Document:

EX-10.10

 

EXHIBIT 10.10

RYDER SYSTEM, INC.

DEFERRED COMPENSATION PLAN

     This Ryder System, Inc. Deferred Compensation Plan (the “Plan”) is amended and restated as of
January 1, 2005. Compensation deferred and vested as of December 31, 2004 shall continue to be
governed in accordance with the provisions of the Plan in effect for the year of deferral. The
Plan is established and maintained by Ryder System, Inc. (“RSI”) solely for the purpose of
providing specified benefits to the members of the Board of Directors of RSI and a select group of
management and highly compensated Employees who contribute materially to the continued growth,
development and future business success of RSI, and its subsidiaries, that elect to sponsor this
Plan. This Plan shall be unfunded for tax purposes and for purposes of Title I of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”).

ARTICLE I

DEFINITIONS

Wherever used herein the following terms shall have the meanings hereinafter set forth:

     1.1    “Accounting Date” means each business day of the Plan Year on which the
national stock exchanges and the Nasdaq system are open for trading.

     1.2    “Accounting Period” means each period beginning on the day following an
Accounting Date and ending on the following Accounting Date.

     1.3    “Affiliate” means any Employer, and any member of a controlled group of
corporations, a group of trades or businesses under common control, an affiliated service group of
which any Employer is a member or any other entity required to be aggregated with the Employer
pursuant to regulations under Section 414(o) of the Code. For purposes hereof: (i) a “controlled
group of corporations” shall mean a controlled group of corporations as defined in Section 1563(a)
of the Code, determined without regard to Sections 1563(a)(4) and (e)(3)(C) thereof, (ii) a “group
of trades or businesses under common control” shall mean a group of trades or businesses under
common control as defined in the regulations promulgated under Section 414(c) of the Code; and
(iii) an “affiliated service group” shall mean an affiliated service group as defined in Section
414(m) of the Code.

     1.4    “Beneficiary” means the person or persons designated by a Participant, upon
such forms as shall be provided by the Committee, to receive payments of the vested portion of the
Participant’s Account after the Participant’s death. If the Participant shall fail to designate a
Beneficiary, or if for any reason such designation shall be ineffective, or if such Beneficiary
shall predecease the Participant or die simultaneously with him, then the Beneficiary shall be, in
the following order of preference:

     (i)  the Participant’s surviving spouse, or

     (ii) the Participant’s estate.

     1.5    “Board” means the Board of Directors of the Company.

 

 

     1.6    “Change of Control” shall be deemed to have occurred if:

          (i)  any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the “1934 Act”)) (a “Person”) becomes the
beneficial owner, directly or indirectly, of twenty percent (20%) or more of the combined voting
power of RSI’s outstanding voting securities ordinarily having the right to vote for the election
of directors of RSI; provided, however, that for purposes of this subparagraph (i), the following
acquisitions shall not constitute a Change of Control: (A) any acquisition by any employee benefit
plan or plans (or related trust) of RSI and its subsidiaries and affiliates or (B) any acquisition
by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of
subparagraph (iii) of this Section 1.6; or

          (ii)  the individuals who, as of August 18, 1995 constituted the Board of Directors of
RSI (the “Board” generally and as of August 18, 1995 the “Incumbent Board”) cease for any reason to
constitute at least two-thirds (2/3) of the Board, provided that any person becoming a director
subsequent to August 18, 1995 whose election, or nomination for election, was approved by a vote of
the persons comprising at least two-thirds (2/3) of the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office is in connection with an actual or
threatened election contest, as such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the 1934 Act) shall be, for purposes of this Plan, considered as though such person were a
member of the Incumbent Board; or

          (iii)  there is a reorganization, merger or consolidation of RSI (a “Business Combination”),
in each case, unless, following such Business Combination, (A) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of RSI’s outstanding Company
Stock and outstanding voting securities ordinarily having the right to vote for the election of
directors of RSI immediately prior to such Business Combination beneficially own, directly or
indirectly, more than fifty percent (50%) of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting securities ordinarily having the
right to vote for the election of directors, as the case may be, of the corporation resulting from
such Business Combination (including, without limitation, a corporation which as a result of such
transaction owns RSI or all or substantially all of RSI’s assets either directly or through one or
more subsidiaries) in substantially the same proportions as their ownership, immediately prior to
such Business Combination, of RSI’s outstanding Company Stock and outstanding voting securities
ordinarily having the right to vote for the election of directors of RSI, as the case may be, (B)
no Person (excluding any corporation resulting from such Business Combination or any employee
benefit plan or plans (or related trust) of RSI or such corporation resulting from such Business
Combination and their subsidiaries and affiliates) beneficially owns, directly or indirectly, 20%
or more of the combined voting power of the then outstanding voting securities of the corporation
resulting from such Business Combination and (C) at least two-thirds (2/3) of the members of the
board of directors of the corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or

