will be subject to applicable deductions.  For the purposes of this Agreement, “applicable deductions” will mean any federal, state, or local taxes reasonably determined by the Company to be required to be withheld from amounts paid to the Executive pursuant to this Agreement.
e.    Except as provided in this Agreement, the Executive agrees that he is not entitled to any other compensation (including, but not limited to, salary or bonuses), perquisites, or benefits of any kind or description from the Company, or from or under any employee benefit plan or fringe benefit plan sponsored by the Company, other than as described above and other than (i) his regular salary through the Effective Date; (ii) payment for his unpaid vacation time, which will be computed in accordance with the Company’s past practices for departing employees and paid as soon as administratively practical after the termination of his employment; (iii) his accrued benefits under the Erie Insurance Group Retirement Plan for Employees; (iv) his accrued benefits under the Erie Insurance Group Employee Savings Plan; (v) his accrued benefit under the Supplemental Executive Retirement Plan for Certain Members of the Erie Insurance Group Retirement Plan for Employees (“SERP”); (vi) any benefit the 

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Executive may have accrued under the Company’s Deferred Compensation Plan; (vii) any rights the Executive may have under COBRA on account of the termination of his employment; and (viii), with respect to any of the capacities in which the Executive served the Company or an Affiliated Company, and with respect to any service of the Executive as a fiduciary or trustee of any employee benefit plans or trusts or other trusts maintained or sponsored by the Company or an Affiliated Company, any rights the Executive may have for indemnity in relation to any acts or omissions of the Executive or a claim for coverage under any applicable insurances, or any claim relating to enforcement of the Agreement.  
f.    The parties acknowledge and agree that the Executive is not releasing any rights he may have as an owner or holder of the Company’s common stock or any rights he has to enforce this Agreement.  In addition, the Executive is not releasing any rights that he has to be indemnified (including any right to reimbursement of expenses) arising under applicable law, the certificate of incorporation or bylaws (or similar constituent documents of the Company), any indemnification agreement between him and the Company (including, without limitation, the Indemnification Agreement entered into on November 14, 2008), or any directors’ and officers’ or other liability insurance policy of the Company.  Furthermore, the Company agrees to provide indemnification to the Executive, in the same manner and to the same extent as the highest-level officers of the Company, through the Ongoing Cooperation Period (as defined below) and for any claim that may arise relating to or arising out of any matters occurring through the Ongoing Cooperation Period, and for a period of at least three years after the Ongoing Cooperation Period.
4.Executive's Waiver and Release.  

a.    After the termination of the Executive’s employment with the Company, the Executive shall execute a waiver and release in the form attached as Exhibit I to this Agreement (the “Release”).  If the Executive fails to execute the Release by January 31, 2017, the Executive will forfeit all rights to the payments described in Section 3(a)(iii)(A) and (B) (additional retirement compensation). The rest of this Agreement will remain in full force and effect.  

b.    Notwithstanding any provision of this Agreement to the contrary, the payments described in Section 3(a)(iii)(A) and (B) will not be paid unless the Executive executes the Release by January 31, 2017,  and the seven-day revocation period described in the Release expires with no revocation.

c.    The Executive represents and warrants that the Release and a proposed form of agreement was first presented to him for his consideration before the Effective Date and that the Company has encouraged and advised the Executive in writing, prior to his signing this Agreement, to consult with an attorney of the Executive's choosing concerning all of the terms of this Agreement and the Release.

d.    The Company represents and warrants that, as of the date of this Agreement, it does not have knowledge of any claim or action against the Executive.

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5.Non-Disparagement.  The Executive shall not disparage the Company or its officers, directors, or employees in any way orally or in writing, and the directors and executive and senior officers of the Company shall likewise not disparage the Executive, provided, however, that nothing in this Section will prohibit: (a) the Executive or the Company from disclosing truthful information if required by law (whether by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process); or (b) either party from acting in good faith to enforce the party’s rights under this Agreement. 

