ERIE INDEMNITY CO (Form: 10-K, Received: 02/25/2016 17:00:36)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2015

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 0-24000



	ERIE INDEMNITY COMPANY

(Exact name of registrant as specified in its charter)



	Pennsylvania		25-0466020
	(State or other jurisdiction		(I.R.S. Employer
	of incorporation or organization)		Identification No.)

	100 Erie Insurance Place, Erie, Pennsylvania		16530
	(Address of principal executive offices)		(Zip code)



	(814) 870-2000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



	Class A common stock, stated value $0.0292 per share, listed on the NASDAQ Stock Market, LLC
	(Title of each class)	(Name of each exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes X No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No X

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes X No ___

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):



Large Accelerated Filer X	Accelerated Filer	Non-Accelerated Filer	Smaller Reporting Company
	(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No X

Aggregate market value of voting and non-voting common stock held by non-affiliates as of the last business day of the registrant’s most recently completed second fiscal quarter: $2.0 billion of Class A non-voting common stock as of June 30, 2015 . There is no active market for the Class B voting common stock. The Class B common stock is closely held by few shareholders.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date:

46,189,068 shares of Class A common stock and 2,542 shares of Class B common stock outstanding on February 19, 2016 .

DOCUMENTS INCORPORATED BY REFERENCE

Portions of Part III of this Form 10-K (Items 10, 11, 12, 13, and 14) are incorporated by reference to the information statement on Schedule 14(C) to be filed with the Securities and Exchange Commission no later than 120 days after December 31, 2015 .

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INDEX



PART	ITEM NUMBER AND CAPTION		PAGE


I	Item 1.	Business	3
	Item 1A.	Risk Factors	5
	Item 1B.	Unresolved Staff Comments	10
	Item 2.	Properties	10
	Item 3.	Legal Proceedings	11
	Item 4.	Mine Safety Disclosures	12


II	Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	13
	Item 6.	Selected Financial Data	14
	Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
	Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	34
	Item 8.	Financial Statements and Supplementary Data	37
	Item 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure	69
	Item 9A.	Controls and Procedures	69
	Item 9B.	Other Information	69


III	Item 10.	Directors, Executive Officers and Corporate Governance	71
	Item 11.	Executive Compensation	72
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	72
	Item 13.	Certain Relationships and Related Transactions, and Director Independence	72
	Item 14.	Principal Accountant Fees and Services	72


IV	Item 15.	Exhibits and Financial Statement Schedules	73


		Signatures	74

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PART I

ITEM 1. BUSINESS

General

Erie Indemnity Company ("Indemnity", "we", "us", "our") is a publicly held Pennsylvania business corporation that has since our incorporation in 1925 served as the attorney-in-fact for the subscribers (policyholders) at the Erie Insurance Exchange ("Exchange"). The Exchange, which also commenced business in 1925, is a Pennsylvania-domiciled, reciprocal insurer that writes property and casualty insurance. We function solely as the management company and all insurance operations are performed by the Exchange. We operate our business as one segment.

Our primary function as attorney-in-fact is to perform certain services for the Exchange relating to the sales, underwriting, and issuance of policies on behalf of the Exchange. This is done in accordance with a subscriber’s agreement (a limited power of attorney) executed individually by each subscriber (policyholder), which appoints us as their common attorney-in-fact to transact certain business on their behalf and to manage the affairs of the Exchange. Pursuant to the subscriber’s agreement and for our services as attorney-in-fact, we earn a management fee calculated as a percentage, not to exceed 25% , of the direct and assumed premiums written by the Exchange. The management fee rate is set annually by our Board of Directors.

Services

The services we provide to the Exchange are related to the sales, underwriting and issuance of policies. The sales related services we provide include agent compensation and certain sales and advertising support services. Agent compensation includes scheduled commissions to agents based upon premiums written as well as additional commissions and bonuses to agents, which are earned by achieving targeted measures. Agent compensation comprised approximately 67% of our 2015 expenses. The underwriting services we provide include underwriting and policy processing expenses and comprised approximately 11% of our 2015 expenses. We provide information technology services that support all functions that comprised approximately 10% of our 2015 expenses. The remaining services we provide include customer service and administrative costs.

Erie Insurance Exchange

Our primary purpose is to manage the affairs at the Exchange for the benefit of the policyholders. The Exchange is our sole customer and our earnings primarily come from management fees based on the direct and assumed premiums written by the Exchange. We have no direct competition in providing these services to the Exchange.

The Exchange generates revenue by insuring preferred and standard risks, with personal lines comprising 70% of the 2015 direct and assumed premiums written and commercial lines comprising the remaining 30% . The principal personal lines products are private passenger automobile and homeowners. The principal commercial lines products are commercial multi-peril, workers compensation and commercial automobile. Historically, due to policy renewal and sales patterns, the Exchange’s direct and assumed premiums written are greater in the second and third quarters than in the first and fourth quarters of the calendar year.

The Exchange is represented by independent agencies that serve as its sole distribution channel. In addition to their principal role as salespersons, the independent agents play a significant role as underwriting and service providers and are an integral part of the Exchange’s success.

Our results of operations are tied to the growth and financial condition of the Exchange. If any events occurred that impaired the Exchange’s ability to grow or sustain its financial condition, including but not limited to lower financial strength ratings, significant catastrophe losses, disruption in the independent agency relationships, or products offered not meeting customer demands, the Exchange could experience difficulty retaining its existing business and attracting new business. A decline in the business of the Exchange would likely result in a reduction of total premiums paid and a corresponding decrease in the amount of the management fees we receive. We also have an exposure to a concentration of credit risk related to the unsecured receivables due from the Exchange for its management fee. See Part II, Item 8. "Financial Statements and Supplementary Data - Note 14, Concentrations of Credit Risk, of Notes to Financial Statements" contained within this report. See the risk factors related to our dependency on the growth and financial condition of the Exchange in Item 1A. "Risk Factors" contained within this report.

Competition

Our primary function is to provide management services to the Exchange as set forth in the subscriber’s agreement executed by each policyholder of the Exchange. There are a limited number of companies that provide services under a reciprocal insurance

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exchange structure. We do not directly compete against other such companies, given we are appointed by the policyholders of the Exchange to provide these services.

The direct and assumed premiums written by the Exchange drive our management fee which is our primary source of revenue. The property and casualty insurance industry is highly competitive. Property and casualty insurers generally compete on the basis of customer service, price, consumer recognition, coverages offered, claims handling, financial stability and geographic coverage. Vigorous competition, particularly in the personal lines automobile and homeowners lines of business, is provided by large, well-capitalized national companies, some of which have broad distribution networks of employed or captive agents, by smaller regional insurers, and by large companies who market and sell personal lines products directly to consumers. In addition, because the insurance products of the Exchange are marketed exclusively through independent insurance agents, the Exchange faces competition within its appointed agencies based upon ease of doing business, product, price, and service relationships.

Market competition bears directly on the price charged for insurance products and services subject to regulatory limitations. Industry capital levels can also significantly affect prices charged for coverage. Growth is driven by a company’s ability to provide insurance services and competitive prices while maintaining target profit margins. Growth is a product of a company’s ability to retain existing customers and to attract new customers, as well as movement in the average premium per policy.

The Exchange’s strategic focus includes employing an underwriting philosophy and product mix targeted to produce an underwriting profit on a long-term basis through careful risk selection and rational pricing, and consistently providing superior service to policyholders and agents. The Exchange’s business model is designed to provide the advantages of localized marketing and claims servicing with the economies of scale and low cost of operations from centralized support services. The Exchange also carefully selects the independent agencies that represent it and seeks to be the lead insurer with its agents in order to enhance the agency relationship and the likelihood of receiving the most desirable underwriting opportunities from its agents.

See the risk factors related to our dependency on the growth and financial condition of the Exchange in Item 1A. "Risk Factors" contained within this report for further discussion on competition in the insurance industry.

Employees

We had over 4,800 full-time employees at December 31, 2015 , of which approximately 2,200 , or 46% , provide claims related services exclusively for the Exchange. The Exchange reimburses us monthly for the cost of these services.

Government Regulation

Most states have enacted legislation that regulates insurance holding company systems, defined as two or more affiliated persons, one or more of which is an insurer. The Exchange has the following wholly owned property and casualty subsidiaries: Erie Insurance Company, Erie Insurance Company of New York, Erie Insurance Property and Casualty Company and Flagship City Insurance Company, and a wholly owned life insurance company, Erie Family Life Insurance Company ("EFL"). Indemnity and the Exchange, and its wholly owned subsidiaries, meet the definition of an insurance holding company system.

Each insurance company in the holding company system is required to register with the insurance supervisory authority of its state of domicile and furnish information regarding the operations of companies within the holding company system that may materially affect the operations, management, or financial condition of the insurers within the system. Pursuant to these laws, the respective insurance departments may examine us, as the management company, and the Exchange and its wholly owned subsidiaries at any time, and may require disclosure and/or prior approval of certain transactions with the insurers and us, as an insurance holding company.

All transactions within a holding company system affecting the member insurers of the holding company system must be fair and reasonable and any charges or fees for services performed must be reasonable. Approval by the applicable insurance commissioner is required prior to the consummation of transactions affecting the members within a holding company system.

Website Access

Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports are available free of charge on our website at www.erieinsurance.com as soon as reasonably practicable after such material is filed electronically with the Securities Exchange Commission. Additionally, copies of our annual report on Form 10-K are available free of charge, upon written request, by contacting Investor Relations, Erie Indemnity Company,

100 Erie Insurance Place, Erie, PA 16530, or calling (800) 458-0811.

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Our Code of Conduct and Code of Ethics for Senior Financial Officers are also available on our website and in printed form upon request, and our information statement on Schedule 14(C) is available free of charge on our website at www.erieinsurance.com .

ITEM 1A. RISK FACTORS

Our business involves various risks and uncertainties, including, but not limited to those discussed in this section. The risks and uncertainties described in the risk factors below, or any additional risk outside of those discussed below, could have a material adverse effect on our business, financial condition, operating results, cash flows, or liquidity if they were to develop into actual events. This information should be considered carefully together with the other information contained in this report and in other reports and materials we file periodically with the Securities and Exchange Commission.

If the management fee rate paid by the Exchange is reduced or if there is a significant decrease in the amount of direct and assumed premiums written by the Exchange, revenues and profitability could be materially adversely affected.

We are dependent upon management fees paid by the Exchange, which represent our principal source of revenue. Pursuant to the subscriber’s agreements with the policyholders at the Exchange, we may retain up to 25% of all direct and assumed premiums written by the Exchange. Therefore, management fee revenue from the Exchange is calculated by multiplying the management fee rate by the direct and assumed premiums written by the Exchange. Accordingly, any reduction in direct and assumed premiums written by the Exchange would have a negative effect on our revenues and net income.

The management fee rate is determined by our Board of Directors and may not exceed 25% of the direct and assumed premiums written by the Exchange. The Board of Directors sets the management fee rate each December for the following year. At their discretion, the rate can be changed at any time. The factors considered by the Board of Directors in setting the management fee rate include our financial position in relation to the Exchange and the long-term needs of the Exchange for capital and surplus to support its continued growth and competitiveness. If the Exchange’s surplus were significantly reduced, the management fee rate could be reduced and our revenues and profitability could be materially adversely affected.

If the costs of providing services to the Exchange are not controlled, our profitability could be materially adversely affected.

Pursuant to the subscriber’s agreements with the policyholders at the Exchange, we are appointed to perform certain services. These services relate to the sales, underwriting, and issuance of policies on behalf of the Exchange. We incur significant costs related to commissions, employees, and technology in order to provide these services.

Commissions to independent agents are the largest component of our cost of operations. Commissions include scheduled commissions to agents based upon premiums written as well as additional commissions and bonuses to agents, which are earned by achieving certain targeted measures. Changes to commission rates or bonus programs may result in increased future costs and lower profitability.

Employees are an essential part of the operating costs related to providing services for the Exchange. As a result, our profitability is affected by employee costs, including salaries, healthcare, pension, and other benefit costs. Recent regulatory developments, provider relationships, and economic factors that are beyond our control indicate that employee healthcare costs will continue to increase. Although we actively manage these cost increases, there can be no assurance that future cost increases will not occur and reduce our profitability.

Technological development is necessary to facilitate ease of doing business for the agents and policyholders of the Exchange and our employees. If we are unable to keep pace with advancements in technology, our ability to compete may be negatively affected and result in lower revenues and reduced profitability for us. In order to achieve a greater ease of doing business, additional costs may be incurred as we invest in new technology and systems, which may negatively impact profitability.

We are subject to credit risk from the Exchange because the management fees from the Exchange are not paid immediately when premiums are written.

We recognize management fees due from the Exchange as income when the premiums are written because at that time we have performed substantially all of the services we are required to perform, including sales, underwriting, and policy issuance activities. However, such fees are not paid to us by the Exchange until the Exchange collects the premiums from policyholders. As a result, we hold receivables for management fees on premiums that have been written and assumed but not yet collected.

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We also hold receivables from the Exchange for costs we pay on the Exchange’s behalf. The receivable from the Exchange totaled $348.1 million , or approximately 25% of our total assets at December 31, 2015 .

Serving as the attorney-in-fact in the reciprocal insurance exchange structure results in the Exchange being our sole customer. We have an interest in the growth of the Exchange as our earnings are largely generated from management fees based on the direct and assumed premiums written by the Exchange. If the Exchange’s ability to grow or renew policies were adversely impacted, the premium revenue of the Exchange would be adversely affected which would reduce our management fee revenue. The circumstances or events that might impair the Exchange’s ability to grow include, but are not limited to, the items discussed below.

The Exchange faces significant competition from other regional and national insurance companies. The property and casualty insurance industry is highly competitive on the basis of product, price and service. If the Exchange’s competitors offer property and casualty products with more coverage or offer lower rates, and the Exchange is unable to implement product improvements quickly enough to keep pace, its ability to grow and renew its business may be adversely impacted. Likewise, an inability to match or exceed the service provided by competitors, which is increasingly relying on digital delivery and enhanced distribution technology, may impede the Exchange's ability to maintain and/or grow its customer base. In addition, due to the Exchange’s focus on the automobile and homeowners insurance markets, it may be more sensitive to trends that could affect auto and home insurance coverages and rates over time, for example changing driving patterns or advancements in vehicle or home technology or safety features.

The Exchange markets and sells its insurance products through independent, non-exclusive insurance agencies. These agencies are not obligated to sell only the Exchange’s insurance products, and generally also sell products of the Exchange’s competitors. If agencies do not maintain their current levels of marketing efforts, bind the Exchange to unacceptable risks, place business with competing insurers, or the Exchange is unsuccessful in maintaining and/or increasing the number of agencies in its distribution system as well as its relationships with those agencies, the Exchange’s ability to grow and renew its business may be adversely impacted. Additionally, consumer preferences may cause the insurance industry as a whole to migrate to a delivery system other than independent agencies.

The Exchange maintains a brand recognized for customer service. The perceived performance, actions, conduct and behaviors of employees, independent insurance agency representatives, and third-party service partners may result in reputational harm to the Exchange’s brand. Specific incidents which may cause harm include but are not limited to disputes, long customer wait times, errors in processing a claim, failure to protect sensitive customer data, and inappropriate social media communications. If third-party service providers fail to perform as anticipated, the Exchange may experience operational difficulties, increased costs and reputational damage. If an extreme catastrophic event were to occur in a heavily concentrated area of policyholders, an extraordinarily high number of claims could have the potential to strain claims processing and affect the Exchange’s ability to satisfy its customers. Any reputational harm to the Exchange could have the potential to impair its ability to grow and renew its business.

Serving as the attorney-in-fact in the reciprocal insurance exchange structure results in the Exchange being our sole customer. We have an interest in the financial condition of the Exchange as our earnings are largely generated from management fees based on the direct and assumed premiums written by the Exchange. If the Exchange were to fail to maintain acceptable financial strength ratings, its competitive position in the insurance industry would be adversely affected. If a rating downgrade led to customers not renewing or canceling policies, or impacted the Exchange’s ability to attract new customers, the premium revenue of the Exchange would be adversely affected which would reduce our management fee revenue. The circumstances or events that might impair the Exchange’s financial condition include, but are not limited to, the items discussed below.

Financial strength ratings are an important factor in establishing the competitive position of insurance companies such as the Exchange. Higher ratings generally indicate greater financial stability and a stronger ability to meet ongoing obligations to policyholders. The Exchange’s A.M. Best rating is currently A+ ("Superior"). Rating agencies periodically review insurers' ratings and change their rating criteria; therefore, the Exchange’s current rating may not be maintained in the future. A significant downgrade in this or other ratings would reduce the competitive position of the Exchange, making it more difficult to attract profitable business in the highly competitive property and casualty insurance market and potentially result in reduced sales of its products and lower premium revenue.

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The performance of the Exchange’s investment portfolio is subject to a variety of investment risks. The Exchange’s investment portfolio is comprised principally of fixed income securities, equity securities and limited partnerships. The fixed income portfolio is subject to a number of risks including, but not limited to, interest rate risk, investment credit risk, sector/concentration risk and liquidity risk. The Exchange’s common stock and preferred equity securities have exposure to price risk, the risk of potential loss in estimated fair value resulting from an adverse change in prices. Limited partnerships are significantly less liquid and generally involve higher degrees of price risk than publicly traded securities. Limited partnerships, like publicly traded securities, have exposure to market volatility; but unlike fixed income securities, cash flows and return expectations are less predictable. If any investments in the Exchange’s investment portfolio were to suffer a substantial decrease in value, the Exchange’s financial position could be materially adversely affected through increased unrealized losses or impairments. A significant decrease in the Exchange’s portfolio could also put it, or its subsidiaries, at risk of failing to satisfy regulatory or rating agency minimum capital requirements.

Property and casualty insurers are subject to extensive regulatory supervision in the states in which they do business. This regulatory oversight includes, by way of example, matters relating to licensing, examination, rate setting, market conduct, policy forms, limitations on the nature and amount of certain investments, claims practices, mandated participation in involuntary markets and guaranty funds, reserve adequacy, insurer solvency, restrictions on underwriting standards, accounting standards, and transactions between affiliates. Such regulation and supervision are primarily for the benefit and protection of policyholders. Changes in applicable insurance laws, regulations, or changes in the way regulators administer those laws or regulations could adversely change the Exchange’s operating environment and increase its exposure to loss or put it at a competitive disadvantage, which could result in reduced sales of its products and lower premium revenue.

As insurance industry practices and legal, judicial, social and other environmental conditions change, unexpected and unintended issues related to claims and coverage may emerge. In some instances, these emerging issues may not become apparent for some time after the Exchange has issued the affected insurance policies. As a result, the full extent of liability under the Exchange’s insurance policies may not be known for many years after the policies are issued. These issues may adversely affect the Exchange’s business by either extending coverage beyond its underwriting intent or by increasing the number or size of claims.

The Exchange’s insurance operations are exposed to claims arising out of catastrophes. Common natural catastrophic events include hurricanes, earthquakes, tornadoes, hail storms, and severe winter weather. The frequency and severity of these catastrophes is inherently unpredictable. Changing climate conditions have added to the unpredictability, frequency and severity of natural disasters and have created additional uncertainty as to future trends and exposures. A single catastrophic occurrence or aggregation of multiple smaller occurrences could adversely affect the financial condition of the Exchange.

Terrorist attacks could also cause losses from insurance claims related to the property and casualty insurance operations. The Exchange could incur large net losses if terrorist attacks were to occur which could adversely affect its financial condition.

Our ability to attract, develop, and retain talented executives, key managers, and employees is critical to our success.

Our success is largely dependent upon our ability to attract and retain executives and other key management. The loss of the services and leadership of certain key officers and the failure to attract and develop talented new executives and managers could prevent us from successfully communicating, implementing, and executing business strategies, and therefore have a material adverse effect on our financial condition and results of operations.

Our success also depends on our ability to attract, develop, and retain a talented employee base. The inability to staff all functions of our business with employees possessing the appropriate technical expertise could have an adverse effect on our business performance. Staffing appropriately skilled employees for the handling of claims and servicing of customers, rendering of disciplined underwriting, and effective sales and marketing are critical to the core functions of our business. In addition, skilled employees in the actuarial, finance, and information technology areas are also essential to support our core functions.

If we are unable to ensure system availability, unable to secure sensitive information, or we make significant decisions based on inaccurate data, we may experience adverse financial consequences and/or may be unable to compete effectively. Our business depends on the uninterrupted operations of our facilities, systems, and business functions.

Our business is highly dependent upon the effective operations of our technology and information systems. We also conduct business functions and computer operations using the systems of third-party vendors, which may provide software, data storage, and other computer services to us. We rely upon our systems, and those of third-party vendors, to assist in key functions of core business operations including processing claims, applications, and premium payments, providing customer support, performing actuarial and financial analysis, and maintaining key data.

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We necessarily collect, use, and hold data concerning individuals, businesses, strategic plans, and intellectual property. Threats to data security, including unauthorized access, cyber-attacks, and other computer related penetrations, expose us to additional costs for protection or remediation to secure our data in accordance with customer expectations and statutory and regulatory requirements, including data privacy laws. Preventative actions we take, or our third-party vendors take, to reduce the risk of cyber incidents and protect our information may be insufficient to prevent physical and electronic break-ins or other security breaches to our computer system. Additionally, a breach of security that results in unauthorized access to our data could expose us to an operational disruption, data loss, litigation, fines and penalties, increased compliance costs, and reputational damages. While we maintain cyber liability insurance to mitigate the amount of financial loss, our insurance coverage may not be sufficient to protect against all loss.

We depend on a large amount of data to price policies appropriately, track exposures, perform financial analysis, and ultimately make business decisions. Should this data be inaccurate or insufficient, risk exposure may be underestimated and/or poor business decisions may be made. This may in turn lead to adverse operational or financial performance.

We have an established business continuity plan to ensure the continuation of core business operations in the event that normal business operations could not be performed due to a catastrophic event. While we continue to test and assess our business continuity plan to ensure it meets the needs of our core business operations and addresses multiple business interruption events, there is no assurance that core business operations could be performed upon the occurrence of such an event. Systems failures or outages could compromise our ability to perform our business functions in a timely manner, which could harm our ability to conduct business and hurt our relationships with our business partners and customers. Our business continuity is also dependent on third-party systems on which our information technology systems interface and rely. Our systems and those of our third-party vendors may become vulnerable to damage or disruption due to circumstances beyond our or their control, such as from catastrophic events, power anomalies or outages, natural disasters, network failures, and viruses. The failure of our information systems for any reason could result in a material adverse effect on our business, financial condition, or results of operations.

The performance of our investment portfolio is subject to a variety of investment risks, which may in turn have a material adverse effect on our results of operations or financial condition.

Our investment portfolio is comprised principally of fixed income securities and limited partnerships. At December 31, 2015 , our investment portfolio consisted of approximately 85% fixed income securities, 13% limited partnerships, and 2% equity securities.

All of our marketable securities are subject to market volatility. To the extent that future market volatility negatively impacts our investments, our financial condition will be negatively impacted. We review the investment portfolio on a continuous basis to evaluate positions that might have incurred other-than-temporary declines in value. Inherent in management’s evaluation of a security are assumptions and estimates about the operations of the issuer and its future earnings potential. The primary factors considered in our review of investment valuation include the extent and duration to which fair value is less than cost, historical operating performance and financial condition of the issuer, short- and long-term prospects of the issuer and its industry, specific events that occurred affecting the issuer, including rating downgrades, and, depending on the type of security, our intent to sell or our ability and intent to retain the investment for a period of time sufficient to allow for a recovery in value. As the process for determining impairments is highly subjective, changes in our assessments may have a material effect on our operating results and financial condition. See also Item 7A. "Quantitative and Qualitative Disclosures about Market Risk".

If the fixed income, equity, or limited partnership portfolios were to suffer a substantial decrease in value, our financial position could be materially adversely affected through increased unrealized losses or impairments.

Currently, 39% of the fixed income portfolio is invested in municipal securities. The performance of the fixed income portfolio is subject to a number of risks including, but not limited to:


•	Interest rate risk - the risk of adverse changes in the value of fixed income securities as a result of increases in market interest rates. A sustained low interest rate environment would pressure our net investment income.


•	Investment credit risk - the risk that the value of certain investments may decrease due to the deterioration in financial condition of, or the liquidity available to, one or more issuers of those securities or, in the case of asset-backed securities, due to the deterioration of the loans or other assets that underlie the securities, which, in each case, also includes the risk of permanent loss.

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•

Sector/Concentration risk - the risk that the portfolio may be too heavily concentrated in the securities of one or more issuers, sectors, or industries. Events or developments that have a negative impact on any particular industry, group of related industries, or geographic region may have a greater adverse effect on our investment portfolio to the extent that the portfolio is concentrated within those issuers, sectors, or industries.

•

Liquidity risk - the risk that we will not be able to convert investment securities into cash on favorable terms and on a timely basis, or that we will not be able to sell them at all, when desired. Disruptions in the financial markets or a lack of buyers for the specific securities that we are trying to sell, could prevent us from liquidating securities or cause a reduction in prices to levels that are not acceptable to us.

General economic conditions and other factors beyond our control can adversely affect the value of our equity investments and the realization of net investment income, or result in realized investment losses. In addition, downward economic trends also may have an adverse effect on our investment results by negatively impacting the business conditions and impairing credit for the issuers of securities held in their respective investment portfolios. This could reduce fair values of investments and generate significant unrealized losses or impairment charges which may adversely affect our financial results.

In addition to the fixed income securities, a portion of our portfolio is invested in limited partnerships. At December 31, 2015 , we had investments in limited partnerships of $88.5 million , or 6% of total assets. In addition, we are obligated to invest up to an additional $19.1 million in limited partnerships, including private equity, mezzanine debt, and real estate partnership investments. Limited partnerships are significantly less liquid and generally involve higher degrees of price risk, the risk of potential loss in estimated fair value resulting from an adverse change in prices, than publicly traded securities. Limited partnerships, like publicly traded securities, have exposure to market volatility; but unlike fixed income securities, cash flows and return expectations are less predictable.

The primary basis for the valuation of limited partnership interests are financial statements prepared by the general partner. Because of the timing of the preparation and delivery of these financial statements, the use of the most recently available financial statements provided by the general partners result in a quarter delay in the inclusion of the limited partnership results in our Statements of Operations. Due to this delay, our financial statements at December 31, 2015 do not reflect market conditions experienced in the fourth quarter of 2015 .

Our equity securities have exposure to price risk. We do not hedge our exposure to equity price risk inherent in our equity investments. Equity markets, sectors, industries, and individual securities may also be subject to some of the same risks that affect our fixed income portfolio, as discussed above.

Deteriorating capital and credit market conditions or a failure to accurately estimate capital needs may significantly affect our ability to meet liquidity needs and access capital.

Sufficient liquidity and capital levels are required to pay operating expenses, income taxes, and to provide the necessary resources to fund future growth opportunities, pay dividends on common stock, and repurchase common stock. Management estimates the appropriate level of capital necessary based upon current and projected results, which include a loading for potential risks. Failure to accurately estimate our capital needs may have a material adverse effect on our financial condition until additional sources of capital can be located. Further, a deteriorating financial condition may create a negative perception of us by third parties, including rating agencies, investors, agents, and customers which could impact our ability to access additional capital in the debt or equity markets.

Our primary sources of liquidity are management fees and cash flows generated from our investment portfolio. In the event our current sources do not satisfy our liquidity needs, we have the ability to access our $100 million bank revolving line of credit, from which there were no borrowings as of December 31, 2015 , or sell assets in our investment portfolio. Volatility in the financial markets could limit our ability to sell certain of our fixed income securities or, to a greater extent, our significantly less liquid limited partnership investments, or cause such investments to sell at deep discounts.

In the event these traditional sources of liquidity are not available, we may have to seek additional financing. Our access to funds will depend upon a number of factors including current market conditions, the availability of credit, market liquidity, and credit ratings. In deteriorating market conditions, there can be no assurance that we will obtain additional financing, or, if available, that the cost of financing will not substantially increase and affect our overall profitability.

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We are subject to applicable insurance laws, tax statutes, and regulations, as well as claims and legal proceedings, which, if determined unfavorably, could have a material adverse effect on our business, results of operations, or financial condition.

We face a significant risk of litigation and regulatory investigations and actions in the ordinary course of operating our businesses including the risk of class action lawsuits. Our pending legal and regulatory actions include proceedings specific to us and others generally applicable to business practices in the industries in which we operate. In our operations, we are, have been, or may become subject to class actions and individual suits alleging, among other things, issues relating to sales or underwriting practices, payment of contingent or other sales commissions, product design, product disclosure, policy issuance and administration, additional premium charges for premiums paid on a periodic basis, charging excessive or impermissible fees on products, recommending unsuitable products to customers, and breaching alleged fiduciary or other duties, including our obligations to indemnify directors and officers in connection with certain legal matters. We are also subject to litigation arising out of our general business activities such as our contractual and employment relationships. Plaintiffs in class action and other lawsuits against us may seek very large or indeterminate amounts, including punitive and treble damages, which may remain unknown for substantial periods of time. We are also subject to various regulatory inquiries, such as information requests, subpoenas, and books and record examinations from state and federal regulators and authorities. Changes in the way regulators administer those laws, tax statutes, or regulations could adversely impact our business, results of operations, or financial condition.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Indemnity and the Exchange share a corporate home office complex in Erie, Pennsylvania, which comprises approximately 620,000 square feet. Additionally, we lease one office building and one warehouse facility from unaffiliated parties. We are charged rent for the related square footage we occupy.

Indemnity and the Exchange also operate 25 field offices in 12 states. Of these field offices, 16 provide both agency support and claims services and are referred to as branch offices, while seven provide only claims services and are referred to as claims offices, and two provide only agency support and are referred to as sales offices. We own three field offices and lease a portion of these buildings to the Exchange. The remaining field offices are leased from other parties as detailed below:



		Number of
Field office ownership:		field offices
Erie Indemnity Company		3
Erie Insurance Exchange		3
Erie Family Life Insurance Company		1
Unaffiliated parties ⁽¹⁾		18
		25

(1) Lease commitments for these properties expire periodically through 2020. We

expect that most leases will be renewed or replaced upon expiration.

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ITEM 3. LEGAL PROCEEDINGS

State Court Lawsuit Against Erie Indemnity Company

Erie Indemnity Company (“Indemnity”) was named as a defendant in a complaint filed on August 1, 2012 by alleged subscribers of the Erie Insurance Exchange (the “Exchange”) in the Court of Common Pleas Civil Division of Fayette County, Pennsylvania captioned Erie Insurance Exchange, an unincorporated association, by Joseph S. Sullivan and Anita Sullivan, Patricia R. Beltz, and Jenna L. DeBord, trustees ad litem v. Erie Indemnity Co. (the “ Sullivan ” lawsuit).

As subsequently amended, the complaint alleges that, beginning on September 1, 1997, Indemnity retained “Service Charges” (installment fees) and “Added Service Charges” (late fees and policy reinstatement charges) on policies written by the Exchange and its insurance subsidiaries, which allegedly should have been paid to the Exchange, in the amount of approximately $308 million. In addition to their claim for monetary relief on behalf of the Exchange, the plaintiffs seek an accounting of all so-called intercompany transactions between Indemnity and the Exchange from 1996 to date. Plaintiffs allege that Indemnity breached its contractual, fiduciary, and equitable duties by retaining Service Charges and Added Service Charges that should have been retained by the Exchange. Plaintiffs bring these same claims under three separate derivative-type theories. First, plaintiffs purport to bring suit as members of the Exchange on behalf of the Exchange. Second, plaintiffs purport to bring suit as trustees ad litem on behalf of the Exchange. Third, plaintiffs purport to bring suit on behalf of the Exchange pursuant to Rule 1506 of the Pennsylvania Rules of Civil Procedure, which allows shareholders to bring suit derivatively on behalf of a corporation or similar entity.

Indemnity filed a motion in the state court in November 2012 seeking dismissal of the lawsuit. On December 19, 2013, the court granted Indemnity’s motion in part, holding that the Pennsylvania Insurance Holding Company Act “provides the [Pennsylvania Insurance] Department with special competence to address the subject matter of plaintiff’s claims” and referring “all issues” in the Sullivan lawsuit to the Pennsylvania Insurance Department (the “Department”) for “its views and any determination.” The court stayed all further proceedings and reserved decision on all other grounds for dismissal raised by Indemnity. Plaintiffs sought reconsideration of the court’s order, and on January 13, 2014, the court entered a revised order affirming its prior order and clarifying that the Department “shall decide any and all issues within its jurisdiction.” On January 30, 2014, Plaintiffs asked the court to certify its order to permit an immediate appeal to the Superior Court of Pennsylvania and to stay any proceedings in the Department pending completion of any appeal. On February 18, 2014, the court issued an order denying Plaintiffs’ motion. On March 20, 2014, Plaintiffs filed a petition for review with the Superior Court, which was denied by the Superior Court on May 5, 2014.

The Sullivan matter was assigned to an Administrative Judge within the Department for determination. The parties agreed that an evidentiary hearing was not required and they entered into a stipulated record and submitted briefing to the Department. Oral argument was held before the Administrative Judge on January 6, 2015. On April 29, 2015, the Department issued a declaratory opinion and order (1) finding that the transactions between Exchange and Indemnity in which Indemnity retained or received revenue from installment and other service charges from Exchange subscribers complied with applicable insurance laws and regulations and that Indemnity properly retained charges paid by Exchange policyholders for certain installment premium payment plans, dishonored payments, policy cancellations and policy reinstatements and (2) returning jurisdiction for the matter to the Fayette County Court of Common Pleas.

On May 26, 2015, Plaintiffs appealed the Department’s decision to the Pennsylvania Commonwealth Court. Oral argument was held before the Commonwealth Court en banc on December 9, 2015. On January 27, 2016, the Commonwealth Court issued an opinion vacating the Department’s ruling and directing the Department to return the case to the Court of Common Pleas, essentially holding that the primary jurisdiction referral of the trial court was improper at this time because the allegations of the complaint do not implicate the special competency of the Department. Indemnity is permitted to file a petition for allowance of appeal to the Pennsylvania Supreme Court seeking further review of the Commonwealth Court opinion. Such a filing currently would be due on February 26, 2016.

Indemnity believes that it continues to have meritorious legal and factual defenses to the Sullivan lawsuit and intends to vigorously defend against all allegations and requests for relief.

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Federal Court Lawsuit Against Directors

On February 6, 2013, a lawsuit was filed in the United States District Court for the Western District of Pennsylvania, captioned Erie Insurance Exchange, an unincorporated association, by members Patricia R. Beltz, Joseph S. Sullivan and Anita Sullivan, and Patricia R. Beltz, on behalf of herself and others similarly situate v. Richard L. Stover; J. Ralph Borneman, Jr; Terrence W. Cavanaugh; Jonathan Hirt Hagen; Susan Hirt Hagen; Thomas B. Hagen; C. Scott Hartz; Claude C. Lilly, III; Lucian L. Morrison; Thomas W. Palmer; Martin P. Sheffield; Elizabeth H. Vorsheck; and Robert C. Wilburn (the “ Beltz ” lawsuit), by alleged policyholders of the Exchange who are also the plaintiffs in the Sullivan lawsuit. The individuals named as defendants in the Beltz lawsuit were the then-current Directors of Indemnity.

As subsequently amended, the Beltz lawsuit asserts many of the same allegations and claims for monetary relief as in the Sullivan lawsuit. Plaintiffs purport to sue on behalf of all policyholders of the Exchange, or, alternatively, on behalf of the Exchange itself. Indemnity filed a motion to intervene as a Party Defendant in the Beltz lawsuit in July 2013, and the Directors filed a motion to dismiss the lawsuit in August 2013. On February 10, 2014, the court entered an order granting Indemnity’s motion to intervene and permitting Indemnity to join the Directors’ motion to dismiss; granting in part the Directors’ motion to dismiss; referring the matter to the Department to decide any and all issues within its jurisdiction; denying all other relief sought in the Directors’ motion as moot; and dismissing the case without prejudice. To avoid duplicative proceedings and expedite the Department’s review, the Parties stipulated that only the Sullivan action would proceed before the Department and any final and non-appealable determinations made by the Department in the Sullivan action will be applied to the Beltz action.

On March 7, 2014, Plaintiffs filed a notice of appeal to the United States Court of Appeals for the Third Circuit. Indemnity filed a motion to dismiss the appeal on March 26, 2014. On November 17, 2014, the Third Circuit deferred ruling on Indemnity’s motion to dismiss the appeal and instructed the parties to address that motion, as well as the merits of Plaintiffs’ appeal, in the parties’ briefing. Briefing was completed on April 2, 2015. In light of the Department’s April 29, 2015 decision in Sullivan , the Parties then jointly requested that the Beltz appeal be voluntarily dismissed as moot on June 5, 2015. The Third Circuit did not rule on the Parties’ request for dismissal and instead held oral argument as scheduled on June 8, 2015. On July 16, 2015, the Third Circuit issued an opinion and judgment dismissing the appeal. The Third Circuit found that it lacked appellate jurisdiction over the appeal, because the District Court’s February 10, 2014 order referring the matter to the Department was not a final, appealable order.

Indemnity believes that it has meritorious legal and factual defenses and intends to vigorously defend against all allegations and requests for relief in the Beltz lawsuit. The Directors have also advised Indemnity that they intend to vigorously defend against the claims in the Beltz lawsuit and have sought indemnification and advancement of expenses from the Company in connection with the Beltz lawsuit.

For additional information on contingencies, see Part II, Item 8. "Financial Statements and Supplementary Data - Note 15, Commitment and Contingencies, of Notes to Financial Statements".

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Common Stock Market Prices and Dividends

Our Class A, non-voting common stock trades on The NASDAQ Stock Market ^SM LLC under the symbol "ERIE". No established trading market exists for the Class B voting common stock. American Stock Transfer & Trust Company serves as our transfer agent and registrar. As of February 19, 2016 , there were approximately 715 beneficial shareholders of record for the Class A non-voting common stock and 9 beneficial shareholders of record for the Class B voting common stock.

Historically, we have declared and paid cash dividends on a quarterly basis at the discretion of the Board of Directors. The payment and amount of future dividends on the common stock will be determined by the Board of Directors and will depend upon, among other things, our operating results, financial condition, cash requirements, and general business conditions at the time such payment is considered. The common stock high and low sales prices and cash dividends declared for each full quarter of the last two years were as follows:



	2015								2014
	Stock sales price				Cash dividend declared				Stock sales price				Cash dividend declared
Quarter ended	High		Low		Class A		Class B		High		Low		Class A		Class B
March 31	$	93.01	$	84.11	$	0.681	$	102.15	$	74.57	$	66.63	$	0.635	$	95.25
June 30	87.15		80.02		0.681		102.15		76.71		68.72		0.635		95.25
September 30	87.82		79.79		0.681		102.15		78.48		72.63		0.635		95.25
December 31	100.56		81.37		0.730		109.50		93.35		75.72		0.681		102.15
Total					$	2.773	$	415.95					$	2.586	$	387.90

Stock Performance

The following graph depicts the cumulative total shareholder return, assuming reinvestment of dividends, for the periods indicated for our Class A common stock compared to the Standard & Poor's 500 Stock Index and the Standard & Poor's Supercomposite Insurance Industry Group Index. The Standard & Poor's Supercomposite Insurance Industry Group Index is made up of 55 constituent members represented by property and casualty insurers, insurance brokers, and life insurers, and is a capitalization weighted index.



	2010			2011		2012		2013		2014		2015
Erie Indemnity Company Class A common stock	$	100	⁽¹⁾	$	123	$	116	$	126	$	160	$	175
Standard & Poor's 500 Stock Index	100		⁽¹⁾	102		118		156		177		180
Standard & Poor's Supercomposite Insurance Industry Group Index	100		⁽¹⁾	93		111		161		175		181


(1)	Assumes $100 invested at the close of trading, on the last trading day preceding the first day of the fifth preceding fiscal year, in our Class A common stock, the Standard & Poor’s 500 Stock Index, and the Standard & Poor’s Supercomposite Insurance Industry Group Index.

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Issuer Purchases of Equity Securities

We may purchase shares, from time-to-time, in the open market, through trading plans entered into with one or more brokerage firms pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, or through privately negotiated transactions. The purchase of shares is dependent upon prevailing market conditions and alternate uses of capital, and at times and in a manner that is deemed appropriate.

Our Board of Directors authorized a stock repurchase program effective January 1, 1999, allowing the repurchase of our outstanding Class A nonvoting common stock. Various approvals for continuation of this program have since been authorized, with the most recent occurring in October 2011 for $150 million , which was authorized with no time limitation. There were no repurchases of our Class A common stock under this program during the quarter ending December 31, 2015 . We had approximately $17.8 million of repurchase authority remaining under this program, based upon trade date, at both December 31, 2015 and February 19, 2016 .

See Part II, Item 8. "Financial Statements and Supplementary Data – Note 11, Capital Stock, of Notes to Financial Statements" contained within this report for discussion of additional shares repurchased outside of this program.

ITEM 6. SELECTED FINANCIAL DATA




(in thousands, except per share data)	Years Ended December 31,

	2015		2014		2013		2012		2011
Operating Data:
Operating revenue	$	1,505,508	$	1,407,119	$	1,297,331	$	1,188,430	$	1,099,836
Operating expenses	1,272,967		1,184,272		1,087,995		983,420		892,101
Investment income	33,708		28,417		37,278		36,204		46,999
Income before income taxes	266,249		251,264		246,614		241,214		254,734
Net income	174,678		167,505		162,611		160,145		169,503

Per Share Data:
Net income per Class A share – diluted	$	3.33	$	3.18	$	3.08	$	2.99	$	3.08
Book value per share – Class A common and equivalent B shares	14.72		13.45		13.96		12.11		14.48
Dividends declared per Class A share	2.773		2.586		2.4125		4.25		2.0975
Dividends declared per Class B share	415.95		387.90		361.875		637.50		314.625

Financial Position Data:
Investments	$	688,476	$	702,387	$	721,728	$	687,525	$	808,500
Receivables from Erie Insurance Exchange and affiliates	348,055		335,220		300,442		280,787		254,098
Total assets	1,407,296		1,319,198		1,213,042		1,160,153		1,237,277
Total equity	769,503		703,134		733,982		641,870		781,325

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of financial condition and results of operations highlights significant factors influencing Erie Indemnity Company ("Indemnity", "we", "us", "our"). This discussion should be read in conjunction with the audited financial statements and related notes and all other items contained within this Annual Report on Form 10-K as these contain important information helpful in evaluating our financial condition and results of operations.

INDEX



	Page Number
Cautionary Statement Regarding Forward-Looking Information	15
Retrospectively Adopted Accounting Standards	16
Recent Accounting Standards	16
Operating Overview	16
Critical Accounting Estimates	18
Results of Operations	23
Financial Condition	27
Investments	27
Shareholders’ Equity	30
Liquidity and Capital Resources	30
Transactions/Agreements with Related Parties	33

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995:

Statements contained herein that are not historical fact are forward-looking statements and, as such, are subject to risks and uncertainties that could cause actual events and results to differ, perhaps materially, from those discussed herein. Forward-looking statements relate to future trends, events or results and include, without limitation, statements and assumptions on which such statements are based that are related to our plans, strategies, objectives, expectations, intentions, and adequacy of resources. Examples of forward-looking statements are discussions relating to premium and investment income, expenses, operating results, and compliance with contractual and regulatory requirements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Among the risks and uncertainties, in addition to those set forth in our filings with the Securities and Exchange Commission, that could cause actual results and future events to differ from those set forth or contemplated in the forward-looking statements include the following:


•	dependence upon our relationship with the Exchange and the management fee under the agreement with the subscribers at the Exchange;


•	costs of providing services to the Exchange under the subscriber’s agreement;


•	credit risk from the Exchange;


•	dependence upon our relationship with the Exchange and the growth of the Exchange, including:


◦	general business and economic conditions;


◦	factors affecting insurance industry competition;


◦	dependence upon the independent agency system; and


◦	ability to maintain our reputation for customer service;


•	dependence upon our relationship with the Exchange and the financial condition of the Exchange, including:


◦	the Exchange’s ability to maintain acceptable financial strength ratings;


◦	factors affecting the quality and liquidity of the Exchange’s investment portfolio;


◦	changes in government regulation of the insurance industry;


◦	emerging claims and coverage issues in the industry; and


◦	severe weather conditions or other catastrophic losses, including terrorism;


•	ability to attract and retain talented management and employees;


•	ability to maintain uninterrupted business operations;


•	factors affecting the quality and liquidity of our investment portfolio;

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•	our ability to meet liquidity needs and access capital; and


•	outcome of pending and potential litigation.

A forward-looking statement speaks only as of the date on which it is made and reflects our analysis only as of that date. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changes in assumptions, or otherwise.

RETROSPECTIVELY ADOPTED ACCOUNTING STANDARDS

In February 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-02, Consolidation, which changed the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. This guidance changed the conditions to be met in determining if a reporting entity has a variable interest in a legal entity. In accordance with the new accounting guidance, Indemnity is not deemed to have a variable interest in the Exchange as the fees paid for services provided to the Exchange no longer represent a variable interest. The compensation received from the attorney-in-fact fee arrangement with the subscribers is for services provided by Indemnity acting in its role as attorney-in-fact and is commensurate with the level of effort required to perform those services. Under the previously issued accounting guidance, Indemnity was deemed to have a variable interest and was the primary beneficiary of the Exchange and its financial position and operating results were consolidated with Indemnity. Following adoption of the new accounting guidance, the Exchange’s results are no longer required to be consolidated with Indemnity.

Indemnity adopted the new accounting standard on a retrospective basis effective with the annual reporting period ending December 31, 2015. The 2014 and 2013 financial information within this report has been conformed to the presentation in accordance with the amended guidance.

RECENT ACCOUNTING STANDARDS

See Part II, Item 8. "Financial Statements and Supplementary Data - Note 2, Significant Accounting Policies, of Notes to Financial Statements" contained within this report for a discussion of adopted and other recently issued accounting standards, none of which had or are expected to have a material impact on our future financial condition, results of operations or cash flows.

OPERATING OVERVIEW

Overview

We are a Pennsylvania business corporation that since 1925 has been the managing attorney-in-fact for the subscribers (policyholders) at the Erie Insurance Exchange ("Exchange"), a reciprocal insurer that writes property and casualty insurance. Our primary function is to perform certain services relating to the sales, underwriting and issuance of policies on behalf of the Exchange. We operate our business as one segment.

The Exchange is a reciprocal insurance exchange organized under Article X of Pennsylvania's Insurance Company Law of 1921 under which individuals, partnerships, and corporations are authorized to exchange reciprocal or inter-insurance contracts with each other, or with individuals, partnerships, and corporations of other states and countries, providing indemnity among themselves from any loss which may be insured against under any provision of the insurance laws except life insurance. Each applicant for insurance to the Exchange signs a subscriber’s agreement, which contains an appointment of Indemnity as their attorney-in-fact to transact the business of the Exchange on their behalf.

Pursuant to the subscriber’s agreement and for its services as attorney-in-fact, we earn a management fee calculated as a percentage of the direct and assumed premiums written by the Exchange.

Our earnings are primarily driven by the management fee revenue generated for the services we provide relating to certain sales, underwriting, and issuance of policies for the Exchange. Management fee revenue is based upon all direct and assumed premiums written by the Exchange and the management fee rate, which is not to exceed 25% . Our Board of Directors establishes the management fee rate at least annually, generally in December for the following year, and considers factors such as the relative financial strength of Indemnity and the Exchange and projected revenue streams. The management fee rate was set at 25% for 2015 , 2014 and 2013 . Our Board of Directors set the 2016 management fee rate again at 25% , its maximum level.

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Our results of operations are tied to the growth and financial condition of the Exchange as the Exchange is our sole customer and our earnings are largely generated from management fees based on the direct and assumed premiums written by the Exchange. The Exchange generates revenue by insuring preferred and standard risks, with personal lines comprising 70% of the 2015 direct and assumed written premiums and commercial lines comprising the remaining 30% . The principal personal lines products are private passenger automobile and homeowners. The principal commercial lines products are commercial multi-peril, workers compensation and commercial automobile.

We generate investment income from our fixed maturity, equity security, and limited partnership investment portfolios. Our portfolio is managed with the objective of maximizing after-tax returns on a risk-adjusted basis. We actively evaluate the portfolios for impairments, and record impairment write-downs on investments in instances where the fair value of the investment is substantially below cost, and it is concluded that the decline in fair value is other-than-temporary, which includes consideration for intent to sell.

Financial Overview



	Years ended December 31,
(dollars in thousands, except per share data)	2015		% Change		2014		% Change			2013
Total operating revenue	$	1,505,508	7.0	%	$	1,407,119	8.5		%	$	1,297,331
Total operating expenses	1,272,967		7.5		1,184,272		8.8			1,087,995
Net revenue from operations	232,541		4.3		222,847		6.5			209,336
Total investment income	33,708		18.6		28,417		(23.8	)		37,278
Income before income taxes	266,249		6.0		251,264		1.9			246,614
Income tax expense	91,571		9.3		83,759		(0.3	)		84,003
Net income	$	174,678	4.3	%	$	167,505	3.0		%	$	162,611
Net income per share - diluted	$	3.33	4.5	%	$	3.18	3.5		%	$	3.08

Total operating revenue increased 7.0% and 8.5% in 2015 and 2014 , respectively, driven by the increase in management fee revenue. The two components of management fee revenue are the management fee rate we charge, and the direct and assumed premiums written by the Exchange. The management fee rate was 25% for both 2015 and 2014 . The direct and assumed premiums written by the Exchange were $5.9 billion in 2015 and $5.5 billion in 2014 .

Total operating expenses increased 7.5% and 8.8% in 2015 and 2014 , respectively. The increase in operating expenses was driven primarily by increases in commissions and personnel costs.

Gross margin from operations decreased slightly to 15.4% in 2015 from 15.8% in 2014 .

Total investment income increased 18.6% in 2015 primarily due to higher earnings from limited partnership investments.

Reconciliation of Operating Income to Net Income

We disclose operating income, a non-GAAP financial measure, to enhance our investors’ understanding of our performance. Our method of calculating this measure may differ from those used by other companies, and therefore comparability may be limited.

We define operating income as net income excluding realized capital gains and losses, impairment losses, and related federal income taxes.

We use operating income to evaluate the results of our operations. It reveals trends that may be obscured by the net effects of realized capital gains and losses including impairment losses. Realized capital gains and losses, including impairment losses,

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may vary significantly between periods and are generally driven by business decisions and economic developments such as capital market conditions which are not related to our ongoing operations. We are aware that the price to earnings multiple commonly used by investors as a forward-looking valuation technique uses operating income as the denominator. Operating income should not be considered as a substitute for net income prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and does not reflect our overall profitability.

The following table reconciles operating income and net income for the years ended December 31:



(in thousands, except per share data)
	2015			2014			2013
Operating income	$	175,371		$	166,886		$	162,248
Net realized (losses) gains and impairments on investments	(1,066		)	952			557
Income tax benefit (expense)	373			(333		)	(194		)
Realized (losses) gains and impairments, net of income taxes	(693		)	619			363
Net income	$	174,678		$	167,505		$	162,611

Per Class A common share-diluted:
Operating income	$	3.34		$	3.17		$	3.07
Net realized (losses) gains and impairments on investments	(0.02		)	0.02			0.01
Income tax benefit (expense)	0.01			(0.01		)	0.00
Realized (losses) gains and impairments, net of income taxes	(0.01		)	0.01			0.01
Net income	$	3.33		$	3.18		$	3.08

General Conditions and Trends Affecting Our Business

Economic conditions

Unfavorable changes in economic conditions, including declining consumer confidence, inflation, high unemployment, and the threat of recession, among others, may lead the Exchange’s customers to modify coverage, not renew policies, or even cancel policies, which could adversely affect the premium revenue of the Exchange, and consequently our management fee. Further, unanticipated increased inflation costs including medical cost inflation, construction and auto repair cost inflation, and tort issues may impact the estimated loss reserves and future premium rates. If any of these items impacted the financial condition or continuing operations of the Exchange, it could have an impact on our financial results.

Financial market volatility

Our portfolio of fixed maturity, equity security, and limited partnership investments is subject to market volatility especially in periods of instability in the worldwide financial markets. Over time, net investment income could also be impacted by volatility and by the general level of interest rates, which impact reinvested cash flow from the portfolio and business operations. Depending upon market conditions, which are unpredictable and remain uncertain, considerable fluctuation could exist in the fair value of our investment portfolio and reported total investment income, which could have an adverse impact on our financial condition, results of operations, and cash flows.

CRITICAL ACCOUNTING ESTIMATES

The financial statements include amounts based upon estimates and assumptions that have a significant effect on reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period and related disclosures. We consider an accounting estimate to be critical if 1) it requires assumptions to be made that were uncertain at the time the estimate was made, and 2) different estimates that could have been used, or changes in the estimate that are likely to occur from period-to-period, could have a material impact on our Statements of Operations or Financial Position.

The following presents a discussion of those accounting policies surrounding estimates that we believe are the most critical to our reported amounts and require the most subjective and complex judgment. If actual events differ significantly from the underlying assumptions, there could be material adjustments to prior estimates that could potentially adversely affect our results of operations, financial condition, and cash flows. The estimates and the estimating methods used are reviewed continually, and any adjustments considered necessary are reflected in current earnings.

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Investment Valuation

Available-for-sale securities

We make estimates concerning the valuation of all investments. Valuation techniques are used to derive the fair value of the available-for-sale securities we hold. Fair value is the price that would be received to sell an asset in an orderly transaction between willing market participants at the measurement date.

Fair value measurements are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our view of market assumptions in the absence of observable market information. We utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.

For purposes of determining whether the market is active or inactive, the classification of a financial instrument is based upon the following definitions:


•	An active market is one in which transactions for the assets being valued occur with sufficient frequency and volume to provide reliable pricing information.


•	An inactive (illiquid) market is one in which there are few and infrequent transactions, where the prices are not current, price quotations vary substantially, and/or there is little information publicly available for the asset being valued.

We continually assess whether or not an active market exists for all of our investments and as of each reporting date re-evaluate the classification in the fair value hierarchy. All assets carried at fair value are classified and disclosed in one of the following three categories:


•	Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date.


•	Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.


•	Level 3 – Unobservable inputs for the asset or liability.

Level 1 includes nonredeemable preferred stock and exchange traded funds, and reflects market data obtained from independent sources, such as prices obtained from an exchange or a nationally recognized pricing service for identical instruments in active markets.

Level 2 includes those financial instruments that are valued using industry-standard models that consider various inputs, such as the interest rate and credit spread for the underlying financial instruments. All significant inputs are observable, or derived from observable information in the marketplace, or are supported by observable levels at which transactions are executed in the marketplace. Financial instruments in this category primarily include corporate bonds, municipal bonds, structured securities, redeemable preferred stock and certain nonredeemable preferred stock.

Level 3 securities are valued based upon unobservable inputs, reflecting our estimates of value based upon assumptions used by market participants. Securities are assigned to Level 3 in cases where non-binding broker quotes are significant to the valuation and there is a lack of transparency as to whether these quotes are based upon information that is observable in the marketplace. Fair value estimates for securities valued using unobservable inputs require significant judgment due to the illiquid nature of the market for these securities and represent the best estimate of the fair value that would occur in an orderly transaction between willing market participants at the measurement date under current market conditions. Fair value for these securities are generally determined using comparable securities or non-binding broker quotes received from outside broker dealers based upon security type and market conditions. Remaining securities, where a price is not available, are valued using an estimate of fair value based upon indicative market prices that include significant unobservable inputs not based upon, nor corroborated by, market information, including the utilization of discounted cash flow analyses which have been risk-adjusted to take into account illiquidity and other market factors. This category primarily consists of collateralized debt obligations priced using non-binding broker quotes.

As of each reporting period, financial instruments recorded at fair value are classified based upon the lowest level of input that is significant to the fair value measurement. The presence of at least one unobservable input would result in classification as a Level 3 instrument. Our assessment of the significance of a particular input to the fair value measurement requires judgment,

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and considers factors specific to the asset, such as the relative impact on the fair value as a result of including a particular input and market conditions. We did not make any other significant judgments except as described above.

Estimates of fair values for our investment portfolio are obtained primarily from a nationally recognized pricing service. Our Level 1 category includes those securities valued using an exchange traded price provided by the pricing service. The methodologies used by the pricing service that support a Level 2 classification of a financial instrument include multiple verifiable, observable inputs including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data. Pricing service valuations for Level 3 securities are based upon proprietary models and are used when observable inputs are not available in illiquid markets. In limited circumstances we adjust the price received from the pricing service when, in our judgment, a better reflection of fair value is available based upon corroborating information and our knowledge and monitoring of market conditions such as a disparity in price of comparable securities and/or non-binding broker quotes. In other circumstances, certain securities are internally priced because prices are not provided by the pricing service.

We perform continuous reviews of the prices obtained from the pricing service. This includes evaluating the methodology and inputs used by the pricing service to ensure we determine the proper classification level of the financial instrument. Price variances, including large periodic changes, are investigated and corroborated by market data. We have reviewed the pricing methodologies of our pricing service as well as other observable inputs, such as benchmark yields, reported trades, issuer spreads, two-sided markets, benchmark securities, bids, offers, reference data, and transaction volumes, and believe that the prices adequately consider market activity in determining fair value. Our review process continues to evolve based upon accounting guidance and requirements.

When a price from the pricing service is not available, values are determined by obtaining non-binding broker quotes and/or market comparables. When available, we obtain multiple quotes for the same security. The ultimate value for these securities is determined based upon our best estimate of fair value using corroborating market information. Our evaluation includes the consideration of benchmark yields, reported trades, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data.

Other-than-temporary impairments

Investments are evaluated monthly for other-than-temporary impairment loss. Some factors considered in evaluating whether or not a decline in fair value is other-than-temporary include:


•	the extent and duration for which fair value is less than cost;


•	historical operating performance and financial condition of the issuer;


•	short- and long-term prospects of the issuer and its industry based upon analysts’ recommendations;


•	specific events that occurred affecting the issuer, including rating downgrades;


•	intent to sell or more likely than not we would be required to sell (debt securities); and


•	ability and intent to retain the investment for a period of time sufficient to allow for a recovery in value (equity securities).

For available-for-sale equity securities, a charge is recorded in the Statements of Operations for positions that have experienced other-than-temporary impairments. For debt securities in which we do not expect full recovery of amortized cost, the security is deemed to be credit-impaired. Credit-related impairments and impairments on securities we intend to sell or more likely than not will be required to sell are recorded in the Statements of Operations. It is our intention to sell all debt securities with credit impairments.

Limited partnerships

The primary basis for the valuation of limited partnership interests is financial statements prepared by the general partner. Because of the timing of the preparation and delivery of these financial statements, the use of the most recently available financial statements provided by the general partners generally result in a quarter delay in the inclusion of the limited partnership results in our Statements of Operations. Due to this delay, these financial statements do not reflect the market conditions experienced in the fourth quarter of 2015 .

The majority of our limited partnership holdings are considered investment companies where the general partners record assets at fair value. These limited partnerships are recorded using the equity method of accounting. We also own some real estate limited partnerships that do not meet the criteria of an investment company. These partnerships prepare audited financial statements on a cost basis. We have elected to report these limited partnerships under the fair value option, which is based on the net asset value (NAV) from our partner's capital statement reflecting the general partner's estimate of fair value for the

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fund's underlying assets. Fair value provides consistency in the evaluation and financial reporting for these limited partnerships and limited partnerships accounted for under the equity method.

We have three types of limited partnership investments: private equity, mezzanine debt, and real estate. Our private equity and mezzanine debt partnerships are diversified among numerous industries and geographies to minimize potential loss exposure. Nearly all of the underlying investments in our limited partnerships are valued using a source other than quoted prices in active markets. The fair value amounts for our private equity and mezzanine debt partnerships are based upon the financial statements prepared by the general partners, who use various methods to estimate fair value including the market approach, income approach, and the cost approach. The market approach uses prices and other pertinent information from market-generated transactions involving identical or comparable assets or liabilities. Such valuation techniques often use market multiples derived from a set of comparables. The income approach uses valuation techniques to convert future cash flows or earnings to a single discounted present value amount. The measurement is based upon the value indicated by current market expectations about those future amounts. The cost approach is derived from the amount that is currently required to replace the service capacity of an asset. If information becomes available that would impair the cost of investments owned by the partnerships, then the general partner would adjust the investments to the net realizable value.

The fair value of investments in real estate limited partnerships is determined by the general partner based upon independent appraisals and/or internal valuations. Real estate projects under development are generally valued at cost and impairment tested by the general partner. We minimize the risk of market decline by avoiding concentration in a particular geographic area and are diversified across residential, commercial, industrial, and retail real estate investments.

While we perform various procedures in review of the general partners’ valuations, we rely on the general partners’ financial statements as the best available information to record our share of the partnership unrealized gains and losses resulting from valuation changes. Due to the limited market for these investments, there is the greatest potential for variability. We survey each of the general partners quarterly about expected significant changes (plus or minus 10% compared to previous quarter) to valuations prior to the release of the fund’s quarterly and annual financial statements. Based upon that information from the general partner, we consider whether additional disclosure is warranted. We analyze limited partnerships measured at fair value based upon NAV to determine if the most recently available NAV reflects fair value at the balance sheet date, with an adjustment being made where appropriate (change of plus or minus 5% compared to most recent NAV.)

Retirement Benefit Plans for Employees

Our pension plans consist of a noncontributory defined benefit pension plan covering substantially all employees and an unfunded supplemental employee retirement plan ("SERP") for certain members of executive and senior management. Although we are the sponsor of these postretirement plans and record the funded status of these plans, the Exchange reimburses us for approximately 57% of the annual benefit expense of these plans, which represents pension benefits for our employees performing claims and life insurance functions.

Our pension obligation is developed from actuarial estimates. Several statistical and other factors, which attempt to anticipate future events, are used in calculating the expense and liability related to the plans. Key factors include assumptions about the discount rates and expected rates of return on plan assets. We review these assumptions annually and modify them considering historical experience, current market conditions, including changes in investment returns and interest rates and expected future trends.

Accumulated and projected benefit obligations are expressed as the present value of future cash payments. We discount those cash payments based upon a yield curve developed from corporate bond yield information with maturities that correspond to the payment of benefits. Lower discount rates increase present values and subsequent year pension expense, while higher discount rates decrease present values and subsequent year pension expense. The construction of the yield curve is based upon yields of corporate bonds rated Aa quality. Target yields are developed from bonds at various maturity points and a curve is fitted to those targets. Spot rates (zero coupon bond yields) are developed from the yield curve and used to discount benefit payment amounts associated with each future year. The present value of plan benefits is calculated by applying the spot/discount rates to projected benefit cash flows. A single discount rate is then developed to produce the same present value. The cash flows from the yield curve were matched against our projected benefit payments in the pension plan, which have a duration of about 19 years. This yield curve supported the selection of a 4.57% discount rate for the projected benefit obligation at December 31, 2015 and for the 2016 pension expense. The same methodology was used to develop the 4.17% and 5.11% discount rates used to determine the projected benefit obligation for 2014 and 2013 , respectively, and the pension expense for 2015 and 2014 , respectively. A 25 basis point decrease in the discount rate assumption, with other assumptions held constant, would increase pension cost in the following year by $3.5 million and would increase the pension benefit obligation by $33.0 million .

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Unrecognized actuarial gains and losses arise from several factors, including experience and assumption changes in the obligations and from the difference between expected returns and actual returns on plan assets. These unrecognized gains and losses are recorded in the pension plan obligation and accumulated other comprehensive income (loss) on the Statements of Financial Position. These amounts are systematically recognized to net periodic pension expense in future periods, with gains decreasing and losses increasing future pension expense. If actuarial net gains or losses exceed 5% of the greater of the projected benefit obligation and the market-related value of plan assets, the excess is recognized through the net periodic pension expense equally over the estimated service period of the employee group, which is currently 14 years.

The expected long-term rate of return for the pension plan represents the average rate of return to be earned on plan assets over the period the benefits included in the benefit obligation are to be paid. The expected long-term rate of return is less susceptible to annual revisions, as there are typically no significant changes in the asset mix. To determine the expected long-term rate of return assumption, we utilized models based upon rigorous historical analysis and forward-looking views of the financial markets based upon key factors such as historical returns for the asset class' applicable indices, the correlations of the asset classes under various market conditions and consensus views on future real economic growth and inflation. The expected future return for each asset class is then combined by considering correlations between asset classes and the volatilities of each asset class to produce a reasonable range of asset return results within which our expected long-term rate of return assumption falls. A change of 25 basis points in the expected long-term rate of return assumption, with other assumptions held constant, would have an estimated $1.4 million impact on net pension benefit cost in the following year, of which our share would be approximately $0.6 million .

We use a four year averaging method to determine the market-related value of plan assets, which is used to determine the expected return component of pension expense. Under this methodology, asset gains or losses that result from returns that differ from our long-term rate of return assumption are recognized in the market-related value of assets on a level basis over a four year period. The market-related asset experience during 2015 that related to the actual investment return being different from that assumed during the prior year was a loss of $37.0 million . Recognition of this loss will be deferred and recognized over a four year period, consistent with the market-related asset value methodology. Once factored into the market-related asset value, these experience gains and losses will be amortized over a period of 14 years, which is the remaining service period of the employee group.

Estimates of fair values of the pension plan assets are obtained primarily from our trustee and custodian of our pension plan. Our Level 1 category includes a money market fund that is a mutual fund for which the fair value is determined using an exchange traded price provided by the trustee and custodian. Our Level 2 category includes commingled pools. Estimates of fair values for securities held by our commingled pools are obtained primarily from the trustee and custodian. The methodologies used by the trustee and custodian that support a financial instrument Level 2 classification include multiple verifiable, observable inputs including benchmark yields, reported trades, broker/dealer quotes, issuers spreads, two-sided markets, benchmark securities, bids, offers, and reference data. There were no Level 3 investments in 2015 or 2014 .

We expect our net pension benefit costs to decrease from $40.0 million in 2015 to $30.0 million in 2016 . This decrease is primarily due to the higher discount rate and the mortality tables being updated with two additional years of mortality data, partially offset by less than expected asset returns in 2015 . Our share of the net pension benefit costs after reimbursements will decrease from $17.8 million in 2015 to approximately $12.9 million in 2016 .

The actuarial assumptions we used in determining our pension obligation may differ materially from actual results due to changing market and economic conditions, higher or lower withdrawal rates, or longer or shorter life spans of participants. While we believe that the assumptions used are appropriate, differences in actual experience or changes in assumptions may materially affect our financial position, results of operations, or cash flows. See Part II, Item 8. "Financial Statements and Supplementary Data - Note 8, Postretirement Benefits, of Notes to Financial Statements" contained within this report for additional details on the pension plans.

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RESULTS OF OPERATIONS

We earn management fee revenue from providing services relating to the sales, underwriting, and issuance of policies on behalf of the Exchange as a result of its attorney-in-fact relationship. A summary of the financial results of these operations is as follows:



	Years ended December 31,
(dollars in thousands)	2015			% Change			2014			% Change			2013
Management fee revenue, net	$	1,475,511		7.2		%	$	1,376,190		8.7		%	$	1,266,401
Service agreement revenue	29,997			(3.0	)		30,929			NM			30,930
Total operating revenue	1,505,508			7.0			1,407,119			8.5			1,297,331
Total operating expenses	1,272,967			7.5			1,184,272			8.8			1,087,995
Net revenue from operations	$	232,541		4.3		%	$	222,847		6.5		%	$	209,336
Gross margin	15.4		%	(0.4	)	pts.	15.8		%	(0.3	)	pts.	16.1		%

NM = not meaningful

Management fee revenue

Management fee revenue is based upon all direct and assumed premiums written by the Exchange and the management fee rate, which is determined by our Board of Directors at least annually. Management fee revenue is calculated by multiplying the management fee rate by the direct and assumed premiums written by the Exchange. The following table presents the calculation of management fee revenue:



	Years ended December 31,
(dollars in thousands)	2015			% Change		2014			% Change		2013
Direct and assumed premiums written by the Exchange	$	5,914,045		7.3	%	$	5,513,962		8.6	%	$	5,076,003
Management fee rate	25		%			25		%			25		%
Management fee revenue, gross	1,478,511			7.3		1,378,490			8.6		1,269,001
Change in allowance for management fee returned on cancelled policies ⁽¹⁾	(3,000		)	NM		(2,300		)	NM		(2,600		)
Management fee revenue, net of allowance	$	1,475,511		7.2	%	$	1,376,190		8.7	%	$	1,266,401

NM = not meaningful

(1) Management fees are returned to the Exchange when policies are cancelled mid-term and unearned premiums are refunded. We record an estimated allowance for management fees returned on mid-term policy cancellations.

Direct and assumed premiums written by the Exchange

Direct and assumed premiums include premiums written directly by the Exchange and premiums assumed from its wholly owned property and casualty subsidiaries. Direct and assumed premiums written by the Exchange increased 7.3% to $5.9 billion in 2015 , from $5.5 billion in 2014 , driven by an increase in policies in force and increases in average premium per policy. Year-over-year policies in force for all lines of business increased by 3.6% in 2015 as the result of continuing strong policyholder retention and an increase in new policies written, compared to 4.3% in 2014 . The year-over-year average premium per policy for all lines of business increased 3.5% at December 31, 2015 , compared to 4.2% at December 31, 2014 .

Premiums generated from new business increased 3.9% to $722 million in 2015 , compared to 5.8% , or $695 million , in 2014 . Underlying the trend in new business premiums was a 2.3% increase in new business policies written in 2015 , compared to 2.9% in 2014 , while the year-over-year average premium per policy on new business increased 1.6% at December 31, 2015 , compared to 2.9% at December 31, 2014 .

Premiums generated from renewal business increased 7.7% to $5.2 billion in 2015 , compared to 9.0% , or $4.8 billion , in 2014 . Underlying the trend in renewal business premiums were increases in average premium per policy and steady policy retention ratios. The renewal business year-over-year average premium per policy increased 3.8% at December 31, 2015 , compared to 4.3% at December 31, 2014 .

The Exchange implemented rate increases in 2015 , 2014 , and 2013 in order to meet loss cost expectations. As the Exchange writes policies with annual terms only, rate actions take 12 months to be fully recognized in written premium and 24 months to

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be fully recognized in earned premiums. Since rate changes are realized at renewal, it takes 12 months to implement a rate change to all policyholders and another 12 months to earn the increased or decreased premiums in full. As a result, certain rate actions approved in 2014 were reflected in 2015 , and recent rate actions in 2015 will be reflected in 2016 . The Exchange continuously evaluates pricing and product offerings to meet consumer demands.

Personal lines – Total personal lines premiums written increased 6.5% to $4.2 billion in 2015 , from $3.9 billion in 2014 , driven by an increase of 3.7% in total personal lines policies in force and an increase of 2.7% in the total personal lines year-over-year average premium per policy.

Commercial lines – Total commercial lines premiums written increased 9.1% , to $1.8 billion in 2015 , from $1.6 billion in 2014 , driven by a 2.9% increase in total commercial lines policies in force and a 6.0% increase in the total commercial lines year-over-year average premium per policy.

Future trends-premium revenue - The Exchange plans to continue its efforts to grow premiums and improve its competitive position in the marketplace. Expanding the size of its agency force through a careful agency selection process and increased market penetration in our existing operating territories will contribute to future growth as existing and new agents build their books of business

Changes in premium levels attributable to the growth in policies in force directly affects the profitability of the Exchange and has a direct bearing on our management fee. The Exchange’s continued focus on underwriting discipline and the maturing of our pricing sophistication models has contributed to its growth in new policies in force, steady policy retention ratios, and increased average premium per policy. The continued growth of its policy base is dependent upon the Exchange’s ability to retain existing policyholders and attract new policyholders. A lack of new policy growth or the inability to retain existing customers could have an adverse effect on the Exchange’s premium level growth, and consequently our management fee.

Changes in premium levels attributable to rate changes also directly affect the profitability of the Exchange and have a direct bearing on our management fee. Pricing actions contemplated or taken by the Exchange are subject to various regulatory requirements of the states in which it operates. The pricing actions already implemented, or to be implemented, have an effect on the market competitiveness of the Exchange’s insurance products. Such pricing actions, and those of the Exchange’s competitors, could affect the ability of the Exchange’s agents to retain and attract new business. We expect the Exchange’s pricing actions to result in a net increase in direct written premium in 2016 ; however, exposure reductions and/or changes in mix of business as a result of economic conditions could impact the average premium written and assumed by the Exchange, as customers may reduce coverages.

Management fee rate

The management fee rate was set at 25% , the maximum rate, for 2015 , 2014 and 2013 . The management fee rate for 2016 was set at 25% by our Board of Directors. Changes in the management fee rate can affect our revenue and net income significantly. See also, the “Transactions/Agreements with Related Parties” section within this report.

Change in allowance for management fee returned on cancelled policies

Management fees are returned to the Exchange when policyholders cancel their insurance coverage mid-term and unearned premiums are refunded to them. We maintain an allowance for management fees returned on mid-year policy cancellations that recognizes the management fee anticipated to be returned to the Exchange based on historical mid-term cancellation experience. Our cash flows are unaffected by the recording of this allowance.

