Exhibit 10.107
ERIE INDEMNITY COMPANY
ANNUAL INCENTIVE PLAN
          Section 1. Purpose. The purpose of the Annual Incentive Plan (the
“Plan”) of Erie Indemnity Company (the “Company”) is to advance the best
interests of the Erie Insurance Group—consisting of the Company and its
subsidiaries and affiliates, including Erie Family Life Insurance Company, and
the Erie Insurance Exchange (collectively, the “Erie Insurance Group”)—and
thereby enhance shareholder value of the Company by providing incentives in the
form of annual cash bonus awards to certain management employees of the Company
and other Participating Entities upon the attainment of performance goals
established in accordance with the Plan.
          Section 2. Effective Date and Performance Periods. This document is an
amendment and restatement of the Plan. The original Plan was approved by
shareholders of the Company in 2004, with an effective date of March 2, 2004.
This amendment and restatement shall be effective January 1, 2009. The Plan will
remain in effect from year to year (each calendar year shall be referred to
herein as a “Plan Year”) until formally amended or terminated in writing by the
Company’s Board of Directors (the “Board”), provided that, absent additional
shareholder approval after 2008, no awards may be granted under the Plan after
the Company’s Annual Meeting of Shareholders in 2009. There shall be one year
performance periods (each, a “Performance Period”) under the Plan. A new
Performance Period shall commence on the first day of each Plan Year and end on
December 31 of such Plan Year.
          Section 3. Administration of the Plan.
          Section 3.01. General. The Plan shall be administered by the Executive
Compensation and Development Committee (the “Committee”) of the Board or other
committee appointed by the Board, which shall be comprised solely of two or more
“outside directors” as then defined in the regulations under Section 162(m) of
the Internal Revenue Code of 1986, as amended (the “Code”), or any successor
provision. The Committee shall interpret the Plan and prescribe such rules,
regulations and procedures in connection with the operations of the Plan as it
shall deem to be necessary and advisable for the administration of the Plan
consistent with the purposes of the Plan. The Committee’s determinations under
the Plan need not be uniform and may be made by it selectively among persons who
receive, or are eligible to receive, awards under the Plan, whether or not such
persons are similarly situated. For each Plan Year, the Committee shall
(i) designate the Participants eligible to receive awards under the Plan,
(ii) determine the Company Performance Goals and the Company Incentive Targets
for such Participants, (iii) determine the Individual Performance Goals and
Individual Incentive Targets for eligible Participants, and (iv) make such other
determinations as may be required or permitted by the Plan. Prior to payment of
any Company Incentive Award or Individual Incentive Award for any Plan Year, the
Committee shall certify that the Company Performance Goals and Individual
Performance Goals (and other material terms of any award) have been achieved.
For purposes of the required certification, approved minutes of the meeting of
the Committee at which the certification is made shall be sufficient to satisfy
the requirement of a written certification.
          Section 3.02. Section 162(m). Company Incentive Awards under this Plan
are intended to constitute “qualified performance-based compensation” under
Section 162(m) of the Code (or any successor section thereto) and the
regulations thereunder with respect to Participants who are or who are
anticipated to be covered employees, as such term is defined in Section 162(m)
of the Code (or any successor section thereto) for any Plan Year (each, a
“Covered Employee”) and the Plan shall be administered and interpreted
consistently with said Section 162(m) with respect to awards to Covered
Employees.
          Section 4. Eligibility, Termination, New Participants.
               Section 4.01. Eligibility. Any key employee of the Company or any
corporation, partnership or other organization of which the Company owns or
controls, directly or indirectly, not less than 50% of the total combined voting
power of all classes of stock or other equity interests (each, a “Participating
Entity”) who the Committee determines, in its sole discretion, has a significant
affect on the operations and/or results of the Company shall be eligible to
participate in the Plan (each, a “Participant”); provided, that the Company’s
Chief Executive Officer and the Executive Vice Presidents of the Company shall
not be eligible to receive Individual Incentive