6.Covenants as to Confidential Information and Competition.  The Executive acknowledges and agrees as follows:  (i) this Section 6 is necessary for the protection of the legitimate business interests of the Company, (ii) the restrictions contained in this Section 6 with regard to geographical scope, length of term and types of restricted activities are reasonable; (iii) the Executive has received adequate and valuable consideration for entering into this Agreement, and (iv) the Executive's expertise and capabilities are such that his obligations under and the enforcement of this Section 6 by injunction or otherwise will not adversely affect the Executive's ability to earn a livelihood.

a.    Confidentiality of Information and Nondisclosure.  The Executive agrees that the Executive shall not, directly or indirectly, without the express written approval of the Company, unless directed by applicable legal authority (including any court of competent jurisdiction, governmental agency having supervisory authority over the business of the Company or an Affiliated Company, or any legislative or administrative body having supervisory authority over the business of the Company or an Affiliated Company) having jurisdiction over the Executive, disclose to or use, or knowingly permit to be so disclosed or used, for the benefit of himself, any person, corporation or other entity other than the Company, (i) any non-public information concerning any financial matters, customer relationships, competitive status, supplier matters, internal organizational matters, current or future plans, or other business affairs of or relating to the Company or an Affiliated Company, (ii) any proprietary management, operational, trade, technical or other secrets or any other proprietary information or other data of the Company or an Affiliated Company, or (iii) any other information related to the Company or an Affiliated Company, or which the Executive should reasonably believe will be damaging to the Company or an Affiliated Company, which has not been published and is not generally known outside of the Company.  The Executive acknowledges that all of the foregoing constitutes confidential and proprietary information, which is the exclusive property of the Company.  Nothing in this Agreement or any other agreement with the Company prohibits or prevents the Executive from filing a complaint or charge with or participating, testifying, or assisting in any investigation, hearing, or other proceeding before any federal, state, or local government agency.  Notwithstanding the non-disclosure, non-disparagement, or any other provision of this Agreement, the Executive acknowledges and affirms his understanding that nothing in this Agreement is intended to preclude, prohibit, or otherwise limit, in any way, his rights and abilities to contact, communicate with, or report matters to any government entity or agency including but not limited to the United States Department of Justice, any Office of Inspector General of any United States agency, the United States Securities and Exchange Commission, or Congress, regarding possible violations of laws or regulations.  However, to the 

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maximum extent permitted by law, the Executive agrees that if such an administrative claim is made, the Executive shall not be entitled to recover any individual monetary relief or other individual remedies, except that this provision is not applicable to any bounty that may be recoverable by the Executive as a result of participating in the Securities and Exchange Commission’s whistleblower program. 

b.    Restrictive Covenant.  For the period from the Effective Date through June 30, 2018 (the "Restrictive Period"), the Executive shall not directly or indirectly, on behalf of himself or in conjunction with any other individual or entity, own (other than less than 3 percent ownership in a publicly traded company), manage, operate, control,  participate in the ownership, management, operation, or control of, or render service in any capacity to, (i) any entity that offers property insurance, casualty insurance, or life insurance, or any combination of those products, and that operates in any of the states or territories in which the Company or an Affiliated Company is licensed and does business at the Effective Date or the date of the termination of the Executive's employment with the Company or (ii) any parent, subsidiary, or affiliate of such an entity.  The covenant in the preceding sentence does not apply to any state or territory in which the only Affiliated Company licensed and doing business is Erie Resource Management Corp., nor does the covenant apply to a parent, subsidiary, or affiliate of an entity described in clause (i) which parent, subsidiary, or affiliate itself does not offer property, casualty, or life insurance and does not manage or otherwise participate in the operation of any entity that offers property, casualty, or life insurance.  The Executive Compensation and Development Committee of the Board of Directors may, in its discretion, grant a waiver of this covenant, upon a request by the Executive in advance of a proposed activity providing full disclosure of the nature of the proposed activity. The Executive further agrees that at no time during the Restrictive Period will the Executive attempt directly or indirectly to solicit or hire employees of the Company or any of its Affiliated Companies or to induce any of them to terminate their employment with the Company or any of its Affiliated Companies.  If these restrictions are adjudicated to be unreasonable in any legal proceeding, the parties agree to the reformation of these restrictions by the relevant court or tribunal to limits adjudicated to be reasonable, and the parties further agree that neither party may assert that these restrictions should be eliminated in their entirety by any court or tribunal.  If the Executive violates any of the provisions contained in this Section 6, the Restrictive Period shall be increased by the period of time from the commencement by the Executive of any violation until such violation has been cured to the satisfaction of the Company.  

7.Company Office, Property, Records, Files and Equipment.  By July 31, 2016, the Executive shall, with the Company’s assistance, move to the office the Company will provide for him as President of the Company, the furnishings of which will include the Executive’s current desk, credenza, and chair.  While the Executive remains the President of the Company, the Executive’s current secretary will continue as his secretary with work space proximate to the Executive’s office, subject her agreement to remain employed by the Company.  Upon the termination of his employment with the Company, the Executive shall return all Company property he then has in his possession or control, including but not limited to all equipment, confidential information, records, and files, regardless of format or storage location.  