          (iv)  there is a liquidation or dissolution of RSI approved by the shareholders; or

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          (v)  there is a sale of all or substantially all of the assets of RSI. If the sponsor enters
into an agreement or series of agreements or the Board passes a resolution which will result in the
occurrence of any of the matters described in subsections (i), (ii), (iii), (iv), or (v), and a
Participant’s employment is terminated subsequent to the date of execution of such agreement or
series of agreements or the passage of such resolution, but prior to the occurrence of any of the
matters described in subsections (i), (ii), (iii), (iv), or (v), a Change of Control shall be
deemed to have retroactively occurred on the date of the execution of the earliest of such
agreements(s), or the passage of such resolution.

     If a Change of Control occurs and if a Participant’s employment is terminated prior to the
date on which the Change of Control occurs, and if it is reasonably demonstrated by the Participant
that such termination of employment (A) was at the request of a third party who has taken steps
reasonably calculated to effect a Change of Control or (B) otherwise arose in connection with or in
anticipation of a Change of Control, a Change of Control shall be deemed to have retroactively
occurred on the date immediately prior to the date of such termination of employment.

     1.7    “Code” means the Internal Revenue Code of 1986, as amended from time to time,
and any regulations relating thereto.

     1.8    “Committee” means the Committee appointed by the Board to administer the
Savings Plan in accordance with Article X of the Savings Plan or when applicable, the person to
whom the Committee has delegated authority pursuant to Article X of the Savings Plan for the matter
in question.

     1.9    “Company” means Ryder System, Inc., a Florida corporation, or any successor
corporation or other entity resulting from a merger or consolidation into or with the Company or a
transfer or sale of substantially all of the assets of the Company.

     1.10    “Company Stock” means the common stock of the Company, par value $.50, which
is readily tradable on an established securities market.

     1.11    “Compensation” means (i) in the case of an Employee, the sum of the total of
all amounts paid to a Participant by an Employer as salary (including commissions) or bonuses for
personal services and any Savings Plan Tax-Deferred Contributions or Tax-Deferred Contributions
made by the Employer on behalf of a Participant for the Plan Year excluding any other amounts
earned by the Participant for the Plan Year but that are deferred under any other plan or
arrangement maintained by the Employer, or (ii) in the case of a Director, the Director’s fees
including the Director’s annual cash retainer, committee retainer and per diem meeting fees earned
by the Director.

     1.12    “Director” means a member of the Board.

     1.13    “Disability” means a Participant’s inability to engage in any substantial
gainful activity by reason of any medically determined physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for a continuous period
of not less than 12 months, as determined in a uniform and non-discriminatory manner by the
Committee after requiring any medical examinations by a physician or reviewing any medical

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evidence which the Committee considers necessary, and which results in the Participant’s
Separation from Employment.

     1.14    “Eligible Employee” means any Employee who is (i) employed by the Employer,
(ii) designated by the Committee to be eligible to participate in the Plan, and (iii) is part of a
select group of management or highly compensated employees within the meaning of Sections 201(2),
301(a)(3)and 401(a)(l) of ERISA, and any regulations relating thereto. Notwithstanding the
foregoing, effective as of January 1, 2005, Employees shall only become Eligible Employees on the
January 1st, or July 1st next following the date on which the Committee selects the Employee for
Plan participation.

     1.15    “Employee” means any employee of (i) the Company or (ii) any other entity that
is an Employer as defined in the Savings Plan.

     1.16    “Employer” means (i) the Company and (ii) any other entity that is an Employer
as defined in the Savings Plan.

     1.17    “Investment Funds” means those investment options that shall from time to time
be made available as investment options under the Plan, as determined by the Committee.

     1.18    “Key Employee” means an Employee who meets the definition of a “key employee”
set forth in Section 416(i) of the Code, without regard to paragraph (5) thereof.