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Awards. Participants in the Plan for any Plan Year shall be deemed ineligible to
participate in the Erie Insurance Group Employee Profit Sharing Bonus Plan (the
“Profit Sharing Plan”) for such Plan Year. No employee of the Company or any
Participating Entity shall have a right (a) to be selected to participate in the
Plan for any Plan Year, or (b) having once been selected for a Plan Year, to
(i) be selected to participate again in the future or (ii) continue as an
employee of the Company or any Participating Entity.
               Section 4.02. Termination of Employment. If the active employment
of a Participant shall be terminated before the Payment Date of an award for any
Plan Year for any reason, such Participant may receive all or such portion of
his or her award as may be determined by the Committee in its sole discretion;
provided, that if a Participant ceases to be an employee of the Company or a
Participating Entity prior to the Payment Date of an award for any Plan Year by
reason of death, Disability (meaning total and permanent disability within the
meaning of Section 22(e)(3) of the Code), or Normal or Early Retirement (as
defined below), the Participant shall be entitled to payment of not less than a
pro rata portion of such award, based on the number of days such Participant was
an employee during the Performance Period; and provided, further, that a
Participant who is terminated for cause (as defined in such employee’s
employment agreement with the Company or Participating Entity or, if no such
agreement exists, as defined by the Committee) shall not be entitled to receive
payment of any award for the Plan Year. For the purposes of this Plan, “Normal
Retirement” means cessation of employment upon or after attainment of age 65,
and “Early Retirement” means cessation of employment upon or after attainment of
age 55 and completion of 15 years of Credited Service (as defined under the Erie
Insurance Group Retirement Plan for Employees).
               Section 4.03. New Participants. Except as provided in this
Section 4.03, an employee who is not a Participant as of the first day of a
Performance Period shall not become a Participant for that Performance Period.
New employees of the Company or a Participating Entity hired during a
Performance Period, and employees promoted during the Performance Period who
were not eligible to participate in the Plan at the beginning of the Performance
Period, may, as determined by the Committee in its sole discretion, become a
Participant during a Performance Period and participate in the Plan for such
Performance Period on a pro-rata basis (based on the number of days in the
Performance Period that such employee is an employee who is deemed eligible to
participate in the Plan); provided, that if the new or promoted employee is a
Covered Employee for the Plan Year, then the employee shall not be eligible to
participate in the Plan unless he or she becomes a Participant effective not
later than 90 days after the beginning of the Performance Period. An employee
who becomes a Participant after the first day of a Performance Period shall not
be eligible to participate in the Profit Sharing Plan from the date the employee
becomes a Participant in the Plan; however, such Participant shall be entitled
to a pro rata portion of the benefit, if any, to which he or she otherwise would
be entitled under the Profit Sharing Plan for such Plan Year based on the number
of days in the year prior to the date he or she became a Participant in this
Plan.
          Section 5. Company Incentive Targets, Company Incentive Awards,
Company Performance Measures, Company Performance Goals.
               Section 5.01. Company Incentive Targets. Each Participant under
the Plan shall be assigned a Company Incentive Target, which shall be expressed
as a percentage of the Participant’s annual rate of base salary in effect on
December 31 of the Plan Year for which the Company Incentive Target is being
assigned, and which shall establish the amount of cash compensation payable to
the Participant upon attaining, in whole or in part, or exceeding, the Company
Performance Goals for a Performance Period (the “Company Incentive Target”). The
Company Incentive Targets shall be determined and approved by the Committee not
later than 90 days after the commencement of each Performance Period. At the
time the Company Incentive Target is established, the Committee shall establish
the maximum Company Incentive Award that may be paid for the Performance Period
to Participants who are Covered Employees.
               Section 5.02. Company Incentive Awards. Company incentive awards
are the actual cash amounts earned by Participants during a Performance Period
for attaining, in whole or in part, or exceeding the Company Performance Goals
for such Performance Period (“Company Incentive Awards”); provided, however,
that for Participants who are Covered Employees (a) no Company Incentive Award
may exceed the Participant’s Company Incentive Target established for the actual
level of achievement attained, and (b) payment of any Company Incentive Award
under the Plan shall be contingent upon the achievement of the Company
Performance Goals.