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8.Breach of Agreement.  The Executive agrees that if he breaches any of the terms of this Agreement, the Company may pursue whatever rights it has under this Agreement, whether in law or in equity, without affecting the validity and enforceability of the Release contemplated by Section 4 of this Agreement. The Executive agrees that any breach of this Agreement may result in immediate and irreparable harm to the Company, and that the Company may not be reasonably or adequately compensated by damages in an action at law. The Executive agrees that if he breaches Section 6 of this Agreement, the Company will be entitled, to the extent permitted by law, immediately to cease to pay or provide the Executive or the Executive's dependents any compensation or benefit being, or to be, paid or provided pursuant to this Agreement, and also to obtain immediate injunctive relief restraining the Executive from conduct in breach of this Agreement.  In addition, the Executive agrees that if he breaches Section 6 of this Agreement, the Executive shall reimburse the Company and its Affiliated Companies for their costs and expenses (including, without limitation, all reasonable fees and expenses, including the costs of any computer forensics imaging and analysis, etc., as well as reasonable attorney’s fees) incurred by the Company and its Affiliated Companies in connection with the breach.  The Executive agrees that the incurrence of such fees and expenses will be necessary for the Company’s and its Affiliated Companies’ protection of its valuable confidential information, trade secrets, and business relationships.  Nothing in this Agreement shall be construed as prohibiting the Company from pursuing any other remedies available to it for a breach of this Agreement, including the recovery of damages from the Executive.

9.Notice of Immunity from Liability for Confidential Disclosure of a Trade Secret to the Government or in a Court Filing.  Notwithstanding the foregoing, the Executive shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (a) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.   If the Executive files a lawsuit for retaliation by the Company for reporting a suspected violation of law, a trade secret may be disclosed to his attorney and used in the court proceeding, if the Executive (c) files any document containing the trade secret under seal; and (d) does not disclose the trade secret, except pursuant to court order.

10.Ongoing Cooperation.  For the period from the date of the termination of the Executive’s employment with the Company through December 31, 2018 (the “Ongoing Cooperation Period”), the Executive agrees to use his reasonable efforts to assist, advise and cooperate with the Company if the Company so requests on issues that arose or were in any way developing during his employment with the Company, including but not limited to the Sullivan legal action, the Beltz legal action (including any refiling of the Beltz legal action), and the writ of summons filed by Laurel Hirt on December 19, 2014.  The Executive shall furnish such assistance, advice or cooperation to the Company as the Company may reasonably request and as is within the Executive's reasonable capability.  Such assistance, advice and cooperation may include, but will not be limited to, the preparation for, or the conduct of, any litigation, investigation or proceeding involving matters or events which occurred during the Executive's employment by the Company as to which the Executive's knowledge or testimony may be 

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important to the Company.  In connection with the preparation for, or the conduct of such litigation, investigation or proceeding as described in the preceding sentence, the Executive shall promptly provide the Company with any records or other materials in his possession that the Company may request in connection with the defense or prosecution of such litigation, investigation or proceeding.  If and to the extent that the Company requests that the Executive provide assistance, advice, or cooperation to the Company, as described above, or it requests that he attend a meeting, deposition or trial at any time during the Ongoing Cooperation Period, the Company shall compensate the Executive for his time at the rate of $800.00 for each hour during which Executive complies with such request.  The Company shall also pay or reimburse the Executive for (i) his reasonable legal fees and expenses incurred in the course of providing such cooperation, provided that the Company agrees that the Executive’s engagement of his own counsel is necessary and appropriate, and (ii) his travel expenses reasonably incurred in the course of providing such cooperation, provided that the Executive provides reasonable substantiating documentation by November 30 of the calendar year following the calendar year in which the fee or expense was incurred;  the Company shall make any payment required under this sentence within thirty days after receipt of such documentation.

11.Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania applicable to contracts executed in and to be performed in that commonwealth without regard to its conflicts of laws provisions.  Each of the parties irrevocably and unconditionally consents to submit to the exclusive jurisdiction of the courts of the Commonwealth of Pennsylvania located in the County of Erie, Pennsylvania, and of the United States for the Western District of Pennsylvania for any litigation arising out of or relating to this Agreement or the transactions contemplated by this Agreement.  Any legal action relating to this Agreement shall be brought in the courts of the Commonwealth of Pennsylvania located in the County of Erie, Pennsylvania, and of the United States for the Western District of Pennsylvania and the parties irrevocably and unconditionally waive and will not plead or claim in any such court that venue is improper or that such litigation has been brought in an inconvenient forum. 

