Document:

Exhibit 10.84

 

EXHIBIT 10.84

ERIE INDEMNITY COMPANY

LONG-TERM INCENTIVE PLAN

SECTION 1. GENERAL

     1.1 Purpose. The purposes of the Long-Term Incentive Plan (the “Plan”) are:
(a) to enhance the growth and profitability of Erie Indemnity Company, a Pennsylvania business
corporation (the “Company”), and its subsidiaries and affiliates, including Erie Family
Life Insurance Company, and the Erie Insurance Exchange (collectively, the “Erie Insurance
Group”) by providing the incentive of long-term rewards to key employees who are capable of
having a significant impact on the performance of the Company and its subsidiaries and affiliates;
(b) to attract and retain employees of outstanding competence and ability; and (c) to further align
the interests of such employees with those of the shareholders of the Company .

     1.2 Administration of the Plan. The Plan shall be administered by the Executive
Compensation and Development Committee (the “Committee”) of the Company’s Board of
Directors (the “Board”) or other committee appointed by the Board, which shall be comprised
of not less than two members of the Board, each of whom at the time of appointment to the Committee
and at all times during service as a member of the Committee shall be both (1) a “non-employee
director” as then defined under Rule 16b-3 under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), or any successor rule and (2) an “outside director” as then defined
in the regulations under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
“Code”), or any successor provision. Subject to the provisions of the Plan, the Committee
shall have sole and complete authority to: (i) select Participants after receiving the
recommendations of the management of the Company; (ii) determine the number of Restricted
Performance Shares, as described in Section 2 subject to each grant; (iii) determine the time or
times when grants are to be made or are to be effective, including the Performance Period for each
grant; (iv) determine the terms and conditions, including the Performance Goals, subject to which
grants may be made; (v) extend the term of any grant; (vi) prescribe the form or forms of the
instruments evidencing any grants made hereunder, provided that such forms are consistent with the
Plan; (vii) adopt, amend, and rescind such rules and regulations as, in its opinion, may be
advisable for the administration of the Plan; (viii) construe and interpret the Plan and all rules,
regulations, and instruments utilized thereunder; and (ix) make all determinations deemed advisable
or necessary for the administration of the Plan. All determinations by the Committee shall be
final and binding.

     1.3 Eligibility and Participation. Participation in the Plan shall be limited to
officers (who may also be members of the Board) and other salaried key employees of the Company and
its subsidiaries and affiliates as identified by the Committee to participate in the Plan.
Employees who are granted awards under the Plan are referred to herein as “Participants”.

     1.4 Shares Available. The aggregate net number of shares of Class A (non-voting)
Common Stock of the Company (the “Common Stock”) which may be paid and as to which grants
of Restricted Performance Shares may be made under the Plan is 1,000,000 shares, subject to
adjustment and substitution as set forth in Section 3. The Company or its agent shall repurchase
outstanding shares of Common Stock in order to satisfy the Company’s obligation under the Plan to
pay awards in shares of Common Stock. If shares of Common Stock are forfeited to the Company
pursuant to the restrictions applicable to Restricted Performance Shares or are withheld or
delivered to the Company in satisfaction of a tax withholding obligation, the shares so forfeited,
withheld or delivered shall again be available for purposes of the Plan.

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     1.5 New Participants. Except as provided in this Section 1.5, an employee who is not
a Participant as of the first day of a Performance Period shall not become a Participant for that
Performance Period. New employees of the Company or its subsidiaries and affiliates hired during a
Performance Period, and employees promoted during the Performance Period who were not eligible to
participate in the Plan at the beginning of the Performance Period, may, as determined by the
Committee in its sole discretion, become a Participant during a Performance Period and participate
in the Plan for such Performance Period on a pro-rata basis (based on the number of days in the
Performance Period that such employee is an employee who is deemed eligible to participate in the
Plan); provided, that if the new or promoted employee is a covered employee (as such term is
defined under Section 162(m) of the Code or any successor section thereto and the regulations
thereunder), then the employee shall not be eligible to participate in the Plan unless he or she
becomes a Participant effective not later than 90 days after the beginning of the Performance
Period.

SECTION 2. RESTRICTED PERFORMANCE SHARES

     2.1 Restricted Performance Shares. The Committee is authorized to grant Restricted
Performance Shares to Participants on the following terms and conditions:

     (i) Right to Payment of Shares. Restricted Performance Shares shall represent a right
to receive shares of Common Stock based on the achievement, or the level of achievement,
during a specified Performance Period of one or more Performance Goals established by the
Committee at the time of the award.

     (ii) Terms of Restricted Performance Shares. At the time Restricted Performance Shares
are granted, the Committee shall cause to be set forth in the agreement covering such award
or otherwise in writing (1) the Performance Goals applicable to the award, the weighting of
such goals, and the Performance Period during which the achievement of the Performance Goals
shall be measured, (2) the number of shares of Common Stock which may be earned by the
Participant based on the achievement, or the level of achievement, of the Performance Goals
or the formula by which such amount shall be determined and (3) such other terms and
conditions applicable to the award as the Committee may, in its discretion, determine to
include therein. The terms so established by the Committee shall be objective such that a
third party having knowledge of the relevant facts could determine whether or not any
Performance Goal has been achieved, or the extent of such achievement, and the amount, if
any, which has been earned by the Participant based on such performance.