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               Section 5.03. Company Performance Goals.
                    (a) Company Performance Goals. For each Performance Period,
the Committee shall establish specific, written, objective performance goals
(the “Company Performance Goals”) for each Participant, which may be based upon
one or more of the following performance measures and expressed in either, or a
combination of, absolute values or rates of change: (i) the operating ratio of
the property and casualty insurance operations of the Erie Insurance Group
(ii) direct written premiums of the Erie Insurance Group, (iii) the statutory or
GAAP combined ratio, loss ratio, expense ratio or dividend ratio of the property
and casualty insurance operations of the Erie Insurance Group, (iv) net income
(including net income before or after taxes and net income before interest,
taxes, depreciation and amortization), net income per share and net income per
share growth rate, (v) operating revenue, net premiums written or net premiums
earned, (vi) operating expenses, cost of management operations or underwriting
expenses, (vii) cash flow, (viii) return on capital, shareholders’ equity,
assets or investments, (ix) stock price, (x) market share or (xi) gross margins
(“Company Performance Measures”). Company Performance Measures may be based on
the performance of the Erie Insurance Group, the Company or a subsidiary or
subsidiaries or affiliate of the Company, a division, department, business unit
or other portion thereof, a product line or products, or any combination of the
foregoing and/or upon a comparison of such performance with the performance of a
peer group or other measure selected or defined by the Committee at the time of
assigning the Company Incentive Target. For Participants who are Covered
Employees, the Company Performance Goals shall be established for any
Performance Period not later than 90 days after the commencement of the
Performance Period.
                    (b) Manner of Calculating Company Incentive Awards. When the
Company Performance Goals are established, the Committee shall also specify, in
terms of an objective formula or standard, the method for computing the amount
of the Company Incentive Award if the Company Performance Goal is attained, in
whole or in part, or exceeded. If more than one Company Performance Goal is
established for any Performance Period, the Committee shall also specify the
weighting assigned to such Company Performance Goals. The Committee may, at the
time the Company Performance Goals are established, determine that unusual items
or certain specified events or occurrences, including changes in accounting
standards or tax laws and the effects of non-operational or extraordinary items
as defined by generally accepted accounting principles, shall be excluded from
the calculation; provided that such determination does not cause the Company
Incentive Award for any Performance Period to fail to constitute “qualified
performance-based compensation” under Section 162(m) of the Code (or any
successor section thereto) and the regulations thereunder with respect to
Participants who are Covered Employees.
               Section 5.04. Discretion. The Committee shall have no discretion
to increase any Company Incentive Target or Company Incentive Award that would
otherwise be due upon attainment of the Company Performance Goals, or otherwise
modify any Company Performance Goals associated with a Performance Period;
provided, however, that solely with respect to Participants who are eligible to
receive Individual Incentive Awards under Section 6, the Committee may in its
discretion reduce or eliminate such Company Incentive Target or Company
Incentive Award for a Performance Period.
               Section 5.05. Determination of Company Incentive Award. As
promptly as reasonably practicable following receipt of the information
necessary for the calculation of any Company Incentive Award, the Committee
shall determine the amount of a Participant’s Company Incentive Award for the
Plan Year, if any, based on the level of attainment of the applicable Company
Performance Goals for the Performance Period in accordance with the terms of the
award as set forth in the Award Agreement and the other terms of the Plan. Such
determination shall be communicated to the Participant in writing. Prior to any
payment of the Company Incentive Awards hereunder, the Committee shall determine
and certify in writing the extent to which the Company Performance Goals and
other material terms of the Plan and the applicable Award Agreement were
achieved.
               Section 5.06. Maximum Company Incentive Awards. Notwithstanding
any other provision of this Plan, the maximum Company Incentive Award payable in
cash to any one Participant under the Plan with respect to any Performance
Period shall be $3.0 million.
          Section 6. Individual Incentive Targets, Individual Incentive Awards
and Individual Performance Goals.
               Section 6.01. Individual Incentive Targets. Each Participant
under the Plan who is eligible to receive Individual Incentive Awards under this
Section 6 shall be assigned an individual incentive target, which shall be
expressed as a percentage of the Participant’s annual rate of base salary in
effect on December 31 of the

