Document:

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                    EXHIBIT 10.4 - ERIE INSURANCE COMPANY AND
                       ERIE INSURANCE COMPANY OF NEW YORK
                               ERIE, PENNSYLVANIA

                 AGGREGATE EXCESS OF LOSS REINSURANCE CONTRACT

This REINSURANCE CONTRACT is made between ERIE INSURANCE EXCHANGE, by and
through its Attorney-in-Fact, ERIE INDEMNITY COMPANY, of Erie, Pennsylvania
(hereafter called the "REINSURER"), and ERIE INSURANCE COMPANY and its wholly
owned subsidiary ERIE INSURANCE COMPANY OF NEW YORK, both of Erie, Pennsylvania
(herein referred to collectively (or individually as the context requires) as
the "COMPANY").

In consideration of the agreements and mutual promises contained herein, the
parties hereby agree that this Reinsurance Contract covers 95% of the Ultimate
Net Loss for each Annual Period, as herein provided and specified, which may
accrue to the COMPANY under all policies, contracts, and binders of insurance
and reinsurance as respects coverages classified by the COMPANY as Property and
Casualty as a result of any loss or losses thereunder occurring each Annual
Period during the term of this Reinsurance Contract, subject to the following
terms and conditions:

ARTICLE 1 - Term

This Reinsurance Contract shall commence on the first day of January, 1998, and
shall remain in force thereafter until cancelled in accordance with Article 18.

"Annual Period", as used herein, shall mean the period from January 1 to
December 31, both days inclusive, of any calendar year.

ARTICLE 2 - Retention and Limit

No claim shall be made hereunder unless the COMPANY'S total Ultimate Net Losses,
as herein defined, incurred during any Annual Period covered hereunder exceed an
amount equal to 72.5% of the COMPANY'S Net Premiums, as herein defined, earned
during that Annual Period of this Reinsurance Contract. The REINSURER shall then
be liable for 95% of the amount of such excess up to, but not exceeding, an
amount equal to 95% of 15% of the COMPANY'S Net Premium earned during that
Annual Period.

It is understood and agreed that losses equal to 5% of the Ultimate Net Loss in
excess of the retentions hereunder, shall be retained net by the COMPANY for its
own account.
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ARTICLE 3 - Definition of Ultimate Net Loss

The term "Ultimate Net Loss" shall mean the liabilities incurred during any
Annual Period by the COMPANY under insurance or reinsurance agreements,
contracts, policies, certificates, binders, endorsements or agreements of
insurance or reinsurance and shall include those liabilities of the COMPANY
incurred during any Annual Period under that certain Reinsurance Pooling
Agreement between Erie Insurance Exchange, Erie Insurance Company and Erie
Insurance Company of New York effective January 1, 1995 ("Reinsurance Pooling
Agreement") as it currently exists or may hereafter be amended, except that
"Ultimate Net Loss" as used herein shall not include unallocated loss adjustment
expenses incurred by the Company.

Nothing in this Article shall be construed to mean that losses are not
recoverable hereunder until the COMPANY'S Ultimate Net Loss has been
ascertained.

ARTICLE 4 - Definition of Net Premiums

The term "Net Premiums" shall mean direct premiums, less return premiums,
received by the COMPANY during any Annual Period under insurance or reinsurance
agreements, contracts, policies, certificates, binders, endorsements, or
agreements of insurance or reinsurance, and shall include the COMPANY'S
respective share of the premiums received under the Reinsurance Pooling
Agreement as it currently exists or may hereafter be amended, less premiums for
all reinsurances inuring to the benefit of this Reinsurance Contract without
deduction of dividends declared, paid, or credited to policyholders.

ARTICLE 5 - Underwriting Warranty

It is warranted by the COMPANY that it will not knowingly retain net liability
in excess of the following respective amounts:

<TABLE>
<S>                              <C>
Property coverages:              $10,000,000 as respects any one risk.

Casualty coverages:              $5,000,000 as respects any one policy other than Workers'
                                 Compensation policies.
</TABLE>

It is understood that the COMPANY shall be the sole judge of what constitutes
any one risk as respects property coverages and any one policy as respects
casualty coverages.

ARTICLE 6 - Net Retained Liability

This Reinsurance Contract shall apply only to that portion of any insurance or
reinsurance which the COMPANY retains net for its own account during any Annual
Period, and in calculating the amount of any loss hereunder, and also in
computing the amount in excess of which this Reinsurance

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Contract attaches, only loss or losses in respect to that portion of any
insurance or reinsurance which the COMPANY retains net for its own account shall
be included. It is, however, understood and agreed that the amount of the
REINSURER'S liability during any Annual Period hereunder in respect to any loss
or losses shall not be increased by reason of the inability of the COMPANY to
collect from any other reinsurers, whether specific or general, any amounts
which may have become due from them, whether such inability arises from the
insolvency of such other reinsurers or otherwise.

ARTICLE 7 - Quota Share Reinsurance

Unless otherwise specially agreed, it is understood that, in the event the
COMPANY cedes reinsurance on a quota share or portfolio basis, the provisions of
this Reinsurance Contract shall apply as if such reinsurance had not been
effected.

ARTICLE 8 - Notice of Loss

In the event of a claim arising hereunder, notice shall be given to Erie
Insurance Exchange, 100 Erie Insurance Place, Erie, Pennsylvania, 16530-0001, to
the attention of the Managing Director of Reinsurance as soon as practicable.

ARTICLE 9 - Loss Settlements

All loss settlements made by the COMPANY, providing the same are within the
terms of this Reinsurance Contract, shall be unconditionally binding upon the
REINSURER, and amounts falling to the share of the REINSURER shall be payable by
it upon reasonable evidence of the amount due or to be due being given by the
COMPANY.

Should the COMPANY'S Ultimate Net Losses incurred during any Annual Period
covered hereunder exceed, at any time during that Annual Period, an amount equal
to 72.5% of the Net Premiums earned through that period of time, it is
understood and agreed that, at the option of the COMPANY, 95% of such excess and
95% of all such additional Ultimate Net Losses occurring thereafter will be paid
by the REINSURER, subject to a limit of 95% of 15% of the Net Premiums earned as
respects any losses occurring during that Annual Period. Any such payment shall
be subject to adjustment in accordance with the provisions of Article 3 after
the REINSURER'S ultimate liability hereunder has been determined.

ARTICLE 10 - Governing Law; Jurisdiction

Subject to "Article 15 - Arbitration", if the REINSURER fails to pay any amount
claimed to be due hereunder, the REINSURER, at the request of the COMPANY, will
submit to the jurisdiction of a court of competent jurisdiction within the
United States. Nothing in this clause constitutes or should

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be understood to constitute a waiver of the REINSURER'S rights to commence an
action in any court of competent jurisdiction in the United States, to remove an
action to a United States District Court, or to seek a transfer of a case to
another court as permitted by the laws of the United States or of any state in
the United States.

It is further agreed that service of process in such suit may be made upon the
REINSURER, and that the reinsurer will abide by the final decision of such court
or of any appellate court in the event of an appeal.

Further, pursuant to any statute of any state, territory, or district of the
United States which makes provision therefor, the REINSURER hereby designates
the Superintendent, Commissioner, or Director of Insurance, or other officer
specified for that purpose in the statute, or his successor or successors in
office, as its true and lawful attorney upon whom may be served any lawful
process in any action, suit, or proceeding instituted by or on behalf of the
COMPANY or any beneficiary hereunder arising out of this Reinsurance Contract,
and hereby authorizes the said officer to mail such process, or a true copy
thereof, to the COMPANY.

ARTICLE 11 - Insolvency

In the event of insolvency of the COMPANY, the reinsurance under this
Reinsurance Contract shall be payable by the REINSURER to the COMPANY or to its
liquidator, receiver, or statutory successor, on the basis of the liability of
the COMPANY under the policy or policies reinsured without diminution because of
the insolvency of the COMPANY.

It is further agreed that the liquidator, or receiver, or statutory successor of
the COMPANY, shall give written notice to the REINSURER of the pendency of any
claim against the COMPANY on the policies reinsured within a reasonable time
after such claim is filed in the insolvency proceeding, and that, during the
pendency of such claim, the REINSURER may investigate such claim and interpose,
at their own expense, in the proceeding where such claim is to be adjudicated,
any defense or defenses which they may deem available to the COMPANY or to its
liquidator, or receiver, or statutory successor. The expense thus incurred by
the REINSURER shall be chargeable, subject to court approval, against the
COMPANY as part of the expense of liquidation to the extent of a proportionate
share of the benefit which may accrue to the COMPANY solely as a result of the
defense undertaken by the REINSURER.

ARTICLE 12 - Premium

The premium for this reinsurance shall be 1.01% of the subject Net Premiums
earned by the COMPANY during any Annual Period this Reinsurance Contract remains
in force, and shall be subject to a minimum premium of $800,000 for each Annual
Period.

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The COMPANY shall pay to the REINSURER a deposit premium of $900,000 for each
Annual Period which shall be payable in equal installments of $450,000 each on
the first days of January and July during the period this Reinsurance Contract
remains in force. Final adjustment of the premium for each Annual Period
hereunder shall be made as soon as may be reasonably practicable after
expiration of that Annual Period.

ARTICLE 13 - Premium and Loss Payments

Premiums shall be payable directly to the REINSURER and losses shall be paid
directly to the COMPANY in United States currency.

ARTICLE 14 - Access to Records

The REINSURER, by its duly appointed representative, shall have the right, at
any reasonable time, to examine all papers in the possession of the COMPANY
referring business effected hereunder.

ARTICLE 15 - Arbitration

Except as provided in "Article 16 - Loss Commutation", should an irreconcilable
difference of opinion arise between the COMPANY and the REINSURER as to the
interpretation or payment under this Reinsurance Contract, it is hereby mutually
agreed that, as a condition precedent to any right of action hereunder, such
difference, upon the written request of either party, shall be submitted to
arbitration, one arbitrator to be chosen by the COMPANY, one by the REINSURER,
and an umpire to be chosen by the two arbitrators before they enter upon
arbitration.

In the event that either party should fail to choose an arbitrator within sixty
days following a written request by the other party to enter upon arbitration,
the requesting party may choose two arbitrators who shall in turn choose an
umpire before entering upon arbitration. If the arbitrators have not chosen an
umpire at the end of ten days following the last day of the selection of the two
arbitrators, each of the arbitrators shall name three, of whom the other
declines two, and the decision shall be made of the remaining two by drawing
lots. The arbitrators and the umpire shall be active or retired disinterested
officers of insurance or reinsurance companies or Underwriters at Lloyd's,
London, not under the control of either party to this Reinsurance Contract. Each
party shall present its case to the arbitrators within sixty days following the
date of their appointment.

The decision, in writing, of the arbitrators shall be final and binding upon
both parties as to questions of fact, but failing to agree, they shall call in
the umpire and the decision of the majority shall be final and binding as to
questions of fact upon both parties. Judgment upon the award rendered may be
entered in any court having jurisdiction. Each party shall bear the expense of
its own arbitrator and shall jointly and equally bear with the other the expense
of the umpire and of the arbitration.

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In the event that the two arbitrators are chosen by one party, as above
provided, the expense of the arbitrators, the umpire, and the arbitration shall
be equally divided between the two parties.

Any such arbitration shall take place at Erie, Pennsylvania, unless some other
location is mutually agreed upon by the two parties in interest.

ARTICLE 16 - Loss Commutation

Sixty months after expiration of each Annual Period, the COMPANY and the
REINSURER agree to commute any unpaid net losses recoverable applicable to that
Annual Period.

The COMPANY shall submit a statement of valuation of the net losses recoverable
showing the elements considered reasonable to establish the net losses to be
commuted. The COMPANY and the REINSURER shall agree upon the capitalized value
of such losses and the REINSURER shall pay to the COMPANY the amount so
determined. Payment by the REINSURER of the capitalized value of such losses
shall constitute a complete and final release of the REINSURER'S liability in
respect of such losses for that Annual Period.

If the COMPANY and the REINSURER fail to agree on the capitalized value of such
losses within sixty days of receipt of the statement of valuation, then any
difference shall be settled by a panel of three Actuaries or Appraisers, one to
be chosen by each party and the third by the two so chosen. If either party
refuses or neglects to appoint an Actuary or Appraiser within sixty days after
the request in writing that the difference be settled by a panel of three
Actuaries or Appraisers, the other party may appoint two Actuaries or
Appraisers. If the two Actuaries or Appraisers fail to agree on the selection of
a third Actuary or Appraiser within thirty days of their appointment, then each
of them shall name two, one of whom the other shall decline and the
determination of the Actuary or Appraiser shall be made by drawing lots. All the
Actuaries or Appraisers shall be regularly engaged in the valuation of claims
subject to the provisions of this Article 16 - Commutation. None of the
Actuaries or Appraisers shall be under the control of either party to this
Reinsurance Contract nor shall they have any interest in the net losses being
commuted other than that which is required to fulfill their obligations
hereunder.

Each party shall submit its case to its Actuary or Appraiser within thirty days
of the appointment of the third Actuary or Appraiser. The decision in writing of
any two Actuaries or Appraisers, when filed with the COMPANY and the REINSURER,
shall be final and binding on both parties. The expense of the Actuaries or
Appraisers and of the Commutation shall be equally divided between the COMPANY
and the REINSURER. Said Commutation shall take place in Erie, Pennsylvania,
unless some other place is mutually agreed upon by the COMPANY and the
REINSURER. The term "capitalized value" as used herein shall mean the estimated
value of all future payments hereunder, excluding any provision for incurred but
not reported losses, reduced to present value at

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an agreed upon rate of interest to be determined at the time of commutation or
the prime rate, whichever is less.

ARTICLE 17 - Extended Expiration

Should this Reinsurance Contract terminate while a loss occurrence covered
hereunder is in progress, it is understood and agreed that, subject to the other
conditions of this Reinsurance Contract, the REINSURER shall be responsible for
their proportion of the entire loss or damage caused by such occurrence.

ARTICLE 18 - Termination

Either party may terminate this Reinsurance Contract at any December 31, by
giving the other party not less than 30 days prior written notice.

ARTICLE 19 - Singular Contains the Plural

In interpretation of this Reinsurance Contract, the singular includes the plural
and the plural includes the singular, should the context so require to give full
force and effect to the intent of the parties and the provisions hereunder.

ARTICLE 20 - Notice of Default; Cure

In the event of a default of any of the terms of this Reinsurance Contract,
notice of the default shall be given and the party against which a default is
alleged shall have fifteen days in which to cure such default, prior to any
action being taken hereunder.

ARTICLE 21 - Notices

Notice to REINSURER shall be given at the following address or at any address
specified in writing by REINSURER:

                                        Erie Insurance Exchange
                                        100 Erie Insurance Place
                                        Erie, PA  l6530

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Notice to COMPANY shall be given at the following addresses or at any addresses
specified in writing by COMPANY:

<TABLE>
<S>                                   <C>
     Erie Insurance Exchange          Erie Insurance Company of New York
     100 Erie Insurance Place         175 Corporate Woods,
     Erie, PA  l6530                  Suite 100
                                      Rochester, NY 14623
</TABLE>

Notice is effective when given in writing, upon personal delivery, or sent
postage pre-paid by regular mail, Federal Express or similar service, telex or
telecopier to the address specified herein.

ARTICLE 22 - Amendments

This Reinsurance Contract may be altered or amended in any of its terms and
conditions by the written mutual consent of the parties, and such amendment
shall be considered as part of this Reinsurance Contract.

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ARTICLE 23 - Binding Effect

The provisions of this Reinsurance Contract shall be binding on both parties and
their respective heirs, legal representatives, successors and assigns, binding
any receivers, trustees or other fiduciaries appointed in any federal state
insolvency proceeding or federal bankruptcy case.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives.

In Erie, Pennsylvania, this 31st day of August, 1998.

