Document:

EX 10.1

EXHIBIT 10.1

RTI International Metals, Inc.
Amended and Restated Executive Change in Control Severance Policy
		
	A.
	Applicability 

The following executive officers (the “Executives” and each an “Executive”) of RTI International Metals, Inc. (the “Company”) are entitled to participate in this Amended and Restated Change in Control Severance Policy (the “CIC Severance Policy”), as may be amended from time to time, together with any other executive officer who is informed in writing by the Company of participation:
Vice Chair, President & Chief Executive Officer (“CEO”); Executive Vice President – Operations (“EVP”); Senior Vice President and Chief Risk Officer (“CRO”); Senior Vice President and Chief Financial Officer (“CFO”); General Counsel and Senior Vice President – Government Relations (“GC”); Senior Vice President – Titanium Operations (“SVP-TO”); Vice President – RTI Aerospace & Defense (“VP-RAD”); Vice President – Business Excellence (“VP-BE”); Vice President – HR Operations (“VP-HRO”); Chief Information Officer (“CIO”); Corporate Controller (“CC”); Vice President – Business Integrations (“VP-BI”); and Secretary & Assistant General Counsel (“AGC”).
If an Executive is entitled to payments and/or benefits under this CIC Severance Policy following Executive’s termination of employment, then this CIC Severance Policy shall control and the Executive shall not receive the payments and benefits provided under the Company’s Executive Non-Change in Control Severance Policy or any other Company severance policy or plan.
		
	B.
	Definitions

(1)    “Base Salary” shall mean the Executive’s annual salary, as may be increased (but not decreased without Executive’s written consent) from time to time in the sole discretion of the Company.
(2)    “Cause” shall mean termination upon (i) any material breach by Executive of their Letter Agreement, if any, (ii) the Executive’s gross misconduct, (iii) the Executive’s gross neglect of their duties with the Company or failure to follow the lawful directives of the Board of Directors of the Company, in each case after a demand for substantial performance is delivered to the Executive that identifies the manner in which the Company believes that the Executive has not acted in accordance with requirements and the Executive has failed to resume substantial performance of their duties within fourteen (14) days of receiving such demand, (iv) the Executive’s indictment, conviction, guilty plea, or plea of nolo contendere to or of any felony, a misdemeanor which substantially impairs the Executive’s ability to perform his or her duties with the Company, or intentional or willful securities law violation, including Sarbanes-Oxley 

CHI-181958659v4 

law violations, (v) the Executive’s act of theft or dishonesty which is injurious to the Company, or (vi) the Executive’s intentional violation of any written Company policy, including any substance abuse policy, that is not cured within fourteen (14) days after written notice of such violation is delivered to Executive.
(3)    For purposes of this CIC Severance Policy, a “Change in Control” of the Company shall be deemed to have occurred if:
		
	(A)
	Any person (within the meaning of that term as used in Sections 13(d) and 14(d) of the Exchange Act (a “Person”)) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing thirty percent (30%) or more of the combined voting power of the Company’s then outstanding voting securities; provided, however, that for purposes of this CIC Severance Policy the term “Person” shall not include (i) the Company or any of its majority-owned subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its subsidiaries, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, or

		
	(B)
	The following individuals cease for any reason to constitute a majority of the number of directors then serving on the Board of Directors of the Company: individuals who, on the date hereof, are serving as directors on the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved, or

		
	(C)
	There is consummated a merger or consolidation of the Company or a subsidiary thereof with any other corporation, other than a merger or consolidation which would result in the holders of the voting securities of the Company outstanding immediately prior thereto holding securities which represent immediately after such merger or consolidation at least 60% of the combined voting power of the voting securities of the entity surviving the merger or consolidation, (or the parent of such surviving entity) or the shareholders of the Company approve a plan of complete liquidation of the Company, or there is consummated the sale or other disposition of all or substantially all of the Company’s assets.