     1.19    “Leave of Absence” means an Employee’s leave of absence from active employment
with the Company or an Affiliate because of military service, illness which does not constitute a
Disability, educational pursuits, services as a juror, or temporarily with a government agency, or
any other leave of absence, if (i) such leave of absence is approved by the Company or an Affiliate
that employs the Employee, and (ii) upon termination of any such leave of absence, such Employee
promptly returns or has returned to the employ of the Company or an Affiliate, without employment
(other than military service) elsewhere in the meantime except with the consent of the Company or
an Affiliate. The Company or an Affiliate shall determine the first and last days of any Leave of
Absence that it approves.

     1.20    “Matching Contributions” means the matching contributions credited to the
Participant’s Account in accordance with Section 3.2 of the Plan.

     1.21    “Matching Contributions Account” means the account maintained by the Company
under the Plan for a Participant that is credited with the Participant’s Matching Contributions,
and any gains or losses allocable thereto.

     1.22    “Participant” means a Director or an Eligible Employee of the Employer who
elects to participate in the Plan.

     1.23    “Participant’s Account” means the total amount credited to the account
maintained in the Plan in accordance with the provisions of the Plan for each Participant, which
represents his total proportionate interest of all accounts under the Plan as of any Accounting
Date, and which consists of his Tax-Deferred Contributions Account and his Matching Contributions
Account.

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     1.24    “Plan” means the Ryder System, Inc. Deferred Compensation Plan.

     1.25    “Plan Year” means the calendar year.

     1.26    “Retirement” means either (i) in the case of an Employee, termination of
employment from an Employer at or after Retirement Age or (ii) in the case of a Director,
retirement as a member of the Board.

     1.27    “Retirement Age” means the earlier of (i) the date on which a Participant
attains age 65, and (ii) the date on which a Participant has both (a) attained age 55 and (b)
completed at least 10 years of service. For purposes of this provision, Service shall mean that
period of an Employee’s continuous uninterrupted employment with an Employer and any Affiliate, and
with any predecessor businesses of the Employer or an Affiliate, conducted as corporations,
partnerships, or proprietorships, from the Employee’s last date of hire to the date of termination
of his employment for any reason; provided however, that the employment of an Employee, who
immediately before his current employment was employed by a predecessor or acquired business
continuously up to the date of its merger with or acquisition by the Employer or an Affiliate,
shall include only that part of his employment for said business which has occurred after the date
fixed for this purpose by the Company and provided that the same date is uniformly fixed for this
purpose as to all of the employees of a given predecessor or acquired business. An Employee may
work simultaneously for more than one Employer and Affiliate, but the total period of his
employment shall not be increased by reason of such simultaneous employment.

     1.28    “Savings Plan” means the Ryder System, Inc. Employee Savings Plan A,
established effective January 1, 1984, and as amended from time to time, and the Ryder System, Inc.
Employee Savings Plan B, established effective January 1, 1993, and as amended from time to time,
and each successor or replacement salaried employees cash or deferred arrangement.

     1.29    “Savings Plan Matching Contributions” means the total of all Matching
Contributions made by the Employer for the benefit of a Participant under and in accordance with
the terms of the Savings Plan.

     1.30    “Savings Plan Tax-Deferred Contributions” means the Tax Deferred Contributions
made by the Employer for the benefit of a Participant under and in accordance with the terms of the
Savings Plan.

     1.31    “Separation from Employment” means a discontinuance of the Participant’s
employment relationship with the Company and its Affiliates due to Retirement, Disability, death,
or other termination of employment (voluntary or involuntary). For purposes of this provision, the
employment relationship with the Company and its Affiliates of a Participant entitled to earned
vacation time and/or severance pay after he ceases to perform services for the Company and its
Affiliates shall be deemed to terminate upon the date his earned vacation time, if any, expires, or
if the Participant is entitled to severance pay, then upon the last date on which the Participant
is entitled to receive payment of such severance pay from the Company or any Affiliate. The fact
that an Employee who is a Participant ceases to elect to have any Tax-Deferred Contributions
credited to his Account under the Plan shall not constitute a Separation

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from Employment, and a Participant’s absence from active employment due to military service or
Leave of Absence shall not constitute a Separation from Employment.

     1.32    “Tax-Deferred Contributions” means the compensation reduction contributions
credited to the Participant’s Account under Section 3.1 of the Plan.