Service agreement revenue

Service agreement revenue includes service charges we collect from policyholders for providing extended payment terms on policies written and assumed by the Exchange and late payment and policy reinstatement fees. The service charges are fixed dollar amounts per billed installment. Service agreement revenue totaled $30.0 million in 2015 and $30.9 million in 2014 and 2013 . The consistency in the service agreement revenue compared to the growth in policies in force reflects the continued shift in policies to the monthly direct debit payment plan, which does not incur service charges, and the no-fee single payment plan, which offers a premium discount. The shift to these plans is driven by the consumers’ desire to avoid paying service charges and to take advantage of the discount in pricing offered for paid-in-full policies.

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Cost of management operations



	Years ended December 31,
(dollars in thousands)	2015		% Change		2014		% Change		2013
Commissions:
Total commissions	$	847,880	8.3	%	$	783,017	10.3	%	$	710,058
Non-commission expense:
Underwriting and policy processing	$	134,837	6.4		$	126,779	5.8		$	119,777
Information technology	123,362		1.9		121,094		12.5		107,605
Sales and advertising	64,403		6.7		60,334		2.1		59,079
Customer service	29,325		10.6		26,522		18.4		22,397
Administrative and other	73,160		10.0		66,526		(3.7	)	69,079
Total non-commission expense	425,087		5.9		401,255		6.2		377,937
Total cost of management operations	$	1,272,967	7.5	%	$	1,184,272	8.8	%	$	1,087,995

Commissions – Commissions increased $64.9 million in 2015 compared to 2014 , and increased $73.0 million in 2014 compared to 2013 , primarily as a result of the 7.3% and 8.6% respective increases in direct and assumed premiums written by the Exchange, while approximately one-quarter of the respective increases for the years ended December 31, 2015 and 2014 was due to higher agent incentive costs primarily related to profitable growth.

Non-commission expense – Non-commission expense increased $23.8 million in 2015 compared to 2014 . Underwriting and policy processing costs increased $8.0 million due to increased personnel and postage costs. Information technology costs increased $2.3 million primarily due to hardware and software costs. Sales and advertising costs increased $4.1 million primarily due to personnel costs. Customer service costs increased $2.8 million due to an increase in personnel costs and credit card processing fees. Administrative and other costs increased $6.6 million due to personnel costs and professional fees. Personnel costs in all expense categories were impacted by increased pension and medical costs, and increased estimates for incentive plan compensation costs related to underwriting performance.

In 2014 , compared to 2013 , non-commission expense increased $23.3 million . Underwriting and policy processing costs increased $7.0 million due to the increased cost of underwriting reports, postage, and printing costs related to increased volume. Information technology costs increased $13.5 million , which included $6.1 million of professional fees, $3.9 million of personnel costs, and $3.5 million of hardware and software costs. Customer service costs increased $4.1 million due to an increase of $2.1 million in credit card processing fees and $2.0 million in personnel costs. All other operating costs decreased $1.3 million .

Gross margin

The gross margin in 2015 was 15.4% , compared to 15.8% in 2014 and 16.1% in 2013 .

Total Investment Income

A summary of the results of our investment operations is as follows for the years ended December 31:



(dollars in thousands)	2015			% Change		2014			% Change		2013
Net investment income	$	17,791		7.6	%	$	16,536		10.0	%	$	15,027
Net realized investment gains	492			(53.4	)	1,057			11.8		945
Net impairment losses recognized in earnings	(1,558		)	NM		(105		)	NM		(388		)
Equity in earnings of limited partnerships	16,983			55.4		10,929			(49.6	)	21,694
Total investment income	$	33,708		18.6	%	$	28,417		(23.8	)%	$	37,278

NM = not meaningful

Net investment income

Net investment income primarily includes interest and dividends on our fixed maturity and equity security portfolios.

Net investment income increased by $1.3 million in 2015, compared to 2014, and increased by $1.5 million in 2014, compared to 2013. The increases in net investment income in both 2015 and 2014 were primarily attributable to income from fixed maturity investments, reflecting higher invested balances and higher investment yields.

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Net realized investment gains

A breakdown of our net realized investment gains (losses) is as follows for the years ended December 31:



(in thousands)	2015			2014		2013
Securities sold:
Fixed maturities	$	(193	)	$	120	$	847
Equity securities	685			937		98
Total net realized gains ⁽¹⁾	$	492		$	1,057	$	945


(1)	See Part II, Item 8. "Financial Statements and Supplementary Data – Note 5, Investments, of Notes to Financial Statements" contained within this report for additional disclosures regarding net realized investment gains (losses).

Net realized investment gains and losses include gains and losses resulting from the sales of our fixed maturity or equity securities.

Net realized gains were $0.5 million in 2015, compared to gains of $1.1 million in 2014 and $0.9 million in 2013. Net realized gains in 2015 were due to gains from sales of nonredeemable preferred stock, which were partially offset by losses from sales of fixed maturities. Net realized gains were primarily attributable to gains from sales of equity securities in 2014, and gains from sales of fixed maturity securities in 2013.

Net impairment losses recognized in earnings

Net impairment losses recognized in earnings were $1.6 million in 2015, compared to $0.1 million in 2014, and $0.4 million in 2013. Net impairment losses recognized in earnings in 2015 were primarily due to several securities in an unrealized loss position where we determined the loss was other-than-temporary based on credit factors. Impairment losses were also recognized in 2015 on securities in an unrealized loss position that we intended to sell prior to an expected recovery to our cost basis.

Equity in earnings of limited partnerships

The components of equity in earnings of limited partnerships are as follows for the years ended December 31:



(in thousands)	2015		2014		2013
Private equity	$	12,169	$	4,060	$	6,377
Mezzanine debt	1,788		1,882		2,761
Real estate	3,026		4,987		12,556
Total equity in earnings of limited partnerships	$	16,983	$	10,929	$	21,694

Limited partnership earnings pertain to investments in U.S. and foreign private equity, mezzanine debt, and real estate partnerships. Valuation adjustments are recorded to reflect the changes in fair value of the underlying investments held by the limited partnerships. These adjustments are recorded as a component of equity in earnings of limited partnerships in the Statements of Operations.

Limited partnership earnings tend to be cyclical based upon market conditions, the age of the partnership, and the nature of the investments. Generally, limited partnership earnings are recorded on a quarter lag from financial statements we receive from our general partners. As a consequence, earnings from limited partnerships reported at December 31, 2015 reflect investment valuation changes resulting from the financial markets and the economy for the twelve month period ending September 30, 2015 .

Equity in earnings of limited partnerships increased by $6.1 million in 2015, compared to 2014, and decreased by

$10.8 million in 2014, compared to 2013. The increase in earnings in 2015 was due to higher earnings from private equity investments that were partially offset by lower earnings from real estate investments. The decrease in earnings in 2014 was the result of lower earnings from each investment sector.

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Financial Condition of Erie Insurance Exchange

Serving in the capacity of attorney-in-fact for the Exchange, we are dependent on the growth and financial condition of the Exchange, who is our sole customer. The strength of the Exchange and its wholly owned subsidiaries is rated annually by A.M. Best Company. Higher ratings of insurance companies generally indicate financial stability and a strong ability to pay claims. The ratings are generally based upon factors relevant to policyholders and are not directed toward return to investors. The Exchange and each of its property and casualty subsidiaries are rated A+ “Superior”. The outlook for the financial strength rating is stable. According to A.M. Best, this second highest financial strength rating category is assigned to those companies that, in A.M. Best’s opinion, have achieved superior overall performance when compared to the standards established by A.M. Best and have a superior ability to meet obligations to policyholders over the long term. Only 11.0% of insurance groups are rated A+ or higher, and the Exchange is included in that group.

The financial statements of the Exchange are prepared in accordance with statutory accounting principles prescribed by the Commonwealth of Pennsylvania. Financial statements prepared under statutory accounting principles focus on the solvency of the insurer and generally provide a more conservative approach than under GAAP. Statutory direct written premiums of the Exchange and its wholly owned property and casualty subsidiaries grew 7.3% to $5.9 billion in 2015 from $5.5 billion in 2014 . These premiums, along with investment income, are the major sources of cash that support the operations of the Exchange. Policyholders’ surplus, determined under statutory accounting principles was $7.1 billion and $6.8 billion at December 31, 2015 and 2014 , respectively. The Exchange and its wholly owned property and casualty subsidiaries' year-over-year policy retention ratio continues to be high at 89.9% at December 31, 2015 and 90.3% at December 31, 2014 .

FINANCIAL CONDITION

Investments

Our investment portfolio is managed with the objective of maximizing after-tax returns on a risk-adjusted basis.

Distribution of investments



	Carrying value at December 31,
(dollars in thousands)	2015		% to total		2014		% to total
Fixed maturities	$	587,209	85	%	$	564,540	80	%
Equity securities:
Preferred stock	0		0		12,541		2
Common stock	12,732		2		12,689		2
Limited partnerships:
Private equity	48,397		7		51,379		7
Mezzanine debt	12,701		2		13,978		2
Real estate	27,437		4		47,260		7
Real estate mortgage loans	333		0		490		0
Total investments	$	688,809	100	%	$	702,877	100	%

We continually review our investment portfolio to evaluate positions that might incur other-than-temporary declines in value. We record impairment write-downs on investments in instances where the fair value of the investment is substantially below cost, and we conclude that the decline in fair value is other-than-temporary, which includes consideration for intent to sell.

For all investment holdings, general economic conditions and/or conditions specifically affecting the underlying issuer or its industry, including downgrades by the major rating agencies, are considered in evaluating impairment in value. In addition to specific factors, other factors considered in our review of investment valuation are the length of time the fair value is below cost and the amount the fair value is below cost.

We individually analyze all positions with emphasis on those that have, in our opinion, declined significantly below cost. In compliance with impairment guidance for debt securities, we perform further analysis to determine if a credit-related impairment has occurred. Some of the factors considered in determining whether a debt security is credit impaired include potential for the default of interest and/or principal, level of subordination, collateral of the issue, compliance with financial covenants, credit ratings and industry conditions. We have the intent to sell all credit-impaired debt securities; therefore, the entire amount of the impairment charges are included in earnings and no impairments are recorded in other comprehensive income. For available-for-sale equity securities, a charge is recorded in the Statements of Operations for positions that have experienced other-than-temporary impairments. (See the "Total Investment Income" section herein for further information.)

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We believe our investment valuation philosophy and accounting practices result in appropriate and timely measurement of value and recognition of impairment.

Fixed maturities

Under our investment strategy, we maintain a fixed maturity portfolio that is of high quality and well diversified within each market sector. This investment strategy also achieves a balanced maturity schedule. Our fixed maturity portfolio is managed with the goal of achieving reasonable returns while limiting exposure to risk. Our municipal bond portfolio accounts for

$231.8 million , or 39% , of the total fixed maturity portfolio at December 31, 2015 . The overall credit rating of the municipal portfolio without consideration of the underlying insurance is AA+.

Fixed maturities classified as available-for-sale are carried at fair value with unrealized gains and losses, net of deferred taxes, included in shareholders’ equity. Net unrealized gains on fixed maturities, net of deferred taxes, amounted to $3.4 million at December 31, 2015 , compared to $6.2 million at December 31, 2014 .

The following table presents a breakdown of the fair value of our fixed maturity portfolio by sector and rating as of December 31, 2015 : ⁽¹⁾



(in thousands)									Non-investment		Fair
Industry Sector	AAA		AA		A		BBB		grade		value
Indemnity
Basic materials	$	0	$	0	$	1,965	$	3,016	$	2,901	$	7,882
Communications	0		0		2,008		18,584		12,473		33,065
Consumer	0		0		7,126		22,638		36,139		65,903
Diversified	0		0		0		0		235		235
Energy	0		0		3,565		7,739		3,657		14,961
Financial	0		2,102		27,599		46,801		12,297		88,799
Government-municipal	112,329		102,046		16,430		1,042		0		231,847
Industrial	0		0		617		5,130		10,785		16,532
Structured securities ⁽²⁾	32,366		35,961		18,021		16,191		2,490		105,029
Technology	0		0		2,305		2,298		5,863		10,466
Utilities	0		0		8,169		3,002		1,319		12,490
Total	$	144,695	$	140,109	$	87,805	$	126,441	$	88,159	$	587,209

(1) Ratings are supplied by S&P, Moody’s, and Fitch. The table is based upon the lowest rating for each security.

(2) Structured securities include residential mortgage-backed securities. commercial mortgage-backed securities, collateralized debt obligations, and asset-backed securities.

Equity securities

Our equity securities consist of common stock and nonredeemable preferred stock. Investment characteristics of common stock and nonredeemable preferred stock differ from one another. Our nonredeemable preferred stock portfolio provides a source of current income that is competitive with investment-grade bonds.

The following table presents an analysis of the fair value of our preferred and common stock securities by sector at December 31:



(in thousands)	2015				2014
Industry sector	Preferred stock		Common stock		Preferred stock		Common stock
Communications	$	0	$	0	$	1,251	$	0
Financial	0		0		6,964		0
Funds ⁽¹⁾	0		12,732		0		12,689
Utilities	0		0		4,326		0
Total	$	0	$	12,732	$	12,541	$	12,689

(1) Includes certain exchange traded funds with underlying holdings of fixed maturity securities. These securities meet the criteria of a common stock under U.S. GAAP, and are included on the balance sheet as available-for-sale equity securities.

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Equity securities classified as available-for-sale include preferred and certain common stock securities, and are carried at fair value on the Statements of Financial Position with all changes in unrealized gains and losses reflected in other comprehensive income. The net unrealized loss on equity securities classified as available-for-sale, net of deferred taxes, was $0.1 million at December 31, 2015 , compared to a net unrealized gain of $0.6 million at December 31, 2014 .

During 2015, we sold our preferred stock portfolio to fund purchases of additional fixed maturity investments.

Limited partnerships

In 2015 , investments in limited partnerships decreased from the investment levels at December 31, 2014 . Changes in partnership values are a function of contributions and distributions, adjusted for market value changes in the underlying investments. The decrease in limited partnership investments was due to net distributions received from the partnerships which were partially offset by increases in underlying asset values. We have made no new limited partnership commitments since 2006, and the balance of limited partnership investments is expected to decline over time as additional distributions are received. The results from our limited partnerships are based upon financial statements received from our general partners, which are generally received on a quarter lag. As a result, the market values and earnings recorded at December 31, 2015 reflect the partnership activity experienced during the twelve month period ending September 30, 2015 .

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Shareholders’ Equity

Postretirement benefit plans

The funded status of our postretirement benefit plans is recognized in the Statements of Financial Position, with a corresponding adjustment to accumulated other comprehensive income, net of tax. At December 31, 2015 , shareholders’ equity amounts related to these postretirement plans increased by $25.1 million , net of tax, of which $9.4 million represents amortization of the prior service cost and net actuarial loss and $15.7 million represents the current period actuarial gain . The 2015 actuarial gain was primarily due to the change in the discount rate assumption used to measure the future benefit obligations to 4.57% in 2015 , from 4.17% in 2014 . At December 31, 2014 , shareholders’ equity amounts related to these postretirement plans decreased by $59.4 million , net of tax, of which $4.4 million represents amortization of the prior service cost and net actuarial loss and $63.8 million represents the current period actuarial loss . The 2014 actuarial loss was primarily due to the change in the discount rate assumption used to measure the future benefit obligations to 4.17% in 2014 , from 5.11% in 2013 . Although we are the sponsor of these postretirement plans and record the funded status of these plans, the Exchange reimburses us for approximately 57% of the annual benefit expense of these plans, which represents pension benefits for our employees performing claims and life insurance functions.

LIQUIDITY AND CAPITAL RESOURCES

Sources and Uses of Cash

Liquidity is a measure of a company’s ability to generate sufficient cash flows to meet the short- and long-term cash requirements of its business operations and growth needs. Our liquidity requirements have been met primarily by funds generated from management fee revenue and income from investments. Cash provided from these sources is used primarily to fund the costs of our management operations including commissions, salaries and wages, pension plans, share repurchases, dividends to shareholders, and the purchase and development of information technology. We expect that our operating cash needs will be met by funds generated from operations.

Volatility in the financial markets presents challenges to us as we do occasionally access our investment portfolio as a source of cash. Some of our fixed income investments, despite being publicly traded, are illiquid. Volatility in these markets could impair our ability to sell certain of our fixed income securities or cause such securities to sell at deep discounts. Additionally, our limited partnership investments are significantly less liquid. We believe we have sufficient liquidity to meet our needs from other sources even if market volatility persists throughout 2016 .

Cash flow activities

The following table provides condensed cash flow information for the years ended December 31:



(in thousands)	2015			2014			2013
Net cash provided by operating activities	$	217,378		$	186,013		$	218,008
Net cash provided by (used in) investing activities	622			(5,097		)	(65,232		)
Net cash used in financing activities	(126,858		)	(138,218		)	(115,339		)
Net increase in cash	$	91,142		$	42,698		$	37,437

Net cash provided by operating activities increased to $217.4 million in 2015 , compared to $186.0 million in 2014 , and $218.0 million in 2013 . Increased cash from operating activities in 2015 was primarily due to increases in management fee revenue received and reimbursements collected from affiliates, combined with a decrease in pension and employee benefits paid. Somewhat offsetting this increase in cash provided were increases in commissions and bonuses paid to agents, and general operating expenses and income taxes paid, compared to 2014 . Management fee revenues were higher reflecting the increase in direct and assumed premiums written by the Exchange. Cash paid for agent commissions and bonuses increased to $822.5 million in 2015 , compared to $748.6 million in 2014 , as a result of an increase in cash paid for scheduled commissions due to premium growth and bonus awards due to profitable underwriting results. We contributed $17.0 million to our pension plan in 2015 , compared to $23.1 million in 2014 . Additionally, we made a contribution to our pension plan for $17.4 million in January 2016 . Our funding policy is generally to contribute an amount equal to the greater of the target normal cost for the plan year or the amount necessary to fund the plan to 100% plus interest to the date the contribution is made. We are reimbursed approximately 57% of the net periodic benefit cost of the pension plans from the Exchange, which represents pension benefits for our employees performing claims and life insurance functions. In 2014 , decreased cash from operating activities, compared to 2013 , was primarily due to increases in commissions and bonuses paid to agents and general operating expenses, combined with decreases in reimbursements collected from affiliates and limited partnership distributions. Somewhat offsetting this decrease in cash provided was an increase in management fee revenue received, compared to 2013 .

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At December 31, 2015 , we recorded a net deferred tax asset of $40.7 million . There was no deferred tax valuation allowance recorded at December 31, 2015 .

Net cash provided by investing activities totaled $0.6 million in 2015 compared to cash used of $5.1 million in 2014 and $65.2 million in 2013 . While cash generated from the sale of available-for-sale securities was lower in 2015 , compared to 2014 , decreases in purchases of available-for-sale securities and fixed assets contributed to net cash being generated for the year. Also impacting our future investing activities are limited partnership commitments, which totaled $19.1 million at December 31, 2015 , and will be funded as required by the partnerships’ agreements. Of this amount, the total remaining commitment to fund limited partnerships that invest in private equity securities was $7.3 million , mezzanine debt securities was $8.2 million , and real estate activities was $3.6 million . Changes in our 2014 investing activities primarily included increased cash generated from the sale of available-for-sale securities somewhat offset by an increase in purchases of fixed assets and available-for-sale securities, compared to 2013 .

Net cash used in financing activities totaled $126.9 million in 2015 , $138.2 million in 2014 , and $115.3 million in 2013 . While cash was paid in dividends to shareholders, there were no share repurchases under our program in 2015 . The increase in cash used in financing activities for 2014 , compared to 2013 , was driven by an increase in the cash outlay for dividends paid to shareholders, somewhat offset by a decrease in the cash outlay for share repurchases. Dividends paid to shareholders totaled $126.9 million , $118.5 million , and $83.6 million in 2015 , 2014 and 2013 , respectively. We increased both our Class A and Class B shareholder regular quarterly dividends for 2015 and 2014 . Dividends have been approved at a 7.2% increase for 2016 .

No shares of our Class A nonvoting common stock were repurchased in 2015 in conjunction with our stock repurchase program. In 2014 , shares repurchased under this program totaled 276,390 at a total cost of $19.5 million , compared to 441,024 shares at a total cost of $31.9 million in 2013 , based upon settlement date. In October 2011 , our Board of Directors approved a continuation of the current stock repurchase program for a total of $150 million with no time limitation. This repurchase authority includes, and is not in addition to, any unspent amounts remaining under the prior authorization. We had approximately $17.8 million of repurchase authority remaining under this program at December 31, 2015 , based upon trade date.

In 2015 , we purchased 111,535 shares of our outstanding Class A nonvoting common stock outside of our publicly announced share repurchase program at a total cost of $10.4 million for the vesting of stock-based awards in conjunction with our long-term incentive plan, for stock-based awards for executive management and an outside director, and for the rabbi trust outside director deferred compensation plan. These shares were delivered in 2015. In 2014 , we purchased 64,398 shares of our outstanding Class A nonvoting common stock outside of our publicly announced share repurchase program at a total cost of $4.9 million for the vesting of stock-based awards for executive management and an outside director, and for awards under our long-term incentive plan. These shares were delivered in 2014. In 2013 , we purchased 3,477 shares of our outstanding Class A nonvoting common stock outside of our publicly announced share repurchase program at a total cost of $0.3 million to settle payments due to a retired executive under our long-term incentive plan. These shares were delivered in 2013.

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Capital Outlook

We regularly prepare forecasts evaluating the current and future cash requirements for both normal and extreme risk events. Should an extreme risk event result in a cash requirement exceeding normal cash flows, we have the ability to meet our future funding requirements through various alternatives available to us.

Outside of our normal operating and investing cash activities, future funding requirements could be met through:

1) cash and cash equivalents, which total approximately $182.9 million at December 31, 2015 , 2) a $100 million bank revolving line of credit, and 3) liquidation of assets held in our investment portfolio, including common stock and investment grade bonds which totaled approximately $402.8 million at December 31, 2015 . Volatility in the financial markets could impair our ability to sell certain of its fixed income securities or cause such securities to sell at deep discounts. Additionally, we have the ability to curtail or modify discretionary cash outlays such as those related to shareholder dividends and share repurchase activities.

As of December 31, 2015 , we have access to a $100 million bank revolving line of credit with a $25 million letter of credit sublimit that expires on November 3, 2020 . As of December 31, 2015 , a total of $98.2 million remains available under the facility due to $1.8 million outstanding letters of credit, which reduce the availability for letters of credit to $23.2 million . We had no borrowings outstanding on our line of credit as of December 31, 2015 . Bonds with a fair value of $109.0 million were pledged as collateral on the line at December 31, 2015 . These securities have no trading restrictions and are reported as available-for-sale securities in the Statements of Financial Position. The bank requires compliance with certain covenants, which include leverage ratios. We were in compliance with our bank covenants at December 31, 2015 .

Contractual Obligations

We have certain obligations and commitments to make future payments under various contracts. As of December 31, 2015 , the aggregate obligations were as follows:



( in thousands)	Payments due by period
	Total		2016		2017-2018		2019-2020		2021 and thereafter

Limited partnership commitments ⁽¹⁾	$	19,108	$	19,108	$	0	$	0	$	0
Pension contribution ⁽²⁾	17,357		17,357		0		0		0
Other commitments ⁽³⁾	52,353		28,333		21,306		2,714		0
Operating leases – vehicles	17,243		5,163		8,983		3,097		0
Operating leases – real estate ⁽⁴⁾	7,710		2,607		3,488		1,463		152
Operating leases – computer equipment	2,307		1,587		720		0		0
Gross contractual obligations	116,078		74,155		34,497		7,274		152
Estimated reimbursements from affiliates	50,712		22,163		23,202		5,244		103
Net contractual obligations	$	65,366	$	51,992	$	11,295	$	2,030	$	49

(1)

Limited partnership commitments will be funded as required for capital contributions at any time prior to the agreement expiration date. The commitment amounts are presented using the expiration date as the factor by which to age when the amounts are due. At December 31, 2015 , our total commitment to fund limited partnerships that invest in private equity securities was $7.3 million , mezzanine debt was $8.2 million , and real estate activities was $3.6 million .

(2)

The pension contribution for 2016 was estimated in accordance with the Pension Protection Act of 2006. Contributions anticipated in future years depend upon certain factors that cannot be reasonably predicted. Any contributions required in future years will be an amount equal to the greater of the target normal cost for the plan year or the amount necessary to fund the plan to 100% plus interest to the date the contribution is made. The obligations for our unfunded benefit plans, including the Supplemental Employee Retirement Plan (SERP) for our executive and senior management, are not included in gross contractual obligations. The recorded accumulated benefit obligation for this plan at December 31, 2015 is $10.5 million . We expect to have sufficient cash flows from operations to meet the future benefit payments as these become due.


(3)	Other commitments include various agreements for services, including such things as computer software, telephones, copiers, and maintenance.


(4)	Operating leases – real estate are for 18 of our 25 field offices and two operating leases are for office space and a warehouse facility.

Balance Sheet Arrangements

Off-balance sheet arrangements include those with unconsolidated entities that may have a material current or future effect on our financial condition or results of operations, including material variable interests in unconsolidated entities that conduct certain activities. We have no material off-balance sheet obligations or guarantees, other than limited partnership investment commitments. See the preceding Contractual Obligations section for further discussion of limited partnership investment commitments.

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Enterprise Risk Management

The role of our Enterprise Risk Management ("ERM") function is to ensure that all significant risks are clearly identified, understood, proactively managed and consistently monitored to achieve strategic objectives for all stakeholders. Our ERM program views risk holistically across our entire group of companies. It ensures implementation of risk responses to mitigate potential impacts. See Item 1A "Risk Factors" contained in this report for a list of risk factors.

Our ERM process is founded on a governance framework that includes oversight at multiple levels of our organization, including our Board of Directors and executive management. Accountability to identify, manage, and mitigate risk is embedded within all functions and areas of our business. We have defined risk tolerances to monitor and manage significant risks within acceptable levels. In addition to identifying, evaluating, prioritizing, monitoring, and mitigating significant risks, our ERM process includes extreme event analyses and scenario testing. Given our defined tolerance for risk, risk model output is used to quantify the potential variability of future performance and the sufficiency of capital and liquidity levels.

TRANSACTIONS/AGREEMENTS WITH RELATED PARTIES

Board Oversight

Our Board of Directors has a broad oversight responsibility over our intercompany relationships with the Exchange. As a consequence, our Board of Directors may be required to make decisions or take actions that may not be solely in the interest of our shareholders, such as setting the management fee rate paid by the Exchange to us and ratifying any other significant intercompany activity.

Subscriber’s Agreement

We serve as attorney-in-fact for the policyholders at the Exchange, a reciprocal insurance exchange. Each applicant for insurance to a reciprocal insurance exchange signs a subscriber’s agreement that contains an appointment of an attorney-in-fact. Through the designation of attorney-in-fact, we are required to provide certain sales, underwriting, and policy issuance services to the policyholders of the Exchange, as discussed previously. Pursuant to the subscriber’s agreement, we earn a management fee for these services calculated as a percentage of the direct and assumed premiums written by the Exchange.

Insurance holding company system

Intercompany Agreements

Service agreements

We make certain payments on behalf of the Exchange and EFL. These amounts are reimbursed to us on a cost basis in accordance with service agreements between us and the Exchange’s wholly owned subsidiaries. These reimbursements are settled on a monthly basis.

Leased property

We lease certain office space from the Exchange including the home office and three field office facilities. We also have a lease commitment with EFL for a field office. Rents are determined considering returns on invested capital and building operating and overhead costs. Rental costs of shared facilities are allocated based upon usage or square footage occupied.

Cost Allocation

The allocation of costs affects the financial condition of us and the Exchange and its wholly owned subsidiaries. Management’s role is to determine that allocations are consistently made in accordance with the subscriber’s agreements with the policyholders at the Exchange, intercompany service agreements, and applicable insurance laws and regulations. Allocation of costs under these various agreements requires judgment and interpretation, and such allocations are performed using a consistent methodology, which is intended to adhere to the terms and intentions of the underlying agreements.

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Intercompany Receivables



(dollars in thousands)	2015		Percent of total assets		2014		Percent of total assets
Receivables from the Exchange and other affiliates (management fees, costs and reimbursements)	$	348,055	24.7	%	$	335,220	25.4	%
Note receivable from EFL	25,000		1.8		25,000		1.9
Total intercompany receivables	$	373,055	26.5	%	$	360,220	27.3	%

We have significant receivables from the Exchange that result in a concentration of credit risk. These receivables include management fees due for services performed by us for the Exchange under the subscriber’s agreement, and certain costs we pay on behalf of the Exchange and EFL. We periodically evaluate credit risks related to the receivables from the Exchange. The receivable from the Exchange for management fees and costs we pay on behalf of the Exchange and EFL is settled monthly.

Surplus Note

We hold a surplus note for $25 million from EFL that is payable on demand on or after December 31, 2018 ; however, no principal or interest payments may be made without prior approval by the Pennsylvania Insurance Commissioner. Interest payments are scheduled to be paid semi-annually. We recognized interest income on the note of $1.7 million in 2015 , 2014 and 2013 .

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

Market risk is the risk of loss arising from adverse changes in interest rates, credit spreads, equity prices, or foreign exchange rates, as well as other relevant market rate or price changes. The volatility and liquidity in the markets in which the underlying assets are traded directly influence market risk. The following is a discussion of our primary risk exposures, including interest rate risk, investment credit risk, concentration risk, liquidity risk, and equity price risk, and how those exposures are currently managed as of December 31, 2015 .

Interest Rate Risk

We invest primarily in fixed maturity investments, which comprised 85% of our invested assets at December 31, 2015 . The value of the fixed maturity portfolio is subject to interest rate risk. As market interest rates decrease, the value of the portfolio increases with the opposite holding true in rising interest rate environments. We do not hedge our exposure to interest rate risk. A common measure of the interest sensitivity of fixed maturity assets is effective duration, a calculation that utilizes maturity, coupon rate, yield, and call terms to calculate an expected change in fair value given a change in interest rates. The longer the duration, the more sensitive the asset is to market interest rate fluctuations. Duration is analyzed quarterly to ensure that it remains in the targeted range we established.

A sensitivity analysis is used to measure the potential loss in future earnings, fair values, or cash flows of market-sensitive instruments resulting from one or more selected hypothetical changes in interest rates and other market rates or prices over a selected period. In our sensitivity analysis model, a hypothetical change in market rates is selected that is expected to reflect reasonably possible changes in those rates. The following pro forma information is presented assuming a 100-basis point increase in interest rates at December 31 of each year and reflects the estimated effect on the fair value of our fixed maturity portfolio. We used the effective duration of our fixed maturity portfolio to model the pro forma effect of a change in interest rates at December 31, 2015 and 2014 .

Fixed maturities interest-rate sensitivity analysis



(dollars in thousands)	At December 31,
	2015		2014
Fair value of fixed maturity portfolio	$	587,209	$	564,540
Fair value assuming 100-basis point rise in interest rates	$	571,167	$	552,230
Effective duration (as a percentage)	2.5		2.6

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At December 31, 2015, we began reporting effective duration instead of a previously utilized modified duration calculation to measure the interest rate risk of our fixed maturity portfolio. We believe effective duration more appropriately reflects the economic impact of features such as call provisions contained in certain securities in our fixed maturity portfolio.

While the fixed maturity portfolio is sensitive to interest rates, the future principal cash flows that will be received by contractual maturity date are presented below at December 31, 2015 and 2014 . Actual cash flows may differ from those stated as a result of calls, prepayments, or defaults.

Contractual repayments of principal by maturity date



(in thousands)
Fixed maturities:	December 31, 2015
2016	$	61,608
2017	76,526
2018	92,108
2019	37,921
2020	53,169
Thereafter	237,824
Total ⁽¹⁾	$	559,156
Fair value	$	587,209

(1) This amount excludes Indemnity’s $25 million surplus note due from EFL.




(in thousands)
Fixed maturities:	December 31, 2014
2015	$	62,563
2016	110,845
2017	62,239
2018	28,617
2019	32,721
Thereafter	233,100
Total ⁽¹⁾	$	530,085
Fair value	$	564,540

(1) This amount excludes Indemnity’s $25 million surplus note due from EFL.

Investment Credit Risk

Our objective is to earn competitive returns by investing in a diversified portfolio of securities. Our portfolios of fixed maturity securities, nonredeemable preferred stock, mortgage loans and, to a lesser extent, short-term investments are subject to credit risk. This risk is defined as the potential loss in fair value resulting from adverse changes in the borrower’s ability to repay the debt. We manage this risk by performing upfront underwriting analysis and ongoing reviews of credit quality by position and for the fixed maturity portfolio in total. We do not hedge the credit risk inherent in our fixed maturity investments.

Generally, the fixed maturities in our portfolio are rated by external rating agencies. If not externally rated, we rate them internally on a basis consistent with that used by the rating agencies. We classify all fixed maturities as available-for-sale securities, allowing us to meet our liquidity needs and provide greater flexibility to appropriately respond to changes in market conditions.

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The following table shows our fixed maturity investments by rating as of December 31, 2015 : ⁽¹⁾



(dollars in thousands)	Amortized cost		Fair value		Percent of total
AAA, AA, A	$	363,088	$	372,609	63	%
BBB	127,489		126,441		22
Total investment grade	490,577		499,050		85
BB	35,145		34,765		6
B	43,350		42,311		7
CCC, CC, C, and below	12,900		11,083		2
Total non-investment grade	91,395		88,159		15
Total	$	581,972	$	587,209	100	%

(1) Ratings are supplied by S&P, Moody’s, and Fitch. The table is based upon the lowest rating for each security.

Approximately 18% of the fixed income portfolio is invested in structured products. This includes residential mortgage-backed securities, commercial mortgage-backed securities, collateralized debt obligations, and asset-backed securities. The overall credit rating of the structured product portfolio is AA-.

Our municipal bond portfolio accounts for $231.8 million , or 39% of the total fixed maturity portfolio. The overall credit rating of our municipal portfolio is AA+.

Our limited partnership investment portfolio is exposed to credit risk, as well as price risk. Price risk is defined as the potential loss in estimated fair value resulting from an adverse change in prices. Our investments are directly affected by the impact of changes in these risk factors on the underlying investments held by our fund managers, which could vary significantly from fund to fund. We manage these risks by performing up-front due diligence on our fund managers, ongoing monitoring, and through the construction of a diversified portfolio.

We are also exposed to a concentration of credit risk with the Exchange. See the section, "Transactions/Agreements with Related Parties, Intercompany Receivables" for further discussion of this risk.

Concentration Risk

While our portfolio is well diversified within each market sector, there is an inherent risk of concentration in a particular industry or sector. We continually monitor our level of exposure to individual issuers as well as our allocation to each industry and market sector against internally established policies. See the "Financial Condition" section of Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" contained within this report for details of investment holdings by sector.

Liquidity Risk

Periods of volatility in the financial markets can create conditions where fixed maturity investments, despite being publicly traded, can become illiquid. However, we actively manage the maturity profile of our fixed maturity portfolio such that scheduled repayments of principal occur on a regular basis. Additionally, there is no ready market for limited partnerships, which increases the risk that these investments may not be converted to cash on favorable terms and on a timely basis.

Equity Price Risk

Common stocks designated as available-for-sale securities represent investments in certain exchange traded funds with underlying holdings of fixed maturity securities. While the performance of the exchange traded funds closely tracks that of the underlying fixed maturity securities, these investments are reported as common stock based on U.S. GAAP requirements. The average effective duration of these investments as reported by the funds was 4.7 at December 31, 2015 , compared to 6.3 at December 31, 2014 .

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of

Erie Indemnity Company

We have audited the accompanying statements of financial position of Erie Indemnity Company as of December 31, 2015 and 2014, and the related statements of operations, comprehensive income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2015. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Erie Indemnity Company at December 31, 2015 and 2014, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2015, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Erie Indemnity Company's internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 25, 2016 expressed an unqualified opinion thereon.

/s/ Ernst & Young

Philadelphia, PA

February 25, 2016

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ERIE INDEMNITY COMPANY

STATEMENTS OF OPERATIONS

Years ended December 31, 2015, 2014 and 2013

(dollars in thousands, except per share data)



	2015			2014			2013
Operating revenue
Management fee revenue, net	$	1,475,511		$	1,376,190		$	1,266,401
Service agreement revenue	29,997			30,929			30,930
Total operating revenue	1,505,508			1,407,119			1,297,331

Operating expenses
Commissions	847,880			783,017			710,058
Salaries and employee benefits	226,713			206,690			207,559
All other operating expenses	198,374			194,565			170,378
Total operating expenses	1,272,967			1,184,272			1,087,995
Net revenue from operations	232,541			222,847			209,336

Investment income
Net investment income	17,791			16,536			15,027
Net realized investment gains	492			1,057			945
Net impairment losses recognized in earnings	(1,558		)	(105		)	(388		)
Equity in earnings of limited partnerships	16,983			10,929			21,694
Total investment income	33,708			28,417			37,278
Income before income taxes	266,249			251,264			246,614
Income tax expense	91,571			83,759			84,003
Net income	$	174,678		$	167,505		$	162,611


Earnings Per Share
Net income per share
Class A common stock – basic	$	3.75		$	3.59		$	3.46
Class A common stock – diluted	$	3.33		$	3.18		$	3.08
Class B common stock – basic	$	563		$	539		$	520
Class B common stock – diluted	$	562		$	538		$	519

Weighted average shares outstanding – Basic
Class A common stock	46,186,671			46,247,876			46,660,651
Class B common stock	2,542			2,542			2,542

Weighted average shares outstanding – Diluted
Class A common stock	52,498,811			52,616,234			52,855,757
Class B common stock	2,542			2,542			2,542

See accompanying notes to Financial Statements. Se e Note 12, "Acc umulated Other Comprehensive Income (Loss)", for amounts reclassified out of accumulated other comprehensive income (loss) into the Statements of Operations.

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ERIE INDEMNITY COMPANY

STATEMENTS OF COMPREHENSIVE INCOME

Years ended December 31, 2015, 2014 and 2013

(in thousands)



	2015			2014			2013
Net income	$	174,678		$	167,505		$	162,611

Other comprehensive (loss) income, net of tax
Change in unrealized holding (losses) gains on available-for-sale securities	(4,280		)	823			(7,341		)
Pension and other postretirement plans	25,117			(59,425		)	81,433
Total other comprehensive income (loss), net of tax	20,837			(58,602		)	74,092
Comprehensive income	$	195,515		$	108,903		$	236,703

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ERIE INDEMNITY COMPANY

STATEMENTS OF FINANCIAL POSITION

At December 31, 2015 and 2014

(dollars in thousands, except per share data)



	2015			2014
Assets
Current assets:
Cash and cash equivalents	$	182,889		$	91,747
Available-for-sale securities	62,067			63,278
Receivables from Erie Insurance Exchange and affiliates	348,055			335,220
Prepaid expenses and other current assets	24,697			26,020
Federal income taxes recoverable	11,947			11,448
Accrued investment income	5,491			5,538
Total current assets	635,146			533,251

Available-for-sale securities	537,874			526,492
Limited partnership investments	88,535			112,617
Fixed assets, net	59,087			62,991
Deferred income taxes, net	40,686			37,321
Note receivable from Erie Family Life Insurance Company	25,000			25,000
Other assets	20,968			21,526
Total assets	$	1,407,296		$	1,319,198

Liabilities and shareholders' equity
Current liabilities:
Commissions payable	$	195,542		$	189,918
Agent bonuses	106,752			88,228
Accrued expenses and other current liabilities	42,006			39,560
Accounts payable	46,526			35,844
Dividends payable	33,996			31,714
Deferred executive compensation	20,877			14,891
Total current liabilities	445,699			400,155

Defined benefit pension plans	172,700			188,820
Employee benefit obligations	1,234			1,889
Deferred executive compensation	16,580			24,087
Other long-term liabilities	1,580			1,113
Total liabilities	637,793			616,064

Shareholders’ equity
Class A common stock, stated value $0.0292 per share; 74,996,930 shares authorized; 68,299,200 shares issued; 46,189,068 shares outstanding	1,992			1,992
Class B common stock, convertible at a rate of 2,400 Class A shares for one Class B share, stated value $70 per share; 3,070 shares authorized; 2,542 shares issued and outstanding	178			178
Additional paid-in-capital	16,311			16,317
Accumulated other comprehensive loss	(96,864		)	(117,701		)
Retained earnings	1,993,976			1,948,438
Total contributed capital and retained earnings	1,915,593			1,849,224
Treasury stock, at cost; 22,110,132 shares held	(1,155,108		)	(1,146,090		)
Deferred compensation	9,018			—
Total shareholders’ equity	769,503			703,134
Total liabilities and shareholders’ equity	$	1,407,296		$	1,319,198

See accompanying notes to Financial Statements.

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ERIE INDEMNITY COMPANY

STATEMENTS OF SHAREHOLDERS’ EQUITY

Years ended December 31, 2015, 2014 and 2013

(dollars in thousands, except per share data)



	Class A common stock		Class B common stock		Additional paid-in-capital			Accumulated other comprehensive income (loss)			Retained earnings			Treasury stock			Deferred compensation		Total shareholders' equity
Balance, December 31, 2012	$	1,992	$	178	$	16,346		$	(133,191	)	$	1,852,180		$	(1,095,635	)	$	—	$	641,870
Net income											162,611								162,611
Other comprehensive income								74,092											74,092
Dividends declared:
Class A $2.4125 per share											(112,443		)						(112,443		)
Class B $361.875 per share											(920		)						(920		)
Net purchase of treasury stock					19									(31,248		)			(31,229		)
Balance, December 31, 2013	$	1,992	$	178	$	16,365		$	(59,099	)	$	1,901,428		$	(1,126,883	)	$	—	$	733,981
Net income											167,505								167,505
Other comprehensive loss								(58,602		)									(58,602		)
Dividends declared:
Class A $2.586 per share											(119,509		)						(119,509		)
Class B $387.90 per share											(986		)						(986		)
Net purchase of treasury stock					(48		)							(19,207		)			(19,255		)
Balance, December 31, 2014	$	1,992	$	178	$	16,317		$	(117,701	)	$	1,948,438		$	(1,146,090	)	$	—	$	703,134
Net income											174,678								174,678
Other comprehensive income								20,837											20,837
Dividends declared:
Class A $2.773 per share											(128,082		)						(128,082		)
Class B $415.95 per share											(1,058		)						(1,058		)
Net purchase of treasury stock ⁽¹⁾					(6		)							0					(6		)
Deferred compensation														(9,018		)	9,018		0
Balance, December 31, 2015	$	1,992	$	178	$	16,311		$	(96,864	)	$	1,993,976		$	(1,155,108	)	$	9,018	$	769,503

(1) Net purchases of treasury stock in 2015 includes the repurchase of our Class A common stock in the open market that were subsequently distributed to satisfy stock based compensation awards. Se e Note 11, "Capital Stock ", for additional information on treasury stock transactions.

See accompanying notes to Financial Statements.

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ERIE INDEMNITY COMPANY

STATEMENTS OF CASH FLOWS

Years ended December 31, 2015, 2014 and 2013

(in thousands)



	2015			2014			2013
Cash flows from operating activities
Management fee received	$	1,454,902		$	1,348,885		$	1,240,311
Service agreement fee received	29,997			30,929			30,930
Net investment income received	25,999			22,846			21,517
Limited partnership distributions	14,112			15,327			27,050
Increase (decrease) in reimbursements collected from affiliates	7,775			(7,472		)	6,435
Commissions paid to agents	(725,714		)	(665,154		)	(617,086		)
Agents bonuses paid	(96,749		)	(83,436		)	(64,597		)
Salaries and wages paid	(155,303		)	(153,459		)	(147,059		)
Pension contribution and employee benefits paid	(40,993		)	(48,516		)	(40,844		)
General operating expenses paid	(190,301		)	(178,452		)	(152,456		)
Income taxes paid	(106,347		)	(95,485		)	(86,193		)
Net cash provided by operating activities	217,378			186,013			218,008

Cash flows from investing activities
Purchase of investments:
Available-for-sale securities	(228,308		)	(250,789		)	(242,676		)
Limited partnerships	(928		)	(1,123		)	(2,907		)
Proceeds from investments:
Available-for-sale securities	214,991			236,080			159,524
Limited partnerships	26,735			28,613			29,054
Net purchase of fixed assets	(12,556		)	(19,473		)	(10,750		)
Net collections on agent loans	688			1,595			2,523
Net cash provided by (used in) investing activities	622			(5,097		)	(65,232		)

Cash flows from financing activities
Purchase of treasury stock	0			(19,692		)	(31,721		)
Dividends paid to shareholders	(126,858		)	(118,526		)	(83,618		)
Net cash used in financing activities	(126,858		)	(138,218		)	(115,339		)

Net increase in cash and cash equivalents	91,142			42,698			37,437
Cash and cash equivalents, beginning of year	91,747			49,049			11,612
Cash and cash equivalents, end of year	$	182,889		$	91,747		$	49,049

See accompanying notes to Financial Statements. See Note 16, “Supplementary Data on Cash Flows”, for supplemental cash flow information.

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ERIE INDEMNITY COMPANY

NOTES TO FINANCIAL STATEMENTS

Note 1. Nature of Operations

Erie Indemnity Company ("Indemnity", "we", "us", "our") is a publicly held Pennsylvania business corporation that has since its incorporation in 1925 served as the attorney-in-fact for the subscribers (policyholders) at the Erie Insurance Exchange ("Exchange"). The Exchange, which also commenced business in 1925, is a Pennsylvania-domiciled reciprocal insurer that writes property and casualty insurance. We function solely as the management company and all insurance operations are performed by the Exchange.

Our primary function, as attorney-in-fact, is to perform certain services for the Exchange relating to the sales, underwriting, and issuance of policies on behalf of the Exchange. This is done in accordance with a subscriber’s agreement (a limited power of attorney) executed individually by each subscriber (policyholder), which appoints us as their common attorney-in-fact to transact certain business on their behalf and to manage the affairs of the Exchange. Pursuant to the subscriber’s agreement and for its services as attorney-in-fact, we earn a management fee calculated as a percentage of the direct and assumed premiums written by the Exchange.

Our results of operations are tied to the growth and financial condition of the Exchange. If any events occurred that impaired the Exchange’s ability to grow or sustain its financial condition, including but not limited to reduced financial strength ratings, disruption in the independent agency relationships, significant catastrophe losses, or products not meeting customer demands, the Exchange could find it more difficult to retain its existing business and attract new business. A decline in the business of the Exchange almost certainly would have as a consequence a decline in the total premiums paid and a correspondingly adverse effect on the amount of the management fees we receive. We also have an exposure to a concentration of credit risk related to the unsecured receivables due from the Exchange for its management fee. See Note 14, "Concentrations of Credit Risk" contained within this report.

Note 2. Significant Accounting Policies

Basis of presentation

The accompanying financial statements have been prepared in conformity with U.S. generally accepted accounting principles ("GAAP").

Use of estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Retrospective adoption of recently issued accounting standards

In February 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-02, Consolidation , which changed the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. This guidance changed the conditions to be met in determining if a reporting entity has a variable interest in a legal entity. In accordance with the new accounting guidance, Indemnity is not deemed to have a variable interest in the Exchange as the fees paid for services provided to the Exchange no longer represent a variable interest. The compensation received from the attorney-in-fact fee arrangement with the subscribers is for services provided by Indemnity acting in its role as attorney-in-fact and is commensurate with the level of effort required to perform those services. Under the previously issued accounting guidance, Indemnity was deemed to be the primary beneficiary of the Exchange and its financial

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position and operating results were consolidated with Indemnity. Following adoption of the new accounting guidance, the Exchange’s results are no longer required to be consolidated with Indemnity.


•	Indemnity's management fee revenues are included on the face of the Statements of Operations. The Noncontrolling Interest - Exchange revenues and expenses are no longer included in the Statements of Operations, Statements of Comprehensive Income or Statements of Cash Flows.


•	The assets and liabilities of the Noncontrolling Interest - Exchange are not included on the Statements of Financial Position. The assets and liabilities of Indemnity are presented on a classified basis, which distinguishes between current and noncurrent on the Statements of Financial Position.


•	There is no cumulative effect to Indemnity's shareholders’ equity. The noncontrolling interest in total equity that represented the amount of the Exchange’s subscribers’ equity was presented separately from Indemnity's shareholders’ equity.

In May 2015, the FASB issued ASU 2015-07, "Fair Value Measurement" , which removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient and limits the disclosure requirements. ASU 2015-07 is effective for annual and interim periods beginning after December 15, 2015 with early adoption permitted. Our disclosure was prepared in accordance with this amended guidance at December 31, 2015.

In November 2015, the FASB issued ASU 2015-17, " Balance Sheet Classification of Deferred Taxes". ASU 2015-17 simplifies the presentation of deferred income taxes by requiring deferred tax assets and liabilities to be classified as noncurrent in a classified statement of financial position. ASU 2015-17 is effective for annual periods beginning after December 15, 2016 with early adoption permitted. We adopted the guidance on a retrospective basis effective December 31, 2015. Prior to December 31, 2015, we were not required to present a classified balance sheet that distinguished between current and noncurrent deferred taxes.

Recently issued accounting standards

In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers" . ASU 2014-09 clarifies the principles for recognizing revenue and provides a common revenue standard for GAAP. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the

consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, ASU 2015-14, "Revenue from Contracts with Customers", deferred the effective date of ASU 2014-09 to annual and interim reporting periods beginning after December 15, 2017. Earlier application is permitted only as of annual and interim reporting periods beginning after December 15, 2016. We do not expect the adoption of ASU 2014-09 related to the management fee and service agreement revenue to have a material impact on our financial statements.

Cash and cash equivalents – Cash, money market accounts and other short-term, highly liquid investments with a maturity of three months or less at the date of purchase, are considered cash and cash equivalents.

Investments

Available-for-sale securities – Fixed maturity, preferred stock, and common stock securities classified as available-for-sale are reported at fair value. Available-for-sale securities with a remaining maturity of 12 months or less are reported as current assets on the Statements of Financial Position. Unrealized holding gains and losses, net of related tax effects, on available-for-sale securities are recorded directly to shareholders’ equity as accumulated other comprehensive income (loss).

Common stock securities classified as available-for-sale represent certain exchange traded funds with underlying holdings of fixed maturity securities.

Realized gains and losses on sales of available-for-sale securities are recognized in income based upon the specific identification method. Interest and dividend income are recognized as earned.

Available-for-sale securities are evaluated monthly for other-than-temporary impairment loss.

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For fixed income and redeemable preferred stock (debt securities) that have experienced a decline in fair value and that we intend to sell, or for which it is more likely than not we will be required to sell the security before recovery of its amortized cost, an other-than-temporary impairment is deemed to have occurred, and is recognized in earnings.

Debt securities that have experienced a decline in fair value and that we do not intend to sell, and that we will not be required to sell before recovery, are evaluated to determine if the decline in fair value is other-than-temporary.

Some factors considered in this evaluation include:


•	the extent and duration to which fair value is less than cost;


•	historical operating performance and financial condition of the issuer;


•	short and long-term prospects of the issuer and its industry based upon analysts’ recommendations;


•	specific events that occurred affecting the issuer, including a ratings downgrade;


•	near term liquidity position of the issuer; and


•	compliance with financial covenants.

If a decline is deemed to be other-than-temporary, an assessment is made to determine the amount of the total impairment related to a credit loss and that related to all other factors. Consideration is given to all available information relevant to the collectability of the security in this determination. If the entire amortized cost basis of the security will not be recovered, a credit loss exists. Currently, we have the intent to sell all of our securities that have been determined to have a credit-related impairment. As a result, the entire amount of any impairment would be recognized in earnings. If we had securities with credit impairments that we did not intend to sell, the non-credit portion of the impairment would be recorded in other comprehensive income.

For equity securities in an unrealized loss position where fair value is not expected to recover to our cost basis in a reasonable time period, or where we do not expect to hold the security for a period of time sufficient to allow for a recovery to our cost basis, an other-than-temporary impairment is deemed to have occurred, and is recognized in earnings.

Limited partnerships – Limited partnerships include U.S. and foreign private equity, mezzanine debt, and real estate investments. The majority of our limited partnership holdings are considered investment companies and are recorded using the equity method of accounting. For these limited partnerships the general partners record assets at fair value, including any other-than-temporary impairments of these individual investments. Our ownership interest in partnerships accounted for under the equity method is generally less than 10% , and does not provide us the ability to significantly influence the operations of the partnerships. However, we believe the equity method most appropriately reflects the value of our economic interest in these investments. We also own certain real estate limited partnerships that do not meet the criteria of an investment company. These partnerships prepare audited financial statements on a cost basis. We have elected to report these limited partnerships under the fair value option, which is based on the net asset value (NAV) from our partner’s capital statement reflecting the general partner’s estimate of fair value for the fund’s underlying assets. Limited partnerships reported under the fair value option are disclosed in Note 4, "Fair Value" as other investments. Fair value provides consistency in the evaluation and financial reporting for these limited partnerships and limited partnerships accounted for under the equity method.

Because of the timing of the preparation and delivery of financial statements for limited partnership investments, the use of the most recently available financial statements provided by the general partners results in a quarter delay in the inclusion of the limited partnership results in our Statements of Operations. Due to this delay, these financial statements do not yet reflect the market conditions experienced in the fourth quarter of 2015 for all partnerships other than the real estate limited partnerships that are reported under the fair value option.

Nearly all of the underlying investments in our limited partnerships are valued using a source other than quoted prices in active markets. The fair value amounts for our private equity and mezzanine debt partnerships are based upon the financial statements of the general partners, who use multiple methods to estimate fair value including the market approach, income approach or the cost approach. The market approach uses prices and other pertinent information from market-generated transactions involving identical or comparable assets or liabilities. Such valuation techniques often use market multiples derived from a set of comparables. The income approach uses valuation techniques to convert future cash flows or earnings to a single discounted present value amount. The measurement is based upon the value indicated by current market expectations on those future amounts. The cost approach is derived from the amount that is currently required to replace the service capacity of an asset. If information becomes available that would impair the cost of investments owned by the partnerships, then the general partner would adjust to the net realizable value. For real estate limited partnerships, the general partners record these at fair value based upon an independent appraisal or internal estimates of fair value.

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Unrealized gains and losses for these investments are reflected in equity in earnings (losses) of limited partnerships in our Statements of Operations in accordance with the equity method of accounting or the fair value option, as applicable. Cash contributions made to and distributions received from the partnerships are recorded in the period in which the transaction occurs.

Deferred taxes

Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and the reported amounts in the financial statements, using the statutory tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date under the law. The need for valuation allowances on deferred tax assets are estimated based upon our assessment of the realizability of such amounts.

Software costs

We capitalize certain computer software and software development costs incurred in connection with developing or obtaining computer software for internal use. Capitalized software costs are included in fixed assets and amortized on a straight-line basis over the estimated useful lives of the software, which do not exceed seven years .

Agent bonus estimates

Agent bonuses are based upon an individual agency’s property and casualty underwriting profitability and also include a component for growth in agency property and casualty premiums if the agency’s underwriting profitability targets for the book of business are met. The estimate for agent bonuses, which are based upon the performance over 36 months , is modeled on a monthly basis using actual underwriting data by agency for the prior two years combined with the current year-to-date actual data.

At December 31 of each year, we use actual data available and record an accrual based upon the expected payment amount. These costs are included in commissions expense in the Statements of Operations.

Recognition of management fee revenue

We earn management fees from the Exchange for providing certain sales, underwriting, and policy issuance services. Pursuant to the subscriber’s agreements with the policyholders at the Exchange, we may retain up to 25% of all direct and assumed premiums written by the Exchange. Management fee revenue is calculated by multiplying the management fee rate by the direct and assumed premiums written by the Exchange. The Exchange issues policies with annual terms only. Management fees are recorded as revenue upon policy issuance or renewal, as substantially all of the services required to be performed by us have been satisfied at that time. Certain activities are performed and related costs are incurred by us subsequent to policy issuance in connection with the services provided to the Exchange; however, these activities are inconsequential and perfunctory.

Recognition of service agreement revenue

Service agreement revenue consists of service charges we collect from policyholders for providing multiple payment plans on policies written by the Exchange. Service charges, which are flat dollar charges for each installment billed beyond the first installment, are recognized as revenue when bills are rendered to the policyholder. Service agreement revenue also includes late payment and policy reinstatement fees.

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Note 3. Earnings Per Share

Class A and Class B basic earnings per share and Class B diluted earnings per share are calculated under the two-class method. The two-class method allocates earnings to each class of stock based upon its dividend rights. Class B shares are convertible into Class A shares at a conversion ratio of 2,400 to 1. See Note 11, "Capital Stock".

Class A diluted earnings per share are calculated under the if-converted method, which reflects the conversion of Class B shares to Class A shares. Diluted earnings per share calculations include the dilutive effect of assumed issuance of stock-based awards under compensation plans that have the option to be paid in stock using the treasury stock method. See Note 9, "Incentive and Deferred Compensation Plans".

A reconciliation of the numerators and denominators used in the basic and diluted per-share computations is presented as follows for each class of common stock:



(dollars in thousands, except per share data)						For the years ended December 31,
	2015					2014					2013
	Allocated net income (numerator)		Weighted shares (denominator)	Per- share amount		Allocated net income (numerator)		Weighted shares (denominator)	Per- share amount		Allocated net income (numerator)		Weighted shares (denominator)	Per- share amount
Class A – Basic EPS:
Income available to Class A stockholders	$	173,248	46,186,671	$	3.75	$	166,134	46,247,876	$	3.59	$	161,290	46,660,651	$	3.46
Dilutive effect of stock-based awards	0		211,340	—		0		267,558	—		0		94,306	—
Assumed conversion of Class B shares	1,430		6,100,800	—		1,371		6,100,800	—		1,321		6,100,800	—
Class A – Diluted EPS:
Income available to Class A stockholders on Class A equivalent shares	$	174,678	52,498,811	$	3.33	$	167,505	52,616,234	$	3.18	$	162,611	52,855,757	$	3.08
Class B – Basic EPS:
Income available to Class B stockholders	$	1,430	2,542	$	563	$	1,371	2,542	$	539	$	1,321	2,542	$	520
Class B – Diluted EPS:
Income available to Class B stockholders	$	1,429	2,542	$	562	$	1,369	2,542	$	538	$	1,320	2,542	$	519

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Note 4. Fair Value

Our available-for-sale and trading securities are recorded at fair value, which is the price that would be received to sell the asset in an orderly transaction between willing market participants as of the measurement date.

Valuation techniques used to derive the fair value of our available-for-sale and trading securities are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources. Unobservable inputs reflect our own assumptions regarding fair market value for these securities. Although the majority of our prices are obtained from third-party sources, we also perform an internal pricing review for securities with low trading volumes under current market conditions. Financial instruments are categorized based upon the following characteristics or inputs to the valuation techniques:


•	Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date.


•	Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.


•	Level 3 – Unobservable inputs for the asset or liability.

In limited circumstances we adjust the price received from the pricing service when, in our judgment, a better reflection of fair value is available based upon corroborating information and our knowledge and monitoring of market conditions such as a disparity in price of comparable securities and/or non-binding broker quotes. In other circumstances, certain securities are internally priced because prices are not provided by the pricing service.

We perform continuous reviews of the prices obtained from the pricing service. This includes evaluating the methodology and inputs used by the pricing service to ensure that we determine the proper classification level of the financial instrument. Price variances, including large periodic changes, are investigated and corroborated by market data. We have reviewed the pricing methodologies of our pricing service as well as other observable inputs, such as data, and transaction volumes and believe that the prices adequately consider market activity in determining fair value. Our review process continues to evolve based upon accounting guidance and requirements.

When a price from the pricing service is not available, values are determined by obtaining broker/dealer quotes and/or market comparables. When available, we obtain multiple quotes for the same security. The ultimate value for these securities is determined based upon our best estimate of fair value using corroborating market information. Our evaluation includes the consideration of benchmark yields, reported trades, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data.

For certain securities in an illiquid market, there may be no prices available from a pricing service and no comparable market quotes available. In these situations, we value the security using an internally-developed, risk-adjusted, discounted cash flow model.

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The following tables present our fair value measurements on a recurring basis by asset class and level of input:



	At December 31, 2015
	Fair value measurements using:
(in thousands)	Total		Quoted prices in active markets for identical assets Level 1		Observable inputs Level 2		Unobservable inputs Level 3
Available-for-sale securities:
States & political subdivisions	$	231,847	$	0	$	231,847	$	0
Corporate debt securities	250,333		0		250,264		69
Residential mortgage-backed securities	13,513		0		13,513		0
Commercial mortgage-backed securities	37,571		0		37,571		0
Collateralized debt obligations	51,745		0		43,168		8,577
Other debt securities	2,200		0		2,200		0
Total fixed maturities	587,209		0		578,563		8,646
Common stock	12,732		12,732		0		0
Total available-for-sale securities	599,941		12,732		578,563		8,646
Other investments ⁽¹⁾	4,526		—		—		—
Total	$	604,467	$	12,732	$	578,563	$	8,646



	At December 31, 2014
	Fair value measurements using:
(in thousands)	Total		Quoted prices in active markets for identical assets Level 1		Observable inputs Level 2		Unobservable inputs Level 3
Available-for-sale securities:
States & political subdivisions	$	231,134	$	0	$	231,134	$	0
Corporate debt securities	234,040		0		234,040		0
Residential mortgage-backed securities	8,375		0		8,375		0
Commercial mortgage-backed securities	51,255		0		51,255		0
Collateralized debt obligations	32,932		0		32,932		0
Other debt securities	6,804		0		6,804		0
Total fixed maturities	564,540		0		564,540		0
Nonredeemable preferred stock	12,541		2,068		10,473		0
Common stock	12,689		12,689		0		0
Total available-for-sale securities	589,770		14,757		575,013		0
Other investments ⁽¹⁾	7,583		—		—		—
Total	$	597,353	$	14,757	$	575,013	$	0

(1) Other investments measured at fair value represent real estate funds included on the balance sheet as limited partnership investments that are reported under the fair value option using the net asset value practical expedient. These amounts are not required to be categorized in the fair value hierarchy. The investments can never be redeemed with the funds. Instead, distributions are received when liquidation of the underlying assets of the funds occur. It is estimated that the underlying assets will generally be liquidated between 5 and 10 years from the inception of the funds. The fair value of these investments is based on the net asset value (NAV) information provided by the general partner. Fair value is based on our proportionate share of the NAV based on the most recent partners' capital statements received from the general partners, which is generally one quarter prior to our balance sheet date. These values are then analyzed to determine if the NAV represents fair value at our balance sheet date, with adjustment being made where appropriate. We consider observable market data and perform a review validating the appropriateness of the NAV at each balance sheet date. It is likely that all of the investments will be redeemed at a future date for an amount different than the NAV of our ownership interest in partners' capital as of December 31, 2015 and December 31, 2014 . During the year ended December 31, 2015 , no contributions were made and distributions totaling $3.5 million were received from these investments. During the year ended December 31, 2014 , no contributions were made and distributions totaling $12.9 million were received from these investments. As of December 31, 2015 and 2014, the amount of unfunded commitments related to the investments was $0.6 million .

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Level 3 Assets –Year-to-Date Change:



(in thousands)	Beginning balance at December 31, 2014		Included in earnings ⁽¹⁾			Included in other comprehensive income			Purchases		Sales		Transfers in and (out) of Level 3			Ending balance at December 31, 2015
Available-for-sale securities:
Corporate debt securities	$	0	$	(1	)	$	(59	)	$	180	$	0	$	(51	)	$	69
Collateralized debt obligations	0		3			(7		)	8,581		0		0			8,577
Total fixed maturities	0		2			(66		)	8,761		0		(51		)	8,646
Total available-for-sale securities	0		2			(66		)	8,761		0		(51		)	8,646
Total Level 3 assets	$	0	$	2		$	(66	)	$	8,761	$	0	$	(51	)	$	8,646

(1) These amounts are reported in the Statements of Operations as net investment income (losses) for the year ended December 31, 2015 on Level 3 securities.

We review the fair value hierarchy classifications each reporting period. Transfers between hierarchy levels may occur due to changes in available market observable inputs. Transfers in and out of level classifications are reported as having occurred at the beginning of the quarter in which the transfers occurred.

There were no transfers between Level 1 and Level 2 for the year ended December 31, 2015 . Level 2 to Level 3 transfers totaled $0.1 million related to one fixed maturity holding due to the use of unobservable market data to determine the fair value at December 31, 2015 . Level 3 to Level 2 transfers totaled $0.2 million related to two fixed maturity holdings due to the use of observable market data to determine the fair value at December 31, 2015 .

Level 3 Assets – Year-to-Date Change:



(in thousands)	Beginning balance at December 31, 2013		Included in earnings ⁽¹⁾			Included in other comprehensive income			Purchases		Sales			Transfers in and (out) of Level 3			Ending balance at December 31, 2014
Available-for-sale securities:
Corporate debt securities	$	1,054	$	0		$	(28	)	$	0	$	(85	)	$	(941	)	$	0
Commercial mortgage-backed securities	0		1			9			2,976		0			(2,986		)	0
Collateralized debt obligations	378		(47		)	(40		)	0		(291		)	0			0
Total fixed maturities	1,432		(46		)	(59		)	2,976		(376		)	(3,927		)	0
Total available-for-sale securities	1,432		(46		)	(59		)	2,976		(376		)	(3,927		)	0
Total Level 3 assets	$	1,432	$	(46	)	$	(59	)	$	2,976	$	(376	)	$	(3,927	)	$	0

(1) These amounts are reported in the Statements of Operations as net realized investment gains (losses) for the year ended December 31, 2014 on Level 3 securities.

There were no transfers between Level 1 and Level 2, or from Level 2 to Level 3, for the year ended December 31, 2014 . Level 3 to Level 2 transfers totaled $3.9 million related to two fixed maturity holdings due to the use of observable market data to determine the fair value at December 31, 2014 .

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Quantitative and Qualitative Disclosures about Unobservable Inputs

When a non-binding broker quote was the only input available, the security was classified within Level 3. Use of non-binding brokers quotes totaled $8.6 million at December 31, 2015. The unobservable inputs are not reasonably available to us.

The following table presents our fair value measurements on a recurring basis by pricing source:



(in thousands)	At December 31, 2015
	Total		Level 1		Level 2		Level 3
Fixed maturities:
Priced via pricing services	$	578,516	$	0	$	578,516	$	0
Priced via market comparables/broker quotes	8,693		0		47		8,646
Total fixed maturities	587,209		0		578,563		8,646
Common stock:
Priced via pricing services	12,732		12,732		0		0
Total common stock	12,732		12,732		0		0
Other investments:
Priced via unobservable inputs ⁽¹⁾	4,526		—		—		—
Total other investments	4,526		—		—		—
Total	$	604,467	$	12,732	$	578,563	$	8,646

(1)

Other investments measured at fair value represent real estate funds included on the balance sheet as limited partnership investments that are reported under the fair value option using the net asset value practical expedient. These amounts are not required to be categorized in the fair value hierarchy. The fair value of these investments is based on the net asset value (NAV) information provided by the general partner.

There were no assets measured at fair value on a nonrecurring basis during the year ended December 31, 2015 .

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Note 5. Investments

Available-for-sale securities

The following tables summarize the cost and fair value of our available-for-sale securities:



	At December 31, 2015
(in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Available-for-sale securities:
States & political subdivisions	$	221,093	$	10,761	$	7	$	231,847
Corporate debt securities	254,464		281		4,412		250,333
Residential mortgage-backed securities	13,639		4		130		13,513
Commercial mortgage-backed securities	38,630		30		1,089		37,571
Collateralized debt obligations	51,905		61		221		51,745
Other debt securities	2,241		0		41		2,200
Total fixed maturities	581,972		11,137		5,900		587,209
Common stock	12,865		0		133		12,732
Total available-for-sale securities	$	594,837	$	11,137	$	6,033	$	599,941



	At December 31, 2014
(in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Available-for-sale securities:
States & political subdivisions	$	219,550	$	11,609	$	25	$	231,134
Corporate debt securities	235,613		1,491		3,064		234,040
Residential mortgage-backed securities	8,379		15		19		8,375
Commercial mortgage-backed securities	51,647		63		455		51,255
Collateralized debt obligations	32,964		40		72		32,932
Other debt securities	6,832		0		28		6,804
Total fixed maturities	554,985		13,218		3,663		564,540
Nonredeemable preferred stock	11,375		1,166		0		12,541
Common stock	12,865		0		176		12,689
Total available-for-sale securities	$	579,225	$	14,384	$	3,839	$	589,770

The amortized cost and estimated fair value of fixed maturities at December 31, 2015 , are shown below by remaining contractual term to maturity. Mortgage-backed securities are allocated based upon stated maturity dates. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.



	At December 31, 2015
(in thousands)	Amortized		Estimated
	cost		fair value
Due in one year or less	$	62,113	$	62,067
Due after one year through five years	267,468		265,917
Due after five years through ten years	163,827		168,918
Due after ten years	88,564		90,307
Total fixed maturities	$	581,972	$	587,209

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Available-for-sale securities in a gross unrealized loss position are as follows. Data is provided by length of time for securities in a gross unrealized loss position.



	At December 31, 2015
(dollars in thousands)	Less than 12 months				12 months or longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized		No. of
	value		losses		value		losses		value		losses		holdings
Available-for-sale securities:
States & political subdivisions	$	5,867	$	7	$	0	$	0	$	5,867	$	7	3
Corporate debt securities	172,831		2,447		19,086		1,965		191,917		4,412		349
Residential mortgage-backed securities	9,827		84		936		46		10,763		130		9
Commercial mortgage-backed securities	13,081		68		19,081		1,021		32,162		1,089		24
Collateralized debt obligations	27,981		103		9,174		118		37,155		221		19
Other debt securities	1,960		40		241		1		2,201		41		2
Total fixed maturities	231,547		2,749		48,518		3,151		280,065		5,900		406
Common stock	12,732		133		0		0		12,732		133		1
Total available-for-sale securities	$	244,279	$	2,882	$	48,518	$	3,151	$	292,797	$	6,033	407
Quality breakdown of fixed maturities:
Investment grade	$	174,723	$	1,296	$	38,369	$	1,256	$	213,092	$	2,552	105
Non-investment grade	56,824		1,453		10,149		1,895		66,973		3,348		301
Total fixed maturities	$	231,547	$	2,749	$	48,518	$	3,151	$	280,065	$	5,900	406



	At December 31, 2014
(dollars in thousands)	Less than 12 months				12 months or longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized		No. of
	value		losses		value		losses		value		losses		holdings
Available-for-sale securities:
States & political subdivisions	$	6,251	$	10	$	2,378	$	15	$	8,629	$	25	4
Corporate debt securities	120,850		3,064		0		0		120,850		3,064		250
Residential mortgage-backed securities	5,702		19		0		0		5,702		19		4
Commercial mortgage-backed securities	40,865		455		0		0		40,865		455		24
Collateralized debt obligations	20,985		72		0		0		20,985		72		9
Other debt securities	6,805		28		0		0		6,805		28		3
Total fixed maturities	201,458		3,648		2,378		15		203,836		3,663		294
Common stock	0		0		12,689		176		12,689		176		1
Total available-for-sale securities	$	201,458	$	3,648	$	15,067	$	191	$	216,525	$	3,839	295
Quality breakdown of fixed maturities:
Investment grade	$	145,364	$	949	$	2,378	$	15	$	147,742	$	964	58
Non-investment grade	56,094		2,699		0		0		56,094		2,699		236
Total fixed maturities	$	201,458	$	3,648	$	2,378	$	15	$	203,836	$	3,663	294

The above securities have been evaluated and determined to be temporary impairments for which we expect to recover our entire principal plus interest. The primary components of this analysis include a general review of market conditions and financial performance of the issuer along with the extent and duration at which fair value is less than cost. Any securities that we intend to sell or will more likely than not be required to sell before recovery are included in other-than-temporary impairments with the impairment charges recognized in earnings.

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Net investment income

Interest and dividend income are recognized as earned and recorded to net investment income. Investment income, net of expenses, was generated from the following portfolios for the years ended December 31:



(in thousands)	2015		2014		2013
Fixed maturities	$	16,457	$	14,173	$	11,945
Equity securities	1,045		1,550		2,126
Cash equivalents and other	1,174		1,207		1,439
Total investment income	18,676		16,930		15,510
Less: investment expenses	885		394		483
Investment income, net of expenses	$	17,791	$	16,536	$	15,027

Realized investment gains (losses)

Realized gains and losses on sales of securities are recognized in income based upon the specific identification method. Realized gains (losses) on investments were as follows for the years ended December 31:



(in thousands)	2015			2014			2013
Available-for-sale securities:
Fixed maturities:
Gross realized gains	$	1,571		$	453		$	890
Gross realized losses	(1,764		)	(333		)	(43		)
Net realized (losses) gains	(193		)	120			847
Equity securities:
Gross realized gains	759			1,132			391
Gross realized losses	(74		)	(195		)	(293		)
Net realized gains	685			937			98
Net realized investment gains	$	492		$	1,057		$	945

The components of other-than-temporary impairments on investments are included below for the years ended December 31:



(in thousands)	2015			2014			2013
Fixed maturities	$	(1,558	)	$	(105	)	$	(388	)
Total other-than-temporary impairments	(1,558		)	(105		)	(388		)
Portion recognized in other comprehensive income	0			0			0
Net impairment losses recognized in earnings	$	(1,558	)	$	(105	)	$	(388	)

In considering if fixed maturity securities were credit-impaired, some of the factors considered include: potential for the default of interest and/or principal, level of subordination, collateral of the issue, compliance with financial covenants, credit ratings, and industry conditions. We have the intent to sell all credit-impaired fixed maturity securities; therefore, the entire amount of the impairment charges were included in earnings and no non-credit impairments were recognized in other comprehensive income. See also Note 2, "Significant Accounting Policies".