     (iii) Performance Goals. “Performance Goals” shall mean one or more preestablished,
objective measures of performance during a specified “Performance Period”, selected
by the Committee in its discretion. Performance Goals may be based upon one or more of the
following objective performance measures and expressed in either, or a combination of,
absolute or relative values: (i) adjusted combined ratio of property and casualty insurance
operations of Erie Insurance Group, (ii) growth in direct written premiums of Erie Insurance
Group, (iii) the statutory or GAAP combined ratio, loss ratio, expense ratio or dividend
ratio of the property and casualty insurance operations of the Erie Insurance Group, (iv) net
income (including net income before or after taxes and net income before interest, taxes,
depreciation and amortization), net income per share and net income per share growth rate,
(v) operating revenue, net premiums written or net premiums earned, (vi) operating expenses,
cost of management operations or underwriting expenses, (vii) cash flow, (viii) return on
capital, shareholders’ equity, assets or investments, (ix) stock price, (x) market share or
(xi) gross margins. Performance measures may be based on the performance of the Erie
Insurance Group, the Company or a subsidiary or subsidiaries or affiliate of the Company, a
division, department, business unit or other portion thereof, a product line or products, or
any combination the foregoing and/or upon a comparison of such performance with the
performance of a peer group of corporations or other measure selected or defined by the
Committee at

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the time of making the award of Restricted Performance Shares. The Committee may in its
discretion also determine to use other objective performance measures as Performance Goals.

     (iv) Committee Certification. Following completion of the applicable Performance
Period, and prior to any payment of shares of Common Stock to the Participant for Restricted
Performance Shares, the Committee shall determine, in accordance with the terms of the
Restricted Performance Shares, and certify in writing whether the applicable Performance Goal
or Goals were achieved, or the level of such achievement, and the number of shares, if any,
earned by the Participant based upon such performance. For this purpose, approved minutes of
the meeting of the Committee at which certification is made shall be sufficient to satisfy
the requirement of a written certification.

     (v) Maximum Individual Payments. The maximum number of shares of Common Stock which
may be earned under the Plan by any single Participant during any one calendar year shall be
limited to 250,000 shares. The limitation in the preceding sentence shall be interpreted and
applied in a manner consistent with Section 162(m) of the Code.

     (vi) Termination of Employment.

(a) Death, Disability or Normal or Early Retirement. If a Participant
ceases to be an employee of the Company, its subsidiaries and affiliates prior to the
end of a Performance Period by reason of death, disability (meaning total and
permanent disability within the meaning of Section 22(e)(3) of the Code) or Normal or
Early Retirement (as defined in the Company’s qualified pension plan for employees),
the Participant may receive all or such portion of his or her award as may be
determined by the Committee in its sole discretion; provided, that the Participant
shall not receive less than the total number of shares of Common Stock earned pursuant
to such Restricted Performance Shares held by such Participant based upon performance
during the reduced Performance Period which is deemed to end on the last day of the
year in which such termination occurs. Such award will be paid in the form of shares
of Common Stock in the manner provided for in Section 2.1(vii).

(b)Other Terminations. If a Participant ceases to be an employee of the Company,
its subsidiaries and affiliates prior to the end of a Performance Period for any
reason other than death, disability or Normal or Early Retirement as described in
subsection (a), above, the Participant may receive all or such portion of his or her
award as may be determined by the Committee in its sole discretion; provided, that a
Participant who is terminated for cause (as defined in such employee’s employment
agreement with the Company or its subsidiary or affiliate, if no such agreement
exists, as defined by the Committee) shall not be entitled to receive payment of any
award for any Performance Period.

     (vii) Payment. As soon as reasonably practicable following the Committee’s
determination and certification, as set forth in Section 2.1(iv), the Company shall pay to
the Participant the number of shares of Common Stock earned pursuant to the award of
Restricted Performance Shares held by the Participant for the relevant Performance Period.

SECTION 3. ADJUSTMENT PROVISIONS

     3.1 Adjustments Generally. If a dividend or other distribution shall be declared upon
the Common Stock payable in shares of Common Stock, the number of shares of Common Stock then
subject to any outstanding Restricted Performance Shares, the number of shares of Common Stock
which may be issued under the Plan but not then subject to outstanding Restricted Performance
Shares and the maximum number of shares as to which Restricted Performance Shares may be granted
and as to which shares may be awarded under Section 2.1(v), shall be adjusted by adding thereto the
number of shares of Common Stock which would have

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been distributable thereon if such shares had been outstanding on the date fixed for
determining the shareholders entitled to receive such stock dividend or distribution.

     3.2 Recapitalizations, Mergers, Etc . If the outstanding shares
of Common Stock shall be changed into or exchangeable for a different number or kind
of shares of stock or other securities of the Company or another corporation, or cash
or other property, whether through reorganization, reclassification, recapitalization,
stock split-up, combination of shares, merger or consolidation, then there shall be
substituted for each share of Common Stock subject to any then outstanding Restricted
Performance Share, and for each share of Common Stock which may be issued under the
Plan but which is not then subject to any outstanding Restricted Performance Share,
the number and kind of shares of stock or other securities (and in the case of
outstanding Restricted Performance Share, the cash or other property) into which each
outstanding share of the Common Stock shall be so changed or for which each such share
shall be exchangeable.