     1.33    “Tax-Deferred Contributions Account” means the account maintained by the
Company under the Plan for a Participant that is credited with the Participant’s Tax-Deferred
Contributions, and any gains or losses allocable thereto.

ARTICLE II

ELIGIBILITY

     2.1    Eligibility. An Employee shall be eligible to participate each January 1 or
July 1 coincident with or immediately following the date as of which he becomes an Eligible
Employee. Each Director shall be eligible to participate in the Plan each January 1 or July 1
coincident with or immediately following election to the Board.

ARTICLE III

CONTRIBUTIONS AND VESTING

     3.1    Tax-Deferred Contributions.

          (i)  Each Participant who is an Eligible Employee, so long as he remains a Participant, may
elect (via on-line election) to reduce and defer receipt pursuant to this Plan of his Compensation
by an amount equal to the excess of (a) a minimum of 1% and a maximum of 100% of his Compensation,
over (b) the amount of his Savings Plan Tax-Deferred Contributions for the Plan Year, if any, after
applicable taxes and deductions. The amount of deferral so elected shall be applied against and
reduce the Participant’s (x) salary (including commissions), (y) bonuses, or (z) salary, (including
commissions) and bonuses, earned during the Plan Year as elected by the Participant (via on-line
election).

          (ii)  Each Participant who is a Director, so long as he remains a Participant, may elect (on a
form furnished by the Committee and in accordance with Committee rules) to reduce and defer receipt
pursuant to this Plan of his Compensation by an amount equal to a minimum of 1% and a maximum of
100% of his Compensation.

          (iii)  A Participant’s election to participate in the Plan shall be effective on a Plan Year
basis, and must be made before the beginning of the Plan Year to which it relates, provided that,
with respect to any compensation deemed to be “performance-based” under Section 409A of the Code,
such election must be made by no later than six months before the end of the performance cycle.
Notwithstanding the foregoing, a newly eligible participant may elect to participate in the Plan
within 30 days following the date as of which he become an Eligible Employee or Director with
respect to compensation earned thereafter in the current Plan Year. The election of an Eligible
Employee to enroll in the Plan must be made via on-line election. The election of a Director to
enroll in the Plan must be made on a Participant Election and

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Enrollment Form. In either case, an enrollment election may not be amended or revoked during
the Plan Year to which it relates. The Employer shall withhold, by payroll deduction, the
Compensation deferred pursuant to this Section 3.1 from the current Compensation payments of a
Participant and credit such withheld amount to a Participant’s Tax-Deferred Contributions Account
under the Plan.

     3.2    Matching Contribution.

          (i)  For Participants who are Eligible Employees, and specifically excluding Participants who
are Directors, the Employer shall credit to the Participant’s Matching Contributions Account of
each such Participant who elects to make an eligible Tax-Deferred Contribution for the Plan Year an
amount equal to the excess, if any, of:

          (a)    the amount of the Savings Plan Matching Contribution that would have been credited to
such Participant’s Account under the Savings Plan if the Eligible Tax-Deferred Contributions had
been made into the Savings Plan, over

          (b)    the Savings Plan Matching Contributions actually allocated to such Participant’s
Account under the Savings Plan for the Plan Year.

     For purposes of this provision, the term “Eligible Tax-Deferred Contribution” shall mean the
Tax-Deferred Contributions made on behalf of the Participant for the Plan Year pursuant to Section
3.1(i).

          (ii)  Each Matching Contribution for each Participant shall be credited to the Participant’s
Account as of the end of the Accounting Period for which the Tax-Deferred Contribution is withheld,
or as soon as practicable thereafter. Each Matching Contribution shall be made in cash and shall
be invested according to the investment options selected by the Participant. Matching
Contributions prior to October 1, 2002 which were made in Company Stock may be exchanged in whole
or in part beginning July 1, 2003.

          (iii)  Participants who are Directors shall not be credited with Matching Contributions under
this Section 3.2.

     3.3    Vesting.

          (i)  A Participant’s interest in his Tax-Deferred Contributions Account shall be 100%
nonforfeitable at all times. A Participant’s interest in his Matching Contributions Account shall
become nonforfeitable and vest in accordance with the following schedule, based upon the number of
the Participant’s Years of Vesting Service as determined under the Savings Plan.