12.Waiver.  The waiver by a party of any breach by the other party of any provision of this Agreement will not operate or be construed as a waiver of any other or subsequent breach by a party.

13.Assignment.  This Agreement will be binding upon and inure to the benefit of the successors and assigns of the Company and the Company shall be obligated to require any successor to expressly acknowledge and assume its obligations under this Agreement.  This Agreement will inure to the extent provided under this Agreement to the benefit of and be enforceable by the Executive or the Executive's legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  The Executive may not delegate any of the Executive's duties, responsibilities, obligations or positions under this Agreement to any person and any such purported delegation will be void and of no force and effect.

14.Severability.  Whenever possible, each provision of this Agreement will be interpreted in such a manner as to be effective and valid under applicable law, but if any 

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provision of this Agreement is held to be invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

15.Notices.  Any notices required or permitted to be given under this Agreement will be sufficient if in writing, and if personally delivered or when sent by first class certified or registered mail, postage prepaid, return receipt requested − in the case of the Executive, to his principal residence address, and in the case of the Company, to the address of its principal place of business as set forth above, to the attention of the General Counsel of the Company.

16.Entire Agreement.  This Agreement constitutes the entire agreement of the parties relating to the subject matter of this Agreement, and supersedes any obligations of the Company under any previous agreements or arrangements, except as otherwise provided in this Agreement.  This Agreement does not supersede the Company’s Policy Regarding the Recoupment of Officer Bonuses in Certain Instances, as adopted on December 9, 2008, and as it may be amended.  Except as provided in  Section 2(e) (referring to Appendix A), the provisions of this Agreement may not be amended, modified, repealed, waived, extended or discharged except by an agreement in writing signed by the party against whom enforcement of any amendment, modification, repeal, waiver, extension or discharge is sought.  

17.Code Section 409A.  It is intended that this Agreement comply with the provisions of section 409A of the Internal Revenue Code of 1986, as amended, and the Treasury regulations relating thereto (“Code Section 409A”), or an exemption to Code Section 409A.  Payments, rights and benefits may only be made, satisfied or provided under this Agreement upon an event and in a manner permitted by Code Section 409A, to the extent applicable, so as not to subject the Executive to the payment of taxes and interest under Code Section 409A.  In furtherance of this intent, this Agreement shall be interpreted, operated and administered in a manner consistent with these intentions, and to the extent that any regulations or other guidance issued under Code Section 409A would result in the Executive being subject to payment of additional income taxes or interest under Code Section 409A, the parties agree, to the extent possible, to amend this Agreement to maintain to the maximum extent practicable the original intent of this Agreement while avoiding the application of such taxes or interest under Code Section 409A.   All payments to be made upon a termination of employment under this Agreement may only be made upon a “separation from service” as defined under Code Section 409A.  Notwithstanding any provision of this Agreement to the contrary, if, on the date of the Executive's separation from service, the Executive is a “specified employee” as defined under Code Section 409A, then, except to the extent that this Agreement does not provide for a “deferral of compensation” within the meaning of Code Section 409A of the Code, no payments may be made and no benefits may be provided to the Executive during the period beginning on the date of the Executive's separation from service and ending on the last day of the sixth month after such date.  In no event may the Executive, directly or indirectly, designate the calendar year of any payment under this Agreement.

18.Headings.  The descriptive headings used in this Agreement are used for convenience of reference only and do not constitute a part of this Agreement. 

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19.Counterparts.  This Agreement may be executed in separate counterparts, both of which taken together shall constitute one and the same Agreement, and will be fully executed when one or more counterparts have been signed by and delivered to each party.
 
THE EXECUTIVE EXPRESSLY WARRANTS AND REPRESENTS THAT, BEFORE ENTERING INTO THIS AGREEMENT, HE HAS RECEIVED A REASONABLE PERIOD OF TIME WITHIN WHICH TO CONSIDER ALL OF THE PROVISIONS CONTAINED IN THIS AGREEMENT AND THE RELEASE, THAT HE HAS FULLY READ, INFORMED HIMSELF OF AND UNDERSTANDS ALL THE TERMS, CONTENTS, CONDITIONS AND EFFECTS OF ALL PROVISIONS OF THIS AGREEMENT AND THE RELEASE, AND THAT HE CONSIDERS ALL SUCH PROVISIONS TO BE SATISFACTORY. 