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Limited partnerships

Limited partnership investments, excluding certain real estate limited partnerships recorded at fair value, are generally reported on a one-quarter lag; therefore, our year-to-date limited partnership results through December 31, 2015 are comprised of partnership financial results for the fourth quarter of 2014 and the first, second and third quarters of 2015 . Given the lag in reporting, our limited partnership results do not reflect the market conditions of the fourth quarter of 2015 . Cash contributions made to and distributions received from the partnerships are recorded in the period in which the transaction occurs.

Amounts included in equity in earnings of limited partnerships by method of accounting are included below for the years ended December 31:



(in thousands)	2015		2014		2013
Equity in earnings of limited partnerships accounted for under the equity method	$	16,545	$	8,517	$	20,488
Change in fair value of limited partnerships accounted for under the fair value option	438		2,412		1,206
Equity in earnings of limited partnerships	$	16,983	$	10,929	$	21,694

The following table summarizes limited partnership investments by sector at December 31:



(in thousands)	2015		2014
Private equity	$	48,397	$	51,379
Mezzanine debt	12,701		13,978
Real estate	22,911		39,677
Real estate - fair value option	4,526		7,583
Total limited partnerships	$	88,535	$	112,617

See also Note 15, "Commitments and Contingencies", for investment commitments related to limited partnerships.

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Note 6. Capitalized Software Development Costs

Capitalized software costs include internal and external labor and overhead and are included in fixed assets in the Statements of Financial Position. Capitalization ceases and amortization begins when a computer software project is complete and ready for its intended use.

The following table outlines the total capitalized software development costs subject to amortization and the related amortization expense:



(in thousands)	Years ended December 31,
	2015			2014			2013
Gross carrying amount	$	81,007		$	67,820		$	58,408
Accumulated amortization	(34,210		)	(25,210		)	(17,804		)
Net carrying amount	$	46,797		$	42,610		$	40,604

Amortization expense	$	9,000		$	7,406		$	6,909

Included in the gross carrying amount above are costs not yet subject to amortization of $15.8 million , $10.9 million and $9.2 million in 2015 , 2014 and 2013 , respectively.

The following table outlines the estimated future amortization expense related to capitalized software development costs as of December 31, 2015 :



(in thousands)
	Years ending December 31,		Estimated amortization expense
	2016	$	9,314
	2017		8,674
	2018		4,906
	2019		3,467
	2020		2,405

Note 7. Bank Line of Credit

As of December 31, 2015 , we have access to a $100 million bank revolving line of credit with a $25 million letter of credit sublimit that expires on November 3, 2020 . As of December 31, 2015 , a total of $98.2 million available under the facility due to $1.8 million outstanding letters of credit, which reduce the availability for letters of credit to $23.2 million . We had no borrowings outstanding on our line of credit as of December 31, 2015 . Bonds with a fair value of $109.0 million were pledged as collateral on the line at December 31, 2015 . The securities pledged as collateral have no trading restrictions and are reported as available-for-sale securities in the Statements of Financial Position as of December 31, 2015 . The banks require compliance with certain covenants, which include leverage ratios, for our line of credit. We are in compliance with all covenants at December 31, 2015 .

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Note 8. Postretirement Benefits

Pension plans

Our pension plans consist of a noncontributory defined benefit pension plan covering substantially all employees and an unfunded supplemental employee retirement plan ("SERP") for certain members of executive and senior management. The pension plans provide benefits to covered individuals satisfying certain age and service requirements. The defined benefit pension plan and SERP each provide benefits through a final average earnings formula.

Although we are the sponsor of these postretirement plans and record the funded status of these plans, the Exchange reimburses us for approximately 57% of the annual benefit expense of these plans, which represents pension benefits for our employees performing claims and life insurance functions. For our funded pension plan, amounts are settled in cash for the portion of pension costs allocated to the Exchange. For our unfunded plans, we pay the obligations when due and amounts are settled in cash between entities when there is a payout.

Prior to 2003, the employee pension plan purchased annuities from Erie Family Life Insurance Company ("EFL"), a wholly owned subsidiary of the Exchange, for certain plan participants that were receiving benefit payments under the pension plan. These are nonparticipating annuity contracts under which EFL has unconditionally contracted to provide specified benefits to beneficiaries; however, the pension plan remains the primary obligor to the beneficiaries. A contingent liability of $22.6 million at December 31, 2015 , exists in the event EFL does not honor the annuity contracts.

Cost of pension plans

Pension plan cost includes the following components:



(in thousands)
	2015			2014			2013
Service cost for benefits earned	$	30,433		$	22,510		$	26,896
Interest cost on benefit obligation	30,755			28,112			25,474
Expected return on plan assets	(35,921		)	(31,419		)	(30,414		)
Prior service cost amortization	670			712			798
Net actuarial loss amortization	14,031			6,344			14,946
Pension plan cost ⁽¹⁾	$	39,968		$	26,259		$	37,700


(1)	Pension plan costs represent the total cost before reimbursements to Indemnity from the Exchange and EFL.

Actuarial assumptions

The following table describes the assumptions at December 31 used to measure the year-end obligations and the net periodic benefit costs for the subsequent year:



	2015		2014		2013		2012
Employee pension plan:
Discount rate	4.57	%	4.17	%	5.11	%	4.19	%
Expected return on assets	7.00		7.00		7.50		7.50
Compensation increases ⁽¹⁾	3.32		3.32		4.15		4.15
SERP:
Discount rate – pre-retirement/post-retirement	4.57/4.07		4.17/3.67		5.11/4.61		4.19/3.69
Rate of compensation increase	5.00		5.00		6.00		6.00


(1)	The rate of compensation increase for the employee plan is age-graded. An equivalent single compensation increase rate of 3.32% in 2015 and 2014 , and 4.15% in 2013 would produce similar results.

The economic assumptions that have the most impact on the postretirement benefits expense are the discount rate and the long-term rate of return on plan assets. The discount rate assumption used to determine the benefit obligation for 2015 was based upon a yield curve developed from corporate bond yield information. The same methodology was employed to develop the discount rates used to determine the benefit obligation for 2014 and 2013 .

The pension plan's expected long-term rate of return represents the average rate of return to be earned on plan assets over the period the benefits included in the benefit obligation are to be paid. To determine the expected long-term rate of return assumption, we utilized models based upon rigorous historical analysis and forward-looking views of the financial markets

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based upon key factors such as historical returns for the asset class' applicable indices, the correlations of the asset classes under various market conditions and consensus views on future real economic growth and inflation. The expected future return for each asset class is then combined by considering correlations between asset classes and the volatilities of each asset class to produce a reasonable range of asset return results within which our expected long-term rate of return assumption falls.

Projected benefit obligations decreased $12.1 million at December 31, 2015 compared to December 31, 2014 , driven primarily by the higher discount rate and the mortality tables being updated with two additional years of mortality data, partially offset by less than expected asset returns in 2015 .

Funding policy/funded status

Our funding policy is generally to contribute an amount equal to the greater of the target normal cost for the plan year or the amount necessary to fund the plan to 100% plus interest to the date the contribution is made. Employer contributions of

$17.4 million were made to the defined benefit pension plan in January 2016 . The following table sets forth the funded status of the pension plans and the amounts recognized in the Statements of Financial Position at December 31:



(in thousands)
	2015			2014
Funded status at end of year	$	(173,089	)	$	(188,917	)

Pension liabilities – due within one year ⁽¹⁾	$	(389	)	$	(97	)
Pension liabilities – due after one year	(172,700		)	(188,820		)
Net amount recognized	$	(173,089	)	$	(188,917	)

(1) The current portion of pension liabilities is included in accrued expenses and other current liabilities in the Statements of Financial Position.

Benefit obligations

Benefit obligations are described in the following tables. Accumulated and projected benefit obligations represent the obligations of a pension plan for past service as of the measurement date. The accumulated benefit obligation is the present value of pension benefits earned as of the measurement date based on employee service and compensation prior to that date. It differs from the projected benefit obligation in that the accumulated benefit obligation includes no assumptions to reflect expected future compensation. The following table sets forth a reconciliation of beginning and ending balances of the projected benefit obligation, as well as the accumulated benefit obligation at December 31:



(in thousands)
	2015			2014
Projected benefit obligation, beginning of year	$	736,705		$	557,279
Service cost for benefits earned	30,433			22,510
Interest cost on benefit obligation	30,755			28,112
Plan amendments	0			164
Actuarial (gain) loss	(60,774		)	139,816
Benefits paid	(12,539		)	(11,176		)
Projected benefit obligation, end of year	$	724,580		$	736,705

Accumulated benefit obligation, end of year	$	583,432		$	583,469

The following table describes plans with assets less than accumulated benefit obligation at December 31:



(in thousands)
	2015		2014
Projected benefit obligation	$	724,580	$	736,705
Accumulated benefit obligation	583,432		583,469
Plan assets	551,491		547,788

Both the defined benefit pension plan and the SERP had accumulated benefit obligations in excess of plan assets at December 31, 2015 and 2014 .

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Pension assets

The following table sets forth a reconciliation of beginning and ending balances of the fair value of plan assets at December 31:



(in thousands)
	2015			2014
Fair value of plan assets, beginning of year	$	547,788		$	462,322
Actual (loss) gain on plan assets	(1,042		)	72,932
Employer contributions	17,284			23,710
Benefits paid	(12,539		)	(11,176		)
Fair value of plan assets, end of year	$	551,491		$	547,788

Accumulated other comprehensive income

Net actuarial loss and prior service cost included in accumulated other comprehensive income that were not yet recognized as components of net benefit costs were as follows:



(in thousands)
	2015		2014
Net actuarial loss	$	148,865	$	186,707
Prior service cost	4,605		5,274
Net amount not yet recognized	$	153,470	$	191,981

The estimated net actuarial loss and prior service cost for the pension plans that will be amortized from accumulated other comprehensive income into pension cost during 2016 is $7.6 million and $0.7 million , respectively.

Other comprehensive income

Amounts recognized in other comprehensive income for pension plans:



(in thousands)
	2015			2014
Net actuarial (gain) loss arising during the year	$	(23,810	)	$	98,303
Amortization of net actuarial loss	(14,031		)	(6,344		)
Amortization of prior service cost	(670		)	(712		)
Amendments	0			164			⁽¹⁾
Total recognized in other comprehensive income	$	(38,511	)	$	91,411


(1)	The charges recognized as amendments were the result of factoring in the prior service cost for four new plan participants in 2014 .

Asset allocation

The employee pension plan utilizes a return seeking and a liability asset matching allocation strategy. It is based upon the understanding that 1) equity investments are expected to outperform debt investments over the long-term, 2) the potential volatility of short-term returns from equities is acceptable in exchange for the larger expected long-term returns, and 3) a portfolio structured across investment styles and markets (both domestic and foreign) reduces volatility. As a result, the employee pension plan’s investment portfolio utilizes a broadly diversified asset allocation across domestic and foreign equity and debt markets. The investment portfolio is composed of commingled pools that are dedicated exclusively to the management of employee benefit plan assets.

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The target and actual asset allocations for the portfolio are as follows for the years ended December 31:




	Target asset allocation			Target asset allocation		Actual asset allocation		Actual asset allocation
Asset allocation:	2015			2014		2015		2014
Equity securities:
U.S. equity securities	35	%	⁽¹⁾	35	%	36	%	37	%
Non-U.S. equity securities	20		⁽²⁾	20		20		19
Total equity securities	55			55		56		56
Debt securities	44		⁽³⁾	44		43		43
Other	1		⁽⁴⁾	1		1		1
Total	100	%		100	%	100	%	100	%


(1)	U.S. equity securities – 22% seek to achieve excess returns relative to the Russell 2000 Index, while 30% seek to achieve excess returns relative to the S&P 500. The remaining 48% of the allocation to U.S. equity securities are comprised of equity index funds that track the S&P 500.


(2)	Non-U.S. equity securities – 11% are allocated to international small cap investments, while another 11% are allocated to international emerging market investments. The remaining 78% of the Non-U.S. equity securities are allocated to investments seeking to achieve excess returns relative to an international market index.


(3)	Debt securities – 44% are allocated to long U.S. Treasury Strips, 44% are allocated to U.S. corporate bonds with an emphasis on long duration bonds rated A or better, while the remaining 12% are allocated to floating rate high income leverage loans.


(4)	Institutional money market fund.

The following tables represent the fair value measurements for the pension plan assets by major category and level of input:




	At December 31, 2015
	Fair value measurements of plan assets using:
(in thousands)	Total		Quoted prices in active markets for identical assets Level 1		Significant observable inputs Level 2		Significant unobservable inputs Level 3
Equity securities:
U.S. equity securities	$	201,021	$	0	$	201,021	$	0
Non-U.S. equity securities	107,945		0		107,945		0
Total equity securities	308,966		0		308,966		0
Debt securities	236,619		0		236,619		0
Other	5,906		5,906		0		0
Total	$	551,491	$	5,906	$	545,585	$	0




	At December 31, 2014
	Fair value measurements of plan assets using:
(in thousands)	Total		Quoted prices in active markets for identical assets Level 1		Significant observable inputs Level 2		Significant unobservable inputs Level 3
Equity securities:
U.S. equity securities	$	202,036	$	0	$	202,036	$	0
Non-U.S. equity securities	106,025		0		106,025		0
Total equity securities	308,061		0		308,061		0
Debt securities	236,402		0		236,402		0
Other	3,325		3,325		0		0
Total	$	547,788	$	3,325	$	544,463	$	0

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verifiable, observable inputs including benchmark yields, reported trades, broker/dealer quotes, issuers spreads, two-sided markets, benchmark securities, bids, offers, and reference data.

Estimated future benefit payments

The following table sets forth amounts of benefits expected to be paid over the next 10 years from our pension plans as of December 31:



(in thousands)
Year ending December 31,		Expected future benefit payments
2016	$	14,781
2017		16,595
2018		18,632
2019		20,669
2020		23,223
2021 - 2025		163,388

Retiree health benefit plan

The retiree health benefit plan was terminated in 2006. We continue to provide retiree health benefits only to employees who met certain age and service requirements on or before July 1, 2010. The accumulated benefit obligation and net periodic benefit cost of this plan were not material to our financial statements.

Employee savings plan

All full-time and regular part-time employees are eligible to participate in a traditional qualified 401(k) or a Roth

401(k) savings plan. We match 100% of the participant contributions up to 3% of compensation and 50% of participant contributions over 3% and up to 5% of compensation. Matching contributions paid to the plan were $11.6 million in 2015 , $10.7 million in 2014 , and $10.4 million in 2013 . Employees are permitted to invest the employer-matching contributions in our Class A common stock. Employees, other than executive and senior officers, may sell the shares at any time without restriction; sales by executive and senior officers are subject to restrictions imposed by our insider trading policies and the federal securities laws. The plan acquires shares in the open market necessary to meet the obligations of the plan. Plan participants held 0.2 million shares of our Class A common stock at December 31, 2015 and 2014 .

Note 9. Incentive and Deferred Compensation Plans

Annual incentive plan

Our annual incentive plan is a bonus plan that pays cash to our executive and senior vice presidents annually. The cash awards are based on attainment of corporate and individual performance measures, which can include various financial measures. The plan includes a funding qualifier which considers our financial results, based on operating income, before a payout can be made to plan participants. If the funding qualifier is met, plan participants are eligible to receive the incentive based upon specific performance measures. The measures are established at the beginning of each year by the Executive Compensation and Development Committee of our Board of Directors ("ECDC"), with ultimate approval by the full Board of Directors. For 2015 and 2014 , the performance measures primarily included the growth in direct written premium and statutory combined ratio of the Exchange and its property and casualty subsidiaries.

Long-term incentive plan

Our long-term incentive plan ("LTIP") is a performance based incentive plan designed to reward executive and senior vice presidents who can have a significant impact on our long-term performance and to further align the interests of such employees with those of our shareholders. The LTIP permits grants of performance shares or units, or phantom shares to be satisfied with shares of our Class A common stock or cash payment as determined by the ECDC. The ECDC determines the form of the award to be granted at the beginning of each performance period, which is generally a three -year period. The number of shares of the Company’s common stock authorized for grant under the LTIP is 1.5 million shares, with no one person able to receive more than 250,000 shares or the equivalent of $5 million during any one performance period. We repurchase our Class A common stock on the open market to settle stock awards under the plan. We do not issue new shares of common stock to settle stock awards. LTIP awards are considered vested at the end of each applicable performance period.

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The LTIP provides the recipient the right to earn performance shares or units, or phantom stock based on the level of achievement of performance goals as defined by us. Performance measures and a peer group of property and casualty companies to be used for comparison are determined by the ECDC. The performance measures for the 2015 , 2014 and 2013 awards were the reported growth in direct written premium and statutory combined ratio of the Exchange and its property and casualty subsidiaries and return on invested assets over a three -year performance period as compared to the results of the peer group over the same period. Because the award is based upon a comparison to results of a peer group over a three -year period, the award accrual is based upon estimates of probable results for the remaining performance period. This estimate is subject to variability if our results or the results of the peer group are substantially different than the results we project.

The fair value of LTIP awards is measured at each reporting date at the current share price of our Class A common stock. A liability is recorded and compensation expense is recognized ratably over the performance period.

At December 31, 2015 , the plan awards for the 2013-2015 performance period were fully vested. Distributions will be made in 2016 once peer group financial information becomes available at which time participants will elect the form of payment, either cash or stock. The estimated plan award based upon the peer group information as of September 30, 2015 is $13.5 million . At December 31, 2014 , the awards for the 2012-2014 period were fully vested. Participants had the option of receiving either cash or stock for the 2012-2014 award. The cash award of $8.2 million was paid in June 2015 and the stock award of 1,567 shares with an average share price of $81.04 and a market value of $0.1 million was delivered to plan participants in June 2015 . At December 31, 2013 , the awards, granted as stock, for the 2011-2013 performance period were fully vested. The average share price on the date the shares were delivered to plan participants for the 2011-2013 performance period was $75.36 . The plan award of 54,371 shares of Class A common stock with a market value of approximately $4.1 million was paid in June 2014 .

Earned compensation costs are allocated to related entities and reimbursed to us in cash once the payout is made. The total compensation cost charged to operations related to these LTIP awards was $13.4 million in 2015 , $12.5 million in 2014 , and $7.9 million in 2013 . The related tax benefits recognized in income were $4.7 million in 2015 , $4.4 million in 2014 , and $2.8 million in 2013 . The Exchange reimburses us for approximately 33% of the annual compensation cost of these plans, which represents the amount of compensation expense for our employees performing claims and life insurance functions.

At December 31, 2015 , there was $11.1 million of total unrecognized compensation cost for non-vested LTIP awards related to open performance periods. Unrecognized compensation is expected to be recognized over a period of two years.

Equity compensation plan

Effective April 17, 2013, our Board of Directors approved an equity compensation plan ("ECP") designed to reward key employees, as determined by the ECDC or the chief executive officer, who can have a significant impact on our long-term performance and to further align the interests of such employees with those of our shareholders. The ECP permits grants of restricted shares, restricted share units and other share based awards, to be satisfied with shares of our Class A common stock or cash. The ECDC determines the form of the award to be granted at the beginning of each performance period. The number of shares of the Company's Class A common stock authorized for grant under the ECP is 100,000 shares, with no one person able to receive more than 5,000 shares in a calendar year. Share awards are settled through the repurchase of our Class A common stock on the open market. We do not issue new shares of common stock to satisfy plan awards.

Restricted share awards may be entitled to receive dividends payable during the performance period, or, if subject to performance goals, to receive dividend equivalents payable upon vesting. Dividend equivalents may provide for the crediting of interest or hypothetical reinvestment experience payable after expiration of the performance period.

Vesting conditions are determined at the time the award is granted and may include continuation of employment for a specific period, satisfaction of performance goals and the defined performance period, and the satisfaction of any other terms and conditions as determined to be appropriate. The plan is to remain in effect until December 31, 2022, unless earlier amended or terminated by our Board of Directors. The total number of restricted stock units granted under the plan was 5,500 and 8,750 in 2015 and 2014 , respectively. There were no awards granted during 2013 . The total compensation charged to operations related to these ECP awards was $0.4 million and $0.3 million in 2015 and 2014 , respectively. The Exchange reimburses us for approximately 31% of the annual compensation cost of these plans, which represents the amount compensation expense for our employees performing claims functions. Unrecognized compensation expense of $0.7 million is expected to be recognized over a period of three years.

Deferred compensation plans

Our deferred compensation plans are arrangements for our executive and senior vice presidents and outside directors that allows participants to elect to defer receipt of a portion of their compensation until a later date. Employer 401(k) matching contributions that are in excess of the annual contribution or compensation limits are also credited to the participant accounts

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for those who elected to defer receipt of some portion of their base salary. The deferred compensation plan for our outside directors allows participants to defer receipt of a portion of their director and meeting fees until a later date. Employees or outside directors participating in the respective plans select hypothetical investment funds for their deferrals which are credited with the hypothetical returns generated.

The following summarizes the incentive and deferred compensation plans for the years ended December 31 :



(in thousands)
	2015			2014			2013
Awards, employer match, and hypothetical earnings by plan:
Annual incentive plan awards	$	7,057		$	6,222		$	8,015
Long-term incentive plan awards	13,407			12,523			7,941
Deferred compensation plans, employer match, and hypothetical earnings	2,042			2,789			2,086
Total plan awards and earnings	22,506			21,534			18,042
Total plan awards paid	(14,317		)	(14,839		)	(10,602		)
Compensation deferred under the plans	996			527			146
Distributions from the deferred compensation plans	(1,688		)	(1,072		)	(823		)
Funding of rabbi trust for outside directors	(9,018		)	—			—
Gross incentive plan and deferred compensation liabilities at end of period	$	37,457		$	38,978		$	32,828

Stock compensation plan for outside directors

We have a stock compensation plan for our outside directors to further align the interests of directors with those of our shareholders that provides for a portion of the directors’ annual compensation in shares of our Class A common stock. Each director vests in the grant 25% every three months over the course of a year. Dividends paid by us are credited to each director’s account which vest immediately. We do not issue new shares of common stock to directors. Our practice is to repurchase shares of our Class A common stock in the open market to satisfy these awards.

Prior to October 2015 , these shares were accounted for as a liability which was equal to the total number of share credits earned at the current fair market value. Directors were paid shares of our Class A common stock equal to the number of share credits in their deferred stock account upon ending board service.

In October 2015 we established a rabbi trust to hold the shares earned by outside directors. The rabbi trust purchased 94,938 shares of our common stock on the open market at an average price of $94.99 for $9.0 million to satisfy the liability of the deferred compensation plan. The rabbi trust is classified and accounted for as equity in a manner consistent with the accounting for treasury stock. Dividends received on the shares in the rabbi trust will be used to purchase additional shares. The shares will be distributed to the outside director from the rabbi trust upon ending board service.

The annual charge related to these awards totaled $1.9 million , $2.2 million and $1.1 million in 2015 , 2014 and 2013 , respectively.

Note 10. Income Taxes

The provision for income taxes consists of the following for the years ended December 31:



(in thousands)
	2015			2014			2013
Current income tax expense	$	106,155		$	87,064		$	89,005
Deferred income tax benefit	(14,584		)	(3,305		)	(5,002		)
Income tax expense	$	91,571		$	83,759		$	84,003

A reconciliation of the provision for income taxes, with amounts determined by applying the statutory federal income tax rate to pre-tax income, is as follows for the years ended December 31:



(in thousands)
	2015			2014			2013
Income tax at statutory rate	$	93,187		$	87,943		$	86,315
Tax-exempt interest	(2,285		)	(2,589		)	(2,345		)
Other, net	669			(1,595		)	33
Income tax expense	$	91,571		$	83,759		$	84,003

Temporary differences and carry-forwards, which give rise to deferred tax assets and liabilities, are as follows for the years ended December 31:



(in thousands)
	2015		2014
Deferred tax assets:
Other employee benefits	$	19,945	$	17,846
Pension and other postretirement benefits	48,897		55,443
Allowance for management fee returned on cancelled policies	4,375		3,850
Other	546		44
Total deferred tax assets	73,763		77,183
Deferred tax liabilities:
Depreciation	17,843		17,290
Prepaid expenses	6,929		8,090
Limited partnerships	5,822		10,526
Unrealized gains on investments	1,360		3,691
Other	1,123		265
Total deferred tax liabilities	33,077		39,862
Net deferred tax asset	$	40,686	$	37,321

We had no valuation allowance recorded at December 31, 2015 or December 31, 2014 . The IRS has examined our tax filings through tax year ended 2009 and is currently examining our federal income tax returns for 2010, 2011 and 2012.

We are the attorney-in-fact for the subscribers (policyholders) at the Exchange, a reciprocal insurance exchange. In that capacity, we provide all services and facilities necessary to conduct the Exchange’s insurance business. Indemnity and the Exchange together constitute a single insurance business. Consequently, we are not subject to state corporate income or franchise taxes in states where the Exchange conducts its business and the states collect premium tax in lieu of corporate income or franchise tax, as a result of the Exchange’s remittance of premium taxes in those states.

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Note 11. Capital Stock

Class A and B common stock

We have two classes of common stock: Class A which has a dividend preference and Class B which has voting power and a conversion right. Each share of Class A common stock outstanding at the time of the declaration of any dividend upon shares of Class B common stock shall be entitled to a dividend payable at the same time, at the same record date, and in an amount at least equal to 2/3 of 1.0% of any dividend declared on each share of Class B common stock. We may declare and pay a dividend in respect to Class A common stock without any requirement that any dividend be declared and paid in respect to Class B common stock. Sole shareholder voting power is vested in Class B common stock except insofar as any applicable law shall permit Class A common shareholders to vote as a class in regards to any changes in the rights, preferences, and privileges attaching to Class A common stock. Holders of Class B shares may, at their option, convert their shares into Class A shares at the rate of 2,400 Class A shares per Class B share. There were no shares of Class B common stock converted into Class A common stock in 2015 , 2014 or 2013 .

Stock repurchases

Our Board of Directors authorized a stock repurchase program effective January 1, 1999 allowing the repurchase of our outstanding Class A nonvoting common stock. Treasury shares are recorded in the Statements of Financial Position at total cost based upon trade date. There were no shares repurchased under this program during 2015 . During 2014 , 272,057 shares were repurchased under the program at a total cost of $19.2 million . In October 2011 , our Board of Directors approved a continuation of the current stock repurchase program for a total of $150 million , with no time limitation. We had approximately $17.8 million of repurchase authority remaining under this program at December 31, 2015 , based upon trade date.

In 2015 , we purchased 111,535 shares of our outstanding Class A nonvoting common stock outside of our publicly announced share repurchase program at a total cost of $10.4 million . Of this amount, we purchased 1,567 shares of our outstanding Class A nonvoting common stock at a total cost of $0.1 million or $81.91 per share, for the vesting of stock-based awards in conjunction with our long-term incentive plan. These shares were delivered to plan participants in June 2015. We purchased 2,800 shares of our outstanding Class A nonvoting common stock at a total cost of $0.2 million , or $86.24 per share, for the vesting of stock-based awards for executive management. These shares were delivered to executive management in August 2015 . In November 2015, we purchased 12,230 shares of our outstanding Class A nonvoting common stock at a total cost of $1.1 million or $87.03 per share, for the vesting of stock-based awards for a former outside director. These shares were delivered in November 2015. In November and December 2015, we purchased 94,938 shares of our outstanding Class A nonvoting common stock at a total cost of $9.0 million or $94.99 per share, to fund the newly established rabbi trust for the outside director deferred compensation plan. See Note 9, "Incentive and Deferred Compensation Plans".

In 2014 , we purchased 64,398 shares of our outstanding Class A nonvoting common stock outside of our publicly announced share repurchase program at a total cost of $4.9 million . Of this amount, we purchased 2,800 shares of our outstanding Class A nonvoting common stock at a total cost of $0.2 million , or $71.93 per share, for the vesting of stock-based awards for executive management. These shares were delivered to executive management in January 2014 . In May 2014 , we purchased

7,227 shares of our outstanding Class A nonvoting common stock at a total cost of $0.6 million , or $76.45 per share, for the vesting of stock-based awards for a former outside director. These shares were delivered in May 2014 . In May and June 2014 , we purchased 54,371 shares of our outstanding Class A nonvoting common stock at a total cost of $4.1 million , or $76.21 per share, for the vesting of stock-based awards in conjunction with our long-term incentive plan. These shares were delivered to plan participants in June 2014 .

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Note 12. Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) by component, including amounts reclassified out of accumulated other comprehensive income (loss) and the related line item in the Statements of Operations where net income is presented, are as follows for the year ended December 31:



(in thousands)
	2015			2014			2013
Investment securities:
Accumulated other comprehensive income, beginning of the year	$	6,807		$	5,984		$	13,325
Other comprehensive (loss) income before reclassifications, net of tax benefit (expense) of $2,678, $(633), and $3,852, respectively	(4,973		)	1,175			(7,153		)
Realized investment gains, net of tax benefit of $172, $226 and $236, respectively	(320		)	(420		)	(440		)
Impairment losses, net of tax expense of $(545), $(37), and $(136), respectively	1,013			68			252
Other comprehensive (loss) income, net of tax	(4,280		)	823			(7,341		)
Accumulated other comprehensive income, end of the year	$	2,527		$	6,807		$	5,984

Pension and other postretirement plans:
Accumulated other comprehensive loss, beginning of the year	$	(124,508	)	$	(65,083	)	$	(146,516	)
Other comprehensive income (loss) before reclassifications, net of tax (expense) benefit of $(8,433), $34,378, and $(38,352), respectively	15,661			(63,845		)	71,226
Amortization of prior service costs, net of tax expense of $234, $248, and $278, respectively ⁽¹⁾	434			461			517
Amortization of net actuarial loss, net of tax expense of $4,858, $2,131, and $5,218, respectively ⁽¹⁾	9,022			3,959			9,690
Other comprehensive income (loss), net of tax	25,117			(59,425		)	81,433
Accumulated other comprehensive loss, end of the year	$	(99,391	)	$	(124,508	)	$	(65,083	)

Total
Accumulated other comprehensive loss, beginning of the year	$	(117,701	)	$	(59,099	)	$	(133,191	)
Investment securities	(4,280		)	823			(7,341		)
Pension and other postretirement plans	25,117			(59,425		)	81,433
Other comprehensive income, net of tax	20,837			(58,602		)	74,092
Accumulated other comprehensive loss, end of the year	$	(96,864	)	$	(117,701	)	$	(59,099	)


(1)	These components of accumulated other comprehensive income (loss) are included in the computation of net periodic pension cost. See Note 8, "Postretirement Benefits", for additional information.

Note 13. Related Party

Management fee

A management fee is charged to the Exchange for services we provide under subscriber’s agreements with policyholders at the Exchange. The fee is a percentage of direct and assumed premiums written by the Exchange. This percentage rate is adjusted periodically by our Board of Directors but cannot exceed 25% . The effective management fee rate charged the Exchange was 25% in 2015 , 2014 and 2013 . The Board of Directors elected to maintain the fee at 25% beginning January 1, 2016.

There is no provision in the subscriber's agreement for termination of our appointment as attorney-in-fact by the subscribers of the Exchange and the appointment is not affected by a policyholder’s disability or incapacity.

Insurance holding company system

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Expense allocations

All claims handling services for the Exchange are performed by our employees who are entirely dedicated to claims related activities. All costs associated with these employees are reimbursed to us from the Exchange’s revenues in accordance with the subscriber’s agreement. We are reimbursed by EFL from its revenues for all costs associated with employees who perform life insurance related operating activities for EFL in accordance with its service agreement with us. Common overhead expenses included in the expenses paid by us are allocated based upon appropriate utilization statistics (employee count, square footage, vehicle count, project hours, etc.) specifically measured to accomplish proportional allocations. Executive compensation is allocated based upon each executive’s primary responsibilities (management services, property and casualty claims operations, EFL operations, and investment operations). We believe the methods used to allocate common overhead expenses among the affiliated entities are reasonable. See also Note 8, "Postretirement Benefits" for a discussion of intercompany expense allocations under the postretirement benefit plans.

Payments on behalf of related entities

We make certain payments on behalf of the Exchange and EFL. These reimbursements are settled on a monthly basis. The amounts of these cash settlements were as follows for the years ended December 31:



(in thousands)	2015		2014
Erie Insurance Exchange	$	406,246	$	378,496
Erie Family Life Insurance	35,761		37,159
Total cash settlements	$	442,007	$	415,655

Office leases

We lease certain office space from the Exchange including the home office and three field office facilities. Rent expenses under these leases totaled $6.5 million , $7.8 million and $5.9 million in 2015 , 2014 and 2013 , respectively. We also have a lease commitment with EFL for a branch office until 2018. Annual rentals paid to EFL under this lease totaled $0.4 million in 2015 , 2014 and 2013 .

Notes receivable from EFL

We are due $25 million from EFL in the form of a surplus note that was issued in 2003. The note may be repaid only out of unassigned surplus of EFL. Both principal and interest payments are subject to prior approval by the Pennsylvania Insurance Commissioner. The note bears an annual interest rate of 6.7% and will be payable on demand on or after December 31, 2018, with interest scheduled to be paid semi-annually. EFL paid annual interest to us of $1.7 million in 2015 , 2014 and 2013 .

Note 14. Concentrations of Credit Risk

Financial instruments could potentially expose us to concentrations of credit risk, including unsecured receivables from the Exchange. A large majority of our revenue and receivables are from the Exchange and affiliates. See also Note 1, "Nature of Operations". Management fee amounts and other reimbursements due from the Exchange and affiliates were $348.1 million and $335.2 million at December 31, 2015 and 2014 , respectively.

Note 15. Commitments and Contingencies

We have contractual commitments to invest up to $19.1 million related to our limited partnership investments at December 31, 2015 . These commitments are split between private equity securities of $7.3 million , mezzanine debt securities of $8.2 million , and real estate activities of $3.6 million . These commitments will be funded as required by the limited partnership agreements.

We are involved in litigation arising in the ordinary course of conducting business. In accordance with current accounting standards for loss contingencies and based upon information currently known to us, we establish reserves for litigation when it is probable that a loss associated with a claim or proceeding has been incurred and the amount of the loss or range of loss can be reasonably estimated. When no amount within the range of loss is a better estimate than any other amount, we accrue the minimum amount of the estimable loss. To the extent that such litigation against us may have an exposure to a loss in excess of the amount we have accrued, we believe that such excess would not be material to our financial condition, results of operations, or cash flows. Legal fees are expensed as incurred. We believe that our accruals for legal proceedings are appropriate and, individually and in the aggregate, are not expected to be material to our financial condition, operations, or cash flows.

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We review all litigation on an ongoing basis when making accrual and disclosure decisions. For certain legal proceedings, we cannot reasonably estimate losses or a range of loss, if any, particularly for proceedings that are in their early stages of development or where the plaintiffs seek indeterminate damages. Various factors, including, but not limited to, the outcome of potentially lengthy discovery and the resolution of important factual questions, may need to be determined before probability can be established or before a loss or range of loss can be reasonably estimated. If the loss contingency in question is not both probable and reasonably estimable, we do not establish an accrual and the matter will continue to be monitored for any developments that would make the loss contingency both probable and reasonably estimable. In the event that a legal proceeding results in a substantial judgment against, or settlement by, us, there can be no assurance that any resulting liability or financial commitment would not have a material adverse effect on our financial condition, results of operations, or cash flows.

Note 16. Supplementary Data on Cash Flows

A reconciliation of net income to net cash provided by operating activities as presented in the Statements of Cash Flows is as follows for the years ended December 31:



(in thousands)
	2015			2014			2013
Cash flows from operating activities:
Net income	$	174,678		$	167,505		$	162,611
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	16,461			15,656			14,998
Deferred income tax benefit	(14,584		)	(3,305		)	(5,002		)
Realized losses (gains) and impairments on investments	1,066			(952		)	(557		)
Equity in earnings of limited partnerships	(16,983		)	(10,929		)	(21,694		)
Net amortization of bond premium	8,160			7,225			6,864
(Decrease) increase in deferred compensation	(1,526		)	6,149			6,762
Limited partnership distributions	14,112			15,327			27,050
Increase in receivables from affiliates	(12,835		)	(34,778		)	(19,655		)
Decrease (increase) in accrued investment income	47			(915		)	(374		)
(Increase) decrease in federal income taxes recoverable	(499		)	(8,421		)	2,812
Decrease in prepaid pension	20,307			557			17,842
Decrease (increase) in prepaid expenses and other assets	1,193			(1,747		)	(5,831		)
Increase in accounts payable and accrued expenses	3,633			1,753			4,910
Increase in commissions payable	5,624			20,596			10,508
Increase in accrued agent bonuses	18,524			12,292			16,764
Net cash provided by operating activities	$	217,378		$	186,013		$	218,008

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Note 17. Quarterly Results of Operations (unaudited)



	Year ended December 31, 2015
(in thousands, except per share data)	First quarter		Second quarter		Third quarter		Fourth quarter		Year
Operating revenue	$	350,831	$	401,660	$	396,637	$	356,380	$	1,505,508
Operating expenses	298,401		331,677		328,348		314,541		1,272,967
Investment income	6,539		15,705		7,220		4,244		33,708
Income before income taxes	58,969		85,688		75,509		46,083		266,249
Net income	$	38,833	$	56,150	$	49,562	$	30,133	$	174,678

Earnings per share ⁽¹⁾
Net income per share
Class A common stock – basic	$	0.83	$	1.21	$	1.06	$	0.65	$	3.75
Class A common stock – diluted	$	0.74	$	1.07	$	0.94	$	0.57	$	3.33
Class B common stock – basic	$	125	$	181	$	160	$	97	$	563
Class B common stock – diluted	$	125	$	180	$	159	$	97	$	562


( 1)	The cumulative sum of quarterly basic and diluted net income per share amounts may not equal total basic and diluted net income per share for the year due to differences in weighted average shares and equivalent shares outstanding for each of the periods presented.



	Year ended December 31, 2014
(in thousands, except per share data)	First quarter		Second quarter		Third quarter		Fourth quarter		Year
Operating revenue	$	326,247	$	373,978	$	369,638	$	337,256	$	1,407,119
Operating expenses	267,819		306,060		308,550		301,843		1,184,272
Investment income	11,599		6,872		7,604		2,342		28,417
Income before income taxes	70,027		74,790		68,692		37,755		$	251,264
Net income	$	46,262	$	49,047	$	46,900	$	25,296	$	167,505

Earnings per share ⁽¹⁾
Net income per share
Class A common stock – basic	$	0.99	$	1.05	$	1.01	$	0.54	$	3.59
Class A common stock – diluted	$	0.88	$	0.94	$	0.90	$	0.48	$	3.18
Class B common stock – basic	$	149	$	158	$	151	$	81	$	539
Class B common stock – diluted	$	149	$	158	$	151	$	81	$	538


( 1)	The cumulative sum of quarterly basic and diluted net income per share amounts may not equal total basic and diluted net income per share for the year due to differences in weighted average shares and equivalent shares outstanding for each of the periods presented.

Note 18. Subsequent Events

No items were identified in the period subsequent to the financial statement date that required adjustment or disclosure.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosures.

As required by the Securities and Exchange Commission Rule 13a-15(e), we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2015 . Based upon the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There has been no change in our internal controls over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect our internal controls over financial reporting. Our process for evaluating controls and procedures is continuous and encompasses constant improvement of the design and effectiveness of established controls and procedures.

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting of Erie Indemnity Company, as defined in Rules 13a-15(f) under the Exchange Act. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the Erie Indemnity Company’s internal control over financial reporting based upon the framework in the Internal Control-Integrated Framework issued in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission. Based upon our evaluation under the framework in the Internal Control-Integrated Framework issued in 2013, management has concluded that Erie Indemnity Company’s internal control over financial reporting was effective as of December 31, 2015 .



/s/ Terrence W. Cavanaugh	/s/ Gregory J. Gutting	/s/ Julie M. Pelkowski
Terrence W. Cavanaugh	Gregory J. Gutting	Julie M. Pelkowski
President and	Interim Executive Vice President	Interim Vice President
Chief Executive Officer	and Chief Financial Officer	and Controller
February 25, 2016	February 25, 2016	February 25, 2016

Our independent auditor, Ernst & Young LLP, a registered public accounting firm, has issued an attestation report on our internal control over financial reporting. This report appears on the following page.

ITEM 9B. OTHER INFORMATION

There was no additional information in the fourth quarter of 2015 that has not already been filed in a Form 8-K.

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of

Erie Indemnity Company

We have audited Erie Indemnity Company’s internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). Erie Indemnity Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Erie Indemnity Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the statements of financial position of Erie Indemnity Company as of December 31, 2015 and 2014, and the related statements of operations, comprehensive income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2015 of Erie Indemnity Company and our report dated February 25, 2016 expressed an unqualified opinion thereon.

/s/ Ernst & Young

Philadelphia, PA

February 25, 2016

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information with respect to our outside directors, audit committee and audit committee financial experts and Section

16(a) beneficial ownership reporting compliance, is incorporated by reference to the information statement on Schedule 14(C) to be filed with the Securities and Exchange Commission no later than 120 days after December 31, 2015 .

We have adopted a Code of Conduct that applies to all of our outside directors, officers and employees. In addition to this, we have adopted a Code of Ethics for Senior Financial Officers that also applies to our Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and any other person performing similar functions. We have updated the Code of Conduct effective January 1, 2016 and have filed a copy as Exhibit 14.3 to this annual report on Form 10-K. We have previously filed a copy of the Code of Ethics for Senior Financial Officers as Exhibit 14.2 to the Registrant's Form 8-K as filed with the Securities and Exchange Commission on April 25, 2012. Our Code of Conduct and Code of Ethics for Senior Financial Officers are also available on our website at www.erieinsurance.com .

Executive Officers of the Registrant



Name	Age as of 12/31/2015	Principal Occupation and Positions for Past Five Years

President & Chief Executive Officer:
Terrence W. Cavanaugh	62	President and Chief Executive Officer of Erie Indemnity Company since July 29, 2008; Director, Erie Indemnity Company, Erie Family Life Insurance Company ("EFL"), Erie Insurance Company ("EIC"), Flagship City Insurance Company ("Flagship"), Erie Insurance Company of New York ("ENY") and Erie Insurance Property and Casualty Company ("EPC").
Executive Vice Presidents:
Gregory J. Gutting	52	Interim Executive Vice President and Chief Financial Officer since October 12, 2015; Senior Vice President and Controller since March 2009; Director, EFL, EIC, Flagship, ENY and EPC.

George D. Dufala	44	Executive Vice President – Services since September 1, 2010; Director, EFL, EIC, Flagship, ENY and EPC.

Robert C. Ingram, III	57	Executive Vice President and Chief Information Officer since August 13, 2012; Senior Vice President and Chief Information Officer (for Commercial Lines, Hartford Investment Management Company and Enterprise Risk Management), The Hartford Financial Services Group, February 2011 through August 2012; Senior Vice President and Chief Information Officer, Commercial and Consumer Markets, The Hartford Financial Services Group, August 2009 through February 2011; Director, EFL, EIC, Flagship, ENY and EPC.

John F. Kearns	56	Executive Vice President – Sales & Marketing since September 1, 2010; Director, EFL, EIC, Flagship, ENY and EPC.

Sean J. McLaughlin	60	Executive Vice President, Secretary and General Counsel since August 26, 2013; Chief Judge, United States District Court for the Western District of Pennsylvania, April 2013 through August 2013; United States District Judge for the Western District of Pennsylvania, October 1994 through April 2013; Director, EFL, EIC, Flagship, ENY and EPC.

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ITEM 11. EXECUTIVE COMPENSATION

The information required by this item with respect to executive compensation is incorporated by reference to the information statement on Schedule 14(C) to be filed with the Securities and Exchange Commission no later than 120 days after December 31, 2015 .

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information with respect to security ownership of certain beneficial owners and management and securities authorized for issuance under equity compensation plans, is incorporated by reference to the information statement on Schedule 14(C) to be filed with the Securities and Exchange Commission no later than 120 days after December 31, 2015 .

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information with respect to certain relationships with our outside directors is incorporated by reference to the information statement on Schedule 14(C) to be filed with the Securities and Exchange Commission no later than 120 days after December 31, 2015 .

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this item is incorporated by reference to the information statement on Schedule 14(C) to be filed with the Securities and Exchange Commission no later than 120 days after December 31, 2015 .

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PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The following documents are filed as part of this report:

1. Financial Statements

Included in Item 8 "Financial Statements and Supplementary Data" contained in this report.

Erie Indemnity Company :


•	Report of Independent Registered Public Accounting Firm on the Effectiveness of Internal Control over Financial Reporting


•	Report of Independent Registered Public Accounting Firm on the Financial Statements


•	Statements of Operations for the three years ended December 31, 2015 , 2014 and 2013


•	Statements of Comprehensive Income for the three years ended December 31, 2015 , 2014 and 2013


•	Statements of Financial Position as of December 31, 2015 and 2014


•	Statements of Shareholders’ Equity for the three years ended December 31, 2015 , 2014 and 2013


•	Statements of Cash Flows for the three years ended December 31, 2015 , 2014 and 2013


•	Notes to Financial Statements

2. Financial Statement Schedules

All schedules are not required, not applicable, or the information is included in the financial statements or notes thereto.

Page



Exhibit Index				75

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



February 25, 2016	ERIE INDEMNITY COMPANY
	(Registrant)

By:	/s/ Terrence W. Cavanaugh
	Terrence W. Cavanaugh, President and CEO
	(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated.



February 25, 2016		/s/ Terrence W. Cavanaugh
		Terrence W. Cavanaugh, President and CEO
		(Principal Executive Officer)

		/s/ Gregory J. Gutting
		Gregory J. Gutting, Interim Executive Vice President and CFO
		(Principal Financial Officer)

		/s/ Julie M. Pelkowski
		Julie M. Pelkowski, Interim Vice President and Controller
		(Principal Accounting Officer)

Board of Directors:



/s/ J. Ralph Borneman, Jr.		/s/ Thomas W. Palmer
J. Ralph Borneman, Jr.		Thomas W. Palmer

/s/ Terrence W. Cavanaugh		/s/ Martin P. Sheffield
Terrence W. Cavanaugh		Martin P. Sheffield

/s/ Jonathan Hirt Hagen		/s/ Richard L. Stover
Jonathan Hirt Hagen		Richard L. Stover

/s/ Thomas B. Hagen		/s/ Elizabeth Hirt Vorsheck
Thomas B. Hagen, Chairman		Elizabeth Hirt Vorsheck

/s/ C. Scott Hartz		/s/ Robert C. Wilburn
C. Scott Hartz		Robert C. Wilburn

/s/ Claude C. Lilly, III
Claude C. Lilly, III

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EXHIBIT INDEX

(Pursuant to Item 601 of Regulation S-K)



Exhibit
Number		Description of Exhibit

3.1		Articles of Incorporation of Registrant. Such exhibit is incorporated by reference to the like numbered exhibit in the Registrant’s Form 10 Registration Statement Number 0-24000 filed with the Commission on May 2, 1994.

3.1A		Amendment to the Articles of Incorporation of Registrant effective May 2, 1996. Such exhibit is incorporated by reference to the like numbered exhibit in the Registrant’s Form 10-Q that was filed with the Commission on July 29, 2010.

3.1B		Amendment to the Articles of Incorporation of Registrant effective May 4, 2001. Such exhibit is incorporated by reference to the like numbered exhibit in the Registrant’s Form 10-Q that was filed with the Commission on July 29, 2010.

3.1C		Amendment to the Articles of Incorporation of Registrant effective May 10, 2007. Such exhibit is incorporated by reference to the like numbered exhibit in the Registrant’s Form 10-Q that was filed with the Commission on July 29, 2010.

3.7		Erie Indemnity Company Amended and Restated Bylaws effective May 5, 2009. Such exhibit is incorporated by reference to the like titled exhibit in the Registrant’s Form 8-K that was filed with the Commission on May 11, 2009.

3.8		Amended and Restated Articles of Incorporation of Registrant dated April 19, 2011. Such exhibit is incorporated by reference to the like titled exhibit in the Registrant’s Form 10-Q that was filed with the Commission on August 2, 2011.

10.12		Form of Subscriber’s Agreement whereby policyholders of Erie Insurance Exchange appoint Registrant as their Attorney-in-Fact. Such exhibit is incorporated by reference to the like titled but renumbered exhibit in the Registrant’s Form 10-Q that was filed with the Securities and Exchange Commission on November 6, 2002.

10.129		Lease Agreement between Erie Insurance Exchange and Erie Indemnity Company dated January 1, 2011. Such exhibit is incorporated by reference to the like titled exhibit in the Registrant’s Form 10-K that was filed with the Commission on February 24, 2011.

10.145		Erie Indemnity Company Equity Compensation Plan (incorporated by reference to Appendix A to the Registrant's Information Statement for the 2013 Annual Meeting of Shareholders filed with the Commission on March 18, 2013).

10.146		Amended and Restated Credit Agreement among JPMorgan Chase Bank, National Association, as Administrative Agent; the Lenders named therein; and Erie Indemnity Company, dated October 25, 2013. Such exhibit is incorporated by reference to the like titled exhibit in the Registrant's Form 8-K that was filed with the Commission on October 30, 2013.

10.147		Second Amended and Restated Credit Agreement among PNC Bank, National Association, as Administrative Agent; the Lenders named therein; and Erie Insurance Exchange, dated October 25, 2013. Such exhibit is incorporated by reference to the like titled exhibit in the Registrant's Form 8-K that was filed with the Commission on October 30, 2013.

10.152		Erie Indemnity Company Annual Incentive Plan (As Amended and Restated Effective as of January 1, 2014). Such exhibit is incorporated by reference to Appendix A to the Registrant's Information Statement for the 2014 Annual Meeting of Shareholders filed with the Commission on March 14, 2014.

10.153		Erie Indemnity Company Long-Term Incentive Plan (As Amended and Restated Effective as of January 1, 2014). Such exhibit is incorporated by reference to Appendix B to the Registrant's Information Statement for the 2014 Annual Meeting of Shareholders filed with the Commission on March 14, 2014.

10.154		First Amendment to Erie Indemnity Company Equity Compensation Plan effective January 1, 2014, dated March 10, 2014. Such exhibit is incorporated by reference to the like titled exhibit in the Registrant’s Form 10-Q that was filed with the Commission on May 1, 2014.

10.156		Form of Indemnification Agreement by and between Erie Indemnity Company and each Director and Executive Officer of Erie Indemnity Company. Such exhibit is incorporated by reference to the like titled exhibit in the Registrant’s Form 10-K that was filed with the Commission on February 26, 2009.

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Exhibit
Number		Description of Exhibit

10.157		First Amendment to Erie Indemnity Company Long-Term Incentive Plan (As Amended and Restated Effective as of January 1, 2014), dated March 25, 2015. Such exhibit is incorporated by reference to the like titled exhibit in the Registrant’s Form 10-Q that was filed with the Commission on April 30, 2015.

10.158*		Erie Indemnity Company Deferred Compensation Plan for Outside Directors (As Amended and Restated as of July 29, 2015), dated October 20, 2015.

10.159*		Erie Indemnity Company Deferred Stock Plan for Outside Directors (As of July 29, 2015), dated October 20, 2015.

10.160		First Amendment to Amended and Restated Credit Agreement among JPMorgan Chase Bank, National Association, as Administrative Agent; the Lenders named therein; and Erie Indemnity Company, dated October 28, 2015. Such exhibit is incorporated by reference to the like titled exhibit in the Registrant’s Form 10-Q that was filed with the Commission on October 29, 2015.

10.161		First Amendment to Second Amended and Restated Credit Agreement among PNC Bank, National Association, as Administrative Agent; the Lenders named therein; and Erie Insurance Exchange, dated October 28, 2015. Such exhibit is incorporated by reference to the like titled exhibit in the Registrant’s Form 10-Q that was filed with the Commission on October 29, 2015.

10.162*		Erie Insurance Group Retirement Plan for Employees (As Amended and Restated Effective December 31, 2014), dated December 18, 2015.

10.163*		Erie Insurance Group Employee Savings Plan (As Amended and Restated Effective as of January 1, 2015), dated December 18, 2015.

10.164		Agreement between Erie Indemnity Company and Marcia A. Dall, dated December 20, 2015. Such exhibit is incorporated by reference to the like titled exhibit in the Registrant's Form 8-K that was filed with the Commission on December 22, 2015.

14.2		Code of Ethics for Senior Financial Officers. Such exhibit is incorporated by reference to the like titled exhibit in the Registrant’s Form 8-K that was filed with the Commission on April 25, 2012.

14.3*		Code of Conduct, effective January 1, 2016.

23*		Consent of Independent Registered Public Accounting Firm.

31.1*		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32*		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*		XBRL Instance Document.

101.SCH*		XBRL Taxonomy Extension Schema Document.

101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB*		XBRL Taxonomy Extension Label Linkbase Document.

101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document.

* Filed herewith.

Exhibit 10.158

ERIE INDEMNITY COMPANY
DEFERRED COMPENSATION PLAN
FOR OUTSIDE DIRECTORS

(As Amended and Restated as of July 29, 2015)

BASIC PLAN DOCUMENT

APPENDIX A

APPENDIX B

ERIE INDEMNITY COMPANY
DEFERRED COMPENSATION PLAN
FOR OUTSIDE DIRECTORS

(As Amended and Restated as of July 29, 2015)

BASIC PLAN DOCUMENT

ARTICLE ONE

INTRODUCTION

This Erie Indemnity Company Deferred Compensation Plan for Outside Directors (the “Plan”) is an unfunded, non-qualified, deferred compensation arrangement created for outside directors of Erie Indemnity Company (the “Company”). It is intended that the Plan will aid in retaining and attracting outside directors of exceptional ability by providing such directors with a vehicle for deferring director’s compensation until retirement or other separation from service from the Board of Directors of Erie Indemnity Company.

The Plan was effective as of May 1, 1997 and has been amended thereafter. Effective as soon as practical following July 29, 2015, the Plan is being divided into its two principal components, a voluntary deferred compensation component, governed by the terms of the documents comprising the Plan, and a deferred stock component, governed by the terms of the documents comprising the Erie Indemnity Company Deferred Stock Plan for Outside Directors (the “Deferred Stock Plan”). This amendment and restatement of the Plan shall constitute an amendment, restatement and continuation of the voluntary deferred compensation component of the Plan and is generally effective as of July 29, 2015. Events occurring before the applicable effective date of any provision of this amendment and restatement shall be governed by the applicable provision of the Plan as in effect on the date of the event.

This amendment and restatement of the Plan is comprised of three primary documents: (i) this Basic Plan Document, which principally addresses definitions and procedural matters that apply to all amounts that accumulate under the Plan, (ii) Appendix A, which incorporates provisions of the Plan relating to Plan accounts that were earned and vested on or before December 31, 2004, and (iii) Appendix B, which incorporates provisions of the Plan relating to those portions of Plan accounts that are earned or become vested on or after January 1, 2005.

ARTICLE TWO

DEFINITIONS

When the following words or phrases are used in the Plan document with initial capital letters, they shall have the following meanings, except where otherwise modified in Appendix A or Appendix B:


2.1	“ Administrator ” shall mean the person or committee, appointed by the Board, who shall be responsible for the administrative functions assigned to it under the Plan.

2.2

“ Beneficiary ” shall mean the individual(s) or trust(s) selected by a Participant to receive payment of amounts credited under the Plan in the event of the Participant’s death, as evidenced by the most recent, properly completed and executed, Beneficiary designation which the Participant has delivered to the Administrator prior to the Participant’s death. A Participant may make a single Beneficiary designation to govern the distribution of the Participant’s entire interest under the Plan (including the total balance of all accounts maintained under both Appendix A and Appendix B) that shall apply in the event of the Participant’s death before commencement of payments. Furthermore, the Participant may make a single, but separate, Beneficiary designation to govern the distribution of any remaining interest under the Plan (including the total balance of all accounts maintained under both Appendix A and Appendix B) that shall apply in the event of the Participant’s death after payments have commenced but before all scheduled payments have been made. A Participant may change either or both of these Beneficiary designations at any time by delivering a new designation of Beneficiary to the Administrator on such form or forms as may be satisfactory to the Administrator. A new designation of Beneficiary shall be effective upon receipt by the Administrator of the completed and executed designation. As of such effective date, the new designation shall divest any Beneficiary named in a prior designation in that interest indicated in the prior designation. If no effective Beneficiary designation is in effect on the death of the Participant, or if all designated Beneficiaries have predeceased the Participant, any payments to be made under the Plan on account of the Participant’s death shall be paid to the estate of the Participant.

The Beneficiary election, or default election, in effect under the Plan as of July 28, 2015 shall remain in effect on July 29, 2015 under the Plan and under the Deferred Stock Plan until otherwise changed pursuant to the terms of the Plan and/or the terms of the Deferred Stock Plan.


2.3	“ Board ” shall mean the Board of Directors of the Erie Indemnity Company.


2.4	“ Board Compensation ” shall mean the remuneration, expressed in terms of a cash amount, earned by a Director for service on the Board including, without limitation, a retainer, meeting fees and chairperson’s fees.


2.5	“ Code ” shall mean the Internal Revenue Code of 1986, as amended.


2.6	“ Committee ” shall mean the Executive Compensation and Development Committee of the Board or its successor, as designated by the Board.


2.7	“ Company ” shall mean the Erie Indemnity Company, a Pennsylvania business corporation.


2.8	“ Deferred Compensation Account ” shall mean such account as defined in Appendix A and/or Appendix B, as applicable. A Participant’s Deferred Compensation Account shall at all times be 100% vested and nonforfeitable.


2.9	“Deferred Stock Plan” shall mean the Erie Indemnity Company Deferred Stock Plan for Outside Directors, as amended and in effect on the date of determination.


2.10	“ Director ” shall mean a member of the Board.


2.11	“ Employee ” shall mean a person engaged in performing services for the Company, or its affiliates or subsidiaries, as an exempt or non-exempt full-time employee, as defined by the Company’s Corporate Personnel Manual, as in existence at the time of determination, and not as an independent contractor.


2.12	“ Outside Director ” shall mean a Director who is not an Employee or officer of the Company, its affiliates or subsidiaries.


2.13	“ Participant” shall mean each Outside Director who participates in the Plan in accordance with the terms and conditions of the Plan.


2.14	“ Plan” shall mean the Erie Indemnity Company Deferred Compensation Plan for Outside Directors, as set forth in the provisions of the Basic Plan Document, Appendix A, Appendix B, and including any amendments, appendices and exhibits to these documents.


2.15	“ Retirement Plan Transfer Account ” shall mean such account as defined in Appendix B. Effective on and after December 6, 2011, each Participant’s Retirement Plan Transfer Account shall be 100% vested and nonforfeitable.


2.16	“ Total Deferred Cash Account” shall mean such account as defined in Appendix B.

ARTICLE THREE

ADMINISTRATION


3.1.	GENERAL ADMINISTRATION

The Administrator shall be charged with the administration of the Plan. The Administrator shall have all such powers as may be necessary to discharge its duties relative to the administration of the Plan, including by way of illustration and not limitation, discretionary authority to interpret and construe the Plan, to determine and decide all questions of fact, and all disputes arising under the Plan including, but not limited to, the validity of any election or designation as may be necessary or appropriate hereunder and the right of any Participant or Beneficiary to receive payment of all or any portion of amounts represented by a Deferred Compensation Account and/or Retirement Plan Transfer Account maintained hereunder. The Administrator shall have all power necessary to adopt, alter and repeal such administrative rules, regulations and practices governing the operation of the Plan as it, in its sole discretion, may from time to time deem advisable and shall have the power to make equitable adjustments to remedy any mistakes or errors in the administration of the Plan. The Administrator shall not be liable to any person for any action taken or omitted in connection with the interpretation and administration of the Plan unless attributable to willful misconduct. The Administrator shall be entitled to conclusively rely

upon all tables, valuations, certificates, opinions and reports furnished by any actuary, accountant, controller, counsel or other person employed or engaged by the Company with respect to the Plan. Any individual serving as Administrator shall not participate in any action or determination regarding solely his own benefits payable hereunder. Decisions of the Administrator made in good faith shall be final, conclusive and binding upon all parties. Until modified by the Administrator, the claims and review procedures set forth in Sections 3.2 and 3.3 shall be the exclusive procedures for the disposition of claims for benefits arising under the Plan.


3.2.	CLAIMS PROCEDURE

Except as otherwise provided in the Plan, payment to a Participant or Beneficiary of any amount determined under the Plan shall be made by the Company at the time and in the method of payment elected by the Participant under the terms of the Plan. If the Administrator denies, in whole or in part, a claim for benefits filed by any person (hereinafter referred to as a “Claimant”), the Administrator shall transmit a written notice setting forth (i) the specific reasons for the denial of the claim, (ii) references to the specific provisions of the Plan on which the denial is based, (iii) a description of any additional material or information that is needed to perfect the claim and why such material or information is necessary, and (iv) further steps which the Claimant can take in order to have his claim reviewed (including a statement that the Claimant or his duly authorized representative may review the Plan document and submit issues and comments regarding the claim to the Administrator). In addition, the written notice shall contain the date on which the notice was sent and a statement advising the Claimant that, within ninety (90) days of the date on which such notice is received, he may request a review of the Administrator’s decision.


3.3.	CLAIMS REVIEW

Within ninety (90) days of the date on which the notice of denial of claim is received by the Claimant, the Claimant or his authorized representative may request that the claim denial be reviewed by filing with the Administrator a written request for review, which request shall contain the following information:


a)	The date on which the notice of denial of claim was received by the Claimant;


b)	The date on which the Claimant’s request was filed with the Administrator; provided, however, that the date on which the Claimant’s request for review was in fact filed with the Administrator shall control in the event that the date of the actual filing is later than the date stated by the Claimant pursuant to this paragraph (b);


c)	The specific portions of the claim denial which the Claimant requests the Administrator to review;


d)	A statement by the Claimant setting forth the basis upon which he believes the Administrator should reverse its previous denial of his

claim for benefits and accept his claim as made;


e)	Whether the Claimant desires a hearing on the claim; and


f)	Any written material (included as exhibits) which the Claimant desires the Administrator to examine in its consideration of his position as stated pursuant to paragraph (d) above.

If the Claimant has requested a hearing on the claim, such hearing shall be held within thirty (30) days after the date determined pursuant to paragraph (b) above. Within sixty (60) days of the date determined pursuant to paragraph (b) above (or, if special circumstances or the request for a hearing require an extension of time, within ninety (90) days of such date), the Administrator shall conduct a full and fair review of the decision denying the Claimant’s claim for benefits and shall deliver its decision to the Claimant in writing. Such written decision shall set forth the specific reasons for the decision, including references to the specific provisions of this Plan which were relied upon. The decision will be final and binding on all persons concerned.

ARTICLE FOUR

AMENDMENT AND TERMINATION

The Company expects to continue the Plan indefinitely, but reserves the right to amend or terminate the Plan at any time, if, in its sole judgment, such amendment or termination is necessary or desirable. Any such amendment or termination shall be made pursuant to a resolution of the Board and shall be effective as of the date specified in such resolution. Without consent of the Participant, no amendment or termination of the Plan shall reduce the balance of a Participant’s Deferred Compensation Account or Retirement Plan Transfer Account at the time of amendment or termination. Except as may otherwise be provided by the Company, or as provided in Appendix B, in the event of a termination of the Plan, the Company (or any transferee, or successor entity of the Company) shall be obligated to pay amounts represented by Total Deferred Cash Account balances to Participants and Beneficiaries at such time or times and in such forms as provided under the terms of the Plan. Nothing herein shall limit the Company’s reserved right to terminate and liquidate the Plan in accordance with generally applicable guidance prescribed by the Commissioner of Internal Revenue and published in the Internal Revenue Bulletin.

ARTICLE FIVE

GENERAL PROVISIONS


5.1.	GENERAL CONTRACTUAL OBLIGATION

It is the intent of this Plan, and each Participant understands, that no trust has been created for his or her benefit in connection with this Plan and that eligibility and participation in this Plan does not grant any Participant or Beneficiary any interest in any asset of the Company or any affiliated

company. The Company’s obligation to pay to the Participant or Beneficiary the amounts credited hereunder is a general contract obligation and shall be satisfied solely from the general assets of the Company. Nothing contained in the Plan shall constitute a guaranty by the Company, any affiliated company, or any other entity or person that the assets of the Company will be sufficient to pay amounts determined in accordance with the Plan. The obligation of the Company under the Plan shall be merely that of an unfunded and unsecured promise of the Company to pay amounts in the future. In each case in which amounts represented by the balances credited to a Participant’s Deferred Compensation Account and Retirement Plan Transfer Account have been distributed to the Participant, Beneficiary, or other person entitled to receipt thereof and which purports to cover in full the benefits hereunder, such Participant, Beneficiary or other person shall have no further right or interest in the other assets of the Company on account of participation in the Plan. Notwithstanding a Participant’s entitlement to amounts credited under the terms of the Plan, the status of the Participant, or any person claiming by or through the Participant, is that of an unsecured general creditor to the extent of his entire interest under the Plan as herein described.


5.2.	SPENDTHRIFT PROVISIONS

The interest of a Participant or Beneficiary under the Plan shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or charge, either voluntarily or involuntarily, prior to the Participant’s or Beneficiary’s actual receipt of amounts represented by the balances credited under the Plan on his behalf; any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge any such interest prior to such receipt shall be void. Amounts credited hereunder and not paid to a Participant or Beneficiary shall not be subject to garnishment, attachment or other legal or equitable process nor shall they be an asset in bankruptcy. Notwithstanding the preceding sentence, no amount shall be payable from this Plan to a Participant, or any person claiming by or through a Participant, unless and until any and all amounts representing debts or other obligations owed to the Company or any affiliated company by the Participant have been fully paid and satisfied; provided, however, that any such offset, as applicable to a person’s Plan interest under Appendix B, shall not exceed such offset as is permitted under Section 409A of the Code. Neither the Company nor any affiliate or subsidiary of the Company shall be liable in any manner for or subject to the debts, contracts, liabilities, torts or engagements of any person who has a Total Deferred Cash Account maintained on his behalf under the Plan.


5.3.	NO SPOUSAL RIGHTS

Except as required by law or specifically provided by the Plan, no spouse or surviving spouse of a Participant and no person designated to be a Beneficiary shall have any rights or interest in the accounts accumulated under the Plan including, but not limited to, the right to be the sole Beneficiary or to consent to the Participant’s designation of Beneficiary.


5.4.	INCAPACITY OF RECIPIENT

In the event a Participant or Beneficiary is declared incompetent and a guardian, conservator or other person legally charged with the care of his person or of his estate is appointed, any Total

Deferred Cash Account under the Plan to which such Participant, or Beneficiary is entitled shall be paid to such guardian, conservator or other person legally charged with the care of his person or his estate. Except as provided in the preceding sentence, when the Administrator, in its sole discretion, determines that a Participant or Beneficiary is unable to manage his financial affairs, the Administrator may direct the Company to make distribution(s) from the Total Deferred Cash Account maintained on behalf of such Participant or Beneficiary to any one or more of the spouse, lineal ascendants or descendants or other closest living relatives of such Participant or Beneficiary who demonstrates to the satisfaction of the Administrator the propriety of making such distribution(s). Any payment so made shall not exceed such amount as is permitted under Section 409A of the Code and shall be in complete discharge of any liability of the Company and Administrator under the Plan for such payment. The Administrator shall not be required to see to the application of any such distribution made as provided above.


5.5.	INFORMATION FURNISHED BY PARTICIPANTS AND BENEFICIARIES

Neither the Company nor the Administrator shall be liable or responsible for any error in the computation of a Participant’s or Beneficiary’s interest under the Plan resulting from any misstatement of fact made by the Participant or Beneficiary, directly or indirectly, to the Company or to the Administrator and used by it in determining the Participant’s or Beneficiary’s Plan interest. Neither the Company nor the Administrator shall be obligated or required to increase the Plan interest of any such Participant or Beneficiary which, on discovery of the misstatement, is found to be understated as a result of such misstatement. However, the Plan interest of any Participant or Beneficiary which is overstated by reason of any such misstatement shall be reduced to the amount appropriate in view of accurate facts.


5.6.	OVERPAYMENTS

If a payment or a series of payments made from the Plan is found to be greater than the payment(s) to which a Participant or Beneficiary is entitled due to factual errors, mathematical errors or otherwise, the Administrator may, in its discretion and to the extent consistent with Section 409A of the Code, suspend or reduce future payments to such Participant or Beneficiary or exercise such legal or equitable remedies as it deems appropriate to correct the overpayment.


5.7.	UNCLAIMED BENEFIT

In the event that any amount determined to be payable to a Participant or Beneficiary hereunder remains unclaimed by such Participant or Beneficiary for a period of three years after the whereabouts or existence of such person was last known to the Administrator, the Administrator may direct that all rights of such person to such amounts be terminated absolutely; provided, however, that if such Participant or Beneficiary subsequently appears and files a claim for payment in accordance with Article Three and such claim is fully or partially successful, the liability under the Plan for an amount equal to the successful claim shall be reinstated.


5.8.	ELECTIONS, APPLICATIONS, NOTICES

Every designation, direction, election, revocation or notice authorized or required under the Plan which is to be delivered to the Company or the Administrator shall be deemed delivered to the

Company or the Administrator as the case may be: (a) on the date it is personally delivered to the Administrator at the Company’s executive offices at 100 Erie Insurance Place, Erie, Pennsylvania 16530 or (b) three business days after it is sent by registered or certified mail, postage prepaid, addressed to the Administrator at the offices indicated above. Every such item which is to be delivered to a person or entity designated by the Administrator to perform recordkeeping and other administrative services on behalf of the Plan shall be deemed delivered to such person or entity when it is actually received (either physically or through interactive electronic communication) by such person or entity. Every designation, direction, election, revocation or notice authorized or required which is to be delivered to a Participant or Beneficiary shall be deemed delivered to a Participant or Beneficiary: (a) on the date it is personally delivered to such individual (either physically or through interactive electronic communication), or (b) three business days after it is sent by registered or certified mail, postage prepaid, addressed to such individual at the last address shown for him on the Company’s records. Any notice required under the Plan may be waived by the person entitled thereto.


5.9.	COUNTERPARTS

This Plan may be executed in any number of counterparts, each of which shall be considered as an original, and no other counterparts need be produced.


5.10.	SEVERABILITY

In the event any provision of this Plan shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining provisions of the Plan. This Plan shall be construed and enforced as if such illegal or invalid provision had never been contained herein.


5.11.	GOVERNING LAW

The Plan is established under and will be construed according to the laws of the Commonwealth of Pennsylvania.


5.12.	HEADINGS

The headings of Sections of this Plan are for convenience of reference only and shall have no substantive effect on the provisions of this Plan.

5.13. CONSTRUCTION

The masculine gender, where appearing in this Plan, shall be deemed to also include the feminine gender. The singular shall also include the plural, where appropriate.

Executed at Erie, Pennsylvania this 20 ^th day of October, 2015.

ERIE INDEMNITY COMPANY

By: /s/ Sean J. McLaughlin

Title: EVP, Secretary and General Counsel

ATTEST:

/s/ Brian W. Bolash

Assistant Secretary

APPENDIX A

ERIE INDEMNITY COMPANY
DEFERRED COMPENSATION PLAN
FOR OUTSIDE DIRECTORS

Accounts Earned and Vested On or Before December 31, 2004

ARTICLE ONE

INTRODUCTION

This Appendix A incorporates the provisions of the Plan as it relates to Deferred Compensation Accounts that were earned and vested on or before December 31, 2004, without material modifications to the terms of the Plan after October 3, 2004. The provisions of this Appendix A shall apply in determining the rights and features of such accounts.

ARTICLE TWO

DEFINITIONS

When the following words or phrases are used in this Appendix A with initial capital letters, they shall have the following meanings:


2.1	“ Administrator” is a term that is defined in Article Two of the Basic Plan Document.


2.2	“ Amendment Form ” shall mean the Amendment Form described in Section 6.3.


2.3	“ Beneficiary ” is a term that is defined in Article Two of the Basic Plan Document.


2.4	“ Board ” is a term that is defined in Article Two of the Basic Plan Document.


2.5	“ Board Compensation ” is a term that is defined in Article Two of the Basic Plan Document.