     3.3 Spin-Offs, Liquidations, Etc. If the outstanding shares of the Common Stock shall
be changed in value by reason of any spin-off, split-off or split-up, or dividend in partial
liquidation, dividend in property other than cash, or extraordinary distribution to shareholders of
the Common Stock, the Committee shall make any adjustments to any then outstanding Restricted
Performance Share which it determines are equitably required to prevent dilution or enlargement of
the rights of awardees which would otherwise result from any such transaction.

     3.4 No Fractional Shares. No adjustment or substitution provided for in this Section
3.1 shall require the Company to pay or sell a fraction of a share of Common Stock or other
security. Accordingly, all fractional shares of Common Stock or other securities which result from
any such adjustment or substitution shall be eliminated and not carried forward to any subsequent
adjustment or substitution.

SECTION 4. AMENDMENTS TO AND TERMINATION OF THE PLAN

     4.1 Amendment and Termination. The Board may amend, alter, suspend, discontinue or
terminate the Plan without the consent of shareholders or Participants, except that, without the
approval of the shareholders of the Company, no amendment, alteration, suspension, discontinuation
or termination shall be made if shareholder approval is required by any federal or state law or
regulation or by the rules of any stock exchange on which the shares may then be listed, or if the
amendment, alteration or other change materially increases the benefits accruing to Participants,
increases the number of shares available under the Plan or modifies the requirements for
participation under the Plan, or if the Board in its discretion determines that obtaining such
shareholder approval is for any reason advisable; provided, however, that except as provided in
Section 5.15, without the consent of the Participant, no amendment, alteration, suspension,
discontinuation or termination of the Plan may materially and adversely affect the rights of such
Participant under any award theretofore granted to him. The Committee may, consistent with the
terms of the Plan, waive any conditions or rights under, amend any terms of, or amend, alter,
suspend, discontinue or terminate, any award theretofore granted, prospectively or retrospectively;
provided, however, that except as provided in Section 5.15, without the consent of a Participant,
no amendment, alteration, suspension, discontinuation or termination of any award may materially
and adversely affect the rights of such Participant under any award theretofore granted to him.

SECTION 5. MISCELLANEOUS

     5.1 Designation of Beneficiary. A Participant may designate, in a writing delivered to
the Company before his death, a person or persons to receive, in the event of his death, any rights
to which he would be entitled under the Plan. Such designation may be made, revoked or changed by
the Participant at any time before the earlier of death or receipt of any unpaid amounts, but such
designation of beneficiary will not be effective and supersede all prior designations until it is
received and acknowledged by the Committee or its delegate. If the Committee has any doubt as to
the proper beneficiary to receive payments hereunder, the Committee shall have

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the right to withhold such payments until the matter is finally adjudicated. However, any
payment made in good faith shall fully discharge the Committee, the Company, its subsidiaries,
affiliates and the Board from all further obligations with respect to that payment.

     5.2 No Right to Employment. Nothing contained in the Plan or any award agreement
shall confer, and no grant of an award shall be construed as conferring, upon any Participant any
right to continue in the employ of the Company, its subsidiaries or affiliates or to interfere in
any way with the right of the Company to terminate his employment at any time or increase or
decrease his compensation from the rate in existence at the time of granting of an award.

     5.3 Nontransferability. A Participant’s rights under the Plan, including the right to
any shares payable, may not be assigned, pledged, or otherwise transferred except, in the event of
a Participant’s death, to his designated beneficiary or, in the absence of such a designation, by
will or the laws of descent and distribution.

     5.4 Relationship to Other Benefits. No payment under the Plan shall be taken into
account in determining any benefits under any retirement, group insurance, or other employee
benefit plan of the Company. The Plan shall not preclude the shareholders of the Company, the
Board or any committee thereof, or the Company from authorizing or approving other employee benefit
plans or forms or incentive compensation, nor shall it limit or prevent the continued operation of
other incentive compensation plans or other employee benefit plans of the Company or the
participation in any such plans by Participants in the Plan.

     5.5 Withholding. To the extent required by applicable Federal, state, local or
foreign law, the Participant or his successor shall make arrangements satisfactory to the Company,
in its discretion, for the satisfaction of any withholding tax obligations that arise in connection
with an award. The Company shall not be required to pay any shares of Common Stock or other
payment under the Plan until such obligations are satisfied. The Company is authorized to withhold
from any award granted or any payment due under the Plan, including from a distribution of shares
of Common Stock, amounts of withholding taxes due with respect to an award, or any payment
thereunder, and to take such other action as the Committee may deem necessary or advisable to
enable the Company and Participants to satisfy obligations for the payment of such taxes. This
authority shall include authority to withhold or receive previously owned shares to satisfy such
tax withholding obligations, provided that shares withheld or delivered to satisfy such obligations
in excess of the minimum required statutory withholding rate must have been held for at least six
months to the extent that the Committee so requires.

     5.6 Unfunded Status of Awards; Creation of Trusts. The Plan is intended to constitute
an “unfunded” plan for incentive and deferred compensation. With respect to any payments not yet
made to a Participant pursuant to an award, nothing contained in the Plan or any award agreement
shall give any such Participant any rights that are greater than those of a general unsecured
creditor of the Company; provided, however, that the Committee may authorize the creation of trusts
or make other arrangements to meet the Company’s obligations under the Plan to deliver shares
pursuant to any award, which trusts or other arrangements shall be consistent with the “unfunded”
status of the Plan.