ATTEST:                                    ERIE INSURANCE COMPANY

/s/ Mark Torok                             /s/ Jan R. Van Gorder
-------------------------------            ----------------------------------
Mark Torok                                 Jan R. Van Gorder

                                           ERIE INSURANCE COMPANY OF NEW YORK
ATTEST:

/s/ Mark Torok                             /s/ Philip A. Garcia
-------------------------------            ----------------------------------
Mark Torok                                 Philip A. Garcia

                                           ERIE INSURANCE EXCHANGE, by ERIE
ATTEST:                                    INDEMNITY COMPANY, Attorney-in-Fact

/s/ Maureen Sidelinger                     /s/ Michael S. Zavasky
-------------------------------            ----------------------------------
Maureen Sidelinger                         Michael S. Zavasky

                                       9<PAGE>

                                  EXHIBIT 10.5

                              Erie Insurance Group

                          RETIREMENT PLAN FOR EMPLOYEES

               As Amended and Restated Effective December 31, 2000

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                                       <C>
ARTICLE I - INTRODUCTION..................................................................................1
ARTICLE II - DEFINITIONS
       2.1   "Accrued Pension"............................................................................2
       2.2   "Actuary"....................................................................................2
       2.3   "Administrator"..............................................................................2
       2.4   "Affiliate"..................................................................................2
       2.5   "Anniversary Date"...........................................................................2
       2.6   "Annuity Starting Date"......................................................................2
       2.7   "Beneficiary"................................................................................3
       2.8   "Board of Directors" or "Board"..............................................................3
       2.9   "Code".......................................................................................3
       2.10  "Company"....................................................................................3
       2.11  "Compensation"...............................................................................3
       2.12  "Covered Employee"...........................................................................4
       2.13  "Credited Service"...........................................................................4
       2.14  "Date of Hire"...............................................................................4
       2.15  "Date of Severance"..........................................................................4
       2.16  "Earliest Retirement Age"....................................................................5
       2.17  "Effective Date".............................................................................5
       2.18  "Employee"...................................................................................5
       2.19  "Employer(s)"................................................................................5
       2.20  "ERISA"......................................................................................5
       2.21  "Final Average Earnings".....................................................................5
       2.22  "Highly Compensated".........................................................................5
       2.23  "Hour of Service"............................................................................6
       2.24  "Leased Employee"............................................................................7
       2.25  "Maternity or Paternity Absence".............................................................7
       2.26  "Normal Retirement Age"......................................................................8
       2.27  "Normal Retirement Date".....................................................................8
       2.28  "Participant"................................................................................8
       2.29  "Period of Severance"........................................................................8
       2.30  "Plan" or "Pension Plan".....................................................................8
       2.31  "Plan Year"..................................................................................8
       2.32  "Service"....................................................................................8
       2.33  "Social Security Covered Compensation".......................................................9
       2.34  "Test Compensation"..........................................................................9
       2.35  "Top Paid Group".............................................................................9
       2.36  "Total and Permanent Disability".............................................................10
       2.37  "Trust Agreement"............................................................................10
</TABLE>

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<TABLE>
<S>                                                                                                       <C>
2.38 "Trustee"............................................................................................10
2.39 "Trust Fund" or "Fund"...............................................................................10

ARTICLE III - ADMINISTRATION OF THE PLAN
       3.1   Pension Administrator........................................................................11
       3.2   Powers.......................................................................................11
       3.3   Delegation of Duties.........................................................................13
       3.4   Administrator as Named Fiduciary.............................................................13
       3.5   Conclusiveness of Various Documents..........................................................13
       3.6   Actions to be Uniform........................................................................14
       3.7   Liability and Indemnification................................................................14
       3.8   Claims Review Procedure......................................................................14
       3.9   Waiver of Participation......................................................................16

ARTICLE IV - SERVICE PROVISIONS
       4.1   Service......................................................................................17
       4.2   Credited Service.............................................................................17
       4.3   Loss and Reinstatement of Service............................................................17
       4.4   Transfer to Other Employment.................................................................18
       4.5   Transfer From Other Employment...............................................................18

ARTICLE V - ELIGIBILITY FOR PENSIONS
       5.1   Normal Retirement............................................................................19
       5.2   Early Retirement.............................................................................19
       5.3   Disability Retirement........................................................................19
       5.4   Vesting......................................................................................20

ARTICLE VI - AMOUNT OF PENSION
       6.1   Normal Retirement Pension....................................................................21
       6.2   Early Retirement Pension.....................................................................21
       6.3   Disability Retirement Pension................................................................21
       6.4   Deferred Pension Upon Termination of Service.................................................22
       6.5   Increases in Pension for Certain Retired Participants........................................23
       6.6   Offset of Accruals by Plan Distributions.....................................................23
       6.7   Non-Duplication of Benefits..................................................................23
       6.8   Special Provisions Pertaining to Section 401(a)(17) Employees................................24

ARTICLE VII - COMMENCEMENT AND DURATION OF PENSIONS
       7.1   Normal and Early Retirement Pensions.........................................................25
       7.2   Disability Retirement Pension................................................................25
       7.3   Deferred Vested Pension......................................................................26
       7.4   Reemployment of a Retired Participant........................................................26
       7.5   Automatic Surviving Spouse's Pension.........................................................27
       7.6   Requirement for Spouse Consent...............................................................30
       7.7   Optional Forms of Pensions...................................................................30
       7.8   Payment of Small Pension.....................................................................32
</TABLE>

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<TABLE>
<S>                                                                                                       <C>
       7.9   Repayment of Cashout on Reemployment.........................................................33
       7.10  Delay in Commencement of Pension Payments....................................................34
       7.11  Direct Rollover of Eligible Rollover Distributions...........................................35
       7.12  Change to Pension Payments in Connection with Qualifying Event...............................36

ARTICLE VIII - DEATH BENEFITS
       8.1   Death Prior to Retirement or Severance.......................................................41
       8.2   Death Prior to Commencement of Early or Disability Pensions..................................41
       8.3   Death Prior to Commencement of Vested Pensions...............................................42
       8.4   Effect of Valid 100% Joint and Survivor Election.............................................43
       8.5   Death On or After Annuity Starting Date......................................................43
       8.6   Death Benefit for Vested Participants Who Terminated
             After September 1, 1974 and Prior to August 23, 1984.........................................43

ARTICLE IX - TRUST FUND AND THE TRUSTEE
       9.1   Trust Fund...................................................................................45
       9.2   Irrevocability...............................................................................45
       9.3   Contributions by the Company.................................................................45
       9.4   Contributions by Participants................................................................46
       9.5   Benefits Payable Only From Trust Fund........................................................47
       9.6   Plan Expenses................................................................................47

ARTICLE X - BENEFIT LIMITATIONS
       10.1  Maximum Limitation Under Section 415(b) of the Code..........................................48
       10.2  Defined Benefit Plan and Defined Contribution Plan
             Combined Limitation..........................................................................51

ARTICLE XI - MISCELLANEOUS PROVISIONS
       11.1  Plan Non-Contractual.........................................................................53
       11.2  Non-Alienation of Retirement Rights or Benefits..............................................53
       11.3  Payment of Pension to Others.................................................................54
       11.4  Prohibition Against Reversion................................................................54
       11.5  Merger, Transfer of Assets or Liabilities....................................................54
       11.6  Actuarial Equivalence........................................................................55
       11.7  Change of Vesting Schedule...................................................................55
       11.8  Controlled Group.............................................................................56
       11.9  Severability.................................................................................56
       11.10 Employer Records.............................................................................56
       11.11 Application of Plan Provisions...............................................................56
       11.12 Missing Participants.........................................................................56
       11.13 IRC 414(u) Compliance Provision..............................................................57

ARTICLE XII - AMENDMENT AND TERMINATION
       12.1  Amendment and Termination of the Plan........................................................58
       12.2  Administration of the Plan in Case of Termination............................................58
       12.3  Internal Revenue Service Limitations.........................................................59
</TABLE>

                                       iii
<PAGE>
<TABLE>
<S>                                                                                                       <C>
ARTICLE XIII - TOP-HEAVY PROVISIONS
       13.1  General......................................................................................60
       13.2  Definitions Relating to Top-Heavy Provisions.................................................60
       13.3  Top-Heavy Plan Vesting Requirements..........................................................62
       13.4  Top-Heavy Plan Minimum Benefit Requirements..................................................63
       13.5  Required Adjustments.........................................................................64
       13.6  Limited Application of this Article..........................................................65

ARTICLE XIV - JURISDICTION
       14.1  Jurisdiction.................................................................................66
</TABLE>

                                       iv
<PAGE>
                              Erie Insurance Group

                          RETIREMENT PLAN FOR EMPLOYEES
                           Effective December 31, 1946

               As Amended and Restated Effective December 31, 2000

                                    ARTICLE I

                                  INTRODUCTION

      The Erie Insurance Group adopted a Retirement Plan, effective December 31,
1946. Such Plan, which has been heretofore amended from time to time by action
of the Board of Directors in accordance with the provisions of the Plan, is
herein amended and restated.

This amendment and restatement of the Plan shall constitute an amendment,
restatement and continuation of the Plan. This amendment and restatement is
generally effective December 31, 2000. However, certain provisions of this
amendment and restatement are effective as of some other date. The provisions of
this amendment and restatement with stated effective dates prior to December 31,
2000 shall be deemed to amend the corresponding provisions, if any, of the Plan
as in effect before this amendment and restatement and all amendments thereto as
of such dates. Events occurring before the applicable effective date of any
provision of this amendment and restatement shall be governed by the applicable
provision of the Plan as in effect on the date of the event. The object of the
Plan is to provide retirement pensions for eligible employees.

                                       1
<PAGE>
                                   ARTICLE II

                                   DEFINITIONS

For the purposes of this Retirement Plan for Employees, the following words and
phrases shall have the following meanings unless a different meaning is clearly
required by the context. Any terms herein used in the masculine shall be read
and construed in the feminine where they would so apply, and any terms used in
the singular shall be read and construed in the plural if again so applicable.

2.1   "Accrued Pension" shall mean a pension amount determined with respect to a
      Participant in accordance with Section 6.2(a) of the Plan using the date
      of determination for the date of early retirement.

2.2   "Actuary" shall mean the actuary or firm of actuaries chosen by, but
      independent of the Company, who is, or in the case of a firm one or more
      of whose members is, an enrolled actuary under the provisions of Section
      3042 of the Employee Retirement Income Security Act of 1974.

2.3   "Administrator" shall mean the Pension Administrator appointed by the
      Board under the provisions of Article III of the Plan.

2.4   "Affiliate" means any other employer which, together with the Company, is
      a member of a controlled group of corporations or of a commonly controlled
      trade or business (as defined in Code Sections 414(b) and (c) and as
      modified, where appropriate, by Code Section 415(h)) or of an affiliated
      service group (as defined in Code Section 414(m)) or other organization
      described in Code Section 414(o). Each such Affiliate shall be treated as
      an Affiliate only during such period as it is or was an Affiliate as
      defined above.

2.5   "Anniversary Date" shall mean any December 31 occurring after the
      Effective Date.

2.6   "Annuity Starting Date" shall mean the first day of the first period for
      which an amount is received as an annuity (whether by reason of retirement
      or other termination of Service). A Participant whose benefit is suspended
      under any provision of the Plan shall be deemed not to have reached his
      Annuity Starting Date until such benefit again

                                       2
<PAGE>
      becomes payable. The Annuity Starting Date for a benefit payable under
      Section 7.10 shall be the applicable date described therein.

2.7   "Beneficiary" shall mean any person who, by reason of a designation made
      by a Participant, is or will be entitled to receive any amount or benefit
      hereunder upon the death of such Participant.

2.8   "Board of Directors" or "Board" shall mean the Board of Directors of the
      Company.

2.9   "Code" shall mean the Internal Revenue Code of 1986, as amended.

2.10  "Company" shall mean Erie Indemnity Company, a corporation organized and
      existing under the laws of Pennsylvania.

2.11  "Compensation" for any period shall mean the aggregate amount of base
      salary received by a Covered Employee from the Employers during the
      period. For this purpose, "base salary" shall exclude overtime
      compensation, bonuses, and commissions, but shall include compensation
      excluded from W-2 income because of salary reduction agreements in
      connection with plans described in Section 125, 401(k), or, for periods on
      and after January 1, 2001, 132(f)(4) of the Code, or resulting from
      annuity or deferred compensation contracts. Effective for each Plan Year
      beginning on and after December 31, 1989, in no event shall the amount of
      Compensation taken into account under the Plan exceed the adjusted annual
      limitation permitted under Section 401(a)(17) of the Code for such Plan
      Year. Such adjusted annual limitation shall be, for each Plan Year
      beginning on and after December 31, 1989 and prior to December 31, 1994,
      $200,000 as adjusted for such year in the same manner as under Section
      415(d) of the Code and, for each Plan Year beginning on and after December
      31, 1994, $150,000 as adjusted for such year as provided under Section
      401(a)(17)(B) of the Code. However, with respect to the determination of a
      retirement pension or Accrued Pension for the 1993 Plan Year, the adjusted
      annual limitation for the 1993 Plan Year will be assumed to apply to all
      prior years.

      For Plan Years beginning before January 1, 1997, in determining the
      Compensation of a Covered Employee for purposes of the foregoing annual
      limitation, the rules aggregating certain family members (as set forth in
      Section 2.22) shall apply, except that in applying such rules, the term
      "family" shall include only the spouse of the

                                       3
<PAGE>
      Covered Employee and any lineal descendent of the Covered Employee who has
      not attained age 19 before the end of the calendar year. If, as a result
      of the family aggregation rules, the adjusted annual limitation is
      exceeded, then the limitation shall be prorated among the family members
      in proportion to each individual's Compensation as determined under this
      paragraph without regard to the adjusted annual limitation.

2.12  "Covered Employee" shall mean any Employee of an Employer, excluding:

      (a)   any such Employee whose employment is governed by the terms of a
            collective bargaining agreement under which retirement benefits were
            the subject of good faith bargaining,

      (b)   any such Employee who has voluntarily waived participation in the
            Plan, and

      (c)   any such Employee who is compensated on an hourly basis.

      Notwithstanding any provision of the Plan to the contrary, an individual
      who an Employer determines to be a contract employee, independent
      contractor, leased employee (including a Leased Employee as defined
      hereunder), leased owner, leased manager, shared employee or person
      working under a similar classification shall not become a Covered Employee
      hereunder, regardless of whether any such individual is ultimately
      determined to be a common law employee, unless and until the Employer
      shall otherwise determine.

2.13  "Credited Service" shall mean a Participant's service determined in
      accordance with Article IV hereof for the purpose of calculating the
      amount of benefit earned under the Plan.

2.14  "Date of Hire" shall mean the date on which an Employee first commences
      employment or reemployment and works at least one Hour of Service for an
      Employer or an Affiliate.

2.15  "Date of Severance" shall mean the earliest to occur of the following
      dates:

      (a)   date of retirement,

      (b)   date of voluntary employment termination,

      (c)   date of discharge by an Employer unless he is subsequently
            reemployed and given pay back to the date of discharge,

      (d)   date of death,

                                       4
<PAGE>
      (e)   the first anniversary of a date of absence from active employment
            for any other reason; provided, however, that the second anniversary
            of a date of absence from active employment shall be used for an
            Employee who is absent by reason of a Maternity or Paternity Absence
            which commenced on or after December 31, 1985, or who is absent by
            reason of Total and Permanent Disability.

      An Employee shall not incur a Date of Severance while he is in the active
      service of the United States Armed Forces if his reemployment rights are
      protected by law.

2.16  "Earliest Retirement Age" shall mean the earliest date on which, under the
      Plan, the Participant could elect to receive retirement benefits in
      accordance with Section 5.1 or 5.2 hereof.

2.17  "Effective Date" shall mean December 31, 1946.

2.18  "Employee" shall mean any common-law employee of an Employer or an
      Affiliate; provided, however, that for purposes of Section 2.22;
      "Employee" shall include any self-employed individual performing services
      for an Employer or Affiliate who is treated as an employee under Section
      401(c)(1) of the Code.

2.19  "Employer(s)" shall mean the Company, Erie Family Life Insurance Company,
      Erie Insurance Exchange, Erie Insurance Company, EI Holding Corp., EI
      Service Corp., Erie Insurance Company of New York, Erie Insurance Property
      & Casualty Company, Flagship City Insurance Company and any other
      Affiliate which may adopt this Plan.

2.20  "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
      amended.

2.21  "Final Average Earnings" shall mean 1/36th of the aggregate Compensation
      received during the thirty-six consecutive calendar months as a Covered
      Employee which produces the greatest aggregate Compensation out of the one
      hundred twenty calendar month period ending on the earlier of the date on
      which the Participant retires or terminates employment with the Employers
      or the date on which the Participant is no longer considered a Covered
      Employee.

2.22  "Highly Compensated" shall mean, for years beginning on and after January
      1, 1997, any Employee who is a more than five percent (5%) owner of an
      Employer or both

                                       5
<PAGE>
      earned $80,000 or more in Test Compensation from the Employer in the prior
      Plan Year (the "lookback year") and was member of the Top Paid Group for
      such year; provided, however, that such $80,000 figure shall be adjusted
      for cost of living at the same time and in the same manner as determined
      under Code Section 415(d). For years beginning before January 1, 1997,
      "Highly Compensated" shall mean any Employee who meets any of the
      following requirements in either the lookback year or the current Plan
      Year (the "determination year"):

      (a)   is a more than five percent (5%) owner of an Employer;

      (b)   earns $75,000 or more in Test Compensation;

      (c)   earns $50,000 or more in Test Compensation and is member of the Top
            Paid Group;

      (d)   is an officer of an Employer (as described in Section 416(i) of the
            Code) who earns Test Compensation of more than fifty percent (50%)
            of the amount in effect under Section 415(b)(1)(A) of the Code for
            such year; or

      (e)   is a former Employee who was Highly Compensated upon separation from
            service prior to the determination year, performs no service for an
            Employer during the determination year or was Highly Compensated at
            any time after age 55.

      In addition, the Test Compensation paid to any family member (spouse,
      lineal ascendant or descendent and their spouses) of a more than five
      percent owner or of one of the top 10 Highly Compensated Employees on the
      basis of Test Compensation, shall be aggregated with the Test Compensation
      of such Employee for the purposes of this definition. Notwithstanding the
      foregoing, an Employee will not be Highly Compensated for the current year
      merely by compensation or officer status, unless he is in the top 100
      Employees by Test Compensation. The amounts indicated in (b) and (c) above
      shall be adjusted for cost of living by the Secretary of the Treasury at
      the same time and in the same manner as under Code Section 415(d). To the
      extent permitted under regulations and other guidance promulgated by the
      Internal Revenue Service, the Company may elect to determine the status of
      Highly Compensated Employees on a basis other than that provided above.

2.23  "Hour of Service" shall include the following:

      (a)   each hour for which an Employee is directly or indirectly paid or
            entitled to payment from an Employer or an Affiliate as an Employee
            for the performance of duties during an applicable computation
            period (these hours must be credited

                                       6
<PAGE>
            to the Employee in the computation period during which the duties
            were performed and not when paid, if different); and

      (b)   each hour for which back pay, irrespective of mitigation of damages,
            has been awarded or agreed to by an Employer or an Affiliate (these
            hours must be credited in the computation period or periods to which
            the award or agreement pertains rather than that in which the
            payment, award or agreement was made); and

      (c)   each hour for which an Employee is directly or indirectly paid or
            entitled to payment from an Employer or an Affiliate for reasons,
            such as vacation, sickness or disability, other than for the
            performance of duties (these hours shall be calculated and credited
            pursuant to Section 2530.200b-2 of the Department of Labor
            regulations which are incorporated herein by reference).

2.24  "Leased Employee" shall mean any person (other than an Employee of an
      Employer) who pursuant to an agreement between the Employer and any other
      person ("leasing organization") has performed services for the Employer
      (or for the Employer and related persons determined in accordance with
      Section 414(n)(6) of the Code) on a substantially full-time basis for a
      period of at least one year and, for periods before January 1, 1997, such
      services are of a type historically performed by employees in the business
      field of the Employer or, for periods on and after January 1, 1997, such
      services are performed under primary direction or control by the
      recipient. Except as provided below, any person satisfying the foregoing
      criteria shall be treated as an Employee. Contributions or benefits
      provided a Leased Employee by the leasing organization which are
      attributable to services performed for the Employer shall be treated as
      provided by the Employer.