(4)    “Exchange Act” shall mean the Securities Exchange Act of 1934.
(5)    “Good Reason” shall mean, without the Executive’s express written consent, the occurrence after a Change in Control of the Company of any one or more of the following:

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	(A)
	The assignment to Executive of duties inconsistent with the Executive’s position immediately prior to the Change in Control;

		
	(B)
	A material reduction or alteration in the nature of Executive’s position, duties, status or responsibilities from those in effect immediately prior to the Change in Control;

		
	(C)
	The failure by the Company to continue in effect any of the Company’s incentive compensation plans or programs (excluding for the avoidance of doubt any retention, transaction or other “deal bonus” arrangements adopted in connection with a Change in Control) or employee benefit plans, programs, policies, practices or arrangements in which Executive participates (or substantially equivalent successor or replacement employee benefit plans, programs, policies, practices or arrangements) or the failure by the Company to continue Executive’s participation therein on substantially the same basis, both in terms of the amount of benefits provided and the level of Executive’s participation relative to other participants, as existed immediately prior to the Change in Control;

		
	(D)
	The failure of the Company to obtain a satisfactory agreement from any successor to the Company to assume and agree to perform Executive’s Letter Agreement, if any;

		
	(E)
	Any purported termination by the Company of Executive’s employment that is not effected pursuant to the termination requirements as may be set forth in Executive’s Letter Agreement, if any; 

		
	(F)
	The Company’s requiring Executive to be based at a location in excess of fifty (50) miles from the location where Executive is based immediately prior to the Change in Control;

		
	(G)
	The election by the Company not to extend the Employment Period of Executive’s Letter Agreement, if any; and

		
	(H)
	A decrease in the Executive’s Base Salary. 

(6)    “Letter Agreement” shall mean the Executive’s employment letter agreement with the Company, if any, as may be amended from time to time.
(7)    “Payment Multiple” shall mean:  2.5, in the case of the CEO; 2.0, in the case of the CRO, CFO, EVP, GC, SVP-TO, VP-RAD, VP-BE and VP-HRO; and 1.5 in the case of the CIO, CC, VP-BI and AGC.
(8)    “Payment Period” shall mean a number of months equal to the Payment Multiple times twelve (12), which for purposes of measurement shall commence upon the Executive’s separation from service.

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	C.
	Benefits

Following a Change in Control of the Company, upon termination of an Executive’s employment within twenty-four (24) months following the Change in Control, Executive shall be entitled to the following benefits:
(1)    If Executive’s employment shall be terminated by the Company for Cause or by Executive other than for Good Reason, no benefits shall be payable pursuant to this CIC Severance Policy, and the Company shall pay Executive the benefits provided within his or her Letter Agreement or, in the absence of such an agreement, the Company shall pay Executive only that portion, if any, of Executive’s Base Salary that is accrued and unpaid upon the date of termination, which will be payable on the next regularly scheduled payroll date following termination of employment.
(2)    If Executive’s employment terminates by reason of Executive’s death or disability, no benefits shall be payable pursuant to this CIC Severance Policy, and the Executive shall be entitled to the benefits provided within his or her Letter Agreement, if any, and/or the Company’s retirement, survivor’s benefits, insurance and other applicable programs and plans, then in effect.
(3)    If Executive’s employment by the Company is terminated (i) by the Company other than for Cause or Executive’s death or disability, or (ii) by Executive for Good Reason, Executive shall be entitled to the benefits provided in subparagraphs (i) through (viii) below (provided, that the provisions of subparagraph (iv)(i) below shall only apply to the CEO, CRO and GC and the provisions of subparagraph (iv)(ii) shall apply to all other Executives), which shall be in lieu of and cancel any further rights Executive has to receive any Base Salary that would be otherwise due under his or her Letter Agreement, if any, or otherwise:
(i)    The Company will pay as severance benefits, a severance payment (the “Severance Payment”) equal to the product of the Payment Multiple times the sum of (x) Executive’s annual Base Salary in effect immediately prior to the occurrence of the circumstances giving rise to such termination, and (y) the amount equal to Executive’s Annual Bonus.  For purposes of the preceding sentence, Annual Bonus means the product of (x) the greater of (aa) Executive’s average actual Bonus Percent for the three years immediately preceding the date of termination, or shorter period if Executive was employed for less than three years, and (bb) Executive’s target Bonus Percent at the time of termination, and (y) Executive’s Base Salary.  For purposes of calculating Annual Bonus under the preceding sentence, Bonus Percent means the actual or target bonus amount paid or payable to Executive with respect to a particular year or years divided by the Base Salary paid or payable to Executive for such year or years.  The Severance Payment shall be payable on the first day following the six month anniversary of Executive’s separation from service; provided, however, the Severance Payment must be repaid in full to the Company in the event that the Executive violates his or her duty to maintain in strict confidence and not disclose any confidential information, as set forth in his or her Letter Agreement, if any, or in any other agreement between Executive and the Company, or provides or engages in the dissemination of false and/or defamatory information pertaining to the Company, to its shareholders or otherwise; provided, further, in the event the event giving rise to 