2.6	“ Committee ” is a term that is defined in Article Two of the Basic Plan Document.


2.7	“ Company ” is a term that is defined in Article Two of the Basic Plan Document.


2.8	“ Deferred Compensation Account ” shall mean the bookkeeping account described in Section 4.2.


2.9	“ Deferred Stock Plan ” is a term that is defined in Article Two of the Basic Plan Document.


2.10	“ Director ” is a term that is defined in Article Two of the Basic Plan Document.


2.11	“ Election Form ” shall mean the Participation Election Form described in Section 3.2.


2.12	“ Employee ” is a term that is defined in Article Two of the Basic Plan Document.


2.13	“ Hypothetical Interest ” shall mean the gains and losses credited to a Participant’s Deferred Compensation Account and/or Retirement Plan Transfer Account in accordance with Article Five.


2.14	“ Outside Director ” is a term that is defined in Article Two of the Basic Plan Document.

2.15

“ Participant ” shall mean each Outside Director who participated in the Plan in accordance with the terms and conditions of this Appendix A. Participant shall also include a former Outside Director who had become a Participant during his period of active Board service and on whose behalf the Administrator is maintaining a Deferred Compensation Account pursuant to the terms of this Appendix A.


2.16	“ Plan ” is a term that is defined in Article Two of the Basic Plan Document.


2.17	“ Valuation Date ” shall mean the close of business as of each business day.

ARTICLE THREE

PARTICIPATION

3.1 ELIGIBILITY AND PARTICIPATION

Each Outside Director serving on the Board before 2005 was eligible to participate in the Board Compensation deferral provisions of the Plan and may have chosen to defer Board Compensation in accordance with the provisions of Section 4.1.

3.2 PARTICIPATION ELECTION FORM

An Outside Director delivered to the Administrator the following elections, to the extent applicable to such Director, made on such Election Form or Forms as the Administrator, in its discretion, prescribed:


a)	The method by which amounts credited to the Participant’s Deferred Compensation Account are to be paid;


b)	The date, following the Participant’s official termination of service on the Board, as of which payment of amounts credited to the Participant’s Deferred Compensation Account is to occur (in the event of a lump sum distribution) or commence (in the event of distribution in installments); and


c)	The Beneficiary to whom payments of amounts credited to the Participant’s Deferred Compensation Account will be made in the event of the Participant’s death.

In addition, an Outside Director on whose behalf a Deferred Compensation Account is being maintained also completed and delivered to the Administrator the investment designation described in Section 5.2.

The elections under paragraphs (a) and (b) shall be irrevocable except as provided in Section 6.3. The election under paragraph (c) may be changed as provided in Section 2.2 of the Basic Plan Document.

The elections under Article Three and/or Article Eight of Appendix A, as in effect as of July 28, 2015, shall remain in effect on July 29, 2015 under this Appendix A and under Appendix A of the Deferred Stock Plan until otherwise changed pursuant to the terms of this Appendix A and/or the terms of Appendix A of the Deferred Stock Plan.

ARTICLE FOUR

BOARD COMPENSATION DEFERRED

4.1 DEFERRED COMPENSATION ELECTION

A Participant who is an Outside Director may have elected to defer Board Compensation for a given calendar year beginning before January 1, 2005 by delivering a properly completed and executed Election Form to the Administrator by the end of the calendar year which precedes the given calendar year in which the election was to be effective. Such Election Form stated, in 10% increments from 10% to 100%, the percentage of Board Compensation to be deferred. Such deferral election was irrevocable as of the January 1 of the calendar year to which the election applied. Such deferral election terminated as to all Board Compensation earned after such calendar year.

4.2 DEFERRED COMPENSATION ACCOUNT

A Deferred Compensation Account was established for each Outside Director who properly completed, executed, and delivered an Election Form on which he elected to defer Board Compensation. The Board Compensation which each Participant deferred for calendar years beginning before January 1, 2005 and Hypothetical Interest earned on such Board Compensation (as provided in Section 5.1) is credited to this Deferred Compensation Account. Board Compensation deferred under this Section 4.2 was credited to the Participant's Deferred Compensation Account as of the date such compensation would otherwise have been payable to the Participant. A Participant’s Deferred Compensation Account shall be kept only for bookkeeping and accounting purposes and no Company funds shall be transferred or designated to this account. A Participant’s interest in the Deferred Compensation Account maintained on his behalf shall be 100 % vested and nonforfeitable at all times.

ARTICLE FIVE

CREDITS TO PARTICIPANT DEFERRED COMPENSATION ACCOUNTS

EARNED AND VESTED ON OR BEFORE DECEMBER 31, 2004

5.1 HYPOTHETICAL INTEREST

The Deferred Compensation Account maintained on behalf of a Participant under this Appendix A is credited with Hypothetical Interest. The Hypothetical Interest is credited as of each Valuation Date on the amount credited to the Participant’s Deferred Compensation Account on such Valuation Date in accordance with the valuation procedure adopted by the Administrator. The Hypothetical Interest credited to each Deferred Compensation Account is determined by the Administrator and computed in reference to the appreciation or depreciation experienced since the immediately preceding Valuation Date by the hypothetical investment funds which the Administrator may offer to Participants under Section 5.2. For any given period, Hypothetical Interest may be a positive or a negative figure. The crediting of Hypothetical Interest shall occur so long as there is a balance in the Participant’s Deferred Compensation Account regardless of whether the Participant has terminated service with the Board or has died. The Administrator may prescribe any reasonable method or procedure for the accounting of Hypothetical Interest.

5.2 PARTICIPANT INVESTMENT DESIGNATION

A Participant (and any Outside Director first electing to participate in the Plan) may have designated on such form or forms satisfactory to the Administrator, that portion of his future deferred compensation and, separately, that portion of any existing Deferred Compensation Account maintained on his behalf which were to be credited with Hypothetical Interest in reference to each of the hypothetical investment funds that were offered by the Administrator, in the discretion of the Administrator. Such designations specified, in 1% increments, the percentages to be credited in reference to each of the hypothetical investment funds offered. Such designations may remain in effect until the Participant submits a new designation within such times and in accordance with such means as are designated by the Administrator. New designations are made as to (i) future deferred compensation and/or (ii) any existing Deferred Compensation Account. All new designations are effective as of a given date specified by the Administrator. In the event a Participant fails to make an effective designation under this paragraph (a), the Administrator, acting in its discretion, shall make such designation on behalf of the Participant.

In accepting participation in the Plan, a Participant agreed on behalf of himself and his Beneficiary to assume all risk in connection with any decrease in value of the hypothetical investment funds in reference to which Hypothetical Interest is credited to the Participant’s Deferred Compensation Account. The Company and the Administrator shall not be liable to any Participant or Beneficiary for the under-performance of any hypothetical investment fund offered under the Plan.

Participant who is affected by the discontinuation of a hypothetical investment fund but who fails to make any replacement designation offered in this paragraph (c) shall mirror, to the extent of the Participant’s interest in such discontinued fund, such hypothetical investment fund or funds as the Administrator may choose in its discretion. Any changes under this paragraph (c) shall take effect at such times and under such rules as shall be established by the Administrator.

Notwithstanding any provision of the Plan to the contrary, the eligibility of a Participant to make any designation under this Section 5.2 shall not be construed as to provide any Participant or any other person with a beneficial ownership interest in any assets of the Company or an affiliated company or subsidiary. Title to and beneficial ownership of any assets which the Company may earmark to pay the contingent deferred compensation hereunder shall at all times remain in the Company, affiliated company or subsidiary. The Participant, his Beneficiary and any heirs, successors or assigns shall not have any legal or equitable right, interest or control over or any property interest whatsoever in any specific assets of the Company or any affiliated company or subsidiary on account of having an interest under the Plan. Any and all of the Company’s assets, and any life insurance policies, annuity contracts or the proceeds therefrom which may be acquired by the Company shall be, and remain, the general unpledged, unrestricted assets of the Company. In no event shall the Company be required to purchase any specific shares or interest in any investment fund.

5.3 STATEMENTS

Statements will be sent to each Participant as to the balance of his Deferred Compensation Account at least once each calendar year.

ARTICLE SIX

PAYMENT OF DEFERRED COMPENSATION ACCOUNTS

6.1 PAYMENT

The Company shall pay a Participant the amounts represented by the balances credited to the Participant’s Deferred Compensation Account after the Participant’s termination of services with the Board. Except as otherwise provided in this Article Six, such payment shall be made according to the method and at the times selected by the Participant in his Election Form or, if applicable, in the most recent, properly executed and effective Amendment Form(s) which the Participant has delivered to the Administrator prior to the Participant’s termination of Board service.

6.2 METHODS OF PAYMENT


a)	A Participant may elect any one of the following methods of payment for the amounts represented by his Deferred Compensation Account:


(i)	A lump sum distribution;


(ii)	Payment in approximately equal annual installments for a period not to exceed 10 years; or


(iii)	Payment in approximately equal monthly installments for a period not to exceed 10 years.

Payments of the distributable amount represented by all or a portion of the balance in the Participant’s Deferred Compensation Account shall be made in cash.


b)	In the event the Participant dies before receiving the entire distribution to which he is entitled under the Plan, the provisions of Section 6.4 shall apply.

6.3 AMENDMENT TO PAYMENT ELECTION

A Participant who is an active Director may request to defer the date at which payment of the amount represented by his Deferred Compensation Account will occur (or commence) and may request a change in his elected method of payment by submitting a properly completed and executed Amendment Form to the Administrator which indicates the period of additional deferral and/or the desired method of payment; provided, however:

Such request of additional deferral or alternative method of payment shall be subject to the Administrator's power, to be exercised at the Administrator’s discretion, to direct that payment of the amount represented by the Participant’s Deferred Compensation Account will occur or commence, or will be paid under a method, in accordance with the Participant’s election(s) on a previously delivered Amendment Form or on the Participant’s Election Form; and

In no event shall any requested additional deferral or alternative method of payment become effective unless the Amendment Form evidencing such request is submitted to, and approved by, the Administrator at least twelve months prior to the date payment of the amount represented by the Deferred Compensation Account would otherwise have occurred or commenced under the Election Form or Amendment Form in effect on the date the Participant requests the additional deferral or alternative method of payment.

6.4 PAYMENT UPON DEATH OF PARTICIPANT

In the event of a Participant’s death the amount represented by the Participant’s Deferred Compensation Account (or, if the Participant had begun payment prior to death, the remaining balance of such account) shall be paid by the Company to the Participant’s Beneficiary or Beneficiaries as soon as practicable in the form of a lump sum.

6.5 EMERGENCY CIRCUMSTANCES

Notwithstanding any other provision of this Plan, if the Committee determines, after consideration of a Participant’s application, that the Participant has a financial necessity of such a substantial nature that a current payment of compensation deferred under this Plan is warranted, the Committee may in its sole and absolute discretion direct that all or a portion of the Participant’s Deferred Compensation

Account balance be paid to him. The payment shall be made in the manner and at the times specified by the Committee for payment; provided, however, such payment shall not be in excess of that amount which is, in the discretion of the Committee, required to satisfy the financial necessity. In making determinations under this Section 6.5, no member of the Committee shall vote with respect to any application made by the Committee member under this Section.

ARTICLE SEVEN

CONSTRUCTION

This Appendix A is intended to memorialize the provisions of the Plan as it pertains to grandfathered amounts within the meaning of guidance promulgated by the Internal Revenue Service pursuant to Section 409A of the Internal Revenue Code of 1986, as amended. As a result, the Administrator shall interpret and construe the terms of this Appendix A so as to preserve the status of these amounts as grandfathered amounts under such guidance. References, or cross references to an identified Article, Section, or specific part thereof, shall refer to such Article, Section (or part) of this Appendix A, unless otherwise qualified by the context.

APPENDIX B

ERIE INDEMNITY COMPANY
DEFERRED COMPENSATION PLAN
FOR OUTSIDE DIRECTORS

Accounts Not Earned and Vested On or Before December 31, 2004

ARTICLE ONE

INTRODUCTION

This Appendix B incorporates the provisions of the Plan as it relates to Total Deferred Cash Accounts other than such accounts that were earned and vested on or before December 31, 2004, without material modifications to the terms of the Plan after October 3, 2004. The provisions of this Appendix B shall apply in determining the rights and features of such accounts.

ARTICLE TWO

DEFINITIONS

When the following words or phrases are used in this Appendix B with initial capital letters, they shall have the following meanings:


2.1	“ Administrator ” is a term that is defined in Article Two of the Basic Plan Document.


2.2	“ Affiliate ” shall mean any organization which, together with the Company, is a member of a controlled group of corporations under Sections 414(b), 414(c) and 1563(a) of the Code, applying an 80% test for purposes of Section 1563(a).


2.3	“ Amendment Form ” shall mean the Amendment Form described in Section 7.6. An Amendment Form may be in paper and/or electronic form, as designated by the Administrator.


2.4	“ Beneficiary ” is a term that is defined in Article Two of the Basic Plan Document.


2.5	“ Board” is a term that is defined in Article Two of the Basic Plan Document.


2.6	“ Board Compensation ” is a term that is defined in Article Two of the Basic Plan Document.


2.7	“ Committee ” is a term that is defined in Article Two of the Basic Plan Document.


2.8	“ Company ” is a term that is defined in Article Two of the Basic Plan Document.


2.9	“ Deferred Compensation Account ” shall mean the bookkeeping account described in Section 4.2.


2.10	“ Deferred Stock Plan ” is a term that is defined in Article Two of the Basic Plan Document.


2.11	“ Director ” is a term that is defined in Article Two of the Basic Plan Document.


2.12	“ Election Form” shall mean the Participation Election Form described in Section 3.2. An Election Form may be in paper and/or electronic form, as designated by the Administrator.


2.13	“ Employee ” is a term that is defined in Article Two of the Basic Plan Document.


2.14	“ Hypothetical Interest ” shall mean the gains and losses credited to a Participant’s Deferred Compensation Account and/or Retirement Plan Transfer Account in accordance with Article Six.


2.15	“ Outside Director ” is a term that is defined in Article Two of the Basic Plan Document.


2.16	“ Participant ” shall mean each Outside Director who participates in the Plan in accordance with the terms and conditions of this Appendix B. Participant shall also include a former Outside Director who had become a Participant during his period of active Board service and on whose behalf the Administrator is maintaining a Total Deferred Cash Account pursuant to the terms of this Appendix B.


2.17	“ Plan ” is a term that is defined in Article Two of the Basic Plan Document.


2.18	“ Retirement Plan ” shall mean the Erie Indemnity Company Retirement Plan for Outside Directors, effective as of January 1, 1991 and as amended thereafter.


2.19	“ Retirement Plan Transfer Account ” shall mean the bookkeeping account described in Section 5.3.


2.20	“ Retirement Plan Transfer Credit ” shall mean the contribution credit determined under Section 5.2.


2.21	“ Separation from Board Service ” shall mean the complete cessation of services as a member of the Board and of the board of directors of any Affiliate.


2.22	“ Total Deferred Cash Account ” shall mean the sum of the amounts credited under any Deferred Compensation Account and any Retirement Plan Transfer Account maintained on behalf of a Participant.


2.23	“ Valuation Date” shall mean the close of business as of each business day.

ARTICLE THREE

PARTICIPATION

3.1 ELIGIBILITY AND PARTICIPATION

Each Outside Director is eligible to participate in the Board Compensation deferral provisions of the Plan and may choose to defer Board Compensation in accordance with the provisions of Section 4.1.

3.2 PARTICIPATION ELECTION FORM

An Outside Director shall deliver to the Administrator the following elections, to the extent applicable to such Director, to be made on such Election Form or Forms as the Administrator, in its discretion, shall prescribe:


a)	The percentage of Board Compensation to be deferred for the calendar year to which the election applies;


b)	The method by which amounts credited to the Participant’s Total Deferred Cash Account are to be paid;


c)	The date, following the Participant’s Separation from Board Service, as of which payment of amounts credited to the Participant’s Total Deferred Cash Account is to occur (in the event of a lump sum distribution) or commence (in the event of a distribution in installments);


d)	The Beneficiary to whom payments of amounts credited to the Participant’s Total Deferred Cash Account will be made in the event of the Participant’s death; and


e)	The investment designation described in Section 6.2.

The election under paragraph (a) shall be delivered to the Administrator within 30 days after first becoming a Participant under Section 3.1 and shall be irrevocable for the calendar year of the election, except as provided in Section 4.1(c) or 4.1(d). The elections under paragraphs (b) and (c) above shall be delivered to the Administrator within 30 days after first becoming a Participant under Section 3.1 and shall be irrevocable except as provided in Section 7.6. The election under paragraph (d) above are subject to the provisions of Section 2.2 of the Basic Plan Document. The election under -paragraph (e) above may be made and changed as provided in Section 6.2.

The elections under Article Three and/or Article Eight of Appendix B, as in effect as of July 28, 2015, shall remain in effect on July 29, 2015 under this Appendix B and under Appendix B of the Deferred Stock Plan until otherwise changed pursuant to the terms of this Appendix B and/or the terms of Appendix B of the Deferred Stock Plan.

ARTICLE FOUR

BOARD COMPENSATION DEFERRED

4.1 DEFERRED COMPENSATION ELECTION

Initial Deferral Election. A Participant who is an Outside Director may elect to defer Board Compensation for a given calendar year by delivering a properly completed and executed Election Form to the Administrator as provided in Section 3.2(a). Such Election Form shall state, in 10% increments from 0% to 100%, the percentage of Board Compensation the Outside Director chooses to defer that is attributable to services performed after the election is delivered. Except as provided in paragraphs (c) and (d) below, such deferral election shall be irrevocable as of the date the election is delivered to the Administrator, as applicable to such future Board Compensation attributable to the calendar year to which the election applies. Such deferral election shall automatically terminate as to all Board Compensation after such calendar year.

Subsequent Deferral Elections. With respect to any calendar years beginning after the year an Outside Director first becomes a Participant under Section 3.1, the Participant may elect to defer Board Compensation attributable to services performed in such year by delivering a properly completed and executed Election Form to the Administrator by the end of the calendar year which immediately precedes the calendar year for which the election is to be effective. Such Election Form shall state, in 10% increments from 0% to 100%, the percentage of Board Compensation the Outside Director chooses to defer that is attributable to services performed in the calendar year for which the election is to be effective. Except as provided in paragraphs (c) or (d) below, such deferral election shall be irrevocable as of the December 31 of the calendar year that immediately precedes the calendar year to which the election applies. Such deferral election shall automatically terminate as to all Board Compensation attributable to services after such calendar year.

If a Participant makes a withdrawal due to an unforeseeable emergency under Section 7.5, all remaining deferrals of Board Compensation under the Plan for the calendar year in which such withdrawal is made shall be cancelled. Such Participant shall not be permitted to make any further deferral of Board Compensation until the Participant again satisfies the procedures set forth in paragraph (b) above.

Participant deferrals of Board Compensation under the Plan shall be cancelled in such other events or conditions as the Commissioner of Internal Revenue may prescribe in generally applicable guidance published in the Internal Revenue Bulletin which the Administrator, in its discretion, chooses to apply under the Plan; provided, however, that a Participant shall have no direct or indirect election to the application of such events or conditions to his individual circumstances.

4.2 DEFERRED COMPENSATION ACCOUNT

A Deferred Compensation Account shall be established for each Outside Director who properly completes, executes and delivers an Election Form on which he elects to defer Board Compensation. The Board Compensation which each Participant defers for calendar years beginning on and after January 1, 2005 and Hypothetical Interest earned on such Board Compensation (as provided in Section 6.1) shall be credited to this Deferred Compensation Account. Board Compensation deferred under this Section 4.2 shall be credited to the Participant's Deferred Compensation Account as of the date such compensation would otherwise have been payable to the Participant. A Participant’s Deferred Compensation Account shall be kept only for bookkeeping and accounting purposes and no Company funds shall be transferred or designated to this account. A Participant’s interest in the Deferred Compensation Account maintained on his behalf shall be 100% vested and nonforfeitable at all times.

ARTICLE FIVE

TRANSFER OF RETIREMENT PLAN CREDIT

5.1 RETIREMENT PLAN TRANSFER ELECTION

The Company has recorded a contribution credit under the Plan on behalf of each Outside Director who satisfied the criteria set forth in paragraph (b) of this Section 5.1. Such contribution credit is referred to herein as the Retirement Plan Transfer Credit, was recorded as of December 31, 1997 and, except as provided in Section 6.1(b), was equal to the amount individually determined under Section 5.2.


b)	An Outside Director was entitled to a Retirement Plan Transfer Credit if:


(i)	The Outside Director was an Outside Director on May 1, 1997; and


(ii)	During the period beginning June 17, 1997 and ending August 1, 1997, the Outside Director elected to have the Retirement Plan Transfer Credit recorded on his behalf under the Plan in lieu of any continuing interest under the Retirement Plan.

5.2 RETIREMENT PLAN TRANSFER CREDIT


a)	The Retirement Plan Transfer Credit with respect to an Outside Director who satisfied the criteria set forth in Section 5.1 was the actuarial present value (as defined in subparagraph (i) below) of the retirement benefit accrued by the Outside Director under the Retirement Plan as of May 1, 1997.


(i)	For purposes of this Section 5.2(a), “actuarial present value” shall mean the single sum value of a retirement benefit, determined as of May 1, 1997, by using the 1983 Group Annuity Mortality Table (50% male/50% female) and an interest rate of seven percent.


b)	Effective December 6, 2011, the Company recorded a contribution credit under the Plan on behalf of each Outside Director on whose behalf an interest was then being maintained under the Retirement Plan. Such contribution credit shall be referred herein as the Retirement Plan Transfer Credit and shall be equal to the amount determined under subparagraph (i) below.

(i)

The Retirement Plan Transfer Credit described in paragraph (b) was equal to the actuarial present value of the contingent retirement benefit interest that would have accrued on behalf of the Outside Director under the Retirement Plan if December 6, 2011 were to be such Director’s date of Retirement under the Retirement Plan. For this purpose, “actuarial present value” shall mean the single lump sum value, determined as of December 6, 2011, by using the 2011 mortality table under IRS Notice 2008-85 for purposes of determining minimum present value under Section 417(e)(3) of the Code and an interest rate equal to the average of the Moody’s Aa corporate bond rates for October 2011.

5.3 RETIREMENT PLAN TRANSFER ACCOUNT

A Retirement Plan Transfer Account has been established for each Outside Director described in Section 5.1(b) or Section 5.2(b). The Retirement Plan Transfer Credit and Hypothetical Interest earned on such Retirement Plan Transfer Credit shall be recorded in this Retirement Plan Transfer Account. A Participant’s Retirement Plan Transfer Account shall be kept only for bookkeeping and accounting purposes and no Company funds shall be transferred or designated to this account. Notwithstanding any provision of the Plan to the contrary and effective December 6, 2011, a Participant’s interest in his Retirement Plan Transfer Account became 100% vested and nonforfeitable.

Notwithstanding the provisions of Article Seven, but subject to the terms of Section 7.7, the Company shall pay a Participant who is an Outside Director described in Section 5.2(b), the amounts represented by the balance credited to the Participant’s Retirement Plan Transfer Account in the form of approximately equal quarterly installments for a period of 5 years, commencing as of the first day of the calendar quarter next following the Participant’s Separation from Board Service.

ARTICLE SIX

CREDITS TO PARTICIPANT TOTAL DEFERRED CASH ACCOUNTS

NOT EARNED AND VESTED ON OR BEFORE DECEMBER 31, 2004

6.1 HYPOTHETICAL INTEREST


a)	The Total Deferred Cash Account maintained on behalf of a Participant under this Appendix B will be credited with Hypothetical Interest. The Hypothetical Interest shall be credited as of each Valuation Date on the amount credited to the Participant’s

Total Deferred Cash Account on such Valuation Date in accordance with the valuation procedure adopted by the Administrator. The Hypothetical Interest to be credited to each Total Deferred Cash Account shall be determined by the Administrator and computed in reference to the appreciation or depreciation experienced since the immediately preceding Valuation Date by the hypothetical investment funds which the Administrator may offer to Participants under Section 6.2. For any given period, Hypothetical Interest may be a positive or a negative figure. The crediting of Hypothetical Interest shall occur so long as there is a balance in the Participant’s Total Deferred Cash Account regardless of whether the Participant has terminated service with the Board or has died. The Administrator may prescribe any reasonable method or procedure for the accounting of Hypothetical Interest.


b)	Notwithstanding any provision of this Article Six to the contrary:


(i)	The Retirement Plan Transfer Credit, determined under Section 5.2 and recorded as of December 31, 1997 on behalf of an Outside Director described in Section 5.1(b), was increased with Hypothetical Interest for the period beginning on May 1, 1997 and ending on December 31, 1997; and

(ii)

For purposes of subparagraph (i) above, “Hypothetical Interest” was in reference to the interest, compounded on a daily basis, at the rate or rates in effect during the period beginning on May 1, 1997 and ending December 31, 1997, as declared by the Board of Directors of Erie Family Life Insurance Company on the Erie Family Life Insurance Company deposit administration group annuity contract held by the trustee of the Erie Insurance Group Employee Savings Plan.

6.2 PARTICIPANT INVESTMENT DESIGNATION

A Participant (and any Outside Director first electing to participate in the Plan) may designate, within such times and in accordance with such means as are designated by the Administrator, that portion of his future deferred compensation under Section 4.1 and, separately, that portion of any existing Total Deferred Cash Account maintained on his behalf which shall be credited with Hypothetical Interest in reference to each of the hypothetical investment funds that may be offered by the Administrator, in the discretion of the Administrator. Such designations may specify, in 1% increments, the percentages to be credited in reference to each of the hypothetical investment funds offered. Such designations may remain in effect until the Participant submits a new designation within such time and in accordance with such means as are designated by the Administrator. New designations may be made as to (i) future deferrals of Board Compensation and/or (ii) any existing Total Deferred Cash Account, provided that separate designations as to the crediting of a Deferred Compensation Account and a Retirement Plan Transfer Account shall not be available. All new designations shall be effective as of a given date specified by the Administrator. In the event a Participant fails to make an effective designation under this paragraph (a), the Administrator, acting in its discretion, shall make such designation on behalf of the Participant.

In accepting participation in the Plan, a Participant agrees on behalf of himself and his Beneficiary to assume all risk in connection with any decrease in value of the hypothetical investment funds in reference to which Hypothetical Interest is credited to the Participant’s Total Deferred Cash Account. The Company, the Affiliates and the Administrator shall not be liable to any Participant or Beneficiary for the under-performance of any hypothetical investment fund offered under the Plan.

The Administrator may, in its discretion, offer additional hypothetical investment funds to Participants and may cease to offer any such fund at such time as it deems appropriate. In the event the Administrator decides to discontinue offering a hypothetical investment fund under the Plan, those Participants on whose behalf Hypothetical Interest is then being credited on the basis of the discontinued hypothetical investment fund may be required, at the discretion of the Administrator, to have affected amounts consolidated with (or “mapped” to) a replacement hypothetical investment fund selected by the Administrator or may be required to designate, from such selection of hypothetical funds as may be offered by the Administrator, a hypothetical fund or funds as a replacement for the hypothetical investment fund being discontinued. Any such designation by a Participant shall be made in accordance with paragraph (a) above. Hypothetical Interest credited on behalf of any Participant who is affected by the discontinuation of a hypothetical investment fund but who fails to make any replacement designation offered in this paragraph (c) shall mirror, to the extent of the Participant’s interest in such discontinued fund, such hypothetical investment fund or funds as the Administrator may choose in its discretion. Any changes under this paragraph (c) shall take effect at such times and under such rules as shall be established by the Administrator.

Notwithstanding any provision of the Plan to the contrary, the eligibility of a Participant to make any designation under this Section 6.2 shall not be construed as to provide any Participant or any other person with a beneficial ownership interest in any assets of the Company or an Affiliate. Title to and beneficial ownership of any assets which the Company or an Affiliate may earmark to pay the contingent deferred compensation hereunder shall at all times remain in the Company or Affiliate. The Participant, his Beneficiary and any heirs, successors or assigns shall not have any legal or equitable right, interest or control over or any property interest whatsoever in any specific assets of the Company or any Affiliate or related entity on account of having an interest under the Plan. Any and all of the Company’s assets, and any life insurance policies, annuity contracts or the proceeds therefrom which may be acquired by the Company shall be, and remain, the general unpledged, unrestricted assets of the Company. In no event shall the Company or any Affiliate be required to purchase any specific shares or interest in any investment fund.

6.3 STATEMENTS

Statements will be sent to each Participant as to the balance of his Total Deferred Cash Account at least once each calendar year.

ARTICLE SEVEN

PAYMENT OF TOTAL DEFERRED CASH ACCOUNT

7.1 PAYMENT

Except as otherwise provided in this Article Seven, the Company shall pay a Participant the amounts represented by the balances credited to the Participant’s Total Deferred Cash Account after the Participant’s Separation from Board Service and such payment shall be made according to the method and at the time(s) permitted under Section 7.2 and elected by the Participant in his Election Form or, if applicable, in the most recent, properly executed and effective Amendment Form(s) which the Participant has delivered to the Administrator prior to the Participant’s Separation from Board Service. If a Participant has not delivered to the Administrator a properly completed and effective Election Form with respect to a Total Deferred Cash Account or, if for any reason the Administrator determines that any Election Form or Amendment Form is materially deficient, payment of the affected accounts shall be made in a lump sum during the month next following the month of the Participant’s Separation from Board Service except as otherwise provided in this Article Seven. For all purposes of the Plan and effective until such time as the Participant delivers to the Administrator a properly completed and effective Election Form or Amendment Form that includes a method and time of payment election, such default method and time of payment shall be treated as the Participant’s elected method and time of payment with respect to any Total Deferred Cash Account to which the default applies.

7.2 METHODS AND TIMES OF PAYMENT


a)	A Participant may elect any one of the following methods of payment for the amounts represented by his Total Deferred Cash Account:


(i)	A lump sum distribution;


(ii)	Payment in approximately equal annual installments for a period not to exceed 10 years; or


(iii)	Payment in approximately equal monthly installments for a period not to exceed 10 years.

Payments of the distributable amount represented by all or a portion of the balance in the Participant’s Total Deferred Cash Account shall be made in cash.

A Participant may elect to have the amount represented by his Total Deferred Cash Account distributed to him (or, in the case of an installment distribution, commence to be distributed to him) as of the month next following the month of the Participant’s Separation from Board Service or as of any later month that follows his Separation from Board Service. Except as provided in Sections 7.3, 7.4 or 7.5, no distribution shall commence before or after such elected distribution date; provided, however, that if the Company makes a distribution within the permitted distribution period (as

defined below) and the actual date of distribution is not within the direct or indirect control of the Participant, such distribution shall be treated as having been made on such elected distribution date. The “permitted distribution period” for this purpose shall begin on the thirtieth day before the Participant’s elected distribution date and shall end on the later of (i) the last day of the calendar year that includes the Participant’s elected distribution date, and (ii) the fifteenth day of the third month following the Participant’s elected distribution date.


c)	In the event the Participant dies before receiving the entire distribution to which he is entitled under the Plan, the provisions of Section 7.7 shall apply.

7.3 ACCELERATION OF PAYMENTS

Notwithstanding the provisions of Sections 7.1 and 7.2 and any Participant election thereunder, the Company shall pay a Participant the amounts represented by the balances credited to a Participant’s Total Deferred Cash Account in a lump sum as of the first Valuation Date that is administratively reasonable following the occurrence of any of the events or conditions identified below. Such lump sum payment shall be equal to the amount, as determined by the Administrator, as is reasonably estimated to be required to satisfy the purpose of the accelerated payment. The events or conditions to which this Section 7.3 applies are:


a)	The Participant needs to avoid a violation of an applicable federal, state, local, or foreign ethics law or conflicts of interest law.


b)	The Participant incurs state, local, or foreign tax obligations arising from participation in the Plan that apply to a Plan interest before such interest is otherwise payable from the Plan.


c)	The Plan is terminated and liquidated in accordance with generally applicable guidance prescribed by the Commissioner of Internal Revenue and published in the Internal Revenue Bulletin.

Such other events or conditions as the Commissioner of Internal Revenue may prescribe in generally applicable guidance published in the Internal Revenue Bulletin which the Administrator, in its discretion, chooses to apply under the Plan; provided, however, that a Participant shall have no direct or indirect election as to the application of such events or conditions to his individual circumstances.

Any payment under this Section 7.3 shall be contingent upon the Administrator’s decision that a Participant has satisfied all material elements of an applicable event or condition and that the Participant produces evidence to that effect that is satisfactory to the Administrator. If any payment under this Section 7.3 is made and such payment is less than an amount that represents the entire Total Deferred Cash Account maintained on the Participant’s behalf, the amount of such payment shall offset any future payment from the Plan to the Participant or any Beneficiary or other person who claims through the Participant.

7.4 DELAY OF PAYMENTS

Notwithstanding the provisions of Sections 7.1 and 7.2 and any Participant election thereunder, the Company may delay the payment of amounts represented by the balances credited to a Participant’s Total Deferred Cash Account in connection with any of the events or conditions identified below; provided, however that, with respect to any given event or condition, the Administrator shall treat Plan payments to all similarly-situated Participants in a reasonably consistent manner:


a)	The Administrator reasonably anticipates that making scheduled Plan payments will violate federal securities laws or other applicable law; provided that the scheduled payments are then made at the earliest date at which the Administrator reasonably contemplates that making the scheduled payments will not cause such a violation.

7.5 EMERGENCY CIRCUMSTANCES

Notwithstanding any other provision of this Plan, if the Administrator determines, after consideration of a Participant’s application, that the Participant has incurred a severe financial hardship (as defined below) the Administrator may in its sole and absolute discretion direct that all or a portion of the Participant’s Deferred Compensation Account balance be paid to him. The payment shall be made in the manner and at the times specified by the Administrator for payment; provided, however, such payment shall not be in excess of that amount which is, in the discretion of the Administrator, reasonably necessary to satisfy the financial hardship.

For purposes of this Section 7.5, a “severe financial hardship” shall mean a financial hardship resulting from (i) an illness or accident of the Participant, the Participant’s spouse, beneficiary or dependent, (ii) the Participant’s loss of property due to casualty, or (iii) any other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant; provided, however, that such financial hardship is not or may not be relieved through reimbursement or compensation from insurance or otherwise, by cessation of deferrals of Board Compensation in future years, or by liquidation of the Participant’s assets to the extent such liquidation would not cause severe financial hardship.

7.6 AMENDMENT TO PAYMENT ELECTION

A Participant who is a Director who has not incurred a Separation from Board Service may elect to defer the date at which payment of the amount represented by his Total Deferred Cash Account will occur (or commence) and may elect a change in his elected method of payment (or the default form of payment under Section 7.1) by submitting a properly completed and executed Amendment Form to the Administrator which indicates the period of additional deferral and/or the desired method of payment; provided that:


a)	Such election shall not be effective until 12 months after it is submitted to the Administrator;


b)	Such election shall require that the payment with respect to which the election is made shall be delayed for a period of not less than five years from the date payment would have been made (or commence) absent the elected change; and


c)	If the election pertains to a delay in the payment of a Total Deferred Cash Account from a specific year and month that the Participant previously elected in his Election Form or a subsequent Amendment Form (or to which the Participant has defaulted under Section 7.1) such election cannot be made less than 12 months before the date the payment was otherwise scheduled to be made (or commence).

For purposes of this Article Seven, installment payments shall be treated as a single payment.

7.7 PAYMENT UPON DEATH OF PARTICIPANT

In the event of a Participant’s death, the amount represented by the Participant’s Total Deferred Cash Account (or, if the Participant began payment prior to death, the remaining balance of such account) shall be paid by the Company to the Participant’s Beneficiary in the form of a lump sum during the month next following the month of the Participant’s death. Except as provided in Sections 7.3 or 7.4, no payment to a Beneficiary under this Section 7.7 shall be made before or after such identified payment date; provided, however, that if the Company makes a payment within the permitted payment period (as defined below) and the actual date of payment is not within the direct or indirect control of the Beneficiary, such payment shall be treated as having been made on such identified payment date. The “permitted payment period” for this purpose shall begin on the day of the Participant’s death and shall end on the later of (a) the last day of the calendar year that includes the identified payment date, and (b) the fifteenth day of the third month following the identified payment date.

ARTICLE NINE

CONSTRUCTION

This Appendix B is intended to memorialize the provisions of the Plan as it pertains to amounts other than grandfathered amounts within the meaning of guidance promulgated by the Internal Revenue Service pursuant to Section 409A of the Code. As a result, the Administrator shall interpret and construe the terms of this Appendix B so as to be consistent with such Internal Revenue Service guidance. References or cross references to an identified Article, Section or specific part thereof, shall refer to such Article, Section (or part) of this Appendix B, unless otherwise qualified by the context.

Exhibit 10.159

ERIE INDEMNITY COMPANY
DEFERRED STOCK PLAN
FOR OUTSIDE DIRECTORS

(As of July 29, 2015)

BASIC PLAN DOCUMENT

APPENDIX A

APPENDIX B

ERIE INDEMNITY COMPANY
DEFERRED STOCK PLAN
FOR OUTSIDE DIRECTORS

(As of July 29, 2015)

BASIC PLAN DOCUMENT

ARTICLE ONE

INTRODUCTION

This Erie Indemnity Company Deferred Stock Plan for Outside Directors (the “Plan”) is an unfunded, non-qualified, deferred compensation arrangement created for outside directors of Erie Indemnity Company (the “Company”). It is intended that the Plan will aid in retaining and attracting outside directors of exceptional ability by providing such directors with a vehicle for accumulating credits denominated in the Class A shares of the Company until retirement or other separation from service from the Board of Directors of Erie Indemnity Company.

The Plan was effective as of May 1, 1997 as part of the Erie Indemnity Company Deferred Compensation Plan for Outside Directors (the “Deferred Compensation Plan”) and has been amended thereafter. Effective as soon as practical following July 29, 2015, the Deferred Compensation Plan is being divided into its two principal components, a voluntary deferred compensation component governed by the terms of the documents comprising the Deferred Compensation Plan, and a deferred stock component, governed by the terms of the documents comprising the Plan. This Plan shall constitute a spin-off of the Deferred Stock Accounts from the Deferred Compensation Plan and is generally effective as of July 29, 2015. Events occurring before the applicable effective date of any provision of this Plan shall be governed by the applicable provision of the Deferred Compensation Plan as in effect on the date of the event.

This Plan is comprised of three primary documents: (i) this Basic Plan Document, which principally addresses definitions and procedural matters that apply to all amounts that accumulate under the Plan, (ii) Appendix A, which incorporates provisions of the Plan relating to Plan accounts that were earned and vested on or before December 31, 2004, and (iii) Appendix B, which incorporates provisions of the Plan relating to those portions of Plan accounts that are earned or become vested on or after January 1, 2005.

ARTICLE TWO

DEFINITIONS

When the following words or phrases are used in the Plan document with initial capital letters, they shall have the following meanings, except where otherwise modified in Appendix A or Appendix B:


2.1	“ Administrator ” shall mean the person or committee, appointed by the Board, who shall be responsible for the administrative functions assigned to it under the Plan.

2.2

The Beneficiary election, or default election, in effect under the Deferred Compensation Plan as of July 28, 2015 shall remain in effect on July 29, 2015 under the Plan until otherwise changed pursuant to the terms of the Plan.


2.3	“ Board ” shall mean the Board of Directors of the Erie Indemnity Company.


2.4	“ Code ” shall mean the Internal Revenue Code of 1986, as amended.


2.5	“ Committee ” shall mean the Executive Compensation and Development Committee of the Board or its successor, as designated by the Board.


2.6	“ Common Stock ” shall mean the Class A common stock of the Company.


2.7	“ Company ” shall mean the Erie Indemnity Company, a Pennsylvania business corporation.


2.8	“ Deferred Compensation Plan ” shall mean the Erie Indemnity Company Deferred Compensation Plan, as amended and in effect on the date of determination.


2.9	“ Deferred Stock Account ” shall mean such account as defined in Appendix A and/or Appendix B, as applicable.


2.10	“ Director ” shall mean a member of the Board.


2.11	“ Employee ” shall mean a person engaged in performing services for the Company, or its affiliates or subsidiaries, as an exempt or non-exempt full-time employee, as defined by the Company’s Corporate Personnel Manual, as in existence at the time of determination, and not as an independent contractor.


2.12	“ Outside Director ” shall mean a Director who is not an Employee or officer of the Company, its affiliates or subsidiaries.


2.13	“ Participant” shall mean each Outside Director who participates in the Plan in accordance with the terms and conditions of the Plan.


2.14	“ Plan” shall mean the Erie Indemnity Company Deferred Stock Plan for Outside Directors, as set forth in the provisions of the Basic Plan Document, Appendix A, Appendix B, and including any amendments, appendices and exhibits to these documents.


2.15	“ Vested ” shall mean, as of any given date, the portion of the Deferred Stock Account maintained on behalf of a Participant which is then 100% vested and nonforfeitable, as determined under Appendix A and/or Appendix B, as applicable.

ARTICLE THREE

ADMINISTRATION


3.1.	GENERAL ADMINISTRATION

The Administrator shall be charged with the administration of the Plan. The Administrator shall have all such powers as may be necessary to discharge its duties relative to the administration of the Plan, including by way of illustration and not limitation, discretionary authority to interpret and construe the Plan, to determine and decide all questions of fact, and all disputes arising under the Plan including, but not limited to, the validity of any election or designation as may be necessary or appropriate hereunder and the right of any Participant or Beneficiary to receive payment of all or any portion of amounts represented by a Deferred Stock Account maintained hereunder. The Administrator shall have all power necessary to adopt, alter and repeal such administrative rules, regulations and practices governing the operation of the Plan as it, in its sole discretion, may from time to time deem advisable and shall have the power to make equitable adjustments to remedy any mistakes or errors in the administration of the Plan. The Administrator shall not be liable to any person for any action taken or omitted in connection with the interpretation and administration of the Plan unless attributable to willful misconduct. The Administrator shall be entitled to conclusively rely upon all tables, valuations, certificates, opinions and reports furnished by any actuary, accountant, controller, counsel or other person employed or engaged by the Company with respect to the Plan. Any individual serving as Administrator shall not participate in any action or determination regarding solely his own benefits payable hereunder. Decisions of the Administrator made in good faith shall be final, conclusive and binding upon all parties. Until modified by the Administrator, the claims and

review procedures set forth in Sections 3.2 and 3.3 shall be the exclusive procedures for the disposition of claims for benefits arising under the Plan.


3.2.	CLAIMS PROCEDURE


3.3.	CLAIMS REVIEW


a)	The date on which the notice of denial of claim was received by the Claimant;


b)	The date on which the Claimant’s request was filed with the Administrator; provided, however, that the date on which the Claimant’s request for review was in fact filed with the Administrator shall control in the event that the date of the actual filing is later than the date stated by the Claimant pursuant to this paragraph (b);


c)	The specific portions of the claim denial which the Claimant requests the Administrator to review;


d)	A statement by the Claimant setting forth the basis upon which he believes the Administrator should reverse its previous denial of his claim for benefits and accept his claim as made;


e)	Whether the Claimant desires a hearing on the claim; and


f)	Any written material (included as exhibits) which the Claimant desires the Administrator to examine in its consideration of his position as

stated pursuant to paragraph (d) above.

ARTICLE FOUR

AMENDMENT AND TERMINATION

The Company expects to continue the Plan indefinitely, but reserves the right to amend or terminate the Plan at any time, if, in its sole judgment, such amendment or termination is necessary or desirable. Any such amendment or termination shall be made pursuant to a resolution of the Board and shall be effective as of the date specified in such resolution. Without consent of the Participant, no amendment or termination of the Plan shall reduce the balance of a Participant’s Deferred Stock Account at the time of amendment or termination. Except as may otherwise be provided by the Company, or as provided in Appendix B, in the event of a termination of the Plan, the Company (or any transferee, or successor entity of the Company) shall be obligated to pay amounts represented by Vested Deferred Stock Account balances to Participants and Beneficiaries at such time or times and in such forms as provided under the terms of the Plan. Nothing herein shall limit the Company’s reserved right to terminate and liquidate the Plan in accordance with generally applicable guidance prescribed by the Commissioner of Internal Revenue and published in the Internal Revenue Bulletin.

ARTICLE FIVE

GENERAL PROVISIONS


5.1.	GENERAL CONTRACTUAL OBLIGATION

It is the intent of this Plan, and each Participant understands, that eligibility and participation in this Plan does not grant any Participant or Beneficiary any interest in any asset of the Company or any affiliated company. The Company’s obligation to pay to the Participant or Beneficiary the amounts credited hereunder is a general contract obligation and shall be satisfied from the general assets of the Company. Nothing contained in the Plan shall constitute a guaranty by the Company, any affiliated company, or any other entity or person that the assets of the Company will be sufficient to pay amounts determined in accordance with the Plan. The obligation of the Company under the Plan shall be merely that of an unfunded and unsecured promise of the Company to pay amounts in the future.

The Company intends to enter into a trust agreement with a trustee to establish a grantor trust fund and to transfer assets thereto, subject to the claims of creditors of the Company. The time, manner, and amount of any such asset transfer shall at all times be in the sole discretion of the Company. The assets of such trust fund shall be used to pay some or all of the amounts credited under the Plan and may be used, at the sole discretion of the Company, to pay administrative expenses of the Plan and the trust. Payments by the trustee from such trust fund to or on behalf of a Participant or Beneficiary shall discharge, to the extent thereof, the Company’s obligation to make payments of amounts credited under the Plan from other assets.

In each case in which amounts represented by the balances credited to a Participant’s Vested Deferred Stock Account have been distributed to the Participant, Beneficiary, or other person entitled to receipt thereof and which purports to cover in full the benefits hereunder, such Participant, Beneficiary or other person shall have no further right or interest in the other assets of the Company on account of participation in the Plan. Notwithstanding a Participant’s entitlement to Vested amounts under the terms of the Plan, the status of the Participant, or any person claiming by or through the Participant, is that of an unsecured general creditor to the extent of his entire interest under the Plan as herein described.


5.2.	SPENDTHRIFT PROVISIONS

The interest of a Participant or Beneficiary under the Plan shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or charge, either voluntarily or involuntarily, prior to the Participant’s or Beneficiary’s actual receipt of amounts represented by the balances credited under the Plan on his behalf; any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge any such interest prior to such receipt shall be void. Amounts credited hereunder and not paid to a Participant or Beneficiary shall not be subject to garnishment, attachment or other legal or equitable process nor shall they be an asset in bankruptcy. Notwithstanding the preceding sentence, no amount shall be payable from this Plan to a Participant, or any person claiming by or through a Participant, unless and until any and all amounts representing debts or other obligations owed to the Company or any affiliated company by the Participant have been fully paid and satisfied; provided, however, that any such offset, as applicable to a person’s Plan interest under Appendix B, shall not exceed such offset as is permitted under Section 409A of the Code. Neither the Company nor any affiliate or subsidiary of the Company shall be liable in any manner for or subject to the debts, contracts, liabilities, torts or engagements of any person who has a Deferred Stock Account maintained on his behalf under the Plan.


5.3.	NO SPOUSAL RIGHTS


5.4.	INCAPACITY OF RECIPIENT

In the event a Participant or Beneficiary is declared incompetent and a guardian, conservator or other person legally charged with the care of his person or of his estate is appointed, any Vested Deferred Stock Account under the Plan to which such Participant, or Beneficiary is entitled shall be paid to such guardian, conservator or other person legally charged with the care of his person or his estate. Except as provided in the preceding sentence, when the Administrator, in its sole discretion, determines that a Participant or Beneficiary is unable to manage his financial affairs, the Administrator may direct the Company to make distribution(s) from the Vested Deferred Stock Account maintained on behalf of such Participant or Beneficiary to any one or more of the spouse, lineal ascendants or descendants or other closest living relatives of such Participant or Beneficiary who demonstrates to the satisfaction of the Administrator the propriety of making such distribution(s). Any payment so made shall not exceed such amount as is permitted under Section 409A of the Code and shall be in complete discharge of any liability of the Company and Administrator under the Plan for such payment. The Administrator shall not be required to see to the application of any such distribution made as provided above.


5.5.	INFORMATION FURNISHED BY PARTICIPANTS AND BENEFICIARIES


5.6.	OVERPAYMENTS


5.7.	UNCLAIMED BENEFIT


5.8.	ELECTIONS, APPLICATIONS, NOTICES

Every designation, direction, election, revocation or notice authorized or required under the Plan which is to be delivered to the Company or the Administrator shall be deemed delivered to the Company or the Administrator as the case may be: (a) on the date it is personally delivered to the Administrator at the Company’s executive offices at 100 Erie Insurance Place, Erie, Pennsylvania 16530 or (b) three business days after it is sent by registered or certified mail, postage prepaid, addressed to the Administrator at the offices indicated above. Every such item which is to be delivered to a person or entity designated by the Administrator to perform recordkeeping and other administrative services on behalf of the Plan shall be deemed delivered to such person or entity when it is actually received (either physically or through interactive electronic communication) by such person or entity. Every designation, direction, election, revocation or notice authorized or required which is to be delivered to a Participant or Beneficiary shall be deemed delivered to a Participant or Beneficiary: (a) on the date it is personally delivered to such individual (either physically or through interactive electronic communication), or (b) three business days after it is sent by registered or certified mail, postage prepaid, addressed to such individual at the last address shown for him on the Company’s records. Any notice required under the Plan may be waived by the person entitled thereto.


5.9.	COUNTERPARTS

This Plan may be executed in any number of counterparts, each of which shall be considered as an original, and no other counterparts need be produced.


5.10.	SEVERABILITY


5.11.	GOVERNING LAW

The Plan is established under and will be construed according to the laws of the Commonwealth of Pennsylvania.


5.12.	HEADINGS

The headings of Sections of this Plan are for convenience of reference only and shall have no substantive effect on the provisions of this Plan.


5.13.	CONSTRUCTION

The masculine gender, where appearing in this Plan, shall be deemed to also include the feminine gender. The singular shall also include the plural, where appropriate.

Executed at Erie, Pennsylvania this 20 ^th day of October, 2015.

ERIE INDEMNITY COMPANY

By: /s/ Sean J. McLaughlin

Title: EVP, Secretary and General Counsel

ATTEST:

/s/ Brian W. Bolash

Assistant Secretary

APPENDIX A

ERIE INDEMNITY COMPANY
DEFERRED STOCK PLAN
FOR OUTSIDE DIRECTORS

Accounts Earned and Vested On or Before December 31, 2004

ARTICLE ONE

INTRODUCTION

This Appendix A incorporates the provisions of the Plan as it relates to Deferred Stock Accounts that were earned and vested on or before December 31, 2004, without material modifications to the terms of the Plan after October 3, 2004. The provisions of this Appendix A shall apply in determining the rights and features of such accounts.

ARTICLE TWO

DEFINITIONS

When the following words or phrases are used in this Appendix A with initial capital letters, they shall have the following meanings:


2.1	“ Administrator” is a term that is defined in Article Two of the Basic Plan Document.


2.2	“ Amendment Form ” shall mean the Amendment Form described in Section 5.3.


2.3	“ Annual Share Credit ” shall mean the Share Credit addition determined under Section 4.2.


2.4	“ Beneficiary ” is a term that is defined in Article Two of the Basic Plan Document.


2.5	“ Board ” is a term that is defined in Article Two of the Basic Plan Document.


2.6	“ Board Tenure Year ” shall mean the period which, in reference to any given calendar year, begins on the date of the Company’s annual shareholder meeting held in such year and ends on the day before the Company’s annual shareholder meeting held in the immediately following calendar year.


2.7	“ Committee ” is a term that is defined in Article Two of the Basic Plan Document.


2.8	“ Common Stock ” is a term that is defined in Article Two of the Basic Plan Document.


2.9	“ Company ” is a term that is defined in Article Two of the Basic Plan Document.


2.10	“ Deferred Stock Account ” shall mean the bookkeeping account described in Article Four.


2.11	“ Director ” is a term that is defined in Article Two of the Basic Plan Document.


2.12	“ Dividend Equivalent Credit ” shall mean the Share Credit addition determined under Section 4.3.


2.13	“ Election Form ” shall mean the Participation Election Form described in Section 3.2.


2.14	“ Employee ” is a term that is defined in Article Two of the Basic Plan Document.


2.15	“ Outside Director ” is a term that is defined in Article Two of the Basic Plan Document.


2.16	“ Participant ” shall mean each Outside Director who participated in the Plan in accordance with the terms and conditions of this Appendix A. Participant shall also include a former Outside Director who had become a Participant during his period of active Board service and on whose behalf the Administrator is maintaining a Deferred Stock Account pursuant to the terms of this Appendix A.


2.17	“ Plan ” is a term that is defined in Article Two of the Basic Plan Document.


2.18	“ Share Credit ” shall mean the separate, identifiable units accumulated within a Participant’s Deferred Stock Account attributable to Annual Share Credits and Dividend Equivalent Credits.

2.19

“ Share Credit Allocation Date ” shall mean, with respect to any Board Tenure Year, the business day next following the first day of such Board Tenure Year; provided, however, that in reference to any individual who became an Outside Director on any day other than the first day of a given Board Tenure year, the Share Credit Allocation Date relative to such year shall mean the business day next following the day on which the individual became an Outside Director.


2.20	“ Vested ” shall mean, as of any given date, the portion of the Deferred Stock Account maintained on behalf of a Participant which is then 100% vested and nonforfeitable, as determined under Article Four.


2.21	“ Year of Board Service ” shall mean each Board Tenure Year during which a Director has served on the Board, including, for Directors on the Board as of May 1, 1997, all Years of Board Service prior to the adoption of the Deferred Compensation Plan.

ARTICLE THREE

PARTICIPATION

3.1 ELIGIBILITY AND PARTICIPATION

Effective as of May 1, 2002, all Outside Directors then in Board service who were not yet Participants became Participants in the Deferred Compensation Plan. Any individual who became an Outside Director after May 1, 2002 and before January 1, 2005 began participation in

the Deferred Compensation Plan as of the Share Credit Allocation Date next following the date as of which the individual became an Outside Director. As a condition of participation, each Outside Director delivered to the Administrator properly completed and executed elections as described in Section 3.2.

3.2 PARTICIPATION ELECTION FORM


a)	The method by which amounts credited to the Participant’s Deferred Stock Account are to be paid;


b)	The date, following the Participant’s official termination of service on the Board, as of which payment of amounts credited to the Participant’s Deferred Stock Account is to occur (in the event of a lump sum distribution) or commence (in the event of distribution in installments); and


c)	The Beneficiary to whom payments of amounts credited to the Participant’s Deferred Stock Account will be made in the event of the Participant’s death.

The elections under paragraphs (a) and (b) shall be irrevocable except as provided in Section 5.3. The election under paragraph (c) may be changed as provided in Section 2.2 of the Basic Plan Document.

The elections under Article Three and/or Article Eight of Appendix A under the Deferred Compensation Plan, as in effect as of July 28, 2015, shall remain in effect on July 29, 2015 under this Appendix until otherwise changed pursuant to the terms of this Appendix A.

ARTICLE FOUR

CREDITING OF DEFERRED STOCK

4.1 DEFERRED STOCK ACCOUNT

A Deferred Stock Account shall be maintained under the terms of this Appendix on behalf of any applicable Outside Director to reflect the amounts credited on such Director’s behalf under Sections 4.2 and 4.3 that were earned and vested on or before December 31, 2004, and the future earnings on such amounts. With respect to amounts credited to an Outside Director that are earned or become vested on or after January 1, 2005, a Deferred Stock Account shall be maintained pursuant to the provisions of Appendix B. A Participant’s Deferred Stock Account shall be kept only for bookkeeping and accounting purposes and, except as provided in Section 5.1 of the Basic Plan Document (pertaining to the Company’s intention to establish a grantor

trust in connection with the Plan), no Company funds or property shall be transferred or designated to this account. Statements will be sent to each Participant as to the balance of his Deferred Stock Account at least once each calendar year.

4.2 ANNUAL SHARE CREDIT

With respect to each Board Tenure Year during which the Director is an Outside Director, the Deferred Stock Account maintained on such Participant’s behalf was credited with an Annual Share Credit, effective as of the Share Credit Allocation Date. For any given Board Tenure Year, the Annual Share Credit made to an Outside Director’s Deferred Stock Account was equal to the quotient obtained by dividing a cash amount determined by the Board for the given year by the closing price of Common Stock on the Share Credit Allocation Date. A Participant’s interest in the Annual Share Credit attributable to any given Board Tenure Year vested in accordance with the following schedule:



Date of Retirement or Termination of Board Service	Vested Percentage in that Year’s Annual Share Credit

Before last day of third full month of given Board Tenure Year	0%
After last day of third full month of given Board Tenure Year but before last day of sixth full month of given Board Tenure Year	25%
After last day of sixth full month of given Board Tenure Year but before last day of ninth full month of given Board Tenure Year	50%
After last day of ninth full month of given Board Tenure Year but before the earlier of (i) the twelfth full month of given Board Tenure Year or (ii) the date on which begins the immediately following Board Tenure Year.	75%
On or after the earlier of (i) the twelfth full month of given Board Tenure Year or (ii) the date on which begins the immediately following Board Tenure Year.	100%

4.3 DIVIDEND EQUIVALENT CREDIT

For each quarterly period (i) with respect to which a dividend is paid on Common Stock, and (ii) in which there is a balance in the Deferred Stock Account maintained on behalf of a Participant as of the record date applicable to the dividend paid on Common Stock (regardless of whether the Participant has terminated service with the Board or has died), a Participant’s Deferred Stock Account shall be credited with a Dividend Equivalent Credit. The Dividend Equivalent Credit for any such quarterly period shall be credited as of the date on which the dividend is paid on Common Stock for such quarterly period. For any such applicable quarterly period, the Dividend Equivalent Credit made to a Participant’s Deferred Stock Account shall be determined as follows:

a) A dividend credit is determined, expressed in cash, equal to the product of:


(i)	The dividend payable by the Company on one share of Common Stock for such quarterly period; and


(ii)	The number of accumulated Share Credits credited to the Participant’s Deferred Stock Account as of the Common Stock dividend record date applicable to such quarterly period.


b)	The dividend credit determined in paragraph (a) above will immediately be converted into a Share Credit by dividing such cash dividend credit by the closing price of Common Stock on the date on which the dividend is paid on Common Stock for such quarterly period.

A Participant’s interest in the Share Credits attributable to Dividend Equivalent Credits shall be Vested at all times.

4.4 AGGREGATION OF PARTIAL SHARE CREDITS

Effective as of each Share Credit Allocation Date and each Common Stock dividend record date with respect to which Dividend Equivalent Credits are made, any partial Share Credits then credited to a Participant’s Deferred Stock Account shall be aggregated in such manner as the Administrator shall provide to constitute full Share Credits.

4.5 ADJUSTMENT TO SHARE CREDITS

Share Credits maintained on behalf of a Participant hereunder shall be subject to appropriate adjustment by the Administrator in the event of changes in the outstanding Common Stock by reason of stock dividends, stock splits, recapitalizations, reorganizations, mergers, consolidations, combinations, exchanges, or other relevant changes in capitalization occurring after the date Share Credits are credited hereunder.

ARTICLE FIVE

PAYMENT OF DEFERRED STOCK ACCOUNTS

5.1 PAYMENT

The Company shall pay a Participant the amounts represented by the balances credited to the Participant’s Vested Deferred Stock Account after the Participant’s termination of services with the Board. Except as otherwise provided in this Article Five, such payment shall be made according to the method and at the times selected by the Participant in his Election Form or, if applicable, in the most recent, properly executed and effective Amendment Form(s) which the Participant has delivered to the Administrator prior to the Participant’s termination of Board service.

5.2 METHODS OF PAYMENT


a)	A Participant may elect one of the following methods of payment for the amounts represented by his Vested Deferred Stock Account:

(i) A lump sum distribution; or


(ii)	Payments in approximately equal annual installments for a period not to exceed 10 years.

Payments of the distributable amount represented by all or a portion of the balance in the Participant’s Vested Deferred Stock Account will be made in shares of Common Stock equal to the number of full Share Credits comprising the distributable amount that are then credited to the Participant’s Vested Deferred Stock Account, with fractional Share Credits comprising the distributable amount payable in cash.


b)	In the event the Participant dies before receiving the entire distribution to which he is entitled under the Plan, the provisions of Section 5.4 shall apply.

5.3 AMENDMENT TO PAYMENT ELECTION

A Participant who is an active Director may request to defer the date at which payment of the amount represented by his Vested Deferred Stock Account will occur (or commence) and may request a change in his elected method of payment by submitting a properly completed and executed Amendment Form to the Administrator which indicates the period of additional deferral and/or the desired method of payment; provided, however:

Such request of additional deferral or alternative method of payment shall be subject to the Administrator's power, to be exercised at the Administrator’s discretion, to direct that payment of the amount represented by the Participant’s Vested Deferred Stock Account will occur or commence, or will be paid under a method, in accordance with the Participant’s election(s) on a previously delivered Amendment Form or on the Participant’s Election Form; and

In no event shall any requested additional deferral or alternative method of payment become effective unless the Amendment Form evidencing such request is submitted to, and approved by, the Administrator at least twelve months prior to the date payment of the amount represented by the Vested Deferred Stock Account would otherwise have occurred or commenced under the Election Form or Amendment Form in effect on the date the Participant requests the additional deferral or alternative method of payment.

5.4 PAYMENT UPON DEATH OF PARTICIPANT


a)	In the event of a Participant’s death, the amount represented by the Participant’s Vested Deferred Stock Account (or, if the Participant had begun payment prior to death, the remaining balance of such account) shall be paid by the Company to the Participant’s Beneficiary or Beneficiaries as soon as practicable in the form of a lump sum.


b)	Payment of the distributable amount represented by the deceased Participant’s Vested Deferred Stock Account will be made in shares of Common Stock equal to the number of full Share Credits credited to such account as of the payment date, with fractional Share Credits payable in cash.

ARTICLE SIX

CONSTRUCTION

APPENDIX B

ERIE INDEMNITY COMPANY
DEFERRED STOCK PLAN
FOR OUTSIDE DIRECTORS

Accounts Not Earned and Vested On or Before December 31, 2004

ARTICLE ONE

INTRODUCTION

This Appendix B incorporates the provisions of the Plan as it relates to Deferred Stock Accounts other than such accounts that were earned and vested on or before December 31, 2004, without material modifications to the terms of the Plan after October 3, 2004. The provisions of this Appendix B shall apply in determining the rights and features of such accounts.

ARTICLE TWO

DEFINITIONS

When the following words or phrases are used in this Appendix B with initial capital letters, they shall have the following meanings:


2.1	“ Administrator ” is a term that is defined in Article Two of the Basic Plan Document.


2.2	“ Affiliate ” shall mean any organization which, together with the Company, is a member of a controlled group of corporations under Sections 414(b), 414(c) and 1563(a) of the Code, applying an 80% test for purposes of Section 1563(a).


2.3	“ Amendment Form ” shall mean the Amendment Form described in Section 5.5. An Amendment Form may be in paper and/or electronic form, as designated by the Administrator.


2.4	“ Annual Share Credit ” shall mean the Share Credit addition determined under Section 4.2.


2.5	“ Beneficiary ” is a term that is defined in Article Two of the Basic Plan Document.


2.6	“ Board” is a term that is defined in Article Two of the Basic Plan Document.


2.7	“ Board Tenure Year ” shall mean the period which, in reference to any given calendar year, begins on the date of the Company’s annual shareholder meeting held in such year and ends on the day before the Company’s annual shareholder meeting held in the immediately following calendar year.


2.8	“ Committee ” is a term that is defined in Article Two of the Basic Plan Document.


2.9	“ Common Stock ” is a term that is defined in Article Two of the Basic Plan Document.


2.10	“ Company ” is a term that is defined in Article Two of the Basic Plan Document.


2.11	“ Deferred Stock Account ” shall mean the bookkeeping account described in Article Four.


2.12	“ Director ” is a term that is defined in Article Two of the Basic Plan Document.


2.13	“ Dividend Equivalent Credit ” shall mean the Share Credit addition determined under Section 4.3.


2.14	“ Election Form” shall mean the Participation Election Form described in Section 3.2. An Election Form may be in paper and/or electronic form, as designated by the Administrator.


2.15	“ Employee ” is a term that is defined in Article Two of the Basic Plan Document.


2.16	“ Outside Director ” is a term that is defined in Article Two of the Basic Plan Document.


2.17	“ Participant ” shall mean each Outside Director who participates in the Plan in accordance with the terms and conditions of this Appendix B. Participant shall also include a former Outside Director who had become a Participant during his period of active Board service and on whose behalf the Administrator is maintaining a Deferred Stock Account pursuant to the terms of this Appendix B.


2.18	“ Plan ” is a term that is defined in Article Two of the Basic Plan Document.


2.19	“ Separation from Board Service ” shall mean the complete cessation of services as a member of the Board and of the board of directors of any Affiliate.


2.20	“ Share Credit ” shall mean the separate, identifiable units accumulated within a Participant’s Deferred Stock Account attributable to Annual Share Credits and Dividend Equivalent Credits.

2.21

“ Share Credit Allocation Date ” shall mean, with respect to any Board Tenure Year, the business day next following the first day of such Board Tenure Year; provided, however, that in reference to any individual who becomes an Outside Director on any day other than the first day of a given Board Tenure year, the Share Credit Allocation Date relative to such year shall mean the business day next following the day on which the individual becomes an Outside Director.


2.22	“ Vested ” shall mean, as of any given date, the portion of the Deferred Stock Account maintained on behalf of a Participant which is then 100% vested and nonforfeitable, as determined under Article Four.


2.23	“ Year of Board Service ” shall mean each Board Tenure Year during which a Director has served on the Board, including, for Directors on the Board as of May 1, 1997, all Years of Board Service prior to the adoption of the Deferred Compensation Plan.

ARTICLE THREE

PARTICIPATION

3.1 ELIGIBILITY AND PARTICIPATION

Any individual who becomes an Outside Director shall participate in the Plan as of the Share Credit Allocation Date next following the date as of which the individual becomes an Outside Director. As a condition of participation, each Outside Director shall deliver to the Administrator properly completed and executed elections as described in Section 3.2.

3.2 PARTICIPATION ELECTION FORM


a)	The method by which amounts credited to the Participant’s Deferred Stock Account are to be paid;


b)	The date, following the Participant’s Separation from Board Service, as of which payment of amounts credited to the Participant’s Deferred Stock Account is to occur (in the event of a lump sum distribution) or commence (in the event of distribution in installments);


c)	The Beneficiary to whom payments of amounts credited to the Participant’s Deferred Stock Account will be made in the event of the Participant’s death; and

The elections under paragraphs (a) and (b) above shall be delivered to the Administrator within 30 days after first becoming a Participant under Section 3.1 and shall be irrevocable except as provided in Section 5.5. The election under paragraph (c) above are subject to the provisions of Section 2.2 of the Basic Plan Document.

The elections under Article Three and/or Article Eight of Appendix B under the Deferred Compensation Plan, as in effect as of July 28, 2015, shall remain in effect on July 29, 2015 under this Appendix until otherwise changed pursuant to the terms of this Appendix B.

ARTICLE FOUR

CREDITING OF DEFERRED STOCK

4.1 DEFERRED STOCK ACCOUNT

A Deferred Stock Account shall be maintained under the terms of this Appendix B on behalf of any applicable Outside Director to reflect the amounts credited on such Director’s behalf under Article Four other than such amounts, if any, that were earned and vested on or before December 31, 2004 and the future earnings on such amounts. With respect to amounts credited to an Outside Director that were earned and vested on or before December 31, 2004, and applicable earnings on such amounts, a Deferred Stock Account shall be maintained pursuant to the provisions of Appendix A. A Participant’s Deferred Stock Account shall be kept only for bookkeeping and accounting purposes and, except as provided in Section 5.1 of the Basic Plan Document (pertaining to the Company’s intention to establish a grantor trust in connection with the Plan), no Company funds or property shall be transferred or designated to this account. Statements will be sent to each Participant as to the balance of his Deferred Stock Account at least once each calendar year.

4.2 ANNUAL SHARE CREDIT

With respect to each Board Tenure Year during which the Director is an Outside Director, the Deferred Stock Account maintained on such Participant’s behalf shall be credited with an Annual Share Credit, effective as of the Share Credit Allocation Date. For any given Board Tenure Year, the Annual Share Credit made to an Outside Director’s Deferred Stock Account shall be equal to the quotient obtained by dividing a cash amount determined by the Board for the given year by the closing price of Common Stock on the Share Credit Allocation Date. A Participant’s interest in the Annual Share Credit attributable to any given Board Tenure Year shall vest in accordance with the following schedule:



Date of Retirement or Termination of Board Service	Vested Percentage in that Year’s Annual Share Credit

Before last day of third full month of given Board Tenure Year	0%
After last day of third full month of given Board Tenure Year but before last day of sixth full month of given Board Tenure Year	25%
After last day of sixth full month of given Board Tenure Year but before last day of ninth full month of given Board Tenure Year	50%
After last day of ninth full month of given Board Tenure Year but before the earlier of (i) the twelfth full month of given Board Tenure Year or (ii) the date on which begins the immediately following Board Tenure Year.	75%
On or after the earlier of (i) the twelfth full month of given Board Tenure Year or (ii) the date on which begins the immediately following Board Tenure Year.	100%

4.3 DIVIDEND EQUIVALENT CREDIT


a)	A dividend credit is determined, expressed in cash, equal to the product of:


(i)	The dividend payable by the Company on one share of Common Stock for such quarterly period; and


(ii)	The number of accumulated Share Credits credited to the Participant’s Deferred Stock Account as of the Common Stock dividend record date applicable to such quarterly period.


b)	The dividend credit determined in paragraph (a) above will immediately be converted into a Share Credit by dividing such cash dividend credit by the closing price of Common Stock on the date on which the dividend is paid on Common Stock for such quarterly period.

A Participant’s interest in the Share Credits attributable to Dividend Equivalent Credits shall be Vested at all times.

4.4 AGGREGATION OF PARTIAL SHARE CREDITS

4.5 ADJUSTMENT TO SHARE CREDITS

ARTICLE FIVE

PAYMENT OF DEFERRED STOCK ACCOUNTS

5.1 PAYMENT

Except as otherwise provided in this Article Five, the Company shall pay a Participant the amounts represented by the balances credited to the Participant’s Vested Deferred Stock Account after the Participant’s Separation from Board Service and such payment shall be made according to the method and at the time(s) permitted under Section 5.2 and elected by the Participant in his Election Form or, if applicable, in the most recent, properly executed and effective Amendment Form(s) which the Participant has delivered to the Administrator prior to the Participant’s Separation from Board Service. If a Participant has not delivered to the Administrator a properly completed and effective Election Form with respect to a Deferred Stock Account or, if for any reason the Administrator determines that any Election Form or Amendment Form is materially deficient, payment of the affected Vested account shall be made in a lump sum during the month next following the month of the Participant’s Separation from Board Service except as otherwise provided in this Article Five. For all purposes of the Plan and effective until such time as the Participant delivers to the Administrator a properly completed and effective Election Form or Amendment Form that includes a method and time of payment election, such default method and time of payment shall be treated as the Participant’s elected method and time of payment with respect to any Deferred Stock Account to which the default applies.

5.2 METHODS AND TIMES OF PAYMENT


a)	A Participant may elect one of the following methods of payment for the amounts represented by his Vested Deferred Stock Account:

(i) A lump sum distribution; or


(ii)	Payments in approximately equal annual installments for a period not to exceed 10 years.

Except as provided in Sections 5.3 or 5.4 no distribution shall commence before or after such elected distribution date; provided, however, that if the Company makes a distribution within the permitted distribution period (as defined below) and the actual date of distribution is not within the direct or indirect control of the Participant, such distribution shall be treated as having been made on such elected distribution date. The “permitted distribution period” for this purpose shall begin on the thirtieth day before the Participant’s elected distribution date and shall end on the later of (i) the last day of the calendar year that includes the Participant’s elected distribution date, and (ii) the fifteenth day of the third month following the Participant’s elected distribution date.


c)	In the event the Participant dies before receiving the entire distribution to which he is entitled under the Plan, the provisions of Section 5.6 shall apply.

5.3 ACCELERATION OF PAYMENTS

Notwithstanding the provisions of Sections 5.1 and 5.2 and any Participant election thereunder, the Company shall pay a Participant the amounts represented by the balances credited to a Participant’s Vested Deferred Stock Account in a lump sum as of the first Valuation Date that is administratively reasonable following the occurrence of any of the events or conditions identified below. Such lump sum payment shall be equal to the amount, as determined by the Administrator, as is reasonably estimated to be required to satisfy the purpose of the accelerated payment. The events or conditions to which this Section 5.3 applies are:


a)	The Participant needs to avoid a violation of an applicable federal, state, local, or foreign ethics law or conflicts of interest law.


b)	The Participant incurs state, local, or foreign tax obligations arising from participation in the Plan that apply to a Plan interest before such interest is otherwise payable from the Plan.


c)	The Plan is terminated and liquidated in accordance with generally applicable guidance prescribed by the Commissioner of Internal Revenue and published in the Internal Revenue Bulletin.


d)	Such other events or conditions as the Commissioner of Internal Revenue may prescribe in generally applicable guidance published in the Internal Revenue Bulletin

which the Administrator, in its discretion, chooses to apply under the Plan; provided, however, that a Participant shall have no direct or indirect election as to the application of such events or conditions to his individual circumstances.