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Plan Year for which the Individual Incentive Target is being assigned and which
shall establish the amount of cash compensation payable to the Participant upon
attaining, in whole or in part, or exceeding, the Individual Performance Goals
for a Performance Period (an “Individual Incentive Target”).
               Section 6.02. Individual Incentive Awards. Individual incentive
awards (“Individual Incentive Awards”) are the actual cash amounts earned by
eligible Participants during a Performance Period for attaining, in whole or in
part, or exceeding the Individual Performance Goals for such Performance Period.
               Section 6.03. Individual Performance Goals.
                    (a) Individual Performance Goals. For each Performance
Period, the Committee shall review and approve the individual performance goals
for each eligible Participant as established pursuant to the employee
performance assessment program in effect from time to time and set forth on the
Participant’s individual performance assessment form for such Performance Period
(the “Individual Performance Goals”).
                    (b) Calculation. When the Individual Performance Goals are
established, the Committee shall also specify the method for computing the
amount of the Individual Incentive Award if the Individual Performance Goal is
attained, in whole or in part, or exceeded by the Participant. If more than one
Individual Performance Goal is established for any Performance Period, the
Committee shall also specify the weighting assigned to such Individual
Performance Goals. The Committee may determine that unusual circumstances or
certain specified events or occurrences, shall be excluded from the calculation.
               Section 6.04. Discretion. The Committee shall have no discretion
to increase any Individual Incentive Target or Individual Incentive Award that
would otherwise be due upon attainment of the Individual Performance Goals, or
otherwise modify any Individual Performance Goals associated with a Performance
Period; provided, however, that the Committee may in its discretion reduce or
eliminate Individual Incentive Targets or Individual Incentive Awards for a
Performance Period.
               Section 6.05. Determination of Individual Incentive Award. As
promptly as reasonably practicable following receipt of the information
necessary for the calculation of any Individual Incentive Award, the Committee
shall determine the amount of a Participant’s Individual Incentive Award for the
Plan Year, if any, based on the level of attainment of the applicable Individual
Performance Goals for the Performance Period in accordance with the terms of the
award as set forth in the Award Agreement and the other terms of the Plan. Such
determination shall be communicated to the Participant in writing. Prior to any
payment of the Individual Incentive Awards hereunder, the Committee shall
determine and certify in writing the extent to which the Individual Performance
Goals and other material terms of the Plan were achieved for each Participant.
          Section 7. Payment to Participants.
               Section 7.01. Timing of Payment. Except as may be deferred
pursuant to Section 8.02, Company Incentive Awards and Individual Incentive
Awards for a Performance Period shall be paid to the Participant in the first
calendar year beginning after the end of such Performance Period, as promptly as
reasonably practicable following the Committee’s determination and certification
of such awards (the “Payment Date”).
               Section 7.02. Beneficiary Designation. A Participant may file a
completed designation of beneficiary form with the Committee or its delegate in
the form prescribed. Such designation may be made, revoked or changed by the
Participant at any time before the earlier of death or receipt of any unpaid
Company Incentive Awards or Individual Incentive Awards, but such designation of
beneficiary will not be effective and supersede all prior designations until it
is received and acknowledged in writing by the Committee or its delegate. If the
Committee has any doubt as to the proper beneficiary to receive payments
hereunder, the Committee shall have the right to withhold such payments until
the matter is finally adjudicated. However, any payment made in good faith shall
fully discharge the Committee, the Company, its subsidiaries, Participating
Entities and the Board from all further obligations with respect to that
payment.
               Section 7.03. Form of Payment. Payment of Company Incentive
Awards and Individual Incentive Awards shall be made in cash.
               Section 7.04. Tax Withholding. All Company Incentive Awards and
Individual Incentive Awards shall be subject to Federal income, FICA, and other
tax withholding as required by applicable law.