     5.7 Deferral. Participants may elect to defer all or a portion (in whole percentages)
of their Restricted Performance Shares for any Performance Period, in accordance with the terms of
a deferral agreement entered into between the Participant and the Company; provided that such
election to defer must be made prior to the commencement of the Performance Period to which such
deferral relates. The Company may require that such deferrals be made in the form of Common Stock
units. No amount in excess of the number of the shares of Common Stock underlying such Restricted
Performance Shares deferred shall be payable to the Participant for such deferral, except for the
dividend equivalent amount for dividends paid on the Company’s outstanding Common Stock during the
deferral period.

     5.8 Expenses. The expenses of administering the Plan shall be borne by the Company.

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     5.9 Indemnification. Service on the Committee shall constitute service as a member of
the Board so that members of the Committee shall be entitled to indemnification and reimbursement
as directors of the Company pursuant to its Articles of Incorporation, By-Laws, or resolutions of
its Board or shareholders.

     5.10 Tax Litigation. The Company shall have the right to contest, at its expense, any
tax ruling or decision, administrative or judicial, on any issue that is related to the Plan and
that the Company believes to be important to Participants in the Plan and to conduct any such
contest or any litigation arising therefrom to a final decision.

     5.11 No Right to Awards; No Shareholder Rights. No Participant or employee shall have
any claim to be granted any award under the Plan, and there is no obligation for uniformity of
treatment of Participants and employees. No award shall confer on any Participant any of the
rights of a shareholder of the Company unless and until shares of Common Stock are in fact paid to
such Participant in connection with such award.

     5.12 No Fractional Shares. No fractional shares of Common Stock shall be paid or
delivered pursuant to the Plan or any award. In the event that any award would result in the
issuance of a fractional share of Common Stock, the fractional share shall be rounded up to the
next whole share.

     5.13 Governing Law. The validity, interpretation, construction and effect of the Plan
and any rules and regulations relating to the Plan shall be governed by the laws of the
Commonwealth of Pennsylvania (without regard to the conflicts of laws thereof).

     5.14 Severability. If any provision of the Plan or any award is or becomes or is
deemed invalid, illegal or unenforceable in any jurisdiction, or would disqualify the Plan or any
award under any law deemed applicable by the Committee, such provision shall be construed or deemed
amended to conform to applicable laws or if it cannot be construed or deemed amended without, in
the determination of the Committee, materially altering the intent of the Plan or award, it shall
be deleted and the remainder of the Plan or award shall remain in full force and effect; provided,
however, that, unless otherwise determined by the Committee, the provision shall not be construed
or deemed amended or deleted with respect to any Participant whose rights and obligations under the
Plan are not subject to the law of such jurisdiction or the law deemed applicable by the Committee.

     5.15 Certain Restrictions Under Rule 16b-3. Upon the effectiveness of any amendment
to Rule 16b-3, this Plan and any award agreement for an outstanding award held by a Participant
then subject to Section 16 of the Exchange Act shall be deemed to be amended, without further
action on the part of the Committee, the Board or the Participant, to the extent necessary for
awards under the Plan or such award agreement to qualify for the exemption provided by Rule 16b-3,
as so amended, except to the extent any such amendment requires shareholder approval.

     5.16 Registration and Listing Compliance. No award shall be paid and no shares or
other securities shall be distributed with respect to any award in a transaction subject to the
registration requirements of the Securities Act of 1933, as amended, or any state securities law or
subject to a listing requirement under any listing agreement between the Company and any national
securities exchange, and no award shall confer upon any Participant rights to such payment or
distribution until such laws and contractual obligations of the Company have been complied with in
all material respects. Except to the extent required by the terms of an award agreement or another
contract between the Company and the Participant, neither the grant of any award nor anything else
contained herein shall obligate the Company to take any action to comply with any requirements of
any such securities laws or contractual obligations relating to the registration (or exemption
therefrom) or listing of any shares or other securities, whether or not necessary in order to
permit any such payment or distribution.

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     5.17 Stock Certificates. All certificates for shares delivered under the terms of the
Plan shall be subject to such stop-transfer orders and other restrictions as the Committee may deem
advisable under federal or state securities laws, rules and regulations thereunder, and the rules
of any national securities exchange or automated quotation system on which shares of Common Stock
are listed or quoted. The Committee may cause a legend or legends to be placed on any such
certificates to make appropriate reference to such restrictions or any other restrictions or
limitations that may be applicable to shares. In addition, during any period in which awards or
shares are subject to restrictions or limitations under the terms of the Plan or any award
agreement, or during any period during which delivery or receipt of an award or shares has been
deferred by the Committee or a Participant, the Committee may require any Participant to enter into
an agreement providing that certificates representing shares payable or paid pursuant to an award
shall remain in the physical custody of the Company or such other person as the Committee may
designate.