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	Number of Years	 	Vested Percentage of	 
	of Vesting Service	 	Participant’s Account	 
	Less than 2
	 	 	0	%
	2
	 	 	25	%
	3
	 	 	50	%
	4
	 	 	75	%
	5 or more
	 	 	100	%

     Notwithstanding the foregoing, a Participant’s vested percentage shall be 100% (a) if the
Participant’s employment with the Employer terminates due to Retirement, or by reason of the
Participant’s death or Disability, or (b) in the event that a Change of Control shall occur while
the Participant is an Employee of the Employer or an Affiliate.

          (ii)  The nonvested portion of a Participant’s Account that is forfeited shall not be
allocated to the Participant’s Account of any other Participant.

ARTICLE IV

INVESTMENT OF PARTICIPANT’S ACCOUNTS

     4.1    Investment. Amounts credited to a Participant’s Account shall be treated as if
they were actually invested in the Investment Funds selected by the Participant in accordance with
the Plan, and shall be credited with gains and losses allocable thereto at such times and in such
manner as shall be determined by the Committee. Each Director and Eligible Employee upon becoming
a Participant shall elect, upon enrollment, the portion of the Participant’s Account, in any whole
percentage multiples (or in such other proportions as the Committee may from time to time
determine), that are to be treated as if invested in each of the Investment Funds. A Participant
may, at such times and in such manner as shall be permitted by the Committee, change such election
as to the investment of his Participant’s Account. Sales of Company Stock in the event that there
is insufficient liquidity shall be governed by Schedule F of the Rabbi Trust Agreement dated as of
October 1, 2002 as follows:

          (i) Withdrawals and distributions will be aggregated and placed first in the hierarchy. If
Available Liquidity is sufficient for the aggregate of such transactions, all such withdrawals and
distributions will be honored. If Available Liquidity is not sufficient for the aggregate of such
transactions, then such transactions will be suspended, and no transactions requiring a sale of
Sponsor Stock Fund units shall be honored for that day.

     (ii) If Available Liquidity has not been exhausted by the aggregate of withdrawals and
distributions, then all remaining transactions involving a sale of units in the Sponsor Stock Fund
(exchanges out) shall be grouped on the basis of when such requests were received, in accordance
with standard procedures maintained by the Trustee for such grouping as

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they may be amended from time to time. To the extent of Available Liquidity, groups of
exchanges out of the Sponsor Stock Fund shall be honored, by group, on a “first in, first out”
basis. If Available Liquidity is insufficient to honor all exchanges out within a group, then none
of the exchanges out in such group shall be honored, and no exchanges out in a later group shall be
honored.

          (iii) Transactions not honored on a particular day due to insufficient Available Liquidity
shall be honored, using the hierarchy specified above, on the next business day on which there is
Available Liquidity.

ARTICLE V

DISTRIBUTIONS

     5.1    Fixed Date Distribution.

          (i)  Upon enrollment, a Participant may make an irrevocable election to receive a lump sum
payment of all of the deferral amount at a specific date in the future (the “Fixed Date
Distribution”). Provided, however, that each such Fixed Date Distribution shall be paid in a lump
sum and shall be paid as soon as practicable following the July 1 of the Plan Year designated by
the Participant that is at least two Plan Years after the Plan Year in which such deferral amount
is actually deferred.

          (ii)  Should an event occur that triggers a benefit under Section 5.2, any deferral amounts
that are subject to a Fixed Date Distribution election under this Section 5.1 shall not be paid in
accordance with Section 5.1 but shall be paid in accordance with the other applicable Section.
Except that while the Participant is receiving severance payments, Fixed Date Distributions that
may come due shall be paid.

     5.2    Distributions for Separation from Employment.

          (i)  Effective as of January 1, 2003, in the case of Disability, death or other termination of
employment or Board service (voluntary or involuntary), a Participant shall receive a distribution
from the Plan in a lump sum as soon as practicable following the January 1 immediately following
such Participant’s Separation from Employment or cessation of Board service. Provided that if the
Employee is a Key Employee at the time of such Separation from Employment, the lump sum payment may
not be made earlier than 6 months following the date of such Separation from Employment. Provided
further that if a Director is also an Employee or a Key Employee at the time of such cessation from
service from the Board, the distribution will be delayed until the Participant’s Separation from
Employment (or 6 months thereafter for Key Employees). If a participant has a rehire date prior to
December 31 of the year in which the separation of employment occurs, and the Participant is an
active employee on December 31, no distribution will be made the following January 1.