      Notwithstanding the foregoing, a Leased Employee shall not be considered
      an Employee of an Employer if: (i) such Leased Employee is covered by a
      money purchase pension plan providing: (1) a nonintegrated employer
      contribution rate of at least 10 percent of compensation, (2) immediate
      participation, and (3) full and immediate vesting; and (ii) Leased
      Employees do not constitute more than 20 percent of the Employer's
      non-Highly Compensated workforce.

2.25  "Maternity or Paternity Absence" shall mean an absence from work by an
      Employee for any period:

      (a)   by reason of pregnancy of the Employee,

                                       7
<PAGE>
      (b)   by reason of the birth of a child of the Employee,

      (c)   by reason of the placement of a child with the Employee in
            connection with the adoption of such child by such Employee, or

      (d)   for purposes of caring for such child for a period immediately
            following such birth or placement.

      An absence will not be considered a "Maternity or Paternity Absence"
      unless the Employee provides the Administrator with such timely
      information as the Administrator may reasonably require to establish that
      the absence from work is for one of the four permitted reasons outlined
      above. Nothing in this Plan shall require an Employer to grant a paid
      leave of absence to any Employee.

2.26  "Normal Retirement Age" of a Participant shall be age 65.

2.27  "Normal Retirement Date" of a Participant shall be the first day of the
      month next following the month in which his sixty-fifth birthday occurs.

2.28  "Participant" shall mean any Covered Employee and any former Covered
      Employee who is entitled to, or who is receiving, a retirement benefit or
      deferred vested pension under the Plan.

2.29  "Period of Severance" shall mean the period of time between an Employee's
      Date of Severance and the date as of which he performs his first Hour of
      Service following reemployment.

2.30  "Plan" or "Pension Plan" shall mean this "Erie Insurance Group Retirement
      Plan for Employees" as herein set forth with all amendments, modifications
      and supplements hereafter made.

2.31  "Plan Year" shall mean any period of 12 consecutive calendar months next
      preceding an Anniversary Date of the Plan.

2.32  "Service" shall mean an Employee's service determined in accordance with
      Article IV hereof for the purposes of meeting the eligibility requirements
      for a benefit under the Plan.

                                       8
<PAGE>
2.33  "Social Security Covered Compensation" shall mean, for any Plan Year, the
      average (without indexing) of the Social Security taxable wage bases in
      effect for each calendar year during the 35-year period ending with the
      last day of the calendar year in which the Participant attains (or will
      attain) Social Security Retirement Age (as such term is defined in Section
      10.1(a)(iv) hereof). In determining a Participant's Social Security
      Covered Compensation for a Plan Year, the Social Security taxable wage
      base for the current Plan Year and any subsequent Plan Year shall be
      assumed to be the same as in effect for the Plan Year for which the
      determination is being made. A Participant's Social Security Covered
      Compensation shall be automatically adjusted for each Plan Year in
      accordance with these provisions, up to and including the Plan Year in
      which the Participant attains Social Security Retirement Age.

2.34  "Test Compensation" shall mean, for any Plan Year, an Employee's
      compensation, reported under Sections 6041 and 6051 of the Code on Form
      W-2, as paid by the Company or other Employer for the calendar year ending
      with or within such Plan Year, including any amounts contributed pursuant
      to a salary reduction election on behalf of a Covered Employee to a plan
      described in Sections 125, 402(e)(3), 402(h)(1)(B), 403(b), 457(b) or, for
      periods on and after January 1, 2001, 132(f)(4) of the Code for the period
      in question. Test Compensation in any given year shall not exceed the
      adjusted annual limitation in effect for such year (as set forth in
      Section 2.11), provided that such limitation shall not be applied in
      determining the top 10 Highly Compensated Employees subject to family
      aggregation under the Plan (applicable to Plan Years beginning before
      January 1, 1997) and for purposes of determining the status of an Employee
      as a Highly Compensated Employee or Key Employee. To the extent permitted
      under regulations and other guidance promulgated by the Internal Revenue
      Service, the Company may elect to determine Test Compensation on a basis
      other than that provided above.

2.35  "Top Paid Group" means all active Employees who, as of a given year, are
      in the top twenty percent (20%) of the Company's work force on the basis
      of Test Compensation for such year, excluding the following:

      (a)   employees who have not completed six (6) months of Service by the
            end of such year;

      (b)   employees who work less than seventeen and one-half (17-1/2) hours
            per week for such year;

      (c)   employees who normally do not work more than six (6) months in a
            year;

                                       9
<PAGE>
      (d)   employees under age twenty-one (21) at the end of such year; and

      (e)   non-resident aliens who received no U.S. - source income for such
            year.

      For purposes of this Section, the Company's work force shall include
      individuals employed by an Affiliate.

2.36  "Total and Permanent Disability" shall mean permanent incapacity resulting
      in the Participant being unable to engage in any gainful employment or
      occupation by reason of any medically demonstrable physical or mental
      condition, excluding, however, (a) incapacity contracted, suffered or
      incurred while the Participant was engaged in or which resulted from
      having engaged in a felonious enterprise; and (b) incapacity contracted,
      suffered or incurred in the employment of other than an Employer,
      including self-employment.

2.37  "Trust Agreement" shall mean the trust agreement between the Company and a
      Trustee as provided in Section 9.1, together with all amendments,
      modifications and supplements, thereto.

2.38  "Trustee" shall mean the Trustee or Trustees designated under a Trust
      Agreement including any successor or successors.

2.39  "Trust Fund" or "Fund" shall mean the retirement plan trust fund
      established by the Company in accordance with Article IX.

                                       10
<PAGE>
                                   ARTICLE III

                           ADMINISTRATION OF THE PLAN

3.1   Pension Administrator

      The Plan shall be administered by a Pension Administrator (the
      "Administrator") who shall serve at the pleasure of the Board of
      Directors. Any individual serving as the Administrator may resign by
      delivering his written resignation to the Board. In the event of the
      death, resignation or removal of the Administrator, the Board shall fill
      the vacancy. In making the appointment, the Board shall not be limited to
      any particular group, and nothing herein contained shall be construed to
      prevent any Participant, director, officer, employee or shareholder of the
      Employers from serving as the Administrator. The Administrator will not be
      compensated from the Trust Fund for services performed in such capacity,
      but the Company or Fund will reimburse such individual for expenses
      reasonably incurred by him in such capacity. If the Board does not appoint
      any individuals to the Administrator, then the Company shall act as the
      Administrator.

      Appointment by the Board shall be evidenced by a certified copy of the
      resolution of the Board making such appointment, and copies of such
      certified resolution shall be delivered to the Trustee and to such other
      persons as may require such notice.

3.2   Powers

      The Administrator will have full power to administer the Plan in all of
      its details, subject, however, to the requirements of ERISA. This power
      shall include having the sole and absolute discretion to interpret and
      apply the provisions of the Plan to determine the rights and status
      hereunder of any individual, to decide disputes arising under the Plan,
      and to make any determinations and findings of fact with respect to
      benefits payable hereunder and the persons entitled thereto as may be
      required for any purpose under the Plan. Without limiting the generality
      of the above, the Administrator is granted the following authority which
      it shall discharge in its sole and absolute discretion in accordance with
      Plan provisions as interpreted by the Administrator:

      (a)   To make and enforce such rules and regulations as it deems necessary
            or proper for the efficient administration of the Plan, including
            the modification of the claims procedure under Section 3.8 in
            accordance with any regulations issued under Section 503 of ERISA.

      (b)   To interpret the Plan.

                                       11
<PAGE>
      (c)   To decide all questions concerning the Plan and the eligibility of
            any person to participate in the Plan, his period of participation
            and/or service under the Plan, his date of birth, his eligibility to
            accrue a benefit under the Plan and to receive a distribution from
            the Plan.

      (d)   To compute the amount of benefits which will be payable to any
            Participant or other person in accordance with the provisions of the
            Plan, and to determine the identity of the person or persons to whom
            such benefits will be paid.

      (e)   To authorize the payment of Plan benefits and to direct cessation of
            benefit payments.

      (f)   To appoint one or more investment managers to manage the investment
            and reinvestment of the Fund and to enter into management contracts
            on behalf of the Company with respect to such appointments. Unless
            and until the Administrator appoints an investment manager with
            respect to all or a specific portion of the Fund, the Trustee shall
            have exclusive authority to manage and control all or such portion
            of the Fund.

      (g)   To appoint, employ or engage such other agents, counsel accountants,
            consultants and actuaries as may be required to assist in
            administering the Plan.

      (h)   To establish procedures to determine whether a domestic relations
            order is a qualified domestic relations order within the meaning of
            Section 414(p) of the Code, to determine under such procedures
            whether a domestic relations order is a qualified domestic relations
            order and whether a putative alternate payee otherwise qualifies for
            benefits hereunder, to inform the parties to the order as to the
            effect of the order, and to direct the Trustee to hold in escrow or
            pay any amounts so directed to be held or paid by the order.

      (i)   To determine whether the Plan has incurred a partial termination.

      (j)   To obtain from the Employers, Employees, Participants, spouses and
            Beneficiaries such information as shall be necessary for the proper
            administration of the Plan.

      (k)   To perform all reporting and disclosure requirements imposed upon
            the Plan by ERISA, the Code or any other lawful authority.

      (l)   To take such steps as it, in its discretion, considers necessary
            and/or appropriate to remedy any inequity under the Plan that
            results from incorrect information received or communicated or as
            the consequence of administrative error.

      (m)   To correct any defect, reconcile any inconsistency or supply any
            omission under the Plan.

      (n)   To delegate its powers and duties to others in accordance with
            Section 3.3.

                                       12
<PAGE>
      (o)   To exercise such other authority and responsibility as is
            specifically assigned to it under the terms of the Plan and to
            perform any other acts necessary to the performance of its powers
            and duties.

      The Administrator at its discretion may either request the Company or
      direct the Fund to pay for any or all services rendered by the Trustee and
      by persons appointed, employed or engaged under Section 3.2(f) or (g) or
      under the terms of the Trust Agreement.

      The Administrator's interpretations, decisions, computations and
      determinations under this Section 3.2 which are made in good faith will be
      final and conclusive upon the Employers, all Participants and all other
      persons concerned. Any action taken by the Administrator with respect to
      the rights or benefits of any person under the Plan shall be revocable by
      the Administrator as to payments or distributions not theretofore made,
      pursuant to such action, from the Trust Fund; and appropriate adjustments
      may be made in future payments or distributions to a Participant or
      Beneficiary to offset any excess payment or underpayment previously made
      to such Participant or Beneficiary from the Trust Fund. No ruling or
      decision of the Administrator in any one case shall create a basis for a
      retroactive adjustment in any other case prior to the date of written
      filing of each specific claim.

3.3   Delegation of Duties

      The Administrator may, from time to time, designate any individual to
      carry out any of the responsibilities of the Administrator other than the
      appointment of an investment manager(s). The individual so designated will
      have full authority or such limited authority as the Administrator may
      specify, to take such actions as are necessary or appropriate to carry out
      the responsibilities assigned by the Administrator.

3.4   Administrator as Named Fiduciary

      The Administrator will be a "named fiduciary" for purposes of section
      402(a)(1) of ERISA with authority to control and manage the operation and
      administration of the Plan.

3.5   Conclusiveness of Various Documents

      The Administrator and the Company and its directors and officers will be
      entitled to rely upon all tables, valuations, certificates and reports
      furnished by any actuary,

                                       13
<PAGE>
      accountant, counsel or other expert appointed, employed or engaged by the
      Administrator or the Company.

3.6   Actions to be Uniform

      Any discretionary actions to be taken under the Plan by the Administrator
      will be nondiscriminatory and uniform with respect to all persons
      similarly situated.

3.7   Liability and Indemnification

      To the full extent allowed by law, the Administrator shall not incur any
      liability to any Participant or Beneficiary, or to any other person, by
      reason of any act or failure to act on the part of the Administrator if
      such act or omission is not the result of the Administrator's gross
      negligence, willful misconduct or exercise of bad faith. To the full
      extent allowed by law, the Company agrees to indemnify the Administrator
      against all liability and expenses (including reasonable attorney's fees
      and other reasonable expenses) occasioned by any act or omission to act if
      such act or omission is not the result of the Administrator's gross
      negligence, willful misconduct or exercise of bad faith. Neither this
      Section 3.7 nor any other provision of this Plan shall be applied to
      invalidate, modify, or limit in any respect any contract, agreement, or
      arrangement for indemnifying or insuring the Administrator against, or
      otherwise limiting, such liability or expense, or for settlement of such
      liability, to the extent such contract, agreement, or arrangement is not
      precluded by the terms of Section 410 of ERISA.

3.8   Claims Review Procedure.

      The Administrator shall be responsible for the claims procedure under the
      Plan. An application for a retirement benefit or other benefit under the
      Plan shall be considered a claim for purposes of this Section 3.8.

      (a)   Original Claim. In the event a claim of any Participant,
            Beneficiary, alternate payee, or other person (hereinafter referred
            to in this Section as the "Claimant") for a benefit is partially or
            completely denied, the Administrator shall give, within ninety (90)
            days after receipt of the claim (or if special circumstances, made
            known to the Claimant, require an extension of time for processing
            the claim, within one hundred eighty (180) days after receipt of the
            claim), written notice of such denial to the Claimant. Such notice
            shall set forth, in a manner calculated to be understood by the
            Claimant, the specific reason or reasons for the denial (with
            reference to pertinent Plan provisions upon which the denial is
            based); an

                                       14
<PAGE>
            explanation of additional material or information, if any, necessary
            for the Claimant to perfect the claim; a statement of why the
            material or information is necessary; on and after January 1, 2002,
            a statement of the Claimant's right to bring a civil action under
            Section 502(a) of ERISA; and an explanation of the Plan's claims
            review procedure, including the time limits applicable to such
            procedure. If the notice of denial is not furnished within the
            required time period specified above, the claim shall be deemed to
            be denied and the Claimant shall be permitted to proceed to the
            review stage described in paragraph (b).

      (b)   Review of Denied Claim.

            (i)   A Claimant whose claim is partially or completely denied shall
                  have the right to request a full and fair review of the denial
                  by a written request delivered to the Administrator within
                  sixty (60) days of receipt of the written notice of claim
                  denial (or sixty (60) days after the date on which the claim
                  is deemed denied under paragraph (a) above), or within such
                  longer time as the Administrator, under uniform rules,
                  determines. In such review, the Claimant or his duly
                  authorized representative shall have the right to review, upon
                  request and free of charge, all documents, records or other
                  information relevant to the claim and to submit any written
                  comments, documents, or records relating to the claim to the
                  Administrator.

            (ii)  The Administrator, within sixty (60) days after the request
                  for review, or in special circumstances, such as where the
                  Administrator in its sole discretion holds a hearing, within
                  one hundred twenty (120) days of the request for review, will
                  submit its decision in writing. Such decision shall take into
                  account all comments, documents, records and other information
                  properly submitted by the Claimant, whether or not such
                  information was considered in the original claim
                  determination. The decision on review will be binding on all
                  parties, will be written in a manner calculated to be
                  understood by the Claimant, will contain specific reasons for
                  the decision and specific references to the pertinent Plan
                  provisions upon which the decision is based, will indicate
                  that the Claimant may review, upon request and free of charge,
                  all documents, records or other information relevant to the
                  claim and on and after January 1, 2002, will contain a
                  statement of the Claimant's right to bring a civil action
                  under Section 502(a) of ERISA. If

                                       15
<PAGE>
                  no decision is made within the time period specified above,
                  the claim shall be deemed to be denied on review.

            (iii) If a Claimant fails to file a claim or request for review in
                  the manner and in accordance with the time limitations
                  specified herein, such claim or request for review shall be
                  waived, and the Claimant shall thereafter be barred from again
                  asserting such claim.

      (c)   Determination by the Committee Conclusive. The Administrator's
            determination of factual matter relating to Participants,
            Beneficiaries and alternate payees including, without limitation, a
            Participant's Credited Service, Service and any other factual
            matters, shall be conclusive. The Administrator and the Company and
            its respective officers and directors shall be entitled to rely upon
            all tables, valuations, certificates and reports furnished by an
            actuary, any accountant for the Plan, the Trustee or any investment
            managers and upon opinions given by any legal counsel for the Plan
            insofar as such reliance is consistent with ERISA. The actuary, the
            Trustee and other service providers may act and rely upon all
            information reported to them by the Administrator and/or the Company
            and need not inquire into the accuracy thereof nor shall be charged
            with any notice to the contrary.

3.9   Waiver of Participation

      It is the purpose of this Plan to provide for the accrual of retirement
      benefits for all Covered Employees. Notwithstanding the foregoing, any
      Covered Employee may waive participation in this Plan by executing a
      Waiver of Participation on a form provided by the Administrator for such
      purpose. Any Waiver of Participation shall be effective for the Plan Year
      in which it is executed and shall be irrevocable. During any Plan Year for
      which a Waiver of Participation is in effect, no Service, Credited Service
      or Compensation shall be recognized under the Plan for the Covered
      Employee.

                                       16
<PAGE>
                                   ARTICLE IV

                               SERVICE PROVISIONS

4.1   Service

      Service shall be used to determine a Participant's vested rights under the
      Plan. An Employee shall receive Service for the period of time between his
      Date of Hire and his Date of Severance, provided that no Service shall be
      received for the period of continued absence between the first and second
      anniversary of the date of first absence from work by reason of a
      Maternity or Paternity Absence. Service shall be counted for full years
      only. Service shall include any prior periods of Service that are
      reinstated in accordance with Section 4.3 below. Service shall include any
      Period of Severance which has continued for less than one year.

      Notwithstanding the foregoing, Service (but not Credited Service) shall
      include periods of absence granted under The Family and Medical Leave Act
      of 1993, to the extent of the minimum service credit required by said Act.

4.2   Credited Service

      Credited Service shall be used to compute the amount of a Participant's
      benefit and to determine a Participant's eligibility for an early
      retirement and a disability retirement under the Plan. Credited Service
      shall be based on Service but shall not include (i) any period of Service
      in which a Participant is not a Covered Employee, and (ii) any Period of
      Severance; provided, however, that a Participant's Credited Service shall
      include that Credited Service accumulated during the period in which the
      Participant is eligible for a disability retirement pension (as determined
      under Sections 5.3, 6.3 and 7.2 hereof). Solely for purposes of computing
      the amount of a Participant's benefit under Section 6.1 and subject to the
      foregoing provisions of this Section, Credited Service shall include a
      year of credit for any fraction of a year of Service.