SECTION 6. EFFECTIVE DATE AND TERM OF THE PLAN

     6.1 Effective Date. The effective date and date of adoption of the Plan shall be
March 2, 2004, the date of adoption of the Plan by the Board, provided that the Plan is approved by
a majority of the votes cast at a duly held meeting of shareholders of the Company and any award
granted prior to such shareholder approval shall be subject to and conditioned upon receipt of such
shareholder approval. Notwithstanding anything else contained in the Plan or in any award
agreement, no shares may be distributed pursuant to any award granted under the Plan prior to such
shareholder approval. In the event such shareholder is not obtained, all awards granted under the
Plan shall automatically be deemed void and of no effect. Absent additional shareholder approval,
no Restricted Performance Shares may be granted under the Plan subsequent to the Company’s Annual
Meeting of Shareholders in 2009.

*     *     *

49EX-10.48

 

EXHIBIT 10.48

ERIE INDEMNITY COMPANY

ANNUAL INCENTIVE PLAN

     Section 1. Purpose. The purpose of the Annual Incentive Plan (the
“Plan”) of Erie Indemnity Company (the “Company”) is to advance the best interests
of the Erie Insurance Group—consisting of the Company and its subsidiaries and affiliates,
including Erie Family Life Insurance Company, and the Erie Insurance Exchange (collectively, the
“Erie Insurance Group”)—and thereby enhance shareholder value of the Company by providing
incentives in the form of annual cash bonus awards to certain management employees of the Company
and other Participating Entities upon the attainment of performance goals established in accordance
with the Plan.

     Section 2. Effective Date and Performance Periods. The effective date of the
Plan is March 2, 2004, provided that the Plan is approved by shareholders of the Company prior to
the payment of any awards hereunder. The Plan will remain in effect from year to year (each
calendar year shall be referred to herein as a “Plan Year”) until formally amended or
terminated in writing by the Company’s Board of Directors (the “Board”). There shall be
one year performance periods (each, a “Performance Period”) under the Plan. A new
Performance Period shall commence on the first day of each Plan Year and end on December 31 of such
Plan Year.

     Section 3. Administration of the Plan.

     Section 3.01. General. The Plan shall be administered by the Executive
Compensation and Development Committee (the “Committee”) of the Board or other committee
appointed by the Board, which shall be comprised solely of two or more “outside directors” as then
defined in the regulations under Section 162(m) of the Internal Revenue Code of 1986, as amended
(the “Code”), or any successor provision. The Committee shall interpret the Plan and
prescribe such rules, regulations and procedures in connection with the operations of the Plan as
it shall deem to be necessary and advisable for the administration of the Plan consistent with the
purposes of the Plan. The Committee’s determinations under the Plan need not be uniform and may be
made by it selectively among persons who receive, or are eligible to receive, awards under the
Plan, whether or not such persons are similarly situated. For each Plan Year, the Committee shall
(i) designate the Participants eligible to receive awards under the Plan, (ii) determine the
Company Performance Goals and the Company Incentive Targets for such Participants, (iii) determine
the Individual Performance Goals and Individual Incentive Targets for eligible Participants, and
(iv) make such other determinations as may be required or permitted by the Plan. Prior to payment
of any Company Incentive Award or Individual Incentive Award for any Plan Year, the Committee shall
certify that the Company Performance Goals and Individual Performance Goals (and other material
terms of any award) have been satisfied. For purposes of the required certification, approved
minutes of the meeting of the Committee at which the certification is made shall be sufficient to
satisfy the requirement of a written certification.

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     Section 3.02. Section 162(m). Company Incentive Awards under this Plan are
intended to constitute “qualified performance-based compensation” under Section 162(m) of the Code
(or any successor section thereto) and the regulations thereunder with respect to Participants who
are or who are anticipated to be covered employees, as such term is defined in Section 162(m) of
the Code (or any successor section thereto) for any Plan Year (each, a “Covered Employee”) and the
Plan shall be administered and interpreted consistently with said Section 162(m) with respect to
awards to Covered Employees.

     Section 4. Eligibility, Termination, New Participants.

          Section 4.01. Eligibility. Any key employee of the Company or any
corporation, partnership or other organization of which the Company owns or controls, directly or
indirectly, not less than 50% of the total combined voting power of all classes of stock or other
equity interests (each, a “Participating Entity”) who the Committee determines, in its sole
discretion, has a significant affect on the operations and/or results of the Company shall be
eligible to participate in the Plan (each, a “Participant”); provided, that the Company’s
Chief Executive Officer and the Executive Vice Presidents of the Company shall not be eligible to
receive Individual Incentive Awards. Participants in the Plan for any Plan Year shall be deemed
ineligible to participate in the Erie Insurance Group Employee Profit Sharing Bonus Plan (the
“Profit Sharing Plan”) for such Plan Year. No employee of the Company or any Participating
Entity shall have a right (a) to be selected to participate in the Plan for any Plan Year, or (b)
having once been selected for a Plan Year, to (i) be selected to participate again in the future or
(ii) continue as an employee of the Company or any Participating Entity.