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a Change in Control does not qualify as a change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a corporation, within the meaning of Treas. Reg. § 1.409A-3(i)(5), severance payments shall be made in accordance with the methodology specified in Paragraph 3(i) of the RTI International Metals, Inc. Executive Non-Change in Control Severance Policy;
(ii)    The stock options previously issued to Executive under any option or incentive plan of the Company to purchase shares of Common Stock of the Company (Option Shares), as well as any previously unvested shares of restricted stock granted to Executive, including any stock, cash or property into which any such shares, or shares underlying the stock options, have been converted, shall irrevocably vest upon any such termination;
(iii)    Any performance share or other awards previously awarded to Executive under the Company’s 2004 Stock Plan, the Company’s 2014 Stock and Incentive Plan, or any successor plan, that represent a right to receive shares of the Company’s Common Stock or the equivalent of shares of the Company’s Common Stock shall vest upon any such termination.  Any payout under the performance award shall be payable on the first day following the six month anniversary of Executive’s separation from service;
(iv)    
		
	i.
	CEO, CRO AND GC. In the event that Executive becomes entitled to the Severance Payments, if any of the Severance Payments or other portion of the Total Payments (as defined below) will be subject to the tax (the “Excise Tax”) imposed by Section 4999 of the Internal Revenue Code (the “Code”), the Company shall pay to Executive at the time specified below, an additional amount (the “Gross-Up Payment”) such that the net amount retained by Executive, after deduction of (1) any Excise Tax on the Severance Payments and such other Total Payments, and (2) any federal, state and local income tax, FICA-Health Insurance tax, and Excise Tax upon the payment provided for by this paragraph, shall be equal to the Severance Payments and such other Total Payments.  Notwithstanding the foregoing provisions of this subparagraph, if it shall be determined that Executive is entitled to a Gross-Up Payment, but that the Severance Payments and Total Payments would not be subject to the Excise Tax if such payments were reduced by an amount that is less than 20% of the portion of the payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to Executive under this Policy shall be reduced (but not below zero) to the maximum amount that could be paid to Executive without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to Executive.  The determination of which amounts payable hereunder will be reduced, if applicable, may be elected by Executive.  For purposes of determining whether any of the payments will be subject to the Excise Tax and the amount of such Excise Tax, (1) any other payments or benefits received or to be received by Executive in connection with a Change in Control of the Company or Executive’s termination of employment 

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whether pursuant to the terms of this Policy or any other plan, arrangement or agreement with the Company, any person whose actions result in a Change of Control of the Company or any person affiliated with the Company or such person (together with the Severance Payment, the “Total Payments”) shall be treated as “parachute payments” within the meaning of Section 280G(b)(2) of the Code, and all “excess parachute payments” within the meaning of Section 280G(b)(1) shall be treated as subject to the Excise Tax, except to the extent that in the opinion of tax counsel selected by the Company’s independent auditors and acceptable by Executive such other payments or benefits (in whole or in part) do not constitute parachute payments, or such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered within the meaning of Section 280G(b)(4) of the Code in excess of the base amount within the meaning of Section 280G(b)(3) of the Code, or are otherwise not subject to the Excise Tax, (2) the amount of the Total Payments which shall be treated as subject to the Excise Tax shall be equal to the lesser of (A) the total amount of the Total Payments or (B) the amount of excess parachute payments within the meaning of Section 280G(b)(l) (after applying clause (1), above), and (3) the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Company’s independent auditors in accordance with the principles of Sections 280G(d)(3) and (4) of the Code.  For purposes of determining the amount of the Gross-Up Payment, Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of Executive’s residence on the date of termination, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.  In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of Executive’s employment, Executive shall repay to the Company at the time that the amount of such reduction in Excise Tax is finally determined the portion of the Gross-Up Payment attributable to such reduction (plus the portion of the Gross-Up Payment attributable to the Excise Tax and federal and state and local income tax imposed on the Gross-Up Payment being repaid by Executive if such repayment results in a reduction in Excise Tax and/or a federal and state and local income tax deduction) plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code.  In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of Executive’s employment (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest payable with respect to such excess) at the time that the amount of such excess is finally determined.
The payment provided for in the paragraph above shall be made on the first day following the six month anniversary of Executive’s date of termination; provided, 