THE EXECUTIVE FURTHER EXPRESSLY WARRANTS AND REPRESENTS THAT NO PROMISE OR REPRESENTATION OF ANY KIND HAS BEEN MADE, EXCEPT THOSE EXPRESSLY STATED IN THIS AGREEMENT. 
 
THE EXECUTIVE FURTHER EXPRESSLY WARRANTS AND REPRESENTS THAT THE COMPANY HAS ENCOURAGED AND ADVISED HIM IN WRITING, PRIOR TO HIS SIGNING THIS AGREEMENT, TO CONSULT WITH AN ATTORNEY OF THE EXECUTIVE’S CHOOSING CONCERNING ALL OF THE TERMS OF THIS AGREEMENT AND THE RELEASE.    

THE EXECUTIVE FURTHER EXPRESSLY WARRANTS AND REPRESENTS THAT HE ENTERS INTO THIS AGREEMENT KNOWINGLY AND VOLUNTARILY.

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IN WITNESS WHEREOF, the Executive and the Company, by its duly authorized representative, have signed this Agreement on the date set forth above.

	
			
	WITNESS:
	 
	THE EXECUTIVE:

	 
	 
	 

	 
	 
	 

	/s/ Debra Miller                                   
	 
	/s/  Terrence W. Cavanaugh                

	Debra Miller
	 
	Terrence W. Cavanaugh

	 
	 
	 

	 
	 
	 

	 
	 
	THE COMPANY:

	 
	 
	 

	ATTEST:
	 
	ERIE INDEMNITY COMPANY

	 
	 
	 

	 
	 
	 

	/s/ Brian W. Bolash         
	 
	By:     /s/ Sean J. McLaughlin          

	Brian W. Bolash
	 
	Sean J. McLaughlin

	Corporate Secretary
	 
	Executive Vice President

	 
	 
	and General Counsel

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EXHIBIT I

Executive's Waiver and Release

Terrence W. Cavanaugh (the “Executive”), for himself, his heirs, successors and assigns and in consideration of certain payments to be made by or on behalf of Erie Indemnity Company (the “Company”) pursuant to Section 3 of the Agreement made and entered into on the ____ day of  July, 2016 by and between the Company and the Executive (“the “Agreement”), specifically the payments described in Section 3(a)(iii)(A) and (B) of the Agreement, does hereby forever discharge and release the Company and its shareholders, subsidiaries, affiliated companies, companies with common management, ownership or control, successors, assigns, insurers and reinsurers, attorneys, and agents, and all of their officers, directors, shareholders, employees, agents and representatives, in their official and individual capacities (collectively referred to as “Releasees”) from any and all claims, demands, causes of action, damages, charges, complaints, grievances, expenses, compensation and remedies that the Executive now has or may in the future have on account of or arising out of any matter or thing that has happened, developed or occurred before the date of this Release (collectively “Claims”), including, but not limited to, all Claims arising from the Executive's employment with the Company or any Affiliated Company (as defined in the Agreement), the termination of such employment, any and all relationships or dealings between the Executive and the Company or any of the other Releasees, the termination of any such relationships and dealings, and any and all other Claims the Executive may have against the Company or any of the other Releasees.  The Executive waives any and all such Claims including, but not limited to, all charges or complaints that were or could have been filed with any court, tribunal or governmental agency, and any and all Claims not previously alleged, including, but not limited to, any Claims under the following: (a) Title VII of the Civil Rights Act of 1964, as amended; (b) the Age Discrimination in Employment Act (ADEA), as amended; (c) the Federal Employee Retirement Income Security Act of 1974 (ERISA), as amended; (d) the Americans With Disabilities Act (ADA), as amended; (e) the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), as amended; (f) section 806 of the Sarbanes-Oxley Act of 2002, as amended; (g) the Equal Pay Act of 1963; (h) any other federal statutes, rules, regulations, executive orders or guidelines of any description; (i) any and all statutes of similar nature or purpose under Pennsylvania law, or the law of any other state, including, but not limited to, the Pennsylvania Human Relations Act, as amended, the Pennsylvania Equal Pay Law, and the Pennsylvania Wage Payment and Collection Law; (j) any and all local laws, rules, regulations, executive orders or guidelines of any description including, but not limited to, the Erie County Human Relations Ordinance; and (k) any rule or principle of equity or common law, or any Claim of defamation, conversion, interference with a contract or business relationship, or any other intentional or unintentional tort, or any Claim of loss of consortium, or any Claim of harassment or retaliation, or breach of contract or implied contract, or breach of covenant of good faith and fair dealing, or any whistle-blower Claim.  This release, discharge and waiver shall be referred to here and in the Agreement as the “Release.”