Any payment under this Section 5.3 shall be contingent upon the Administrator’s decision that a Participant has satisfied all material elements of an applicable event or condition and that the Participant produces evidence to that effect that is satisfactory to the Administrator. If any payment under this Section 5.3 is made and such payment is less than an amount that represents the entire Vested Deferred Stock Account maintained on the Participant’s behalf, the amount of such payment shall offset any future payment from the Plan to the Participant or any Beneficiary or other person who claims through the Participant.

5.4 DELAY OF PAYMENTS

Notwithstanding the provisions of Sections 5.1 and 5.2 and any Participant election thereunder, the Company may delay the payment of amounts represented by the balances credited to a Participant’s Vested Deferred Stock Account in connection with any of the events or conditions identified below; provided, however that, with respect to any given event or condition, the Administrator shall treat Plan payments to all similarly-situated Participants in a reasonably consistent manner:


a)	The Administrator reasonably anticipates that making scheduled Plan payments will violate federal securities laws or other applicable law; provided that the scheduled payments are then made at the earliest date at which the Administrator reasonably contemplates that making the scheduled payments will not cause such a violation.

5.5 AMENDMENT TO PAYMENT ELECTION

A Participant who is a Director who has not incurred a Separation from Board Service may elect to defer the date at which payment of the amount represented by his Vested Deferred Stock Account will occur (or commence) and may elect a change in his elected method of payment (or the default form of payment under Section 5.1) by submitting a properly completed and executed Amendment Form to the Administrator which indicates the period of additional deferral and/or the desired method of payment; provided that:


a)	Such election shall not be effective until 12 months after it is submitted to the Administrator;


b)	Such election shall require that the payment with respect to which the election is made shall be delayed for a period of not less than five years

from the date payment would have been made (or commence) absent the elected change; and


c)	If the election pertains to a delay in the payment of a Vested Deferred Stock Account from a specific year and month that the Participant previously elected in his Election Form or a subsequent Amendment Form (or to which the Participant has defaulted under Section 5.1) such election cannot be made less than 12 months before the date the payment was otherwise scheduled to be made (or commence).

For purposes of this Article Five, installment payments shall be treated as a single payment.

5.6 PAYMENT UPON DEATH OF PARTICIPANT

In the event of a Participant’s death, the amount represented by the Participant’s Vested Deferred Stock Account (or, if the Participant began payment prior to death, the remaining balance of such account) shall be paid by the Company to the Participant’s Beneficiary in the form of a lump sum during the month next following the month of the Participant’s death. Except as provided in Sections 5.3 or 5.4, no payment to a Beneficiary under this Section 5.6 shall be made before or after such identified payment date; provided, however, that if the Company makes a payment within the permitted payment period (as defined below) and the actual date of payment is not within the direct or indirect control of the Beneficiary, such payment shall be treated as having been made on such identified payment date. The “permitted payment period” for this purpose shall begin on the day of the Participant’s death and shall end on the later of (a) the last day of the calendar year that includes the identified payment date, and (b) the fifteenth day of the third month following the identified payment date.


b)	Payment of the distributable amount represented by the deceased Participant’s Vested Deferred Stock Account will be made in shares of Common Stock equal to the number of full Share Credits credited to such account as of the payment date, with fractional Share Credits payable in cash.

ARTICLE SIX

CONSTRUCTION

Exhibit 10.162

Erie Insurance Group

RETIREMENT PLAN FOR EMPLOYEES

As Amended and Restated Effective December 31, 2014

Erie Insurance Group

RETIREMENT PLAN FOR EMPLOYEES

As Amended and Restated Effective December 31, 2014

Table of Content

ARTICLE I - INTRODUCTION 1

ARTICLE II - DEFINITIONS 2

2.1 “Accrued Pension” 2

2.2 “Actuary” 2

2.3 “Administrator” 2

2.4 “Affiliate” 2

2.5 “Anniversary Date” 2

2.6 “Annuity Starting Date” 2

2.7 “Beneficiary” 3

2.8 “Board of Directors” or “Board” 3

2.9 “Code” 3

2.10 “Company” 3

2.11 “Compensation” 3

2.12 “Covered Employee” 4

2.13 “Credited Service” 4

2.14 “Date of Hire” 4

2.15 “Date of Severance” 4

2.16 “Earliest Retirement Age” 5

2.17 “Effective Date” 5

2.18 “Employee” 5

2.19 “Employer(s)” 5

2.20 “ERISA” 5

2.21 “Final Average Earnings” 5

2.22 “Highly Compensated” 6

2.23 “Hour of Service” 6

2.24 “Leased Employee” 6

2.25 “Maternity or Paternity Absence” 7

2.26 “Normal Retirement Age” 7

2.27 “Normal Retirement Date” 7

2.28 “Participant” 7

2.29 “Period of Severance” 8

2.30 “Plan” or “Pension Plan” 8

2.31 “Plan Year” 8

2.32 “Service” 8

2.33 “Social Security Covered Compensation” 8

2.34 “Spouse” 8

2.35 “Test Compensation” 8

2.36 “Total and Permanent Disability” 10

2.37 “Trust Agreement” 10

2.38 “Trustee” 10

2.39 “Trust Fund” or “Fund” 10

ARTICLE III - ADMINISTRATION OF THE PLAN 11

3.1 Pension Administrator 11

3.2 Powers 11

3.3 Delegation of Duties 13

3.4 Administrator as Named Fiduciary 14

3.5 Conclusiveness of Various Documents 14

3.6 Actions to be Uniform 14

3.7 Liability and Indemnification 14

3.8 Claims Review Procedure 15


3.9	Exhaustion of Administrative Remedies 16


3.10	Deadline to File Civil Action 17


11	Waiver of Participation 17

ARTICLE IV - SERVICE PROVISIONS 18

4.1 Service 18

4.2 Credited Service 18

4.3 Loss and Reinstatement of Service 18

4.4 Transfer To Other Employment 19

4.5 Transfer From Other Employment 19

ARTICLE V - ELIGIBILITY FOR PENSIONS 20

5.1 Normal Retirement 20

5.2 Early Retirement 20

5.3 Disability Retirement 20

5.4 Vesting 21

ARTICLE VI - AMOUNT OF PENSIONS 22

6.1 Normal Retirement Pension 22

6.2 Early Retirement Pension 22

6.3 Disability Retirement Pension 22

6.4 Deferred Pension Upon Termination of Service 23

6.5 Increase in Pension for Certain Retired Participants 24

6.6 Offset of Accruals by Plan Distributions 24

6.7 Non-Duplication of Benefits 24

ARTICLE VII - COMMENCEMENT AND DURATION OF PENSIONS 25

7.1 Normal and Early Retirement Pensions 25

7.2 Disability Retirement Pension 25

7.3 Deferred Vested Pension 26

7.4 Reemployment of a Retired Participant 27

7.5 Automatic Surviving Spouse’s Pension 28

7.6 Requirement for Spouse Consent 30

7.7 Optional Forms of Pensions 30

7.8 Payment of Small Pension 32

7.9 Repayment of Cashout on Reemployment 34

7.10 Delay in Commencement of Pension Payments 34

7.11 Direct Rollover of Eligible Rollover Distributions. 36

7.12 Change to Pension Payments in Connection with Qualifying Event 38

ARTICLE VIII - DEATH BENEFITS 42

8.1 Death Prior to Retirement or Severance 42

8.2 Death Prior to Commencement of Early or Disability Pensions 42

8.3 Death Prior to Commencement of Vested Pensions 43

8.4 Effect of Valid Joint and Survivor Election 44

8.5 Death on or After Annuity Starting Date 44

8.6 Death Benefit for Vested Participants Who Terminated After September 1, 1974
and Prior to August 23, 1984 45

ARTICLE IX - TRUST FUND AND THE TRUSTEE 46

9.1 Trust Fund 46

9.2 Irrevocability 47

9.3 Contributions by the Company 47

9.4 Contributions By Participants 48

9.5 Benefits Payable Only From Trust Fund 48

9.6 Plan Expenses 49

ARTICLE X - BENEFIT LIMITATIONS 50

10.1 Maximum Limitation Under Section 415(b) of the Code (Effective January 1, 2008) 50

10.2 Limitaions Based on Funding Status 53

ARTICLE XI - MISCELLANEOUS PROVISIONS 62

11.1 Plan Non-Contractual 62

11.2 Non-Alienation of Retirement Rights or Benefits 62

11.3 Payment of Pension to Others 63

11.4 Prohibition Against Reversion 63

11.5 Merger, Transfer of Assets or Liabilities 63

11.6 Actuarial Equivalence 64

11.7 Change of Vesting Schedule 64

11.8 Controlled Group 64

11.9 Severability 65

11.10 Employer Records 65

11.11 Application of Plan Provisions 65

11.12 Missing Participants and Beneficiaries. 65

11.13 IRC 414(u) Compliance Provision 66

ARTICLE XII - AMENDMENT AND TERMINATION 68

12.1 Amendment and Termination of the Plan 68

12.2 Administration of the Plan in Case of Termination 68

12.3 Internal Revenue Service Limitations 69

iii

ARTICLE XIII - TOP-HEAVY PROVISIONS 70

13.1 General 70

13.2 Definitions Relating to Top-Heavy Provisions 70

13.3 Top-Heavy Plan Vesting Requirements 72

13.4 Top-Heavy Plan Minimum Benefit Requirements 72

13.5 Limited Application of this Article. 74

ARTICLE XIV - JURISDICTION 75

14.1 Jurisdiction 75

Erie Insurance Group

RETIREMENT PLAN FOR EMPLOYEES

Effective December 31, 1946

As Amended and Restated Effective December 31, 2014

ARTICLE I - INTRODUCTION

The Erie Insurance Group adopted a Retirement Plan, effective December 31, 1946. Such Plan, which has been heretofore amended from time to time by action of the Board of Directors in accordance with the provisions of the Plan, is herein amended and restated.

This amendment and restatement of the Plan shall constitute an amendment, restatement and continuation of the Plan. This amendment and restatement is generally effective December 31, 2014. However, certain provisions of this amendment and restatement are effective as of some other date. The provisions of this amendment and restatement with stated effective dates prior to December 31, 2014 shall be deemed to amend the corresponding provisions, if any, of the Plan as in effect before this amendment and restatement and all amendments thereto as of such dates. Events occurring before the applicable effective date of any provision of this amendment and restatement shall be governed by the applicable provision of the Plan as in effect on the date of the event. The object of the Plan is to provide retirement pensions for eligible employees.

ARTICLE II - DEFINITIONS

For the purposes of this Retirement Plan for Employees, the following words and phrases shall have the following meanings unless a different meaning is clearly required by the context. Any terms herein used in the masculine shall be read and construed in the feminine where they would so apply, and any terms used in the singular shall be read and construed in the plural if again so applicable.


2.1	“Accrued Pension” shall mean a pension amount determined with respect to a Participant in accordance with Section 6.2(a) of the Plan using the date of determination for the date of early retirement.


2.2	“Actuary” shall mean the actuary or firm of actuaries chosen by, but independent of the Company, who is, or in the case of a firm one or more of whose members is, an enrolled actuary under the provisions of Section 3042 of the Employee Retirement Income Security Act of 1974.


2.3	“Administrator” shall mean the administrative committee described in Article III of the Plan.

2.4

“Affiliate” means any other employer which, together with the Company, is a member of a controlled group of corporations or of a commonly controlled trade or business (as defined in Code Sections 414(b) and (c) and as modified, where appropriate, by Code Section 415(h)) or of an affiliated service group (as defined in Code Section 414(m)) or other organization described in Code Section 414(o). Each such Affiliate shall be treated as an Affiliate only during such period as it is or was an Affiliate as defined above.


2.5	“Anniversary Date” shall mean any December 31 occurring after the Effective Date.

2.6

“Annuity Starting Date” shall mean the first day of the first period for which an amount is received as an annuity (whether by reason of retirement or other termination of employment) or, in the case of a benefit not payable as an annuity, the first day on which all events have occurred which entitle the Participant, or other distributee, to such benefit. A Participant whose benefit is suspended under any provision of the Plan shall not be deemed to have reached a new Annuity Starting Date when such benefit again becomes payable. The Annuity Starting Date for benefits accrued after an earlier Annuity Starting Date shall be determined in accordance with Treasury Regulations. The Annuity Starting Date for a benefit payable under Section 7.10 shall be the applicable date described therein.

2.7

“Beneficiary” shall mean any person who, by reason of a designation made by a Participant under Plan procedures or by operation of the Plan, is or will be entitled to receive any amount or benefit hereunder upon the death of the Participant. Any attempt to designate a person as Beneficiary hereunder orally, or by means other than that permitted under the Plan, shall be void and have no effect.


2.8	“Board of Directors” or “Board” shall mean the Board of Directors of the Company.


2.9	“Code” shall mean the Internal Revenue Code of 1986, as amended.


2.10	“Company” shall mean Erie Indemnity Company, a corporation organized and existing under the laws of Pennsylvania.

2.11

“Compensation” for any period shall mean the rate of base salary of a Covered Employee from the Employers during the period. For this purpose, “base salary” shall exclude Form W-2 income in the form of overtime compensation, bonuses, commissions, deferred compensation plan payments or severance pay under any severance benefit plan, but shall include Form W-2 income paid as a lump sum in lieu of merit increase and compensation excluded from Form W-2 income because of salary reduction agreements in connection with plans described in Section 125, 132(f)(4) or 401(k) of the Code, or resulting from deferred compensation contracts for the period in question. Compensation shall exclude any differential wage payments made on behalf of a Covered Employee who is on military leave. Effective for each Plan Year beginning on and after December 31, 1989, in no event shall the amount of Compensation taken into account under the Plan exceed the adjusted annual limitation permitted under Section 401(a)(17) of the Code for such Plan Year. Such adjusted annual limitation shall be, for each Plan Year beginning on and after December 31, 2001, $200,000 (as adjusted for cost-of-living increases in accordance with Section 401(a)(17)(B) of the Code). For purposes of determining benefit accruals in any given Plan Year beginning after December 31, 2001, the annual compensation limitation for any determination period after December 31, 1993 and before December 31, 2001, shall be $200,000.


2.12	“Covered Employee” shall mean any Employee of an Employer, excluding:


(a)	any such Employee whose employment is governed by the terms of a collective bargaining agreement under which retirement benefits were the subject of good faith bargaining,


(b)	any such Employee who has voluntarily waived participation in the Plan, and


(c)	any such Employee who is compensated on an hourly basis.

Notwithstanding any provision of the Plan to the contrary, an individual who an Employer determines to be a contract employee, independent contractor, leased employee (including a Leased Employee as defined hereunder), leased owner, leased manager, shared employee or person working under a similar classification shall not become a Covered Employee hereunder, regardless of whether any such individual is ultimately determined to be a common law employee, unless and until the Employer shall otherwise determine. An individual shall be treated as a Covered Employee only during such period as he is or was a Covered Employee as defined above.


2.13	“Credited Service” shall mean a Participant’s service determined in accordance with Article IV hereof for the purpose of calculating the amount of benefit earned under the Plan.


2.14	“Date of Hire” shall mean the date on which an Employee first commences employment or reemployment and works at least one Hour of Service for an Employer or an Affiliate.


2.15	“Date of Severance” shall mean the earliest to occur of the following dates:


(a)	date of retirement,


(b)	date of voluntary employment termination,


(c)	date of discharge by an Employer unless he is subsequently reemployed and given pay back to the date of discharge,


(d)	date of death,

(e)

the first anniversary of a date of absence from active employment for any other reason; provided, however, that a later Date of Severance shall apply with respect to a leave of absence which, under Employer policy, provides for a later Date of Severance and, provided further, that the second anniversary of a date of absence from active employment shall be used for an Employee who is absent by reason of a Maternity or Paternity Absence which commenced on or after December 31, 1985, or who is absent by reason of Total and Permanent Disability.

An Employee shall not incur a Date of Severance while he is in the active service of the United States Armed Forces if his reemployment rights are protected by law.


2.16	“Earliest Retirement Age” shall mean the earliest date on which, under the Plan, the Participant could elect to receive retirement benefits in accordance with Section 5.1 or 5.2 hereof.


2.17	“Effective Date” shall mean December 31, 1946.


2.18	“Employee” shall mean any common-law employee of an Employer or an Affiliate; provided, however, that for purposes of Section 2.22; “Employee” shall include any self-employed individual performing services for an Employer or Affiliate who is treated as an employee under Section 401(c)(1) of the Code.


2.19	“Employer(s)” shall mean the Company, Erie Family Life Insurance Company, Erie Insurance Exchange, Erie Insurance Company, EI Holding Corp., EI Service Corp., Erie Insurance Company of New York, Erie Insurance Property & Casualty Company, Flagship City Insurance Company and any other Affiliate which may adopt this Plan.


2.20	“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

2.21

“Final Average Earnings” shall mean 1/36th of the Participant’s aggregate Compensation during the thirty-six consecutive calendar months as a Covered Employee which produces the greatest aggregate Compensation out of the one hundred twenty calendar month period as a Covered Employee ending on the earlier of the date on which the Participant retires or terminates employment with the Employers or the date on which the Participant is no longer considered a Covered Employee. In the event a Participant does not have thirty-six consecutive calendar months of Compensation as a Covered Employee (i) months in which the Participant is not a Covered Employee and months in which the Participant has no Compensation will be excluded for purposes of determining consecutive months for the thirty-six and one hundred twenty month periods and (ii) with respect to a Participant with fewer than thirty-six total calendar months of Compensation as a Covered Employee, Final Average Earnings will be determined as the average monthly Compensation over the Participant’s entire period of employment as a Covered Employee.

2.22

“Highly Compensated” shall mean any Employee who is a more than five percent (5%) owner of an Employer or earned $110,000 or more in Test Compensation from the Employer in the calendar year that begins in the twelve month period that precedes the current Plan Year (the “lookback year”); provided, however, that such $110,000 figure shall be adjusted for cost of living at the same time and in the same manner as determined under Code Section 415(d).


2.23	“Hour of Service” shall include the following:


(a)	each hour for which an Employee is directly or indirectly paid or entitled to payment from an Employer or an Affiliate as an Employee for the performance of duties during an applicable computation period (these hours must be credited to the Employee in the computation period during which the duties were performed and not when paid, if different); and


(b)	each hour for which back pay, irrespective of mitigation of damages, has been awarded or agreed to by an Employer or an Affiliate (these hours must be credited in the computation period or periods to which the award or agreement pertains rather than that in which the payment, award or agreement was made); and


(c)	each hour for which an Employee is directly or indirectly paid or entitled to payment from an Employer or an Affiliate for reasons, such as vacation, sickness or disability, other than for the performance of duties (these hours shall be calculated and credited pursuant to Section 2530.200b-2 of the Department of Labor regulations which are incorporated herein by reference).

2.24

“Leased Employee” shall mean any person (other than an Employee of an Employer) who pursuant to an agreement between the Employer and any other person (“leasing organization”) has performed services for the Employer (or for the Employer and related persons determined in accordance with Section 414(n)(6) of the Code) on a substantially full-time basis for a period of at least one year and such services are performed under primary direction or control by the recipient. Except as provided below, any person satisfying the foregoing criteria shall be treated as an Employee. Contributions or benefits provided a Leased Employee by the leasing organization which are attributable to services performed for the Employer shall be treated as provided by the Employer.

Notwithstanding the foregoing, a Leased Employee shall not be considered an Employee of an Employer if: (i) such Leased Employee is covered by a money purchase pension plan providing: (1) a nonintegrated employer contribution rate of at least 10 percent of compensation, (2) immediate participation, and (3) full and immediate vesting; and (ii) Leased Employees do not constitute more than 20 percent of the Employer’s non-Highly Compensated workforce.


2.25	“Maternity or Paternity Absence” shall mean an absence from work by an Employee for any period:


(a)	by reason of pregnancy of the Employee,


(b)	by reason of the birth of a child of the Employee,


(c)	by reason of the placement of a child with the Employee in connection with the adoption of such child by such Employee, or


(d)	for purposes of caring for such child for a period immediately following such birth or placement.

An absence will not be considered a “Maternity or Paternity Absence” unless the Employee provides the Administrator with such timely information as the Administrator may reasonably require to establish that the absence from work is for one of the four permitted reasons outlined above. Nothing in this Plan shall require an Employer to grant a paid leave of absence to any Employee.


2.26	“Normal Retirement Age” of a Participant shall be age 65.


2.27	“Normal Retirement Date” of a Participant shall be the first day of the month next following the month in which his sixty-fifth birthday occurs.


2.28	“Participant” shall mean any Covered Employee and any former Covered Employee who is entitled to, or who is receiving, a retirement benefit or deferred vested pension under the Plan.


2.29	“Period of Severance” shall mean the period of time between an Employee’s Date of Severance and the date as of which he performs his first Hour of Service following reemployment.


2.30	“Plan” or “Pension Plan” shall mean this “Erie Insurance Group Retirement Plan for Employees” as herein set forth with all amendments, modifications, appendices, and supplements hereafter made.


2.31	“Plan Year” shall mean any period of 12 consecutive calendar months next preceding an Anniversary Date of the Plan.


2.32	“Service” shall mean an Employee’s service determined in accordance with Article IV hereof for the purposes of meeting the eligibility requirements for a benefit under the Plan.

2.33

“Social Security Covered Compensation” shall mean, for any Plan Year, the average (without indexing) of the Social Security taxable wage bases in effect for each calendar year during the 35-year period ending with the last day of the calendar year in which the Participant attains (or will attain) Social Security Retirement Age (as such term is defined in Section 10.1(a)(iv) hereof). In determining a Participant’s Social Security Covered Compensation for a Plan Year, the Social Security taxable wage base for the current Plan Year and any subsequent Plan Year shall be assumed to be the same as in effect for the Plan Year for which the determination is being made. A Participant’s Social Security Covered Compensation shall be automatically adjusted for each Plan Year in accordance with these provisions, up to and including the Plan Year in which the Participant attains Social Security Retirement Age.


2.34	“Spouse” shall mean, with respect to any Participant, the person to whom the Participant is married at a given determination date, as determined under applicable law.

2.35

“Test Compensation” shall mean, for any Plan Year, an Employee’s compensation, reported under Sections 6041 and 6051 of the Code on Form W‑2, as paid by the Company or other Employer for the calendar year ending with or within such Plan Year, including any amounts contributed pursuant to a salary reduction election on behalf of a Covered Employee to a plan described in Sections 125, 132(f), 402(e)(3), 402(h)(1)(B), 403(b), or 457(b) of the Code for the period in question. Effective January 1, 2009, Test Compensation shall include any differential wage payments, as defined in Section 3401(h) of the Code, that are paid by an Employer during a period of qualified military service as defined in Section 414(u) of the Code. Test Compensation in any given year shall not exceed the adjusted annual limitation in effect for such year (as set forth in Section 2.11), provided that such limitation shall not be applied in determining the status of an Employee as a Highly Compensated Employee or Key Employee. To the extent permitted under regulations and other guidance promulgated by the Internal Revenue Service, the Company may elect to determine Test Compensation on a basis other than that provided above.

Notwithstanding the preceding paragraph, i n no event shall Test Compensation include severance pay. However, the following types of remuneration, if includible for purposes of Test Compensation as described above, shall be taken into account only if paid by the later of the date that is 2-1/2 months after the date of severance from employment with an Employer or the end of the limitation year that includes the date of severance from employment with the Employer, if the amounts would have been included in Test Compensation had they been paid before the severance from employment date:


(a)	Regular Pay After Severance from Employment. The payment for services rendered during the Participant’s regular working hours, or for services outside of the Participant’s regular working hours such as overtime or shift differential, commissions, bonuses or other similar payments that would have been paid had the Participant not incurred a severance from employment.

(b)

Leave Cash Outs and Deferred Compensation. Payments of unused accrued bona fide sick, vacation or other leave provided the Participant would have been able to use the leave if employment had continued, or payments from a nonqualified unfunded deferred compensation plan, provided the payment would have been paid had the Participant not incurred a severance from employment and such payment would have been includible in gross income had such payment been made.

(c)

Post-Severance from Employment Salary Continuation Payments. If the Employer continues to provide remuneration to a Participant due to the Participant’s disability or to a Participant who is not performing services because of qualified military service, as defined in Code Section 414(u), in an amount that is not in excess of that which would have been payable to the Participant as compensation had the Participant not entered qualified military service, such amounts will be included in Test Compensation for purposes of this Section.

2.36

“Total and Permanent Disability” shall mean permanent incapacity resulting in the Participant being unable to engage in any gainful employment or occupation by reason of any medically demonstrable physical or mental condition, excluding, however, (a) incapacity contracted, suffered or incurred while the Participant was engaged in or which resulted from having engaged in a felonious enterprise; and (b) incapacity contracted, suffered or incurred in the employment of other than an Employer, including self-employment.


2.37	“Trust Agreement” shall mean the trust agreement between the Company and a Trustee as provided in Section 9.1, together with all amendments, modifications and supplements, thereto.


2.38	“Trustee” shall mean the Trustee or Trustees designated under a Trust Agreement including any successor or successors.


2.39	“Trust Fund” or “Fund” shall mean the retirement plan trust fund established by the Company in accordance with Article IX.

ARTICLE III - ADMINISTRATION OF THE PLAN


3.1	Pension Administrator

The Plan shall be administered by a committee that shall act as Plan Administrator. The initial members of the administrative committee have been appointed by the Board, effective January 1, 2008; provided, however, that such initial members, and any subsequent members of the administrative committee, shall serve at the pleasure of the Executive Council of the Company. Any individual who is a member of the administrative committee may resign by delivering his written resignation to the Executive Council of the Company. In the event of the death, resignation or removal of a member of the administrative committee, such Executive Council shall fill the vacancy. In making the appointment, the Executive Council shall not be limited to any particular person or group, and nothing herein contained shall be construed to prevent any Participant, director, officer, employee or shareholder of the Employers from service as a member of the administrative committee. Members of the administrative committee will not be compensated from the Trust Fund for services performed in such capacity, but the Company will reimburse such individuals for expenses reasonably and necessarily incurred by them in such capacity.

Initial appointment by the Board is evidenced by a resolution of the Board. Appointment by the Executive Council of the Company shall be evidenced in a writing executed on behalf of the Executive Council. Copies of such writings shall be delivered to the Trustee and to such other persons as may require notice of such appointments.

Appointment by the Board shall be evidenced by a certified copy of the resolution of the Board making such appointment, and copies of such certified resolution shall be delivered to the Trustee and to such other persons as may require such notice.


3.2	Powers

The Administrator will have full power to administer the Plan in all of its details, subject, however, to the requirements of ERISA. This power shall include having the sole and absolute discretion to interpret and apply the provisions of the Plan to determine the rights and status hereunder of any individual, to decide disputes arising under the Plan, and to make any determinations and findings of fact with respect to benefits payable hereunder and the persons entitled thereto as may be required for any purpose under the Plan. Without limiting the generality of the above, the Administrator is granted the following authority which it shall discharge in its sole and absolute discretion in accordance with Plan provisions as interpreted by the Administrator:


(a)	To make and enforce such rules and regulations as it deems necessary or proper for the efficient administration of the Plan, including the modification of the claims procedure under Section 3.8 in accordance with any regulations issued under Section 503 of ERISA.


(b)	To interpret the Plan.


(c)	To decide all questions concerning the Plan and the eligibility of any person to participate in the Plan, his period of participation and/or service under the Plan, his date of birth, his eligibility to accrue a benefit under the Plan and to receive a distribution from the Plan.


(d)	To compute the amount of benefits which will be payable to any Participant or other person in accordance with the provisions of the Plan, and to determine the identity of the person or persons to whom such benefits will be paid.


(e)	To authorize the payment of Plan benefits and to direct cessation of benefit payments.

(f)

To appoint one or more investment managers to manage the investment and reinvestment of the Fund and to enter into management contracts on behalf of the Company with respect to such appointments. Unless and until the Administrator appoints an investment manager with respect to all or a specific portion of the Fund, the Trustee shall have exclusive authority to manage and control all or such portion of the Fund.


(g)	To appoint, employ or engage such other agents, counsel accountants, consultants and actuaries as may be required to assist in administering the Plan.

(h)

To establish procedures to determine whether a domestic relations order is a qualified domestic relations order within the meaning of Section 414(p) of the Code, to determine under such procedures whether a domestic relations order is a qualified domestic relations order and whether a putative alternate payee otherwise qualifies for benefits hereunder, to inform the parties to the order as to the effect of the order, and to direct the Trustee to hold in escrow or pay any amounts so directed to be held or paid by the order.


(i)	To determine whether the Plan has incurred a partial termination.


(j)	To obtain from the Employers, Employees, Participants, Spouses and Beneficiaries such information as shall be necessary for the proper administration of the Plan.


(k)	To perform all reporting and disclosure requirements imposed upon the Plan by ERISA, the Code or any other lawful authority.


(l)	To take such steps as it, in its discretion, considers necessary and/or appropriate to remedy any inequity under the Plan that results from incorrect information received or communicated or as the consequence of administrative error including, but not limited to, recouping benefit overpayments.


(m)	To correct any defect, reconcile any inconsistency or supply any omission under the Plan.


(n)	To delegate its powers and duties to others in accordance with Section 3.3.


(o)	To exercise such other authority and responsibility as is specifically assigned to it under the terms of the Plan or the provisions of the Administrator’s charter and to perform any other acts necessary to the performance of its powers and duties.

The Administrator at its discretion may either request the Company or direct the Fund to pay for any or all services rendered by the Trustee and by persons appointed, employed or engaged under Section 3.2(f) or (g) or under the terms of the Trust Agreement.

The Administrator’s interpretations, decisions, computations and determinations under this Section 3.2 which are made in good faith will be final and conclusive upon the Employers, all Participants and all other persons concerned. Any action taken by the Administrator with respect to the rights or benefits of any person under the Plan shall be revocable by the Administrator as to payments or distributions not theretofore made, pursuant to such action, from the Trust Fund; and appropriate adjustments may be made in future payments or distributions to a Participant, Spouse or Beneficiary to offset any excess payment or underpayment previously made to such Participant, Spouse or Beneficiary from the Trust Fund. No ruling or decision of the Administrator in any one case shall create a basis for a retroactive adjustment in any other case prior to the date of written filing of each specific claim.


3.3	Delegation of Duties

The Administrator may, from time to time, designate any individual to carry out any of the responsibilities of the Administrator. The individual so designated will have full authority or such limited authority as the Administrator may specify, to take such actions as are necessary or appropriate to carry out the responsibilities assigned by the Administrator.


3.4	Administrator as Named Fiduciary

The Administrator will be a “named fiduciary” for purposes of section 402(a)(1) of ERISA with authority to control and manage the operation and administration of the Plan.


3.5	Conclusiveness of Various Documents

The Administrator and the Company and its directors and officers will be entitled to rely upon all tables, valuations, certificates and reports furnished by any actuary, accountant, counsel or other expert appointed, employed or engaged by the Administrator or the Company.


3.6	Actions to be Uniform

Any discretionary actions to be taken under the Plan by the Administrator will be nondiscriminatory and uniform with respect to all persons similarly situated.


3.7	Liability and Indemnification

To the full extent allowed by law, the Administrator shall not incur any liability to any Participant or Beneficiary, or to any other person, by reason of any act or failure to act on the part of the Administrator if such act or omission is not the result of the Administrator’s gross negligence, willful misconduct or exercise of bad faith. To the full extent allowed by law, the Company agrees to indemnify the Administrator against all liability and expenses (including reasonable attorney’s fees and other reasonable expenses) occasioned by any act or omission to act if such act or omission is not the result of the Administrator’s gross negligence, willful misconduct or exercise of bad faith. Neither this Section 3.7 nor any other provision of this Plan shall be applied to invalidate, modify, or limit in any respect any contract, agreement, or arrangement for indemnifying or insuring the Administrator against, or otherwise limiting, such liability or expense, or for settlement of such liability, to the extent such contract, agreement, or arrangement is not precluded by the terms of Section 410 of ERISA.


3.8	Claims Review Procedure

The Administrator shall be responsible for the claims procedure under the Plan. An application for a retirement benefit or other benefit under the Plan shall be considered a claim for purposes of this Section 3.8.

(a)

Original Claim . In the event a claim of any Participant, Beneficiary, alternate payee, or other person (hereinafter referred to in this Section as the “Claimant”) for a benefit is partially or completely denied, the Administrator shall give, within ninety (90) days after receipt of the claim (or if special circumstances, made known to the Claimant, require an extension of time for processing the claim, within one hundred eighty (180) days after receipt of the claim), written notice of such denial to the Claimant. Such notice shall set forth, in a manner calculated to be understood by the Claimant, the specific reason or reasons for the denial (with reference to pertinent Plan provisions upon which the denial is based); an explanation of additional material or information, if any, necessary for the Claimant to perfect the claim; a statement of why the material or information is necessary; on and after January 1, 2002, a statement of the Claimant’s right to bring a civil action under Section 502(a) of ERISA; and an explanation of the Plan’s claims review procedure, including the time limits applicable to such procedure.


(b)	Review of Denied Claim .

(i)

A Claimant whose claim is partially or completely denied shall have the right to request a full and fair review of the denial by a written request delivered to the Administrator within sixty (60) days of receipt of the written notice of claim denial, or within such longer time as the Administrator, under uniform rules, determines. In such review, the Claimant or his duly authorized representative shall have the right to review, upon request and free of charge, all documents, records or other information relevant to the claim and to submit any written comments, documents, or records relating to the claim to the Administrator.

(ii)

The Administrator, within sixty (60) days after the request for review, or in special circumstances, such as where the Administrator in its sole discretion holds a hearing, within one hundred twenty (120) days of the request for review, will submit its decision in writing. Such decision shall take into account all comments, documents, records and other information properly submitted by the Claimant, whether or not such information was considered in the original claim determination. The decision on review will be binding on all parties, will be written in a manner calculated to be understood by the Claimant, will contain specific reasons for the decision and specific references to the pertinent Plan provisions upon which the decision is based, will indicate that the Claimant may review, upon request and free of charge, all documents, records or other information relevant to the claim and on and after January 1, 2002, will contain a statement of the Claimant’s right to bring a civil action under Section 502(a) of ERISA.


(iii)	If a Claimant fails to file a claim or request for review in the manner and in accordance with the time limitations specified herein, such claim or request for review shall be waived, and the Claimant shall thereafter be barred from again asserting such claim.

(c)

Determination by the Administrator Conclusive. The Administrator’s determination of factual matter relating to Participants, Beneficiaries and alternate payees including, without limitation, a Participant’s Credited Service, Service and any other factual matters, shall be conclusive. The Administrator and the Company and its respective officers and directors shall be entitled to rely upon all tables, valuations, certificates and reports furnished by an actuary, any accountant for the Plan, the Trustee or any investment managers and upon opinions given by any legal counsel for the Plan insofar as such reliance is consistent with ERISA. The actuary, the Trustee and other service providers may act and rely upon all information reported to them by the Administrator and/or the Company and need not inquire into the accuracy thereof nor shall be charged with any notice to the contrary.


3.9	Exhaustion of Administrative Remedies. The exhaustion of the claims review procedure is mandatory for resolving every claim and dispute arising under the Plan. As to such claims and disputes:


(a)	No claimant shall be permitted to commence any civil action to recover Plan benefits or to enforce or clarify rights under the Plan under Section 502 or Section 510 of ERISA or under any other provision of law, whether or not statutory, until the claims review procedure set forth herein has been exhausted in its entirety; and


(b)	In any such civil action all explicit and all implicit determinations by the Administrator (including, but not limited to, determinations as to whether the claim, or a request for a review of a denied claim, was timely filed) shall be afforded the maximum deference permitted by law.


3.10	Deadline to File Civil Action . No civil action to recover Plan benefits or to enforce or clarify rights under the Plan under Section 502 or Section 510 of ERISA or under any other provision of law, whether or not statutory, may be brought by any claimant on any matter pertaining to the Plan unless the civil action is commenced in the proper forum before the earlier of:


(a)	Thirty months after the claimant knew or reasonably should have known of the principal facts on which the claim is based; or


(b)	Eighteen months after the claimant has exhausted the claims review procedure.


3.11	Waiver of Participation

It is the purpose of this Plan to provide for the accrual of retirement benefits for all Covered Employees. Notwithstanding the foregoing, any Covered Employee may waive participation in this Plan by executing a Waiver of Participation on a form provided by the Administrator for such purpose. Any Waiver of Participation shall be effective for the Plan Year in which it is executed and shall be irrevocable. During any Plan Year for which a Waiver of Participation is in effect, no Service, Credited Service or Compensation shall be recognized under the Plan for the Employee and the Employee shall be considered as other than a Covered Employee.

ARTICLE IV - SERVICE PROVISIONS


4.1	Service

Service shall be used to determine a Participant’s vested rights under the Plan. An Employee shall receive Service for the period of time between his Date of Hire and his Date of Severance, provided that no Service shall be received for the period of continued absence between the first and second anniversary of the date of first absence from work by reason of a Maternity or Paternity Absence. Service shall be counted for full years only. Service shall include any prior periods of Service that are reinstated in accordance with Section 4.3 below. Service shall include any Period of Severance which has continued for less than one year.

Notwithstanding the foregoing, Service shall include periods of absence granted under The Family and Medical Leave Act of 1993, to the extent of the minimum service credit required by said Act.


4.2	Credited Service

Credited Service shall be used to compute the amount of a Participant’s benefit and to determine a Participant’s eligibility for an early retirement and a disability retirement under the Plan. Credited Service shall be based on Service but shall not include (i) any period of Service in which a Participant is not a Covered Employee, and (ii) any Period of Severance; provided, however, that a Participant’s Credited Service shall include that Credited Service accumulated during the period in which the Participant is eligible for a disability retirement pension (as determined under Sections 5.3, 6.3 and 7.2 hereof). Solely for purposes of computing the amount of a Participant’s benefit under Section 6.1 and subject to the foregoing provisions of this Section, Credited Service shall include a year of credit for any fraction of a year of Service.


4.3	Loss and Reinstatement of Service

In the event a Participant incurs a Date of Severance prior to his becoming eligible for a retirement benefit or deferred vested pension under the Plan, he shall be deemed to receive a distribution equal to the actuarial equivalent value of the entire vested pension earned through his Date of Severance. In such a case, the Participant shall lose his Service and Credited Service and his Accrued Pension shall be forfeited as of such date of deemed distribution. If such individual is subsequently reemployed as a Covered Employee, the individual, after again completing one year of Service, shall be considered a Plan Participant retroactively as of such date of reemployment and have his forfeited Service, Credited Service and Accrued Pension reinstated if his last Period of Severance is less than the greater of:


(a)	five years, or


(b)	the Participant’s forfeited Service (including any periods of Service previously reinstated under the provisions of this Section 4.3 or its predecessor).


4.4	Transfer To Other Employment

Upon the transfer of a Participant covered by the Plan to other employment with an Employer or Affiliate whereby he ceases to be a Covered Employee hereunder, his Accrued Pension based on his Credited Service and Final Average Earnings as of the transfer date shall be frozen and Credited Service shall cease to accrue for purposes of the Plan. In the event such Participant remains in the employment of an Employer until such time as, except for such transfer, he would have met the age, service and/or other eligibility requirements for any pension under the Plan, such frozen Accrued Pension shall become payable in accordance with the appropriate provisions of the Plan as in effect on the date of transfer.


4.5	Transfer From Other Employment

Upon transfer or retransfer of an individual from other employment with an Employer or Affiliate such that the individual becomes a Covered Employee hereunder, his years of Service as otherwise computed under this Article IV will include the period of his employment with an Employer or Affiliate prior to such transfer or retransfer for the purpose of meeting the vesting requirements under this Plan; provided, however, that only years of Credited Service acquired while employed as a Covered Employee covered under this Plan shall be used to compute the amount of any pension under this Plan.

ARTICLE V - ELIGIBILITY FOR PENSIONS


5.1	Normal Retirement

A Participant whose employment with an Employer and all Affiliates is terminated when or after he attains Normal Retirement Age shall be eligible for a normal retirement pension in the amount as provided in Section 6.1 hereof. A Participant’s right to his normal retirement pension shall be nonforfeitable upon the attainment of his Normal Retirement Age provided he is an Employee on such date. A Participant continuing in employment with an Employer after his Normal Retirement Date in a capacity such that he completes 40 or more Hours of Service per month will be provided with a notice incorporating the substance of the notification described in Section 2530.203-3(b)(4) of the Code of Federal Regulations. Such notice shall include a statement that the Participant’s pension will be suspended and permanently withheld for months in which he completes 40 or more Hours of Service. Any benefit accrual earned by a Participant for any given Plan Year ending on or after the date on which the Participant attains Normal Retirement Age shall be reduced (but not below zero) by the amount of any actuarial adjustment which may be required in connection with a delay in payment of a Participant’s normal retirement benefit or the suspension of benefits otherwise payable after the Participant attains Normal Retirement Age.


5.2	Early Retirement

A Participant with 15 or more years of Credited Service whose employment with an Employer and all Affiliates is terminated when or after he reaches the age of 55 but prior to the attainment of his Normal Retirement Age, shall be eligible for an early retirement pension in the amount as provided in Section 6.2 hereof.


5.3	Disability Retirement

A Participant whose status as a Covered Employee is terminated due to his Total and Permanent Disability after 15 or more years of Credited Service and who is eligible for and receiving disability benefits under the Erie Insurance Group Long Term Disability Income Benefits Program shall be eligible for a disability retirement pension in an amount as provided in Section 6.3 hereof beginning at his Normal Retirement Date or later disability retirement date providing he remains subject to a Total and Permanent Disability and receives said disability income benefits continuously through his Normal Retirement Age or later disability retirement date.


5.4	Vesting

A Participant with 5 years or more of Service and whose employment with an Employer and all Affiliates is terminated at a time when he is ineligible for any retirement pension under the Plan shall be eligible for a deferred vested pension as computed under Section 6.4.

If a Participant is reemployed as a Covered Employee by an Employer after having qualified for a deferred vested pension in accordance with this Section 5.4, such Participant shall retain his right to receive such deferred vested pension and he shall be reinstated with the Service and Credited Service to which he was entitled at the time of his prior termination of employment. Any benefits to which the Participant may be entitled upon his subsequent retirement or termination of employment shall be reduced actuarially, as provided in Section 7.4, to reflect any deferred vested pension benefits paid prior to reemployment.

ARTICLE VI - AMOUNT OF PENSIONS


6.1	Normal Retirement Pension

Subject to the provisions of Articles VII and X, the monthly pension of a Participant who is eligible for a normal retirement pension under the provisions of Section 5.1 (as stated in the form of a life annuity) shall be one-twelfth (1/12) of the result obtained by multiplying the sum of (a) and (b) by (c), where:


(a)	equals 1.0% of the Participant’s Final Average Earnings not in excess of Social Security Covered Compensation;


(b)	equals 1.5% of the Participant’s Final Average Earnings in excess of Social Security Covered Compensation; and


(c)	equals the Participant’s Credited Service not in excess of 30 years.

In no event shall the overall permitted disparity limits of Section 1.401(l)-5 of the Income Tax Regulations be exceeded.


6.2	Early Retirement Pension

Subject to the provisions of Articles VII and X, the monthly early retirement pension of a Participant eligible for an early retirement pension under the provisions of Section 5.2 shall be, at the option of the Participant, either (a) or (b) as set forth below:


(a)	A deferred pension, commencing as of the Participant’s Normal Retirement Date, equal to the amount of pension, determined under Section 6.1, to which he is entitled based upon his Credited Service and Final Average Earnings as of his date of early retirement and the level of Social Security Covered Compensation in effect on such date.

(b)

An immediate pension, commencing as of any month following the month in which such Participant retires early, determined as provided in (a) above, but reduced by 1/4 of 1 percent for each complete calendar month up to 60 such months and by 3/8ths of 1 percent for each complete calendar month in excess of 60 months, by which his early retirement pension commencement date precedes his Normal Retirement Date.


6.3	Disability Retirement Pension

Subject to the provisions of Articles VII and X, a Participant eligible for disability benefits under the provisions of Section 5.3 shall receive a disability retirement pension beginning as of his Normal Retirement Date, or later disability retirement date. Such disability retirement pension shall be in an amount determined in accordance with Section 6.1 assuming that:


(a)	Service and Credited Service are granted for each calendar year (and part thereof) during which he continues to be subject to a Total and Permanent Disability, and


(b)	his Compensation continues unchanged from the calendar year including his date of disability to the calendar year including his Normal Retirement Age or later disability retirement date, and


(c)	his Social Security Covered Compensation is based on the level in effect at the time he becomes disabled.


6.4	Deferred Pension Upon Termination of Service

Subject to the provisions of Articles VII and X, the monthly pension, commencing as of Normal Retirement Date, of a former Covered Employee whose employment with an Employer and Affiliates has terminated after he has become eligible for a deferred vested pension in accordance with Section 5.4, shall be equal to the pension such Participant would have been entitled to under Section 6.2(a) as of his termination of employment, multiplied by a vesting percentage determined in accordance with the table immediately below:



Years of Service	Vesting Percentage
Less than 5	0%
5 or more	100%

Except as otherwise provided under Section 8.1, any Participant having less than five years of Service at the time of his death or other termination of employment with the Employers or an Affiliate shall have no vested rights under this Plan and neither he nor his Spouse or Beneficiary shall be entitled to any benefits under this Plan.

A former Covered Employee who is eligible for a deferred vested pension and who is credited with 15 or more years of Credited Service may elect (by written application) to commence his deferred vested pension in a reduced amount at any time between the ages of 55 and 65, in which case the monthly pension amount as determined above shall be reduced in accordance with the provisions of subsection (b) of Section 6.2 based on the number of months that his Annuity Starting Date precedes his Normal Retirement Date.


6.5	Increase in Pension for Certain Retired Participants

(a)

Notwithstanding the foregoing provisions of this Article VI and effective for Plan payments made on or after January 1, 1996, the monthly pension payable to a Qualified Pensioner (or to the Beneficiary of a Qualified Pensioner) shall be increased by the greater of five percent (5%) or twenty dollars ($20.00). For purposes of this subsection (a), a “Qualified Pensioner” means a Participant who retired under the normal retirement, early retirement, or disability retirement provisions of the Plan prior to January 1, 1994.

(b)

Notwithstanding the foregoing provisions of this Article VI and effective for Plan payments made on or after January 1, 1999, the monthly pension payable to a Qualified Pensioner (or to the Beneficiary of a Qualified Pensioner) shall be increased by the greater of four percent (4%) or fifteen dollars ($15.00). For purposes of this subsection (b), a “Qualified Pensioner” means a Participant who retired under the normal retirement, early retirement, or disability retirement provisions of the Plan and commenced Plan payment prior to January 1, 1997.


6.6	Offset of Accruals by Plan Distributions

In the event distribution of benefits commence to an employed Participant pursuant to Section 7.10 or for any other reason after the employed Participant has attained his Normal Retirement Age, any increase in the Participant’s monthly benefit which accrues in any Plan Year in which such distribution is made shall be reduced (but not below zero) by the Actuarial Equivalent of total Plan benefit distributions made to such Participant by the close of such Plan Year.


6.7	Non-Duplication of Benefits

(a)

There shall be no duplication of any retirement benefit or deferred vested pension benefit payable under this Plan, and any pension or retirement benefit payable under any other qualified defined benefit pension, retirement, or similar plan to which an Employer or predecessor Employer of the particular Participant has contributed, based upon the same period of service. Unless such other benefits are clearly intended to be in addition to benefits under this Plan, the Administrator shall make or cause to be made appropriate adjustments in the retirement benefit or deferred vested pension benefit payable under this Plan in respect to any Participant to carry out the provisions of this paragraph.


(b)	No benefit shall be payable to any Participant under more than one Section of the Plan for the same period of time.

vii

ARTICLE VII - COMMENCEMENT AND DURATION OF PENSIONS


7.1	Normal and Early Retirement Pensions

(a)

Any normal or early retirement pension shall be payable to a retired Participant who has applied therefor in accordance with the rules established by the Administrator, commencing as of the later of the Participant’s Normal Retirement Date or the first day of the month next following the date as of which the Participant makes proper application to commence retirement payments. A Participant who is eligible for an early retirement pension may elect payment prior to Normal Retirement Date and receive a reduced pension under the provisions of Section 6.2. Subject to Sections 7.10(b) and 11.12, a Participant who fails to elect such payment as provided in this Section 7.1 will be deemed to have made an election to defer distribution.

(b)

Subject to Sections 7.8 and 7.10, a normal or early retirement pension shall be payable monthly for the remaining life of such retired Participant. The last payment to the retired Participant under this form shall be for the month in which the death of such retired Participant occurs. However, if the retired Participant duly accepted the Automatic Surviving Spouse’s Pension as set forth in Section 7.5 or elected an optional form of pension in Section 7.7 and is receiving his retirement pension pursuant to such election, then any pension payments to him and his surviving Spouse or Beneficiary shall be as set forth in Section 7.5 or 7.7, whichever applicable.


7.2	Disability Retirement Pension

A disability retirement pension shall be payable to a disabled Participant who has applied therefor in accordance with the rules established by the Administrator, commencing as of the Participant’s Normal Retirement Date or later disability retirement date (or, if later, commencing as of the first day of the month next following the date as of which application for the disability retirement pension was made), provided the Participant has remained continuously disabled (within the meaning of Section 5.3) up to his Normal Retirement Date or later disability retirement date.

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To ascertain whether a Participant retains his eligibility for a disability retirement pension, the Administrator shall rely on the determination of the Participant’s continuing eligibility for disability benefits under the Erie Insurance Group Long Term Disability Income Benefits Program. If it is determined by the Administrator that the Participant is no longer eligible for and receiving disability benefits under the Erie Insurance Group Long Term Disability Income Benefits Program, the Participant’s eligibility for a disability retirement pension will end and the Participant’s Credited Service and Final Average Earnings accumulated to that time shall be reinstated, whether or not the Participant returns to employment as a Covered Employee. Such Participant shall be eligible for a retirement or deferred vested pension, based on such Credited Service and Final Average Earnings, under the provisions of Section 5.1, 5.2, or 5.4.

If a participant who is disabled (within the meaning of Section 5.3) chooses to begin a retirement or deferred vested pension prior to his Normal Retirement Date and prior to a determination by the Administration that he is no longer disabled, the retirement or deferred vested pension shall be based on the Participant’s Credited Service and Final Average Earnings as of his termination of employment due to disability.

Subject to Section 7.8, a disability pension shall be payable monthly for the remaining life of such retired Participant. The last payment to the retired Participant under this form shall be for the month in which the death of such retired Participant occurs. However, if the Participant duly accepted the Automatic Surviving Spouse’s Pension as set forth in Section 7.5 or elected an optional form of pension in Section 7.7 and is receiving his retirement pension pursuant to such election, then any pension payments to him and his surviving Spouse or Beneficiary shall be as set forth in Section 7.5 or 7.7, whichever applicable.


7.3	Deferred Vested Pension

A deferred vested pension shall be payable to a Participant who has met the criteria provided in Section 5.4 and who has applied therefore in accordance with rules established by the Administrator, commencing as of the later of the Participant’s Normal Retirement Date, or the first day of the month next following the date as of which the Participant makes proper application to commence payment. A Participant who has at least 15 years of Credited Service as of his termination of employment may elect to commence payment as of the first day of any month between the age of 55 and his Normal Retirement Date in accordance with an eligible Participant’s election to receive a reduced amount under the provisions of Section 6.4. Subject to Sections 7.10(b) and 11.12, a Participant who fails to elect payment as provided in this Section 7.3 will be deemed to have made an election to defer distribution. Subject to Section 7.8, a deferred vested pension shall be payable monthly for the remaining life of the Participant. The last payment to the Participant under this form shall be for the month in which the death of such Participant occurs. However, if the Participant duly elected the Automatic Surviving Spouse’s Pension as set forth in Section 7.5 or elected an optional form of pension in Section 7.7 and is receiving his deferred vested pension pursuant to such election, then any pension payments to him and his surviving Spouse or Beneficiary shall be as set forth in Section 7.5 or 7.7, whichever applicable.


7.4	Reemployment of a Retired Participant

The pension payable to any Participant receiving retirement benefits or deferred vested pension benefits shall cease and be permanently withheld if and when such Participant is reemployed by an Employer; provided, however, that no pension shall be withheld by the Plan pursuant to this Section 7.4 for any month during which such reemployed Participant has been employed in a classification which is not covered under the Plan or during which such Participant fails to complete 40 or more Hours of Service. In addition, no payment shall be withheld by the Plan pursuant to this Section 7.4 unless the Plan notifies the reemployed Participant that his benefits are suspended by personal delivery or first class mail before or during the first calendar month in which the Plan withholds payments. Such notification shall contain a description of the specific reasons why benefit payments are being suspended, a general description of the Plan provisions relating to the suspension of payments, a copy of such provisions, and a statement to the effect that applicable Department of Labor regulations may be found in Section 2530.203-3 of the Code of Federal Regulations. In addition, the suspension notification shall inform the reemployed Participant of the Company’s procedure for affording a review of the suspension of benefits.

The retirement or deferred vested pension shall resume with the month following subsequent retirement or termination of employment. Any retirement or deferred vested pension payable upon such subsequent retirement or termination shall be determined as provided in Article VI on the basis of the Participant’s Credited Service, Final Average Earnings and Social Security Covered Compensation at the time of his subsequent retirement or termination; provided, however, that such retirement or deferred vested pension shall be reduced by the actuarial equivalent of the retirement or deferred vested pension benefits, if any, that the Participant received prior to the suspension of payment as provided hereunder. Notwithstanding the foregoing, in no event shall a Participant’s retirement or deferred vested pension payable following his subsequent retirement or termination be less than that retirement or deferred vested pension payable to the Participant prior to his reemployment. In the determination of the Final Average Earnings of a Participant who is reemployed and who again becomes an active Participant, the thirty-six month period to be considered shall be the number of months in such period of reemployment prior to his subsequent date of retirement or termination, plus such number of months immediately prior to his earlier retirement or termination as shall total thirty-six months.


7.5	Automatic Surviving Spouse’s Pension

A married Participant who is eligible to commence payments pursuant to the normal, early or disability retirement provisions of the Plan or pursuant to the deferred vested pension provisions of the Plan and whose benefit may not be paid under the provisions of Section 7.8 shall automatically be deemed to have elected, at the commencement dates otherwise specified herein, an immediate monthly pension during his lifetime with the provision that, following his death, a monthly survivor’s pension equal to 50 percent of his reduced pension shall be payable to his surviving Spouse during the further lifetime of the Spouse (the “Automatic Surviving Spouse’s Pension”). Such pension shall be actuarially equivalent to an immediate single life annuity. The automatic election provided in this Section 7.5 shall become effective as of the Participant’s Annuity Starting Date.

An unmarried Participant who retires pursuant to the normal, early or disability retirement provisions of the Plan or pursuant to the deferred vested pension provisions of the Plan and whose benefit may not be paid under the provisions of Section 7.8 shall automatically be deemed to have elected a monthly pension payable for his lifetime as a single life annuity.

A Participant may prevent the automatic election provided in this Section 7.5 at any time within the “applicable election period” (as hereafter defined) by executing a specific written rejection of such an election on a form approved by the Administrator and filing it with the Administrator; provided that such rejection shall not take effect unless the Participant’s Spouse, if applicable, consents to such rejection in accordance with Section 7.6 of the Plan. Any election to revoke the Automatic Surviving Spouse’s Pension and any Spouse’s consent thereto must specify the particular optional form of benefit elected by the Participant and, if applicable, must state the specific non-Spouse Beneficiary or Beneficiaries (including any class of Beneficiaries or any contingent Beneficiaries) who may be entitled to any benefits upon the Participant’s death. Any subsequent change in optional form of benefit or in a non-Spouse Beneficiary selected shall be valid only if accompanied by the written and witnessed consent of the Participant’s Spouse in the manner described in Section 7.6.

During the period beginning no more than 180 days and ending no less than 30 days prior to the Participant’s Annuity Starting Date, the Administrator shall furnish to the Participant a written general description of the automatic election provided in this Section 7.5. The general description shall include a written explanation of the Participant’s and Spouse’s rights under the Automatic Surviving Spouse’s Pension, including the availability and effect of the election to reject the Automatic Surviving Spouse’s Pension. Such description shall also provide information as to the material features of the optional forms of benefit as well as a brief explanation of their relative values as compared to the Automatic Surviving Spouse’s Pension. In addition, in the event the Participant’s Annuity Starting Date is prior to his attainment of Normal Retirement Age, such description shall inform the Participant of his right to defer commencement of the Plan distribution (including, for Plan Years beginning after December 31, 2006, a description of the consequences of failing to defer commencement). A Participant may make and revoke his written rejection of an Automatic Surviving Spouse’s Option at any time and any number of times within the “applicable election period”. The “applicable election period” shall commence 180 days prior to the Participant’s Annuity Starting Date and shall end on the Participant’s Annuity Starting Date. Distribution to the Participant may commence after seven days have elapsed from the date the Administrator provides the written description provided that the Participant has received information that clearly indicates his right to at least 30 days to consider the contents of the description, the Participant affirmatively elects distribution and any required spousal consent is satisfied.

A Participant who retires pursuant to the normal, early or disability retirement provisions of the Plan or pursuant to the deferred vested pension provisions of the Plan and who is entitled, under such provisions, to a pension with a lump sum actuarial equivalent value not in excess of $5,000 shall receive his pension in accordance with Section 7.8 hereof.


7.6	Requirement for Spouse Consent

Any election of a married Participant under Sections 7.5 and 7.7 (other than an election to revoke a rejection of the Automatic Surviving Spouse’s Pension under Section 7.5) shall require the consent of the Participant’s Spouse unless it is established to the satisfaction of the Administrator that the consent required under this Section 7.6 may not be obtained:


(a)	because there is no Spouse or because the Spouse cannot be located,


(b)	because the Participant is legally separated from the Spouse,


(c)	because the Participant has been abandoned by his Spouse (within the meaning of local law) and such Participant has a court order to that effect, or


(d)	because of such other circumstances as the Secretary of the Treasury may by regulations prescribe.

Any consent by a Spouse shall be in writing acknowledging the effect of such election or revocation and witnessed by a notary public or such Plan representatives as may be designated for this purpose by the Administrator. Any Spouse’s consent (or establishment that the Spouse’s consent may not be obtained) shall be effective only with respect to such Spouse.


7.7	Optional Forms of Pensions

In lieu of a benefit in the form of payment determined in Section 7.5, a Participant may, with the consent of his Spouse as described in Section 7.6, if applicable, elect an actuarially equivalent benefit described below. This election is effective as of a Participant’s Annuity Starting Date.

(a)

Option A : 10-Year Certain and Life Option - A reduced monthly retirement income is payable to the Participant during his remaining lifetime, and upon his death prior to receiving payment for a period equivalent to 120 months, monthly payments of the same reduced amount will be made to his Beneficiary until the number of monthly payments made to the Beneficiary, when added to the number of monthly payments made to the Participant, is equivalent to 120 monthly payments.

(b)

Option B : 15-year Certain and Life Option - A reduced monthly retirement income is payable to the Participant during his remaining lifetime, and upon his death prior to receiving payment for a period equivalent to 180 months, monthly payments of the same reduced amount will be made to his Beneficiary until the number of monthly payments made to the Beneficiary, when added to the number of monthly payments made to the Participant, is equivalent to 180 monthly payments.


(c)	Option C : 50% Joint and Survivor Option - a reduced monthly retirement income is payable to the Participant for his remaining lifetime, and upon his death, monthly income of 50% of such reduced monthly income previously paid to the Participant shall be paid to his Beneficiary for as long thereafter as that person shall live.


(d)	Option D: 75% Joint and Survivor Option - effective for Plan Years beginning after December 31, 2007, a reduced monthly retirement income is payable to the Participant for his remaining lifetime, and upon his death, monthly income of 75% of such reduced monthly income previously paid to the Participant shall be paid to his Beneficiary for as long thereafter as that person shall live.


(e)	Option E : 100% Joint and Survivor Option - a reduced monthly retirement income is payable to the Participant for his remaining lifetime, and upon his death, monthly income of 100% of such reduced monthly income previously paid to the Participant shall be paid to his Beneficiary for as long thereafter as that person shall live.

(f)

Option F : Joint and Survivor Pop-Up Option - a reduced monthly retirement income is payable to the Participant for his remaining lifetime, and upon his death, monthly income of either 50% or 100% (as elected by the Participant) of such reduced monthly income previously paid to the Participant shall be paid to the Participant’s Spouse for as long thereafter as such Spouse shall live; provided, however, that in the event the Spouse of the Participant predeceases the Participant and such Spouse’s death occurs within 60 months of the Participant’s Annuity Starting Date, the provisions of Section 7.12 shall apply. Notwithstanding any provision of the Plan to the contrary (i) the Joint and Survivor Pop-Up Option shall be available only with respect to a Participant who has retired under the normal retirement provisions of Section 5.1 or the early retirement provisions of Section 5.2, and (ii) actuarial equivalence of a benefit payable under the Joint and Survivor Pop-Up Option shall be determined under Section 11.6; provided, however, that in the event an annuity contract is purchased from an insurance company with respect to such benefit, actuarial equivalence shall thereafter be determined by reference to the specific annuity contract which will be purchased by the Plan to provide the monthly retirement income payable under this form of payment.

Election of these options must be made during the applicable election period described in Section 7.5. Except to the extent otherwise provided under Section 8.4, if either the Participant or his Beneficiary dies after the election of an option is made but before the Annuity Starting Date such option will not become effective. If the Beneficiary shall die after commencement of the joint and survivor pension, but before the death of the retired Participant, the Participant shall continue to receive the reduced pension payable in accordance with such option. An option may be cancelled by the Participant prior to the Annuity Starting Date. The effect of such cancellation shall be to reinstate the life annuity specified in Section 7.1, 7.2 or 7.3, whichever applicable, or, if the Participant is married, the Automatic Surviving Spouse’s Pension under Section 7.5 (in which case any subsequent option election must satisfy the requirements of Section 7.5). Except to the extent expressly permitted under the Plan, no election regarding an optional form of payment may be made by a Participant following the Participant’s Annuity Starting Date. If the Beneficiary designated by a Participant in connection with the election of an optional form of benefit is not the Spouse of the Participant, then the election shall be effective only if the minimum distribution incidental benefit requirements of Section 1.401(a)(9)-6 of the Income Tax Regulations are satisfied with respect to such distribution.


7.8	Payment of Small Pension

(a)

Notwithstanding any provision of the Plan to the contrary, if the actuarial equivalent present value of any retirement benefit, deferred vested pension or survivor benefit does not exceed $5,000 such benefit shall be paid as soon as practicable in a lump sum equal to such present value. No lump sum payments shall be made if the actuarial equivalent present value of the benefit is in excess of this threshold.

(b)

Effective for any distribution to a Participant under this Section 7.8 on and after March 28, 2005, the lump sum payment described above shall be made on the conditions that the Participant is alive as of the applicable Annuity Starting Date and, except as otherwise provided in this subsection (b), that the Participant affirmatively elects payment in cash or as a Direct Rollover (as defined in Section 7.11). No further election or consent shall be required or permitted with respect to such distribution. Effective for any distribution to a Participant under this Section 7.8 on and after February 1, 2006, if the Participant fails to affirmatively elect payment in cash or as a Direct Rollover within the 60-day period following the Administrator’s distribution of the Direct Rollover explanation and election, as applicable to a benefit with an actuarial equivalent present value in excess of $1,000, the Administrator shall direct distribution of the lump sum payment in the form of a Direct Rollover to an individual retirement plan or annuity selected by the Administrator. If the actuarial equivalent present value of the retirement benefit or deferred vested pension does not exceed $1,000 as of the applicable Annuity Starting Date and the Participant fails to make a cash/Direct Rollover election within such 60-day period, the Plan shall pay such benefit in the form of an actuarial equivalent cash lump sum as soon as practicable following the expiration of such 60-day period.

(c)

The actuarial equivalent present value of a retirement benefit, deferred vested pension or survivor benefit shall be calculated and paid on the basis of the “applicable mortality table”, as defined in Section 417(e)(3)(B) of the Code, and the “applicable interest rate”, as defined in Section 417(e)(3)(C) of the Code, for the second calendar month preceding the month in which the distribution is payable (and, for Plan Years beginning before December 31, 2012, reflecting the phase-in applicable under Section 417(e)(3)(D) of the Code); provided, however, that in the event the Alternative Present Value (as hereinafter defined) of the applicable benefit is a larger amount, such larger amount shall be paid (provided such Alternative Present Value calculation does not exceed $5,000). For purposes of this Section 7.8, the “Alternative Present Value” of a retirement benefit, deferred vested pension or survivor benefit shall be based on the Accrued Pension earned by the Participant at the earlier of his termination of employment, or December 30, 1995, determined by using the UP-1984 mortality table (reflecting a one-year setback for Participants and a two-year setback for Beneficiaries) and a 6% interest rate.

(d)

The provisions of this Section 7.8 shall likewise apply to any Participant who terminates his employment with an Employer and all Affiliates prior to his completion of such period of Service as is required for a deferred vested pension under the Plan. In such case the terminated Participant shall be deemed to receive a lump sum distribution of the actuarial equivalent present value of his entire vested pension as of his date of termination of employment. Subject to Section 7.9 hereof, a Participant who receives a distribution (or deemed distribution) under this Section 7.8 shall lose his Credited Service (and Service, in the case of a deemed distribution) under the Plan, shall forfeit his nonvested Accrued Pension and shall no longer be considered a Participant hereunder after such date of distribution (or deemed distribution).


7.9	Repayment of Cashout on Reemployment

Notwithstanding any provision of Section 7.8 to the contrary, in the event a Participant described in Section 7.8 receives a distribution described thereunder and is subsequently reemployed by an Employer as a Covered Employee, such Participant’s Credited Service and Accrued Pension earned before his termination of employment shall be reinstated for all purposes of the Plan if the Participant repays to the Plan the full amount of his distribution with interest, compounded annually from the date of distribution to December 30, 1988 at the rate of five percent (5%) per annum and from December 31, 1988 to the date of repayment at the rate determined for each Plan Year within such period under Section 411(c)(2)(C) of the Code. With respect to a former Participant who has been deemed to receive a distribution of his entire vested pension upon his termination of employment in accordance with Section 7.8(d), such individual shall be deemed to have repaid such distribution, with interest, as of his date of rehire and such Participant’s Service, Credited Service and Accrued Pension earned before his termination of employment shall be reinstated as of such date. For purposes of the foregoing, the period in which the Participant’s repayment or deemed repayment must occur shall end on the earlier of the fifth anniversary of the Participant’s reemployment or the date on which the Participant’s Period of Severance extends to five consecutive years.


7.10	Delay in Commencement of Pension Payments

(a)

Unless the Participant otherwise elects, payment of any pension under the provisions of this Article VII shall commence as of a date that is no later than 60 days after the later of the close of the Plan Year during which a Participant: (i) attains his Normal Retirement Age or, (ii) terminates his employment with an Employer and Affiliates. A Participant who has terminated employment with an Employer and Affiliates may not affirmatively elect to defer payment of any retirement or deferred vested benefit beyond the Participant’s Normal Retirement Date; provided, however, that a Participant who is receiving benefits under a long-term disability benefit contract or plan to which an Employer or Affiliate has

contributed may affirmatively elect to defer payment beyond Normal Retirement Date until the earlier of (A) the month following the month in which such long-term disability benefit payments cease, and (B) the Participant’s Required Beginning Date under Section 7.10(b). Notwithstanding the foregoing and subject to Sections 7.10(b) and 11.12, the failure of a Participant, surviving Spouse or Beneficiary to properly complete and file the required application materials shall be deemed to be an election to defer commencement of payment. No payment under the Plan will be increased on account of any delay in payment due to a Participant’s or Beneficiary’s failure to properly file the required application forms or to otherwise accept such payment. No payment to an alternate payee under a qualified domestic relations order may be made before the affected Participant’s earliest retirement age under the Code.

(b)

Notwithstanding any inconsistent provision of the Plan and effective January 1, 2003, all distributions under the Plan shall be made in accordance with Code Section 401(a)(9), including the incidental death benefit requirement of Code Section 401(a)(9)(G), and Sections 1.401(a)(9)-1 through 1.401(a)(9)-9 of the Income Tax Regulations. Specifically, distribution of the Participant’s interest shall:

(i) be completed no later than the Required Beginning Date; or


(ii)	commence not later than the Required Beginning Date with distribution to the Participant made over the life of the Participant or joint lives of the Participant and a designated Beneficiary or a period not longer than the life of the Participant or joint lives of the Participant and a designated Beneficiary.

For purposes of this Section 7.10, Required Beginning Date shall mean April 1 of the calendar year following the later of the calendar year in which the Participant attains age 70½ or the calendar year in which the Participant terminates employment or retires; provided, however, if the Participant is a five-percent owner (as defined in Section 416 of the Code), the Required Beginning Date shall be April 1 of the calendar year following the calendar year in which the

Participant attains age 70½, regardless of the date that the five-percent owner terminates employment or retires. In the case of a Participant who terminates employment or retires in a calendar year after the calendar year in which he attains age 70½ and who has not commenced payments as of the first day of such later calendar year, the Plan benefit accrued by the Participant shall be actuarially increased, to the extent required by regulations, to take into account the period (commencing on the April 1 ^st of the calendar year following the calendar year in which the Participant attains age 70½ and ending on the date payment commences) during which the Participant did not receive any benefits under the Plan; provided, however, that such actuarial increase, to the extent permitted by regulations, shall reduce the benefit accrual otherwise occurring during such period.


(c)	In the event that a Participant dies prior to the date that distribution commences:


(i)	any portion of the Participant’s interest that is not payable to a designated Beneficiary shall be distributed not later than the end of the calendar year which includes the fifth anniversary of the date of the Participant’s death; and

(ii)

any portion of the Participant’s interest that is payable to a designated Beneficiary shall be distributed in accordance with subsection (i) above or over the life of the designated Beneficiary (or over a period not extending beyond the life expectancy of the Beneficiary), commencing not later than the end of the calendar year following the calendar year of the Participant’s death or, if the Beneficiary is the Participant’s surviving Spouse, commencing not later than the last day of the later of the calendar year in which the Participant would have attained age 70½ or the calendar year following the calendar year which includes the date of the Participant’s death.


(d)	In the event that a Participant dies after distribution of his interest has begun, but prior to distribution of his entire interest, the remaining portion of such interest

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shall be distributed in a method that is at least a rapid as the method in effect at the date of the Participant’s death.


7.11	Direct Rollover of Eligible Rollover Distributions.

Notwithstanding any provision of the Plan to the contrary, a Distributee may elect, subject to provisions adopted by the Administrator which shall be consistent with income tax regulations, to have any portion of an Eligible Rollover Distribution paid directly to an Eligible Retirement Plan specified by the Distributee in a Direct Rollover to such plan. The Administrator shall notify a Distributee of his right to elect a Direct Rollover. Such notice shall be provided to the Distributee between 30 days and 180 days prior to the Distributee’s Annuity Starting Date. A Distributee’s affirmative election to make or not make a Direct Rollover may be implemented by the Administrator less than 30 days after the Distributee receives such notice of his Direct Rollover rights, but only if the Administrator notifies the Distributee that he has the right to consider the decision of whether or not to elect a Direct Rollover for up to 30 days. For purposes of this Section:

(a)

The term “Distributee” shall mean an Employee or former Employee. In addition, such an individual’s surviving Spouse or such an individual’s Spouse or former Spouse who is an alternate payee within the meaning of Section 414(p)(8) of the Code are Distributees with respect to the interest of the Spouse or former Spouse. With respect to distributions made on or after December 31, 2009, a Distributee shall also include an Employee’s or former Employee’s Beneficiary who is not the Employee’s or former Employee’s Spouse.

(b)

The term “Eligible Rollover Distribution” shall mean any distribution of all or any portion of the balance to the credit of the Distributee other than: (i) any distribution that is one of a series of substantially equal periodic payments made for the life (or life expectancy) of the Distributee or the joint lives (or joint life expectancies) of the Distributee and his Beneficiary, or for a specified period of ten years or more; (ii) any distribution to the extent such distribution is required under Section 401(a)(9) of the Code; and, (iii) any portion of a hardship withdrawal. In addition, a portion of a distribution shall not fail to be an Eligible Rollover Distribution merely because the portion consists of after-tax employee contributions which are not includible in gross income. However, such portion may be paid only to an individual retirement account or annuity described in Section 408(a) or (b) of the Code, respectively, or (for distributions on and after January 1, 2008) to a Roth IRA described in Section 408A of the Code, to a qualified trust defined in Section 401(a) of the Code, or to an annuity contract described in Section 403(b) of the Code provided such account, annuity, IRA, trust or annuity contract agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible.

An Eligible Rollover Distribution with respect to a Distributee who is not the Employee’s or former Employee’s Spouse must be made by a direct trustee-to-trustee transfer.