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however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to Executive on such day an estimate as determined in good faith by the Company of the minimum amount of such payments and shall pay the remainder of such payments (together with interest at the rate provided in Section 1274(b)(2)(B) of) the Code) as promptly as practicable following calculation thereof, but in no event later than the end of the Executive’s taxable year following the Executive’s taxable year in which the Executive remits the related taxes..  In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, Executive shall repay such excess to the Company on the fifth day after calculation of the correct amount and notice by the Company (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code);
		
	ii.
	All Other Executives.  Notwithstanding any other provisions in this CIC Severance Policy, in the event that any of the Severance Payments or other portion of the Total Payments (as defined in (i) above) to be received by the Executive would be subject (in whole or in part) to the Excise Tax (as defined in (i) above), then, after taking into account any reduction in the Total Payments provided by reason of Section 280G of the Code in such other plan, agreement, arrangement or program, the Total Payments shall be reduced (but in no event to less than zero) in the following order to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax:  (i) cash payments that do not constitute deferred compensation within the meaning of Section 409A of the Code, (ii) acceleration of vesting of equity and equity-based awards and non-cash benefits that do not constitute deferred compensation within the meaning of Section 409A of the Code and (iii) all other cash payments, acceleration of vesting of equity and equity-based awards and non-cash benefits that do constitute deferred compensation within the meaning of Section 409A of the Code (the payments and benefits in clauses (i), (ii) and (iii), together, the “Potential Payments”); provided, however, that the Potential Payments shall only be reduced if (a) the net amount of the Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such reduced Total Payments), is greater than or equal to (b) the net amount of the Total Payments without such reduction (but after subtracting the net amount of federal, state, municipal and local income taxes on such Total Payments and the amount of Excise Tax to which the Executive would be subject in respect of such unreduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such unreduced Total Payments).

All determinations under this subparagraph (iv)(ii) shall be made by tax counsel selected by the Company’s independent auditors and acceptable by Executive (the “Tax Advisor”), and the Company and Executive will each provide the Tax Advisor access to and copies of any books, records and documents in the 

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possession of the Company or Executive, as the case may be, reasonably requested by the Tax Advisor, and otherwise cooperate with the Tax Advisor in connection with the preparation and issuance of the determinations and calculations contemplated by this subparagraph (iv)(ii).
(v)    During the Payment Period, the Company will arrange to provide Executive at the Company’s expense with life, disability, accident and health insurance benefits substantially similar to those which Executive was receiving immediately prior to the termination of employment; but benefits otherwise receivable by Executive pursuant to this paragraph shall be reduced to the extent comparable benefits are actually received by Executive during the Payment Period following his or her termination, and any such benefits actually received by Executive shall be reported to the Company for purposes of offset.  The benefits to be provided under this Paragraph C(3)(v) will be provided as follows:
		
	i.
	Life insurance benefits shall be provided through the reimbursement of Executive’s premiums upon conversion to individual policy.

		
	ii.
	The first eighteen (18) months of accident and health insurance coverage will be available through the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”).  Provided the Executive timely elects COBRA continuation coverage, the Executive shall continue to participate in all accident and health insurance plans he was participating on the date of termination, and the Company shall pay the applicable premium.  To the extent that Executive had dependent coverage immediately prior to termination of employment, such continuation of benefits for Executive shall also cover Executive’s dependents for so long as Executive is receiving benefits under this Paragraph and such dependents remain eligible.  The COBRA continuation period for accident and health insurance under this Paragraph shall be deemed to run concurrent with the continuation period federally mandated by COBRA, or any other legally mandated and applicable federal, state, or local coverage period.

		
	iii.
	Following the conclusion of the COBRA continuation period, the Company will provide coverage for the remainder of the Payment Period, if any, as follows:

		
	(a)
	If the relevant medical plan is self insured (within the meaning of Code Section 105(h)), and such plan permits coverage for the Executive, then the Company will continue to provide coverage during the Payment Period and will annually impute income to the Executive for the fair market value of the premium.

		
	(b)
	If, however, the plan does not permit the continued participation following the end of the COBRA continuation period as contemplated above, then the Company will reimburse Executive for the actual cost to Executive of an individual medical insurance policy obtained by Executive providing comparable coverage.