4.3   Loss and Reinstatement of Service

      In the event a Participant incurs a Date of Severance prior to his
      becoming eligible for a retirement benefit or deferred vested pension
      under the Plan, he shall be deemed to receive a distribution equal to the
      actuarial equivalent value of the entire vested pension earned through his
      Date of Severance. In such a case, the Participant shall lose his Service
      and Credited Service and his Accrued Pension shall be forfeited as of such
      date of deemed distribution. If subsequently reemployed as a Covered
      Employee, a

                                       17
<PAGE>
      Participant shall, after again completing one year of Service, be
      considered a Plan Participant retroactively as of such date of
      reemployment and have his forfeited Service, Credited Service and Accrued
      Pension reinstated if his last Period of Severance is less than the
      greater of:

      (a)   five years, or

      (b)   the Participant's forfeited Service (including any periods of
            Service previously reinstated under the provisions of this Section
            4.3 or its predecessor).

4.4   Transfer To Other Employment

      Upon the transfer of a Participant covered by the Plan to other employment
      with an Employer or Affiliate whereby he ceases to be a Covered Employee
      hereunder, his Accrued Pension based on his Credited Service and Final
      Average Earnings as of the transfer date shall be frozen and Credited
      Service shall cease to accrue for purposes of the Plan. In the event such
      Participant remains in the employment of an Employer until such time as,
      except for such transfer, he would have met the age, service and/or other
      eligibility requirements for any pension under the Plan, such frozen
      Accrued Pension shall become payable in accordance with the appropriate
      provisions of the Plan as in effect on the date of transfer.

4.5   Transfer From Other Employment

      Upon transfer or retransfer of an individual from other employment with an
      Employer or Affiliate such that the individual becomes a Covered Employee
      hereunder, his years of Service as otherwise computed under this Article
      IV will include the period of his employment with an Employer or Affiliate
      prior to such transfer or retransfer for the purpose of meeting the
      vesting requirements under this Plan; provided, however, that only years
      of Credited Service acquired while employed as a Covered Employee covered
      under this Plan shall be used to compute the amount of any pension under
      this Plan.

                                       18
<PAGE>
                                    ARTICLE V

                            ELIGIBILITY FOR PENSIONS

5.1   Normal Retirement

      A Participant whose employment with an Employer and all Affiliates is
      terminated when or after he attains Normal Retirement Age shall be
      eligible for a normal retirement pension in the amount as provided in
      Section 6.1 hereof. A Participant's right to his normal retirement pension
      shall be nonforfeitable upon the attainment of his Normal Retirement Age
      provided he is an Employee on such date. A Participant continuing in
      employment with an Employer after his Normal Retirement Date in a capacity
      such that he completes 40 or more Hours of Service per month will be
      provided with a notice incorporating the substance of the notification
      described in Section 2530.203-3(b)(4) of the Code of Federal Regulations.
      Such notice shall include a statement that the Participant's pension will
      be suspended and permanently withheld for months in which he completes 40
      or more Hours of Service. Any benefit accrual earned by a Participant for
      any given Plan Year ending on or after the date on which the Participant
      attains Normal Retirement Age shall be reduced (but not below zero) by the
      amount of any actuarial adjustment which may be required in connection
      with a delay in payment of a Participant's normal retirement benefit or
      the suspension of benefits otherwise payable after the Participant attains
      Normal Retirement Age.

5.2   Early Retirement

      A Participant with 15 or more years of Credited Service whose employment
      with an Employer and all Affiliates is terminated when or after he reaches
      the age of 55 but prior to the attainment of age 65, shall be eligible for
      an early retirement pension in the amount as provided in Section 6.2
      hereof.

5.3   Disability Retirement

      A Participant whose status as a Covered Employee is terminated due to his
      Total and Permanent Disability after 15 or more years of Credited Service
      and prior to the attainment of age 65, and who is eligible for and
      receiving disability benefits under the Erie Insurance Group Long Term
      Disability Plan shall be eligible for a disability retirement pension in
      an amount as provided in Section 6.3 hereof beginning at his Normal
      Retirement Date providing he remains Totally and Permanently Disabled up
      to his Normal Retirement Date.

                                       19
<PAGE>
5.4   Vesting

      A Participant with 5 years or more of Service and whose employment with an
      Employer and all Affiliates is terminated at a time when he is ineligible
      for any retirement pension under the Plan shall be eligible for a deferred
      vested pension as computed under Section 6.4.

      If a Participant is reemployed as a Covered Employee by an Employer after
      having qualified for a deferred vested pension in accordance with this
      Section 5.4, such Participant shall retain his right to receive such
      deferred vested pension and he shall be reinstated with the Service and
      Credited Service to which he was entitled at the time of his prior
      termination of employment. Any benefits to which the Participant may be
      entitled upon his subsequent retirement or termination of employment shall
      be reduced actuarially, as provided in Section 7.4, to reflect any
      deferred vested pension benefits paid prior to reemployment.

                                       20
<PAGE>
                                   ARTICLE VI

                               AMOUNT OF PENSIONS

6.1   Normal Retirement Pension

      Subject to the provisions of Section 7.1 and Article X, the monthly
      pension of a Participant who is eligible for a normal retirement pension
      under the provisions of Section 5.1 (as stated in the form of a life
      annuity) shall be one-twelfth (1/12) of the result obtained by multiplying
      the sum of (a) and (b) by (c), where:

      (a)   equals 1.0% of the Participant's Final Average Earnings not in
            excess of Social Security Covered Compensation;

      (b)   equals 1.5% of the Participant's Final Average Earnings in excess of
            Social Security Covered Compensation; and

      (c)   equals the Participant's Credited Service not in excess of 30 years.

      In no event shall the overall permitted disparity limits of Section
      1.401(l)-5 of the Income Tax Regulations be exceeded.

6.2   Early Retirement Pension

      Subject to the provisions of Section 7.1 and Article X, the monthly early
      retirement pension of a Participant eligible for an early retirement
      pension under the provisions of Section 5.2 shall be, at the option of the
      Participant, either (a) or (b) as set forth below:

      (a)   A deferred pension, commencing as of the Participant's Normal
            Retirement Date, equal to the amount of pension, determined under
            Section 6.1, to which he is entitled based upon his Credited Service
            and Final Average Earnings as of his date of early retirement and
            the level of Social Security Covered Compensation in effect on such
            date.

      (b)   An immediate pension, commencing as of the month following the month
            in which such Participant retires early, determined as provided in
            (a) above, but reduced by 1/4 of 1 percent for each complete
            calendar month up to 60 such months and by 3/8ths of 1 percent for
            each complete calendar month in excess of 60 months, by which his
            early retirement pension commencement date precedes his Normal
            Retirement Date.

6.3   Disability Retirement Pension

      Subject to the provisions of Section 7.2 and Article X, a Participant
      eligible for disability benefits under the provisions of Section 5.3 and
      under Title II of the Social Security Act shall receive a disability
      retirement pension beginning as of his Normal

                                       21
<PAGE>
      Retirement Date. Such disability retirement pension shall be in an amount
      determined in accordance with Section 6.1 assuming that:

      (a)   service and Credited Service are granted for each calendar year (and
            part thereof) during which he continues to be Totally and
            Permanently Disabled and to qualify for Social Security disability
            benefits, and

      (b)   his Compensation during his last full calendar year before his
            termination due to disability continues unchanged from the calendar
            year including his date of disability to the calendar year including
            his Normal Retirement Date, and

      (c)   his Social Security Covered Compensation is based on the level in
            effect at the time he becomes disabled.

6.4   Deferred Pension Upon Termination of Service

      Subject to the provisions of Section 7.3 and Article X, the monthly
      pension, commencing as of Normal Retirement Date, of a former Covered
      Employee whose employment with an Employer and Affiliates has terminated
      after he has become eligible for a deferred vested pension in accordance
      with Section 5.4, shall be equal to the pension such Participant would
      have been entitled to under Section 6.2(a) as of his termination of
      employment, multiplied by a vesting percentage determined in accordance
      with the table immediately below:

<TABLE>
<CAPTION>
Years of Service                   Vesting Percentage
----------------                   ------------------
<S>                                <C>
Less than 5                                    0%
5 or more                                    100%
</TABLE>

      Except as otherwise provided under Section 8.1, any Participant having
      less than five years of Service at the time of his death or other
      termination of employment with the Employers or an Affiliate shall have no
      vested rights under this Plan and neither he nor his spouse or Beneficiary
      shall be entitled to any benefits under this Plan.

      A former Covered Employee who is eligible for a deferred vested pension
      and who is credited with 15 or more years of Credited Service may elect
      (by written application) to commence his deferred vested pension in a
      reduced amount at any time between the ages of 55 and 65, in which case
      the monthly pension amount as determined above shall be reduced in
      accordance with the provisions of subsection (b) of Section 6.2 based on
      the number of months that his Annuity Starting Date precedes his Normal
      Retirement Date.

                                       22
<PAGE>
6.5   Increase in Pension for Certain Retired Participants

      (a)   Notwithstanding the foregoing provisions of this Article VI and
            effective for Plan payments made on or after January 1, 1996, the
            monthly pension payable to a Qualified Pensioner (or to the
            Beneficiary of a Qualified Pensioner) shall be increased by the
            greater of five percent (5%) or twenty dollars ($20.00). For
            purposes of this subsection (a), a "Qualified Pensioner" means a
            Participant who retired under the normal retirement, early
            retirement, or disability retirement provisions of the Plan prior to
            January 1, 1994.

      (b)   Notwithstanding the foregoing provisions of this Article VI and
            effective for Plan payments made on or after January 1, 1999, the
            monthly pension payable to a Qualified Pensioner (or to the
            Beneficiary of a Qualified Pensioner) shall be increased by the
            greater of four percent (4%) or fifteen dollars ($15.00). For
            purposes of this subsection (b), a "Qualified Pensioner" means a
            Participant who retired under the normal retirement, early
            retirement, or disability retirement provisions of the Plan and
            commenced Plan payment prior to January 1, 1997.

6.6   Offset of Accruals by Plan Distributions

      In the event distribution of benefits commence to an employed Participant
      pursuant to Section 7.10 or for any other reason after the employed
      Participant has attained his Normal Retirement Age, any increase in the
      Participant's monthly benefit which accrues in any Plan Year in which such
      distribution is made shall be reduced (but not below zero) by the
      Actuarial Equivalent of total Plan benefit distributions made to such
      Participant by the close of such Plan Year.

6.7   Non-Duplication of Benefits

      (a)   There shall be no duplication of any retirement benefit or deferred
            vested pension benefit payable under this Plan, and any pension or
            retirement benefit payable under any other qualified defined benefit
            pension, retirement, or similar plan to which an Employer or
            predecessor Employer of the particular Participant has contributed,
            based upon the same period of service. Unless such other benefits
            are clearly intended to be in addition to benefits under this Plan,
            the Administrator shall make or cause to be made appropriate
            adjustments in the retirement benefit or deferred vested pension
            benefit payable under this Plan in respect to any Participant to
            carry out the provisions of this paragraph.

                                       23
<PAGE>
      (b)   No benefit shall be payable to any Participant under more than one
            Section of the Plan for the same period of time. No retirement
            benefit or deferred vested pension benefit shall be paid to any
            Participant while he is receiving benefits under a long-term
            disability benefit contract or plan to which an Employer or
            Affiliate has contributed.

6.8   Special Provisions Pertaining to Section 401(a)(17) Employees

      Unless otherwise provided under the Plan, the Accrued Pension of each
      Section 401(a)(17) Employee (as hereinafter defined) will be the greater
      of the Accrued Pension determined for such Employee under (a) or (b)
      below:

      (a)   The Employee's Accrued Pension determined with respect to the
            benefit formula applicable for the Plan Year beginning on or after
            December 31, 1994, as applied to the Employee's total years of
            service taken into account under the Plan for the purpose of benefit
            accruals; or

      (b)   The sum of: (i) the Employee's Accrued Pension as of the last day of
            the last Plan Year beginning before December 31, 1994, frozen in
            accordance with Section 1.401(a)(4)-13 of the Income Tax
            Regulations, and (ii) the Employee's Accrued Pension determined
            under the benefit formula applicable for the Plan Years beginning on
            and after December 31, 1994, as applied to the Employee's years of
            service credited for Plan Years beginning on and after December 31,
            1994, for purposes of benefit accruals.

      A "Section 401(a)(17) Employee" means a Covered Employee whose current
      Accrued Pension as of a date on or after the first day of the first Plan
      Year beginning on or after December 31, 1994, is based on Compensation for
      a year beginning on or after December 31, 1994, that exceeded $150,000.

                                       24
<PAGE>
                                   ARTICLE VII

                      COMMENCEMENT AND DURATION OF PENSIONS

7.1   Normal and Early Retirement Pensions

      Any normal or early retirement pension shall be payable to a retired
      Participant who has applied therefor in accordance with the rules
      established by the Administrator, commencing as of the first day of the
      month next following the date as of which he retires (or, if later,
      commencing as of the first day of the month next following the date as of
      which such application was made), and shall be payable monthly for the
      remaining life of such retired Participant. The last payment to the
      retired Participant under this form shall be for the month in which the
      death of such retired Participant occurs. However, if the retired
      Participant duly accepted the Automatic Surviving Spouse's Pension as set
      forth in Section 7.5 or elected an optional form of pension in Section 7.7
      and is receiving his retirement pension pursuant to such election, then
      any pension payments to him and his surviving spouse or Beneficiary shall
      be as set forth in Section 7.5 or 7.7, whichever applicable.

7.2   Disability Retirement Pension

      A disability retirement pension shall be payable to a disabled Participant
      who has applied therefor in accordance with the rules established by the
      Administrator, commencing as of the Participant's Normal Retirement Date
      (or, if later, commencing as of the first day of the month next following
      the date as of which such application was made), provided the Participant
      has remained continuously disabled (within the meaning of Section 5.3) up
      to his Normal Retirement Date.

      To ascertain whether a Participant retains his eligibility for a
      disability retirement pension up to his Normal Retirement Date, he may be
      required by the Administrator to submit to a medical examination at any
      time prior to age 65, but not more often than semi-annually. If it is
      determined by the Administrator that he is no longer totally and
      permanently disabled on the basis of such an examination, or that he has
      engaged or is engaging in gainful employment (except for purposes of
      rehabilitation approved by the Administrator), or that prior to age 65 he
      ceases to be eligible for disability benefits under the Social Security
      Act, then his eligibility for a disability retirement pension will end
      and, if reemployed, his Credited Service accumulated to that time shall be
      reinstated. If such retired Participant is not reemployed by an Employer
      upon the

                                       25
<PAGE>
      termination of such disability, he shall be entitled to such pension as
      may be available to him under Article V based on his then current age and
      Credited Service.

      In the event a person eligible for a disability retirement pension refuses
      to submit to a medical examination as required by the Administrator, all
      his rights to a disability retirement pension hereunder shall cease until
      he submits to such examination.

      Any disability pension shall be payable monthly for the remaining life of
      such retired Participant. The last payment to the retired Participant
      under this form shall be for the month in which the death of such retired
      Participant occurs. However, if the Participant duly accepted the
      Automatic Surviving Spouse's Pension as set forth in Section 7.5 or
      elected an optional form of pension in Section 7.7 and is receiving his
      retirement pension pursuant to such election, then any pension payments to
      him and his surviving spouse or Beneficiary shall be as set forth in
      Section 7.5 or 7.7, whichever applicable.

7.3   Deferred Vested Pension

      A deferred vested pension shall be payable to a Participant who has met
      the criteria provided in Section 5.4, commencing as of the Participant's
      Normal Retirement Date (or, if later, commencing as of the first day of
      the month next following the month proper application is made therefor),
      or, if the Participant has at least 15 years of Credited Service as of his
      termination of employment, commencing as of the first day of any month
      between the ages of 55 and 65 in accordance with an eligible Participant's
      election to receive a reduced amount under the provisions of Section 6.4.
      A deferred vested pension shall be payable monthly for the remaining life
      of the Participant. The last payment to the Participant under this form
      shall be for the month in which the death of such Participant occurs.
      However, if the Participant duly elected the Automatic Surviving Spouse's
      Pension as set forth in Section 7.5 or elected an optional form of pension
      in Section 7.7 and is receiving his deferred vested pension pursuant to
      such election, then any pension payments to him and his surviving spouse
      or Beneficiary shall be as set forth in Section 7.5 or 7.7, whichever
      applicable.

7.4   Reemployment of a Retired Participant

      The pension payable to any Participant receiving retirement benefits or
      deferred vested pension benefits shall cease and be permanently withheld
      if and when such Participant is reemployed by an Employer; provided,
      however, that no pension shall be withheld by the Plan pursuant to this
      Section 7.4 for any month during which such reemployed

                                       26
<PAGE>
      Participant has been employed in a classification which is not covered
      under the Plan or during which such Participant fails to complete 40 or
      more Hours of Service. In addition, no payment shall be withheld by the
      Plan pursuant to this Section 7.4 unless the Plan notifies the reemployed
      Participant by personal delivery or first class mail during the first
      calendar month in which the Plan withholds payments that his benefits are
      suspended. Such notification shall contain a description of the specific
      reasons why benefit payments are being suspended, a general description of
      the Plan provisions relating to the suspension of payments, a copy of such
      provisions, and a statement to the effect that applicable Department of
      Labor regulations may be found in Section 2530.203-3 of the Code of
      Federal Regulations. In addition, the suspension notification shall inform
      the reemployed Participant of the Company's procedure for affording a
      review of the suspension of benefits.

      The retirement or deferred vested pension shall resume with the month
      following subsequent retirement or termination of employment. Any
      retirement or deferred vested pension payable upon such subsequent
      retirement or termination shall be determined as provided in Article VI on
      the basis of the Participant's Credited Service at the time of his
      previous retirement or termination, plus his Credited Service as a
      Participant during his period of reemployment; provided, however, that
      such retirement or deferred vested pension shall be reduced by the
      actuarial equivalent of the retirement or deferred vested pension
      benefits, if any, that the Participant received prior to his reemployment.
      Notwithstanding the foregoing, in no event shall a Participant's
      retirement or deferred vested pension payable following his subsequent
      retirement or termination be less than that retirement or deferred vested
      pension payable to the Participant prior to his reemployment. In the
      determination of the Final Average Earnings of a Participant who is
      reemployed and who again becomes an active Participant, the thirty-six
      month period to be considered shall be the number of months in such period
      of reemployment prior to his subsequent date of retirement or termination,
      plus such number of months immediately prior to his earlier retirement or
      termination as shall total thirty-six months; provided that Final Average
      Earnings shall in no case be diminished as a result of such period of
      reemployment.