(c)

The term “Eligible Retirement Plan” shall mean an individual retirement account described in Section 408(a) of the Code, an individual retirement annuity described in Section 408(b) of the Code, an annuity described in Section 403(a) of the Code, an annuity described in Section 403(b) of the Code, an eligible plan under Section 457(b) of the Code which is maintained by a state or a political subdivision of a state and which agrees to separately account for amounts transferred, a qualified trust described in Section 401(a) of the Code, and for periods on and after January 1, 2008, a Roth IRA under Section 408A of the Code, that accepts the Distributee’s Eligible Rollover Distribution. However, in the case of an Eligible Rollover Distribution: (i) that includes after-tax employee contributions, an Eligible Retirement Plan is an individual retirement account or annuity described in Section 408(a) or (b) of the Code, or a qualified defined contribution plan or annuity described in Section 401(a) or 403(a) of the Code that agrees to separately account for such Eligible Rollover Distributions, including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible, (ii) that includes a Designated Roth Account, an Eligible Retirement Plan is an individual retirement plan described in Section 408A of the Code or a qualified defined contribution plan described in Section 401(a) of the Code that agrees to separately account for such Eligible Rollover Distribution, including separately accounting for the portion of such distribution which is includible in gross income and the potion of such distribution which is not so includible, and (iii) that is made on behalf of a Distributee who is not the Employee’s or former Employee’s Spouse, an Eligible Retirement Plan shall mean an individual retirement account described in Section 408(a) of the Code or an individual retirement annuity described in Section 408(b) of the Code established for the purpose of receiving a distribution on behalf of a Beneficiary, which will be treated as an inherited IRA pursuant to Section 402(c)(11) of the Code.


(d)	The term “Direct Rollover” shall mean a payment by the Plan to the Eligible Retirement Plan specified by the Distributee.


7.12	Change to Pension Payments in Connection with Qualifying Event.

(a)

In the event an Eligible Retiree (as hereinafter defined) experiences a Qualifying Event (as hereinafter defined), the provisions of this Section 7.12 shall apply, provided that the Eligible Retiree furnishes the Administrator with reasonable notice of the Qualifying Event within 120 days of the Qualifying Event and provides such further information applicable hereunder as the Administrator may reasonably require. For purposes of this Section:


(i)	“Eligible Retiree” shall mean a Participant who has retired under the normal retirement provisions of Section 5.1 or the early retirement provisions of Section 5.2 and who, as of his Annuity Starting Date, was either:


(A)	legally married and commencing receipt of his retirement income in the form of an Automatic Surviving Spouse’s Pension (as defined in Section 7.5), under the 100% Joint and Survivor Option (with his Spouse as Beneficiary thereunder) or under the Joint and Survivor Pop-Up Option; or


(B)	unmarried and commencing receipt of his retirement income in the normal form of benefit provided under Section 7.1 (a life annuity).


(ii)	“Qualifying Event” shall mean an event described in (A), (B) or (C) below:


(A)	The Spouse of an Eligible Retiree who is receiving retirement income under the Joint and Survivor Pop-Up Option under Section 7.7(e) predeceases the Eligible Retiree and such Spouse’s death occurs within 60 months of the Eligible Retiree’s Annuity Starting Date;


(B)	The marital status of an Eligible Retiree who is receiving retirement income under any of the forms of payment described in subparagraph (a)(i)(A) of this Section 7.12 changes within 120 months of his Annuity Starting Date due to the Eligible Retiree’s divorce, marital dissolution, or legal separation; or


(C)	The marital status of an Eligible Retiree who is described under subparagraph (a)(i)(B) of this Section 7.12 changes and within 120 months of his Annuity Starting Date due to the Eligible Retiree’s marriage.


(iii)	“Qualifying Event Election Period” shall mean the 90-day period beginning on the date on which the Eligible Retiree timely notifies the Administrator of a Qualifying Event, as provided in Section 7.12(a) above.


(iv)	The determination of an Eligible Retiree’s marital status and the determination of whether a divorce, marital dissolution or legal separation has occurred shall be made on the basis of the laws of the Commonwealth of Pennsylvania unless preempted by federal law.

(b)

In the event of the occurrence of a Qualifying Event described in subparagraphs (a)(ii)(A) or (a)(ii)(B) of this Section 7.12, and contingent upon the Eligible Retiree’s timely notification to the Administrator, the retirement income payable to the affected Eligible Retiree shall revert to the normal form of benefit provided under Section 7.1 (a life annuity) as of the first day of the month following the expiration of the Qualifying Event Election Period; provided, however, that:

(i)

The amount of such monthly life annuity shall be the actuarial equivalent of the Eligible Retiree’s benefit, determined as of the time of calculation hereunder, under the form of payment in effect as of his Annuity Starting Date; provided, however, that such monthly amount shall not exceed the amount of the monthly life annuity which the Eligible Retiree was entitled to as of his Annuity Starting Date; and

(ii)

In the case of a Qualifying Event described in subparagraph (a)(ii)(B) of this Section 7.12, the Spouse or ex-Spouse of the Eligible Retiree, as part of the division of marital property (or other determination which is not subject to modification under state law), expressly waives all interest in the Eligible Retiree’s pension under the Plan and such waiver is incorporated into a document which satisfies the formal requirements of a “Qualified Domestic Relations Order” as defined in Section 414(p) of the Code; and


(iii)	In the case of a Qualifying Event described in subparagraph (a)(ii)(B) of this Section 7.12, the Spouse or ex-Spouse of the Eligible Retiree shall secure such proof of insurability as the Administrator may require, in its discretion.

(c)

In the case of any Qualifying Event described in subparagraph (a)(ii)(C) of this Section 7.12 and contingent upon the Eligible Retiree’s timely notification to the Administrator, the affected Eligible Retiree shall be permitted to elect, within the Qualifying Event Election Period, to receive his future retirement income from the Plan in one of the forms of payment described in paragraphs (c), (d), or (e) of Section 7.7 (a 50% or 100% Joint and Survivor Option or a 50% or 100% Joint and Survivor Pop-Up Option) with his Spouse as Beneficiary thereunder; provided, however, that:


(i)	Payments under any elected form of payment shall commence as of the first day of the month next following the month in which the Eligible Retiree makes full and complete application to the Administrator in accordance with rules established by the Administrator (such commencement date referred to herein as the “Adjusted Commencement Date”); and

(ii)

Payments under any elected form of payment shall be the actuarial equivalent of the Eligible Retiree’s benefit, determined as of the time of calculation hereunder, under the form of payment in effect as of his Annuity Starting Date; provided, however, that such monthly amount shall not exceed the amount of the monthly benefit under the elected form of payment which the Eligible Retiree was entitled to as of his Annuity Starting Date; and


(iii)	The Eligible Retiree shall secure such proof of insurability of the Eligible Retiree and/or the Eligible Retiree’s Spouse as the Administrator may require, in its discretion; and


(iv)	The provisions of Sections 7.5 and 7.6 hereof shall apply with respect to any Eligible Retiree who is married as of the Adjusted Commencement Date and, for purposes of such Sections and Section 7.7, the Adjusted Commencement Date shall be deemed the Annuity Starting Date for the elected form of payment described in this Section 7.12(c); and


(v)	In no event shall more than one election be made under this Section 7.12(c) by an Eligible Retiree with respect to any single Qualifying Event nor shall this Section 7.12 be applicable more than twice with respect to any Eligible Retiree, Section 7.12(c), irrespective of the number of Qualifying Events affecting such Eligible Retiree; and


(vi)	A Participant’s status as an Eligible Retiree must be independently satisfied with respect to each Qualifying Event (substituting, where applicable, the Adjusted Commencement Date for the Annuity Starting Date under Section 7.12(a)(i)).

ARTICLE VIII - DEATH BENEFITS


8.1	Death Prior to Retirement or Severance

Upon the death of a Participant prior to his Date of Severance, his surviving Spouse, if any, shall receive a monthly surviving Spouse’s benefit under the assumption that the Participant had retired the day prior to his death with an Accrued Pension under the Plan as determined in accordance with the provisions of Section 6.2(a), and under the further assumption that the automatic election of a surviving Spouse’s benefit pursuant to subsection 7.5 was in effect at the time of death. Such surviving Spouse benefit shall commence as of the first day of the month following the Participant’s death, shall be unreduced for early commencement and shall be payable for the lifetime of the surviving Spouse.

For purposes of Sections 8.1, 8.2 and 8.3, the interest that is payable to the Participant’s surviving Spouse shall be distributed over a period not in excess of the life expectancy of such surviving Spouse and shall commence no later than the December 31 of the calendar year in which the Participant would have attained age 65 (or the December 31 of the calendar year immediately following the calendar year of the Participant’s death, if later).


8.2	Death Prior to Commencement of Early or Disability Pensions

Upon the death of a Participant after his Date of Severance, and prior to his Annuity Starting Date and while the Participant is awaiting the commencement of payment of either: (1) an early retirement pension pursuant to Section 6.2(a) above, or (2) a disability pension after attainment of age 55 but prior to the attainment of his Normal Retirement Date, his surviving Spouse, if any, shall receive a monthly surviving Spouse’s benefit under the assumption that the Participant had retired the day prior to his death with an Accrued Pension under the Plan as determined in accordance with the provisions of Section 6.2(a), and under the further assumption that the automatic election of a surviving Spouse’s benefit pursuant to subsection 7.5 was in effect at the time of death. Following proper application, such surviving Spouse’s benefit shall commence as of the first day of the month following the Participant’s death unless the surviving Spouse elects a later commencement date. Subject to Sections 7.10(c) and 11.12, a surviving Spouse who fails to make proper application for payment will be deemed to have made an election to defer distribution. Such surviving Spouse’s benefit shall be reduced for early commencement in accordance with the provisions of Section 6.2(b) and shall be payable for the lifetime of the surviving Spouse.

Upon the death of a disabled Participant who is awaiting commencement of his pension at his Normal Retirement Date and who has not incurred his Date of Severance at the time of his death, his surviving Spouse, if any, shall receive a monthly surviving Spouse’s benefit determined under the provisions of Section 8.1.

If a Participant incurs his Date of Severance when eligible for a disability retirement pension under Section 5.3 and at a time during which he is receiving long term disability benefits under the Erie Insurance Group Long Term Disability Income Benefits Program, then service to date of death will be included for benefit purposes.


8.3	Death Prior to Commencement of Vested Pensions

If a vested former Participant who has at least one Hour of Service on or after December 31, 1976, and who has been married for at least one year on his date of death, dies on or after August 23, 1984 but prior to his Annuity Starting Date, then his surviving Spouse shall be provided with a preretirement survivor annuity determined as follows:


(a)	in the case of a Participant who dies after the date on which the Participant attained his Earliest Retirement Age as though such Participant had retired on the day before the Participant’s date of death, with an immediate benefit determined under the provisions of Section 6.2(a) and payable under the Automatic Surviving Spouse’s Pension in Section 7.5 of the Plan, or


(b)	in the case of a Participant who dies on or before the date on which the Participant would have attained his Earliest Retirement Age, as though such Participant had:


(i)	separated from Service on his Date of Severance,


(ii)	survived to his Earliest Retirement Age,


(iii)	retired with an immediate benefit determined under the provisions of Section 6.4 and payable under the Automatic Surviving Spouse’s Option in Section 7.5 of the Plan at the Earliest Retirement Age, and


(iv)	died on the day after the day on which such Participant would have attained the Earliest Retirement Age.

Following proper application, a monthly surviving Spouse’s benefit shall commence under this Section 8.3 as of the first day of the month following the later of the month of the Participant’s death or the month in which the Participant would have attained his Earliest Retirement Age under the Plan unless the surviving Spouse elects a later commencement date (which shall not be later than the Participant’s Normal Retirement Date. Subject to Section 7.10(a) and 11.12, a surviving Spouse who fails to make proper application for payment will be deemed to have made an election to defer distribution. Such surviving Spouse’s benefit shall be reduced for early commencement in accordance with Section 6.2(b) and shall be payable thereafter for the remainder of the surviving Spouse’s lifetime.


8.4	Effect of Valid Joint and Survivor Election

Notwithstanding the foregoing, in the event a Participant described in Section 8.1, 8.2 or 8.3 above has made a valid election of either Option D or Option E under Section 7.7 and names his Spouse as Beneficiary thereunder, or a valid election of a 100% Joint and Survivor Pop‑Up Option under Section 7.7, the amount of the surviving Spouse’s benefit under Section 8.1, 8.2 or 8.3 shall be based on the survivor percentage applicable to the Participant’s elected option.


8.5	Death on or After Annuity Starting Date

Upon the death of a Participant on or after his Annuity Starting Date, payments, if any, to a Beneficiary shall be made in accordance with the form of benefit in effect on the date of the Participant’s death. If the Beneficiary of the deceased Participant is entitled to receive the remaining certain period payments from the 10-Year or 15-Year Certain and Life forms of payment, the Administrator shall instruct the Trustee to pay to such Beneficiary the actuarial equivalent value of the monthly payments to which the Beneficiary is entitled in a single sum. Actuarial equivalence for this purpose shall be determined under the assumptions set forth in Section 7.8. If the Beneficiary under such form of payment is the surviving Spouse of the deceased Participant, then any amounts payable may be converted to an actuarially equivalent life annuity to such Spouse provided the Spouse requests payment in such form. Notwithstanding the foregoing, in all events the deceased Participant’s remaining interest in the Plan shall be distributed at least as rapidly as under the form of distribution in operation as of the date of the Participant’s death.


8.6	Death Benefit for Vested Participants Who Terminated After September 1, 1974 and Prior to August 23, 1984

Any vested former Participant who terminated after September 1, 1974 and prior to August 23, 1984 and whose benefits are not in pay status as of August 23, 1984 is to be provided with the right to elect to receive such benefits reduced and payable in the form of a qualified 50% joint and survivor annuity as defined by ERISA and the Internal Revenue Code as in effect prior to August 23, 1984, including the right to revoke such coverage without spousal consent if such former Participant:


(a)	completed at least one Hour of Service under the Plan after September 1, 1974, and


(b)	survives to his Annuity Starting Date.

ARTICLE IX - TRUST FUND AND THE TRUSTEE

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9.1	Trust Fund

(a)

The Company has executed a Trust Agreement with a Trustee under the terms of which a Trust Fund will be established for the purpose of receiving and holding contributions made by the Company as well as interest and other income on investments of such funds, and for the purpose of paying the pensions and other benefits provided by the Plan and paying any expenses incident to the operation of the Plan or Trust Fund as otherwise provided herein. The Trustee is to manage and operate the Trust Fund and to receive, hold, invest and reinvest the funds of the Trust.

(b)

The Company may modify the Trust Agreement as provided therein to accomplish the purpose of the Plan. The Administrator may remove any Trustee and may select any successor trustee. Pensions under the Plan may alternatively be provided through the purchase of annuity contracts issued by an insurance company. In lieu of a Trust Agreement and Trust Fund, the Company may utilize a contract or contracts of insurance for the purpose of receiving and holding contributions made by the Company and for the purpose of paying pensions and other benefits provided by the Plan, and in such event the references hereunder to “Trust Agreement”, “Trustee” and “Trust Fund” shall be deemed to be references to “Insurance Contract”, “Insurance Carrier” and “Insured Fund” respectively.

(c)

The Administrator may select an independent investment manager to invest any portion of the Trust Fund in each of the various funds. Such investment manager shall be either registered as an investment manager under the Investment Adviser’s Act of 1940, a bank, a mutual fund, or an insurance company, and as required by the Administrator, shall acknowledge in writing that he is a fiduciary with respect to the Plan.


(d)	The Administrator shall perform such duties relating to the operation of the Trust Fund as it deems appropriate and shall perform the duties specified in this Section 9.1. The Administrator shall have the following responsibilities:


(i)	to appoint and remove Trustees;

xiv


(ii)	to appoint investment managers;


(iii)	to select investment funds or other investments under the Plan;


(iv)	to allocate the duties and procedures for the Trustee and investment managers;


(v)	to establish an investment philosophy and goals for each of the investment managers;


(vi)	to monitor the Trustee with respect to servicing the Trust Fund in a fiduciary capacity; and


(vii)	to monitor the investment managers including, without limitation, their investment philosophies, goals, and rates of return.

The Administrator may, from time-to-time, designate another person to carry out any of the Administrator’s responsibilities under this Section 9.1. The person so designated will have full authority, or such limited authority as the Administrator may specify, to take such actions as are necessary or appropriate to carry out the duties delegated by the Administrator.


9.2	Irrevocability

The Trust Fund shall be used to pay pensions and other benefits as provided in the Plan and, as provided in Section 9.6, those reasonable expenses, taxes and fees incurred in the administration of the Plan and Trust Fund which are not paid directly by the Company. No part of the principal or income of the fund shall be used for or diverted to purposes other than those provided in the Plan and no part of the Trust Fund shall revert to the Company for the benefit of the Company, except as permitted under Sections 9.3, 11.4 and 12.2 hereof.


9.3	Contributions by the Company

The Company will pay to the Trustee, subject to all the other provisions of the Plan, such amounts as its Board determines, authorizes and directs; provided that as a minimum contribution, the Company intends to pay to the Trustee such amounts as may be necessary to meet the minimum funding standards established under the Employee Retirement Income Security Act of 1974. The Company also intends to pay all expenses incident to the operation of the Plan that are not paid directly from the Trust Fund. Any forfeitures arising from the severance of employment or death of a Participant, or for any other reason, shall be used to reduce the contributions of the Company under the Plan and shall not be applied to increase the pensions or benefits any Participant would otherwise receive under the Plan at any time prior to the termination of the Plan.

Payments made to meet the minimum funding standards established under ERISA shall, to the maximum extent permitted by valid provisions of ERISA, be in complete discharge of the financial obligation of the Company under this Plan. The pension benefits of the Plan shall, subject to valid provisions of ERISA, be only such as can be provided by the assets of the Trust and there shall be no further liability or obligation on any Employer to make any further contributions to the Trust for any reason. Except as prescribed by valid provisions of ERISA, the Company does not guarantee continuity of payment of any benefits under the Plan. The Company does not, in any event, guarantee that its contributions or the Trust Fund will be sufficient to provide the benefits hereunder. All rights of Participants and Beneficiaries, and of any person claiming under any Participant or Beneficiary, shall be enforceable only against the Trust Fund, except as ERISA may otherwise provide.

Notwithstanding any provisions of the Plan to the contrary, each contribution made by the Company shall be conditioned upon the deductibility of the contribution under Section 404 of the Code. If the deduction of all or part of the contribution is disallowed, the contribution shall, to the extent disallowed, be repaid to the Company within one year after the date of disallowance. A contribution also may be repaid to the Company, within one year after the date made, to the extent it exceeded the full funding limitation or otherwise was made in error because of a mistake in fact. Amounts returned under this Section 9.3 shall recognize any net losses attributable to the returned contribution but shall not include any net earnings thereon.


9.4	Contributions By Participants

No Participant shall be required or allowed to make any contribution to the Trust Fund established under the Plan.


9.5	Benefits Payable Only From Trust Fund

Payment of benefits under the Plan to Participants and Beneficiaries will be made only by the Trustee from the funds or securities held by the Trust and/or the annuity contract or contracts held by the Trust. Except as may be provided by law, no liability for the payment of benefits to Participants or their Beneficiaries hereunder shall be imposed upon the Company, any Employer or the officers or shareholders of the Company or any Employer, and there shall be no liability or obligation on the part of the Company or any Employer, to make any further contributions in the event of termination of the Plan.


9.6	Plan Expenses

All reasonable expenses, taxes and fees of the Plan, the Administrator and the Trustee incurred in the administration of the Plan and Trust Fund shall be paid from the Trust Fund; provided, however, that the obligation of the Trust Fund to pay such expenses, taxes and fees shall cease to exist to the extent that the same are paid, at the discretion of the Company, by the Employers.

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ARTICLE X - BENEFIT LIMITATIONS


10.1	Maximum Limitation Under Section 415(b) of the Code (Effective January 1, 2008)

This Section 10.1 is intended to comply with Section 415(b) of the Code, the terms of which are incorporated herein by reference and this Section shall be so construed. Any provisions of the Plan to the contrary notwithstanding, benefits accrued and benefits payable under the Plan shall be subject to the following limitations, effective for limitation years on or after July 1, 2007:

(a)

In no event shall the annual benefit accrued, distributed or otherwise payable to any Participant exceed the Section 415 limit described in subsection (b). To the extent necessary to comply with Section 411(b) of the Code, if the benefit the Participant would otherwise accrue in a limitation year would produce an annual benefit in excess of the Section 415 limit described in subsection (b), the benefit will be limited (or the rate of accrual reduced) to a benefit that does not exceed such limit.


(b)	The Section 415 limit is the lesser of (i) and (ii) below:


(i)	The dollar limitation set forth in Section 415(b)(1)(A) of the Code, or


(ii)	100% of the Participant’s average annual Test Compensation for the three consecutive calendar years (or, if his period of employment is less than three years, for his entire period of employment) as a Participant during which he received the greatest aggregate Test Compensation.


(c)	In no event shall the limitations in subsection (b) be less than $10,000 if the Participant has not at any time participated in a defined contribution plan maintained by the Employer.

(d)

For purposes of the maximum limitation of this Article, all qualified defined benefit plans (whether or not terminated) maintained by an Employer or any Affiliate shall be treated as a single plan. For purposes of applying the limitations of Section 415, the terms “Employer” and “Affiliate” shall be construed in light of Sections 414(b) and 414(c) of the Code, as modified by Section 415(h) of the Code.

xvii


(e)	The dollar limitation described in paragraph (b)(i) above shall be increased by the cost of living adjustment factor prescribed by the Secretary of the Treasury under Section 415(d) of the Code. Such adjustment factor shall be applied to Participants and to such items as the Secretary of the Treasury shall prescribe.

(f)

If the benefit payable to a Participant commences prior to age 62, the dollar limitation specified under paragraph (b)(i) above as adjusted by subsection (e) shall be the lesser of: (A) the dollar limitation specified under paragraph (b)(i) above as adjusted by subsection (e) multiplied by the ratio of the annual amount of the straight life annuity commencing at his Annuity Starting Date, over the annual amount of the straight life annuity commencing at age 62 (both determined without regard to the limitations of Section 415 of the Code), or (B) such limit, after the application of an actuarially equivalent reduction from age 62 to his age as of his Annuity Starting Date, using a 5% interest rate assumption and the applicable mortality table under Section 417(e)(3)(B) of the Code. No adjustment shall be made to reflect the probability of a Participant’s death after the Annuity Starting Date and before age 62.

(g)

If the benefit payable to a Participant commences after age 65, the dollar limitation specified under paragraph (b)(i) above as adjusted by subsection (e) shall be the lesser of : (A) the dollar limitation specified under paragraph (b)(i) above as adjusted by subsection (e) multiplied by the ratio of the annual amount of the immediately commencing straight life annuity payable to the Participant (ignoring accruals after age 65) using the actuarial adjustments in Section 11.6 over the annual amount of the straight life annuity that would have been payable at age 65, or (B) the dollar limitation specified under paragraph (b)(i) above as adjusted by subsection (e) actuarially increased using a 5% interest rate assumption and the applicable mortality table under Section 417(e)(3)(B) of the Code. The probability of the Participant dying after age 65 and before the age at which the payment of benefits would commence shall not be taken into account in increasing the dollar limitation under this subsection (g).

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(h)	The annual benefit is a retirement benefit under the Plan which is payable annually in the form of a single life annuity.


(i)	If the benefit payable to a Participant is not in the normal form of payment nor in the form of a qualified joint and survivor annuity, and it is not payable in a form to which Section 417(e)(3) of the Code applies, then the maximum annual amount determined under subsection (b) above shall be adjusted such that it is the greater of:


(A)	the actuarially equivalent straight life annuity commencing at the same Annuity Starting Date as the form of benefit payable to the Participant using the Plan’s factors for determining actuarial equivalence, and


(B)	the actuarially equivalent straight life annuity commencing at the same Annuity Starting Date as the form of benefit payable to the Participant using an interest rate of 5% and the applicable mortality table under Section 417(e)(3)(B) of the Code.


(ii)	If the benefit is payable in a form to which Code Section 417(e)(3) applies, the actuarially equivalent straight life annuity benefit shall be the greatest of:


(A)	the annual amount of the straight life annuity commencing at the Annuity Starting Date that has the same actuarial present value as the particular form of benefit payable, computed using the Plan’s factors for determining actuarial equivalence;


(B)	the annual amount of the straight life annuity commencing at the Annuity Starting Date that has the same actuarial present value as the particular form of benefit payable, computed using a 5.5% interest assumption and the applicable mortality table under Section 417(e)(3)(B) of the Code; or


(C)	the annual amount of the straight life annuity commencing at the Annuity Starting Date that has the same actuarial present value as the particular form of benefit payable, computed using the

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applicable interest rate under Section 417(e)(3)(C) of the Code and the applicable mortality table specified in Revenue Ruling 2001-62, divided by 1.05.


(iii)	Notwithstanding the foregoing, for a benefit that has an Annuity Starting Date in 2004 or 2005, the actuarially equivalent straight life annuity benefit shall be the greater of:


(A)	the annual amount of the straight life annuity commencing at the Annuity Starting Date that has the same actuarial present value as the particular form of benefit payable, computed using the Plan’s actuarial equivalence factors; or


(B)	the annual amount of the straight life annuity commencing at the Annuity Starting Date that has the same actuarial present value as the particular form of benefit payable, computed using a 5.5% interest assumption and the applicable mortality table for the distribution under Treasury Regulation Section 1.417(e)-1(d)(2).

Benefits with an Annuity Starting Date in 2004 shall be calculated in accordance with the requirements of Notice 2004-78, the terms of which are hereby incorporated by reference.


(i)	If the Participant has completed less than 10 years of Plan participation, the dollar limitation determined under paragraph (b)(i) above shall be adjusted by multiplying such amount by a fraction, the numerator of which is the Participant’s number of years of Plan participation (or parts thereof) and the denominator of which is 10.


(j)	If the Participant has completed less than 10 years of Credited Service, the maximum amount determined under paragraph (b)(ii) and subsection (c) (without regard to paragraph (b)(i) above) shall be adjusted by multiplying such amount by a fraction, the numerator of which is the Participant’s number of years of Credited Service (or parts thereof) and the denominator of which is 10.


(k)	In no event shall the provisions of subsection (i) or subsection (j) above reduce the limitations in subsection (b) to an amount less than one tenth of such limitations, determined without regard to the provisions of subsection (i) and (j).


(l)	For purposes of applying the benefit limitations set forth herein, the “limitation year” shall be the calendar year.


10.2	Limitations Based on Funding Status

(a)

Limitations Applicable If the Plan’s Adjusted Funding Target Attainment Percentage Is Less Than 80 Percent, But Not Less Than 60 Percent . Notwithstanding any other provisions of the Plan, if the Plan’s adjusted funding target attainment percentage for a Plan Year is less than 80 percent (or would be less than 80 percent to the extent described in Section 10.2(a)(ii) below) but is not less than 60 percent, then the limitations set forth in this subsection (a) apply.

(i)

50 Percent Limitation on Single Sum Payments, Other Accelerated Forms of Distribution, and Other Prohibited Payments . A Participant or Beneficiary is not permitted to elect, and the Plan shall not pay, a single sum payment or other optional form of benefit that includes a prohibited payment with an annuity starting date on or after the applicable Section 436 measurement date, and the Plan shall not make any payment for the purchase of an irrevocable commitment from an insurer to pay benefits or any other payment or transfer that is a prohibited payment, unless the present value of the portion of the benefit that is being paid in a prohibited payment does not exceed the lesser of:

(A) 50 percent of the present value of the benefit payable in the optional form of benefit that includes the prohibited payment; or

(B) 100 percent of the PBGC maximum benefit guarantee amount (as defined in Treasury Regulations Section 1.436-1(d)(3)(iii)(C)). The limitation set forth in this Section 10.2(a)(i) does not apply to any payment of a benefit which under Section 411(a)(11) of the Code may be immediately distributed without the consent of the Participant. If an

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optional form of benefit that is otherwise available under the terms of the Plan is not available to a Participant or Beneficiary as of the annuity starting date because of the application of the requirements of this Section 10.2(a)(i), the Participant or Beneficiary is permitted to elect to bifurcate the benefit into unrestricted and restricted portions (as described in Treasury Regulations Section 1.436-1(d)(3)(iii)(D)). The Participant or Beneficiary may also elect any other optional form of benefit otherwise available under the Plan at that annuity starting date that would satisfy the 50 percent/PBGC maximum benefit guarantee amount limitation described in this Section 10.2(a)(i), or may elect to defer the benefit in accordance with any general right to defer commencement of benefits under the Plan.

(ii) Plan Amendments Increasing Liability for Benefits . No amendment to the Plan that has the effect of increasing liabilities of the Plan by reason of increases in benefits, establishment of new benefits, changing the rate of benefit accrual, or changing the rate at which benefits become nonforfeitable shall take effect in a Plan Year if the adjusted funding target attainment percentage for the Plan Year is:

(A) Less than 80 percent; or

(B) 80 percent or more, but would be less than 80 percent if the benefits attributable to the amendment were taken into account in determining the adjusted funding target attainment percentage.

The limitation set forth in this Section 10.2(a)(ii) does not apply to any amendment to the Plan that provides a benefit increase under a Plan formula that is not based on compensation, provided that the rate of such increase does not exceed the contemporaneous rate of increase in the average wages of Participants covered by the amendment.

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(b)

Limitations Applicable If the Plan’s Adjusted Funding Target Attainment Percentage Is Less Than 60 Percent . Notwithstanding any other provisions of the Plan, if the Plan’s adjusted funding target attainment percentage for a Plan Year is less than 60 percent (or would be less than 60 percent to the extent described in Section 10.2(b)(ii) below), then the limitations in this subsection (b) apply.

(i)

Single Sums, Other Accelerated Forms of Distribution, and Other Prohibited Payments Not Permitted . A Participant or Beneficiary is not permitted to elect, and the Plan shall not pay, a single sum payment or other optional form of benefit that includes a prohibited payment with an annuity starting date on or after the applicable Section 436 measurement date, and the Plan shall not make any payment for the purchase of an irrevocable commitment from an insurer to pay benefits or any other payment or transfer that is a prohibited payment. The limitation set forth in this Section 10.2(b)(i) does not apply to any payment of a benefit which under Section 411(a)(11) of the Code may be immediately distributed without the consent of the Participant.


(ii)	Shutdown Benefits and Other Unpredictable Contingent Event Benefits Not Permitted to Be Paid . An unpredictable contingent event benefit with respect to an unpredictable contingent event occurring during a Plan Year shall not be paid if the adjusted funding target attainment percentage for the Plan Year is:


(A)	Less than 60 percent; or


(B)	60 percent or more, but would be less than 60 percent if the adjusted funding target attainment percentage were redetermined applying an actuarial assumption that the likelihood of occurrence of the unpredictable contingent event during the Plan Year is 100 percent.


(iii)	Benefit Accruals Frozen . Benefit accruals under the Plan shall cease as of the applicable Section 436 measurement date. In addition, if the Plan is required to cease benefit accruals under this Section 10.2(b)(iii), then the Plan is not permitted to be amended in a manner that would increase the

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liabilities of the Plan by reason of an increase in benefits or establishment of new benefits.


(c)	Limitations Applicable If the Plan Sponsor Is In Bankruptcy .

Notwithstanding any other provisions of the Plan, a Participant or Beneficiary is not permitted to elect, and the Plan shall not pay, a single sum payment or other optional form of benefit that includes a prohibited payment with an annuity starting date that occurs during any period in which the Company is a debtor in a case under Title 11, United States Code, or similar Federal or State law, except for payments made within a Plan Year with an annuity starting date that occurs on or after the date on which the Plan’s enrolled actuary certifies that the Plan’s adjusted funding target attainment percentage for that Plan Year is not less than 100 percent (without regard to the interest stabilization rules under Section 430(h)(2)(C)(iv) for Plan Years beginning on or after January 1, 2015). In addition, during such period in which the Company is a debtor, the Plan shall not make any payment for the purchase of an irrevocable commitment from an insurer to pay benefits or any other payment or transfer that is a prohibited payment, except for payments that occur on a date within a Plan Year that is on or after the date on which the Plan’s enrolled actuary certifies that the Plan’s adjusted funding target attainment percentage for that Plan Year is not less than 100 percent. The limitation set forth in this Section 10.2(c) does not apply to any payment of a benefit which under Section 411(a)(11) of the Code may be immediately distributed without the consent of the Participant.

(d) Provisions Applicable After Limitations Cease to Apply .

(i)

Resumption of Prohibited Payments . If a limitation on prohibited payments under Section 10.2(a)(i), Section 10.2(b)(i) or Section 10.2(c) applied to the Plan as of a Section 436 measurement date, but that limit no longer applies to the Plan as of a later Section 436 measurement date, then that limitation does not apply to benefits with annuity starting dates that are on or after that later Section 436 measurement date.

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(ii) Resumption of Benefit Accruals . If a limitation on benefit accruals under Section 10.2(b)(iii) applied to the Plan as of a Section 436 measurement date, but that limitation no longer applies to the Plan as of a later Section 436 measurement date, then benefit accruals shall not automatically resume on a prospective basis unless otherwise provided by the Company. The Plan shall comply with the rules relating to partial years of participation and the prohibition on double proration under Department of Labor regulation 29 CFR Section 2530.204-2(c) and (d).

(iii) Shutdown and Other Unpredictable Contingent Event Benefits . If an unpredictable contingent event benefit with respect to an unpredictable contingent event that occurs during the Plan Year is not permitted to be paid after the occurrence of the event because of the limitation of Section 10.2(b)(ii), but is permitted to be paid later in the same Plan Year (as a result of additional contributions or pursuant to the enrolled actuary’s certification of the adjusted funding target attainment percentage for the Plan Year that meets the requirements of Treasury Regulations Section 1.436-1(g)(5)(ii)(B)), then that unpredictable contingent event benefit shall be paid, retroactive to the period that benefit would have been payable under the terms of the Plan (determined without regard to Section 10.2(b)(ii)). If the unpredictable contingent event benefit does not become payable during the Plan Year in accordance with the preceding sentence, then the Plan is treated as if it does not provide for that benefit.

(iv) Treatment of Plan Amendments That Do Not Take Effect . If a Plan amendment does not take effect as of the effective date of the amendment because of the limitation of Section 10.2(a)(ii) or Section 10.2(b)(iii), but is permitted to take effect later in the same Plan Year (as a result of additional contributions or pursuant to the enrolled actuary's certification of the adjusted funding target attainment percentage for the Plan Year that meets the requirements of Treasury Regulations Section 1.436-1(g)(5)(ii)(C)), then the Plan amendment must automatically take effect as of the first day of the Plan Year (or, if later, the original effective date of the amendment). If the Plan amendment cannot take

xxv

effect during the same Plan Year, then it shall be treated as if it were never adopted, unless the Plan amendment provides otherwise.


(e)	Notice Requirement . The Administrator shall provide a written notice in accordance with Section 101(j) of ERISA to Participants and Beneficiaries within 30 days after certain specified dates if the Plan has become subject to a limitation described in Section 10.2(a)(i), Section 10.2(b) or Section 10.2(c).

(f)

Methods to Avoid or Terminate Benefit Limitations . The Company may apply methods prescribed under Section 436(b)(2), (c)(2), (e)(2), and (f) of the Code and Treasury Regulations Section 1.436-1(f) to avoid or terminate the application of the limitations set forth in Sections 10.2(a), (b) and (c) for a Plan Year. In general, the methods the Company may use to avoid or terminate one or more of the benefit limitations under Sections 10.2(a), (b) and (c) for a Plan Year include employer contributions and elections to increase the amount of Plan assets which are taken into account in determining the adjusted funding target attainment percentage, making an employer contribution that is specifically designated as a current year contribution that is made to avoid or terminate application of certain of the benefit limitations, or providing security to the Plan.


(g)	Special Rules .


(i)	Rules of Operation for Periods Prior to and After Certification of Plan’s Adjusted Funding Target Attainment Percentage .

(A)

In General . Section 436(h) of the Code and Treasury Regulations Section 1.436-1(h) set forth a series of presumptions that apply (1) before the Plan’s enrolled actuary issues a certification of the Plan’s adjusted funding target attainment percentage for the Plan Year and (2) if the Plan’s enrolled actuary does not issue a certification of the Plan’s adjusted funding target attainment percentage for the Plan Year before the first day of the 10th month of the Plan Year (or if the Plan’s enrolled actuary issues a range certification for the Plan Year pursuant to Treasury Regulations Section 1.436-1(h)(4)(ii) but does not issue a certification of the specific adjusted funding target

xxvi

attainment percentage for the Plan by the last day of the Plan Year). For any period during which a presumption under Section 436(h) of the Code and Treasury Regulations Section 1.436-1(h) applies to the Plan, the limitations under Sections 10.2(a), (b) and (c) are applied to the Plan as if the adjusted funding target attainment percentage for the Plan Year were the presumed adjusted funding target attainment percentage determined under the rules of Section 436(h) of the Code and Treasury Regulations Section 1.436-1(h)(1), (2), or (3). These presumptions are set forth in Section 10.2(g)(i)(B), (C) and (D).

(B) Presumption of Continued Underfunding Beginning First Day of Plan Year . If a limitation under Section 10.2(a), (b) or (c) applied to the Plan on the last day of the preceding Plan Year, then, commencing on the first day of the current Plan Year and continuing until the Plan’s enrolled actuary issues a certification of the adjusted funding target attainment percentage for the Plan for the current Plan Year, or, if earlier, the date Section 10.2(g)(i)(C) or Section 10.2(g)(i)(D) applies to the Plan:

(1) The adjusted funding target attainment percentage of the Plan for the current Plan Year is presumed to be the adjusted funding target attainment percentage in effect on the last day of the preceding Plan Year; and

(2) The first day of the current Plan Year is a Section 436 measurement date.

(C) Presumption of Underfunding Beginning First Day of 4th Month . If the Plan’s enrolled actuary has not issued a certification of the adjusted funding target attainment percentage for the Plan Year before the first day of the 4th month of the Plan Year and the Plan’s adjusted funding target attainment percentage for the preceding Plan Year was either at least 60 percent but less than 70 percent or at least 80 percent but less than 90 percent, or is described in Treasury Regulations Section 1.436-1(h)(2)(ii),

xxvii

then, commencing on the first day of the 4th month of the current Plan Year and continuing until the Plan’s enrolled actuary issues a certification of the adjusted funding target attainment percentage for the Plan for the current Plan Year, or, if earlier, the date Section 10.2(g)(i)(D) applies to the Plan:

(1) The adjusted funding target attainment percentage of the Plan for the current Plan Year is presumed to be the Plan’s adjusted funding target attainment percentage for the preceding Plan Year reduced by 10 percentage points; and

(2) The first day of the 4th month of the current Plan Year is a Section 436 measurement date.

(D) Presumption of Underfunding On and After First Day of 10th Month . If the Plan’s enrolled actuary has not issued a certification of the adjusted funding target attainment percentage for the Plan Year before the first day of the 10th month of the Plan Year (or if the Plan’s enrolled actuary has issued a range certification for the Plan Year pursuant to Treasury Regulations Section 1.436-1(h)(4)(ii) but has not issued a certification of the specific adjusted funding target attainment percentage for the Plan by the last day of the Plan Year), then, commencing on the first day of the 10th month of the current Plan Year and continuing through the end of the Plan Year:

(1) The adjusted funding target attainment percentage of the Plan for the current Plan Year is presumed to be less than 60 percent; and

(2) The first day of the 10th month of the current Plan Year is a section 436 measurement date.

(ii) New Plans, Plan Termination, Certain Frozen Plans, and Other Special Rules .

(A) First 5 Plan Years . The limitations in Section 10.2(a)(ii), Section 10.2(b)(ii), and Section 10.2(b)(iii) do not apply to a new plan for the first

xxviii

5 plan years of the plan, determined under the rules of Section 436(i) of the Internal Revenue Code and Treasury Regulations Section 1.436-1(a)(3)(i).

(B) Plan Termination . The limitations on prohibited payments in Section 10.2(a)(i), Section 10.2(b)(i), and Section 10.2(c) do not apply to prohibited payments that are made to carry out the termination of the Plan in accordance with applicable law. Any other limitations under this section of the Plan do not cease to apply as a result of termination of the Plan.

(C) Exception to Limitations on Prohibited Payments Under Certain Frozen Plans . The limitations on prohibited payments set forth in Sections 10.2(a)(i), 10.2(b)(i) and 10.2(c) do not apply for a Plan Year if the terms of the Plan, as in effect for the period beginning on September 1, 2005, and continuing through the end of the Plan Year, provide for no benefit accruals with respect to any Participants. This Section 10.2(g)(ii)(C) shall cease to apply as of the date any benefits accrue under the Plan or the date on which a Plan amendment that increases benefits takes effect.

(D) Special Rules Relating to Unpredictable Contingent Event Benefits and Plan Amendments Increasing Benefit Liability . During any period in which none of the presumptions under Section 10.2(g)(i) apply to the Plan and the Plan’s enrolled actuary has not yet issued a certification of the Plan’s adjusted funding target attainment percentage for the Plan Year, the limitations under Section 10.2(a)(ii) and Section 10.2(b)(ii) shall be based on the inclusive presumed adjusted funding target attainment percentage for the Plan, calculated in accordance with the rules of Treasury Regulations Section 1.436-1(g)(2)(iii).

(iii) Special Rules Under PRA 2010 .


(A)	Payments Under Social Security Leveling Options . For purposes of determining whether the limitations under Section 10.2(a)(i) or Section 10.2((b)(i) apply to payments under a social security leveling option, within the meaning of Section 436(j)(3)(C)(i) of the

xxix

Code, the adjusted funding target attainment percentage for a Plan Year shall be determined in accordance with the “Special Rule for Certain Years” under Section 436(j)(3) of the Code and any Treasury Regulations or other published guidance thereunder issued by the Internal Revenue Service.

(B)

Limitation on Benefit Accruals . For purposes of determining whether the accrual limitation under Section 10.2(b)(iii) applies to the Plan, the adjusted funding target attainment percentage for a Plan Year shall be determined in accordance with the “Special Rule for Certain Years” under Section 436(j)(3) of the Code (except as provided under Section 203(b) of the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010, if applicable).

(iv) Interpretation of Provisions . The limitations imposed by this section of the Plan shall be interpreted and administered in accordance with Section 436 of the Code and Treasury Regulations Section 1.436-1.

(h)

Definitions . The definitions in the following Treasury Regulations apply for purposes of Sections 10.2(a) through (g): Section 1.436-1(j)(1) defining adjusted funding target attainment percentage; Section 1.436-1(j)(2) defining annuity starting date; Section 1.436-1(j)(6) defining prohibited payment; Section 1.436-1(j)(8) defining Section 436 measurement date; and section 1.436-1(j)(9) defining an unpredictable contingent event and an unpredictable contingent event benefit.

(i) Effective Date . The rules in Sections 10.2(a) through (h) are effective for Plan Years beginning after December 31, 2007.

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ARTICLE XI - MISCELLANEOUS PROVISIONS


11.1	Plan Non-Contractual

No Participant or Beneficiary shall have any right or interest under the Plan unless and until he becomes entitled thereto as provided in the Plan. The adoption and maintenance of the Plan shall not be deemed to constitute a contract between an Employer and any Employee. Inclusion in the Plan will not affect an Employer’s right to discharge or otherwise discipline Employees and membership in the Plan will not give any Employee the right to be retained in the service of an Employer nor any right or claim to a pension or other benefit unless such right is specifically granted under the terms of the Plan.


11.2	Non-Alienation of Retirement Rights or Benefits

(a)

Except as provided in Section 11.2(b) or 11.2(c), no benefit payable under the Plan shall be subject in any manner to anticipation, sale, transfer, assignment, pledge, encumbrance, security interest or charge, and any action by way of anticipating, alienating, selling, transferring, assigning, pledging, encumbering, charging or granting a security interest in the same shall be void and of no effect; nor shall any such benefit be in any manner liable for or subject to the debts, contracts, liabilities, engagements or torts of the person entitled to such benefit.

(b)

Section 11.2(a) shall not apply to the creation, assignment, or recognition of a right to any benefit payable pursuant to a qualified domestic relations order as defined in Section 414(p) of the Code. The Administrator shall establish reasonable procedures to determine the status of domestic relations orders and to administer distributions under such orders which are deemed to be qualified domestic relations orders. Such procedures shall be in writing shall comply with the provisions of Section 414(p) of the Code and shall be incorporated into this plan document. To the extent that, because of a qualified domestic relations order, more than one individual is to be treated as a surviving Spouse, the total amount payable from the Plan as a result of the death of a Participant shall not exceed the amount that would be payable from the Plan if there were only one surviving Spouse.


(c)	Notwithstanding the provisions of Section 11.2(a), the Plan may offset any portion of the Accrued Pension of a Participant or the Participant’s Beneficiary against a claim of the Plan arising:


(i)	as a result of the Participant’s or Beneficiary’s conviction of a crime involving the Plan; or


(ii)	with regard to the Participant’s or Beneficiary’s violation of ERISA’s fiduciary provisions upon:


(A)	the entry of any civil judgment, consent order, or decree against the Participant or Beneficiary; or


(B)	the execution of any settlement agreement between the Participant or Beneficiary and the Department of Labor or Pension Benefit Guaranty Corporation.


11.3	Payment of Pension to Others

In the event that the Administrator shall find that any Participant or Beneficiary to whom a pension is payable, is unable to care for his affairs because of illness, accident or incapacity, any payment due (unless prior claim therefor shall have been made by a duly qualified guardian or other legal representative) may, in the discretion of the Administrator, be paid to the Spouse, parent, child, brother or sister of such Participant or Beneficiary or to any other person deemed by the Administrator to be maintaining or responsible for the maintenance of such Participant or Beneficiary. Any such payment shall be a payment for the account of the Participant or Beneficiary and shall be a complete discharge of any liability of the Plan and any Employer therefor.


11.4	Prohibition Against Reversion

Except as provided in Section 9.2 hereof, in no event shall any funds held in the Trust Fund revert to the Company or be diverted to purposes other than the exclusive benefit of Participants or their Beneficiaries prior to the satisfaction of all liabilities under the Plan; provided, however, that in the event the Plan is terminated, if, after all plan liabilities are satisfied, there remains a balance in the Fund as a result of actuarial error, such balance shall be returned to the Company.


11.5	Merger, Transfer of Assets or Liabilities

The Company may merge or consolidate the Plan with, transfer assets and liabilities of the Plan to, or receive a transfer of assets and liabilities from, any other plan without the consent of any other Employer or other person, if such transfer is effected in accordance with applicable law and if such other plan meets the requirements of Code Sections 401(a) and 501(a), permits such transfer or the receipt of such transfer and, with respect to liabilities to be transferred from this Plan to such other plan, satisfies the requirements of Code Sections 411(d)(6) and 417. This Plan may not be merged or consolidated with any other plan, nor may any assets or liabilities of this Plan be transferred to any other plan, unless the terms of the merger, consolidation or transfer are such that each Participant in the Plan would, if the Plan were terminated immediately after such merger, consolidation or transfer, receive a pension having a value equal to or greater than the pension he would have been entitled to receive if this Plan had terminated immediately prior to the merger, consolidation or transfer.


11.6	Actuarial Equivalence

Any determination of actuarial equivalence required by the provisions of this Plan, when not otherwise specified in the Plan, shall be made on the basis of the mortality table referenced in IRS Revenue Ruling 2001-62, (GAR ’94) with an annual interest rate of 6%.


11.7	Change of Vesting Schedule

If the Plan’s vesting schedule is amended or if the Plan is deemed amended by an automatic change to or from a Top-Heavy Plan vesting schedule (Section 13.3), each Participant with at least three years of Service with an Employer may elect, within a reasonable period after the adoption of the amendment or change, to have his nonforfeitable pension computed under the Plan without regard to such amendment or change.

The period during which the election may be made shall commence at the date the amendment is adopted or deemed to be made and shall end on the latest of:


(a)	60 days after the amendment is adopted;


(b)	60 days after the amendment becomes effective; or


(c)	60 days after the Participant is issued written notice of the amendment by the Administrator.

Notwithstanding the foregoing provisions of this Section 11.7, the vested interest of any Participant on the date such amendment is effective shall not be less than his vested interest under the Plan as in effect immediately prior to the effective date of such change.


11.8	Controlled Group

For purposes only of determining eligibility to participate in the Plan and eligibility for any pension (but not the amount thereof) under the Plan, all employment with an Employer or an Affiliate shall be deemed to be employment with an Employer in computing Hours of Service and Service.


11.9	Severability

If any provision of this Plan is held to be invalid or unenforceable, such determination shall not affect the other provisions of this Plan. In such event, this Plan shall be construed and enforced as if such provision had not been included herein.


11.10	Employer Records

The records of a Participant’s Employer shall be presumed to be conclusive of the facts concerning his employment or non-employment, Service, Credited Service and Compensation unless shown beyond a reasonable doubt to be incorrect.


11.11	Application of Plan Provisions

This Plan shall be binding on all Participants and their Spouses and Beneficiaries and upon heirs, executors, administrators, successors, and assigns of all persons having an interest herein. The provisions of the Plan in no event shall be considered as giving any such person any legal or equitable right against the Company, an Employer or an Affiliate, any of its officers, employees, directors, or shareholders, or against the Trustee, except such rights as are specifically provided for in the Plan or hereafter created in accordance with the terms of the Plan.

11.12

Missing Participants and Beneficiaries.
Notwithstanding Section 7.10, if a Participant who has left employment with the Company and Affiliates (or a surviving Spouse or Beneficiary who is eligible for a death benefit or survivor benefit) has failed to file an application for benefits within 120 days after attainment of the Participant’s Normal Retirement Date, the Administrator shall treat the Participant’s retirement benefit and vested Accrued Pension (or the surviving Spouse’s or Beneficiary’s death benefit or survivor benefit) as forfeited; provided, however, that such retirement benefit, Accrued Pension, death benefit or survivor benefit shall be reinstated retroactive to the commencement date set forth below upon the subsequent filing of a completed application with the Administrator and shall commence within ninety (90) days after such application is filed. For purposes of this Section 11.12, the commencement date shall be the later of:


(a)	the Participant’s Normal Retirement Date; and


(b)	the date on which the Participant terminated employment with the Employer and Affiliates.

No payment under the Plan will be increased on account of any delay in payment due to a Participant’s, surviving Spouse’s or Beneficiary’s failure to properly file the required application forms furnished by the Administrator or to otherwise accept such payments.


11.13	IRC 414(u) Compliance Provision

Notwithstanding any provision of the Plan to the contrary, contributions, benefits and service credit with respect to qualified military service shall be provided in accordance with Section 414(u) of the Code.


(a)	As provided by Section 414(u) of the Code, “qualified military service” means service in the uniformed services (as defined in Chapter 54 of Title 38, United Stated Code) by an individual if the individual is qualified under such chapter to reemployment rights with the Company or an Affiliate following such military service.


(b)	“USERRA” means the Uniformed Services Employment and Reemployment Rights Act of 1994 as amended.


(c)	If an individual returns to employment with the Company or an Affiliate following a period of qualified military service under circumstances such that the individual has reemployment rights under USERRA, and the individual reports for said reemployment within the time frame required by USERRA, the following provisions shall apply:


(i)	The qualified military service shall be recognized as Credited Service and Service to the same extent as it would have been if the individual had remained continuously employed with the Company or an Affiliate rather than leaving active employment to go into qualified military service.


(ii)	Compensation shall be determined by the Company consistent with the requirements of USERRA, and shall reflect the Company’s best estimate of the earnings the individual would have received but for the qualified military service.

(d)

If a Participant fails to return to employment with the Company or an Affiliate on account of the Participant’s death in qualified military service on or after January 1, 2007, the surviving Spouse of such Participant shall be eligible to receive any death benefit provided under the Plan as if the Participant had returned to employment as a Covered Employee immediately prior to his death and then terminated employment on account of his death.

(e)

If a Participant fails to return to employment with the Company or an Affiliate on account of either the Participant’s incurring a disability in qualified military service or the Participant’s death in qualified military service, the Participant (or the surviving Spouse of the Participant, in the event of the Participant’s death) shall be eligible for a benefit under the Plan determined by using the Credited Service the Participant would have had hereunder had the Participant returned to employment as a Covered Employee immediately prior to his date of disability or death and then terminated employment on the date of his disability or death.


(f)	The foregoing provisions are intended to provide the benefits required by USERRA and the Heroes Earnings Assistance and Relief Tax Act of 2008, and are not intended to provide any other benefits. This section shall be construed consistently with said intent.

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ARTICLE XII - AMENDMENT AND TERMINATION


12.1	Amendment and Termination of the Plan

The Company hopes and expects to continue the Plan, but expressly reserves the right at any time and from time to time, without the consent of Participants:


(a)	to reduce or discontinue payments to the Plan;


(b)	to terminate the Plan;


(c)	to amend the Plan, retroactively or otherwise, in such manner as it may deem necessary or advisable in order to qualify the Plan and any trust established in conjunction therewith under the provisions of Sections 401(a) and 501(a) of the Code, or any similar Code provisions from time to time in effect;


(d)	to amend the Plan in any other respect, provided, however, that no such amendment shall forfeit or diminish the interest of any Participant in the Trust Fund to the extent that such interest has become vested in such Participant, except as may be permitted under the Code or ERISA.

Any such amendment to or termination of this Plan shall be evidenced by a written instrument adopted by the Board; provided, however, that the Administrator may adopt such amendments as shall fall within the limited amendment authority contained in the Administrator’s charter. Any such written instrument shall recite at which time the amendments contained therein shall become effective.

Promptly after an amendment of this Plan shall have become effective, the Company, or Administrator, as the case may be, shall cause a copy of such amendment to be filed with the Administrator and with the Trustee. The Administrator shall take such steps as it may deem appropriate and reasonable to communicate the amendment to Participants.


12.2	Administration of the Plan in Case of Termination

Upon termination of the Plan, as determined by the Pension Benefit Guaranty Corporation, the assets of the Trust Fund shall be liquidated and distributed in accordance with Section 4044 of ERISA and applicable regulations issued thereunder. In the event of the termination of the Plan or a partial termination of the Plan, the rights of all affected Participants to Accrued Pensions determined as of the date of such termination or partial termination, to the extent funded, or as further adjusted by the Pension Benefit Guaranty Corporation as of such date, shall be nonforfeitable. Notwithstanding the foregoing, upon Plan termination, the benefit of any Highly Compensated Employee shall be limited to a benefit that is nondiscriminatory under Section 401(a)(4) of the Code.

Upon termination of the Plan, after the satisfaction of all liabilities of the Plan to its Participants, Beneficiaries and surviving Spouses, the Company shall receive any remaining amount resulting from any variations between actual requirements and actuarially expected requirements.


12.3	Internal Revenue Service Limitations


(a)	Except in such cases where the circumstances described in subsection (b) apply, the annual payments under the Plan to any one (1) of the twenty-five (25) highest paid Highly Compensated Employees (and Highly Compensated former Employees), ranked by Test Compensation, shall not exceed the sum of:


(i)	those payments that would be made on behalf of such Employee under a single life annuity that is the Actuarial Equivalent of the sum of the Employee’s Accrued Pension and the Employee’s Other Benefits (as defined in subsection (c) below) under the Plan; and


(ii)	those payments the Employee is entitled to receive under a social security supplement.


(b)	The provisions of subsection (a) above shall not apply if:


(i)	after payment of all such benefits to an Employee described in subsection (a), the value of Plan assets equals or exceeds 110% of the value of current liabilities (as defined in Code Section 412(l)(7) under the Plan;


(ii)	the value of all such benefits to an Employee described in subsection (a) above is less than one percent of the value of current liabilities under the Plan prior to the payment of all such benefits to such Employee; or


(iii)	the value of all such benefits to an Employee described in subsection (a) does not exceed $5,000 or such other amount as may be prescribed under Section 411(a)(11)(A) of the Code as the maximum amount that may be paid out without the Participant’s consent.


(c)	For purposes of this Section 12.3, “Other Benefits” shall include any loan in excess of the amounts set forth in Code Section 72(p)(2)(A), any periodic income, any withdrawal values payable to a living Employee and any death benefits not provided for by insurance on the Employee’s life. “Other Benefits” for this purpose shall not include any social security supplements.

ARTICLE XIII - TOP-HEAVY PROVISIONS

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13.1	General

Notwithstanding any provision of this Plan to the contrary, the provisions of this Article XIII shall apply with respect to any Plan Year provided the Plan is a Top-Heavy Plan (as defined in Section 13.2(c) below) for such Plan Year.


13.2	Definitions Relating to Top-Heavy Provisions

For purposes of this Article XIII:

(a)

“Key Employee” means any Employee (including any deceased Employee) who at any time during the Plan Year that includes the determination date was an officer of the Employer having annual Test Compensation greater than $130,000 (as adjusted under Section 416(i)(1) of the Code for Plan Years beginning after December 31, 2002), a five percent (5%) owner of the Employer, or a one percent (1%) owner of the Employer having annual Test Compensation of more than $150,000 (as adjusted under Section 416(i)(1) of the Code for Plan Years beginning after December 31, 2002). The determination of who is a key employee will be made in accordance with Section 416(i)(1) of the Code and the applicable regulations and other guidance of general applicability issued thereunder.


(b)	“Determination Date” means, with respect to any Plan Year, the last day of the immediately preceding Plan Year.

(c)

“Top-Heavy Plan” means a plan where, as of the Determination Date, the present value of the cumulative accrued benefits (including any part of any accrued benefit distributed in the five-year period ending on the Determination Date) under the Plan for Key Employees exceeds sixty percent (60%) of the present value of the cumulative accrued benefits (including any part of any accrued benefit distributed in the five-year period ending on the Determination Date) under the Plan for all Employees. The present values of accrued benefits and the amounts of account balances of an Employee as of the Determination Date shall be increased by the distributions made with respect to the Employee under the Plan and any plan aggregated with the Plan under Section 416(g)(2) of the Code during the one-year period ending on the Determination Date. The preceding sentence shall also apply to distributions under a terminated plan which, had it not been terminated, would have been aggregated with the Plan under Section 416(g)(2)(A)(i) of the Code. In the case of a distribution made for a reason other than severance from employment, death or disability, this

xxxiii

provisions shall be applied by substituting “five-year period” for “one-year period”. However, the accrued benefits of any individual who has not performed services for the Employer or any Affiliate during the one-year period ending on the Determination Date shall not be taken into account.


(i)	If this Plan is in a Required Aggregation Group, each Plan of an Employer required to be in such group will be a Top-Heavy Plan if such group is a Top-Heavy Group.


(ii)	If this Plan is in a Permissive Aggregation Group which is not a Top-Heavy Group, no Plan of an Employer in such group will be a Top-Heavy Plan.


(d)	“Required Aggregation Group” means:


(i)	each plan of an Employer in which a Key Employee is a participant (regardless of whether the plan has terminated), and


(ii)	each other plan of an Employer which enables a plan in which a Key Employee is a participant to meet the requirements of Internal Revenue Code Sections 401(a)(4) or 410.


(e)	“Permissive Aggregation Group” means any plan of an Employer which is not part of the Required Aggregation Group, but is treated as if it were at the option of the Company, provided such group continues to meet the requirements of Internal Revenue Code Sections 401(a)(4) and 410.

(f)

“Top-Heavy Group” means any Required or Permissive Aggregation Group, if as of the Determination Date, the sum of the present value of cumulative accrued benefits for Key Employees under all defined benefit plans included in such Group and the aggregate of the accounts of Key Employees under all defined contribution plans included in such Group exceeds sixty percent (60%) of the similar sum determined for all Employees.


(g)	“Present Value of Accrued Benefits” shall be determined as of the most recent valuation date within a twelve-month period ending on the Determination Date, but for the purposes of determining whether this Plan is a Top-Heavy Plan, shall not include:

xxxiv


(i)	Any rollover contribution initiated by the Employee.


(ii)	Any accrued benefit or account attributable to an Employee who is not a Key Employee, but who was a Key Employee in any prior Plan Year. To the extent that a Key Employee is deemed to be a Key Employee if he meets the definition of Key Employee within any of the four (4) preceding Plan Years, this provision shall apply following the end of such period of time.


(iii)	Any accrued benefit or account attributable to any individual who has not performed any services for an Employer at any time during the five-year period ending on the Determination Date.

Solely for purposes of determining if the Plan is a Top Heavy Plan as described above, the Present Value of Accrued Benefits shall be determined by using the single accrual method which is used for all plans of the Company and of any Affiliate. If no such single method exists, benefits shall be determined as if they accrued not more rapidly than the lowest accrued rate permitted under Section 411(b)(1)(C) of the Code.


(h)	“Valuation Date” means December 31.


(i)	“Non-Key Employee” means any Employee who is not a Key Employee.


13.3	Top-Heavy Plan Vesting Requirements


(a)	For any Plan Year in which the Plan is a Top-Heavy Plan, the following vesting schedule will apply to benefits derived from Employer contributions. The nonforfeitable interest in a Participant’s accrued benefit will be determined as follows:



Years of Service	Nonforfeitable Percentage of Accrued Benefit
0 but less than 2	0%
2 but less than 3	20%
3 but less than 4	40%
4 but less than 5	60%
5 or more	100%

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This Section 13.3 does not apply to any Participant who does not have an Hour of Service after the Plan becomes a Top-Heavy Plan.


(b)	If the vesting schedule under the Plan shifts in or out of the above schedule due to determination of whether or not the Plan is a Top-Heavy Plan, such shift shall be an amendment to the vesting schedule and Section 11.7 shall apply.


13.4	Top-Heavy Plan Minimum Benefit Requirements


(a)	For any Plan Year in which the Plan is determined to be a Top-Heavy Plan, each Non-Key Employee Participant who has completed a year of service will accrue a minimum annual benefit (derived from Employer contributions and expressed as a life annuity beginning at Normal Retirement Age and determined without regard to any Social Security contribution or benefit).


(b)	Such accrual of a minimum annual benefit will be the lesser of:


(i)	Two percent (2%) of the Participant’s highest average compensation for the five consecutive years during which the Participant had the greatest compensation from the Employer multiplied by the years of service as defined in (c) below, or


(ii)	Twenty percent (20%) times the Participant’s highest average compensation for the five consecutive years during which the Participant had the greatest compensation from an Employer.

(c)

(i) For the purpose of the accrual of minimum annual benefit, year of service shall mean a year of Credited Service as defined in Article IV, but will exclude years when the Plan was not a Top-Heavy Plan for any Plan Year ending during such year of Credited Service, as well as years of Credited Service in a Plan Year beginning before December 31, 1984. Notwithstanding the above, each Non-Key Employee Participant who has completed 1,000 Hours of Service in a year in which the Plan is a Top-Heavy Plan shall be entitled to the minimum annual benefit regardless of the level of such Non-Key Employee’s compensation.


(ii)	The compensation required to be taken into account for purposes of this Section 13.4 is Test Compensation; provided, however, that such compensation shall not exceed the adjusted annual limitation in effect for the given year (as set forth in Section 2.11) and compensation in years after the close of the last Plan Year in which the Plan is a Top-Heavy Plan shall be disregarded.


(d)	Notwithstanding any other provision of the Plan, an Employee shall be a Participant for the purposes of this Section 13.4, and a Participant shall be entitled to an accrual under this Section 13.4, even if he would not otherwise be entitled to receive an accrual or would have received a lesser accrual for the year because the Non-Key Employee Participant is not employed on a specified date.

(e)

If the annual retirement pension payable under the Plan to a Participant who has accrued a minimum annual benefit under this Article XIII commences at a date other than at Normal Retirement Age, such Participant shall receive at least an amount that is the actuarial equivalent of the minimum annual benefit commencing at Normal Retirement Age as provided under this Section 13.4 using a five percent (5%) interest rate assumption for such determination. If the annual retirement pension payable to a Participant who has accrued a minimum annual benefit under this Article XIII is in a form other than a single life annuity, such Participant shall receive an amount that is not less than the minimum annual benefit as otherwise provided in this Section 13.4 adjusted to be the actuarial equivalent of a single life annuity commencing at the same age using the provisions of Section 11.6 of the Plan for such determination.


(f)	In the case of Employees covered under both this Plan and any other plan maintained by an Employer, this Plan will provide the top heavy minimum benefit which shall be offset by the benefit, if any, provided under such other plans.


13.5	Limited Application of this Article.

The sole purpose of this Article is to comply with Section 416 of the Code and the terms of this Article shall be interpreted, applied, and if and to the extent necessary, shall be deemed modified so as to satisfy solely the minimum requirements of Section 416 of the Code and the regulations promulgated with respect thereto.

ARTICLE XIV - JURISDICTION


14.1	Jurisdiction

The provisions of the Plan shall be construed in accordance with ERISA, the Code, and, where not superseded by ERISA, the laws of the Commonwealth of Pennsylvania.

Executed at Erie, Pennsylvania, this 18 ^th day of December, 2015.

ERIE INDEMNITY COMPANY

By: /s/ Sean J. McLaughlin

Title: EVP, Secretary and General Counsel

ATTEST:

/s/ Patrick Simpson

Counsel II

xxxvi

Exhibit 10.163

ERIE INSURANCE GROUP

EMPLOYEE SAVINGS PLAN

As Amended and Restated

Effective as of January 1, 2015

INTRODUCTION

The Erie Indemnity Company (the “Company”) adopted the Erie Insurance Group Employee Savings Plan (the “Plan”) effective January 1, 1989. The Company has subsequently amended the Plan from time to time and last amended and restated the Plan effective as of January 1, 2010.

This amendment and restatement of the Plan shall constitute an amendment, restatement and continuation of the Plan. This amendment and restatement is generally effective as of January 1, 2015. However, certain provisions of this amendment and restatement are effective as of some other date. The provisions of this amendment and restatement with stated effective dates prior to January 1, 2015, shall be deemed to amend the corresponding provisions, if any, of the Plan as in effect before this amendment and restatement and all amendments thereto as of such dates. Events occurring before the applicable effective date of any provision of this amendment and restatement shall be governed by the applicable provision of the Plan as in effect on the date of the event.

The purpose of the Plan is to provide a pre-tax long term savings vehicle for eligible employees and to provide participants with an opportunity to contribute toward additional retirement security according to the provisions of Sections 401(a), 401(k) and 402A of the Internal Revenue Code of 1986, as amended.

TABLE OF CONTENTS

Page

INTRODUCTION

ARTICLE ONE - DEFINITIONS

1.1 Administrator or Plan Administrator 1

1.2 Affiliate 1

1.3 Beneficiary 1

1.4 Board 1

1.5 Catch-Up Contribution 1

1.6 Code 1

1.7 Company 1

1.8 Compensation 1

1.9 Covered Employee 1

1.10 Elective Deferral 1

1.11 Eligible Applicant 2

1.12 Employee 2

1.13 Employer(s) 2

1.14 Erie Indemnity Stock 2

1.15 Erie Indemnity Stock Fund 3

1.16 ERISA 3

1.17 Highly Compensated 3

1.18 Hour of Service 3

1.19 Interactive Electronic Communication 3

1.20 Leased Employee 3

1.21 Normal Retirement Date 4

1.22 Notice 4

1.23 Participant 4

1.24 Plan 4

1.25 Plan Year 4

1.26 Qualified Domestic Relations Order or QDRO 4

1.27 Rollover Contribution 5

1.28 Roth Catch-Up Contribution 5

1.29 Roth Elective Deferral 5

1.30 Roth Rollover Contribution 5

1.31 Safe Harbor Matching Contribution 5

1.32 Spousal Consent 6

1.33 Spouse 6

1.34 Tax Deferred Catch-Up Contribution 6

1.35 Tax Deferred Contribution 6

1.36 Test Compensation 6

1.37 Total Account 6

1.38 Trust Agreement 8

1.39 Trust Fund 8

1.40 Trustee 8

1.41 Valuation Date 8

1.42 Year of Eligibility Service 8

ARTICLE TWO - PARTICIPATION

2.1 Participation 9

2.2 Rehired Employees 10

2.3 Employment Transfers 10

ARTICLE THREE - EMPLOYER CONTRIBUTIONS

3.1 Elective Deferrals 11

3.2 Dollar Limitation on Elective Deferrals 13

3.3 Catch-Up Contributions 14

3.4 Safe Harbor Matching Contributions 15

3.5 Source of Employer Contributions 16

3.6 Investment of Employer Contributions 17

3.7 Recovery of Contributions 17

3.8 Other Provisions Relating to Employer Contributions 17

3.9 Roth In-Plan Conversions 18

ARTICLE FOUR - ROLLOVER CONTRIBUTIONS

4.1 Rollover Contributions 19

4.2 Vesting of Rollover Contributions 19

ARTICLE FIVE - PARTICIPANT ACCOUNTS AND VALUATION OF FUNDS

5.1 Establishment of Participant Accounts 20

5.2 Valuation Date Adjustments 20

5.3 Investment Elections 20

5.4 Erie Indemnity Stock Fund 23

5.5 Temporary Suspension of Certain Administrative Activities 24

ARTICLE SIX - VESTING & DISTRIBUTIONS

6.1 Vesting 25

6.2 Distributions Upon Retirement, or Other Termination of Employment 25

6.3 Payment of Amounts Distributed 26

6.4 Direct Rollovers 28

ARTICLE SEVEN – WITHDRAWALS AND LOANS

7.1 Withdrawals Generally 31

7.2 Hardship Withdrawal 31

7.3 Safe Harbor Distribution 32

7.4 Hardship Withdrawal Priority 32

7.5 Modifications to Hardship Withdrawal Standards 33

7.6 In-Service Withdrawals for Reasons Other than Hardship 33

7.7 Availability of Loans 34

7.8 Terms and Conditions of Participant Loans 35

7.9 Loan Accounts 37

ARTICLE EIGHT - THE TRUST FUND

8.1 Trust Agreement 38

8.2 Appointment of Independent Accountants 38

8.3 Appointment of Investment Manager 38

8.4 Role of Administrator in Operation of the Trust Fund 38

8.5 Voting of Erie Indemnity Stock 39

ARTICLE NINE - ADMINISTRATION OF THE PLAN

9.1 The Administrator 40

9.2 Powers of Administrator 40

9.3 Delegation of Duties 42

9.4 Conclusiveness of Various Documents 42

9.5 Actions to be Uniform 42

9.6 Liability and Indemnification 43

ARTICLE TEN - CLAIMS PROCEDURE

10.1 Claims Review Procedure 44

10.2 Original Claim 44

10.3 Review of Denied Claim 44

10.4 Determination by the Administrator Conclusive 45

10.5 Exhaustion of Administrative Remedies 45

10.6 Deadline to File Civil Action 45

ARTICLE ELEVEN - MISCELLANEOUS

11.1 Non-Alienation of Benefits 46

11.2 Risk to Participants and Source of Payments 47

11.3 Expenses 47

11.4 Rights of Participants 47

11.5 Statement of Accounts 47

11.6 Designation of Beneficiary 48

11.7 Payment to Incompetents 48

11.8 Authority to Determine Payee 49

11.9 Severability 49

11.10 Employer Records 49

11.11 Limitation on Contributions 49

11.12 IRC 414(u) Compliance Provision 51

11.13 Governing Law 52

ARTICLE TWELVE - AMENDMENT, TERMINATION OR MERGER OF THE PLAN

12.1 Right to Amend 53

12.2 Right to Terminate 53

12.3 Merger, Transfer of Assets or Liabilities 54

ARTICLE THIRTEEN - TOP HEAVY PROVISIONS

13.1 Top Heavy Provisions Inapplicable 55

ARTICLE ONE

DEFINITIONS

As used in this Plan, the following terms shall have the following meanings unless a different meaning is clearly required by the context. Any terms herein used in the masculine shall be read and construed in the feminine where they would so apply and any terms used in the singular shall be read and construed in the plural if so applicable.


1.1	“Administrator” or “Plan Administrator” means the administrative committee described in Article Nine.

1.2


1.3	“Beneficiary” means any person who, by reason of a designation made by a Participant under Plan procedures or by operation of the Plan, is or will be entitled to receive any amount or benefit hereunder upon the death of such Participant. Any attempt to designate a person as Beneficiary hereunder orally, or by means other than that permitted under the Plan shall be void and have no effect.


1.4	“Board” means the Board of Directors of the Company.


1.5	“Catch-Up Contribution” means, with respect to a given Participant, the total amount of the Participant’s Tax Deferred Catch-Up Contributions and the Participant’s Roth Catch-Up Contributions.


1.6	“Code” means the Internal Revenue Code of 1986, as amended from time to time.


1.7	“Company” means Erie Indemnity Company, a corporation organized and existing under the laws of Pennsylvania.