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	iv.
	Notwithstanding the foregoing, if at any time the Executive is eligible to enroll in The Program of Hospital-Medical Benefits for Eligible Pensioners and Surviving Spouses of RMI Titanium Company and the Executive elects to enroll in such plan in accordance with its terms, accident and health insurance benefits shall be provided solely in accordance with the terms of such plan without further obligation by Company.

		
	v.
	To the extent required by law, the Company will annually report as taxable wages and/or impute income to the Executive the value of any taxable benefits and/or payments to the Executive.  Reimbursements to the Executive pursuant to the provisions of this Paragraph 3(C)(v) above will be available only to the extent that (a) such expense is actually incurred for any particular calendar year and reasonably substantiated; (b) reimbursement shall be made no later than the end of the calendar year following the year in which such expense is incurred by the Executive; (c) no reimbursement provided for any expense incurred in one taxable year will affect the amount available in another taxable year; and (d) the right to this reimbursement is not subject to liquidation or exchange for another benefit.  Notwithstanding the foregoing, no reimbursement will be provided for any expense incurred following the Payment Period, or for any expense that relates to coverage after the Payment Period contemplated by this Policy.

(vi)    The Company shall pay Executive an additional amount equal to the excess of (x) minus (y), where (x) equals the sum of the pension, surviving spouse and/or survivor benefits on Executive’s behalf under the RTI Pension Plan and the RTI Supplemental Pension Program if such benefits were calculated using (i) Executive’s actual age at termination plus the number of months in the Payment Period, (ii) Executive’s actual continuous service for benefit accrual purposes at termination plus the number of months in the Payment Period, (iii) the interest and mortality table specified by the plans for calculating lump sum distributions as of the date of Executive’s termination of employment, (iv) the actuarial factors and assumptions that are in effect under the plans, using Executive’s age at termination of employment and (y) equals the sum of pension, surviving spouse’s benefits and/or survivor benefits which are actually payable on Executive’s behalf under the RTI Pension Plan and the RTI Supplemental Pension Program as of Executive’s termination of employment.  For purposes of determining the amounts in (x) and (y) above, benefits will be based upon the amount of immediate pension payable in the form of a lump sum distribution under the terms of the applicable plan.  The additional amount payable to Executive hereunder shall be payable in the form of a lump sum distribution on the first day following the six month anniversary of Executive’s separation from service.
(vii)    The Company shall pay to Executive an additional amount equal to the product of Executive’s annual bonus based on performance through the date of such termination of employment, in accordance with the applicable bonus plan or arrangement, multiplied by a fraction, the numerator of which is the number of days that elapse between January 1 of the year of termination of employment and the date of termination of employment and the denominator of which is 365.

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(viii)    The Company shall pay to Executive an additional amount equal to $10,000 for tax preparation and financial counseling.
(4)    The Company shall also pay to Executive all reasonable legal fees and expenses incurred by Executive as a result of such termination of employment, including all such fees and expenses, if any, incurred in contesting or disputing any such termination or in seeking to obtain or enforce any right or benefit provided by this CIC Severance Policy or in connection with any tax audit or proceeding to the extent attributable to the application of Section 4999 of the Code to any payment or benefit provided hereunder.  The payment provided for in this paragraph shall be made on the first day following the six month anniversary of Executive’s date of termination; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, such payment shall be made on or before the last day of the Executive’s taxable year following the taxable year in which such fees and expenses are incurred.
		
	D.
	Amendment or Termination

This CIC Severance Policy may be amended or terminated at any time in the Company’s discretion; provided, however, that no such amendment or termination made simultaneously with or following a Change in Control shall be binding upon the Executive, or in any way adversely affect such Executive’s rights under the CIC Severance Policy as it existed prior to such amendment or termination.
		