7.5   Automatic Surviving Spouse's Pension

      A married Participant who is eligible to commence payments pursuant to the
      normal, early or disability retirement provisions of the Plan or pursuant
      to the deferred vested pension provisions of the Plan and whose benefit
      may not be paid under the provisions

                                       27
<PAGE>
      of Section 7.8 shall automatically be deemed to have elected, at the
      commencement dates otherwise specified herein, an immediate monthly
      pension during his lifetime with the provision that, following his death,
      a monthly survivor's pension equal to 50 percent of his reduced pension
      shall be payable to his surviving spouse during the further lifetime of
      the spouse (the "Automatic Surviving Spouse's Pension"). Such pension
      shall be actuarially equivalent to an immediate single life annuity. The
      automatic election provided in this Section 7.5 shall become effective as
      of the Participant's Annuity Starting Date; provided, however, that such
      automatic election shall become effective only after the Participant and
      his surviving spouse have been married for at least one year.

      Notwithstanding the foregoing, if the Participant and his designated
      spouse have not been married for at least one year as of the Participant's
      Annuity Starting Date, the Automatic Surviving Spouse's Pension hereunder
      shall nonetheless take effect, provided that, in the event the Participant
      and his designated spouse do not remain married for a period of at least
      one year the Plan shall treat the Participant as not having been married
      on the Annuity Starting Date with the result that no survivor pension
      shall be payable to the spouse (absent a Qualified Domestic Relations
      Order to the contrary) and no retroactive correction shall be made to the
      benefit payable to the Participant.

      An unmarried Participant who retires pursuant to the normal, early or
      disability retirement provisions of the Plan or pursuant to the deferred
      vested pension provisions of the Plan and whose benefit may not be paid
      under the provisions of Section 7.8 shall automatically be deemed to have
      elected a monthly pension payable for his lifetime.

      A Participant may prevent the automatic election provided in this Section
      7.5 at any time within the "applicable election period" (as hereafter
      defined) by executing a specific written rejection of such an election on
      a form approved by the Administrator and filing it with the Administrator;
      provided that such rejection shall not take effect unless the
      Participant's spouse, if applicable, consents to such rejection in
      accordance with Section 7.6 of the Plan. Any election to revoke the
      Automatic Surviving Spouse's Pension and any spouse's consent thereto must
      specify the particular optional form of benefit elected by the Participant
      and, if applicable, must state the specific non-spouse Beneficiary or
      Beneficiaries (including any class of Beneficiaries or any contingent
      Beneficiaries) who may be entitled to any benefits upon the Participant's
      death. Any subsequent change in optional form of benefit or in a
      non-spouse Beneficiary selected

                                       28
<PAGE>
      shall be valid only if accompanied by the written and witnessed consent of
      the Participant's spouse in the manner described in Section 7.6.

      During the period beginning no more than 90 days and ending no less than
      30 days prior to the Participant's Annuity Starting Date, the
      Administrator shall furnish to the Participant a written general
      description of the automatic election provided in this Section 7.5. The
      general description shall include a written explanation of the
      Participant's and spouse's rights under the Automatic Surviving Spouse's
      Pension, including the availability and effect of the election to reject
      the Automatic Surviving Spouse's Pension. Such description shall also
      provide information as to the material features of the optional forms of
      benefit as well as a brief explanation of their relative values as
      compared to the Automatic Surviving Spouse's Pension. In addition, in the
      event the Participant's Annuity Starting Date is prior to his attainment
      of Normal Retirement Age, such description shall inform the Participant of
      his right to defer receipt of the Plan distribution. A Participant may
      make and revoke his written rejection of an Automatic Surviving Spouse's
      Option at any time and any number of times within the "applicable election
      period". The "applicable election period" shall commence 90 days prior to
      the Participant's Annuity Starting Date and shall end on the Participant's
      Annuity Starting Date. Notwithstanding the foregoing, effective on and
      after January 1, 1997, the written description identified in this
      paragraph may be provided after the Participant's Annuity Starting Date
      provided the Participant has at least 30 days following distribution of
      the written description to reject the Automatic Surviving Spouse's Pension
      and elect another form of payment permitted under the Plan. Distribution
      to the Participant may commence after seven days have elapsed from the
      date the Administrator provides the written description provided that the
      Participant has received information that clearly indicates his right to
      at least 30 days to consider the contents of the description, the
      Participant affirmatively elects distribution and any required spousal
      consent is satisfied.

      A Participant who retires pursuant to the normal, early or disability
      retirement provisions of the Plan or pursuant to the deferred vested
      pension provisions of the Plan and who is entitled, under such provisions,
      to a pension with a lump sum actuarial equivalent value not in excess of
      $5,000 (or for distributions prior to December 31, 2001 was not in excess
      of $3,500 at the time of that distribution or any prior distribution)
      shall receive his pension in accordance with Section 7.8 hereof.

                                       29
<PAGE>
7.6   Requirement for Spouse Consent

      Any election of a married Participant under Sections 7.5 and 7.7 (other
      than an election to revoke a rejection of the Automatic Surviving Spouse's
      Pension under Section 7.5) shall require the consent of the Participant's
      spouse unless it is established to the satisfaction of the Administrator
      that the consent required under this Section 7.6 may not be obtained:

            (i)   because there is no spouse or because the spouse cannot be
                  located,

            (ii)  because the Participant is legally separated from the spouse,

            (iii) because the Participant has been abandoned by his spouse
                  (within the meaning of local law) and such Participant has a
                  court order to that effect, or

            (iv)  because of such other circumstances as the Secretary of the
                  Treasury may by regulations prescribe.

      Any consent by a spouse shall be in writing acknowledging the effect of
      such election or revocation and witnessed by a notary public or such Plan
      representatives as may be designated for this purpose by the
      Administrator. Any spouse's consent (or establishment that the spouse's
      consent may not be obtained) shall be effective only with respect to such
      spouse.

7.7   Optional Forms of Pensions

      In lieu of a benefit in the form of payment determined in Section 7.5, a
      Participant may, with the consent of his spouse as described in Section
      7.6, elect an actuarially equivalent benefit described below. This
      election is effective as of a Participant's Annuity Starting Date.

      (a)   Option A: 10-Year Certain and Life Option - A reduced monthly
            retirement income is payable to the Participant during his remaining
            lifetime, and upon his death prior to receiving payment for a period
            equivalent to 120 months, monthly payments of the same reduced
            amount will be made to his Beneficiary until the number of monthly
            payments made to the Beneficiary, when added to the number of
            monthly payments made to the Participant, is equivalent to 120
            monthly payments.

      (b)   Option B: 15-year Certain and Life Option - A reduced monthly
            retirement income is payable to the Participant during his remaining
            lifetime, and upon his death prior to receiving payment for a period
            equivalent to 180 months, monthly payments of the same reduced
            amount will be made to his Beneficiary until the number of monthly
            payments made to the Beneficiary, when added to the

                                       30
<PAGE>
            number of monthly payments made to the Participant, is equivalent to
            180 monthly payments.

      (c)   Option C: 50% Joint and Survivor Option - a reduced monthly
            retirement income is payable to the Participant for his remaining
            lifetime, and upon his death, monthly income of 50% of such reduced
            monthly income previously paid to the Participant shall be paid to
            his Beneficiary for as long thereafter as that person shall live.

      (c)   Option D: 100% Joint and Survivor Option - a reduced monthly
            retirement income is payable to the Participant for his remaining
            lifetime, and upon his death, monthly income of 100% of such reduced
            monthly income previously paid to the Participant shall be paid to
            his Beneficiary for as long thereafter as that person shall live.

      (e)   Option E: Joint and Survivor Pop-Up Option - a reduced monthly
            retirement income is payable to the Participant for his remaining
            lifetime, and upon his death, monthly income of either 50% or 100%
            (as elected by the Participant) of such reduced monthly income
            previously paid to the Participant shall be paid to the
            Participant's spouse for as long thereafter as such spouse shall
            live; provided, however, that in the event the spouse of the
            Participant predeceases the Participant and such spouse's death
            occurs within 60 months of the Participant's Annuity Starting Date,
            the provisions of Section 7.12 shall apply. Notwithstanding any
            provision of the Plan to the contrary (i) the Joint and Survivor
            Pop-Up Option shall be available only with respect to a Participant
            who has retired under the normal retirement provisions of Section
            5.1 or the early retirement provisions of Section 5.2, and (ii)
            actuarial equivalence of a benefit payable under the Joint and
            Survivor Pop-Up Option shall be determined under Section 11.6;
            provided, however, that in the event an annuity contract is
            purchased from an insurance company with respect to such benefit,
            actuarial equivalence shall thereafter be determined by reference to
            the specific annuity contract which will be purchased by the Plan to
            provide the monthly retirement income payable under this form of
            payment.

      Election of these options must be made during the applicable election
      period described in Section 7.5. Except to the extent otherwise provided
      under Section 8.4, if either the Participant or his Beneficiary dies after
      the election of an option is made but before the Annuity Starting Date
      such option will not become effective. If the Beneficiary shall die after
      commencement of the joint and survivor pension, but before the death of
      the retired Participant, the Participant shall continue to receive the
      reduced pension payable

                                       31
<PAGE>
      in accordance with such option. An option may be cancelled by the
      Participant prior to the Annuity Starting Date. The effect of such
      cancellation shall be to reinstate the life annuity specified in Section
      7.1, 7.2 or 7.3, whichever applicable, or, if the Participant is married,
      the Automatic Surviving Spouse's Pension under Section 7.5 (in which case
      any subsequent option election must satisfy the requirements of Section
      7.5). Except to the extent expressly permitted under the Plan, no election
      regarding an optional form of payment may be made by a Participant
      following the Participant's Annuity Starting Date. If the Beneficiary
      designated by a Participant in connection with the election of an optional
      form of benefit is not the spouse of the Participant, then the election
      shall be effective only if the minimum distribution incidental benefit
      requirements of Section 1.401(a)(9)-2 of the Income Tax Regulations are
      satisfied with respect to such distribution.

7.8   Payment of Small Pension

      Notwithstanding any provision of the Plan to the contrary, if the
      actuarial equivalent present value of any retirement benefit, deferred
      vested pension or survivor benefit does not exceed $5,000 (or for
      distributions prior to December 31, 2001, did not exceed $3,500 at the
      time of distribution or any prior distribution), the pension shall be paid
      as soon as practicable in a lump sum equal to such present value. No lump
      sum payments shall be made if the actuarial equivalent present value of
      the benefit is in excess of these thresholds. For determinations made
      prior to December 31, 1995, the actuarial equivalent present value of a
      retirement benefit, deferred vested pension or survivor benefit for
      purposes of this Section 7.8 shall be calculated on the basis of the
      UP-1984 Table (reflecting a one-year setback for Participants and a
      two-year setback for Beneficiaries) and the interest rates which would be
      used (as of the beginning of the month in which the distribution occurs)
      by the Pension Benefit Guaranty Corporation in determining the present
      value of a lump sum distribution on plan termination. In no event shall
      such actuarial equivalent present value be less than that calculated using
      the same mortality table described above with a 6% interest rate. For
      determinations made on and after December 31, 1995, the actuarial
      equivalent present value of a retirement benefit, deferred vested pension
      or survivor benefit shall be calculated and paid on the basis of the
      "applicable mortality table" defined in Section 417(e)(3)(A)(ii)(I) of the
      Code and the annual interest rate on 30-year Treasury securities for the
      second calendar month preceding the month in which the distribution is
      payable; provided, however, that in the event the Alternative Present
      Value (as hereinafter defined) of the applicable benefit is a larger
      amount, such larger amount shall be paid (provided such Alternative

                                       32
<PAGE>
      Present Value calculation does not exceed $5,000 or, for periods prior to
      December 31, 2001, $3,500). For purposes of this Section 7.8, the
      "Alternative Present Value" of a retirement benefit, deferred vested
      pension or survivor benefit shall be based on the Accrued Pension earned
      by the Participant at the earlier of his termination of employment, or
      December 30, 1995, determined by using the UP-1984 mortality table
      (reflecting a one-year setback for Participants and a two-year setback for
      Beneficiaries) and a 6% interest rate.

      The provisions of this Section 7.8 shall likewise apply to any Participant
      who terminates his employment with an Employer and all Affiliates prior to
      his completion of such period of Service as is required for a deferred
      vested pension under the Plan. In such case the terminated Participant
      shall be deemed to receive a lump sum distribution of the actuarial
      equivalent present value of his entire vested pension as of his date of
      termination of employment. Subject to Section 7.9 hereof, a Participant
      who receives a distribution (or deemed distribution) under this Section
      7.8 shall lose his Credited Service (and Service, in the case of a deemed
      distribution) under the Plan, shall forfeit his nonvested Accrued Pension
      and shall no longer be considered a Participant hereunder after such date
      of distribution (or deemed distribution).

7.9   Repayment of Cashout on Reemployment

      Notwithstanding any provision of Section 7.8 to the contrary, in the event
      a Participant described in Section 7.8 receives a distribution described
      thereunder and is subsequently reemployed by an Employer as a Covered
      Employee, such Participant's Credited Service and Accrued Pension earned
      before his termination of employment shall be reinstated for all purposes
      of the Plan if the Participant repays to the Plan the full amount of his
      distribution with interest, compounded annually from the date of
      distribution to December 30, 1988 at the rate of five percent (5%) per
      annum and from December 31, 1988 to the date of repayment at the rate
      determined for each Plan Year within such period under Section
      411(c)(2)(C) of the Internal Revenue Code. With respect to a former
      Participant who has been deemed to receive a distribution of his entire
      vested pension upon his termination of employment in accordance with the
      second paragraph of Section 7.8, such individual shall be deemed to have
      repaid such distribution, with interest, as of his date of rehire and such
      Participant's Service, Credited Service and Accrued Pension earned before
      his termination of employment shall be reinstated as of such date. For
      purposes of the foregoing, the period in which the Participant's repayment
      or deemed repayment must occur shall end on the earlier of

                                       33
<PAGE>
      the fifth anniversary of the Participant's reemployment or the date on
      which the Participant's Period of Severance extends to five consecutive
      years.

7.10  Delay in Commencement of Pension Payments

      In no event shall payment of any pension under the provisions of this
      Article VII commence as of a date that is later than 60 days after the
      close of the Plan Year during which a Participant attains his Normal
      Retirement Date or, if later, terminates his employment with an Employer
      and Affiliates.

      Notwithstanding the foregoing, with respect to a Participant who attains
      age 70-1/2 before January 1, 1999 and any Participant who attains age
      70-1/2 after January 1, 1999 but who has either terminated employment with
      an Employer and all Affiliates prior to attaining such age or is a 5%
      owner (for purposes of Section 416 of the Code), distribution of benefits
      to the Participant must commence no later than the April 1st of the
      calendar year following the calendar year in which the Participant attains
      age 70-1/2 unless the Participant had attained age 70-1/2 prior to January
      1, 1988. With respect to an employed Participant who attains age 70-1/2 on
      or after January 1, 1999, distribution of benefits to the Participant
      (other than a 5% owner), must commence no later than the April 1st of the
      calendar year following the calendar year in which the Participant
      retires. In the case of a Participant who retires in a calendar year after
      the calendar year in which he attains 70-1/2 and who has not commenced
      payments as of the first day of such later calendar year, the Plan benefit
      accrued by the Participant shall be actuarially increased, to the extend
      required by regulations, to take into account the period (commencing on
      the April 1st of the calendar year following the calendar year in which
      the Participant attains 70-1/2 and ending on the date payment commences)
      during which the Participant did not receive any benefits under the Plan;
      provided, however, that such actuarial increase, to the extent permitted
      by regulations, shall reduce the benefit accrual otherwise occurring
      during such period.

      Notwithstanding any provision of the Plan to the contrary, all
      distributions under the Plan shall be made in accordance with regulations
      under Section 401(a)(9) of the Code (including Section 1.401(a)(9)-2 of
      the Income Tax Regulations). Furthermore, those provisions reflecting
      Section 401(a)(9) of the Code (as included here by reference if not
      specifically stated) shall override any provision hereof inconsistent with
      Section 401(a)(9).

                                       34
<PAGE>
7.11  Direct Rollover of Eligible Rollover Distributions.

      Notwithstanding any provision of the Plan to the contrary, a Distributee
      may elect, subject to provisions adopted by the Administrator which shall
      be consistent with income tax regulations, to have any portion of an
      Eligible Rollover Distribution paid directly to an Eligible Retirement
      Plan specified by the Distributee in a Direct Rollover to such plan. The
      Administrator shall notify a Distributee of his right to elect a Direct
      Rollover. Such notice shall be provided to the Distributee not less than
      30 days before the vested Accrued Pension maintained on behalf of the
      Distributee is distributed without the Distributee's affirmative election
      to make or not make a Direct Rollover. A Distributee's affirmative
      election to make or not make a Direct Rollover may be implemented by the
      Administrator less than 30 days after the Distributee receives such notice
      of his Direct Rollover rights, but only if the Administrator notifies the
      Distributee that he has the right to consider the decision of whether or
      not to elect a Direct Rollover for up to 30 days. A Distributee who is
      eligible for an automatic lump sum distribution under Section 7.8 and who
      has been given a timely notice and explanation of the election to have his
      Eligible Rollover Distribution paid to an Eligible Retirement Plan will be
      presumed to have elected to have his benefit paid directly to him if the
      Distributee fails to make the election within 31 days of being notified of
      his rights to make the election. For purposes of this Section:

      (a)   The term "Distributee" shall mean a Covered Employee or former
            Covered Employee. In addition, such an individual's surviving spouse
            or such an individual's spouse or former spouse who is an alternate
            payee within the meaning of Section 414(p)(8) of the Code are
            Distributees with respect to the interest of the spouse or former
            spouse.