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          Section 8. Miscellaneous.
               Section 8.01. Non-alienation. Except as may be required by law,
neither the Participant nor any beneficiary shall have the right to, directly or
indirectly, alienate, assign, transfer, pledge, anticipate or encumber (except
by reason of death) any amount that is or may be payable hereunder, including in
respect of any liability of a Participant or beneficiary for alimony or other
payments for the support of a spouse, former spouse, child or other dependent,
prior to actually being received by the Participant or beneficiary hereunder,
nor shall the Participant’s or beneficiary’s rights to benefit payments under
the Plan be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by creditors of the
Participant or beneficiary or to the debts, contracts, liabilities, engagements,
or torts of any Participant or beneficiary, or transfer by operation of law in
the event of bankruptcy or insolvency of the Participant or any beneficiary, or
any legal process.
               Section 8.02. Deferral. A Participant may elect to defer all or a
portion (in whole percentages) of his or her Company Incentive Award and
Individual Incentive Award, in accordance with the terms of a deferral agreement
entered into between the Participant and the Company pursuant to the Deferred
Compensation Plan of Erie Indemnity Company (the “Deferred Compensation Plan”).
An election to defer must be made prior to the commencement of the Plan Year to
which the Incentive Award relates, except as otherwise allowed under the
Deferred Compensation Plan for a new employee. No amount in excess of the amount
of the Company or Individual Incentive Award deferred shall be payable to the
Participant for such deferral, except as may be based upon either an actual or
deemed reasonable rate of interest or on one or more actual or deemed investment
vehicles as made available from time to time by the Company pursuant to the
Deferred Compensation Plan and elected by the Participant.
               Section 8.03. Amendment or Termination of this Plan. The Board
shall have the right to amend or terminate the Plan at any time, provided that
any termination shall automatically end the outstanding Performance Period and
calculations shall be made with respect to achievement of the Company and
Individual Performance Goals for such Performance Periods for the purpose of
determining whether any partial Company or Individual Incentive Awards may be
payable under the Plan, and provided further that the conditions of Section 8.04
are satisfied. No employee or Participant shall have any vested right to payment
of any Company or Individual Incentive Award hereunder prior to its payment. The
Company shall notify affected employees in writing of any amendment or
termination of the Plan.
               Section 8.04. Restrictions on Acceleration of Payment Date;
Deferrals; Delay of Payment to Specified Employee.
               (a) Acceleration or Delay. The amendment or termination of the
Plan shall not accelerate or defer a Payment Date except as follows:
                    (1) The Board may accelerate the payment of all or part of
an award upon the following events: the termination and liquidation of the Plan
or any other event the Commissioner of Internal Revenue may prescribe in
generally applicable guidance under the Section 409A of the Internal Revenue
Code, provided, in any event, that the terms and conditions of the acceleration
would not cause the Plan to fail to meet the requirements of Section 409A and of
any generally applicable guidance published by the Commissioner of Internal
Revenue under Section 409(A) for the deferral (until payment) of the inclusion
of awards in gross income.
                    (2) The Board may defer a Payment Date for all or a part of
an award under the following circumstances:
                         (i) The Committee reasonably anticipates that, if an
award were to be paid as scheduled, the Company’s deduction with respect to such
payment would not be permitted under Section 162(m) of the Code; provided such
scheduled payment is then made during the Participant’s first taxable year in
which the Committee reasonably anticipates that the Company’s deduction will not
be barred by application of Section 162(m) of the Code.
                         (ii) The Committee reasonably anticipates that the
payment of an award as scheduled will violate federal securities laws or other
applicable law; provided that the scheduled payment is then made at the earliest
date on which the Committee reasonably determines that making the scheduled
payment will not cause such a violation.
                         (iii) Such other events or conditions as the
Commissioner of Internal Revenue may prescribe in generally applicable guidance
that the Board, 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 or her individual circumstances.