1.8

“Compensation” for any period means the rate of base salary or the wages paid by an Employer to an Employee during the period. For this purpose, the “rate of base salary or the wages paid” shall exclude Form W-2 income in the form of overtime compensation, bonuses, commissions, deferred compensation plan payments or severance pay under any severance benefit plan, but shall include Form W-2 income paid as a lump sum in lieu of merit increase and compensation excluded from Form W-2 income because of salary reduction agreements in connection with plans described in Sections 125, 132(f)(4) or 401(k) of the Code or resulting from deferred compensation contracts for the Plan Year in question. For Plan Years beginning on and after January 1, 2015, the “rate of base salary or the wages paid” shall include an amount, determined under the Company’s vacation conversion program, that is paid to the Employee as Form W-2

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income and/or is excluded from Form W-2 income on account of such Employee’s salary reduction agreement applicable to such amount. Compensation shall exclude any differential wage payments made on behalf of a Covered Employee who is on military leave. Effective for each Plan Year beginning on and after December 31, 1989, in no event shall the amount of Compensation taken into account under the Plan exceed the adjusted annual limitation permitted under Section 401(a)(17) of the Code for such Plan Year. Such adjusted annual limitation shall be, for each Plan Year beginning on and after December 31, 2001, $200,000 (as adjusted for cost-of-living increases in accordance with Section 401(a)(17)(B) of the Code. However, for the sole purpose of computing Plan contributions that are based on an Employee’s percentage of Compensation election, such adjusted annual limitation may be ignored; provided, the Employee does not receive a higher allocation of any type of contribution than the Employee could have received under the Plan had the adjusted annual limitation been considered.


1.9	“Covered Employee” means any Employee of an Employer, excluding any such Employee whose employment is governed by the terms of a collective bargaining agreement under which retirement benefits were the subject of good faith bargaining.

Notwithstanding any provision of the Plan to the contrary, any individual who an Employer determines to be a contract employee, independent contractor, leased employee (including a Leased Employee as defined hereunder), leased owner, leased manager, shared employee or person working under a similar classification shall not become a Covered Employee hereunder, regardless of whether any such individual is ultimately determined to be a common law employee, unless and until the Employer shall otherwise determine. An Employee shall be considered a Covered Employee only during such period in which the individual satisfies the requirements defined above.


1.10	“Elective Deferral” means, with respect to a given Participant, the total amount of the Participant’s Tax Deferred Contributions and the Participant’s Roth Elective Deferrals.


1.11	“Eligible Applicant” means a Participant who is actively employed with the Company or an Affiliate; provided, however, that for purposes of Sections 7.1 through 7.6, an Eligible Applicant shall also include a Participant who is on a disability leave of absence.


1.12	“Employee” means any common-law employee of an Employer or an Affiliate; provided, however, that for purposes of Section 1.17 “Employee” shall include any self-employed individual performing services for an Employer or Affiliate who is treated as an employee under Section 401(c)(1) of the Code.


1.13	“Employer(s)” means the Company, Erie Family Life Insurance Company, Erie Insurance Exchange, Erie Insurance Company, EI Holding Corp., EI Service Corp., Erie Insurance Company of New York, Erie Insurance Property & Casualty Company, Flagship City Insurance Company and any other Affiliate which may adopt this Plan.


1.14	“Erie Indemnity Stock” means the Class A common stock of the Company which is a qualifying employer security within the meaning of Section 407(d)(5) of ERISA.

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1.15	“Erie Indemnity Stock Fund” means the investment fund described in Section 5.4.


1.16	“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.


1.17	“Highly Compensated” means any Employee who is a more than five percent (5%) owner of an Employer or earned $110,000 or more in Test Compensation from the Employer in the lookback year; provided, however, that such $110,000 figure shall be adjusted for cost of living at the same time and in the same manner as determined under Code Section 415(d).


1.18	“Hour of Service” shall include the following:


(a)	Each hour for which an Employee is directly or indirectly paid or entitled to payment from an Employer or an Affiliate as an Employee for the performance of duties during an applicable computation period (these hours must be credited to the Employee in the computation period during which the duties were performed and not when paid, if different); and


(b)	Each hour for which back pay, irrespective of mitigation of damages, has been awarded or agreed to by an Employer or an Affiliate (these hours must be credited in the computation period or periods to which the award or agreement pertains rather than that in which the payment, award or agreement was made); and


(c)	Each hour for which an Employee is directly or indirectly paid or entitled to payment from an Employer or an Affiliate for reasons, such as vacation, sickness or disability, other than for the performance of duties (these hours shall be calculated and credited pursuant to Section 2530.200b-2 of the Department of Labor regulations which are incorporated herein by reference).

1.19

“Interactive Electronic Communication” means a communication between a Participant or Beneficiary and the person or entity designated by the Administrator to perform recordkeeping and other administrative services on behalf of the Plan pursuant to a system maintained by such person or entity and communicated to each Participant and Beneficiary whereby each such individual may make elections and exercise options as described herein with respect to all or a portion of his Total Account through the use of such system and a personal identification number. If a Participant or Beneficiary (i) consents to participate in Interactive Electronic Communication procedures adopted by the Administrator and (ii) acknowledges that actions taken by him through the use of his personal identification number pursuant to the Interactive Electronic Communication procedure constitute his signature for purposes of initiating transactions such as investment option changes, and increases, decreases, and suspensions of Elective Deferrals, the Participant or Beneficiary, as the case may be, will be deemed to have given his written consent and authorization to any such action resulting from the use of the Interactive Electronic Communication system by the Participant or Beneficiary.


1.20	“Leased Employee” means any person (other than an Employee of an Employer) who pursuant to an agreement between the Employer and any other person (“leasing organization”) has performed services for the Employer (or for the Employer and related persons determined in accordance with

- -

Section 414(n)(6) of the Code) on a substantially full-time basis for a period of at least one year and such services are performed under primary direction or control by the recipient. Except as provided below, any person satisfying the foregoing criteria shall be treated as an Employee. Contributions or benefits provided a Leased Employee by the leasing organization which are attributable to services performed for the Employer shall be treated as provided by the Employer.


1.21	“Normal Retirement Date” means the first day of the month next following the month in which the Participant attains age 65 (his “Normal Retirement Age”).

1.22

“Notice” means, unless otherwise specifically provided herein, (i) written notice on an appropriate form provided by the Administrator that is, at the discretion of the Administrator, properly completed and executed by the party giving such notice and which is delivered by hand or by mail to the Administrator or to such party designated by the terms of the Plan or by the Administrator to receive the notice, or (ii) notice provided by Interactive Electronic Communication to or from to the person or entity designated by the Administrator to perform recordkeeping and other administrative services on behalf of the Plan. The form of Notice satisfactory in any given circumstance under the Plan shall be determined by the Administrator, in its discretion, and shall be applied uniformly to all Participants and Beneficiaries. Notice to any party as provided herein shall be deemed to be given when it is actually received (either physically or by Interactive Electronic Communication, as the case may be) by the party to whom such Notice is given.


1.23	“Participant” means any Covered Employee who participates in the Plan as provided in Section 3.1 (an “active” Participant) or Section 4.1, and further, shall include any current or former Covered Employee who has suspended his Elective Deferrals or has terminated or retired if such individual has a vested Total Account balance maintained on his behalf under the Plan.


1.24	“Plan” means this Erie Insurance Group Employee Savings Plan as herein set forth with all amendments, modifications and supplements hereafter made.


1.25	“Plan Year” means the calendar year.


1.26	“Qualified Domestic Relations Order” or “QDRO” means any judgment, decree or order (including approval of a property settlement agreement) which is made pursuant to a State Domestic Relations Law (including a community property law) and which:


(a)	relates to provision of child support, alimony payments, or marital property rights of a Spouse, former Spouse, child or other dependent of a Participant;


(b)	recognizes or creates an alternate payee’s right to, or assigns to an alternate payee the right to receive all or a portion of the benefits payable with respect to a Participant under this Plan; and

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(c)	clearly specifies:


(i)	name and last known address of the Participant and of each alternate payee;


(ii)	the amount, percentage, or manner in which such could be determined, of the Participant’s benefits to be paid to such alternate payee by the Plan;


(iii)	the number of payments or time periods the QDRO covers; and


(iv)	each plan to which the QDRO applies.

A QDRO cannot require the Plan to provide a type or form of benefit, or any option not otherwise provided by the Plan, nor can it require the Plan to provide increased benefits. A QDRO cannot require payment to an alternate payee by virtue of a previous QDRO.

A written procedure will be established to determine the qualified status of domestic relations orders and to administer distributions thereunder.


1.27	“Rollover Contribution” means the Rollover Contribution or Roth Rollover Contribution made by a Covered Employee pursuant to Section 4.1.


1.28	“Roth Catch-Up Contribution” means, effective with respect to pay periods ending on or after January 1, 2007, or such later date as the Administrator shall determine, that portion of the Employer contribution made pursuant to Section 3.3 that is, at the election of the Participant, includible in the Participant’s gross income at the time the contribution is made.

1.29

“Roth Elective Deferral” means, effective with respect to pay periods ending on or after January 1, 2007, or such later date as the Administrator shall determine, the Employer contribution made pursuant to a Participant’s election under Section 3.1(a) to contribute a stated percentage, from one percent (1%) to one hundred percent (100%) of his future Compensation in lieu of receiving such amount directly in cash and to have such amount contributed to a Designated Roth Account maintained on his behalf under the Plan. A Roth Elective Deferral shall be includible in the Participant’s gross income at the time of deferral and shall be irrevocably designated as a Roth Elective Deferral by the Participant in his election.


1.30	“Roth Rollover Contribution” means that portion of a Covered Employee’s Rollover Contribution that is attributable to a designated Roth account under an eligible retirement plan.


1.31	“Safe Harbor Matching Contribution” means the Employer contribution made pursuant to Section 3.4.


1.32	“Spousal Consent” means a written consent given by a Participant’s Spouse to a Participant’s designation of a specified Beneficiary or Beneficiaries (including the designation of any class of Beneficiaries or any contingent Beneficiaries) under Section 11.6(a). Any Spousal Consent shall be effective only with respect to such Spouse. Such consent shall be duly witnessed by a Plan

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representative or a notary public and shall acknowledge the effect on the Spouse of the Participant’s election. The Participant may revoke, without limitation, any such designation without the need for Spousal Consent. Any new designation will require a new Spousal Consent. The requirement for Spousal Consent may be waived by the Administrator if it is established that there is no Spouse, the Spouse cannot be located, the Participant has a court order evidencing a legal separation from or abandonment by the Spouse, or for such other circumstances as shall be prescribed by applicable law.


1.33	“Spouse” means, with respect to any Participant, the person to whom the Participant is married at a given determination date, as determined under applicable law.


1.34	“Tax Deferred Catch-Up Contribution” means that portion of the Employer contribution made pursuant to Section 3.3 that is, at the election of the Participant, not includible in the Participant’s gross income at the time the contribution is made.

1.35

“Tax Deferred Contribution” means the Employer contribution made pursuant to a Participant’s election under Section 3.1(a) to reduce his future taxable Compensation by a stated percentage, from one percent (1%) to one hundred percent (100%), in lieu of receiving such amount directly in cash and to have such amount contributed to a Tax Deferred Account maintained on his behalf under the Plan. Effective on and after March 1, 2013, a Tax Deferred Contribution may also mean the automatic Employer contribution made pursuant to Section 2.1(b). A Tax Deferred Contribution shall not be includable in the Participant’s gross income at the time of deferral.

1.36

“Test Compensation” means, for any Plan Year, an Employee’s compensation, reported under Sections 6041 and 6051 of the Code on Form W-2, as paid by an Employer or an Affiliate for the calendar year ending with or within such Plan Year, including any amounts contributed pursuant to a salary reduction election on behalf of a Covered Employee to a plan described in Sections 125, 132(f)(4), 402(e)(3), 402(h)(1)(B), 403(b), or 457(b) of the Code for the period in question. Test Compensation shall include any differential wage payments, as defined in Section 3401(h) of the Code, that are paid by an Employer during a period of qualified military service as defined in Section 414(u) of the Code. Test Compensation in any given year shall not exceed the adjusted annual limitation in effect for such year (as set forth in Section 1.8), provided that such limitation shall not be applied in determining the status of an Employee as a Highly Compensated Employee. To the extent permitted under regulations and other guidance promulgated by the Internal Revenue Service, the Company may elect to determine Test Compensation on a basis other than that provided above.


1.37	“Total Account” means the total amounts held under the Plan for a Participant, consisting of the following accounts:


(a)	“Designated Roth Account” the portion of the Participant’s Total Account consisting of Roth Elective Deferrals plus (minus) any investment earnings (losses) on such contributions and less any distributions or withdrawals made from this account in accordance with Articles Six and Seven, respectively.

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(b)	“Employer Account” the portion of the Participant’s Total Account consisting of employer matching contributions made under the Plan with respect to Plan Years beginning before January 1, 2001, plus (minus) any investment earnings (losses) on such contributions and less any distributions or withdrawals made from this account in accordance with Articles Six and Seven, respectively.

(c)

“Rollover Account” the portion of the Participant’s Total Account consisting of Rollover Contributions other than that portion of any Rollover Contribution that is attributable to a Roth Rollover Contribution plus (minus) any investment earnings (losses) on such contributions and less any distributions or withdrawals made from this account in accordance with Articles Six and Seven, respectively.


(d)	“Roth Catch-Up Account” the portion of the Participant’s Total Account consisting of Roth Catch-Up Contributions plus (minus) any investment earnings (losses) on such contributions and less any distributions or withdrawals made from this account in accordance with Article Six and Seven, respectively.


(e)	“Roth Rollover Account” the portion of the Participant’s Total Account consisting of Roth Rollover Contributions plus (minus) any investment earnings (losses) on such contributions and less any distributions or withdrawals made from this account in accordance with Article Six and Seven, respectively.


(f)	“Safe Harbor Matching Account” the portion of the Participant’s Total Account consisting of Safe Harbor Matching Contributions, plus (minus) any investment earnings (losses) on such contributions and less any distributions made from this account in accordance with Article Six.


(g)	“Tax Deferred Account” the portion of the Participant’s Total Account consisting of Tax Deferred Contributions plus (minus) any investment earnings (losses) on such contributions and less any distributions or withdrawals made from this account in accordance with Articles Six and Seven, respectively.


(h)	“Tax Deferred Catch-Up Account” the portion of the Participant’s Total Account consisting of Tax Deferred Catch-Up Contributions plus (minus) any investment earnings (losses) on such contributions and less any distributions or withdrawals made from this account in accordance with Article Six and Seven, respectively.


(i)	“Roth In-Plan Conversion Account”, effective on and after January 1, 2016, the portion of the Participant’s Total Account consisting of amounts converted pursuant to Section 3.9 plus (minus) any investment earnings (losses) on such amounts and less any distributions or withdrawals made from this account in accordance with Articles Six and Seven respectively.


1.38	“Trust Agreement” means the Trust Agreement between the Company and a Trustee as provided in Section 8.1, together with all amendments, modifications and supplements thereto.

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1.39

“Trust Fund” means the fund established under the terms of the Trust Agreement for the purpose of holding and investing the assets of the Plan. The Trust Fund shall consist of such investment funds or vehicles as the Administrator may, in its discretion, designate from time to time and may include such investments as may be selected by a Participant or Beneficiary under a self-directed “open option” arrangement authorized by the Administrator.

Nothing herein shall prohibit the Trust Fund from holding reasonable amounts of Plan assets in cash or cash equivalents in any fund or vehicle offered under the Plan. The portion of the Trust Fund to be invested in the various funds or vehicles shall be determined by Participant investment elections made pursuant to Article Five. The Administrator may, in its discretion, offer additional investment funds or vehicles to all Participants and may cease to offer any investment fund or vehicle at such time as it deems appropriate.

For period prior to June 1, 2009 or such later date as the Administrator, in its discretion, shall provide, and except as otherwise indicated, the Trust Fund shall be deemed to include that portion of a Total Account which a Participant and Beneficiary elects to invest in a group annuity contract provided by the Erie Family Life Insurance Company.


1.40	“Trustee” means the Trustee or Trustees acting as such under the Trust Agreement, including any successor or successors.


1.41	“Valuation Date” means the close of business as of each business day.


1.42	“Year of Eligibility Service” means an “Eligibility Computation Period” in which an Employee completes at least 1,000 Hours of Service.

The “Eligibility Computation Period” with respect to an Employee shall mean the 12 consecutive month period that begins on the first day on which the Employee is credited with an Hour of Service in the employment of an Employer or Affiliate (“Employment Commencement Date”) and ends on the first anniversary thereof, and each Plan Year thereafter beginning with the Plan Year that includes the first anniversary of the Employee’s Employment Commencement Date. In the event an Employee completes 1,000 Hours of Service during the Eligibility Computation Period that begins on his Employment Commencement Date and completes 1,000 Hours of Service during the Eligibility Computation Period that begins on the January 1 that next follows his Employment Commencement Date, such Employee shall be credited with two Years of Eligibility Service.

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ARTICLE TWO

PARTICIPATION


2.1	Participation

(a)

Any Employee shall be eligible to participate in the Plan on the first day of a pay period, provided he is a Covered Employee and is actively employed by an Employer on such date and, provided further, that he makes proper application for participation within a reasonable time prior to the start of such pay period by furnishing Notice in accordance with procedures established by the Administrator and communicated to Covered Employees.

(b)

A Covered Employee who is hired on or after March 1, 2013 and who does not make an affirmative election to participate in the Plan pursuant to paragraph (a) above within the 30-day period following notice of his eligibility shall be enrolled automatically to participate in the Plan effective as of the beginning of the first pay period following the expiration of such 30-day period. Such automatic enrollment shall be at the rate of five percent (5%) of Compensation and shall remain in effect during such Participant’s period of employment until such time as the Participant affirmatively acts to change such percentage. The Administrator shall comply with the notice requirements of Section 414(w)(4) of the Code and may establish additional procedures, in its discretion, to administer the automatic enrollment of Covered Employees. For all purposes hereunder, contributions made pursuant to automatic enrollment hereunder shall be treated as Tax Deferred Contributions.

(c)

Notwithstanding the foregoing, any Covered Employee who is compensated on an hourly basis and who is classified by an Employer as other than a regular hourly employee shall be eligible to participate in the Plan on the first day of a pay period coincident with or next following the January 1 or July 1 on which (or which next follows the date) such Employee completes each of the following requirements, provided the Covered Employee remains a Covered Employee as of such January 1 or July 1:


(i)	Attains 21 years of age; and


(ii)	Completes one Year of Eligibility Service.

A Covered Employee who is described in this paragraph (c) and who satisfies the conditions set forth above may participate in the Plan by making proper application for participation within a reasonable time prior to the start of a given pay period by furnishing Notice in accordance with procedures established by the Administrator and communicated to Covered Employees. The automatic enrollment provisions of paragraph (b) shall not apply to a Covered Employee who is described in this paragraph (c).

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If an Employee described in this paragraph (c) is not a Covered Employee on the date he otherwise would have become eligible to participate in the Plan, such Employee shall be eligible to participate in the Plan pursuant to this Section 2.1 upon his return to employment as a Covered Employee.


2.2	Rehired Employees

An Employee who had been an “active” Participant in the Plan, who terminates his employment and is subsequently re-employed may become eligible to participate in the Plan under Section 3.1 on the first day of any pay period following re-employment, provided he is a Covered Employee and is actively employed by an Employer on such date and, provided further, that he makes proper application for participation within a reasonable time prior to the start of such pay period by furnishing Notice in accordance with procedures established by the Administrator and communicated to Covered Employees. The automatic enrollment provisions of Section 2.1(b) shall not apply in connection with the re-employment of a Covered Employee.


2.3	Employment Transfers

(a)

Upon the transfer of a Covered Employee to other employment with an Employer or Affiliate whereby he ceases to be a Covered Employee hereunder, such individual’s ability to have Elective Deferrals made to the Plan on his behalf (and to receive Safe Harbor Matching Contributions) with respect to Compensation earned on and after this date of transfer shall cease and such Participant shall be considered an “inactive” Participant under the Plan.

(b)

Upon the transfer of an individual from other employment with an Employer or Affiliate such that the individual becomes a Covered Employee hereunder, such individual shall be eligible to participate in the Plan as provided in Section 2.1 hereof and, except for individuals who transfer to the employment classification described in Section 2.1(c), the automatic enrollment provisions of Section 2.1(b) shall apply following such transfer.

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ARTICLE THREE

EMPLOYER CONTRIBUTIONS


3.1	Elective Deferrals

(a)

Each Covered Employee who is eligible to participate in the Plan and who has elected to become a Participant (in accordance with Section 2.1(a)) may, at the time of making application to become a Participant, elect to make Elective Deferrals in a fixed, whole percentage, from one percent (1%) to one hundred percent (100%) of Compensation otherwise payable to such Covered Employee in future pay periods. Such election shall be made in accordance with procedures adopted by the Administrator and communicated to Participants.

Subject to the automatic enrollment provisions of Section 2.1(b) and the limitations set forth in Sections 3.2 and 11.11, Elective Deferrals shall be made pursuant to the Participant’s election and shall be designated as either Tax Deferred Contributions or Roth Elective Deferrals in accordance with such election; providing however, that the Administrator, in its discretion may authorize at any time a suspension or reduction of Elective Deferrals, or any part thereof, with respect to any Participant. Elective Deferrals shall be withheld by the Participant’s Employer each pay period by regular payroll deduction in accordance with the Employer’s payroll withholding procedures and shall be credited to the Participant’s Tax Deferred Account or Designated Roth Account as of the date the contributions are received by the Trustee or otherwise deposited in the Trust Fund. Such contributions shall be deposited in the Trust Fund as soon as such amounts can reasonably be segregated from the Employer’s general assets.

In all events, a Covered Employee who is eligible to participate in the Plan pursuant to Article Two shall be permitted to (i) begin making Elective Deferrals, (ii) change an existing election to make Elective Deferrals, and (iii) cease making Elective Deferrals at least once each Plan Year.

(b)

Effective for each Plan Year beginning on and after January 1, 2015, a Covered Employee may make an annual, one-time election to convert a portion of the vacation accrued on his behalf into cash and/or an Elective Deferral. Such Covered Employee election shall be given effect provided that such election is made in a manner satisfactory to the Administrator during the election period described in subparagraph (i) below, the Covered Employee satisfies the eligibility requirements of subparagraph (ii) below, and, provided further, that the total amount of vacation accrual converted into cash and/or an Elective Deferral for any given Plan Year shall not exceed the maximum vacation conversion amount described in subparagraph (iii) below. Any payment in cash or Elective Deferral to the Plan pursuant to an election under this Section 3.1(b) shall be made at the time or times provided in subparagraph (iv) below.

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(i)

A Covered Employee must make the election under this Section 3.1(b) during an election period established by the Company. Such election period shall begin and end in the calendar year that precedes the beginning of the Plan Year for which the election is being made. Such election shall state the number of accrued vacation hours the Covered Employee wishes to convert during such Plan Year, subject to the limitations of subparagraph (iii) below, and his choice of conversion medium (cash, Elective Deferral, or both as delineated on the basis of hours or other reasonable criteria established by the Company). A Covered Employee may not change or discontinue his election after the election period for such Plan Year ends. Any election under this Section 3.1(b) shall be made in such manner provided by the Company and communicated to Covered Employees.

(ii)

Notwithstanding subparagraph (i) above, a Covered Employee’s election to convert an amount of vacation accrual into cash and/or an Elective Deferral shall be given effect only if the Covered Employee has used a minimum allotment of his accrued vacation during the Plan Year for which the election has been made, as determined under the Company’s vacation conversion program as of the Vacation Conversion Date applicable to such Covered Employee, as determined under subparagraph (iv) below. The Company, in its sole discretion, shall determine whether a Covered Employee has used a minimum allotment of accrued vacation as of any given time.


(iii)	Any Covered Employee who chooses to convert accrued vacation under this Section 3.1(b) shall designate, in his election under subparagraph (i) above, to convert an amount not less than one hour of accrued vacation and not more than such amount permitted under the Company’s vacation conversion program.

(iv)

The conversion of accrued vacation into a cash payment and/or an Elective Deferral on behalf of a Covered Employee who satisfies the terms of this Section 3.1(b) shall occur as of the Vacation Conversion Date applicable to the Covered Employee. For purposes hereof, the “Vacation Conversion Date” applicable to a Covered Employee means the June 1 or October 1 of the Plan Year for which the election has been made and which next follows the date the Covered Employee has used a minimum allotment of accrued vacation as described in subparagraph (ii). For any given Plan Year, there shall not exceed one Vacation Conversion Date applicable to a given Covered Employee. The amount of accrued vacation that is actually converted into a cash payment and/or an Elective Deferral on behalf of a Covered Employee as of a Vacation Conversion Date shall not exceed the amount of accrued vacation credited to such Covered Employee as of the Vacation Conversion Date applicable to such Covered Employee. To the extent that a Covered Employee who makes an election under this Section 3.1(b) terminates employment with an Employer before the Vacation Conversion Date applicable to the Covered Employee or fails to use a minimum allotment of accrued vacation as of the October 1 of the Plan Year for which the election has been made, the Covered Employee’s entire election under this Section 3.1(b) shall

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be nullified and any opportunity to convert accrued vacation for such Plan Year shall be forfeited.

Although an Elective Deferral made under this Section 3.1(b) shall be independent from other Elective Deferrals under the Plan, such an Elective Deferral shall be treated as an Elective Deferral for all purposes hereunder, including without limitation, the dollar limitation described in Section 3.2 and eligibility for Safe Harbor Matching Contributions under Section 3.4.

(c)

Elective Deferrals constitute Employer contributions under the Plan and are intended to qualify as elective contributions under Sections 401(k) and 402A of the Code. Elective Deferrals may be made only with respect to an amount which the Participant could otherwise elect to receive in cash and which is not currently available to the Participant as of the date an election specified in this Section 3.1 is made. In the event a Participant has no Compensation for any payroll period, no Elective Deferral may be made for such period.”


3.2	Dollar Limitation on Elective Deferrals

(a)

Any provision of this Plan to the contrary notwithstanding, no Employer shall be permitted, during any calendar year, to make, with respect to such calendar year, Elective Deferrals on behalf of a Participant under the Plan (when combined with the Participant’s elective deferrals under any other plans, contracts, or arrangements) that will exceed the limitation in affect for such year under Section 402(g)(1) of the Code, as adjusted in accordance with Section 402(g)(4) of the Code. Make-up contributions on account of qualified military service under Section 414(u) of the Code shall not be recognized as elective deferrals for purposes of this section.

(b)

In the event any amount of Elective Deferrals for a calendar year exceeds the limitation applicable under this Section 3.2 for such calendar year, such excess amount (hereafter described for purposes of this Section, as “Excess Deferrals”), as adjusted for any income or loss allocable thereto in accordance with regulations, shall to the extent possible be distributed to such Participant, as provided in subparagraphs (i), (ii), (iii) and (iv) below:

(i)

At a date not later than the March 1st of the calendar year immediately following the calendar year to which such Excess Deferrals are attributable, any Participant to whom this Section 3.2 applies may notify, in writing, the Administrator by submitting a form as may be provided by the Administrator which shall specify the amount of the Participant’s Excess Deferrals for the given calendar year and shall contain a certified statement by the Participant indicating that if such amount is not distributed, such Excess Deferrals will exceed the limit imposed on the Participant by Section 402(g) of the Code for the year in which the Elective Deferrals occurred.

Notwithstanding the foregoing and solely for the purpose of facilitating a distribution of Excess Deferrals as required by regulation, in the event a

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Participant has Excess Deferrals in a given year calculated by taking into account his Elective Deferrals hereunder and his elective deferrals under any other plan, contract, or arrangement maintained by an Employer or Affiliate, the Participant will be deemed to have notified the Administrator in the manner provided in this subparagraph.

(ii)

At a date not later than the April 15 of the calendar year immediately following the calendar year to which such Excess Deferrals are attributable, the Plan may distribute to the Participant the amount of the Excess Deferrals allocated to the Plan as adjusted for any income or loss allocable to such excess. Any Excess Deferrals distributed pursuant to this subparagraph that have not previously been included in income are to be included in the gross income of the Participant for the year to which such Excess Deferrals relate. Any income that is allocable to Excess Deferrals (as determined in accordance with rules promulgated by the Secretary of the Treasury or his delegate) that is distributed pursuant to this subparagraph is to be included in the gross income of the Participant for the year in which such amount is distributed. In making a distribution as permitted under this Section, the Administrator shall first allocate the Excess Deferral to any Roth Elective Deferrals for such year and shall allocate the Excess Deferral to Tax Deferred Contributions only to the extent the Excess Deferral exceeds such Roth Elective Deferrals. The Administrator shall designate the distribution as that consisting of Excess Deferrals within the meaning of Section 402(g)(1) of the Code. Any distribution of less than the entire amount of Excess Deferrals plus income or loss attributable to such deferral contributions shall be treated as a pro rata distribution of such excess deferral contributions and income/loss. No corrective distribution under this Section shall be recognized for purposes of determining whether the minimum distribution requirements of Section 401(a)(9) of the Code are satisfied with respect to any Participant.


(iii)	Any distribution in accordance with this Section 3.2 shall be made without regard to any notice or consent otherwise required under Sections 411(a)(11) or 417 of the Code.


3.3	Catch-Up Contributions

(a)

A Participant who is a Covered Employee and who is age 50 or older at any time during a given Plan Year shall be eligible to elect to make a Tax Deferred Catch-Up Contribution for such Plan Year or, for Plan Years beginning on and after January 1, 2007, a Roth Catch-Up Contribution for such Plan Year. Such election shall be made, and may be changed prospectively, in accordance with procedures adopted by the Administrator and communicated to Covered Employees.


(b)	A Catch-Up Contribution is an Employer contribution that is actually made on behalf of a Participant described in Section 3.3(a) whose Elective Deferrals for the give Plan Year are otherwise limited as provided in Section 3.2. and that is in an amount that does not exceed the dollar limit under Section 414(v)(2)(B)(i) of the Code, as adjusted in

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accordance with Section 414(v)(2)(C) of the Code. A Catch-Up Contribution is not taken into account for purposes of the limitations provided in Sections 3.2 and 11.11 of the Plan and the Plan shall not be treated as failing the requirements identified in Section 414(v)(3) of the Code, as applicable, by reason of such Catch-Up Contributions.


3.4	Safe Harbor Matching Contributions


(a)	The Employer shall contribute an amount to the Trust Fund equal to the sum of those amounts individually determined with respect to each Participant, as follows:


(i)	One hundred percent (100%) of the Elective Deferrals made with respect to the Participant during such pay period which do not exceed three percent (3%) of the Participant’s Compensation during such pay period; and


(ii)	Fifty percent (50%) of the Elective Deferrals made with respect to the Participant during such pay period which exceed three percent (3%), but do not exceed five percent (5%), of the Participant’s Compensation during such pay period.

Such contributions shall be designated as Safe Harbor Matching Contributions and shall be 100% vested and nonforfeitable when made. The Employer shall make Safe Harbor Matching Contributions as soon as practicable following the end of the pay period to which they relate and such contributions shall be credited to Participants’ Safe Harbor Matching Accounts as of the date they are received by the Trustee or otherwise deposited in the Trust Fund. Notwithstanding the foregoing provisions, Catch-Up Contributions shall be treated as Elective Deferrals under this Section 3.4 solely to the extent a Participant’s Elective Deferrals (exclusive of Catch-Up Contributions) for a given Plan Year do not equal or exceed five percent (5%) of the Participant’s Compensation during the Plan Year and provided that any such inclusion of Catch-Up Contributions in Elective Deferrals will not cause the amount of Elective Deferrals that are recognized for purposes of the Safe Harbor Matching Contribution formula to exceed five percent (5%) of the Participant’s Compensation during the Plan Year. The Safe Harbor Matching Contribution made on behalf of each Participant shall be adjusted as of the last day of a Plan Year to ensure that the actual Safe Harbor Matching Contribution made equals the appropriate percentages set forth in this Section 3.4(a), as determined on the Plan Year basis.


(b)	Effective with respect to each Plan Year in which the provisions of Section 3.4 are applicable, the Administrator shall provide Notice during the “Safe Harbor Notice Period” (as hereinafter defined) to each Covered Employee who is eligible to participate in the Plan during such Plan Year. Such Notice shall describe the following:


(i)	The formula used to determine the Safe Harbor Matching Contribution to be made on behalf of such Employee for such Plan Year;


(ii)	Any requirements that such Employee must satisfy to become entitled to receive such contributions;

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(iii)	The type and amount of Compensation that may be deferred under the Plan as Elective Deferrals and Catch-Up Contributions;


(iv)	The procedures for making or changing an election to make Elective Deferrals and Catch-Up Contributions, including the periods available for making or changing such elections;


(v)	The withdrawal and vesting provisions applicable to contributions under the Plan; and


(vi)	A means by which Covered Employees may easily obtain additional information about the Plan.

For purposes hereof, the “Safe Harbor Notice Period” shall mean a period beginning 90 days before the first day of the applicable Plan Year and ending 30 days before the first day of the applicable Plan Year; provided, however, with respect to a Covered Employee who becomes eligible to participate in the Plan during a given Plan Year in which the provisions of Section 3.4 are applicable, the “Safe Harbor Notice Period” shall begin 90 days before the day such Employee may first participate in the Plan and shall end on the day such Employee may first participate in the Plan.

(c)

The Employer elects to treat the Plan as automatically satisfying the nondiscrimination in amount of employer contribution requirements of Section 401(a)(4) of the Code. Notwithstanding any provision of this Section 3.4 to the contrary, the Employer reserves the right to suspend future Safe Harbor Matching Contributions at any time provided that the procedures for implementing such suspension are consistent with Section 1.401(k)-3(g) of the Income Tax Regulations.


3.5	Source of Employer Contributions

(a)

The Employer shall make all contributions to the Plan without regard to current or accumulated net profits. Notwithstanding the foregoing, for purposes of Sections 401(a)(27) and 401(k) of the Code, the Plan shall continue to be considered a profit sharing plan. Effective January 1, 2007, this Plan is also intended to be a qualified Roth contribution program under Section 402A of the Code. All Employer contributions shall be made in cash and shall be conditioned on the deductibility of the contribution.

(b)

Any provision of the Plan to the contrary notwithstanding, the total Employer contribution made with respect to any Plan Year, when added to any other contributions made by the Employer to a plan qualified under Section 401(a) of the Code, shall not exceed such amount which is deductible for such Plan Year pursuant to Sections 404(a)(3) or 404(a)(7) of the Code. In any event, all contributions for a Plan Year shall be paid within the regular or extended time for filing the Employer’s federal income tax return for the fiscal year which includes the Plan Year end.

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3.6	Investment of Employer Contributions

The Employer contributions made on behalf of a Participant shall be invested by the Trustee in accordance with the Participant’s election under Sections 5.3(a) and 5.4(a).


3.7	Recovery of Contributions

Except as provided in this Section 3.7, the assets of the Plan shall never inure to the benefit of an Employer or Affiliate and shall be held for the exclusive purpose of providing benefits under the Plan and defraying reasonable expenses of the Plan. However, no provision of this Plan shall:


(a)	prohibit the return of a contribution to an Employer or a Participant within one year after payment if such contribution was made by a mistake of fact; or


(b)	prohibit the return of a contribution that is determined to be nondeductible (to the extent disallowed as a deduction);

provided, however, in the case of the return of a contribution which was made as a result of a mistake of fact, the amount which shall be returned is the excess of the amount contributed over the amount which would have been contributed had the mistake of fact not occurred. Further, in the case of the return of a contribution that is determined to be nondeductible, and in the case of a contribution made as the result of a mistake of fact, earnings attributable to the excess contribution may not be returned, but losses attributable thereto must reduce the amount to be returned. Further, in both such cases, if the withdrawal of the amount attributable to the mistaken or nondeductible contribution would cause the balance of the account of any Participant to be reduced to less than the balance which would have been in the account had the mistaken or nondeductible amount not been contributed, then the amount to be returned to the Employer will be limited so as to avoid such reduction.


3.8	Other Provisions Relating to Employer Contributions


(a)	Except as otherwise provided in accordance with procedures adopted by the Administrator and communicated to applicable Participants, a Participant may as of any time:


(i)	suspend the Elective Deferrals and/or Catch-Up Contributions being made on his behalf;


(ii)	increase or decrease the rate of Elective Deferrals and/or Catch-Up Contributions made on his behalf or have such contributions resumed after a period of suspension;


(iii)	change the allocation of the Elective Deferrals made on his behalf from Tax Deferred Contributions to Roth Elective Deferrals, or vice versa; or

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(iv)	change the allocation of the Catch-Up Contributions made on his behalf from Tax Deferred Catch-Up Contributions to Roth Catch-Up Contributions, or vice versa.

Such suspension or change in rate or allocation shall be effective as of the first day of the pay period next following the date the Participant delivers Notice of the same to the Administrator, provided such Notice is delivered to the Administrator in such time as to allow the Administrator a reasonable period within which to act on the election contained therein.

During any period of suspension, regardless of the length of its duration, the Participant’s Account shall be maintained in accordance with the procedure set forth in Article Five.

(b)

In the event Safe Harbor Matching Contributions have been made with respect to Elective Deferrals that are subsequently determined to fail to meet the annual dollar limitation specified in Section 3.2(a) (and if such Excess Deferrals are distributed pursuant to Section 3.2(b)), such Safe Harbor Matching Contributions (and any income or loss attributable thereto determined in accordance with regulations) shall be forfeited and applied to reduce future Safe Harbor Matching Contributions.


3.9	Roth In-Plan Conversions

Effective for Plan Years beginning on and after January 1, 2016, a Participant may elect to have all or any portion of his Accounts under Sections 1.37(c), (f), (g), (h) and, if the Participant has attained age 59-1/2, under Section 1.37(b), other than any portion of such Accounts that is part of an outstanding loan, converted to a Roth account under Section 402A of the Code (such process herein called a “Roth In-Plan Conversion”). Any Roth In-Plan Conversion shall be effected within such time and in accordance with such procedures as are designated by the Administrator and communicated to Participants and the resulting Roth In-Plan Conversion Account shall be separately accounted for and maintained as necessary for the proper reporting thereof. Any investment, withdrawal, or distribution restrictions applicable to amounts that are to be converted under this Section 3.9 shall continue to be subject to those same restrictions after the conversion. If a Participant makes an election pursuant to this Section 3.9, such election shall be irrevocably designated as being made pursuant to, and intended to comply with, Section 402A of the Code, and the value of Accounts converted in the Roth In-Plan Conversion shall be included in the Participant’s gross income for the taxable year in which the conversion is made.

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ARTICLE FOUR

ROLLOVER CONTRIBUTIONS


4.1	Rollover Contributions

(a)

Under such rules and procedures as the Administrator may establish, any Covered Employee may make a cash Rollover Contribution to this Plan of all or a portion of the amount received by the Covered Employee in the form of an eligible rollover distribution from an eligible retirement plan (as such terms are defined in Section 6.4); provided, however, that the Plan shall not accept (i) a rollover of after-tax employee contributions; (ii) a rollover from an individual retirement account or annuity that is other than a conduit IRA, as determined by the Administrator, or (iii) a rollover from such other source, and/or under such circumstances, as the Administrator, in its discretion, shall determine to be ineligible. Effective January 1, 2007, that portion of a Rollover Contribution that is attributable to a designated Roth account under an eligible retirement plan shall be accepted provided it meets the other requirements of this section and is made as a direct rollover to a Roth Rollover Account hereunder. Such Roth Rollover Contribution shall be subject to separate accounting, including accounting for the amount of such contribution not includable in income. Any portion of a Rollover Contribution that is not a Roth Rollover Contribution and that is accepted by the Administrator shall be allocated to a Rollover Account established on behalf of the Covered Employee. No Rollover Contribution may be made to the Plan unless the Covered Employee had demonstrated to the Administrator’s satisfaction that the contribution satisfies the conditions for tax-free rollover treatment under the applicable provisions of the Code.

(b)

In the event the Administrator has reasonably concluded that an amount may be accepted by the Plan as a Rollover Contribution under Section 4.1(a) but later determines that all or a portion of such amount fails to satisfy the provisions of Section 4.1(a), the Administrator shall cause such ineligible amount and related investment earnings to be distributed to the Covered Employee (or, if applicable, Beneficiary) as soon as administratively feasible.


4.2	Vesting of Rollover Contributions

Amounts contributed under Section 4.1 hereof shall at all times be 100% vested.

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ARTICLE FIVE

PARTICIPANT ACCOUNTS AND VALUATION OF FUNDS


5.1	Establishment of Participant Accounts


(a)	There shall be established and maintained for each Participant a Total Account. A Total Account may consist of the following accounts:


(i)	a Tax Deferred Account;


(ii)	a Safe Harbor Matching Account;


(iii)	an Employer Account;


(iv)	a Rollover Account;


(v)	a Tax Deferred Catch-Up Account;


(vi)	a Designated Roth Account;


(vii)	a Roth Catch-Up Account;


(viii)	a Roth Rollover Account; and


(ix)	for periods on and after January 1, 2016, one or more Roth In-Plan Conversion Accounts

(b)

Within each of the accounts listed in Section 5.1(a) that are applicable to a given Participant, separate records shall be kept of the portion, if any, of each account invested in each investment fund or vehicle then offered under the Plan. The Administrator may adopt rules, consistent with income tax regulations, that designate certain accounts as constituting a separate contract for purposes of Section 72 of the Code.


5.2	Valuation Date Adjustments

As of each Valuation Date, each Participant’s balance in his various accounts shall be adjusted in accordance with the valuation procedure adopted by the Administrator.


5.3	Investment Elections

(a)

When a Covered Employee submits his application to become a Participant, he shall give Notice regarding the investment of contributions to be made on his behalf under the Plan. Such Notice shall be provided to the Administrator or its designee within such time and in accordance with such means as are designated by the Administrator and communicated to Participants and Covered Employees. Subject to such procedural rules as may be established by the Administrator from time-to-time, such Notice shall specify, in 1%

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increments from 0% to 100%, the percentage of each applicable contribution source which is to be invested in each investment option then made available.

A Covered Employee who is enrolled automatically in the Plan pursuant to Section 2.1(b) and who does not give Notice to the Administrator or its designee regarding the investment of the Tax Deferred Contributions and/or the Safe Harbor Matching Contributions to be made on his behalf hereunder shall be deemed to have chosen to invest such contributions in such default fund as is set forth in the Trust Agreement or as otherwise determined by the Administrator.

A Participant may change the investment elections or default investment elections made under this Section 5.3(a) at any time by giving Notice to the Administrator or its designee within such time and in accordance with such means as are designated by the Administrator and communicated to Participants and Covered Employees. Such Notice of change shall be subject to the procedural specifications set forth above (and, if applicable, subject to the limitations set forth in Section 5.4) and, except as may otherwise be provided in the Trust Agreement, shall be effective with respect to contributions received by the Trustee (or otherwise deposited into the Trust Fund) as of the Valuation Date on which the Notice is received or as of the next following Valuation Date, in accordance with procedures established by the Administrator, and communicated to Participants and Covered Employees.

A Covered Employee making a Rollover Contribution shall give Notice regarding the investment of such contribution. Such Notice shall be delivered on or prior to the date the Rollover Contribution is effective and shall specify, in 1% increments from 0% to 100%, the percentage of the Rollover Contribution to be invested in each investment option which is then made available for the investment of Rollover Contributions. To the extent that the Covered Employee does not give Notice to the Administrator or its designee regarding the investment of the Rollover Contribution the Covered Employee shall be deemed to have chosen to invest such contributions in such default fund as is set forth in the Trust Agreement or as otherwise determined by the Administrator.

(b)

Each Participant and Beneficiary shall have the opportunity to change the manner in which the Total Account maintained on his behalf under the Plan is invested. Such opportunity shall be exercised by giving Notice to the Administrator or its designee within such time and in accordance with such means as are designated by the Administrator and communicated to Participants, Covered Employees and affected Beneficiaries. Subject to such procedural rules as may be established by the Administrator from time‑to‑time, such Notice shall specify, in a whole dollar amount or in 1% increments from 0% to 100%, the dollar amount, or percentage, of the Total Account maintained on behalf of the Participant or Beneficiary which is to be invested in each investment option then made available. Except as may otherwise be set forth in the Trust Agreement, such Notice shall be effective as of the Valuation Date on which the Notice is received by the Trustee or as of the next following Valuation Date, in accordance with procedures established by the Administrator and communicated to Participants, Covered Employees and affected Beneficiaries. Notwithstanding any

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provision of this paragraph (b) to the contrary, (i) the election under this Section 5.3(b) shall be subject to any contractual limitations imposed on the direct transfer of assets between given investment funds or such other reasonable limitation on exchanges as may be agreed to between the Administrator and the person or entity designated by the Administrator to perform administrative services on behalf of the Plan (ii) the election under this Section 5.3(b) shall be subject to any regulatory restrictions on transfers, as determined by the Administrator, in its discretion, (iii) prior to March 1, 2009 or such later date as the Administrator, in its discretion shall provide, in no event shall any portion of the Total Account maintained on behalf of a Participant or Beneficiary in the Erie Family Life Group Annuity Fund be transferred to any other investment fund and (iv) in no event shall any portion of the Total Account maintained on behalf of a Participant be transferred to the Erie Indemnity Stock Fund.


(c)	Any investment elections or changes in elections under this Section 5.3 may be limited or delayed by the Administrator or Trustee, if, in the judgment of such party, giving immediate effect to such elections would adversely affect the Total Account balances of a significant number of Participants.


(d)	In the event a Participant’s, Covered Employee’s or Beneficiary’s investment election under the Plan is incomplete, the Participant, Covered Employee or Beneficiary will be deemed to have chosen to invest in such default fund as is set forth in the Trust Agreement or as otherwise determined by the Administrator.

(e)

Any investment election or deemed investment election under the Plan shall remain in effect until changed by an election under this Section. Notwithstanding any provision of this Article Five to the contrary, the Administrator, in its discretion, may offer such investment options to Participants and Beneficiaries as it deems appropriate and may cease to offer any such options as it deems appropriate. In the event the Administrator decides to discontinue offering an investment option under the Plan, those Participants on whose behalf Total Accounts are being maintained that are invested in the discontinued investment option may be required, at the discretion of the Administrator, to have affected amounts consolidated with (or “mapped” to) a replacement investment option selected by the Administrator or may be provided an opportunity to designate, from such selection of investment options as may be offered by the Administrator, an investment option or options as a replacement for the investment option being discontinued. Any such designation by a Participant shall be made in accordance with paragraph (b) above. If a Participant who is affected by the discontinuation of an investment option fails to make any replacement designation offered in this paragraph (e), the Participant’s interest in such discontinued fund, shall be consolidated with (or “mapped” to) such replacement investment option selected by the Administrator, in its discretion. Any changes under this paragraph (e) shall take effect as of such times and under such rules as shall be established by the Administrator.


(f)	Each Participant, Covered Employee and Beneficiary is solely responsible for the selection of his investment option. The Trustee, the Administrator, the Employer, and the directors, officers, supervisors and other employees of the Employer are not empowered

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to advise a Participant, Covered Employee or Beneficiary as to the manner in which any portion of his Total Account shall be invested. The fact that an investment option is available under the Plan shall not be construed as a recommendation for investment in that investment option.


(g)	The Plan is intended to constitute a plan described in Section 404(c) of ERISA and Title 29 of the Code of Federal Regulations Section 2550.404c-1. As a consequence, Plan fiduciaries shall be relieved of liability for any losses resulting from any investment election by a Participant and/or Beneficiary to the fullest extent permitted by law.


5.4	Erie Indemnity Stock Fund

The provisions of this Section shall become applicable to the extent to which Participants’ and Beneficiaries’ Employer Accounts and/or Safe Harbor Matching Accounts under the Plan are invested in the Erie Indemnity Stock Fund.

(a)

The Administrator shall make available under the Plan an investment fund which shall consist exclusively of Erie Indemnity Stock; provided, however, that in the discretion of the Trustee, within guidelines set by the Administrator, a portion of such fund may be held in short-term interest-bearing investments or cash pending purchase of Erie Indemnity Stock and to provide sufficient liquidity for exchanges out of the fund, withdrawals and loans. Such investment fund shall be referred to as the “Erie Indemnity Stock Fund.” Except as otherwise provided in this Section 5.4, a Participant shall be permitted to invest all or a portion of the Safe Harbor Matching Contributions, made on his behalf in the Erie Indemnity Stock Fund in accordance with the provisions of Section 5.3. A Participant shall not be permitted to invest any portion of the Elective Deferrals or Catch-Up Contributions made on his behalf in the Erie Indemnity Stock Fund nor shall any Participant or Covered Employee be permitted to invest any portion of a Rollover Contribution in the Erie Indemnity Stock Fund. No Participant, Covered Employee or Beneficiary may transfer any portion of the Total Account maintained on his behalf to the Erie Indemnity Stock Fund. For purposes of implementing Participant investment elections under Section 5.3, or a Participant’s or Beneficiary’s distribution election under Section 6.3, the Trustee may, in its discretion, purchase or sell Erie Indemnity Stock on the open market or by privately-negotiated transaction; provided however, that any such purchase or sale shall be made only in exchange for fair market value as determined by the Trustee and, provided further that, no commission shall be charged to or paid by the Plan with respect to any purchase or sale of Erie Indemnity Stock between the Plan and a party in interest (as defined in Section 3(14) of ERISA). Any distributions, dividends or other income received by the Trustee with respect to the Erie Indemnity Stock Fund shall be reinvested by the Trustee in the Erie Indemnity Stock Fund.


(b)	The restrictions contained in this paragraph (b) shall apply to that portion of the Employer Accounts and/or Safe Harbor Matching Accounts maintained on behalf of Participants or Beneficiaries which are invested in the Erie Indemnity Stock Fund and, if

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and to the extent necessary, any election made by a Participant or Beneficiary under the Plan shall be deemed modified to be consistent with this paragraph (b).

Notwithstanding the provisions of Section 5.4 and Articles Seven and Fourteen:

(i)

No Participant or Beneficiary shall, on the basis of material nonpublic information with respect to the Company or its affiliates, make an election permitted by that Section or those Articles if (1) such election would result in an exchange into or out of, loans from, withdrawals from, or an increase or decrease in the amount of contributions to the Erie Indemnity Stock Fund, and (2) the transaction resulting from such election is prohibited by Rule 10b‑5.


(ii)	No officer shall make an election permitted by that Section or those Articles if such election would result in a transaction involving the Erie Indemnity Stock Fund which is not an exempt transaction pursuant to Rule 16b‑3.

For purposes of this paragraph (b), the terms “Rule 10b‑5” and “Rule 16b‑3” shall mean the rules, as amended, having those designations promulgated by the United States Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended, and the terms “affiliate” and “officer” shall have the meanings set forth in Rule 12b‑2 and Rule 16a‑1(f), respectively, both as so promulgated and amended.

(c)

Notwithstanding anything in this Article Five to the contrary, Participants and Beneficiaries shall have the right, and be notified of such right, to diversify the portions of their Total Account which are invested in the Erie Indemnity Stock Fund, as required under Section 401(a)(35) of the Code and Section 101(m) of ERISA. Any limitations established by the Administrator related to contributions and/or transfers into or out of the Erie Indemnity Stock Fund shall comply with the divestiture requirements of Section 401(a)(35) of the Code and related guidance.


5.5	Temporary Suspension of Certain Administrative Activities

In the event of a change in the investment options available under the Plan, a change in vendors providing services to the Plan, or a change in the Plan’s administrative procedures, the Administrator may establish procedures for temporarily suspending certain activities under the Plan, as the Administrator may determine are necessary or appropriate, in its discretion. Such temporary suspension shall be conditioned upon any notification to Participants required by law. The activities that may be suspended include, but are not limited to, changes in Elective Deferrals, Rollover Contributions, investment elections or transfers, distributions, in-service withdrawals and loans.

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ARTICLE SIX

VESTING & DISTRIBUTIONS


6.1	Vesting

A Participant shall be fully vested in all contributions made and investment earnings credited under the provisions of the Plan.


6.2	Distributions Upon Retirement or Other Termination of Employment


(a)	Subject to the provisions of paragraph (b) below, upon the termination of a Participant’s employment with the Company and Affiliates for any reason, the Participant (or, if the Participant is deceased, his Beneficiary) shall be paid the entire vested Total Account maintained on behalf of the Participant as provided in subparagraph (i), (ii) or (iii) below:

(i)

If the vested Total Account exceeds $3,500 as of the determination date chosen by the Administrator or its designee, the Participant (or Beneficiary) may elect, in such manner as provided by the Administrator or its designee, to either take or commence an immediate distribution of such vested Total Account in a form permitted under Section 6.3 or to defer receipt of the same until a later date, but not beyond the end of the calendar year in which the Participant attains age 70-1/2 and not beyond such other required commencement date under Section 401(a)(9) of the Code. The failure of any terminated Participant (or terminated Participant’s Beneficiary) to make an election with respect to a vested Total Account in excess of the $3,500 threshold shall be deemed an election by the Participant (or Beneficiary) to defer receipt of such vested Total Account. A Participant or Beneficiary who elects (or is deemed to have elected) to defer receipt of the vested Total Account may request a distribution of the vested Total Account in a form permitted under Section 6.3 at a subsequent date permitted under Section 401(a)(9) of the Code. Pending distribution of his Total Account, such Participant or Beneficiary shall be permitted to change the manner in which such Total Account is invested in accordance with Section 5.3(b).

(ii)

If the vested Total Account does not exceed $3,500 as of the determination date chosen by the Administrator or its designee, such vested Total Account shall be paid in a lump sum to the Participant (or Beneficiary) on the conditions that the Participant (or Beneficiary) is alive as of the applicable payment date and, except as otherwise provided in this subparagraph (ii), that the Participant (or Beneficiary) affirmatively elects payment in cash or as a direct rollover. If the vested Total Account maintained on behalf of the Participant (or Beneficiary) does not exceed $1,000 as of the applicable determination date and the Participant (or Beneficiary) fails to make an affirmative election to receive cash or make a direct rollover within 60 days of being apprised of his distribution options, the Plan shall pay such vested Total Account to the Participant (or Beneficiary) as a lump sum in cash.

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(iii)	For purposes of this Section 6.2(a), the value of a vested Total Account shall be determined with regard to that portion, if any, that is attributable to a Rollover Contribution (and earnings allocated thereon).

(b)

The Administrator or its designee shall notify a Participant or Beneficiary of his election right under Section 6.2(a) and, in the case of a Participant who may defer payment of the vested portion of his Total Account in accordance with Section 6.2(a), of his right to defer payment and, for Plan Years beginning after December 31, 2006, a description of the consequences of a failure to defer payment. Such notification shall be provided to the Participant or Beneficiary not less than 30 days and not more than 90 days before payment is made; provided, however, that a Participant or Beneficiary may affirmatively elect to be paid the vested Total Account being maintained on his behalf within 30 days after the Participant or Beneficiary received the notice described in this Section 6.2(b).


(c)	A Participant who returns to employment with the Employer on a full or part-time basis prior to distribution of his vested Total Account under paragraph (a) shall be deemed to have cancelled his distribution election as of his date of reemployment.

(d)

All payments made pursuant to this Article Six shall be based on the Participant’s vested Total Account balance on the Valuation Date as of which payment is made. Payment shall be made from the accounts comprising the Participant’s (or Beneficiary’s) Total Account and from the investment funds in which such Total Account is invested in such order of priority as the Administrator, pursuant to a uniform and nondiscriminatory policy, shall direct.


6.3	Payment of Amounts Distributed


(a)	Distributions to a Participant or Beneficiary may be paid in the form of:


(i)	a lump sum;


(ii)	monthly, quarterly or annual installments that will provide a fixed amount per pay period; or


(iii)	monthly, quarterly or annual installments that will provide substantially equal payments over a fixed period that is not in excess of the lesser of fifteen (15) years or the recipient’s life expectancy, as determined by the Administrator as of the date the payments begin.

A Participant or Beneficiary who has elected payment in an installment form under Section 6.3(a)(ii) or (iii) may elect, at some future date, to have the balance of the vested Total Account maintained on his behalf paid in the form of a lump sum. Except as provided in the preceding sentence, a Participant or Beneficiary may not change his elected form of distribution following the date Plan payments begin. A Participant who returns to employment with the Employer on a full or part-time basis following commencement of an installment form of distribution shall be deemed to have cancelled his distribution election

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as of his date of reemployment. In no event may distributions from the Plan be made in the form of an annuity.

(b)

A distributee who is receiving payment in the form of a lump sum shall elect to have that portion of his Employer Account and Safe Harbor Matching Account which is invested in the Erie Indemnity Stock Fund paid either (i) in whole units of Erie Indemnity Stock (with fractional units being distributed in cash) or (ii) in cash. The election of a Participant or Beneficiary under this Section 6.3(b) shall be made in connection with the Participant’s or Beneficiary’s lumps sum election under Section 6.2. In the event distribution is made in the form of installments or is made in the form of a lump sum, but such lump sum is paid in the absence of a Participant’s or Beneficiary’s distribution election, that portion of an Employer Account and Safe Harbor Matching Account which is invested in the Erie Indemnity Stock Fund at the time of distribution shall be paid in cash.


(c)	Notwithstanding any inconsistent provision of the Plan, all distributions under the Plan shall be made in accordance with Code Section 401(a)(9), including the incidental death benefit requirement of Code Section 401(a)(9)(G), and Treasury Regulations Sections 1.401(a)(9)-1 through 1.401(a)(9)-9. Specifically, distribution of the Participant’s interest shall:

(i) be completed no later than the required beginning date; or


(ii)	commence not later than the required beginning date with distribution to the Participant made over the life of the Participant or joint lives of the Participant and a designated Beneficiary or a period not longer than the life of the Participant or joint lives of the Participant and a designated Beneficiary.

For purposes of this Section 6.3, “required beginning date” shall mean April 1 of the calendar year following the later of the calendar year in which the Participant attains age 70½ or the calendar year in which the Participant terminates employment or retires; provided, however, if the Participant is a five-percent owner (as defined in Code Section 416), the required beginning date shall be April 1 of the calendar year following the calendar year in which the Participant attains age 70½, regardless of the date that the five-percent owner terminates employment or retires.

Notwithstanding the foregoing, unless the Participant elects otherwise, distribution of benefits under Section 6.2 will begin no later than the 60 ^th day after the latest of the close of the Plan Year in which:

(i) the Participant attains age 65;


(ii)	occurs the fifth anniversary of the Plan Year in which the Participant commenced participant in the Plan; or


(iii)	the Participant terminated employment with the Company and Affiliates.

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(d)	In the event that a Participant dies prior to the date that distribution commences:


(i)	any portion of the Participant’s interest that is not payable to a designated Beneficiary shall be distributed not later than the end of the calendar year which includes the fifth anniversary of the date of the Participant’s death; and

(ii)

any portion of the Participant’s interest that is payable to a designated Beneficiary shall be distributed in accordance with subparagraph (i) above or over the life of the designated Beneficiary (or over a period not extending beyond the life expectancy of the Beneficiary), commencing not later than the end of the calendar year following the calendar year of the Participant’s death or, if the Beneficiary is the Participant’s surviving Spouse, commencing not later than the last day of the later of the calendar year in which the Participant would have attained age 70½, or the calendar year following the calendar year which includes the date of the Participant’s death.


(e)	In the event a Participant dies after distribution of his interest has begun, but prior to distribution of his entire interest, the remaining portion of such interest shall be distributed, at the election of the Participant’s Beneficiary, in a lump sum or in a method that is at least as rapid as the method being used at the date of the Participant’s death.

(f)

Notwithstanding Sections 6.3(c), (d) or (e) of the Plan, a Participant or Beneficiary who would have been required to receive required minimum distributions for 2009 but for the enactment of Section 401(a)(9)(H) of the Code (“2009 RMDs”), and who would have satisfied that requirement by receiving distributions that are (i) equal to the 2009 RMDs or (ii) one or more payments in a series of substantially equal distributions (that include the 2009 RMDs) made at least annually and expected to last for the life (or life expectancy) of the Participant, the joint lives (or life expectancy) of the Participant and the Participant’s Beneficiary, or for a period of at least 10 years (“Extended 2009 RMDs”), will receive those distributions for 2009 unless the Participant or Beneficiary chooses not to receive such distributions. Participants and Beneficiaries described in the preceding sentence will be given the opportunity to elect to stop receiving the distributions described in the preceding sentence.

For purposes of Section 6.4 of the Plan, 2009 RMDs and Extended 2009 RMDs will also be treated as eligible rollover distributions in 2009.


6.4	Direct Rollovers

(a)

A distributee may elect, subject to provisions adopted by the Administrator which shall be consistent with income tax regulations, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover. The Administrator shall notify a distributee of his right to elect a direct rollover; such notice shall be furnished to the distributee between 30 days and 180 days prior to the date as of which the distributee is to receive a distribution from the Plan,

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provided that the distributee may affirmatively elect a distribution or direct rollover to occur within 30 days after the furnishing of such notice.


(b)	Definitions.

(i)

Eligible Rollover Distribution: An eligible rollover distribution is any distribution of all or any portion of the balance to the credit of the distributee other than (A) any distribution that is one of a series of substantially equal periodic payments made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and his designated Beneficiary, or for a specified period of ten (10) years or more; (B) any distribution to the extent such distribution is required under Code Section 401(a)(9); and (C) any portion of a hardship withdrawal. In addition, a portion of a distribution shall not fail to be an eligible rollover distribution merely because the portion consists of after-tax employee contributions which are not includible in gross income. However, such portion may be paid only to an individual retirement account or annuity described in Code Sections 408(a) or (b), respectively, or (for distributions on and after January 1, 2008) to a Roth IRA described in Section 408A of the Code, to a qualified trust defined in Section 401(a) of the Code, or to an annuity contract described in Section 403(b) of the Code provided such account, annuity, IRA, trust or annuity contract agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible.

An eligible rollover distribution with respect to a distributee who is not the Employee’s or former Employee’s Spouse must be made by a direct trustee-to-trustee transfer.

(ii)

Eligible Retirement Plan: An eligible retirement plan is an individual retirement account described in Code Section 408(a), an individual retirement annuity described in Code Section 408(b), an annuity described in Code Section 403(a), an annuity contract described in Code Section 403(b), an eligible plan under Code Section 457(b) which is maintained by a state or a political subdivision of a state, and which agrees to separately account for amounts transferred, a qualified trust described in Code Section 401(a), and for periods on and after January 1, 2008, a Roth IRA under Code Section 408A, that accepts the distributee’s eligible rollover distribution. However, in the case of an eligible rollover distribution: (A) that includes after-tax employee contributions, an eligible retirement plan is an individual retirement account or annuity described in Code Section 408(a) or (b), or a qualified defined contribution plan described in Code Sections 401(a) or 403(a) that agrees to separately account for such eligible rollover distributions, including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible, (B) that includes a Designated Roth Account, an eligible retirement plan is an individual retirement plan described in Code Section 408A or a

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qualified defined contribution plan described in Code Section 401(a) that agrees to separately account for such eligible rollover distribution, including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is part not so includible, and (C) that is made on behalf of a distributee that is not the Employee’s or former Employee’s Spouse, an eligible retirement plan shall mean an individual retirement account described in Code Section 408(a) or an individual retirement annuity described in Code Section 408(b) established for the purpose of receiving a distribution on behalf of a Beneficiary, which will be treated as an inherited IRA pursuant to Code Section 402(c)(11).

(iii)

Distributee: A distributee includes an Employee or former Employee. In addition, the Employee’s or former Employee’s surviving Spouse and the Employee’s or former Employee’s Spouse or former Spouse who is the alternate payee under a qualified domestic relations order, as defined in Code Section 414(p), are distributees with regard to the interest of the Spouse or former Spouse. With respect to distributions made on or after July 1, 2007, a distributee shall also include an Employee’s Beneficiary who is not the Employee’s Spouse.


(iv)	Direct Rollover: A direct rollover is a payment by the Plan to the eligible retirement plan specified by the distributee.

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ARTICLE SEVEN

WITHDRAWALS AND LOANS


7.1	Withdrawals Generally

An Eligible Applicant may make written application to the Administrator for withdrawal of a portion of his account balance without terminating his employment, but only in such amounts and under such conditions as specified in this Article Seven. All such applications for a withdrawal made by an Eligible Applicant shall be approved or denied by the Administrator in accordance with a uniform, non-discriminatory policy and such action by the Administrator shall be final.


7.2	Hardship Withdrawal

Upon proper written application of an Eligible Applicant in such form as the Administrator may specify, the Administrator may permit the Eligible Applicant to withdraw in cash the portion of the balance of his Total Account representing his Rollover Account (if applicable), his Roth Rollover Account (if applicable), his Employer Account, his Roth In-Plan Conversion Account (to the extent not otherwise restricted), and his Elective Deferrals and Catch‑Up Contributions without earnings thereon, provided that the reason for such withdrawal is to enable the Eligible Applicant to meet unusual or special situations in his financial affairs resulting in immediate and heavy financial needs of the Eligible Applicant and, provided further, that the Administrator must be satisfied that any withdrawal hereunder is not in excess of the amount necessary to meet the immediate and heavy financial need and that such need cannot be met from other resources of the Eligible Applicant. The amount available for withdrawal shall be based on the balances of the applicable accounts (and the Elective Deferrals made) as of the Valuation Date on which payment is made. Amounts required to meet the following items are deemed to be for immediate and heavy financial needs:


(a)	payments necessary to prevent the eviction of the Eligible Applicant from, or foreclosure of the mortgage on, his principal residence;


(b)	expenses for medical care described in Code Section 213(d) incurred by the Eligible Applicant, his Spouse, his children, or his dependents as defined in Code Section 152, or necessary for these persons to obtain medical care described in Section 213(d) of the Code;


(c)	costs directly related to the purchase of an Eligible Applicant’s principal residence;


(d)	payment of tuition, related educational fees and room and board expenses, for the next 12 months of post-secondary education for the Eligible Applicant, his Spouse, his children, or his dependents (as defined in Code Section 152 without regard to Code Sections 152(b)(1), (b)(2), and (d)(1)(B)); or

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(e)	payments for burial or funeral expenses for the Eligible Applicant’s deceased parent, his Spouse, his children, or his dependents as defined in Code Section 152, without regard to Code Section 152(d)(1)(B) of the Code; or


(f)	expenses for the repair of damage to the Eligible Applicant’s principal residence that would qualify for a casualty deduction under Code Section 165 (determined without regard to whether the loss exceeds 10% of adjusted gross income).


7.3	Safe Harbor Distribution

A distribution shall be deemed necessary to satisfy an immediate and heavy financial need of an Eligible Applicant if all of the following requirements are satisfied:


(a)	the distribution is not in excess of the amount of the immediate and heavy financial need of the Eligible Applicant including any amounts necessary to pay any federal, state or local income taxes or penalties reasonably anticipated to result from such distribution;


(b)	the Eligible Applicant has obtained all other forms of distribution and nontaxable loans currently available from all plans maintained by an Employer; and


(c)	the Eligible Applicant is suspended from making Elective Deferrals to the Plan until the first day of the pay period occurring six full months after the effective date of the withdrawal.


7.4	Hardship Withdrawal Priority


(a)	A hardship withdrawal pursuant to Section 7.2 shall be made from the Total Account maintained on behalf of an Eligible Applicant in the order of priority set forth in this Section 7.4. That portion of a Eligible Applicant’s Total Account which is of a lower priority shall be withdrawn only after those portions of the Total Account which are of higher priority have been completely withdrawn:


(i)	Designated Roth Account (excluding earnings);


(ii)	Roth Catch-Up Account (excluding earnings);


(iii)	Roth Rollover Account;


(iv)	Roth In-Plan Conversion Account (to the extent not otherwise restricted)


(v)	Rollover Account;


(vi)	Employer Account;


(vii)	Tax-Deferred Account (excluding earnings); and

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(viii)	Tax-Deferred Catch-Up Account (excluding earnings).

In no event shall a hardship withdrawal be taken from the Safe Harbor Matching Account maintained on behalf of an Eligible Applicant.


(b)	Subsequent to the determination under paragraph (a), withdrawals shall be made out of those investment options in which the applicable account is invested according to the withdrawal hierarchy designated by the Administrator and communicated to Participants.


7.5	Modifications to Hardship Withdrawal Standards

The Company shall have full discretionary authority to modify the provisions of Sections 7.2, 7.3 and 7.4 provided that any modifications shall be evidenced by a writing approved by the Plan Administrator, shall be consistently applied to all pending and future applications as of the date of the modification and shall not operate so as to reduce or eliminate any benefit protected under Section 411(d)(6) of the Code that has accrued as of the date of such modifications.


7.6	In-Service Withdrawals for Reasons Other than Hardship

Upon proper written application of an Eligible Applicant in such form as the Administrator may specify, the Administrator shall permit the Eligible Applicant to withdraw all or a portion of the Total Account maintained on his behalf as provided in this Section 7.6.

(a)

Subject to the provisions of paragraphs (c) through (f) below, an Eligible Applicant on whose behalf a Rollover Account or Roth Rollover Account is maintained may elect to withdraw all or a portion of such accounts without regard to whether the Eligible Applicant has attained a given age or completed a given period of service with the Company or other Employer. For purposes of this Section 7.6, the portion of a Roth In-Plan Conversion Account that is attributable to a Rollover Contribution shall be considered a Rollover Account.


(b)	Subject to the provisions of paragraph (c) through (f) below, an Eligible Applicant who has attained age 59-1/2 may elect to withdraw all or a portion of the Total Account maintained on his behalf.


(c)	A withdrawal under this Section 7.6 shall be effective as of the date set forth in the Eligible Applicant’s application for withdrawal, as approved by the Plan Administrator. The Administrator shall endeavor to cause the payment of the withdrawal to be made on, or as soon as practicable following, such effective date.


(i)	The amount available for withdrawal will be based on the balance(s) of the Eligible Applicant’s applicable accounts or sub-accounts on the Valuation Date as of which the payment of the withdrawal is made.


(ii)	Withdrawals shall be made from the applicable accounts and sub-accounts maintained under the Plan on behalf of the Eligible Applicant in such order as the

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Administrator, pursuant to a uniform and nondiscriminatory policy, shall direct and communicate to Eligible Applicants.


(iii)	Withdrawals shall be made from the investment funds maintained under the Plan in such order as the Administrator, pursuant to a uniform and nondiscriminatory policy, shall direct and communicate to Eligible Applicants.

(iv)

Withdrawals may be paid in the form of a cash payment and/or as a direct rollover at the election of the Eligible Applicant. However, to the extent all or a portion of the applicable account(s) of an Eligible Applicant subject to the withdrawal election are invested in the Erie Indemnity Stock Fund, the Eligible Applicant may elect to receive the withdrawal either (A) in whole units of Erie Indemnity Stock (with fractional units distributed in cash) or (B) in cash.


(v)	The minimum amount of withdrawal under this Section 7.6 shall be the lesser of (A) $500 and (B) the balance(s) of the applicable account(s) of the Eligible Applicant from which a withdrawal is requested under paragraphs (a) and/or (b) above.


(d)	Notice shall be provided to an Eligible Applicant in connection with any withdrawal and such Notice shall be consistent with rules promulgated by the Secretary of the Treasury or his delegate.


(e)	The Administrator, in its discretion, may provide that a reasonable administrative fee be charged to an Eligible Applicant who elects a withdrawal under this Section 7.6. Any such administrative fee shall be pursuant to a uniform and nondiscriminatory policy that is communicated to Eligible Applicants.

(f)

The Company shall have full discretionary authority to modify the provisions of this Section 7.6 provided that any modification shall be evidenced by a writing approved by the Administrator, shall be consistently applied to all pending and future applications as of the date of the modification and shall not operate so as to reduce or eliminate any benefit protected under Section 411(d)(6) of the Code that has accrued as of the date of such modification.

7.7 Availability of Loans

Subject to the provisions of Sections 7.7, 7.8 and 7.9, an Eligible Applicant may apply for a loan from the Plan. Any such application shall be approved or denied by the Administrator in accordance with a uniform, non-discriminatory policy and such action by the Administrator shall be final. All loans approved shall be effective as of the “loan effective date” (as hereinafter defined) provided the loan application was submitted to the Administrator within a reasonable time (as determined by the Administrator) prior to the loan effective date. All loans shall be made only in consideration of adequate security. For purposes hereof the term “loan effective

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date” shall mean the date, mutually agreed upon by the Participant and the Administrator, on which the loan shall be considered effective.

The Administrator may establish rules governing the granting of loans, provided (i) that such rules are not inconsistent with the provisions of Sections 7.7, 7.8 and 7.9, (ii) that any such rules adopted by the Administrator shall be described in the documents supporting the loan transaction and (iii) that loans are made available to all Eligible Applicants on a reasonably equivalent basis and are not made available to Eligible Applicants who are Highly Compensated in an amount greater than the amount made available to other Eligible Applicants.

7.8 Terms and Conditions of Participant Loans


(a)	Amount of Loan. At the time the loan is made, the principal amount of the loan, when added to all other outstanding loans of the Participant from the Plan and any other qualified plan of an Employer and Affiliates, shall not exceed the lesser of:


(i)	$50,000, as reduced by the excess, if any, of the Eligible Applicant’s highest outstanding loan balance from the Plan during the one-year period ending on the day before the date such new loan is secured over the outstanding balance of loans from the Plan on the date such loan is made; or


(ii)	one-half of the current value of the Total Account maintained on behalf of the Eligible Applicant under the Plan.