          Section 4.02. Termination of Employment. If the active employment of a
Participant shall be terminated before the Payment Date of an award for any Plan Year for any
reason, such Participant may receive all or such portion of his or her award as may be determined
by the Committee in its sole discretion; provided, that if a Participant ceases to be an employee
of the Company or a Participating Entity prior to the Payment Date of an award for any Plan Year by
reason of death, Disability (meaning total and permanent disability within the meaning of Section
22(e)(3) of the Code), or Normal or Early Retirement (as defined in the Company’s qualified pension
plan for employees), the Participant shall be entitled to payment of not less than a pro rata
portion of such award, based on the number of days such Participant was an employee during the
Performance Period; and provided, further, that a Participant who is terminated for cause (as
defined in such employee’s employment agreement with the Company or Participating Entity or, if no
such agreement exists, as defined by the Committee) shall not be entitled to receive payment of any
award for the Plan Year.

          Section 4.03. New Participants. Except as provided in this Section 4.03, an
employee who is not a Participant as of the first day of a Performance Period shall not become a
Participant for that Performance Period. New employees of the Company or a Participating Entity
hired during a Performance Period, and employees promoted during the Performance Period who were
not eligible to participate in the Plan at the beginning of the Performance Period, may, as
determined by the Committee in its sole discretion, become a Participant during a Performance
Period and participate in the Plan for such Performance Period on a pro-rata basis (based on the
number of days in the Performance Period that such employee is an employee who is deemed eligible
to participate in the Plan); provided, that if the new or promoted employee is a Covered Employee
for the

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Plan Year, then the employee shall not be eligible to participate in the Plan unless he or she
becomes a Participant effective not later than 90 days after the beginning of the Performance
Period. Persons who become Participants after the first day of a Performance Period shall not be
eligible to participate in the Profit Sharing Plan from the date they become a Participant in the
Plan; however, such Participant shall be entitled to a pro rata portion of the benefit, if any, to
which they otherwise would be entitled under the Profit Sharing Plan for such Plan Year based on
the number of days in the year prior to the date they became Participant in the Plan.

     Section 5. Company Incentive Targets, Company Incentive Awards, Company
Performance Measures, Company Performance Goals.

          Section 5.01. Company Incentive Targets. Each Participant under the Plan
shall be assigned a Company Incentive Target, which shall be expressed as a percentage of the
Participant’s annual rate of base salary in effect on December 31 of the Plan Year for which the
Company Incentive Target is being assigned, and which shall establish the amount of cash
compensation payable to the Participant upon attaining, in whole or in part, or exceeding, the
Company Performance Goals for a Performance Period (the “Company Incentive Target”). The
Company Incentive Targets shall be determined and approved by the Committee not later than 90 days
after the commencement of each Performance Period. At the time the Company Incentive Target is
established, the Committee shall establish the maximum Company Incentive Award that may be paid for
the Performance Period to Participants who are Covered Employees.

          Section 5.02. Company Incentive Awards. Company incentive awards are the
actual cash amounts earned by Participants during a Performance Period for attaining, in whole or
in part, or exceeding the Company Performance Goals for such Performance Period (“Company
Incentive Awards”); provided, however, that for Participants who are Covered Employees (a) no
Company Incentive Award may exceed the Participant’s Company Incentive Target established for the
actual level of achievement attained, and (b) payment of any Company Incentive Award under the Plan
shall be contingent upon the achievement of the Company Performance Goals.

          Section 5.03. Company Performance Goals.

               (a) Company Performance Goals. For each Performance Period, the Committee shall
establish specific, written, objective performance goals (the “Company Performance Goals”)
for each Participant, which may be based upon one or more of the following performance measures and
expressed in either, or a combination of, absolute values or rates of change: (i) the operating
ratio of the property and casualty insurance operations of the Erie Insurance Group (ii) direct
written premiums of the Erie Insurance Group, (iii) the statutory or GAAP combined ratio, loss
ratio, expense ratio or dividend ratio of the property and casualty insurance operations of the
Erie Insurance Group, (iv) net income (including net income before or after taxes and net income
before interest, taxes, depreciation and amortization), net income per share and net income per
share growth rate, (v) operating revenue, net premiums written or net premiums earned, (vi)
operating expenses, cost of management operations or underwriting expenses, (vii) cash flow, (viii)
return on capital, shareholders’ equity, assets or investments, (ix) stock price, (x) market share
or (xi) gross margins (“Company Performance Measures”). Company Performance Measures may
be based on the performance of the Erie Insurance Group, the Company or a subsidiary or
subsidiaries or affiliate of the Company, a

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division, department, business unit or other portion thereof, a product line or products, or
any combination of the foregoing and/or upon a comparison of such performance with the performance
of a peer group or other measure selected or defined by the Committee at the time of assigning the
Company Incentive Target. For Participants that are Covered Employees, the Company Performance
Goals shall be established for any Performance Period not later than 90 days after the commencement
of the Performance Period.

               (b) Manner of Calculating Company Incentive Awards. When the Company Performance
Goals are established, the Committee shall also specify, in terms of an objective formula or
standard, the method for computing the amount of the Company Incentive Award if the Company
Performance Goal is attained, in whole or in part, or exceeded. If more than one Company
Performance Goal is established for any Performance Period, the Committee shall also specify the
weighting assigned to such Company Performance Goals. The Committee may, at the time the Company
Performance Goals are established, determine that unusual items or certain specified events or
occurrences, including changes in accounting standards or tax laws and the effects of
non-operational or extraordinary items as defined by generally accepted accounting principles,
shall be excluded from the calculation; provided that such determination does not cause the Company
Incentive Award for any Performance Period to fail to constitute “qualified performance-based
compensation” under Section 162(m) of the Code (or any successor section thereto) and the
regulations thereunder with respect to Participants who are Covered Employees.