      (b)   The term "Eligible Rollover Distribution" shall mean any
            distribution of all or any portion of the balance to the credit of
            the Distributee other than: any distribution that is one of a series
            of substantially equal periodic payments made for the life (or life
            expectancy) of the Distributee or the joint lives (or joint life
            expectancies) of the Distributee and his beneficiary, or for a
            specified period of ten years or more; any distribution to the
            extent such distribution is required under Section 401(a)(9) of the
            Code; for periods on and after January 1, 1999, that portion of a
            hardship withdrawal that is attributable to elective contributions
            within the meaning of Section 1.401(k)-1(g) of Income Tax
            Regulations; and the portion of any distribution that is not
            includible in gross income.

      (c)   The term "Eligible Retirement Plan" shall mean an individual
            retirement account or annuity, as described in Code Sections 408(a)
            and 408(b),

                                       35
<PAGE>
            respectively, an annuity plan described in Section 403(a) of the
            Code, or a qualified trust described in Section 401(a) of the Code
            that accepts the Distributee's Eligible Rollover Distribution.
            However, in the case of an Eligible Rollover Distribution to a
            surviving spouse, an "Eligible Retirement Plan" is an individual
            retirement account or annuity.

      (d)   The term "Direct Rollover" shall mean a payment by the Plan to the
            Eligible Retirement Plan specified by the Distributee.

7.12  Change to Pension Payments in Connection with Qualifying Event.

      (a)   In the event an Eligible Retiree (as hereinafter defined)
            experiences a Qualifying Event (as hereinafter defined), the
            provisions of this Section 7.12 shall apply, provided that the
            Eligible Retiree furnishes the Administrator with reasonable notice
            of the Qualifying Event within 120 days of the Qualifying Event and
            provides such further information applicable hereunder as the
            Administrator may reasonably require. For purposes of this Section:

            (i)   "Eligible Retiree" shall mean a Participant who has retired
                  under the normal retirement provisions of Section 5.1 or the
                  early retirement provisions of Section 5.2 and who, as of his
                  Annuity Starting Date, was either:

                  (A)   legally married and commencing receipt of his retirement
                        income in the form of an Automatic Surviving Spouse's
                        Pension (as defined in Section 7.5), under the 100%
                        Joint and Survivor Option (with his spouse as
                        Beneficiary thereunder) or, on or after November 1,
                        1997, under the Joint and Survivor Pop-Up Option; or

                  (B)   unmarried and commencing receipt of his retirement
                        income in the normal form of benefit provided under
                        Section 7.1 (a life annuity).

            (ii)  "Qualifying Event" shall mean an event described in (A), (B)
                  or (C) below:

                                       36
<PAGE>
                  (A)   The spouse of an Eligible Retiree who is receiving
                        retirement income under the Joint and Survivor Pop-Up
                        Option under Section 7.7(e) predeceases the Eligible
                        Retiree and such spouse's death occurs within 60 months
                        of the Eligible Retiree's Annuity Starting Date;

                  (B)   The marital status of an Eligible Retiree who is
                        receiving retirement income under any of the forms of
                        payment described in subparagraph (a)(i)(A) of this
                        Section 7.12 changes on or after September 1, 1997 and
                        within 120 months of his Annuity Starting Date due to
                        the Eligible Retiree's divorce, marital dissolution, or
                        legal separation; or

                  (C)   The marital status of an Eligible Retiree who is
                        described under subparagraph (a)(i)(B) of this Section
                        7.12 changes on or after September 1, 1997 and within
                        120 months of his Annuity Starting Date due to the
                        Eligible Retiree's marriage.

            (iii) "Qualifying Event Election Period" shall mean the 90-day
                  period beginning on the date on which the Eligible Retiree
                  timely notifies the Administrator of a Qualifying Event, as
                  provided in Section 7.12(a) above.

            (iv)  The determination of an Eligible Retiree's marital status and
                  the determination of whether a divorce, marital dissolution or
                  legal separation has occurred shall be made on the basis of
                  applicable state law unless preempted by federal law.

      (b)   Unless the Eligible Retiree timely makes an election under Section
            7.12(c), in the event of the occurrence of a Qualifying Event
            described in subparagraphs (a)(ii)(A) or (a)(ii)(B) of this Section
            7.12, and contingent upon the Eligible Retiree's timely notification
            to the Administrator, the retirement income payable to the affected
            Eligible Retiree shall revert to the normal form of benefit

                                       37
<PAGE>
            provided under Section 7.1 (a life annuity) as of the first day of
            the month following the expiration of the Qualifying Event Election
            Period; provided, however, that:

            (i)   the amount of such monthly life annuity shall be the actuarial
                  equivalent of the Eligible Retiree's benefit, determined as of
                  the time of calculation hereunder, under the form of payment
                  in effect as of his Annuity Starting Date; provided, however,
                  that such monthly amount shall not exceed the amount of the
                  monthly life annuity which the Eligible Retiree was entitled
                  to as of his Annuity Starting Date; and

            (ii)  in the case of a Qualifying Event described in subparagraph
                  (a)(ii)(B) of this Section 7.12, the spouse or ex-spouse of
                  the Eligible Retiree, as part of the division of marital
                  property (or other determination which is not subject to
                  modification under state law), expressly waives all interest
                  in the Eligible Retiree's pension under the Plan and such
                  waiver is incorporated into a document which satisfies the
                  formal requirements of a "Qualified Domestic Relations Order"
                  as defined in Section 414(p) of the Code; and

            (iii) in the case of a Qualifying Event described in subparagraph
                  (a)(ii)(B) of this Section 7.12, the spouse or ex-spouse of
                  the Eligible Retiree shall secure such proof of insurability
                  as the Administrator may require, in its discretion; and

            (iv)  in the case of a Qualifying Event described in subparagraph
                  (a)(ii)(C) of this Section 7.12, the Eligible Retiree shall
                  secure such proof of insurability as the Administrator may
                  require, in its discretion.

      (c)   In the case of any Qualifying Event and contingent upon the Eligible
            Retiree's timely notification to the Administrator, the affected
            Eligible Retiree shall be permitted to elect, within the Qualifying
            Event Election Period, to receive his

                                       38
<PAGE>
            future retirement income from the Plan in any form of payment
            offered under the Plan; provided, however, that:

            (i)   payments under any elected form of payment shall commence as
                  of the first day of the month next following the month in
                  which the Eligible Retiree makes full and complete application
                  to the Administrator in accordance with rules established by
                  the Administrator (such commencement date referred to herein
                  as the "Adjusted Commencement Date"); and

            (ii)  payments under any elected form of payment shall be the
                  actuarial equivalent of the Eligible Retiree's benefit,
                  determined as of the time of calculation hereunder, under the
                  form of payment in effect as of his Annuity Starting Date;
                  provided, however, that such monthly amount shall not exceed
                  the amount of the monthly benefit under the elected form of
                  payment which the Eligible Retiree was entitled to as of his
                  Annuity Starting Date; and

            (iii) In the case of a Qualifying Event described in subparagraph
                  (a)(ii)(B) of this Section 7.12, the spouse or ex-spouse of
                  the Eligible Retiree, as part of the division of marital
                  property (or other determination which is not subject to
                  modification under state law), expressly waives all interest
                  in the Eligible Retiree's pension under the Plan and such
                  waiver is incorporated into a document which satisfies the
                  formal requirements of a "Qualified Domestic Relations Order"
                  as defined in Section 414(p) of the Code; and

            (iv)  In the case of a Qualifying Event described in subparagraph
                  (a)(ii)(B) of this Section 7.12, the spouse or ex-spouse of
                  the Eligible Retiree shall secure such proof of insurability
                  as the Administrator may require, in its discretion; and

                                       39
<PAGE>
            (v)   In the case of a Qualifying Event described in subparagraph
                  (a)(ii)(C) of this Section 7.12, the Eligible Retiree shall
                  secure such proof of insurability as the Administrator may
                  require, in its discretion; and

            (vi)  The provisions of Sections 7.5 and 7.6 hereof shall apply with
                  respect to any Eligible Retiree who is married as of the
                  Adjusted Commencement Date and, for purposes of such Sections
                  and Section 7.7, the Adjusted Commencement Date shall be
                  deemed the Annuity Starting Date for the elected form of
                  payment described in this Section 7.12(c); and

            (vii) In no event shall more than one election be made under this
                  Section 7.12(c) by an Eligible Retiree with respect to any
                  single Qualifying Event nor shall any Eligible Retiree be
                  permitted to make more than two elections under this Section
                  7.12(c), irrespective of the number of Qualifying Events
                  affecting such Eligible Retiree; and

            (viii) A Participant's status as an Eligible Retiree must be
                  independently satisfied with respect to each Qualifying Event
                  (substituting, where applicable, the Adjusted Commencement
                  Date for the Annuity Starting Date under Section 7.12(a)(i)).

                                       40
<PAGE>
                                  ARTICLE VIII

                                 DEATH BENEFITS

8.1   Death Prior to Retirement or Severance

      Upon the death of a Participant prior to his Date of Severance, his
      surviving spouse, if any, shall receive a monthly surviving spouse's
      benefit under the assumption that the Participant had retired the day
      prior to his death with an Accrued Pension under the Plan as determined in
      accordance with the provisions of subsection 6.2(a), and under the further
      assumption that the automatic election of a surviving spouse's benefit
      pursuant to subsection 7.5 was in effect at the time of death. Such
      surviving spouse benefit shall commence as of the first day of the month
      following the Participant's death, shall be unreduced for early
      commencement and shall be payable for the lifetime of the surviving
      spouse.

      For purposes of Sections 8.1, 8.2 and 8.3, the interest that is payable to
      the Participant's surviving spouse shall be distributed over a period not
      in excess of the life expectancy of such surviving spouse and shall
      commence no later than the December 31 of the calendar year in which the
      Participant would have attained age 65 (or the December 31 of the calendar
      year immediately following the calendar year of the Participant's death,
      if later).

8.2   Death Prior to Commencement of Early or Disability Pensions Upon the death
      of a Participant after his Date of Severance, and prior to his Annuity
      Starting Date and while the Participant is awaiting the commencement of
      payment of either: (1) an early retirement pension pursuant to subsection
      6.2(a) above, or (2) a disability pension after attainment of age 55 but
      prior to the attainment of his Normal Retirement Date, his surviving
      spouse, if any, shall receive a monthly surviving spouse's benefit under
      the assumption that the Participant had retired the day prior to his death
      with an Accrued Pension under the Plan as determined in accordance with
      the provisions of subsection 6.2(a), and under the further assumption that
      the automatic election of a surviving spouse's benefit pursuant to
      subsection 7.5 was in effect at the time of death. Such surviving spouse's
      benefit shall commence as of the first day of the month following the
      Participant's death unless the surviving spouse elects a later
      commencement date. Such benefit shall be reduced for early commencement in
      accordance with the provisions of Section 6.2(b) and shall be payable for
      the lifetime of the surviving spouse.

                                       41
<PAGE>
      Upon the death of a disabled Participant who is awaiting commencement of
      his pension at his Normal Retirement Date and who is under age 55 at the
      time of his death, his surviving spouse, if any, shall receive a monthly
      surviving spouse's benefit determined under the provisions of Section 8.1
      assuming he died prior to his Date of Severance.

      If a Participant terminates employment when eligible for a disability
      retirement pension under Section 5.3 and at a time during which he is
      receiving long term disability benefits under the Erie Insurance Group
      Long Term Disability Plan, then service to date of death will be included
      for benefit purposes.

8.3   Death Prior to Commencement of Vested Pensions

      If a vested former Participant who has at least one Hour of Service on or
      after December 31, 1976, and who has been married for at least one year on
      his date of death, dies on or after August 23, 1984 but prior to his
      Annuity Starting Date, then his spouse shall be provided with a
      preretirement survivor annuity determined as follows:

      (a)   in the case of a Participant who dies after the date on which the
            Participant attained his Earliest Retirement Age as though such
            Participant had retired on the day before the Participant's date of
            death, with an immediate benefit determined under the provisions of
            Section 6.2(a) and payable under the Automatic Surviving Spouse's
            Pension in Section 7.5 of the Plan, or

      (b)   in the case of a Participant who dies on or before the date on which
            the Participant would have attained his Earliest Retirement Age, as
            though such Participant had:

            (i)   separated from Service on the date of death,

            (ii)  survived to his Earliest Retirement Age,

            (iii) retired with an immediate benefit determined under the
                  provisions of Section 6.4 and payable under the Automatic
                  Surviving Spouse's Option in Section 7.5 of the Plan at the
                  Earliest Retirement Age, and

            (iv)  died on the day after the day on which such Participant would
                  have attained the Earliest Retirement Age.

      Under this Section 8.3, a monthly surviving spouse's benefit shall
      commence as of the first day of the month following the later of the month
      of the Participant's death or the month in which the Participant would
      have attained his Earliest Retirement Age under the Plan unless the
      surviving spouse elects a later commencement date (which shall not

                                       42
<PAGE>
      be later than the December 31 of the calendar year in which the deceased
      Participant would have attained age 65). Such surviving spouse's benefit
      shall be reduced for early commencement in accordance with Section 6.2(b)
      and shall be payable thereafter for the remainder of the surviving
      spouse's lifetime.

8.4   Effect of Valid 100% Joint and Survivor Election

      Notwithstanding the foregoing, in the event a Participant described in
      Section 8.1, 8.2 or 8.3 above has made a valid election of Option D under
      Section 7.7 and names his spouse as Beneficiary thereunder, the amount of
      the Pre-Retirement Survivor Annuity shall be equal to the reduced monthly
      amount which otherwise would have been payable to the Participant as
      determined through application of the foregoing provisions of this Article
      VIII.

8.5   Death on or After Annuity Starting Date

      Upon the death of a Participant on or after his Annuity Starting Date,
      payments, if any, to a Beneficiary shall be made in accordance with the
      form of benefit in effect on the date of the Participant's death. If the
      Beneficiary of the deceased Participant is entitled to receive the
      remaining certain period payments from the 10-Year or 15-Year Certain and
      Life forms of payment, the Administrator shall instruct the Trustee to pay
      to such Beneficiary the actuarial equivalent value of the monthly payments
      to which the Beneficiary is entitled in a single sum. Actuarial
      equivalence for this purpose shall be determined under the assumptions set
      forth in Section 7.8. If the Beneficiary under such form of payment is the
      surviving spouse of the deceased Participant, then any amounts payable may
      be converted to an actuarially equivalent life annuity to such spouse
      provided the spouse requests payment in such form. Notwithstanding the
      foregoing, in all events the deceased Participant's remaining interest in
      the Plan shall be distributed at least as rapidly as under the form of
      distribution in operation as of the date of the Participant's death.

8.6   Death Benefit for Vested Participants Who Terminated After September 1,
      1974 and Prior to August 23, 1984

      Any vested former Participant who terminated after September 1, 1974 and
      prior to August 23, 1984 and whose benefits are not in pay status as of
      August 23, 1984 is to be provided with the right to elect to receive such
      benefits reduced and payable in the form of a qualified 50% joint and
      survivor annuity as defined by ERISA and the Internal

                                       43
<PAGE>
      Revenue Code as in effect prior to August 23, 1984, including the right to
      revoke such coverage without spousal consent if such former Participant:

      (a)   completed at least one Hour of Service under the Plan after
            September 1, 1974, and

      (b)   survives to his Annuity Starting Date.

                                       44
<PAGE>
                                   ARTICLE IX

                           TRUST FUND AND THE TRUSTEE

9.1   Trust Fund

      Subject to the provisions of this Section 9.1, the Company shall execute a
      Trust Agreement with a Trustee (or Trustee) selected by the Company under
      the terms of which a Trust Fund will be established for the purpose of
      receiving and holding contributions made by the Company as well as
      interest and other income on investments of such funds, and for the
      purpose of paying the pensions and other benefits provided by the Plan and
      paying any expenses incident to the operation of the Plan or Trust Fund to
      the extent authorized by the Company. The Trustee is to manage and operate
      the Trust Fund and to receive, hold, invest and reinvest the funds of the
      Trust.

      The Company shall determine the form and terms of such Trust Agreement,
      may modify the Trust Agreement from time to time to accomplish the purpose
      of the Plan, may remove any Trustee and may select any successor trustee.
      Pensions under the Plan may alternatively be provided through the purchase
      of annuity contracts issued by an insurance company. In lieu of a Trust
      Agreement and Trust Fund, the Company may utilize a contract or contracts
      of insurance for the purpose of receiving and holding contributions made
      by the Company and for the purpose of paying pensions and other benefits
      provided by the Plan, and in such event the references hereunder to "Trust
      Agreement", "Trustee" and "Trust Fund" shall be deemed to be references to
      "Insurance Contract", "Insurance Carrier" and "Insured Fund" respectively.

9.2   Irrevocability

      The Trust Fund shall be used to pay pensions and other benefits as
      provided in the Plan and, as provided in Section 9.6, those reasonable
      expenses, taxes and fees incurred in the administration of the Plan and
      Trust Fund which are not paid directly by the Company. No part of the
      principal or income of the fund shall be used for or diverted to purposes
      other than those provided in the Plan and no part of the Trust Fund shall
      revert to the Company for the benefit of the Company, except as permitted
      under Sections 9.3, 11.4 and 12.2 hereof.

9.3   Contributions by the Company

      The Company will pay to the Trustee, subject to all the other provisions
      of the Plan, such amounts as its Board determines, authorizes and directs;
      provided that as a

                                       45
<PAGE>
      minimum contribution, the Company intends to pay to the Trustee such
      amounts as may be necessary to meet the minimum funding standards
      established under the Employee Retirement Income Security Act of 1974. The
      Company also intends to pay all expenses incident to the operation of the
      Plan that are not paid directly from the Trust Fund. Any forfeitures
      arising from the severance of employment or death of a Participant, or for
      any other reason, shall be used to reduce the contributions of the Company
      under the Plan and shall not be applied to increase the pensions or
      benefits any Participant would otherwise receive under the Plan at any
      time prior to the termination of the Plan.