	E.
	Section 409A

(1)    The provisions of the Policy shall be administered, interpreted and construed in a manner necessary to comply with Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder (“Section 409A”), or disregarded to the extent such provision cannot be so administered, interpreted, or construed.  For purposes of this Policy, an Executive shall be considered to have experienced a termination of employment if the executive has terminated employment with RTI International Metals, Inc. and all of its controlled group members within the meaning of Section 409A.  Whether an Executive shall have terminated employment will be determined based on all of the facts and circumstances and in accordance with the guidance issued under Section 409A.
(2)    With respect to payments subject to Section 409A of the Code (and not excepted therefrom), it is intended that each payment is paid on a permissible distribution event and at a specified time consistent with Section 409A of the Code.  Each payment with respect to post-termination benefits under this Policy shall be treated as a separate payment and is intended to be excepted from Section 409A to the maximum extent provided under Section 409A as follows: (i) post-termination accident and health benefits are intended to be excepted from Section 409A to the maximum extent provided under the medical benefits exceptions as specified in Treas. Reg. § 1.409A-1(b)(9)(v)(B); and (ii) post-termination life insurance benefits are intended to be excepted under the limited payment exception as specified in Treas. Reg. § 1.409A-1(b)(9)(v)(D).  The Company reserves the right to accelerate and/or defer any payment to the extent permitted and consistent with Section 409A.  An Executive shall have no right to designate the date of any payment under this Policy.

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Adopted February 22, 2007 and Amended January 25 and December 31, 2008 and Amended and Restated March 8, 2015

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CHI-181958659v4EX-10.1 03.31.2015

Exhibit 10.1

Amendment Number 1
to the
ERIE INDEMNITY COMPANY

LONG TERM INCENTIVE PLAN

(As Amended and Restated Effective as of January 1, 2014)

WHEREAS, Erie Indemnity Company (the “Company”) established the Long Term Incentive Plan (the “Plan”) effective March 2, 2004, and most recently amended the Plan through a restatement effective January 1, 2014, which was approved by shareholders on April 15, 2014;
WHEREAS, under Section 14 of the Plan, the board of directors of the Company reserved authority to amend the Plan; and
WHEREAS, the board of directors desires to amend the Plan to allow for the award of phantom stock and for the substitution of payment in cash for payment in shares under outstanding awards.
NOW, THEREFORE, the Plan is amended as follows, effective February 18, 2015:
1.The text of Section 1 of the Plan is amended to read as follows:
Erie Indemnity Company (the “Company”) established the Long Term Incentive Plan (the “Plan”) effective March 2, 2004.  The Company amended and restated the Plan effective as of January 1, 2014, subject to shareholder approval as provided in Section 12.
On April 15, 2014, shareholders approved the Plan as amended and restated effective January 1, 2014.
The Board of Directors of the Company amended the Plan by the adoption of Amendment Number 1, effective February 18, 2015.
2.Section 3(k) of the Plan is amended to read as follows:
(k)    “Fair Market Value” of a Share 
(1)    means, if the Shares are traded on a national securities exchange, the average of the high and low prices of a Share as reported on such exchange or under any composite transaction report of such exchange on a given date, or, if no prices are so reported on that date, on the next preceding date on which such prices are so reported, or if the Shares are traded in the over-the-counter market, the mean between the closing bid and asked prices of a Share on the given date, or, if no prices are so quoted on that date, on the next preceding date on which such prices are so quoted, provided, however, that 
(2)    for the purpose of determining the individual limit on a Phantom Stock award pursuant to Section 5(d)(iii), the amount payable with respect to Phantom Stock, and the amount payable with respect to Restricted Performance Shares payable in cash pursuant to Section 10(c), “Fair Market Value” of a Share means the average of the values determined under paragraph (1) above for each of the last 