The current value of a Total Account shall be determined as of the Valuation Date on which the Eligible Applicant initiates the loan process by providing Notice to the Administrator or its designee. No loan shall be made in an amount less than $1,000. Any loan amount shall be made in accordance with Section 7.9.


(b)	Application for Loan. The Eligible Applicant must give the Administrator adequate written notice, as determined by the Administrator, of the requested amount and desired time for receiving a loan.

(c)

Length of Loan. The Eligible Applicant and the Administrator shall arrange for the repayment of a Plan loan. The period of repayment shall not exceed five years from the date the loan is made. All repayment schedules (whether by payroll withholding or otherwise) shall commence as of the next administratively feasible pay period following the disbursement of the loan and shall provide for substantially level amortization of principal and interest. An Eligible Applicant who is on a military leave of absence may elect to extend the term of the loan by the length of such absence. In all other cases, an Eligible Applicant who is on a leave of absence or who terminates employment with the Company and Affiliates must make principal and interest payments in the amount and on such dates as otherwise due. In the event such payments are not made the maturity of the loan shall be accelerated and the outstanding principal amount of the loan, together with all accrued interest, shall be deemed immediately due and distributable at such date or dates as

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the Administrator deems reasonable and as may be specified by applicable law and regulation. Except as otherwise permitted in Income Tax Regulations, in no event shall the date of deemed distribution extend beyond the end of the calendar quarter next following the calendar quarter in which the payment was not made.


(d)	Prepayment. The Eligible Applicant shall be permitted to repay the loan in total as of any date prior to maturity without penalty.


(e)	Note. The loan shall be evidenced by a promissory note executed by the Eligible Applicant and delivered to the Administrator. The Eligible Applicant will agree to execute any other documents (e.g., payroll withholding forms) that may be necessary or appropriate to effect the loan.

(f)

Interest. All loans shall be considered investments of the Trust and interest shall be charged on the loan at the rate set by the Administrator as of the loan effective date. Such rate, applicable to loans effective in a given calendar quarter, shall be the prime lending rate as determined by the Administrator as of the last business day of the previous calendar quarter, plus 100 basis points, provided that such interest rate may be limited in accordance with law during a period of qualifying military service.

(g)

Security. Subject to the extent required under regulations promulgated by the Secretary of Labor or his delegate, a Plan loan shall be secured by an assignment of the Eligible Applicant’s right, title and interest in that portion of his Total Account under the Plan as shall adequately secure the loan, provided such security shall not exceed one-half of the current value of the Eligible Applicant’s vested Total Account. The Administrator may also require such additional collateral as may be deemed necessary to adequately secure repayment of the loan.

(h)

Default. The Administrator shall take reasonable steps to secure repayment of any loan granted hereunder in accordance with its terms; however, when the Administrator declares a loan to an Eligible Applicant to be in default, the outstanding balance of the loan, together with unpaid, accrued interest, shall be deemed a lien against the Total Account maintained on behalf of the Eligible Applicant. The Administrator shall take such reasonable steps as it shall deem necessary or appropriate to eliminate the default before causing an offset distribution to be made with respect to the Eligible Applicant for the purpose of fully amortizing the loan outstanding; however, should the loan remain in default after these administrative procedures are taken, the Administrator will consider the entire amount of the loan outstanding (including all accrued interest to date) as a distribution as of the first date, on or following the administrative procedures, on which the Eligible Applicant has a distributable event and will process the Total Account of the Eligible Applicant accordingly.


(j)	Other Terms and Conditions . The Administrator shall fix such other terms and conditions of the loan as it deems necessary to comply with legal requirements, to maintain the qualification of the Plan and Trust Fund under Code Section 401(a), to exempt the loan transaction from the prohibited transaction rules of under Code Section 4975, or to prevent

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the treatment of the loan for tax purposes as a distribution to the Eligible Participant. The Administrator may fix other terms and conditions of the loan, not inconsistent with the provisions of this Article Fourteen.


(k)	No Prohibited Transactions . No loan shall be made unless such loan is exempt from the tax imposed on prohibited transactions by Code Section 4975 or would be exempt from such tax (if the Eligible Participant were a disqualified person as defined in Section 4975(e)(2) of the Code) by reason of Code Section 4975(d)(1).

7.9 Loan Accounts

A loan made by the Plan to a Eligible Applicant in accordance with Sections 7.7 and 7.8 shall be from the Total Account maintained on behalf of such Eligible Applicant and from the investment funds in which such Total Account is invested in such order of priority as the Administrator, pursuant to a uniform and nondiscriminatory policy, shall direct. Payments of principal and interest on loans shall be paid over to the Trustee as soon as possible after each payroll deduction or other repayment and shall be credited to the Total Account of the Eligible Applicant as of the date the repayments are received by the Trustee. An Eligible Applicant’s loan repayments will be credited to such individual’s Total Account in such manner as determined by the Administrator and communicated to Eligible Applicants. The Administrator shall have the authority to establish other reasonable rules, not inconsistent with the provisions of the Plan, governing the establishment and maintenance of loan accounts.

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ARTICLE EIGHT

THE TRUST FUND


8.1	Trust Agreement

The Company has entered into a Trust Agreement for the purpose of holding assets of the Trust Fund. The Trust Agreement provides, among other things, that all funds received by the Trustee thereunder shall be held, administered, invested and distributed by the Trustee, and that no part of the corpus or income of the Trust Fund held by the Trustee shall be used for, or diverted to, purposes other than for the exclusive benefit of Participants or their Beneficiaries. The Administrator may remove such Trustee or any successor Trustee, and any Trustee or any successor Trustee may resign. Upon removal or resignation of a Trustee, the Administrator shall appoint a successor Trustee.

The Administrator shall have authority to direct that there shall be more than one Trustee under the Trust Agreement and to determine the portion of the assets under the Trust Agreement to be held by each such Trustee. If such action is taken, the Administrator shall designate the additional Trustee or Trustees, and each Trustee shall hold and invest and keep records with respect to the portion of such assets held by it.


8.2	Appointment of Independent Accountants

The Company may select a firm of independent public accountants to examine and report on the financial position and the results of the operations of the Trust Fund created under the Plan, at such times as it deems proper and/or necessary.


8.3	Appointment of Investment Manager

The Administrator may select an independent investment manager to invest the portion of the Trust Fund in each of the various funds. Such investment manager shall be either registered as an investment manager under the Investment Adviser’s Act of 1940, a bank, a mutual fund or an insurance company, and as required by the Administrator, shall acknowledge in writing that he is a fiduciary with respect to the Plan.


8.4	Role of Administrator in Operation of the Trust Fund The Administrator shall perform such duties relating to the operation of the Trust Fund as it deems appropriate and shall perform the duties specified in this Section 8.4.

The Administrator shall have the following responsibilities:


(a)	to appoint and remove Trustees;


(b)	to appoint investment and fund managers;

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(c)	to allocate the duties and procedures for the Trustee and investment fund managers;


(d)	to select investment funds or other investments to offer under the Plan;


(e)	to establish an investment philosophy and goals for each of the investment and fund managers;


(f)	to monitor the Trustee with respect to servicing the Trust Fund in a fiduciary capacity; and


(g)	to monitor the investment and fund managers including, without limitation, their investment philosophies, goals, and rates of return.

The Administrator may, from time-to-time, designate another person to carry out any of the Administrator’s responsibilities under this Section 8.4. The person so designated will have full authority, or such limited authority as the Administrator may specify, to take such actions as are necessary or appropriate to carry out the duties delegated by the Administrator


8.5	Voting of Erie Indemnity Stock


(a)	Each Participant or Beneficiary who has an Employer Account or Safe Harbor Matching Account maintained under the Plan on his behalf with an investment in the Erie Indemnity Stock Fund shall have the powers and responsibilities set forth in this Section 8.5.

(b)

Prior to each meeting of the Class A shareholders of the Company during which a vote of Class A shares is to be taken, the Company shall cause to be sent to each person described in Section 8.5(a), a copy of the proxy solicitation material for such meeting, together with a form requesting confidential voting instructions for the voting of Erie Indemnity Stock held in the Erie Indemnity Stock Fund in proportion to the number of shares or units of the Erie Indemnity Stock Fund held in such person’s Employer Account. Upon receipt of such a person’s instructions, the Trustee shall then vote in person, or by proxy, such Erie Indemnity Stock as so instructed.


(c)	Instructions received from the persons described in Section 8.5(a) by the Trustee regarding the voting of Erie Indemnity Stock held in the Erie Indemnity Stock Fund shall be held in strictest confidence and shall not be divulged to any other person, including directors, officers or employees of the Company, or any Affiliate, except as otherwise required by law.

(d)

Except as otherwise set forth in the Trust Agreement, the Trustee shall vote Erie Indemnity Stock which represents those shares or units of the Erie Indemnity Stock Fund for which the Trustee does not receive affirmative direction from Participants and Beneficiaries in the same proportion as the Trustee votes those shares of Erie Indemnity Stock held in the Erie Indemnity Stock Fund for which it has received voting instructions.

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ARTICLE NINE

ADMINISTRATION OF THE PLAN


9.1	The Administrator

The Plan shall be administered by a committee that shall act as Plan Administrator. The initial members of the administrative committee have been appointed by the Board. However, such initial members, and any subsequent members of the administrative committee shall serve at the pleasure of the Executive Council of the Company. Any individual who is a member of the administrative committee may resign by delivering his written resignation to the Executive Council of the Company. In the event of the death, resignation or removal of a member of the administrative committee, such Executive Council shall fill the vacancy. In making the appointment, the Executive Council shall not be limited to any particular person or group, and nothing herein contained shall be construed to prevent any Participant, director, officer, employee or shareholder of the Employers from serving as a member of the administrative committee. Members of the administrative committee will not be compensated from the Trust Fund for services performed in such capacity, but the Company will reimburse such individual for expenses reasonably incurred by them in such capacity. The Administrator shall be the “named fiduciary” for purposes of ERISA; provided, however, that Participants and Beneficiaries with Employer Accounts under the Plan shall be considered “named fiduciaries” solely to the extent of those fiduciary duties and responsibilities which are directly related to the exercise of voting rights with respect to Plan interests invested in the Erie Indemnity Stock Fund (and not to other aspects of Plan operation and/or administration).

Appointment by the Executive Council of the Company shall be evidenced in writing executed on behalf of the Executive Council. Copies of such writings shall be delivered to the Trustee and to such other persons as may require such notice.


9.2	Powers of Administrator

The Administrator will have full power to administer the Plan in all of its details, subject, however, to the requirements of ERISA. This power shall include having the sole and absolute discretion to interpret and apply the provisions of the Plan, to determine the rights and status hereunder of any individual, to decide disputes arising under the Plan, and to make any determinations and findings of fact with respect to benefits payable hereunder and the persons entitled thereto as may be required for any purpose under the Plan. Without limiting the generality of the above, the Administrator is hereby granted the following authority which it shall discharge in its sole and absolute discretion in accordance with Plan provisions as interpreted by the Administrator:


(a)	To make and enforce such rules and regulations as it deems necessary or proper for the efficient administration of the Plan, including the modification of the claims procedure under Article Ten in accordance with any regulations issued under Section 503 of ERISA.


(b)	To interpret the Plan.

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(c)	To decide all questions concerning the Plan and the eligibility of any person to participate in the Plan, his period of participation and/or service under the Plan, his date of birth, the value of the Total Account, or any part thereof, maintained on behalf of the person and the rights of any person to receive a distribution from the Plan and the amount of such distribution.


(d)	To determine the character and amount of Tax Deferred Contributions, Roth Elective Deferrals, Tax Deferred Catch-Up Contributions, Roth Catch-Up Contributions and Safe Harbor Matching Contributions to be made on behalf of any Participant in accordance with the provisions of the Plan.


(e)	To identify the proper payee of any portion of a Total Account, to authorize the payment of Plan benefits and to direct cessation of benefit payments.


(f)	To appoint, employ or engage such other agents, counsel, accountants, consultants and actuaries as may be required to assist in administering the Plan.

(g)


(h)	To obtain from the Employers, Employees, Participants, Spouses and Beneficiaries such information as shall be necessary for the proper administration of the Plan.


(i)	To perform all reporting and disclosure requirements imposed upon the Plan by ERISA, the Code or any other lawful authority.


(j)	To ensure that procedures are established which are sufficient to safeguard the confidentiality of information relating to the purchase, holding, and sale of Erie Indemnity Stock held in the Erie Indemnity Stock Fund and the exercise of shareholder rights with respect to Erie Indemnity Stock held in the Erie Indemnity Stock Fund and to ensure such procedures are being followed.


(k)	To appoint and remove an independent fiduciary for the purpose of carrying out activities relating to any situations which the Administrator determines involves an unreasonable potential for undue Employer influence with regard to the direct or indirect exercise of shareholder rights with respect to Erie Indemnity Stock holdings in the Erie Indemnity Stock Fund.


(l)	To take such steps as it, in its discretion, considers necessary and/or appropriate to remedy an inequity under the Plan that results from incorrect information received or communicated or as the consequence of administrative error including, but not limited to, recouping benefit overpayments.

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(m)	To correct any defect, reconcile any inconsistency or supply any omission under the Plan.


(n)	To delegate its powers and duties to others in accordance with Section 9.3.


(o)	To exercise such other authority and responsibility as is specifically assigned to it under the terms of the Plan or the provisions of the Administrator’s charter and to perform any other acts necessary to the performance of its powers and duties.


(p)	To determine if and when Participants and Beneficiaries must be notified of any temporary suspension, limitation or restriction of their ability to execute various transactions under the Plan (including any notice required by Section 101(i) of ERISA) and to determine the content and method of distribution of any such notification.

The Administrator at its discretion may either request the Company or direct the Fund to pay for any or all services rendered by the Trustee, any investment manager, and by persons appointed, employed or engaged under Section 9.2(f) or under the terms of the Trust Agreement.

The Administrator’s interpretations, decisions, computations and determinations under this Section 9.2 which are made in good faith will be final and conclusive upon the Employers, all Participants and all other persons concerned. Any action taken by the Administrator with respect to the rights or benefits of any person under the Plan shall be revocable by the Administrator as to payments or distributions not theretofore made, pursuant to such action, from the Trust Fund; and appropriate adjustments may be made in future payments or distributions to a Participant, Spouse or Beneficiary to offset any excess payment or underpayment previously made to such Participant, Spouse or Beneficiary from the Trust Fund. No ruling or decision of the Administrator in any one case shall create a basis for a retroactive adjustment in any other case prior to the date of a written filing of each specific claim.


9.3	Delegation of Duties

The Administrator may, from time to time, designate any person to carry out any of the responsibilities of the Administrator. The person so designated will have full authority, or such limited authority as the Administrator may specify, to take such actions as are necessary or appropriate to carry out the duties delegated by the Administrator.


9.4	Conclusiveness of Various Documents


9.5	Actions to be Uniform

Any discretionary actions to be taken under the Plan by the Administrator will be nondiscriminatory and uniform with respect to all persons similarly situated.

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9.6	Liability and Indemnification

To the full extent allowed by law, the Administrator shall not incur any liability to any Participant or Beneficiary, or to any other person, by reason of any act or failure to act on the part of the Administrator if such act or omission is not the result of the Administrator’s gross negligence, willful misconduct or exercise of bad faith. To the full extent allowed by law, the Company agrees to indemnify the Administrator against all liability and expenses (including reasonable attorney’s fees and other reasonable expenses) occasioned by any act or omission to act if such act or omission is not the result of the Administrator’s gross negligence, willful misconduct or exercise of bad faith. Neither this Section 9.6 nor any other provision of this Plan
shall be applied to invalidate, modify, or limit in any respect any contract, agreement, or arrangement for indemnifying or insuring the Administrator against, or otherwise limiting, such liability or expense, or for settlement of such liability, to the extent such contract, agreement, or arrangement is not precluded by the terms of Section 410 of ERISA.

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ARTICLE TEN

CLAIMS PROCEDURE


10.1	Claims Review Procedure

The Administrator shall be responsible for the claims procedure under the Plan. An application for a distribution, withdrawal or loan under the Plan shall be considered a claim for purposes of this Article Ten.

10.2

Original Claim

In the event a claim of any Participant, Beneficiary, alternate payee, or other person (hereinafter referred to in this Section as the “Claimant”) for a benefit is partially or completely denied, the Administrator shall give, within ninety (90) days after receipt of the claim (or if special circumstances, made known to the Claimant, require an extension of time for processing the claim, within one hundred eighty (180) days after receipt of the claim), written notice of such denial to the Claimant. Such notice shall set forth, in a manner calculated to be understood by the Claimant, the specific reason or reasons for the denial (with reference to pertinent Plan provisions upon which the denial is based); an explanation of additional material or information, if any, necessary for the Claimant to perfect the claim; a statement of why the material or information is necessary; a statement of the Claimant’s right to bring a civil action under Section 502(a) of ERISA; and an explanation of the Plan’s claims review procedure, including the time limits applicable to such procedure


10.3	Review of Denied Claim

The Administrator, within sixty (60) days after the request for review, or in special circumstances, such as where the Administrator in its sole discretion holds a hearing, within one hundred twenty (120) days of the request for review, will submit its decision in writing. Such decision shall take into account all comments, documents, records and other information properly submitted by the Claimant, whether or not such information was considered in the original claim determination. The decision on review will be binding on all parties, will be written in a manner calculated to be understood by the Claimant, will contain specific reasons for the decision and specific references to the pertinent Plan provisions upon which the decision is based, will indicate that the Claimant may review, upon request and free of charge, all documents, records or other information relevant to the claim and will contain a statement of the Claimant’s right to bring a civil action under Section 502(a) of ERISA.

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If a Claimant fails to file a claim or request for review in the manner and in accordance with the time limitations specified herein, such claim or request for review shall be waived, and the Claimant shall thereafter be barred from again asserting such claim.

10.4

Determination by the Administrator Conclusive

The Administrator’s determination of factual matters relating to Participants, Beneficiaries and alternate payees shall be conclusive. The Administrator and the Company and its respective officers and directors shall be entitled to rely upon all tables, valuations, certificates and reports furnished by any accountant for the Plan, the Trustee or any investment managers and upon opinions given by any legal counsel for the Plan insofar as such reliance is consistent with ERISA. The Trustee and other service providers may act and rely upon all information reported to them by the Administrator and/or the Company and need not inquire into the accuracy thereof nor shall be charged with any notice to the contrary.


10.5	Exhaustion of Administrative Remedies. The exhaustion of the claims review procedure is mandatory for resolving every claim and dispute arising under the Plan. As to such claims and disputes:


(a)	No claimant shall be permitted to commence any civil action to recover Plan benefits or to enforce or clarify rights under the Plan under Section 502 or Section 510 of ERISA or under any other provision of law, whether or not statutory, until the claims review procedure set forth herein has been exhausted in its entirety; and


(b)	In any such civil action all explicit and all implicit determinations by the Administrator (including, but not limited to, determinations as to whether the claim, or a request for a review of a denied claim, was timely filed) shall be afforded the maximum deference permitted by law.


10.6	Deadline to File Civil Action. No civil action to recover Plan benefits or to enforce or clarify rights under the Plan under Section 502 or Section 510 of ERISA or under any other provision of law, whether or not statutory, may be brought by any claimant on any matter pertaining to the Plan unless the civil action is commenced in the proper forum before the earlier of:


(a)	Thirty months after the claimant knew or reasonably should have known of the principal facts on which the claim is based; or


(b)	Eighteen months after the claimant has exhausted the claims review procedure.

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ARTICLE ELEVEN

MISCELLANEOUS


11.1	Non-Alienation of Benefits

(a)

Except as provided in Section 11.1(b) or 11.1(c), no benefit payable under the Plan shall be subject in any manner to anticipation, sale, transfer, assignment, pledge, encumbrance, security interest or charge, and any action by way of anticipating, alienating, selling, transferring, assigning, pledging, encumbering, charging or granting a security interest in the same shall be void and of no effect; nor shall any such benefit be in any manner liable for or subject to the debts, contracts, liabilities, engagements or torts of the person entitled to such benefit.

(b)

Section 11.1(a) shall not apply to the creation, assignment, or recognition of a right to any benefit payable pursuant to a Qualified Domestic Relations Order. The Administrator shall establish reasonable procedures to determine the status of domestic relations orders and to administer distributions under such orders which are deemed to be Qualified Domestic Relations Orders. Such procedures shall be in writing and shall comply with the provisions of Section 414(p) of the Code. To the extent that, because of a Qualified Domestic Relations Order, more than one individual is to be treated as a surviving Spouse, the total amount payable from the Plan as a result of the death of a Participant shall not exceed the amount that would be payable from the Plan if there were only one surviving Spouse.


(c)	Notwithstanding the provisions of Section 11.1(a), the Plan may offset any portion of the Total Account maintained on behalf of a Participant or Beneficiary against a claim of the Plan arising:


(i)	as a result of the Participant’s or Beneficiary’s conviction of a crime involving the Plan; or


(ii)	with regard to the Participant’s or Beneficiary’s violation of ERISA’s fiduciary provisions upon:


(A)	the entry of any civil judgment, consent order, or decree against the Participant or Beneficiary; or


(B)	the execution of any settlement agreement between the Participant and the Department of Labor or Pension Benefit Guaranty Corporation.

The provisions of this Section 11.1(c) shall apply only to orders, judgments, decrees and settlements issued or entered into which expressly provide for such offset.

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11.2	Risk to Participants and Source of Payments

Each Participant assumes all risk in connection with any decrease in the value of any investment fund in the Trust Fund, and the Trust Fund shall be the sole source of any payments to be made to Participants or their Beneficiaries as a result of any right specifically granted under the terms of the Plan.


11.3	Expenses

Subject to any restriction applicable under Section 5.4(a), brokerage fees, transfer taxes and other expenses incurred by the Trustee in connection with the purchase or sale of securities may be added to the cost of such securities or deducted from the proceeds thereof, as the case may be. Earnings credited to accounts invested in mutual funds shall be net of direct fund management expenses. Refunds of fund management expenses shall be allocated to Participant and Beneficiary accounts as earnings in such manner as provided by the Administrator. Pursuant to a uniform and nondiscriminatory policy adopted by the Administrator in its discretion and communicated to eligible Participants and Beneficiaries, fees and other expenses associated with specific voluntary Plan transactions may be assessed directly against the Total Account maintained on behalf of the Participant or Beneficiary participating in such transaction.

All other costs and expenses incurred in administering the Plan shall be paid by the Company or an Employer, unless the Administrator authorizes the payment of such expenses from the Trust Fund.


11.4	Rights of Participants

No Participant or Beneficiary shall have any right or interest under the Plan unless and until he becomes entitled thereto as provided in the Plan. The adoption and maintenance of the Plan shall not be deemed to constitute a contract between an Employer and any Employee or Participant. Inclusion in the Plan will not affect an Employer’s right to discharge or otherwise discipline Employees and membership in the Plan will not give any Employee the right to be retained in the service of an Employer nor any right or claim to a benefit unless such right is specifically granted under the terms of the Plan.

The Plan shall be binding on all Participants and their Spouses and Beneficiaries and upon heirs, executors, administrators, successors, and assigns of all persons having an interest herein. The provisions of the Plan in no event shall be considered as giving any such person any legal or equitable right against the Company, an Employer or an Affiliate, any of its officers, employees, directors, or shareholders, or against the Trustee, except such rights as are specifically provided for in the Plan or created in accordance with the terms of the Plan.


11.5	Statement of Accounts

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As soon as practicable after the last day of March, June, September and December, or such other time or times as the Administrator shall designate, the Administrator shall cause to be sent to each current or former Participant a written statement of his account.


11.6	Designation of Beneficiary

(a)

Each Participant shall give Notice regarding the designation of a Beneficiary or Beneficiaries who shall receive payment of the Participant’s interest under the Plan in the event of his death. Such Notice shall be provided to the Administrator or its designee within such time and in accordance with such means as are designated by the Administrator and communicated to Participants. If the Participant is married, the Participant’s Beneficiary must be his Spouse (in accordance with Code Section 401(a)(11)(B)(iii)) unless Spousal Consent requirements are satisfied. In the event a Participant dies and there is no properly designated Beneficiary then living, the interest of the Participant under the Plan shall be paid in a lump sum to his surviving Spouse, or, if there is no surviving Spouse, to his estate or other successor, all as the Administrator may determine.

(b)

A Beneficiary entitled to a payment of all or a portion of a Participant’s Total Account due to the death of the Participant may disclaim his interest therein subject to the following requirements. To be eligible to disclaim, a Beneficiary must be a natural person, must not have received a distribution of all or any portion of said Total Account at the time such disclaimer is executed and delivered, and must have attained at least age twenty-one (21) years as of the date of the Participant’s death. Any disclaimer must be in writing and must be executed personally by the Beneficiary before a notary public. A disclaimer shall state that the Beneficiary’s entire interest is disclaimed or shall specify what portion thereof is disclaimed. To be effective, an original executed copy of the disclaimer must be both executed and actually delivered to the Administrator after the date of the Participant’s death but not later than one hundred eighty (180) days after the date of the Participant’s death. A disclaimer shall be irrevocable when delivered to the Administrator. A disclaimer shall be considered to be delivered to the Administrator only when actually received by the Administrator. The Administrator shall be the sole judge of the content, interpretation and validity of a purported disclaimer. Upon the filing of a valid disclaimer, the Beneficiary shall be considered not to have survived the Participant as to the interest disclaimed. A disclaimer by a Beneficiary shall not be considered to be a transfer of an interest or an assignment or alienation of benefits in violation of Section 11.1 hereof. No other form of attempted disclaimer shall be recognized by the Administrator.


11.7	Payment to Incompetents

If any person entitled to receive any benefits hereunder is a minor, or is in the judgment of the Administrator, legally, physically, or mentally incapable of personally receiving and receipting for any distribution, the Administrator may instruct the Trustee to make distribution to such other person, persons or institutions who, in the judgment of the Administrator, are then maintaining or

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have custody of such distributee. As a condition to the issuance of such instruction for the distribution to such other person or institution, the Administrator may require such person or institution to exhibit or to secure an order, decree or judgment of a court of competent jurisdiction with respect to the incapacity of the person who would otherwise be entitled to receive the benefits.


11.8	Authority to Determine Payee

The determination of the Administrator as to the identity of the proper payee of any benefit under the Plan and the amount of such benefit properly payable shall be conclusive, and payment in accordance with such determination shall constitute a complete discharge of all obligations on account of such benefit.


11.9	Severability


11.10	Employer Records

The records of a Participant’s Employer shall be presumed to be conclusive of the facts concerning his employment or non-employment, periods of service and Compensation unless shown beyond a reasonable doubt to be incorrect.


11.11	Limitation on Contributions

(a)

In no event shall the total annual additions on behalf of a Participant under this Plan and under any other defined contribution plan or plans maintained by the Employer with respect to any limitation year exceed the lesser of $40,000 (or such dollar figure, as increased in accordance with Section 415(d) of the Code for years up to and including the given limitation year) or 100% of the Test Compensation, paid to the Participant by an Employer within such limitation year. All amounts contributed to any defined contribution plan maintained by an Employer or an Affiliate (taking into account Section 415(h) of the Code) other than any rollover contribution and any salary reduction contribution to a simplified employee pension shall be aggregated with contributions made by an Employer under this Plan in computing any Employee’s total annual additions limitation. For purposes hereof, the limitation year shall be the calendar year.

For purposes of this section, “total annual additions” for any limitation year shall mean the sum of the following:


(i)	Employer contributions under this Plan and under any other defined contribution plan maintained by an Employer or Affiliate;

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(ii)	Reallocated forfeitures under any defined contribution plan maintained by an Employer or Affiliate;


(iii)	After-tax contributions under any other defined contribution plan maintained by an Employer or Affiliate; and

(iv)

Amounts allocated to an individual medical account, as defined in Section 415(1)(2) of the Code, as part of a pension or annuity plan and amounts derived from contributions paid or accrued which are attributable to post-retirement medical benefits described in Section 419A(d) of the Code, under a welfare benefit fund (as defined in Section 419(e) of the Code) maintained by an Employer or Affiliate.

Catch-Up Contributions under Section 3.3, make-up contributions on account of qualified military service under Section 414(u) of the Code and loan repayments under Section 7.8 shall not be recognized as annual additions for purposes of this section.

(b)

In the event that a Participant’s total annual additions for any limitation year exceed the limitations of Section 11.11(a) because of a reasonable error in estimating the Participant’s Compensation, a reasonable error in determining the amount of Elective Deferrals that a Participant may make within the limitations of paragraph (a) above or due to such other facts and circumstances as the Commissioner of Internal Revenue finds justifiable, the excess amount shall be eliminated and/or the error corrected in a manner prescribed under the IRS Employee Plans Compliance Resolution System.

(c)

Notwithstanding anything herein to the contrary, in no event shall Test Compensation, for purposes of this Section 11.11, include severance pay. However, the following types of remuneration, if includible for purposes of Test Compensation as described in paragraph (a) above, shall be taken into account only if paid by the later of the date that is 2-1/2 months after the date of severance from employment with an Employer or the end of the limitation year that includes the date of severance from employment with the Employer, if the amounts would have been included in compensation had they been paid before the severance from employment date:


(i)	The payment for services rendered during the Participant’s regular working hours, or for services outside of the Participant’s regular working hours such as overtime or shift differential, commissions, bonuses or other similar payments that would have been paid had the Participant not incurred a severance from employment.

(ii)

Payments of unused accrued bona fide sick, vacation or other leave provided the Participant would have been able to use the leave if employment had continued, or payments from a nonqualified unfunded deferred compensation plan, provided the payment would have been paid had the Participant not incurred a severance from employment and such payment would have been includible in gross income had such payment been made.

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(iii)

If the Employer continues to provide remuneration to a Participant due to the Participant’s disability or to a Participant who is not performing services because of qualified military service, as defined in Code Section 414(u), in an amount that is not in excess of that which would have been payable to the Participant as compensation had the Participant not entered qualified military service, such amounts will be included in Test Compensation for purposes of this Section.


(d)	The sole purpose of this Section is to comply with the formal requirements of Section 415(c) of the Code and the terms of this Section shall be interpreted, applied and if and to the extent necessary, shall be deemed modified so as to satisfy solely the minimum requirements of Section 415(c) of the Code and the regulations promulgated with respect thereto.


11.12	IRC 414(u) Compliance Provision

Notwithstanding any provision of the Plan to the contrary, contributions, benefits and service credit with respect to qualified military service (as hereinafter defined) shall be provided in accordance with Section 414(u) of the Code.


(a)	As provided by Section 414(u) of the Code, “qualified military service” means service in the uniformed services (as defined in Chapter 43 of Title 38, United States Code) by an individual if he is qualified under such chapter to reemployment rights with the Company or an Affiliate following such military service.


(b)	“USERRA” means the Uniformed Services Employment and Reemployment Rights Act of 1994, as amended.


(c)	If an individual returns to employment with the Company or an Affiliate following a period of qualified military service under circumstances such that he has reemployment rights under USERRA, and the individual reports for said reemployment within the time frame required by USERRA, the following provisions apply:

(i)

The Employee may elect to have “make up” Elective Deferrals made on his behalf following his period of qualified military service to the extent he could have made Elective Deferrals had he remained a Covered Employee under the Plan during his qualified military service. To the extent such “make up” Elective Deferrals are made by the Employee within such period as provided by law, such contributions shall be matched under this Plan according to the same conditions and at the same rate as the Elective Deferrals would have been matched had they actually been made during the period of qualified military service.


(ii)	The period of qualified military service shall be recognized for purposes of determining Years of Eligibility Service under the Plan to the same extent it would have been had the Employee remained continuously employed with the Company

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or an Affiliate rather than leaving active employment to go into qualified military service.


(iii)	Compensation and Test Compensation shall be determined for the individual during the period of qualified military service. The amount of Compensation and Test Compensation shall be determined by the Company consistent with the requirements of the USERRA, and shall reflect the Company’s best estimate of the earnings the individual would have received but for the qualified military service.


(iv)	Notwithstanding the foregoing, investment earnings or losses applicable to any contributions hereunder shall be credited only with respect to periods following the actual deposit of such contributions.


(d)	The Plan shall comply with the provisions of the Heroes Earnings Assistance and Relief Tax Act of 2008 (the “HEART Act”), which amended certain provisions of USERRA.


(i)	If a Participant dies while performing qualified military service and such death occurs on or after January 1, 2007, the Participant’s Beneficiary shall receive the same benefits under the Plan as if the Participant had returned to employment as a Covered Employee immediately prior to his death and then terminated employment on account of his death.

(ii)

A Participant performing qualified military service on or after March 1, 2009 for a period of at least 30 days and who has not incurred a severance from employment may elect to withdraw in cash all or a portion of his Tax Deferred Account. Such a Participant shall be suspended from making Elective Deferrals to the Plan until the first day of the pay period occurring six full months after the effective date of the withdrawal.


(iii)	Effective March 1, 2011, a Participant who is called to qualified military service for a period in excess of 179 days, or for an indefinite period, and who has not incurred a severance from employment, may elect to withdraw in cash all or a portion of his Tax Deferred Account.


(iv)	A withdrawal under this Section 11.12(d) must be effective during a Participant’s period of qualified military service and before the Participant has otherwise incurred a severance from employment with the Employer and Affiliates.


(v)	The provisions of Sections 7.6(c) through 7.6(f) shall apply to the withdrawals under this Section 11.12(d), substituting “Participant” for “Eligible Applicant” thereunder.


(e)	The foregoing provisions are intended to provide the benefits required by USERRA and the HEART Act, and are not intended to provide any other benefits. This Section shall be construed consistent with said intent.

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11.13	Governing Law

Except as provided under federal law, the provisions of the Plan shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania.

ARTICLE TWELVE

AMENDMENT, TERMINATION OR MERGER OF THE PLAN


12.1	Right to Amend

The Company reserves the right at any time or times to modify or amend the Plan; provided, however, that no such modification or amendment shall be made which would:


(a)	increase the duties or liabilities of the Trustee without its written consent; or


(b)	impermissibly divest a Participant of any portion of his Total Account hereunder that has accrued to him prior to the effective date of such amendment; or


(c)	cause or permit any portion of the Trust Fund to be converted to or become the property of the Company; or


(d)	cause any portion of the Trust Fund to be used for purposes other than the exclusive benefit of the Participants or their Beneficiaries;

unless such modification or amendment is necessary or appropriate to enable the Plan or Trust Fund to qualify under Section 401 of the Code, as amended from time to time, or to retain for the Plan or Trust Fund such qualified status.

Any such modification or amendment to this Plan shall be evidenced by a written instrument adopted by the Board; provided, however, that the Administrator may adopt such amendments as shall fall within the limited amendment authority contained in the Administrator’s charter. Any such written instrument shall recite at which time the amendments contained therein shall become effective.

Promptly after an amendment to this Plan shall have become effective, the Company, or Administrator, as the case may be, shall cause a copy of such amendment to be filed with the Administrator and with the Trustee. The Administrator shall take such steps as it may deem appropriate and reasonable to communicate the amendment to Participants.


12.2	Right to Terminate


(a)	Although it is the expectation of the Company that it will continue the Plan as a permanent retirement program for the benefit of the Employees eligible hereunder, the Company reserves the right at any time, by action of its Board, at its sole discretion, to terminate the

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Plan in whole or in part. There shall be no liability or obligation on the part of an Employer to make any further contributions to the Trust Fund in the event of the termination of the Plan.


(b)	Notwithstanding anything to the contrary contained herein, Trustee’s fees and other expenses incident to the operation and management of the Plan incurred after the termination of the Plan may, at the discretion of the Company, be paid from assets of the Trust Fund that are not part of any Participant’s Total Account.


(c)	In the event of the termination of the Plan in whole or in part or in the event of the complete discontinuance of Employer contributions under the Plan, each affected Participant’s interest in the Trust Fund shall become 100% vested and shall be nonforfeitable.


12.3	Merger, Transfer of Assets or Liabilities

The Company may merge or consolidate the Plan with, transfer assets and liabilities of the Plan to, or receive a transfer of assets and liabilities from, any other plan without the consent of any other Employer or other person, if such transfer is effected in accordance with applicable law and if such other plan meets the requirements of Code Sections 401(a) and 501(a), permits such transfer or the receipt of such transfer and, with respect to liabilities to be transferred from this Plan to such other plan, satisfies the requirements of Code Sections 411(d)(6). This Plan may not be merged or consolidated with any other plan, nor may any assets or liabilities of this Plan be transferred to any other plan, unless the terms of the merger, consolidation or transfer are such that each Participant in the Plan would, if the Plan were terminated immediately after such merger, consolidation or transfer, receive a benefit equal to or greater than the benefit he would have been entitled to receive if this Plan had terminated immediately prior to the merger, consolidation or transfer.

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ARTICLE THIRTEEN

TOP HEAVY PROVISIONS


13.1	Top Heavy Provisions Inapplicable

The Plan is a cash or deferred arrangement described in Section 416(g)(4)(H) of the Code and, as a result, is deemed to not be a top heavy plan.

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Executed at Erie, Pennsylvania, this 18 ^th day of December, 2015.

ERIE INDEMNITY COMPANY

By: /s/ Sean J. McLaughlin

Title: EVP, Secretary and General Counsel

ATTEST:

/s/ Patrick Simpson

Counsel II

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Exhibit 14.3

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Exhibit 14.3

ERIE’s Code of Conduct

January 2016

“Simple sense mixed common with just plain decency. “

-H.O. Hirt

Erie Insurance Above all in SERVICE-since 1925

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“ To provide our Policyholders with as near perfect protection, as near perfect service as is humanly possible, and to do so at the lowest possible cost”

– Founder H.O. Hirt

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Table of Contents

Introduction 2

Messages from ERIE 4

What are my responsibilities under our Code? 6

What happens if someone violates our Code? 7

What will happen after I make a report? 8

We are above all when we put our Customers first 9

We are above all when we contribute to a positive work environment 11

We support a safe workplace 14

We are above all when we earn business the right way 14

We don’t bribe 15

We use good judgment when exchanging gifts and entertainment 16

We are above all when we demonstrate professionalism and integrity 17

We participate in political activity lawfully and ethically 18

We keep ERIE’s computer network secure 19

We protect ERIE’s assets 21

We safeguard the confidential information of ERIE 22

We are above all when we operate with truth and transparency 24

We safeguard our intellectual property 24

We do not trade or provide inside information 25

We create and maintain records responsibly 26

We communicate responsibly 27

We use social media responsibly 27

We are above all when we act in the best interest of our community 29

We demonstrate social responsibility 29

We are above all when we do the right thing 30

Key Contacts 30 1

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Introduction

Why do we have a Code?

At Erie Insurance, we believe in doing the right thing.

It’s clear in our Founding Purpose and mission: “To provide Policyholders with as near perfect protection, as near perfect service as is humanly possible and to do so at the lowest possible cost.” We prioritize ethical business conduct, accountability, respectful treatment and teamwork.

We have a Code of Conduct because it provides a roadmap to help us make sure we act not only in compliance with laws and regulations but also in the spirit of our purpose and values. Our Code will help us clearly understand how to deliver on our promise to do the right thing.

How does the Code apply to me?

If you work for, or on behalf of ERIE, we expect you to understand and follow our Code. Our Code applies to all Employees, including officers, and the Board of Directors. We expect everyone associated with ERIE to demonstrate ethical behavior that is consistent with our Code. This includes our Agents, contractors, vendors and others with whom we do business.

Our Code does not address every legal or ethical situation, but it helps guide us by supporting our good judgement when we have questions. When we have more specific questions about laws or policies, we can consult additional resources.

These include:

Employee Handbook

Policies, procedures and manuals available on the company intranet

Online compliance courses 2

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Ethical Decision Making - Four Pillars

Be above all. consider each of these statements in the decisions you make and the actions you take.

This action is legal.

This action is ethical.

This action is in line with our Code and company policies.

This action upholds ERIE’s reputation.

Call ERIE Ethicsline 866.469.5708 or visit erieinsurance.alertline.com Anonymous Reporting 24/7

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Messages from ERIE

When H.O. Hirt called it our purpose to provide Policyholders “with as near perfect protection as possible,” he was thinking about the protection that an insurance policy offers individuals and families.

But we’d like to think he was also anticipating resources like this Code of Conduct, which helps protect against unethical conduct that could damage our business or reputation.

Just as we provide our Customers with “near perfect service,” we want to also be “near perfect” in decisions and actions that have legal, ethical or professional consequences. The Code is one way we equip our Employees, Agents, contractors and vendors with the information and resources they need to meet this very important commitment.

- Tom Hagen, Chairman

The organization of our Code of Conduct follows the principles in Our Founding Purpose.

This is no accident.

Just like Purpose, the Code makes a clear and bold statement about who we are and how we work. It provides clear guidelines so that we reach our business goals with a common understanding of the behavior that’s legally and ethically acceptable.

Finally, because human beings sometimes make mistakes, the Code includes a list of key contacts that can assist with decisions, answer your questions or listen to your concerns.

ERIE Employees want to do the right thing. When you have questions about what’s right, our Code is the best place to start.

- Terry Cavanaugh, Chief Executive Officer 4

Call ERIE Ethicsline 866.469.5708 or visit erieinsurance.alertline.com Anonymous Reporting 24/7

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When you face an ethical decision in business, Founder H.O. Hirt’s guidance that “simple common sense, mixed with just plain decency” still rings true.

But it’s possible you’ll face a situation where your choices have ethical or legal consequences—and the right choice may not seem simple or clear.

If this happens, take personal responsibility for finding the right answer. But, know that the responsibility for determining the right choice is not yours alone. Speak up, ask questions. Talk to your supervisor or manager. Check the Code of Conduct, the Employee Handbook, or company policies and procedures.

Still not sure? Reach out to me or any Employee in Compliance.

Or, use the ERIE Ethicsline, where you can report an issue or request guidance, anonymously, if you choose, 24 hours a day, 7 days a week. In order to do what’s right, it helps to know what’s right—and trust that ERIE is committed to being above all, not just in service, but in all business conduct, every day.

- Theresa Gamble, Director of Compliance 5

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What are my responsibilities under our Code?

We are all expected to “be above all” when it comes to our Code.

This means reading our Code, taking time to understand it and asking questions if they arise. Depending on your role in the Company, you may have different responsibilities under the Code. For example:

Employee Responsibilities

Obey all laws, rules, regulations and court orders.

Know and follow our Code and company policies.

Conduct business truthfully and fairly.

Demonstrate professional behavior at all times.

Exhibit responsible financial management.

Follow our travel and expense policies and guidelines.

Never use a business relationship or company asset for personal gain.

Report violations of our Code and company policies.

Ask questions. If a situation does not meet all Four Pillars of Ethical Decision Making, you should report a potential violation of our Code.

Notify a member of management in the Compliance Department if you become aware of or are convicted of a felony.

Leader Responsibilities

Demonstrate a commitment to compliance with all laws, rules,

regulations and court orders.

Establish and sustain procedures in your area of work that are

consistent with our Code.

Lead by example.

Listen to Employees’ ethical concerns.

Guide Employees through the Four Pillars of Ethical Decision

Making described in the previous section.

Instruct Employees on their options on how to report concerns.

Never influence a subordinate to behave or act in a way that is not in

line with our Code or company policies.

Establish and follow controls in your area that protect company assets.

Protect Employees from retaliation for reporting concerns.

Follow the Anti-Retaliation Policy.

Demonstrate accountability.

Notify a member of management in the Compliance Department

if you or an Employee who reports to you become aware of or are

convicted of a felony.

Remember that federal law regulates the participation in the insurance industry of individuals who have been convicted of some types

of felony charges. To support ERIE’s compliance with federal law, Employees must disclose if they have been convicted of a felony.

Call ERIE Ethicsline 866.469.5708 or visit erieinsurance.alertline.com Anonymous Reporting 24/7

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What happens if someone violates our Code?

Accountability is one of our core values—and consequences are a key part of holding each other accountable. A violation of our Code of Conduct will result in corrective action, up to and including termination of employment.

SPEAK UP

What do we mean by speak up?

Speaking up means looking out for our Company and for our Customers. It means being responsible for recognizing illegal, unethical, unsafe or unprofessional behavior, as well as violations of our Code or Company policies.

If we supervise Employees—it also means promoting a culture which encourages Employees to ask questions and report concerns.

When we speak up—we maintain a high standard of conduct and an ethical work place.

When should I speak up?

Speak up when something does not feel right. Trust yourself if something doesn’t seem right or ethical, don’t do it and don’t tolerate it—instead, seek help. Employee reports can help us identify issues early, when it’s still possible to prevent damage to our business and reputation.

How do I speak up?

ERIE has established several different ways you can speak up if you have a comment, question or need to report misconduct.

To speak up, contact:

Your immediate supervisor or any ERIE leader

Any person listed under Key Contacts

ERIE Ethicsline

You may choose to remain anonymous when reporting. To enable anonymous reporting, ERIE has established ERIE Ethicsline, a service provided by an independent third party, which includes a telephone hotline and a website where Employees can report any concerns.

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What will happen after I make a report?

ERIE will take your report seriously and you will not be retaliated against for making an honest report. ERIE will not discipline, discriminate or retaliate against anyone who reports a concern in good faith, or who cooperates in any investigation or inquiry regarding such conduct whether or not such information is proven to be correct. ERIE will also do everything possible to protect the confidentiality of individuals who make a report or participate in an investigation. Typically, ERIE will only share information about individual reports with those who need to know it to carry out the investigation. If we discover misconduct, ERIE takes corrective action, such as disciplinary action—up to and including termination of employment for individuals responsible.

What happens if the company becomes the subject of an investigation?

Occasionally, ERIE business practices may be subject to investigation. If and when this happens, our goal is to maintain a positive working relationship with regulators, auditors and other entities.

Take time to respectfully participate with other Employees who are coordinating these investigations.

Respond honestly and completely to authorized requests for information, documents and data.

Call ERIE Ethicsline 866.469.5708 or visit erieinsurance.alertline.com Anonymous Reporting 24/7

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We are above all…when we put our Customers first.

We protect the privacy of our Customers.

The business of insurance, by its nature, requires us to collect information about our Customers that is not publicly known—and it is critical to our reputation and trustworthiness that we protect it. This means that we understand the rules and safeguards in place to protect all nonpublic, personally identifiable information concerning an individual or his or her transactions with us, including policies about disclosing this information to others.

DID YOU KNOW?

There are times when it is okay for an Employee to access and disclose personal information. There are other times when it is not.

Make sure:

You have verified the Customer’s identity.

The transaction is in the scope of your job.

The information is secure during the transaction.

The disclosure is of the type permitted under ERIE’s policies.

If these conditions exist, you can release the information. If you have questions, contact your supervisor.

BE ABOVE ALL

Carefully protect all personal information that is in your care.

Access personal information only if you are authorized to do so, and if you need to use the information to do your job.

Know when you can share personal data and when you can’t—never give someone information if you are not sure that you should be sharing it.

If you use data as part of your job, remember that you are responsible for its accuracy, integrity and security. This includes not only protecting it, but managing it in accordance with ERIE’s record retention policy and schedule.

Report any loss or breach of personal information to your supervisor, the Privacy Officer, to Compliance, or the ERIE Ethicsline as soon as possible.

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We strive to deliver near perfect service & handle claims fairly.

We treat our Customers and claimants respectfully and fairly every step of the way, from marketing to sales and service, to the underwriting and rating of each policy. We settle claims fairly, promptly and in good faith.

BE ABOVE ALL

Make sure your actions show that ERIE gives priority to the interest of the Customer.

Always treat the Customer fairly, and go above and beyond when providing service.

Understand and follow corporate policies, laws, and regulations that apply to the work you do.

Consider only the factors you are legally permitted to consider when evaluating or underwriting a risk.

Use ERIE’s underwriting guidelines and rules consistently.

Follow claims handling policy and procedural manuals and consult with a claim supervisor if you are not sure how to proceed.

We are committed to supporting the independent Agent as the face of ERIE in the community.

Our Agents are a reflection of ERIE. Fostering relationships with trustworthy and dependable Agents enables us to provide near perfect service.

DID YOU KNOW?

ERIE sells insurance exclusively through independent Agents. By entering into agency agreements, our Agents agree to follow ERIE business practices and all laws and regulations that apply to them as independent Agents.

BE ABOVE ALL

If you work directly with our Agents, be sure to communicate and demonstrate ERIE’s standards for doing business legally and ethically.

The actions of our Agents reflect on our reputation. If you observe or suspect misconduct of an Agent, notify Compliance.

Call ERIE Ethicsline 866.469.5708 or visit erieinsurance.alertline.com Anonymous Reporting 24/7

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We are above all…when we contribute to a positive work environment.

We value the diversity of experiences and perspectives.

At ERIE, we define diversity as all of the ways, visible, or invisible, that each of us is unique. Our inclusive environment makes it possible for all Employees to make the most of opportunity, take ownership of performance, and realize their full potential. We prohibit and do not tolerate discrimination in our workplace. We employ qualified people on the basis of their ability to do their job.

DID YOU KNOW?

The law is designed to protect individuals from discrimination based on certain characteristics. Some examples of characteristics protected by law include: age, ancestry, citizenship, color, disability, gender identity, genetic information, military status, marital status, national origin, race, religion, sex, and sexual orientation. We also do not discriminate against women who are pregnant or breastfeeding.

BE ABOVE ALL

Make employment-based decisions—such as recruiting, hiring, firing, or promotion—on the basis of the individual’s qualifications, performance and capabilities to succeed in the job.

Never treat any individual differently or make employment-based decisions on the basis of characteristics protected by the law.

Remember—diversity includes all the ways that we are different— including different perspectives or working styles. We expect you to be able to work collaboratively with a wide variety of individuals.

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We treat one another respectfully and prohibit harassment.

At ERIE, we treat one another with dignity and respect. In a culture of dignity and respect, people can work together as members of a team and do better work. ERIE strictly prohibits harassment and will not tolerate disrespectful behavior or remarks.

DID YOU KNOW?

When people hear the word harassment, they often think first of sexual harassment. But the term “harassment” actually refers to any conduct that is unwelcome or personally offensive to another individual. This includes threats or acts of violence, bullying, and intimidation.

BE ABOVE ALL

Always treat your colleagues with respect—even when there are business pressures or differences of opinion.

Never act in a way that could threaten, bully or intimidate others.

Observe the highest standards of professionalism at all times— in person and online.

Speak up if you see someone being harassed or believe you are being harassed—

- to the offender, if you feel comfortable doing so,

- or to your supervisor,

- or the Code of Conduct Key Contacts.

If someone tells you that your behavior is offensive or unwelcome, take it seriously—apologize and stop the behavior.

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KNOWING WHAT IS RIGHT… AND DOING SOMETHING ABOUT IT

Recently, when I was at lunch, I overheard a coworker telling jokes that involved racial stereotypes. Some people were laughing, but the jokes made me uncomfortable—and I could tell, looking around the room, that others seemed to feel the same way.

I wasn’t surprised others looked uncomfortable as well. A few of us are in the same work group and our supervisor had discussed our Company policy against harassment at our last department meeting. I felt the right thing to do would be to alert my supervisor about the jokes. My supervisor thanked me for speaking up and assured me they would appropriately address the situation.

Call ERIE Ethicsline 866.469.5708 or

visit erieinsurance.alertline.com Anonymous Reporting 24/7

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We support a safe workplace.

At ERIE we are committed to providing a safe and healthy work environment. We strive to maintain a workplace free of unsafe conditions, unsafe acts, violence or threats of violence.

BE ABOVE ALL

If someone makes a threat or you believe someone may be

considering a violent action, report it immediately.

Never bring weapons into ERIE buildings, and follow the state specific rules in the Employee Handbook regarding weapons in vehicles and parking lots.

Always have your ID badge on and visible when you are at work.

Always sign in and escort visitors, and make sure they have an ID badge.

When you use your access card to enter an ERIE building, don’t allow people you don’t know to tailgate in after you if they do not have their ID badge.

Always take appropriate precautions when encountering workplace hazards.

Never report to work under the influence of illegal drugs or alcohol.

If you are at a company event use good judgement if alcohol is being served.

If you see something, say something.

Call Security at Home Office ext. 2700.

Never operate vehicles or equipment while using mobile electronic devices.

Always report workplace hazards and accidents, including security incidents.

We are above all… when we earn business the right way.

We compete fairly.

We win business based on our commitment to be Above all in Service®. We make sure that our actions are ethical and in compliance with antitrust and unfair practice laws.

DID YOU KNOW?

Antitrust and unfair competition laws are intended to protect consumers from corporate practices that might limit the free market and restrict their access to competitive products at competitive prices. Refer to the Antitrust Policy in the Employee Handbook for a more detailed list of guidelines to avoid violations.

Call ERIE Ethicsline 866.469.5708 or visit erieinsurance.alertline.com Anonymous Reporting 24/7

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BE ABOVE ALL

Know how antitrust and competition laws apply to your job requirements.

Do not discuss any confidential ERIE information with competitors or with others and do not discuss competitors’ confidential information.

Do not collect information about competitors through illegal means, such as theft, spying, bribery or breach of a confidentiality agreement or contractual agreement.

Be careful about your conversations when attending trade association meetings where you may have contact with competitors. Stick to discussing general business practices and not ERIE-specific confidential company information.

When doing research or requesting information from competitors for business purposes, identify yourself as an ERIE Employee.

Any requests by you to connect with another person or entity online for business purposes must not be misleading, deceptive or misrepresent a relationship with, or connection to, ERIE.

We don’t bribe.

At ERIE we conduct business fairly and do not give anyone anything of value in an attempt to gain an unfair business advantage. We prohibit bribery and kickbacks anywhere we do business. We expect the same of our Agents or third parties who work on our behalf. Bribery and kickbacks aren’t just wrong—they’re often illegal, and failure to comply with our Code can carry significant fines or even criminal charges for individuals and for ERIE.

DID YOU KNOW?

Most laws define a bribe or kickback as any kind of money, fee, commission, credit, gift, gratuity, travel benefits, entertainment or compensation that is provided, with the hopes of improperly obtaining business or receiving favorable treatment from a government official.

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BE ABOVE ALL

Never promise or give someone something that has value to them in an attempt to secure an unfair business advantage.

Decline offers of discounts on personal products or services from third parties who may be making the offer with the hope of receiving favorable treatment from you, or from ERIE in a future transaction.

Remember that ERIE will be held liable for the actions of our Agents and third parties—so monitor their work carefully.

Record all payments and transactions accurately—never try to conceal the true nature of an expense.

We use good judgment when exchanging gifts and entertainment.

At ERIE, we follow corporate policies and procedures and only give or receive gifts and entertainment when we know that doing so will not compromise our ability to make objective business decisions.

DID YOU KNOW?

Prizes can also be considered gifts under our policy—for instance, a prize to attend a golf tournament held by a vendor. Even though a prize is “won” rather than given, consider the source of the prize and also consider the sponsors of the event where the prize is offered. If accepting the prize could cause a reasonable person to question your judgment then you should not accept it.

BE ABOVE ALL

Be mindful that any gifts or entertainment given or received from business contacts should be nominal in value and not given frequently.

Never give or accept cash or cash equivalents, such as gift certificates or gift cards.

Seek approval from your supervisor before you accept a gift that has more than a nominal value.

Remember that if a reasonable observer could question a particular gift or instance of entertainment, you should also question it, and seek advice from Compliance or Human Resources before accepting.

Avoid situations that could reflect poorly on ERIE, such as giving or receiving inappropriate gifts or forms of entertainment.

Be sensitive to the gift policies of Customers and business partners, and do not offer anything that might violate their policies.

Call ERIE Ethicsline 866.469.5708 or visit erieinsurance.alertline.com Anonymous Reporting 24/7

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We are above all…when we demonstrate professionalism and integrity.

We recognize and manage conflicts of interest.

A “conflict of interest” arises when our personal interests interfere, or even appear to interfere, with the Company’s interests. To protect ERIE and preserve our reputation for fairness and professionalism, we must avoid conflicts of interest and disclose anything that could look like a conflict. While having a conflict of interest is not necessarily a violation of our Code, a failure to disclose a potential conflict is always a violation.

DID YOU KNOW?

A conflict can occur on or off the job. For example, a conflict could occur during the course of a second job, an outside activity, a financial investment or endeavor, or any interest that could influence your work and work-related decisions. A conflict of interest can also come from the actions of family members, if their actions or involvements could affect your business decisions.

BE ABOVE ALL

Understand how to identify a conflict of interest.

Update your conflict of interest form if something changes.

Avoid interests, activities or relationships that interfere with ERIE’s Customers and/or shareholders’ best interests or with your ability to be fair and unbiased.

Never work for a competitor while you are an ERIE Employee.

Never process or service your own policy or claim, or the policy or claim of a family member or friend.

Discuss any potential conflicts of interest with your supervisor, Compliance or Human Resources, as soon as possible. For example, you should discuss the following:

- having a beneficial ownership interest in a competitor company, ERIE vendor or supplier.

- having a financial interest in an independent insurance agency.

- giving, receiving or accepting gifts from anyone who may influence your decision or judgment on work-related matters.

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We participate in political activity lawfully and ethically.

To protect our interests and the interests of the insurance industry, ERIE participates in government relations and political action work. In doing this, ERIE observes all lobbying laws and regulations that apply to corporate political activity. We also encourage Employees to participate in the political process in compliance with corporate policies.

Select Employees are invited, but not required, to contribute funds to ERIE’s Political Action Committees.

DID YOU KNOW?

Our nonpartisan political action committees serve as important vehicles to advocate for the insurance industry. Select ERIE Employees in the Law Division are designated to speak on behalf of ERIE regarding our position on pending legislation. Other ERIE Employees should not speak on behalf of ERIE in this regard.

BE ABOVE ALL

If you participate in personal political activities, do not use ERIE’s assets—financial or otherwise—to support your work, and do not solicit contributions from fellow Employees.

Avoid making statements on political issues that could appear to be speaking for ERIE, such as mentioning ERIE’s name or your job title.

If you participate in corporate political activity on ERIE’s behalf, know and follow the laws and regulations that govern this process.

If you have questions, contact Government Relations.

Call ERIE Ethicsline 866.469.5708 or visit erieinsurance.alertline.com Anonymous Reporting 24/7

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We keep ERIE’s computer network secure.

Our computers and networks contain critical business information. Just one mistake can result in serious consequences—for ERIE, our Customers or our Employees. We are all responsible for following ERIE safeguards to protect this important information at all times.

DID YOU KNOW?

If you work remotely or need to access ERIE systems from non-ERIE facilities or take information offsite, you have a responsibility to secure and protect it. Follow these guidelines:

When accessing or sending confidential information, use ERIEapproved access or delivery methods and ensure you are connected to a secure network.

Do not store confidential information on your laptop or portable electronic device (e.g., smartphones, PDAs, flash drives) without properly protecting it.

Do not store ERIE information on your home computer.

Do not leave laptops unattended or check them as luggage.

If you must work in a public place, such as an airport or coffee shop, be aware of your surroundings. Others may be looking over your shoulder when you are working on your laptop. Also, don’t have conversations about confidential information where someone else may hear.

BE ABOVE ALL

Follow all corporate policies and procedures when using ERIE’s computers, mobile devices and networks.

Never share passwords or other login information—even with your coworkers or assistants.

Ensure your screen is locked whether you leave your workstation for a few minutes or a few hours.

Do not use ERIE’s computer network for illegal activities or to create, discuss or send inappropriate sexually explicit or otherwise offensive material.

While limited personal use of ERIE’s computer network is allowed, make sure that your use does not disrupt service to our Customers, or interfere with your ability to do your work or the work of others. Limited personal use does not include use for a personal business. Any use for personal gain is not permitted.

Remember that ERIE may monitor your computer and network use, and may have access to any information that you create, transmit or store.

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KNOWING WHAT IS RIGHT…

AND DOING SOMETHING

ABOUT IT

I am an Employee in a technical position. Recently, I was asked by my business project sponsor to run a system upgrade in a production environment without first running the upgrade in a test environment to save time on the project. Although I was uncomfortable challenging my sponsor, and I knew that the project was on a tight timeline, I decided to tell my supervisor that I did not feel right about proceeding without the test because I knew that this could put ERIE’s information systems at risk. My supervisor stepped in and explained to the sponsor the need for the testing period, even if it slowed down the project.

Call ERIE Ethicsline 866.469.5708 or

visit erieinsurance.alertline.com Anonymous Reporting 24/7

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We protect ERIE’s assets.

At ERIE, our shareholders and Customers depend on us to use our assets responsibly. We all play a role in helping to protect ERIE assets from theft, loss and misuse. This includes everything from correctly reporting business expenses to protecting access to ERIE’s buildings and equipment.

DID YOU KNOW?

Our assets include more than just physical property. ERIE assets include our reputation, money, checks, records and documents, data and information, intellectual property, buildings and grounds, company vehicles, office equipment, furniture, supplies and our computer network.

BE ABOVE ALL

Use ERIE’s assets thoughtfully and responsibly.

Do not use ERIE assets or resources for personal gain.

Report all expenses accurately and timely.

Obtain appropriate approvals for all contracts or purchases.

If you are a senior financial officer, follow the Code of Ethics written for your position.

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We safeguard the confidential information of ERIE.

At ERIE, we are responsible for protecting all confidential information, whether it belongs to ERIE, our Customers, or any third party.

DID YOU KNOW?

We come across confidential information all the time in the course of our work. Some examples of confidential information include:

strategic goals or plans

technology

policy enhancements

processing and billing improvements

pricing

rate filings

non-public financial condition

forecasts and projections

geographic expansion plans

potential mergers and acquisitions

marketing and sales activities

proprietary information about our Agents, Customers, Employees, suppliers, vendors and competitors

information regarding the details of our business arrangements with third parties

BE ABOVE ALL

Recognize confidential information so that you can treat it properly.

Do not access or share confidential information unless you are authorized or have permission to do so.

Be careful not to lose, misplace or leave behind confidential information.

Never use ERIE’s confidential information for your own gain or share it with others for their personal gain.

If you ever have doubts about whether information is confidential, treat it as confidential information and handle it accordingly.

Remember that your obligation to protect confidential information continues even if you no longer work for ERIE.

There is an expectation, repeated often by our founder, that all representatives of ERIE conduct themselves according to “the Golden Rule,” treating others as you would like to be treated. 22

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KNOWING WHAT IS RIGHT…

AND DOING SOMETHING

ABOUT IT

I am an ERIE Employee who negotiates contracts for third-party services. One of our longtime vendors recently asked me to disclose the details of a recent “vendor comparison” between ERIE and a competitor. Although I really value my relationship with this vendor, I also know that sharing this information would be a violation of our Code. I told my contact that I could not share confidential information, and I also shared his request and my response with my supervisor and the Law Division.

Call ERIE Ethicsline 866.469.5708 or

visit erieinsurance.alertline.com Anonymous Reporting 24/7

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We are above all…when we operate with truth and transparency.

We demonstrate transparency in our financial statements.

At ERIE, we maintain accurate and complete accounts and have internal controls in place to ensure that we provide timely, accurate and clear financial statements. If we find discrepancies, we investigate and work quickly to resolve them.

BE ABOVE ALL

Be accurate and follow all corporate policies and internal control procedures when recording assets, liabilities, revenues and expenses.

Never intentionally falsify an asset record or misrepresent the facts of a transaction.

Exercise good judgment and follow corporate guidelines when preparing or approving expense reports.

Report any concerns about financial reporting immediately to the Code Key Contacts, or to the ERIE Ethicsline.

We safeguard our intellectual property.

We value the knowledge and intellectual contribution of our Employees. Our intellectual property is critical to our success as a company—we must safeguard it at all times. We also protect the intellectual property of third parties.

DID YOU KNOW?

Intellectual property is made up of assets each of us create and contribute in our daily work. For the most part, these assets are intangible—meaning, not physical objects, but ideas, concepts, or rights. Here are some examples of intellectual property that we might come across through our work for ERIE:

Trademarks and service marks – are ways ERIE, and other companies, identify their products to make them stand out in the market. Some examples include: our ERIE® service mark, the cupola logo and product or service brand names.

Copyrights – are the rights we have to reproduce, distribute and display the written, graphic and audiovisual works that we create, such as policy forms and marketing materials.

Call ERIE Ethicsline 866.469.5708 or visit erieinsurance.alertline.com Anonymous Reporting 24/7

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Trade secrets and proprietary information – are information that ERIE classifies as confidential and restricted. Some examples include underwriting guidelines, claims handling procedures, investment plans, strategic plans, Customer lists, custom software and computer coding designs. See our Information Classification Policy for additional information.

Patents – are federally-granted rights that prevent others from using company products and processes.

BE ABOVE ALL

Understand how to identify intellectual property and how to protect it.

Be mindful of copyrights that belong to others—don’t copy, download, distribute, use or display materials that may be subject to copyright without permission of the copyright owner.

Contact the Law Division with any questions or guidance on recognizing when something is ERIE’s intellectual property; how to use ERIE’s intellectual property or if you think ERIE’s intellectual property (or someone else’s) has been misused.

We do not trade or provide inside information.

We comply with all laws and corporate policies that prohibit us from trading in ERIE’s securities based on “inside information” that we learn of through the course of our job. This includes information about ERIE as well as information about our Customers, business partners or any other third parties.

DID YOU KNOW?

Insider trading is the purchase or sale of a publicly traded security by someone who has material nonpublic information about the company issuing the security. For example, material information might include news of an expansion, a new strategic direction for a company, or a change in corporate leadership. 25

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BE ABOVE ALL

Never use material nonpublic information for your own financial gain.

Never provide a “tip” and pass on material nonpublic information to another person.

If you are giving a presentation to an outside group, make sure the details of the presentation do not disclose confidential or restricted ERIE information.

If you have any questions about whether a securities transaction is appropriate, given your role at ERIE, talk to the Law Division before you make the trade.

We create and maintain records responsibly.

We are careful to create records that clearly and accurately reflect our intentions, actions and decisions. We maintain records responsibly, in line with the law and ERIE’s records retention schedule.

DID YOU KNOW?

There may be times when ERIE needs to hold onto records because of potential litigation or investigation. When there is a legal hold in place, records must be retained—even if their retention period has expired.

If you have received a legal hold email notice from the Law Division, or if you have heard about the possibility of litigation or an investigation, you must hold onto all records that may be related—regardless of your opinion about the information contained in those records.

Do not destroy or discard anything that may be related to the legal hold until the hold is released.

BE ABOVE ALL

Exercise good judgment when creating any professional communication—recognizing that any email or message may be read in the future by someone without the benefit of context.

Keep records for the appropriate period of time under ERIE’s records retention schedule.

Follow instructions to hold records and cease any normal record destruction when ordered to do so by a legal hold, or if you learn that the records may be relevant to a case or claim.

Call ERIE Ethicsline 866.469.5708 or visit erieinsurance.alertline.com Anonymous Reporting 24/7

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We communicate responsibly.

Our shareholders and Customers rely on us to be truthful and to uphold our values and Founding Purpose. Only certain individuals within ERIE have permission to speak on ERIE’s behalf. This includes being honest, clear and accurate when we communicate to the public and the media about ERIE and our business.

BE ABOVE ALL

If you receive an inquiry from the public, including the media, contact Strategic Marketing/Media Relations.

If you receive an inquiry from a regulator or government agency, contact Government Relations or Compliance.

Do not share internal ERIE information online or on social media, as this may result in an unintended public disclosure.

We use social media responsibly.

We must exercise good judgment when using social media, no matter whether our use is for business or personal reasons.

BE ABOVE ALL

Social media is a generally public forum, and posts and comments might be viewed or read by anyone. Regardless of the context, you are personally responsible and accountable for your communications in social media.

Never disclose confidential information about ERIE or any of our Customers or business partners while using social media.

Never post anything that is vulgar, obscene, threatening, intimidating, harassing or discriminatory, including comments or images that are based on age, ancestry, citizenship, color, disability, gender identity, genetic information, marital status, military status, national origin, race, religion, sex, sexual orientation, or any other protected class, status or characteristic.

Statements or advertisements about ERIE and its products or services or ERIE’s competitors must be truthful and may not be misleading or deceptive. Use social media for business purposes only if you have approval or are permitted to as described in ERIE’s social media policies.

When using social media for personal reasons, be clear that your views are your own views and not ERIE’s view.

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KNOWING WHAT IS RIGHT…

AND DOING SOMETHING

ABOUT IT

I work in the Claims Department at ERIE. Last night at home, when I was on a discussion board I like to visit, I saw someone was complaining about ERIE’s Customer Service. The writer was really negative and all of his points were wrong! As much as I wanted to join in the conversation to try to “fix the problem” or “set the record straight,” I realized that best thing for me to do would be to allow someone at ERIE who is authorized to handle the situation address it. I contacted Customer Service and they said they would handle it from here by following our social media protocols.

Call ERIE Ethicsline 866.469.5708 or

visit erieinsurance.alertline.com Anonymous Reporting 24/7

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We are above all…when we act in the best interest of our community.

We treat the environment with care.

We take care of our environment by supporting sustainable actions in the workplace. We comply with all environmental regulations that apply to our business.

DID YOU KNOW?

The goal of our EcoErie initiative is to make a positive impact on ERIE’s future by implementing and promoting sustainable actions today.

BE ABOVE ALL

Recognize the importance of sustainable actions and share in ERIE’s strategic initiatives to make a positive impact on the environment.

Report any actions or behaviors that may be harmful to the environment.

We demonstrate social responsibility.

We support the communities where we live and work. Throughout our history, Employees have continued Founder H.O. Hirt’s tradition of giving generously. We are committed to helping those in need by assisting disaster victims, building homes for the homeless, developing partnerships with educational, arts, environmental, safety and other organizations, and participating in numerous volunteer activities that benefit those less fortunate.

BE ABOVE ALL

Consider supporting our communities and those in need through the Erie Insurance Giving Network.

Look for ways to “know what’s right and do something about it”— for instance, by participating in one of the community events sponsored by ERIE.

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We are above all…when we do the right thing.

Sometimes, the right thing is informing others when you become aware of potential violations of the law, unethical behavior, or actions that are not consistent with this Code, or not in line with company policies and procedures. Report these things, even if you are not certain of what you have observed, to your supervisor, any ERIE leader, or one of the resources listed to the right.

Call ERIE Ethicsline 866.469.5708 or visit erieinsurance.alertline.com Anonymous Reporting 24/7

KEY CONTACTS

Theresa Gamble

Director, Compliance

Theresa.Gamble@erieinsurance.com

814-870-2800

Jim Stoik

Vice President, Internal Audit

James.Stoik@erieinsurance.com

814-870-4862

Dionne Wallace Oakley

Senior Vice President, Human Resources

Dionne.WallaceOakley@erieinsurance.com

814-870-6965

Gary Veshecco

Senior Vice President, Law

Gary.Veshecco@erieinsurance.com

814-870-2159

Sean McLaughlin

Executive Vice President, Secretary and General Counsel

Sean.Mclaughlin@erieinsurance.com

814-870-2224

ERIE Ethicsline

Erieinsurance.alertline.com

1-866-469-5708

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OFP99 1/16

Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the following Registration Statements:


(1)	Registration Statement (Form S-8 No. 333-188244) pertaining to the Erie Indemnity Company Equity Compensation Plan,


(2)	Registration Statement (Form S-8 No. 333-148705) pertaining to the Erie Indemnity Company 2004 Long-Term Incentive Plan, Erie Indemnity Company 1997 Long-Term Incentive Plan, and Erie Indemnity Company Deferred Compensation Plan for Outside Directors,


(3)	Registration Statement (Form S-8 No. 333-82062) pertaining to the Erie Indemnity Company Long-Term Incentive Plan,


(4)	Registration Statement (Form S-8 No. 333-53318) pertaining to the Erie Indemnity Company Long-Term Incentive Plan

of our reports dated February 25, 2016, with respect to the financial statements of Erie Indemnity Company and the effectiveness of internal control over financial reporting of Erie Indemnity Company included in this Annual Report (Form

10-K) of Erie Indemnity Company for the year ended December 31, 2015.

/s/ Ernst & Young

Philadelphia, PA

February 25, 2016

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Terrence W. Cavanaugh, certify that:

1. I have reviewed this annual report on Form 10-K of Erie Indemnity Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's fourth fiscal quarter that has materially affected or is reasonably likely to materially affect the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.



Date:	February 25, 2016

		/s/ Terrence W. Cavanaugh
		Terrence W. Cavanaugh
		President & CEO

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Gregory J. Gutting, certify that:

1. I have reviewed this annual report on Form 10-K of Erie Indemnity Company;

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.



Date:	February 25, 2016

		/s/ Gregory J. Gutting
		Gregory J. Gutting
		Interim Executive Vice President & CFO

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

We, Terrence W. Cavanaugh, Chief Executive Officer of the Erie Indemnity Company (the "Company"), and Gregory J. Gutting, Interim Chief Financial Officer of the Company, certify, pursuant to § 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1350, that:


(1)	The Annual Report on Form 10-K of the Company for the annual period ended December 31, 2015 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and


(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



/s/ Terrence W. Cavanaugh
Terrence W. Cavanaugh
President & CEO

/s/ Gregory J. Gutting
Gregory J. Gutting
Interim Executive Vice President & CFO


February 25, 2016

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.