          (ii)  Notwithstanding the foregoing, effective as of January 1, 2003, each Participant shall
elect a method of receipt for distributions from the Plan upon Retirement upon

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enrollment. The distribution upon Retirement shall be made in a lump sum or in accordance
with the Participant’s most recent election on file with the Committee which is effective at least
one year prior to the date of the Participant’s Retirement. Such election shall indicate that the
Participant has chosen to receive either: (a) a lump sum as soon as practicable following the
January 1 immediately following the Participant’s Retirement, or (b) a minimum of 2, and a maximum
of 15, annual installments beginning as soon as practicable following the January 1 immediately
following the Participant’s Retirement. Each annual installment shall be equal to the value of the
vested portion of the Participant’s Account multiplied by a fraction, the numerator of which is 1
and the denominator of which is the number of installments remaining to be paid less any applicable
tax withholding. Distributions of amounts contributed to the Plan prior to January 1, 2003 shall be
made in accordance with the Participant’s most recent election on file with the Committee which is
effective at least one year prior to the Participant’s Separation from Employment or cessation of
Board service.

          (iii)  Notwithstanding the foregoing, effective as of January 1, 2005, if a Participant has
elected to receive payments in the form of installments, then he may not later elect to accelerate
the payment of any installment thereunder. In addition, effective as of January 1, 2005, if a
Participant desires to change an election to defer the payment of any benefit, then such election
must be made at least 1 year prior to Retirement and the distributions may not commence for at
least 5 years from the date the first payment would have been made but for such change.

          (iv)  If a Participant should die before distribution of the entire vested portion of the
Participant’s Account has been made to him, any remaining amounts, less applicable withholding
taxes, shall be distributed to the Participant’s Beneficiary in the same manner in which such
amounts otherwise would have been distributed to the Participant.

          (v)  Notwithstanding the foregoing provisions of this Section 5.2 or the provisions of Section
5.1, the remaining vested portion of a Participant’s Account, less applicable withholding taxes,
shall be distributed to the Participant or his Beneficiary, in a lump sum as soon as
administratively practicable following a Change of Control.

          (vi)  The value of a Participant’s Account, for purposes of determining the amount to be
distributed to the Participant or his Beneficiary, shall be determined as of the Accounting Date
immediately preceding the distribution or such other date as the Committee shall determine.

     5.3    Method of Distribution. Distribution of the Participant’s Account shall be
made in cash.

     5.4    Hardship Distributions. Upon the written request of a Participant and in the
event the Committee determines that an “unforeseeable emergency” has occurred with respect to a
Participant, the Participant may be allowed to (i) suspend any deferrals required to be made by the
Participant and/or (ii) receive a partial or full payment from the Plan as long as the amounts
distributed with respect to an emergency do not exceed the amounts necessary to satisfy such
emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the
distribution, after taking into account the extent to which such hardship is or may be relieved

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through reimbursement or compensation by insurance or otherwise or by liquidation of the
Participant’s assets (to the extent the liquidation of such assets wouldn’t itself cause severe
financial hardship). The payout shall not exceed the lesser of (i) the amount the Committee deems
to be necessary to meet the emergency or (ii) the Participant’s Account. For this purpose, an
“unforeseeable emergency” shall mean a severe financial hardship resulting from an illness or
accident of the Participant, the Participant’s spouse or a dependent (as defined in Section 152(a)
of the Code) of the Participant, loss of the Participant’s property due to casualty, or other
similar extraordinary and unforeseeable circumstances arising beyond the control of the
Participant. The need to pay a Participant’s child’s tuition to college and the desire to purchase
a home shall not be considered unforeseeable emergencies.

ARTICLE VI

ADMINISTRATION OF THE PLANS

     6.1    Administration by the Committee. The Committee shall be responsible for the
general operation and administration of the Plan and for carrying out the provisions thereof.

     6.2    General Powers of Administration. All provisions set forth in the Savings Plan
with respect to the administrative powers and duties of the Committee and procedures for filing
claims shall also be applicable with respect to the Plan. The Committee shall be entitled to rely
conclusively upon all tables, valuations, certificates, opinions and reports furnished by any
actuary, accountant, controller, counsel or other person employed or engaged by the Committee with
respect to the Plan. All expenses of administration relating to the Plan may be debited against
the Participant’s Account, in the same manner as expenses are charged to accounts under the Savings
Plan.