          Section 5.04. Discretion. The Committee shall have no discretion to increase
any Company Incentive Target or Company Incentive Award that would otherwise be due upon attainment
of the Company Performance Goals, or otherwise modify any Company Performance Goals associated with
a Performance Period; provided, however, that solely with respect to Participants who are eligible
to receive Individual Incentive Awards under Section 6, the Committee may in its discretion reduce
or eliminate such Company Incentive Target or Company Incentive Award for a Performance Period.

          Section 5.05. Determination of Company Incentive Award. As promptly as
reasonably practicable following receipt of the information necessary for the calculation of any
Company Incentive Award, the Committee shall determine the amount of a Participant’s Company
Incentive Award for the Plan Year, if any, based on the level of attainment of the applicable
Company Performance Goals for the Performance Period in accordance with the terms of the award as
set forth in the Award Agreement and the other terms of the Plan. Such determination shall be
communicated to the Participant in writing. Prior to any payment of the Company Incentive Awards
hereunder, the Committee shall determine and certify in writing the extent to which the Company
Performance Goals and other material terms of the Plan and the applicable Award Agreement were
satisfied.

          Section 5.06. Maximum Company Incentive Awards. Notwithstanding any other
provision of this Plan, the maximum Company Incentive Award payable in cash to any one Participant
under the Plan with respect to any Performance Period shall be $3.0 million.

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     Section 6. Individual Incentive Targets, Individual Incentive Awards and
Individual Performance Goals.

          Section 6.01. Individual Incentive Targets. Each Participant under the Plan
who is eligible to receive Individual Incentive Awards under this Section 6 shall be assigned an
individual incentive target, which shall be expressed as a percentage of the Participant’s annual
rate of base salary in effect on December 31 of the Plan Year for which the Individual Incentive
Target is being assigned and which shall establish the amount of cash compensation payable to the
Participant upon attaining, in whole or in part, or exceeding, the Individual Performance Goals for
a Performance Period (an “Individual Incentive Target”).

          Section 6.02. Individual Incentive Awards. Individual incentive awards
(“Individual Incentive Awards”) are the actual cash amounts earned by eligible Participants
during a Performance Period for attaining, in whole or in part, or exceeding the Individual
Performance Goals for such Performance Period.

          Section 6.03. Individual Performance Goals.

               (a) Individual Performance Goals. For each Performance Period, the Committee shall
review and approve the individual performance goals for each eligible Participant as established
pursuant to the employee performance assessment program in effect from time to time and set forth
on the Participant’s individual performance assessment form for such Performance Period (the
“Individual Performance Goals”).

               (b) Calculation. When the Individual Performance Goals are established, the Committee
shall also specify the method for computing the amount of the Individual Incentive Award if the
Individual Performance Goal is attained, in whole or in part, or exceeded by the Participant. If
more than one Individual Performance Goal is established for any Performance Period, the Committee
shall also specify the weighting assigned to such Individual Performance Goals. The Committee may
determine that unusual circumstances or certain specified events or occurrences, shall be excluded
from the calculation.

          Section 6.04. Discretion. The Committee shall have no discretion to increase
any Individual Incentive Target or Individual Incentive Award that would otherwise be due upon
attainment of the Individual Performance Goals, or otherwise modify any Individual Performance
Goals associated with a Performance Period; provided, however, that the Committee may in its
discretion reduce or eliminate Individual Incentive Targets or Individual Incentive Awards for a
Performance Period.

          Section 6.05. Determination of Individual Incentive Award. As promptly as
reasonably practicable following receipt of the information necessary for the calculation of any
Individual Incentive Award, the Committee shall determine the amount of a Participant’s Individual
Incentive Award for the Plan Year, if any, based on the level of attainment of the applicable
Individual Performance Goals for the Performance Period in accordance with the terms of the award
as set forth in the Award Agreement and the other terms of the Plan. Such determination shall be
communicated to the Participant in writing. Prior to any payment of the Individual Incentive
Awards hereunder, the Committee shall determine and certify in writing the extent to which the
Individual Performance Goals and other material terms of the Plan were satisfied for each
Participant.

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     Section 7. Payment to Participants.

          Section 7.01. Timing of Payment. Except as may be deferred pursuant to
Section 8.02, Company Incentive Awards and Individual Incentive Awards for a Performance Period
shall be paid to the Participant as promptly as reasonably practicable following the end of such
Performance Period and the Committee’s determination and certification of such awards (the “Payment
Date”).

          Section 7.02. Beneficiary Designation. A Participant may file a completed
designation of beneficiary form with the Committee or its delegate in the form prescribed. Such
designation may be made, revoked or changed by the Participant at any time before the earlier of
death or receipt of any unpaid Company Incentive Awards or Individual Incentive Awards, but such
designation of beneficiary will not be effective and supersede all prior designations until it is
received and acknowledged in writing by the Committee or its delegate. If the Committee has any
doubt as to the proper beneficiary to receive payments hereunder, the Committee shall have the
right to withhold such payments until the matter is finally adjudicated. However, any payment made
in good faith shall fully discharge the Committee, the Company, its subsidiaries, Participating
Entities and the Board from all further obligations with respect to that payment.