twenty trading days in the Performance Period to which the Phantom Stock or Restricted Performance Shares relate.
3.Section 3 of the Plan is amended by the redesignation of subsection (r) as subsection (s) and the addition of a new subsection (r) to read as follows:
(r)    “Phantom Stock” and “Phantom Stock Share” have the meanings given in Section 8(d).
4.Section 5 is amended by the redesignation of subsection (d)(iii) as subsection (d)(iv) and the addition of a new subsection (d)(iii) as follows:
(iii)    The maximum dollar amount that may be earned under the Plan by a Participant for a Performance Period with respect to an award of Phantom Stock shall be the product of 250,000 Shares multiplied by the Fair Market Value of a Share.
5.Section 7(a) is amended to read as follows:
(a)    Types of Awards.  Awards under the Plan may be in the form of Restricted Performance Shares, Performance Units, Phantom Stock, or in any combination of them.
6.The first sentence of Section 7(b) is amended to read as follows:
The Committee shall select the Employees to participate in the Plan, determine the times when awards shall be made to Participants and the Performance Periods for awards, determine the number or amount of Restricted Performance Shares, Performance Units, or Phantom Stock Shares subject to each award, and establish all other terms of each award.
7.Section 8 is amended by changing the title to “Restricted Performance Shares, Performance Units, and Phantom Stock” and by the redesignation of subsections (d) through (f) as subsections (e) through (g) (which shall be reflected in the references to the subsections throughout the Plan) and by the addition of a new subsection (d) to read as follows:
(d)    Phantom Stock.  A Phantom Stock Share shall represent a right to receive the Fair Market Value of a Share of Common Stock, and Phantom Stock shall represent the right to receive the value of Shares of Common Stock, the number of which shall be calculated with reference to a Participant’s salary or such other elements of compensation determined by the Committee based on the achievement, or on the level of achievement, of the Performance Goals established by the Committee for the Participant for that Performance Period.  
8.The first sentence of Section 8(e) (as redesignated by this amendment) is amended to read as follows:
When the Committee awards Restricted Performance Shares, Performance Units, or Phantom Stock to and establishes Performance Goals and a Performance Period for a Participant, the Committee shall specify, in terms of an objective formula or standard, the method for calculating the number of Shares (with respect to Restricted Performance Shares), the amount (with respect to Performance Units), or the number of Phantom Stock Shares that shall be earned by the Participant based on the achievement, or level of achievement, of the Performance Goals established for the Participant.  

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9.Section 9(c) is amended to read as follows:
(c)    Retirement, Death, or Disability.  If a Participant’s termination of employment occurs before the last day of the Performance Period by reason of Normal or Early Retirement, Death, or Permanent Disability, the Participant’s interest in a portion of the award for that Performance Period shall be vested.  The Committee in its discretion shall determine the portion to be vested, provided that it shall not be less than a pro rata portion that is determined by multiplying (i) the total number of Shares of Common Stock earned pursuant to a Restricted Performance Share award, or the total dollar amount earned pursuant to a Performance Unit award, or the number of Phantom Stock Shares earned pursuant to a Phantom Stock award, based, in all cases, upon the level of achievement of Performance Goals during a reduced Performance Period that is deemed to end, for the purposes of Section 3(k)(2) (averaging period for Fair Market Value of a Share), Section 8(f) (period for measuring achievement of Performance Goals) and Section 10(a) (timing of payment) as well as of this subsection, on the last day of the calendar year in which such termination of employment occurs, by (ii) a fraction the numerator of which is the number of full months during which the Participant remained employed in the reduced Performance Period, and the denominator of which is the number of full months the Performance Period would have included had it not been reduced.
10.Section 10(a) is amended to read as follows:
(a)    Timing of Payment.  The Company shall pay to the Participant the number of Shares of Common Stock earned and vested pursuant to an award of Restricted Performance Shares, and the dollar amount earned and vested pursuant to an award of Performance Units, or the dollar amount payable with respect to the number of Phantom Stock Shares earned and vested pursuant to an award of Phantom Stock, in the first calendar year beginning after the end of the Performance Period for the award, as promptly as reasonably practicable following the Committee’s determination and certification of the award as set forth in Section 8(f), subject to subsections (b) and (c) below.
11.Section 10(c) is amended to read as follows:
(c)    Restricted Performance Shares Payable in Cash in Certain Cases.
(i)    With respect to an award of Restricted Performance Shares, if the Participant’s termination of employment occurs by reason of Early or Normal Retirement, death, or Permanent Disability, or if the termination occurs for any reason after the end of the Performance Period and before the payment of Shares earned and vested pursuant to the award, the Participant may elect to have payment made not in Shares but in a cash lump sum in an amount equal to the Fair Market Value of the Shares that would otherwise have been payable.  Payment in cash shall be made at the time payment in Shares would have been made.
(ii)    With respect to an award of Restricted Performance Shares, the Board of Directors may, after the grant of the award, amend the award to provide that payment of the award shall be made not in Shares but in a cash lump sum in an amount equal to the Fair Market Value of the Shares that would otherwise have been payable, provided, however, in the case of an award granted before 2015, the amendment shall not be effective without the consent of the holder of the award.  Payment in cash shall be made at the time payment in Shares would have been made.

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IN WITNESS WHEREOF, the Board of Directors of the Company has caused this document to be executed this 25th day of March, 2015.
ERIE INDEMNITY COMPANY

By /s/ Sean J. McLaughlin            
Sean J. McLaughlin
Executive Vice President,
Secretary and General Counsel

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