      Payments made to meet the minimum funding standards established under
      ERISA shall, to the maximum extent permitted by valid provisions of ERISA,
      be in complete discharge of the financial obligation of the Company under
      this Plan. The pension benefits of the Plan shall, subject to valid
      provisions of ERISA, be only such as can be provided by the assets of the
      Trust and there shall be no further liability or obligation on any
      Employer to make any further contributions to the Trust for any reason.
      Except as prescribed by valid provisions of ERISA, the Company does not
      guarantee continuity of payment of any benefits under the Plan. The
      Company does not, in any event, guarantee that its contributions or the
      Trust Fund will be sufficient to provide the benefits hereunder. All
      rights of Participants and Beneficiaries, and of any person claiming under
      any Participant or Beneficiary, shall be enforceable only against the
      Trust Fund, except as ERISA may otherwise provide.

      Notwithstanding any provisions of the Plan to the contrary, each
      contribution made by the Company shall be conditioned upon the
      deductibility of the contribution under Section 404 of the Code. If the
      deduction of all or part of the contribution is disallowed, the
      contribution shall, to the extent disallowed, be repaid to the Company
      within one year after the date of disallowance. A contribution also may be
      repaid to the Company, within one year after the date made, to the extent
      it exceeded the full funding limitation or otherwise was made in error
      because of a mistake in fact. Amounts returned under this Section 9.3
      shall recognize any net losses attributable to the returned contribution
      but shall not include any net earnings thereon.

9.4   Contributions By Participants

      No Participant shall be required or allowed to make any contribution to
      the Trust Fund established under the Plan.

                                       46
<PAGE>
9.5   Benefits Payable Only From Trust Fund

      Payment of benefits under the Plan to Participants and Beneficiaries will
      be made only by the Trustee from the funds or securities held by the Trust
      and/or the annuity contract or contracts held by the Trust. Except as may
      be provided by law, no liability for the payment of benefits to
      Participants or their Beneficiaries hereunder shall be imposed upon the
      Company, any Employer or the officers or shareholders of the Company or
      any Employer, and there shall be no liability or obligation on the part of
      the Company or any Employer, to make any further contributions in the
      event of termination of the Plan.

9.6   Plan Expenses

      All reasonable expenses, taxes and fees of the Plan, the Administrator and
      the Trustee incurred in the administration of the Plan and Trust Fund
      shall be paid from the Trust Fund; provided, however, that the obligation
      of the Trust Fund to pay such expenses, taxes and fees shall cease to
      exist to the extent that the same are paid, at the discretion of the
      Company, by the Employers.

                                       47
<PAGE>
                                    ARTICLE X

                               BENEFIT LIMITATIONS

10.1  Maximum Limitation Under Section 415(b) of the Code

      Any provisions of the Plan to the contrary notwithstanding, benefits
      payable under the Plan shall be subject to the following limitations:

      (a)   Maximum Annual Benefit:

            (i)   Subject to the exception below, the Annual Benefit (as
                  hereinafter defined) payable under this Plan for any
                  limitation year beginning on or after January 1, 1995 shall
                  not exceed the lesser of the Dollar Maximum of $120,000 or the
                  Percentage Maximum of 100% of the Participant's average
                  compensation for the period of three consecutive years during
                  which the Participant had the greatest aggregate compensation
                  from an Employer. Compensation, in determining a Participant's
                  Percentage Maximum, shall include the total of all amounts
                  paid to a Participant by an Employer during the limitation
                  year which are defined as wages within the meaning of Section
                  3401(a) of the Code and, for years beginning on and after
                  January 1, 1998, shall include amounts contributed pursuant to
                  a salary reduction election on behalf of the Participant to a
                  plan described in Sections 125, 402(e)(3), 402(h)(1)(B),
                  403(b) or 457(b) of the Code and, for periods on and after
                  January 1, 2001, to a plan described in Section 132(f)(4) of
                  the Code. Effective each January 1, the Dollar Maximum
                  described above shall be automatically adjusted to the new
                  dollar limitation for that calendar year as determined by the
                  Secretary of the Treasury pursuant to Section 415(d) of the
                  Code. To the extent permitted under Section 415 of the Code,
                  such adjusted limitation shall be applied to the benefits
                  payable to current retirees for that calendar year.

            (ii)  For purposes of this Section, "Annual Benefit" means the
                  benefit payable in the form of a straight-life annuity or a
                  qualified joint and survivor pension, with no ancillary
                  benefit, on an annualized basis. If a benefit is payable in
                  any other form, the Annual Benefit limitation shall be applied
                  by adjusting it to the equivalent of a straight-life annuity.
                  Effective for limitation years beginning before January 1,
                  1995, such actuarially equivalent straight-life annuity shall
                  be computed by using an interest rate equal to the greater of
                  5% or the Plan's interest rate and

                                       48
<PAGE>
                  mortality shall be determined by using the Plan's mortality
                  table. For limitation years beginning on and after January 1,
                  1995, the actuarially equivalent straight-life annuity is
                  equal to the greater of (i) the annuity benefit computed using
                  the Plan's interest rate and mortality tables for adjusting
                  forms of payment or (ii) the annuity benefit computed using an
                  interest rate of 5% and the "applicable mortality table" under
                  Code Section 417(e). In determining the actuarially equivalent
                  straight-life annuity for a benefit form subject to Code
                  Section 417(e)(3), the actuarial assumptions used shall be the
                  "applicable interest rate" and the "applicable mortality
                  table" under Code Section 417(e). For these purposes, the
                  lookback month shall be the second month preceding the Plan
                  Year that includes the Annuity Starting Date.

            (iii) For purposes of the maximum limitation of this Article, all
                  qualified defined benefit plans (whether or not terminated)
                  maintained by an Employer or any Affiliate shall be treated as
                  a single plan. For purposes of applying the limitations of
                  Section 415 of the Internal Revenue Code, the terms "Employer"
                  and "Affiliate" shall be construed in light of Sections 414(b)
                  and (c) of the Code, as modified by Code Section 415(h).

            (iv)  If the Annual Benefit begins before a Participant's Social
                  Security Retirement Age (as hereinafter defined), the Dollar
                  Maximum (but not the Percentage Maximum) shall be actuarially
                  reduced so that it is the actuarial equivalent of an Annual
                  Benefit beginning at the Participant's Social Security
                  Retirement Age:

                  (A)   If a Participant's Social Security Retirement Age is 65,
                        the Dollar Maximum for benefits commencing on or after
                        age 62 is determined by reducing the Dollar Maximum by
                        5/9 of one percent for each month by which benefits
                        commence before the month in which the Participant
                        attains age 65.

                  (B)   If a Participant's Social Security Retirement Age is
                        greater than 65, the Dollar Maximum for benefits
                        commencing on or after age 62 is determined by reducing
                        the Dollar Maximum by 5/9 of one percent for each of the
                        first 36 months and 5/12 of one percent for each of the
                        additional months (up to 24

                                       49
<PAGE>
                        months) by which benefits commence before the month of
                        the Participant's Social Security Retirement Age.

                  For purposes of this Section, the term "Social Security
                  Retirement Age" shall mean the age used as the retirement age
                  of a Participant under Section 216(l) of the Social Security
                  Act, except that such Section shall be applied without regard
                  to the age increase factor and as if the early retirement age
                  under Section 216(l)(2) of such Act were 62.

            (v)   If the Annual Benefit begins before age 62, the Dollar Maximum
                  (but not the Percentage Maximum) shall be reduced so that it
                  is the actuarial equivalent of the Dollar Maximum beginning at
                  age sixty-two (62). For purposes hereof, the age adjusted
                  Dollar Maximum beginning prior to age 62 shall be determined
                  as the lesser of (i) the actuarial equivalent annual benefit
                  computed using the Plan's interest rate and mortality table
                  for early retirement benefits or (ii) the actuarial equivalent
                  annual benefit computed using an interest rate of 5% and the
                  "applicable mortality table" under Section 417(e) of the Code.

            (vi)  If the Annual Benefit begins after a Participant's Social
                  Security Retirement Age, the Dollar Maximum (but not the
                  Percentage Maximum) shall be increased so that it is the
                  actuarial equivalent of an Annual Pension beginning at such
                  age. For purposes hereof, the annual benefit beginning after
                  Social Security Retirement Age shall be determined as the
                  lesser of (i) the actuarial equivalent annual benefit computed
                  using the Plan's interest rate and mortality table for the
                  late retirement benefits or (ii) the actuarial equivalent
                  annual benefit computed using an interest rate of 5% and the
                  "applicable mortality table" under Section 417(e) of the Code.

            (vii) For purposes of adjusting the Annual Benefit under paragraphs
                  (i), (ii), (iv), (v) and/or (vi), no adjustments shall be
                  taken into account before the year for which such adjustment
                  first takes effect.

            (viii) The foregoing Section 415(b)(2)(E) actuarial assumptions
                  shall apply to all benefits under the Plan (including benefits
                  accrued before and after the RPA `94 effective date which
                  shall be the first limitation year beginning on or after
                  January 1, 1995).

                                       50
<PAGE>
      (b)   Adjustment for Plan Participation

            If a Participant retires with less than 10 years of Plan
            participation, the Dollar Maximum (but not the Percentage Maximum)
            shall be reduced by multiplying such dollar limitation by a
            fraction, the numerator of which is the Participant's years of
            participation in the Plan and the denominator of which is 10.

      (c)   Adjustment for Years of Service

            If a Participant has less than 10 years of Service, the maximum
            Annual Benefit payable to the Participant shall be reduced by
            multiplying such maximum Annual Benefit by a fraction, the numerator
            of which is the Participant's years of Service or part thereof, and
            the denominator of which is 10.

      (d)   Exception Benefits

            (i)   Subject to the limitations of paragraph (a), this Plan may pay
                  an Annual Benefit to any retired Participant which shall
                  exceed 100% of such Participant's average compensation,
                  provided that the Annual Pension shall not be in excess of
                  $10,000 for the current Plan Year and for all prior Plan
                  Years, and provided that the Participant shall not be or have
                  been at any time considered as an active participant in any
                  defined contribution plan maintained by an Employer or an
                  Affiliate.

            (ii)  In no event shall the adjustments for participation or Service
                  (pursuant to subsections (b) and (c), respectively) reduce the
                  limitation provided in paragraphs (a)(i) or (d)(i) hereof,
                  whichever is applicable, to an amount less than one-tenth
                  (1/10) of the applicable limitation as determined without
                  regard to such adjustments.

            (iii) To the extent provided by the Secretary of the Treasury or his
                  delegate, the adjustment for Plan participation described in
                  subsection (b) herein shall be applied separately with respect
                  to each change in the benefit structure of the Plan.

10.2  Defined Benefit Plan and Defined Contribution Plan Combined Limitation

      (a)   Effective for limitation years beginning before January 1, 2000, in
            any case in which a Participant is a participant in both a defined
            benefit plan and a defined contribution plan maintained by an
            Employer, benefits payable under this Plan and such other plans
            shall not cause the limitations prescribed in Internal Revenue Code
            Section 415(e) to be exceeded. Except as otherwise provided in
            Internal Revenue Code Section 415(e), the sum of the "defined
            benefit plan fraction" and the "defined contribution plan fraction"
            shall not exceed 1.0.

                                       51
<PAGE>
      (b)   For the purposes of this Section 10.2:

            (i)   "defined benefit plan fraction" for any limitation year is a
                  fraction

                  (A)   the numerator of which is the projected Annual Benefit
                        of each Participant under the Plan (determined as of the
                        close of such limitation year), and

                  (B)   the denominator of which is the lesser of:

                        (1)   the product of 1.25 multiplied by the Dollar
                              Maximum set forth in Section 10.1(a)(i) for such
                              year, or

                        (2)   the product of 1.4 multiplied by the Percentage
                              Maximum set forth in Section 10.1(a)(i).

            (ii)  "defined contribution plan fraction" for any limitation year
                  is a fraction

                  (A)   the numerator of which is the sum of the annual
                        additions under Section 415(c)(2) of the Code to the
                        Participant's account or accounts as of the close of the
                        limitation year, and

                  (B)   the denominator of which is the sum of the lesser of the
                        following amounts determined for such year and for each
                        prior year of Service with an Employer:

                        (1)   the product of 1.25 multiplied by the dollar
                              limitation in effect under Section 415(c)(1)(A) of
                              the Code for such year, or

                        (2)   the product of 1.4 multiplied by the amount which
                              may be taken into account under Section
                              415(c)(1)(B) of the Code with respect to such
                              Participant under such plan for such year.

      (c)   For purposes of applying the limitations set forth in this Section
            10.2, all qualified defined benefit plans (whether or not
            terminated) ever maintained by the Company or an Affiliate shall be
            treated as one defined benefit plan, and all qualified defined
            contribution plans (whether or not terminated) ever maintained by
            the Company or an Affiliate shall be treated as one defined
            contribution plan.

      (d)   Notwithstanding any other provisions of this Plan, the rate of
            benefit accrual under this Plan will be reduced to a level necessary
            to prevent the limitations set forth in this Section 10.2 from being
            exceeded with respect to any Participant; provided, however, if any
            Participant's benefit accrual has been reduced as provided in this
            Section, such reduction shall be restored effective as of the first
            day of the first limitation year beginning on or after January 1,
            2000.

                                       52
<PAGE>
                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

11.1  Plan Non-Contractual

No Participant or Beneficiary shall have any right or interest under the Plan
unless and until he becomes entitled thereto as provided in the Plan. The
adoption and maintenance of the Plan shall not be deemed to constitute a
contract between an Employer and any Employee. Inclusion in the Plan will not
affect an Employer's right to discharge or otherwise discipline Employees and
membership in the Plan will not give any Employee the right to be retained in
the service of an Employer nor any right or claim to a pension or other benefit
unless such right is specifically granted under the terms of the Plan.

11.2  Non-Alienation of Retirement Rights or Benefits

      (a)   Except as provided in Section 11.2(b) or 11.2(c), no benefit payable
            under the Plan shall be subject in any manner to anticipation, sale,
            transfer, assignment, pledge, encumbrance, security interest or
            charge, and any action by way of anticipating, alienating, selling,
            transferring, assigning, pledging, encumbering, charging or granting
            a security interest in the same shall be void and of no effect; nor
            shall any such benefit be in any manner liable for or subject to the
            debts, contracts, liabilities, engagements or torts of the person
            entitled to such benefit.

      (b)   Section 11.2(a) shall not apply to the creation, assignment, or
            recognition of a right to any benefit payable pursuant to a
            qualified domestic relations order as defined in Section 414(p) of
            the Code. The Company shall establish reasonable procedures to
            determine the status of domestic relations orders and to administer
            distributions under such orders which are deemed to be qualified
            domestic relations orders. Such procedures shall be in writing and
            shall comply with the provisions of Section 414(p) of the Code. To
            the extent that, because of a qualified domestic relations order,
            more than one individual is to be treated as a surviving spouse, the
            total amount payable from the Plan as a result of the death of a
            Participant shall not exceed the amount that would be payable from
            the Plan if there were only one surviving spouse.

      (c)   Notwithstanding the provisions of Section 11.2(a), the Plan may
            offset any portion of the Accrued Pension of a Participant or the
            Participant's Beneficiary against a claim of the Plan arising:

                                       53
<PAGE>
            (i)   as a result of the Participant's or Beneficiary's conviction
                  of a crime involving the Plan; or

            (ii)  with regard to the Participant's or Beneficiary's violation of
                  ERISA's fiduciary provisions upon:

                  (A)   the entry of any civil judgment, consent order, or
                        decree against the Participant or Beneficiary; or

                  (B)   the execution of any settlement agreement between the
                        Participant or Beneficiary and the Department of Labor
                        or Pension Benefit Guaranty Corporation.

      The provisions of this Section 11.2(c) shall apply only to orders,
      judgments, decrees and settlements issued or entered into after August 5,
      1997, and which expressly provide for such offset.

11.3  Payment of Pension to Others

      In the event that the Administrator shall find that any Participant or
      Beneficiary to whom a pension is payable, is unable to care for his
      affairs because of illness, accident or incapacity, any payment due
      (unless prior claim therefor shall have been made by a duly qualified
      guardian or other legal representative) may, in the discretion of the
      Administrator, be paid to the spouse, parent, child, brother or sister of
      such Participant or Beneficiary or to any other person deemed by the
      Administrator to be maintaining or responsible for the maintenance of such
      Participant or Beneficiary. Any such payment shall be a payment for the
      account of the Participant or Beneficiary and shall be a complete
      discharge of any liability of the Plan and any Employer therefor.

11.4  Prohibition Against Reversion

      Except as provided in Section 9.2 hereof, in no event shall any funds held
      in the Trust Fund revert to the Company or be diverted to purposes other
      than the exclusive benefit of Participants or their Beneficiaries prior to
      the satisfaction of all liabilities under the Plan; provided, however,
      that in the event the Plan is terminated, if, after all plan liabilities
      are satisfied, there remains a balance in the Fund as a result of
      actuarial error, such balance shall be returned to the Company.

11.5  Merger, Transfer of Assets or Liabilities

      The Company may merge or consolidate the Plan with, transfer assets and
      liabilities of the Plan to, or receive a transfer of assets and
      liabilities from, any other plan without the

                                       54
<PAGE>
      consent of any other Employer or other person, if such transfer is
      effected in accordance with applicable law and if such other plan meets
      the requirements of Code Sections 401(a) and 501(a), permits such transfer
      or the receipt of such transfer and, with respect to liabilities to be
      transferred from this Plan to such other plan, satisfies the requirements
      of Code Sections 411(d)(6) and 417. This Plan may not be merged or
      consolidated with any other plan, nor may any assets or liabilities of
      this Plan be transferred to any other plan, unless the terms of the
      merger, consolidation or transfer are such that each Participant in the
      Plan would, if the Plan were terminated immediately after such merger,
      consolidation or transfer, receive a pension having a value equal to or
      greater than the pension he would have been entitled to receive if this
      Plan had terminated immediately prior to the merger, consolidation or
      transfer.

11.6  Actuarial Equivalence

      Any determination of actuarial equivalence required by the provisions of
      this Plan, when not otherwise specified in the Plan, shall be made on the
      basis of the UP-1984 Table (reflecting a one year setback for Employees
      and a two year setback for Beneficiaries) with an annual interest rate of
      6%.