          Section 7.03. Form of Payment. Payment of Company Incentive Awards and
Individual Incentive Awards shall be made in cash.

          Section 7.04. Tax Withholding. All Company Incentive Awards and Individual
Incentive Awards shall be subject to Federal income, FICA, and other tax withholding as required by
applicable law.

     Section 8. Miscellaneous.

          Section 8.01. Non-alienation. Except as may be required by law, neither the
Participant nor any beneficiary shall have the right to, directly or indirectly, alienate, assign,
transfer, pledge, anticipate or encumber (except by reason of death) any amount that is or may be
payable hereunder, including in respect of any liability of a Participant or beneficiary for
alimony or other payments for the support of a spouse, former spouse, child or other dependent,
prior to actually being received by the Participant or beneficiary hereunder, nor shall the
Participant’s or beneficiary’s rights to benefit payments under the Plan be subject in any manner
to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or
garnishment by creditors of the Participant or beneficiary or to the debts, contracts, liabilities,
engagements, or torts of any Participant or beneficiary, or transfer by operation of law in the
event of bankruptcy or insolvency of the Participant or any beneficiary, or any legal process.

          Section 8.02. Deferral. Participants may elect to defer all or a portion (in
whole percentages) of their Company Incentive Award and Individual Incentive Award, in accordance
with the terms of a deferral agreement entered into between the Participant and the Company;
provided that such election to defer must be made prior to the commencement of the Plan Year to
which such Incentive Award relates. No amount in excess of the amount of the Company or Individual
Incentive Awards deferred shall be payable to the Participant for such deferral, except as may be
based upon either an actual or deemed reasonable rate of interest or on one or more actual or
deemed investment vehicles as made available from time to time by the Company elected by the
Participant, such that the amount payable will be based on the actual rate of return of a specific
investment (including any decrease as well as any increase in the value of an investment).

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          Section 8.03. Amendment or Termination of this Plan. The Board shall have
the right to amend or terminate the Plan at any time, provided that any termination shall
automatically end the outstanding Performance Period and calculations shall be made with respect to
achievement of the Company and Individual Performance Goals for such Performance Periods for the
purpose of determining whether any partial Company or Individual Incentive Awards may be payable
under the Plan; provided, further, that in the event any partial Company or Individual Incentive
Awards are payable, such amounts shall be paid as soon as practicable following termination of the
Plan in the form and subject to any restrictions determined by the Committee in its sole
discretion. No employee or Participant shall have any vested right to payment of any Company or
Individual Incentive Award hereunder prior to its payment. The Company shall notify affected
employees in writing of any amendment or termination of the Plan.

          Section 8.04. Award Agreements. Company Incentive Awards and Individual
Incentive Awards shall be evidenced by a written agreement entered into between the Company or a
Participating Entity and the Participant, setting forth such award granted to the Participant under
this Plan (each, an “Award Agreement”).

          Section 8.05. Limits of Liability. Any liability of the Company to any
Participant with respect to an award shall be based solely upon contractual obligations created by
the Plan and the Award Agreement. Neither the Company, nor any member of its Board or of the
Committee, nor any other person participating in any determination of any question under the Plan,
or in the interpretation, administration or application of the Plan, shall have any liability to
any party for any action taken or not taken in good faith under the Plan.

          Section 8.06. No Employment Rights. Neither the adoption of the Plan nor any
provision of the Plan shall be construed as a contract of employment between the Company or a
subsidiary or Participating Entity and any employee or Participant, or as a guarantee or right of
any employee or Participant to future or continued employment with the Company or a subsidiary or
Participating Entity, or as a limitation on the right of the Company or a subsidiary or
Participating Entity to discharge any of its employees. Specifically, designation as a Participant
does not create any rights, and no rights are created under the Plan, with respect to continued or
future employment or conditions of employment.

          Section 8.07. Illegal or Invalid Provision. In case any provision of the
Plan shall be held illegal or invalid for any reason, such illegal or invalid provision shall not
affect the remaining parts of the Plan, but the Plan shall be construed and enforced without regard
to such provisions.

          Section 8.08. Unsecured Creditor. The Plan constitutes a mere promise by the
Company to make benefit payments in the future. The Company’s obligations under the Plan shall be
unfunded and unsecured promises to pay. The Company shall not be obligated under any circumstance
to fund its financial obligations under the Plan. It may, in its discretion, set aside funds in a
trust or other vehicle, subject to the claims of its creditors, in order to assist it in meeting
its obligations under the Plan, if such arrangement will not cause the Plan to be considered a
funded deferred compensation plan. To the extent that any Participant or beneficiary or other
person acquires a right to receive payments under the Plan, such right shall be no greater than the
right of a general

80

 

unsecured creditor of the Company and each Participant and beneficiary shall at all times have
the status of a general unsecured creditor of the Company.

          Section 8.09. Construction. The provisions of the Plan shall be construed,
administered and governed by the laws of the Commonwealth of Pennsylvania, including its statute of
limitations provisions, but without reference to conflicts of law principles. Titles of Sections
of the Plan are for convenience of reference only and are not to be taken into account when
construing and interpreting the provisions of the Plan. Capitalized terms shall have the meanings
ascribed to them herein unless the context expressly otherwise requires.

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