ARTICLE VII

AMENDMENT OR TERMINATION

     7.1    Amendment or Termination. The Company intends the Plan to be permanent but
reserves the right, by resolution of the Board or by action of any committee thereof, to amend or
terminate the Plan when, in the sole opinion of the Board or the committee, such amendment or
termination is advisable. Any such amendment or termination shall be made pursuant to a resolution
of the Board, or by action of a committee thereof, and shall be effective as of the date of such
resolution or action unless specifically provided otherwise.

     7.2    Effect of Amendment or Termination. No amendment or termination of the Plan
shall directly or indirectly reduce the balance of any Participant’s Account held hereunder as of
the effective date of such amendment or termination. Upon termination of the Plan, distribution of
amounts in the Participant’s Account shall be made to the Participant or his Beneficiary in the
manner and at the time described in Article V of the Plan. No additional credits of Tax Deferred
Contributions or Matching Contributions shall be made to the Participant’s Account for periods
after termination of the Plan, but the Committee shall continue to credit gains and losses to the
Participant’s Account, until the balance of such Participant’s Account has been fully distributed
to the Participant or his Beneficiary.

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ARTICLE VIII

GENERAL PROVISIONS

     8.1    Participant’s Rights Unsecured. The Plan shall be unfunded for tax purposes
and for purposes of Title I of ERISA. However, the Company may transfer assets to cover all or a
portion of the value of Participant Accounts in a trust for the benefit of the Participants which
such trust shall be subject to the rights of creditors of the Company. Although the value of each
Participant’s Account will be measured as if such Accounts were invested in the Investment Funds
selected by the Participant pursuant to the Plan, neither the Company nor any other Employer or the
trust shall be required to invest any assets in any Investment Funds, and if the Company or any
other Employer does in fact make any investments in any Investment Funds, the Participant or
Beneficiary shall have no rights in or claims against any such investments. The right of a
Participant or his designated Beneficiary to receive a distribution hereunder shall be an unsecured
claim against the trust and against the general assets of his Employer and the Company, and neither
the Participant nor a designated beneficiary shall have any rights in or against any specific
assets of the Company or any other Employer.

     8.2    No Guarantee of Benefits. Nothing contained in the Plan shall constitute a
guaranty by the Company or any other Employer or any other person or entity that the assets of the
Company or any other Employer will be sufficient to pay any benefit hereunder.

     8.3    Spendthrift Provision. No interest of any person or entity in, or right to
receive a distribution under, the Plan shall be subject in any manner to sale, transfer,
assignment, pledge, attachment, garnishment, or other alienation or encumbrance of any kind; nor
may such interest or right to receive a distribution be taken, either voluntarily or involuntarily
for the satisfaction of the debts of, or other obligations or claims against, such person or
entity, including claims in bankruptcy proceedings.

     8.4    Applicable Law. Except to the extent preempted by ERISA or other Federal law,
the Plan shall be construed and administered under the laws of the State of Florida.

     8.5    Indirect Payment of Benefits. If any Participant or his Beneficiary is, in the
judgment of the Committee, legally, physically or mentally incapable of personally receiving and
receipting for any payment due hereunder, payment may be made to the guardian or other legal
representative of such Participant or Beneficiary or, if none, to such person or institution who,
in the opinion of the Committee, is then maintaining or has custody of such Participant or
Beneficiary. Such payments shall constitute a full discharge with respect thereto.

     8.6    Notice of Address. Each person entitled to a benefit under the Plan must file
with the Employer or the Company, in writing, his post office address and each change of post
office address which occurs between the date of his termination of service with the Employer or the
Company and the date he ceases to be a Participant. Any communication, statement, or notice
addressed to such a person at his latest reported post office address will be binding upon him for
all purposes of the Plan and neither the Committee, the Company, nor the Employer shall be obliged
to search for or ascertain his whereabouts.

12

 

     8.7    Notices. Any notice required or permitted to be given hereunder to a
Participant or Beneficiary will be properly given if delivered or mailed, postage prepaid, to the
Participant or Beneficiary at his last post office address as shown on the Company’s or the
Employer’s records. Any notice to the Committee, the Company or the Employer shall be properly
given or filed upon receipt by the Committee, the Company or the Employer, as the case may be, at
such address as may be specified from time to time by the Committee.