11.7  Change of Vesting Schedule

      If the Plan's vesting schedule is amended or if the Plan is deemed amended
      by an automatic change to or from a Top-Heavy Plan vesting schedule
      (Section 13.3), each Participant with at least three years of Service with
      an Employer may elect, within a reasonable period after the adoption of
      the amendment or change, to have his nonforfeitable pension computed under
      the Plan without regard to such amendment or change.

      The period during which the election may be made shall commence at the
      date the amendment is adopted or deemed to be made and shall end on the
      latest of:

      (a)   60 days after the amendment is adopted;

      (b)   60 days after the amendment becomes effective; or

      (c)   60 days after the Participant is issued written notice of the
            amendment by the Company.

      Notwithstanding the foregoing provisions of this Section 11.7, the vested
      interest of any Participant on the date such amendment is effective shall
      not be less than his vested interest under the Plan as in effect
      immediately prior to the effective date of such change.

                                       55
<PAGE>
11.8  Controlled Group

      For purposes only of determining eligibility to participate in the Plan
      and eligibility for any pension (but not the amount thereof) under the
      Plan, all employment with an Employer or an Affiliate shall be deemed to
      be employment with an Employer in computing Hours of Service and Service.

11.9  Severability

      If any provision of this Plan is held to be invalid or unenforceable, such
      determination shall not affect the other provisions of this Plan. In such
      event, this Plan shall be construed and enforced as if such provision had
      not been included herein.

11.10 Employer Records

      The records of a Participant's Employer shall be presumed to be conclusive
      of the facts concerning his employment or non-employment, Service,
      Credited Service and Compensation unless shown beyond a reasonable doubt
      to be incorrect.

11.11 Application of Plan Provisions

      This Plan shall be binding on all Participants and their spouses and
      Beneficiaries and upon heirs, executors, administrators, successors, and
      assigns of all persons having an interest herein. The provisions of the
      Plan in no event shall be considered as giving any such person any legal
      or equitable right against the Company, an Employer or an Affiliate, any
      of its officers, employees, directors, or shareholders, or against the
      Trustee, except such rights as are specifically provided for in the Plan
      or hereafter created in accordance with the terms of the Plan.

11.12 Missing Participants.

      If a Participant who has left employment with the Company and Affiliates
      has failed to file an application for benefits within 120 days after
      attainment of his Normal Retirement Date, the Administrator shall treat
      the Participant's retirement benefit or vested Accrued Pension as
      forfeited; provided, however, that such Accrued Pension shall be
      reinstated retroactive to the commencement date set forth below upon the
      subsequent filing of a completed application with the Administrator and
      shall commence within ninety (90) days after such application is filed.
      For purposes of this Section 11.12, the commencement date shall be the
      later of:

                                       56
<PAGE>
      (a)   sixty (60) days after the close of the Plan Year during which the
            Participant attained his Normal Retirement Date; and

      (b)   sixty (60) days after the close of the Plan Year during which the
            Participant terminated employment with the Hospital or Affiliate.

11.13 IRC 414(u) Compliance Provision

      Notwithstanding any provision of the Plan to the contrary and effective as
      of December 12, 1994, contributions, benefits and service credit with
      respect to qualified military service shall be provided in accordance with
      Section 414(u) of the Code.

                                       57
<PAGE>
                                   ARTICLE XII

                            AMENDMENT AND TERMINATION

12.1  Amendment and Termination of the Plan

      The Company hopes and expects to continue the Plan, but expressly reserves
      the right at any time and from time to time, without the consent of
      Participants,

      (a)   to reduce or discontinue payments to the Plan;

      (b)   to terminate the Plan;

      (c)   to amend the Plan, retroactively or otherwise, in such manner as it
            may deem necessary or advisable in order to qualify the Plan and any
            trust established in conjunction therewith under the provisions of
            Sections 401(a) and 501(a) of the Code, or any similar Code
            provisions from time to time in effect;

      (d)   to amend the Plan in any other respect, provided, however, that no
            such amendment shall forfeit or diminish the interest of any
            Participant in the Trust Fund to the extent that such interest has
            become vested in such Participant, except as may be permitted under
            the Code or ERISA.

      Any such amendment to or termination of this Plan shall be evidenced by an
      instrument executed on behalf of the Company by the President. Such
      instrument shall recite at which time the amendments contained therein
      shall become effective.

      Promptly after an amendment of this Plan shall have become effective, the
      Company shall cause a copy of such amendment to be filed with the
      Administrator and with the Trustee, and the Administrator shall take such
      steps as it may deem appropriate to reasonably communicate the amendment
      to Participants.

12.2  Administration of the Plan in Case of Termination

      Upon termination of the Plan, as determined by the Pension Benefit
      Guaranty Corporation, the assets of the Trust Fund shall be liquidated and
      distributed in accordance with Section 4044 of ERISA and applicable
      regulations issued thereunder. In the event of the termination of the Plan
      or a partial termination of the Plan, the rights of all affected
      Participants to Accrued Pensions determined as of the date of such
      termination or partial termination, to the extent funded, or as further
      adjusted by the Pension Benefit Guaranty Corporation as of such date,
      shall be nonforfeitable. Notwithstanding the foregoing, upon Plan
      termination, the benefit of any Highly Compensated Employee shall be
      limited to a benefit that is nondiscriminatory under Section 401(a)(4) of
      the Code.

                                       58
<PAGE>
      Upon termination of the Plan, after the satisfaction of all liabilities of
      the Plan to its Participants, Beneficiaries and surviving spouses, the
      Company shall receive any remaining amount resulting from any variations
      between actual requirements and actuarially expected requirements.

12.3  Internal Revenue Service Limitations

      (a)   Except in such cases where the circumstances described in subsection
            (b) apply, the annual payments under the Plan to any one (1) of the
            twenty-five (25) highest paid Highly Compensated Employees (and
            Highly Compensated former Employees), ranked by Test Compensation,
            shall not exceed the sum of:

            (i)   those payments that would be made on behalf of such Employee
                  under a single life annuity that is the Actuarial Equivalent
                  of the sum of the Employee's Accrued Pension and the
                  Employee's Other Benefits (as defined in subsection (c) below)
                  under the Plan; and

            (ii)  those payments the Employee is entitled to receive under a
                  social security supplement.

      (b)   The provisions of subsection (a) above shall not apply if:

            (i)   after payment of all such benefits to an Employee described in
                  subsection (a), the value of Plan assets equals or exceeds
                  110% of the value of current liabilities (as defined in Code
                  Section 412(l)(7) under the Plan;

            (ii)  the value of all such benefits to an Employee described in
                  subsection (a) above is less than one percent of the value of
                  current liabilities under the Plan prior to the payment of all
                  such benefits to such Employee; or

            (iii) the value of all such benefits to an Employee described in
                  subsection (a) does not exceed $5,000 or such other amount as
                  may be prescribed under Section 411(a)(11)(A) of the Code as
                  the maximum amount that may be paid out without the
                  Participant's consent.

      (c)   For purposes of this Section 12.3, "Other Benefits" shall include
            any loan in excess of the amounts set forth in Code Section
            72(p)(2)(A), any periodic income, any withdrawal values payable to a
            living Employee and any death benefits not provided for by insurance
            on the Employee's life. "Other Benefits" for this purpose shall not
            include any social security supplements.

                                       59
<PAGE>
                                  ARTICLE XIII

                              TOP-HEAVY PROVISIONS

13.1  General

      Notwithstanding any provision of this Plan to the contrary, the provisions
      of this Article XIII shall apply with respect to any Plan Year provided
      the Plan is a Top-Heavy Plan (as defined in Section 13.2(c) below) for
      such Plan Year.

13.2  Definitions Relating to Top-Heavy Provisions

      For purposes of this Article XIII:

      (a)   "Key Employee" means any Employee or former Employee (and the
            beneficiaries of such an Employee or former Employee) who, during
            the current Plan Year or any of the four preceding Plan Years, is:

            (i)   an officer of an Employer having annual Test Compensation
                  greater than 50 percent of the amount in effect under Section
                  415(b)(1)(A) of the Code for any such Plan Year; for purposes
                  of this definition, no more than the lesser of (1) 50
                  Employees or (2) the greater of three Employees or 10% of the
                  Employees shall be treated as officers;

            (ii)  an owner (or considered an owner under Section 318 of the
                  Code) of one of the ten largest interests in an Employer if
                  such individual's annual Test Compensation exceeds the dollar
                  limitation under Section 415(c)(1)(A) of the Code;

            (iii) a five percent (5%) owner (or considered an owner under
                  Section 318 of the Code) who owns more than five percent (5%)
                  of the outstanding stock of an Employer or who owns Employer
                  stock possessing more than five percent (5%) of the total
                  combined voting power of all stock of an Employer;

            (iv)  a one percent (1%) owner (or considered an owner under Section
                  318 of the Code) who has annual Test Compensation from an
                  Employer of $150,000 or more, and who owns more than one
                  percent (1%) of the outstanding stock of an Employer or who
                  owns Employer stock possessing more than one percent (1%) of
                  the total combined voting power of all stock of an Employer.

      (b)   "Determination Date" means, with respect to any Plan Year, the last
            day of the immediately preceding Plan Year.

                                       60
<PAGE>
      (c)   "Top-Heavy Plan" means a plan where, as of the Determination Date,
            the present value of the cumulative accrued benefits (including any
            part of any accrued benefit distributed in the five-year period
            ending on the Determination Date) under the Plan for Key Employees
            exceeds sixty percent (60%) of the present value of the cumulative
            accrued benefits (including any part of any accrued benefit
            distributed in the five-year period ending on the Determination
            Date) under the Plan for all Employees.

            (i)   If this Plan is in a Required Aggregation Group, each Plan of
                  an Employer required to be in such group will be a Top-Heavy
                  Plan if such group is a Top-Heavy Group.

            (ii)  If this Plan is in a Permissive Aggregation Group which is not
                  a Top-Heavy Group, no Plan of an Employer in such group will
                  be a Top-Heavy Plan.

      (d)   "Required Aggregation Group" means:

            (i)   each plan of an Employer in which a Key Employee is a
                  participant, and

            (ii)  each other plan of an Employer which enables a plan in which a
                  Key Employee is a participant to meet the requirements of
                  Internal Revenue Code Sections 401(a)(4) or 410. A terminated
                  plan must be aggregated with other plans of an Employer if it
                  was maintained within the five-year period ending on the
                  Determination Date for the Plan Year in question and it would,
                  but for the fact it terminated, be part of a required
                  aggregation group for such Plan Year.

      (e)   "Permissive Aggregation Group" means any plan of an Employer which
            is not part of the Required Aggregation Group, but is treated as if
            it were at the option of the Company, provided such group continues
            to meet the requirements of Internal Revenue Code Sections 401(a)(4)
            and 410.

      (f)   "Top-Heavy Group" means any Required or Permissive Aggregation
            Group, if as of the Determination Date, the sum of the present value
            of cumulative accrued benefits for Key Employees under all defined
            benefit plans included in such Group and the aggregate of the
            accounts of Key Employees under all defined contribution plans
            included in such Group exceeds sixty percent (60%) of the similar
            sum determined for all Employees.

      (g)   "Present Value of Accrued Benefits" shall be determined as of the
            most recent valuation date within a twelve-month period ending on
            the Determination Date,

                                       61
<PAGE>
            but for the purposes of determining whether this Plan is a Top-Heavy
            Plan, shall not include:

            (i)   any rollover contribution initiated by the Employee.

            (ii)  any accrued benefit or account attributable to an Employee who
                  is not a Key Employee, but who was a Key Employee in any prior
                  Plan Year. To the extent that a Key Employee is deemed to be a
                  Key Employee if he meets the definition of Key Employee within
                  any of the four (4) preceding Plan Years, this provision shall
                  apply following the end of such period of time.

            (iii) Any accrued benefit or account attributable to any individual
                  who has not performed any services for an Employer at any time
                  during the five-year period ending on the Determination Date.

            Solely for purposes of determining if the Plan is a Top Heavy Plan
            as described above, the Present Value of Accrued Benefits shall be
            determined by using the single accrual method which is used for all
            plans of the Company and of any Affiliate. If no such single method
            exists, benefits shall be determined as if they accrued not more
            rapidly than the lowest accrued rate permitted under Section
            411(b)(1)(C) of the Code.

      (h)   "Valuation Date" means December 31.

      (i)   "Non-Key Employee" means any Employee who is not a Key Employee.

13.3  Top-Heavy Plan Vesting Requirements

      (a)   For any Plan Year in which the Plan is a Top-Heavy Plan, the
            following vesting schedule will apply to benefits derived from
            Employer contributions. The nonforfeitable interest in a
            Participant's accrued benefit will be determined as follows:

<TABLE>
<CAPTION>
                                             Nonforfeitable Percentage of
           Years of Service                        Accrued Benefit
           -----------------                 ----------------------------
<S>                                          <C>
           0 but less than 2                              0%
           2 but less than 3                             20%
           3 but less than 4                             40%
           4 but less than 5                             60%
               5 or more                                 100%
</TABLE>

            This Section 13.3 does not apply to any Participant who does not
            have an Hour of Service after the Plan becomes a Top-Heavy Plan.

                                       62
<PAGE>
      (b)   If the vesting schedule under the Plan shifts in or out of the above
            schedule due to determination of whether or not the Plan is a
            Top-Heavy Plan, such shift shall be an amendment to the vesting
            schedule and Section 11.7 shall apply.

13.4  Top-Heavy Plan Minimum Benefit Requirements

      (a)   For any Plan Year in which the Plan is determined to be a Top-Heavy
            Plan, each Non-Key Employee Participant who has completed a year of
            service will accrue a minimum annual benefit (derived from Employer
            contributions and expressed as a life annuity beginning at Normal
            Retirement Age and determined without regard to any Social Security
            contribution or benefit).

      (b)   Such accrual of a minimum annual benefit will be the lesser of:

            (i)   Two percent (2%) of the Participant's highest average
                  compensation for the five consecutive years during which the
                  Participant had the greatest compensation from the Employer
                  multiplied by the years of service as defined in (c) below, or

            (ii)  Twenty percent (20%) times the Participant's highest average
                  compensation for the five consecutive years during which the
                  Participant had the greatest compensation from an Employer.

      (c)   (i)   For the purpose of the accrual of minimum annual benefit, year
                  of service shall mean a year of Credited Service as defined in
                  Article IV, but will exclude years when the Plan was not a
                  Top-Heavy Plan for any Plan Year ending during such year of
                  Credited Service, as well as years of Credited Service in a
                  Plan Year beginning before December 31, 1984. Notwithstanding
                  the above, each Non-Key Employee Participant who has completed
                  1,000 Hours of Service in a year in which the Plan is a
                  Top-Heavy Plan shall be entitled to the minimum annual benefit
                  regardless of the level of such Non-Key Employee's
                  compensation.

            (ii)  The compensation required to be taken into account for
                  purposes of this Section 13.4 is the compensation described in
                  Section 10.1(a)(i) of the Plan; provided, however, that
                  compensation shall not exceed the adjusted annual limitation
                  in effect for the given year (as set forth in Section 2.11)
                  and compensation in years which end in a Plan Year beginning
                  before December 31, 1984 and compensation in years after the
                  close of the last Plan Year in which the Plan is a Top-Heavy
                  Plan shall be disregarded.

                                       63
<PAGE>
      (d)   Notwithstanding any other provision of the Plan, an Employee shall
            be a Participant for the purposes of this Section 13.4, and a
            Participant shall be entitled to an accrual under this Section 13.4,
            even if he would not otherwise be entitled to receive an accrual or
            would have received a lesser accrual for the year because the
            Non-Key Employee Participant is not employed on a specified date.

      (e)   If the annual retirement pension payable under the Plan to a
            Participant who has accrued a minimum annual benefit under this
            Article XIII commences at a date other than at Normal Retirement
            Age, such Participant shall receive at least an amount that is the
            actuarial equivalent of the minimum annual benefit commencing at
            Normal Retirement Age as provided under this Section 13.4 using a
            five percent (5%) interest rate assumption for such determination.
            If the annual retirement pension payable to a Participant who has
            accrued a minimum annual benefit under this Article XIII is in a
            form other than a single life annuity, such Participant shall
            receive an amount that is not less than the minimum annual benefit
            as otherwise provided in this Section 13.4 adjusted to be the
            actuarial equivalent of a single life annuity commencing at the same
            age using the provisions of Section 11.6 of the Plan for such
            determination.

      (f)   In the case of Employees covered under both this Plan and any other
            plan maintained by an Employer, this Plan will provide the top heavy
            minimum benefit which shall be offset by the benefit, if any,
            provided under such other plans.

13.5  Required Adjustments

      In any year which begins before January 1, 2000 and in which the Plan is
      determined to be a Top-Heavy Plan, either (a) or (b) below must apply.

      (a)   The defined benefit plan fraction of Section 10.2(b)(i) of the Plan
            and the defined contribution plan fraction of Section 10.2(b)(ii) of
            the Plan shall be applied by substituting 1.0 for 1.25, OR

      (b)   (i)   This paragraph may apply if this is determined to be a
                  Top-Heavy Plan, but would not be a Top-Heavy Plan if ninety
                  percent (90%) were substituted for sixty percent (60%) in
                  Section 13.2(c) of this Plan, and

            (ii)  The following modifications to Section 13.4, Minimum Benefit
                  Requirements, are adopted:

                                       64
<PAGE>
                  In Section 13.4(b)(i): use 3% instead of 2%, and in Section
                  13.4(b)(ii): increase 20% by one percentage point for each
                  year (up to 10) for which the Plan was considered under this
                  Section 13.5.

13.6  Limited Application of this Article.

      The sole purpose of this Article is to comply with Section 416 of the Code
      and the terms of this Article shall be interpreted, applied, and if and to
      the extent necessary, shall be deemed modified so as to satisfy solely the
      minimum requirements of Section 416 of the Code and the regulations
      promulgated with respect thereto.

                                       65
<PAGE>
                                   ARTICLE XIV

                                  JURISDICTION

14.1  Jurisdiction

      The provisions of the Plan shall be construed in accordance with ERISA,
      the Code, and, where not superseded by ERISA, the laws of the Commonwealth
      of Pennsylvania.

Executed at Erie, Pennsylvania, this 10th day of December, 2001.

                                                   ERIE INDEMNITY COMPANY

                                                   By: /s/ Stephen A. Milne
                                                       ---------------------
                                                           President

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