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The Executive specifically understands and agrees that the termination of his employment does not violate or disregard any oral or written promise or agreement, of any nature whatsoever, express or implied.  If any contract or agreement of employment exists concerning the employment of the Executive by the Company or the terms and conditions of such employment or the termination of such employment, whether oral or written, express or implied (excepting the Agreement), that contract or agreement is terminated and is null and void.

The Executive agrees that this Release may be enforced in federal, state or local court, and before any federal, state or local administrative agency or body.

This Release does not prohibit the Executive from filing an administrative charge of alleged employment discrimination, harassment or retaliation under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, the Americans With Disabilities Act or the Equal Pay Act of 1963; however, the Executive represents that he has not to date filed or cause to be filed any such administrative charge, and further agrees that he waives any right to monetary or other recovery should any federal, state or local administrative agency pursue any Claim on his behalf and will immediately request in writing that the Claim or matter on his behalf be withdrawn.  Thus, by signing this Release, the Executive waives any right he had to obtain a recovery if an administrative agency pursues a Claim against the Company or any of the other Releasees based on any action taken by the Company or any of the other Releasees up to the date of this Release, and acknowledges that he will have released the Company and the other Releasees of any and all Claims, and of the continuing effect of any and all Claims of any nature up to the date of this Release.  This Release does not affect (i) any of the Executive's vested rights under the Erie Insurance Group Retirement Plan for Employees, the Erie Insurance Group Employee Savings Plan, the Supplemental Executive Retirement Plan for Certain Members of the Erie Insurance Group Retirement Plan for Employees (“SERP”), and the Company’s Deferred Compensation Plan; nor (ii) any rights the Executive may have under COBRA on account of the termination of his employment; nor (iii), with respect to any of the capacities in which the Executive served the Company or any Affiliated Company, and with respect to any service of the Executive as a fiduciary or trustee of any employee benefit plans or trusts or other trusts maintained or sponsored by the Company or an Affiliated Company, does it bar any claim the Executive may have for indemnity in relation to any acts or omissions of the Executive or a claim for coverage under any applicable insurances, or any claim relating to enforcement of the Agreement; nor (iv) any rights the Executive has under the Agreement.

The Executive represents and warrants that the Company has given the Executive a reasonable period of time, of at least twenty-one days, for the Executive to consider all the terms of the Agreement and this Release and for the purpose of consulting with an attorney if the Executive so chooses.  A copy of this Release was first given to the Executive on July 1, 2016.  If this Release has been executed by the Executive before the end of the twenty-one day period, the Executive represents that he has freely and willingly elected to do so.

This Release may be revoked by the Executive within seven days after the date this Release is signed by the Executive, by giving notice of revocation to the Executive Vice President, Secretary and General Counsel of the Company.  No consideration described in 

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Section 3(a)(iii)(A) and (B) of the Agreement  (additional retirement compensation) shall be paid unless the Executive has signed this Release by January 31, 2017,  and the revocation period has expired with no revocation.

IN WITNESS WHEREOF, the Executive has signed this Release this ______ day of January, 2017.

	
			
	WITNESS:
	 
	THE EXECUTIVE:

	 
	 
	 

	 
	 
	 

	______________________________
	 
	_________________________________

	 
	 
	Terrence W. Cavanaugh

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

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APPENDIX

Responsibilities, Powers, and Authority
of the
Office of the President of the Company
Effective August 1, 2016

            The responsibilities, powers, and authority of the President of the Company shall be as follows effective August 1, 2016: 

1.  Represent the companies of the Erie Insurance Group, as appropriate, in its relationships with the insurance industry, government regulators, rating agencies, the public, community partners, professional and trade organizations, and other groups and organizations that have business relationships with the Erie Insurance Group; and

2.  When requested, consult with, report to and/or advise the Company and its Board of Directors on matters relating to the Company’s business, insurance operations, the insurance industry and any matters relating to the President’s representation of the Erie Insurance Group as set forth in Paragraph 1, above.

The President of the Company shall continue to report directly to the Board of Directors of the Company.

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