     8.8    Waiver of Notice. Any notice required hereunder may be waived by the person
entitled thereto.

     8.9    Unclaimed Payments. If a Participant or his Beneficiary fails to apprise the
Committee of changes in the address of the Participant or Beneficiary, and the Committee is unable
to communicate with the Participant or Beneficiary at the address last recorded by the Committee
within five years after any benefit becomes due and payable from the Plan to the Participant or
Beneficiary, the Committee may mail a notice by registered mail to the last known address of such
person outlining the following action to be taken unless such person makes written reply to the
Committee within 60 days from the mailing of such notice: The Committee may direct that such
benefit and all further benefits with respect to such person shall be discontinued and all
liability for the payment thereof shall terminate.

     8.10    Employer-Employee Relationship. The establishment of this Plan shall not be
construed as conferring any legal or other rights upon any Employee or any person for a
continuation of employment, nor shall it interfere with the rights of an Employer to discharge any
Employee or otherwise act with relation to him. Each Employer may take any action (including
discharge) with respect to any Employee or other person and may treat him without regard to the
effect which such action or treatment might have upon him as a Participant of this Plan.

     8.11    Receipt and Release. Any final payment or distribution to any Participant,
his Beneficiary or his legal representative in accordance with this Plan shall be in full
satisfaction of all claims against the Committee, the Company, and the Employer; the Employer, the
Company, or the Committee may require a Participant, his Beneficiary or his legal representative to
execute a receipt and release of all claims under this Plan upon a final payment or distribution or
a receipt to the extent of any partial payment or distribution; and the form of any such receipt
and release shall be determined by the Employer, the Company or the Committee.

     8.12    Limitations on Liability. Notwithstanding any of the preceding provisions of
the Plan, neither the Company, the Committee, nor any individual acting as employee or agent of the
Company or the Committee shall be liable to any Participant, former Participant or other person for
any claim, loss, liability or expense incurred in connection with the Plan.

     8.13    Withholding of Taxes. The Employer shall have the right to make such
provisions as it deems necessary or appropriate to satisfy any obligations it may have to withhold
Federal, state or local income or other taxes incurred by reason of payments pursuant to the Plan.
In lieu thereof, the Employer shall have the right to withhold the amount of such taxes from any
other sums due or to become due from the Employer to the Participant upon such terms and conditions
as the Committee may prescribe.

13

 

     8.14    Severability of Provisions. If any provision of the Plan shall be held
invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions
hereof, and the Plan shall be construed and enforced as if such provisions had not been included.

     8.15    Miscellaneous. Words in the masculine gender shall include the feminine and
the singular shall include the plural, and vice versa, unless qualified by the context. Any
headings used herein are included for ease of reference only, and are not to be construed so as to
alter the terms hereof.

14Exhibit 10.83

 

EXHIBIT 10.83

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. The effective date of the
Plan is March 2, 2004, provided that the Plan is approved by shareholders of the Company prior to
the payment of any awards hereunder. 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”). 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 satisfied. 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

37

 

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 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 in the Company’s qualified pension
plan for employees), 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.

          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. Persons who become Participants after the first day of a Performance Period shall not be
eligible to participate in the Profit Sharing Plan from the date they become a Participant in the
Plan; however, such Participant shall be entitled to a pro rata portion of the benefit, if any, to
which they 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 they became Participant in the 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.

          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

38

 

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 that 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
satisfied.

          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 Plan Year for which the Individual Incentive
Target is being assigned and which shall establish the amount of cash compensation

39

 

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 satisfied 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 as promptly as reasonably practicable following the end of such
Performance Period and 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.

40

 

     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. Participants may elect to defer all or a portion (in
whole percentages) of their Company Incentive Award and Individual Incentive Award, in accordance
with the terms of a deferral agreement entered into between the Participant and the Company;
provided that such election to defer must be made prior to the commencement of the Plan Year to
which such Incentive Award relates. No amount in excess of the amount of the Company or Individual
Incentive Awards 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 elected by the
Participant, such that the amount payable will be based on the actual rate of return of a specific
investment (including any decrease as well as any increase in the value of an investment).

          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; provided, further, that in the event any partial Company or Individual Incentive
Awards are payable, such amounts shall be paid as soon as practicable following termination of the
Plan in the form and subject to any restrictions determined by the Committee in its sole
discretion. 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. 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”).

          Section 8.05. 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 8.06. 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 8.07. 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.

41

 

          Section 8.08. 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 8.09. 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. 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.

* * *

42

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