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               (b) Delay of Payment to Specified Employee. If an award is
payable to a Participant on account of separation from service (within the
meaning of Section 409A of the Code), and the Participant is a specified
employee (as defined below), the payment may not be made before the date that is
six months after the Participant’s separation from service (or, if earlier, the
Participant’s death). “Specified employee” means, with respect to the relevant
12-month period beginning on an April 1 and during which the Company remains
publicly traded, a Participant who was a “key employee” within the meaning of
Section 416(i) of the Code, without regard to Section 416(i)(5), at any time
during the calendar year preceding the applicable April 1. For the purpose of
determining whether a Participant is a specified employee, the compensation to
be used is “Test Compensation” as defined in the Erie Insurance Group Employee
Savings Plan.
               Section 8.05. Award Agreements. Company Incentive Awards and
Individual Incentive Awards shall be evidenced by a written agreement entered
into between the Company or a Participating Entity and the Participant, setting
forth such award granted to the Participant under this Plan (each, an “Award
Agreement”). To the extent an Award Agreement, whether issued before 2009 or
after 2008, conflicts with the terms of this Plan as restated, the terms of this
Plan shall supersede the terms of the Award Agreement.
               Section 8.06. Limits of Liability. Any liability of the Company
to any Participant with respect to an award shall be based solely upon
contractual obligations created by the Plan and the Award Agreement. Neither the
Company, nor any member of its Board or of the Committee, nor any other person
participating in any determination of any question under the Plan, or in the
interpretation, administration or application of the Plan, shall have any
liability to any party for any action taken or not taken in good faith under the
Plan.
               Section 8.07. No Employment Rights. Neither the adoption of the
Plan nor any provision of the Plan shall be construed as a contract of
employment between the Company or a subsidiary or Participating Entity and any
employee or Participant, or as a guarantee or right of any employee or
Participant to future or continued employment with the Company or a subsidiary
or Participating Entity, or as a limitation on the right of the Company or a
subsidiary or Participating Entity to discharge any of its employees.
Specifically, designation as a Participant does not create any rights, and no
rights are created under the Plan, with respect to continued or future
employment or conditions of employment.
               Section 8.08. Illegal or Invalid Provision. In case any provision
of the Plan shall be held illegal or invalid for any reason, such illegal or
invalid provision shall not affect the remaining parts of the Plan, but the Plan
shall be construed and enforced without regard to such provisions.
               Section 8.09. Unsecured Creditor. The Plan constitutes a mere
promise by the Company to make benefit payments in the future. The Company’s
obligations under the Plan shall be unfunded and unsecured promises to pay. The
Company shall not be obligated under any circumstance to fund its financial
obligations under the Plan. It may, in its discretion, set aside funds in a
trust or other vehicle, subject to the claims of its creditors, in order to
assist it in meeting its obligations under the Plan, if such arrangement will
not cause the Plan to be considered a funded deferred compensation plan. To the
extent that any Participant or beneficiary or other person acquires a right to
receive payments under the Plan, such right shall be no greater than the right
of a general unsecured creditor of the Company and each Participant and
beneficiary shall at all times have the status of a general unsecured creditor
of the Company.
               Section 8.10. Construction. The provisions of the Plan shall be
construed, administered and governed by the laws of the Commonwealth of
Pennsylvania, including its statute of limitations provisions, but without
reference to conflicts of law principles, and in accordance with the
requirements of Section 409A of the Code to prevent the inclusion of awards in
gross income before the time of payment. Titles of Sections of the Plan are for
convenience of reference only and are not to be taken into account when
construing and interpreting the provisions of the Plan. Capitalized terms shall
have the meanings ascribed to them herein unless the context expressly otherwise
requires.

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*    *    *
          IN WITNESS WHEREOF, the Board of Directors of the Company has caused
this document to be executed this 31st day of December, 2008.

                  ERIE INDEMNITY COMPANY    
 
           
 
  by    /s/ James J. Tanous
 
       James J. Tanous    
 
             Executive Vice President,    
 
                 Secretary and General Counsel    

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